Thomas v. Namba (In re Thomas)
- Citation:
- No. 10-60028; 2012 WL1008654 (9th Cir. Mar. 27, 2012) (Not For Publication).
- Tag(s):
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- Ruling:
- The Court of Appeal for the Ninth Circuit affirmed the decision of the Bankruptcy Appellate Panel (“BAP”) for the Ninth Circuit and upheld a ruling by the United States Bankruptcy Court for the Central District of California that had approved an application for attorneys’ fee submitted by the law firm Farmer & Ready (“Farmer”), counsel for the chapter 7 trustee. The Ninth Circuit rejected debtor’s arguments that: (1) the Bankruptcy Court abused its discretion by approving final fee application without contemporaneous detailed fee records; (2) the Bankruptcy Court abused its discretion by awarding full hourly rate for attorneys’ travel time; and (3) the Bankruptcy Court erred by failing to evaluate the reasonableness of fees on the basis that the sale of real property was not necessary.
Instead, the Ninth Circuit pointed out that the Bankruptcy Court carefully examined reasonableness of attorneys’ fee under the standards set in section 330(a)(3), and disallowed or reduced certain types of fee that were not adequately supported. While evaluating reasonableness of the fee, the Bankruptcy Court correctly noted that failure to maintain contemporaneous fee records negatively affects the reliability of the records, however, it does not automatically disallow such fee. Next, the Ninth Circuit determined that the Bankruptcy Court did not abuse its discretion by awarding full hourly fees for travel time because under specific circumstances of the case Farmer’s travel to and from the courthouse was both: reasonable and necessary.
Lastly, the Ninth Circuit concluded that the doctrine of issue preclusion bars the relitigation of the reasonableness of fees related to the sale of real property. In 2005, the Ninth Circuit in In re Thomas, 154 F. App'x 673 (9th Cir. 2005), already litigated and ruled that the sale order was final because the debtor's objection to the sale was moot due to the debtor's failure to stay the sale pending appeal, and the fact that property was sold to a good faith purchaser. Therefore, the Ninth Circuit confirms the Bankruptcy Court's decision that the debtor cannot raise this issue again as a basis for objection to an application for attorneys' fee.
- Procedural context:
- Appeal from the Ninth Circuit BAP’s decision affirming the United States Bankruptcy Court’s order, on remand from BAP, approving an application for attorneys’ fee. Affirmed.
- Facts:
- The debtor filed a chapter 11 bankruptcy on May 31, 1996. The case was converted to a chapter 7 on October 5, 1996, and a chapter 7 trustee was appointed. On August 18, 2000, the Bankruptcy Court approved Farmer’s appointment as a trustee’s counsel.
On April 25, 2006, Farmer submitted final fee application. The debtor objected to the fee application claiming that Farmer should not be awarded fee related to the sale of real property because the sale was unnecessary. Additionally, the debtor argued that Farmer’s fee application was not sufficiently detailed and that it included unnecessary fees for travel to and from the courthouse.
On January 26, 2007, Bankruptcy Court approved Farmer’s fee application. The debtor appealed to the BAP. The BAP held that the Bankruptcy Court correctly found the fees related to the sale of real property reasonable because the debtor failed to seek stay pending appeal, therefore making his objection to the sale moot. However, the BAP held that the Bankruptcy Court erred in finding attorneys’ fee reasonable where the fees were not adequately documented. Therefore, the BAP vacated the award of Farmer’s fee and remanded the case to the Bankruptcy Court for further examination of supporting documentation. The Bankruptcy Court reviewed supporting documentation, and approved most of the fees, while it disallowed or reduced certain types of fees that were not adequately documented.
The debtor appealed to the BAP. The BAP affirmed the decision of the Bankruptcy Court. The debtor appealed to the Ninth Circuit Court of Appeal.
- Judge(s):
- The Honorable Harry Pregerson, the Honorable Roland M. Gould, and the Honorable Richard C. Tallman, Circuit Judges.
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