IN RE: TH PROPERTIES

Case Type:
Business
Case Status:
Reversed and Remanded
Citation:
No. 17-1922 (3rd Circuit, Nov 28,2018) Not Published
Tag(s):
Ruling:
The Third Circuit Court of Appeals vacated the district court’s order and remanded for further consideration, finding, in part, that the bankruptcy court and district court erred when they found that the parties’ fee stipulation was unambiguous. Judge Ambro dissents.
Procedural context:
The Chapter 11 debtor and its previous bankruptcy counsel entered into a fee stipulation to resolve a contested fee application. The bankruptcy court approved the parties’ stipulation, and the case was eventually closed. Later, the bankruptcy court reopened the case, finding that the Debtor’s interpretation of the fee stipulation controlled. The law firm appealed, and the district court affirmed. The law firm appealed, and the Third Circuit vacated the district court’s order and remanded for further consideration.
Facts:
The debtor, TH Properties, L.P. (“Debtor”), filed for Chapter 11 bankruptcy, retaining Montgomery, McCracken, Walker, and Rhoads, LLP (the “Firm”) as its counsel. The Firm acted as counsel for the Debtor for three years until the Debtor retained new counsel and filed an objection to the Firm’s tenth and final fee application. The parties entered into a fee stipulation wherein the Firm agreed, in part, to reduce its total fees and costs claims against the Debtor from $2.6 million to $2.325 million for all of its pre-petition and post-petition work. The bankruptcy court approved the parties’ stipulation, and the case was eventually closed. Later, at the Firm's request, the bankruptcy court reopened Debtor’s case. The Firm primarily argued that certain language in the parties’ fee stipulation was unambiguous, and that the Debtor failed to fulfill its fee obligation to the Firm because Debtor still owed $680,789 – the amount Debtor had paid prior to the stipulation. The bankruptcy court found that the stipulation was unambiguous, and that the Firm’s argument was “manifestly inconsistent” with the “plain language” of the parties’ stipulation. The district court affirmed, and the Firm appealed. On appeal, the Third Circuit ultimately vacated the district court’s order and remanded for further consideration, finding, in part, that the district court and bankruptcy court erred when they held that the language of the parties’ fee stipulation was unambiguous. Judge Ambro dissented.
Judge(s):
Ambro, Restrepo, and Fuentes, Circuit Judges

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