In re Stanton
In re Stanton
Opinion of the Court
ORDER AND MEMORANDUM OPINION APPROVING BRADLEY AR-ANTES FEE APPLICATION
Glenn Rasmussen previously filed a second interim fee application that included $11,622.50 in fees defending its first fee application against an objection by the U.S. Trustee. While Glenn Rasmussen’s second interim fee application was pending, the U.S. Supreme Court decided Baker Botts v. ASARCO,
The U.S. Trustee now asks the Court to set off the $11,622.50 in fees it awarded Glenn Rasmussen against a fee application filed by Glenn Rasmussen’s successor— Bradley Arant Boult Cummings — -because the $11,622.50 in fees were allegedly not recoverable under Baker Botts. Although the U.S. Trustee is right that the Court can revisit interim fee awards at any time, the Court concludes on the facts of this case that the U.S. Trustee waived its Baker Botts objection by failing to timely assert it.
Background
Ed Rice of the Glenn Rasmussen law firm served as special counsel to the Chapter 7 Trustee, principally handling a fraudulent transfer proceeding against the
To resolve the U.S, Trustee’s principal objection, Glenn Rasmussen supplemented its fee application to provide more detail. Of course, that takes time, which means attorney’s fees.
Glenn Rasmussen’s second interim fee application was filed on negative notice.
While Glenn Rasmussen’s second interim fee application was pending, however, the Supreme Court issued its decision in Baker Botts LLP v. ASARCO, which held that bankruptcy courts are not permitted to award attorney’s fees for work performed defending a fee application.
The U.S. Trustee objected to Bradley Arant’s fee application — but not because the firm’s fees were unreasonable or otherwise objectionable.
Conclusions of Law
This Court has already ruled that time spent by the Chapter 7 Trustee’s general counsel (Herb Donica) supplementing a fee application in response to a similar objection by the U.S. Trustee’s were, in fact, recoverable under Baker Botts.
But the Court writes to address a more fundamental issue: Is the U.S. Trustee’s Baker Botts objection untimely? Ordinarily, a party cannot seek reconsideration of a court’s prior ruling absent (1) an intervening change in controlling law; (2) newly discovered evidence; or (3) the need to correct cleár error or prevent manifest injustice.
This Court can always revisit interim fee awards, regardless of a change in controlling law, newly discovered evidence, or clear error or manifest injustice. Interim fees awards under Bankruptcy Code § 331, which are intended to “alleviate the unwarranted financial burden on professionals that occurs when judicial scrutiny, allowance, and payment of fee applications is withheld until the conclusion of the
But, while the Court is free to revisit its order on Glenn Rasmussen’s second interim fee application, the Court nonetheless concludes the U.S. Trustee waived his Baker Botts objection, “[W]aiver is the voluntary, intentional relinquishment of a known right.”
At the outset, it’s worth noting that the U.S. Trustee created this predicament in the first place by asking for a more detailed fee application than is typically required in chapter 7 cases. Under Local Rule 2016-1, fee applications filed by chapter 7 professionals need only contain the name of the person doing the work; the amount of time expended for each item of work; the requested hourly rate; the date of employment; a discussion of the criteria relevant for determining compensation; a detail of reimbursable costs; and a verification that the fees and costs are reasonable and that the application is true and accurate.
The Court does not fault the U.S. Trustee’s for insisting on heightened disclosure in this case given its complexity and the amount of fees requested (collectively, $1.7 million in the initial fee applications by Donica and Glenn Rasmussen) in this converted chapter 7 case. But the proper time to insist on that heightened disclosure would have been early on in the case when the Trustee retained Glenn Rasmussen.
In any event, Glenn Rasmussen filed its second fee application on negative notice.
At the time he chose not to object to Glenn Rasmussen’s fee application, the U.S. Trustee knew or should have known he had the right to assert a Baker Botts objection. To be fair, Baker Botts was decided only eight days before the negative notice deadline expired.
Not to mention, the Fifth Circuit decision that the Supreme Court upheld in Baker Botts had been decided more than a year before Glenn Rasmussen filed its second interim fee application — and the Fifth Circuit relied on the Eleventh Circuit decision in Grant. Since there was no controlling Eleventh Circuit precedent to the contrary, the Fifth Circuit’s decision in Baker Botts would have supported an objection by the U.S. Trustee here. Given the existence of Eleventh Circuit authority for the proposition that fees defending fees are not compensable, and no Eleventh Circuit precedent to the contrary, it was incumbent upon the U.S. Trustee to object to Glenn Rasmussen’s fees for time spent supplementing its fee application.
Conclusion
The Court can imagine instances where the grounds for objecting to an interim fee award do not become known until later in the case. In those cases, the Court ought to be able to revisit an earlier interim fee award. But that is not this case. Here, the U.S. Trustee insisted on greater disclosure than is ordinarily required,- forcing Glenn Rasmussen to incur additional fees responding to the U.S. Trustee’s objection. When Glenn Rasmussen sought payment of those additional fees, Eleventh Circuit precedent would have supported — or at a minimum would not have foreclosed — an objection by the U.S. Trustee. It was not until a new firm acquired Glenn Rasmussen and sought fees for the work Ed Rice did while at the new firm that the U.S. Trustee raised its objection. On those facts, the Court concludes the U.S. Trustee waived its Baker Botts objection. Accordingly, it is
ORDERED:
*846 1. Bradley Arant’s first interim fee application29 is APPROVED in its entirety. The U.S. Trustee’s objection30 is OVERRULED.
2. Bradley Arant is awarded $15,572.50 in fees and $17.60 in expenses, which the Chapter 7 Trustee is authorized to pay.
. — U.S. -, 135 S.Ct. 2158, 2163, 192 L.Ed. 2d 208 (2015).
. Doc. Nos. 208 & 231.
. Doc. No. 565. Specifically, Glenn Rasmussen sought $935,163 in fees. Id. The firm divided its time into two categories: fraudulent transfer litigation and "other matters.” The other matters only accounted for $51,901 of the fees Glenn Rasmussen sought. The bulk of Glenn Rasmussen's time — 1,770 hours— was spent on the fraudulent transfer proceeding. Glenn Rasmussen claimed $533,262 in hourly fees, with the remaining $350,000 coming from a 10% contingency fee. Id. at 6-13.
. Doc. No. 589. The U.S. Trustee also complained about how the firm calculated a 10% contingency fee.
. Ultimately, the Court approved Glenn Rasmussen’s fee application in its entirety. Doc. Nos. 603 & 625.
. Doc. No. 675.
. Id.
. Doc. No. 680.
. - U.S. -, 135 S.Ct. 2158, 2163, 192 L.Ed.2d 208 (2015).
. Doc. No. 684.
. Doc. No, 702.
. In re Stanton, 559 B.R. 781, 784-85 (Bankr. M.D. Fla. 2016).
. Id. (discussing Baker Botts, 135 S.Ct. at 2165-67).
. Fenello v. Bank of Am., N.A., 577 Fed.Appx. 899, 902 n.7 (11th Cir. 2014) (citing Richardson v. Johnson, 598 F.3d 734, 740 (11th Cir. 2010); Del. Valley Floral Grp., Inc. v. Shaw Rose Nets, LLC, 597 F.3d 1374, 1383 (Fed. Cir. 2010)).
. Teamsters Local 617 Pension & Welfare Funds v. Apollo Grp., Inc., 282 F.R.D. 216 (D. Ariz. 2012) (explaining that an intervening change in controlling law is limited to cases that “generally or substantively alter existing law, such as by overruling it, or creating a significant shift in a court’s analysis”),
. 908 F.2d 874, 883 (11th Cir. 1990). The Fifth Circuit Court of Appeals, in Baker Botts, relied on the Eleventh Circuit’s ruling in Grant.in support of the proposition that fees for defending a fee application are not com-pensable. In re ASARCO, LLC, 751 F.3d 291, 299 (5th Cir. 2014).
. In re Commercial Fin. Servs., Inc., 231 B.R. 351, 354 (Bankr. N.D. Okla. 1999); see also In re Evangeline Ref. Co., 890 F.2d 1312, 1321 (5th Cir. 1989); In re Pub. Serv. Co. of New Hampshire, 138 B.R. 660 (D.N.H. 1992).
. In re Stable Mews Assocs., 778 F.2d 121, 123 n.3 (2d Cir. 1985) ("Interim fee awards are, by definition, not final.”); In re Callister, 673 F.2d 305, 307 (10th Cir. 1982) ("Interim fee awards ... are in no respect final adjudications on the question of compensation.”); In re Evangeline Ref., 890 F.2d at 1321 (citing In re Stable Mews Assocs. and In re Callister).
. In re Evangeline Ref. Co., 890 F.2d at 1321 (quoting 2 Collier on Bankruptcy ¶ 331.03 (15th ed.)).
. Doc. No. 702 at 6-7 (citing In re Pearlman, 2014 WL 1100223, *2 (Bankr. M.D. Fla. 2014)). Of course, the U.S. Trustee's objection is to Bradley Arant’s first fee application. Arguably, Glenn Rasmussen's second interim fee application was its final one, in which case the U.S. Trustee (under its own argument) would be precluded from raising its Baker Botts objection. But the Court, for purposes of the U.S. Trustee’s objection, is treating Bradley Arant’s fee application as if it was Glenn Rasmussen’s final fee application.
. Griffin v. Habitat for Humanity Int'l, Inc., 641 Fed.Appx. 927, 932 (11th Cir. 2016) (citing Witt v. Metropolitan Life Ins. Co., 772 F.3d 1269, 1279 (11th Cir. 2014)).
. Id.
. Local Rule 2016-1.
. Id.
. 11 U.S.C, 330(a)(1). Notice must be given to interested parties and the U.S. Trustee. Id.
'. 11 U.S.C. § 102(1)(B); see also In re Henry, 2006 WL 1997710, at *1 (Bankr. M.D. Ala. June 16, 2006).
. The negative notice deadline expired on June 23, 2015. Baker Botts was decided June 15, 2015.
. Grant v. George Schumann Tire & Battery Co., 908 F.2d 874 (11th Cir. 1990).
. Doc. No. 684.
. Doc. No. 702.
Reference
- Full Case Name
- IN RE: John Dargon STANTON, III, Debtor
- Status
- Published