In re Pfleghaar

• Decision Date: 19 December 1997
• Docket Number: BAP No. 97-6085 MN.
• Citation: 215 BR 394
• Parties: In re Mark William PFLEGHAAR, Debtor. Wayne G. NELSON, Movant-Appellant, v. J.J. MICKELSON, Trustee-Appellee.
• Court: U.S. Bankruptcy Appellate Panel, Eighth Circuit

215 B.R. 394 (1997)

In re Mark William PFLEGHAAR, Debtor Wayne G. NELSON, Movant-Appellant, v. J.J. MICKELSON, Trustee-Appellee.

BAP No. 97-6085 MN.

United States Bankruptcy Appellate Panel of the Eighth Circuit.

Submitted December 16, 1997.

Decided December 19, 1997.

Wayne G. Nelson, Minneapolis, MN, for Appellant.

Stephen J. Creasey, Minneapolis, MN, for Appellee.

Before KOGER, HILL, and SCOTT, Bankruptcy Judges.

KOGER, Chief Judge.

Appellant Wayne G. Nelson, the debtor's attorney, appeals the Order of the bankruptcy court denying his second Application for Compensation. We have jurisdiction to hear this appeal pursuant to 28 U.S.C. § 158(b) and (c).

FACTS

Nelson filed a Chapter 13 Petition, Schedules and Plan on behalf of the debtor on April 14, 1997. On May 27, 1997, Nelson filed an Application for Compensation, under Minnesota Local Rule 2016-1,¹ requesting approval of fees and expenses in the flat amount of $850.00, pursuant to an agreement he had entered with the debtor. On July 10, 1997, the bankruptcy court allowed the Application for Compensation in the amount of $850.00 to Nelson. On August 21, 1997, Nelson filed a second Application for Compensation, asserting he was entitled additional fees for performing additional work which had not been included in the original flat fee agreement.

Specifically, the second Application stated that on March 17, 1997, prior to filing the bankruptcy case, the debtor and Nelson had entered into an attorney retainer agreement whereby the debtor agreed to pay the flat fee of $850.00 as attorneys fees in the case and paying a retainer of $360.00 ($200.00 plus the $160.00 filing fee). On June 6, 1997, prior to the court's approval of the first application for fees, the debtor signed an additional retainer agreement which provided that Nelson would charge $350.00 for additional work, specifically, "Responding to Motion for relief from stay and objection to confirmation and notifying additional creditors." On July 10, apparently unaware of the second agreement between the debtor and Nelson, the bankruptcy court approved the first Application. Then on August 21, Nelson filed his second Application for Compensation seeking the additional $350.00 pursuant to the June 6 agreement with the debtor. Nelson attached an itemization of his time and charges which showed he had expended a total of 15 hours in the case and alleging his usual fee was $150.00 per hour.

The bankruptcy court denied the second Application by Order entered September 10, without holding a hearing on the application. The court found that the bankruptcy case was not a complicated case and that the additional services for which Nelson sought additional fees, (dealing with an objection to confirmation, a motion for relief from stay, and notifying creditors) were all services which were included in the original contract.

Nelson appeals the order denying his second Application for Compensation, asserting the bankruptcy court's sua sponte denial of the attorney's fee application without a hearing was clearly erroneous and that the order should be reversed and his fees granted.

STANDARD OF REVIEW

An appellate court reviews the bankruptcy court's findings of fact, whether based upon oral or documentary evidence, for clear error, and reviews legal conclusions de novo. Fed.R.Bankr.P. 8013; First Nat'l Bank of Olathe v. Pontow, 111 F.3d 604, 609 (8th Cir.1997). We review the bankruptcy court's decisions regarding an award of fees under an abuse of discretion standard. Grunewaldt v. Mutual Life Ins. Co. (In re Coones Ranch, Inc.), 7 F.3d 740, 744 (8th Cir.1993). An abuse of discretion occurs in this context "if the bankruptcy judge fails to apply the proper legal standard or to follow proper procedures in making the determination, or bases an award upon findings of fact that are clearly erroneous." Agate Holdings, Inc. v. Ceresota Mill L.P. (In re Ceresota Mill L.P.), 211 B.R. 315 (8th Cir. BAP 1997). To be clearly erroneous, after reviewing the record, we must be left with the definite and firm impression that a mistake has been committed. In re Waugh, 95 F.3d 706, 711 (8th Cir.1996). Furthermore, review is limited in deference to the bankruptcy judge's familiarity with the work performed by the professional. In re Grady, 618 F.2d 19, 20 (8th Cir.1980).

DISCUSSION

11 U.S.C. § 330 provides, in pertinent part:

(a)(1) After notice to the parties in interest and the United States Trustee and a hearing, and subject to sections 326, 328, and 329, the court may award to a trustee, an examiner, a professional person employed under section 327 or 1103—

(A) reasonable compensation for actual, necessary services rendered by the trustee, examiner, professional person, or attorney and by any paraprofessional person employed by any such person; and

(B) reimbursement for actual, necessary expenses.

(2) The court may, on its own motion or on the motion of the United States Trustee, the United States Trustee for the District or Region, the trustee for the estate, or any other party in interest, award compensation that is less than the amount of compensation that is requested.

Subsection (3) then lists relevant factors which the court is to consider in determining the amount of reasonable compensation, including the time spent; the rates charged; whether the services were necessary to the administration, or beneficial toward the completion of, the bankruptcy case; whether the services were performed within a reasonable amount of time commensurate with the complexity of the task addressed; and whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in non-bankruptcy cases. Finally, subsection (4)(B) provides that in a chapter 13 case in which the debtor is an individual, the court may award reasonable compensation to the debtor's attorney for representing the interests of the debtor in connection with the bankruptcy case based on a consideration of the benefit and necessity of such services to the debtor and the other factors set forth in this section.

Nelson concedes that it was within the bankruptcy judge's discretion to review the application despite the fact that no one objected to it. However, it is Nelson's contention that the court was required to conduct a hearing on the application.

We addressed this issue recently in Chamberlain v. Kula (In re Kula), 213 B.R. 729 (8th Cir. BAP 1997). We are bound by our previous decisions, just as the Court of Appeals for the Eighth Circuit is bound by its prior decisions. See Foss v. U.S., 865 F.2d 178, 180 (8th Cir.1989) (one panel of the Eighth Circuit Court of Appeals cannot reverse another panel; such action requires an en banc decision); Brown v. First Nat. Bank in Lenox, 844 F.2d 580, 581 (8th Cir.1988) (same); Federal Deposit Ins. Corp. v. Bowles Livestock Comm'n Co., 937 F.2d 1350, 1354 (8th Cir.1991) (same); see also Life Ins. Co. of Virginia v. Barakat (In re Barakat), 173 B.R. 672, 677 (Bankr.C.D.Cal.1994) (discussing the doctrine of stare decisis as it relates to Bankruptcy Appellate Panel, District Court, and Circuit Court opinions).

Further, although Chamberlain was decided after the bankruptcy court's opinion and thus the bankruptcy court did not have the benefit of that decision when it issued the instant Order, Chamberlain is controlling. See Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 486 n. 16, 101 S.Ct. 2870, 2879 n. 16, 69 L.Ed.2d 784 (1981) (stating "an appellate court must apply the law in effect at the time it renders its decision" (citation omitted)); Ziffrin, Inc. v. United States, 318 U.S. 73, 78 63 S.Ct. 465, 468, 87 L.Ed. 621 (1943) (noting "a change in the law between a nisi prius and an appellate decision requires the appellate court to apply the changed law"); Zolfo, Cooper & Co. v. Sunbeam-Oster Co., 50 F.3d 253, 258-59 (3d Cir.1995).

In Chamberlain, we held that in making fee awards under § 330, a bankruptcy court is required to either make a specific lodestar calculation or indicate why the lodestar method is inappropriate under the circumstances. We also held, as discussed more fully below, that § 330 on its face entitles the applicant to a hearing on his fee application. On the other hand, we specifically commented that these requirements are frequently inappropriate in Chapter 13 cases and further noted that many districts have local rules permitting applications for fees under a certain amount, typically $850—1,000, be granted without an itemized fee statement and without a hearing. Such instances present an exception to the requirement for a hearing and a lodestar calculation.

As mentioned above, the Bankruptcy Court in Minnesota has such a rule, see Minn. Local Rule 2016-1(d) (permitting a simplified application without a hearing in the event the compensation sought does not exceed $850), and in the case at bar, Nelson filed his initial application for fees under that rule. As such, he was not required to file itemized statements or other documentation as to that Application, nor was he entitled to a hearing at that point.

However, when Nelson filed his second Application, the simplified rules (and thus the exception to the rules announced in Chamberlain) no longer applied. Consequently, as to the second Application, Nelson was required to file sufficient documentation to allow the bankruptcy court to make a decision as to whether the requested compensation was reasonable as enunciated in Chamberlain. The court was then to make a determination as to the reasonableness of the fee request and issue findings and conclusions based on the evidence.

Although...