Reimers, In re
| Decision Date | 19 August 1992 |
| Docket Number | No. 88-15608,88-15608 |
| Citation | 972 F.2d 1127 |
| Parties | , 23 Bankr.Ct.Dec. 591, Bankr. L. Rep. P 74,800 In re Richard H. REIMERS and Jeanne R. Reimers, Debtors. Claude PITRAT, Trustee; W.J. Giles, III, Appellants, v. Richard H. REIMERS; Jeanne R. Reimers, Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
W.J. Giles, III, Sioux City, Iowa, in pro per.
No appearance for appellees.
Appeal from the United States District Court for the District of Arizona.
Before: FLETCHER and T.G. NELSON, Circuit Judges, and WILSON, * District Judge.
Trustee Claude Pitrat and W.J. Giles, special counsel to the trustee, appeal the district court's affirmance of the bankruptcy court's order authorizing compensation to Giles. Pitrat and Giles argue that the bankruptcy court erred in refusing to allow compensation in accord with a contingent fee arrangement agreed to by them and approved by the bankruptcy court at the time of the agreement. Instead, when Pitrat petitioned for authorization to pay the fees, the bankruptcy court awarded substantially reduced compensation.
Because the bankruptcy court did not apply the correct law in determining the fee, we reverse.
In September, 1983, Claude Pitrat, trustee for the estate of debtor Richard Reimers, requested the bankruptcy court's permission to employ W.J. Giles as special counsel to prosecute a fraud claim in Iowa. The fee agreement between the trustee and Giles provided that Giles would be awarded compensation of 40% of the amount he recovered for the estate. The bankruptcy court approved the employment and fee agreement in an order dated November 15, 1983.
Giles succeeded in recovering $37,871.30 for the estate on the claim. In August, 1986, the trustee filed an application seeking authorization to pay Giles $15,101.10 (40% of the amount recovered). At a first hearing on the application, the court directed the trustee to file additional supporting materials. At a subsequent hearing, the court again requested additional materials, in particular records of Giles' billable hours. Giles ultimately submitted, rather than documentation regarding his hours, copies of documents related to the litigation of the claim. On February 11, 1988, the bankruptcy court entered an order approving payment to Giles of only $6,000. The court arrived at this amount by estimating that Giles had spent 60 hours on the case, and multiplying this by his $100 hourly rate. The trustee and Giles filed a motion for reconsideration; the court refused to hold a hearing on the motion, and denied it. Pitrat and Giles appealed to the district court, which affirmed.
This court "will not disturb a bankruptcy court's award of attorney's fees absent a finding that the court abused its discretion or erroneously applied the law." Boldt v. Crake (In re Riverside-Linden Investment Co.), 945 F.2d 320, 322 (9th Cir.1991).
The bankruptcy code contains specific provisions governing compensation of professionals. Section 330 provides:
After notice to any parties in interest and to the United States trustee and a hearing, and subject to sections 326, 328 and 329 of this title, the court may award to a trustee, to an examiner, to a professional person employed under section 327 or 1103 of this title, or to the debtor's attorney
(1) reasonable compensation for actual, necessary services rendered by such trustee, examiner, professional person, or attorney
. . . . .
The provision at issue here, governing professionals employed by a trustee, states:
The trustee ... with the court's approval, may employ or authorize the employment of a professional person under section 327 or 1103 of this title, as the case may be, on any reasonable terms and conditions of employment, including on a retainer, on an hourly basis, or on a contingent fee basis. Notwithstanding such terms and conditions, the court may allow compensation different from the compensation provided under such terms and conditions after the conclusion of such employment, if such terms and conditions prove to have been improvident in light of developments not capable of being anticipated at the time of the fixing of such terms and conditions.
Under section 328, where the bankruptcy court has previously approved the terms for compensation of a professional, when the professional ultimately applies for payment, the court cannot alter those terms unless it finds the original terms "to have been improvident in light of developments not capable of being...
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