Halloum v. McCormick, Barstow, Sheppard, Wayte & Carruth LLP (In re Halloum)

9th Cir. BAP Case No. EC-14-1219-JuKuPa (May 19, 2015)
Bankruptcy Court findings of fact were insufficient to support a disputed fee award where Debtor claimed that Counsel had agreed to flat fee of $40,000 for chapter 11 filing. Order awarding fees was vacated and case remanded to allow bankruptcy court to make the required findings.
Procedural context:
After conversion of Debtor's case from Chapter 11 to Chapter 7, Debtor's chapter 11 Counsel filed a motion for final compensation for its work in the chapter 11 case. Debtor opposed the compensation. Bankruptcy court granted the motion. Debtor appealed.
Form B 203--Disclosure of Compensation of Attorney For Debtor--attached to the bankruptcy petition stated: "For legal services, I have agreed to accept $38,954.00" and further stated as part of the form that "I have agreed to render legal service for all aspects of the bankruptcy case, including: ... representation of the debtor in adversary proceedings and other contested matters." The form was signed by the attorneys for Debtor. Debtor claimed that Counsel agreed to a flat fee of $40,000 and argued that the $38,964 amount represents $40,000 minus the filing fee. Counsel denied the existence of any flat-fee agreement and pointed to the employment application and order and several interim fee applications signed by Debtor that failed to mention a flat-fee agreement. In fact, Counsel pointed to interim fees awarded in the amount of $116,067--far in excess of the $40,000 flat-fee that Debtor argued for. Debtor responded by asserting that he had no choice but to approve the interim fee applications because Counsel threatened to withdraw from the case and the suggestion from Counsel that withdrawal would also lead to conversion of the case to chapter 7. Apparently, there was no written fee agreement. Debtor argued that there must be a written fee contract. Counsel responded by arguing for fees and expenses on a quantum meruit basis.
Jury, Kurtz, and Pappas, Bankruptcy Judges

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