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Inglesby, Falligant, Horne v. Moore, 98-8831 (1999)

Court: Court of Appeals for the Eleventh Circuit Number: 98-8831
Filed: Dec. 15, 1999
Latest Update: Feb. 21, 2020
Summary: PUBLISH IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT FILED U.S. COURT OF APPEALS _ ELEVENTH CIRCUIT 12/15/99 THOMAS K. KAHN No. 98-8831 CLERK _ D. C. Docket No. CV-697-102 IN RE: AMERICAN STEEL PRODUCT, INC., Debtor. INGLESBY, FALLIGANT, HORNE, COURINGTON & NASH, P.C., Plaintiff-Appellant, versus ANNE R. MOORE, Chapter 7 Trustee, Defendant-Appellee. _ Appeal from the United States District Court for the Southern District of Georgia _ (December 15, 1999) Before BLACK and WILSON,
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                                                                         PUBLISH

               IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT                   FILED
                                                          U.S. COURT OF APPEALS
                          ________________________          ELEVENTH CIRCUIT
                                                                 12/15/99
                                                              THOMAS K. KAHN
                                  No. 98-8831                     CLERK
                          ________________________
                          D. C. Docket No. CV-697-102

IN RE: AMERICAN STEEL PRODUCT, INC.,

                                                         Debtor.
INGLESBY, FALLIGANT,
HORNE, COURINGTON & NASH, P.C.,
                                                         Plaintiff-Appellant,

                                      versus

ANNE R. MOORE, Chapter 7 Trustee,
                                                         Defendant-Appellee.

                          ________________________

                   Appeal from the United States District Court
                      for the Southern District of Georgia
                        _________________________
                              (December 15, 1999)


Before BLACK and WILSON, Circuit Judges, and RONEY, Senior Circuit Judge.

WILSON, Circuit Judge:

      This case involves an issue of statutory interpretation. We consider whether a

Chapter 7 debtor’ s attorney is entitled under the Bankruptcy Code to compensation
from the debtor’s bankruptcy estate. The district and bankruptcy courts, interpreting

11 U.S.C. § 330, determined that the debtor’s attorney is not so entitled. We agree

and affirm.

                                    BACKGROUND

       Debtor, American Steel Products, Inc. (“ASP”), was placed in involuntary

Chapter 7 bankruptcy by its creditors. The bankruptcy court subsequently converted

it to a Chapter 11 proceeding and then reconverted it back to a Chapter 7. Although

ASP was initially a debtor in possession,1 Anne R. Moore (“Trustee”) was appointed

as Chapter 11 Trustee and remained as trustee when the case was reconverted to a

Chapter 7. Inglesby, Falligant, Horne, Courington & Nash, P.C., (“the Inglesby

firm”), a law firm, was subsequently appointed as counsel.

       At the conclusion of the bankruptcy proceedings, the Inglesby firm submitted

for court approval its application for compensation for services provided to the

bankruptcy estate in the total amount of $30,141.87. A part of that proposed fee,

$19,600.00, had been paid in the form of a retainer prior to the filing of the initial

petition. The bankruptcy court entered an order permitting payment of $10,541.87,

the difference between the fee application and the retainer fee initially paid, but



       1
       A debtor in possession has (with a few exceptions) the rights and duties of a Chapter
11 Trustee. See 11 U.S.C. § 1107(a).

                                             2
reserved ruling on whether that payment should be derived from the bankruptcy estate

itself or from the initial retainer. After receiving authority on the effect of the 1994

Amendments to 11 U.S.C. § 1330, the bankruptcy court vacated its prior order and

disallowed attorney’s fees out of the estate. The bankruptcy court found that the plain

language of § 330 precluded an award of attorney’s fees to a debtor’s attorney in both

Chapter 7 and Chapter 11 cases. The district court affirmed. We now have

jurisdiction to consider this matter pursuant to 28 U.S.C. § 158(d).

                             STANDARD OF REVIEW

      In bankruptcy proceedings, we review factual findings for clear error and

conclusions of law de novo. See General Trading, Inc. v. Yale Materials Handling

Corp., 
119 F.3d 1486
, 1494 (11th Cir. 1997).

                                    DISCUSSION

      The district court’s ultimate denial of Ingelesby’s compensation request was

based on a plain reading of § 330 barring compensation to debtor’s counsel in a

Chapter 7 or 11 proceeding. In the Bankruptcy Reform Act of 1994, Congress

amended § 330 to eliminate the former authorization for payment of debtor’s counsel

from estate assets in a Chapter 7 and Chapter 11 case. Prior to the 1994 amendments,

§ 330(a) provided in pertinent part:

      (a) 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

                                           3
      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, as
      the case may be, and by any paraprofessional persons employed by such
      trustee, professional person, or attorney, as the case may be, based on the
      nature, the extent, and the value of such services, the time spent on such
      services, and the cost of comparable services other than in a case under
      this title;

(emphasis added).


      As a result of the amendments, Bankruptcy Code § 330(a) now provides in

pertinent part:

      (a)(1) After notice to the parties in interest and the United States Trustee
      and a hearing, and subject to sections 326, 328, and 329, the court may
      award to a trustee, an examiner, a professional person employed under
      section 327 or 1103--
             (A) reasonable compensation for actual, necessary services
      rendered by the trustee, examiner, professional person, or attorney and
      by any paraprofessional person employed by any such person; and
             (B) reimbursement for actual, necessary expenses
             ...


            (4)(A) Except as provided in subparagraph (B), the court shall not
      allow compensation for--
            (i) unnecessary duplication of services; or
            (ii) services that were not--
                    (I) reasonably likely to benefit the debtor’s estate; or
                    (II) necessary to the administration of the case.
            (B) In a Chapter 12 or Chapter 13 case in which the debtor is an
      individual, the court may allow reasonable compensation to the debtor’s
                                           4
      attorney for representing the interests of the debtor in connection
      with the bankruptcy case based on a consideration of the benefit and
      necessity of such services to the debtor and other factors set forth in this
      section . . . . (emphasis added)

      We agree with the district court that the plain reading of § 330 precludes an

award of attorney’s fees to a debtor’s attorney in a Chapter 7 or Chapter 11

proceeding. The Inglesby firm attempts to avoid the plain meaning of the statute by

suggesting that the statute contains a drafting error or is ambiguous since the

amendment specifically authorizes the bankruptcy court to award reasonable

compensation to the debtor’s attorney in a Chapter 12 or Chapter 13 in cases where

the debtor is an individual. We must presume, however, that Congress intended what

it said when it revised § 330 to delete any provision for the award of compensation to

a debtor’s attorney in either a Chapter 7 or a Chapter 11 case.

      It is well-settled that courts are required to apply the plain meaning canon of

statutory construction in interpretation of the Bankruptcy Code. “[A]s long as the

statutory scheme is coherent and consistent, there generally is no need for a court to

inquire beyond the plain language of the statute.” United States v. Ron Pair

Enterprises, Inc., 
489 U.S. 235
, 240 (1989). We are thus obligated in this instance to

apply the plain meaning of § 330 precluding an award of attorney’s fees to a debtor’s

attorney in a Chapter 7 or Chapter 11 case. The statute is clear textually on its face

and the plain meaning of the statute is conclusive.

                                           5
      Both the Fifth and the Ninth Circuits have considered this identical issue and

have reached contrary results. In In re Pro-Snax Distributors Inc., 
157 F.3d 414
, 425

(5th Cir. 1998), the Fifth Circuit rejected the argument that a literal application of §

330(a) would produce a result demonstrably at odds with the intentions of its drafters,

stating:

      Although the legislative history and, indeed, a brief syntactical
      evaluation of the clause at issue suggest that Congress inadvertently
      neglected to include attorneys, our cannons of construction do not
      require–nay, do not permit–us to consider these exogenous sources
      when the statute is clear textually on its face.

Pro 
Snax, 157 F.3d at 425
. On the other hand, the Ninth Circuit in In re Century

Cleaning Services, Inc., 9th Cir. 1999, __ F.3d __ (No. 98-35027, November 18,

1999), found the statutory language of § 330(a) “substantially ambiguous”,

concluding that “Congress made a drafting error of some kind”. 
Id. The divided
Ninth Circuit panel attributes the deletion of attorneys from the first list of

compensable persons as “an unintended slip of the pen and not from a deliberate

change.” 
Id. We do
not believe that it is within our province to make such an

assumption in this case. We agree with the In re Century dissent by Judge Thomas

who reasoned, as we do, that the unambiguous statutory language “should end the

discussion, as it did for the Fifth Circuit.” 
Id. Where the
statute’s language is plain,




                                           6
as here, our sole function is to enforce it according to its terms. See Ron 
Pair, 489 U.S. at 241
.

      The Inglesby firm suggests that, at the very least, it is entitled to compensation

for “professional services” rendered while representing the debtor prior to the

appointment of the Chapter 11 trustee. We will not reach the merits of this issue

because it was not considered by the district court. See Ochran v. U.S., 
117 F.3d 495
,

502 (11th Cir. 1997). Moreover, this case does not present compelling circumstances

which warrant departure from this general rule. See 
id. at 502-503.
                                   CONCLUSION

      We conclude that the plain language of 11 U.S.C. § 330 precludes an award of

a attorney’s fees to the debtor’s attorney from the Chapter 7 bankruptcy estate.

      AFFIRMED.




                                           7

Source:  CourtListener

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