Filed: Aug. 28, 2009
Latest Update: Mar. 02, 2020
Summary: NOT RECOMMENDED FOR FULL-TEXT PUBLICATION File Name: 09a0618n.06 No. 08-2066 FILED UNITED STATES COURT OF APPEALS Aug 28, 2009 FOR THE SIXTH CIRCUIT LEONARD GREEN, Clerk In re: LUCY MAZUREK PILCH, aka Lucy M. Mazurek, Debtor, LUCY MAZUREK PILCH, aka Lucy M. Mazurek, Appellant, On appeal from the United States v. District Court for the Western District of Michigan ROSE E. BAREHAM Chapter 7 Trustee; SALOMON BROTHERS REALTY CORPORATION; OCW EN LOAN SERVICING, LLC, Appellees. / BEFORE: MARTIN, RYAN,
Summary: NOT RECOMMENDED FOR FULL-TEXT PUBLICATION File Name: 09a0618n.06 No. 08-2066 FILED UNITED STATES COURT OF APPEALS Aug 28, 2009 FOR THE SIXTH CIRCUIT LEONARD GREEN, Clerk In re: LUCY MAZUREK PILCH, aka Lucy M. Mazurek, Debtor, LUCY MAZUREK PILCH, aka Lucy M. Mazurek, Appellant, On appeal from the United States v. District Court for the Western District of Michigan ROSE E. BAREHAM Chapter 7 Trustee; SALOMON BROTHERS REALTY CORPORATION; OCW EN LOAN SERVICING, LLC, Appellees. / BEFORE: MARTIN, RYAN, ..
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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 09a0618n.06
No. 08-2066
FILED
UNITED STATES COURT OF APPEALS Aug 28, 2009
FOR THE SIXTH CIRCUIT LEONARD GREEN, Clerk
In re: LUCY MAZUREK PILCH, aka Lucy M.
Mazurek,
Debtor,
LUCY MAZUREK PILCH, aka Lucy M.
Mazurek,
Appellant,
On appeal from the United States
v. District Court for the Western
District of Michigan
ROSE E. BAREHAM Chapter 7 Trustee;
SALOMON BROTHERS REALTY
CORPORATION; OCW EN LOAN
SERVICING, LLC,
Appellees.
/
BEFORE: MARTIN, RYAN, and SUTTON, Circuit Judges.
RYAN, Circuit Judge. Lucy Mazurek Pilch, aka Lucy M. Mazurek, a bankruptcy
debtor and unsuccessful petitioner in a bankruptcy adversary proceeding, appealed the
bankruptcy court’s decision to the district court. The district court held: 1) it is without
jurisdiction to entertain Pilch's appeal of the bankruptcy court's order overruling her
objection to a creditor’s amended proof of claim; and 2) the Trustee, Rose E. Bareham’s
compensation was not calculated improperly. We find no error in the district court’s
decision.
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Moreover, the district court judge, Honorable Gordon J. Quist, prepared a well-
reasoned opinion that thoroughly discusses and analyzes each issue presented to this
court. Because we cannot improve upon the reasoning in Judge Quist’s excellent opinion,
we adopt his opinion as our own.
Accordingly, we AFFIRM the judgment of the district court.
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BOYCE F. MARTIN, JR., concurring. I concur with the majority, with one
clarification. Although I think the district court admirably analyzed this case as it was
presented by the lawyers, it was burdened by their erroneous understanding of the
governing law regarding whether the trustee’s compensation was calculated correctly. In
my view, the compensation of attorneys who render postpetition services—whether hired
by the bankrupt party or by a trustee operating under a stipulation—is governed solely by
11 U.S.C. 503(b)(2), which allows for “compensation and reimbursement awarded under
section 330(a).” Section 330(a) allows for “a professional person employed under section
327,” and § 327, in turn, allows trustees to employ, with court approval, “one or more
attorneys . . . that do not hold or represent an interest adverse to the estate, and that are
disinterested persons, to represent or assist the trustee in carrying out the trustee’s duties.”
11 U.S.C. § 327. The district court, operating under the parties’ incorrect view of the
governing law, instead relied exclusively on 11 U.S.C. § 503(b)(1)(A).
Specifically, I agree with the district court that disbursements to “parties of
interest”—“those persons with a personal stake or pecuniary interest in the outcome of the
controversy,” Normali v. O'Donnell (In re O'Donnell),
326 B.R. 901,
2005 WL 1279268, at
*5 (B.A.P. 6th Cir. 2005)—is the relevant amount for determining a trustee’s compensation.
But it is my view that § 503(b)(2), not 503(b)(1)(A), is the controlling provision. Moreover,
while one argument then might be that either provision could suffice—thus making the
district court’s position kosher—the Seventh Circuit has cogently explained why that view
is illogical, and so the only avenue for attorney compensation is through § 503(b)(2) (and
(No.08-2066) -4-
hence also §§ 330(a) and 327). In re Milwaukee Engraving Co.,
219 F.3d 635, 636 (7th Cir.
2000).
This is significant because it means I cannot agree with the district court that
determining if the trustee’s compensation was calculated correctly depends on whether the
stipulation in this case was an “administrative expense.” That inquiry asks whether the
expense (1) arose from a transaction with or as consideration to the bankruptcy estate, and
(2) directly and substantially benefitted the estate. Pension Benefit Guaranty Corp. v.
Sunarhauserman, Inc.,
126 F.3d 811, 816 (6th Cir. 1997); see also Caradon Doors &
Windows, Inc. v. Eagle-Picher Indus., Inc. (In re Eagle-Picher Indus.),
447 F.3d 461, 464
(6th Cir. 2006). The district court thus asked only whether the attorney’s agreement to take
the case “arose from a transaction with” the bankruptcy estate via the stipulation, or instead
was with Pilch only. That the district court was able to use so much skill in fitting a square
peg into a round hole cannot remedy the parties’ improper reliance on inapposite governing
law.
So what is the proper inquiry? Again, 11 U.§C. § 503(b)(2) provides the only avenue
through which postpetition attorneys can seek compensation. And, again, 503(b)(2)
references § 330, which references § 327. That provision allows “the trustee, with the
court’s approval, [to] employ” an attorney. Thus, we must ask, Did the trustee “employ”
Pilch’s attorney? Although a close issue, I think the answer to that question is yes. The
stipulation required Pilch to hire legal counsel to pursue her state-court claim, and so it is
fair to say that the trustee “employ[ed]” Pilch’s state-court attorney to “represent or assist
the trustee in carrying out the trustee’s duties.” 11 U.S.C. § 327(a). The trustee may not
(No.08-2066) -5-
have directly contracted with the attorney, but the attorney essentially worked on the
trustee’s behalf, and there is nothing in the bankruptcy code that prohibits outsourcing this
task to the debtor.
With this clarification, I concur.