SUE L. ROBINSON, District Judge.
Appellant Michael T. Kennedy ("appellant") filed this bankruptcy appeal on August 7, 2013. (D.I. 1) At the time, he was represented by counsel, but now appears pro se. The appeal arises from an order entered by the bankruptcy court on June 20, 2013, that overruled an objection by appellant to Skadden, Arps, Slate, Meagher & Flom, LLP's ("Skadden") final fee application and that granted appellee's final fee application. The court has jurisdiction to hear an appeal from the bankruptcy court pursuant to 28 U.S.C. § 158(a).
On August 21, 2006, Radnor Holdings Corporation ("Radnor") and numerous related subsidiaries ("debtors") filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. §§ 101 et seq. On August 25, 2006, debtors, as debtors-in-possession, applied to the bankruptcy court (the "Skadden retention application") for an order authorizing debtors to retain Skadden as their bankruptcy counsel, effective as of the petition date, pursuant to an engagement agreement dated July 5, 2006. (Bankr.No. 06-10894-PJW, D.I. 96). The retention application was opposed, pre-retention disclosures were provided to the bankruptcy court, and a contested hearing was held on September 20, 2006. (Id. at D.I. 169, 223, 298) On September 21, 2006, the bankruptcy court authorized the employment of Skadden as counsel to debtors and debtors-in-possession. (Id. at D.I. 246)
On November 18, 2012, Skadden filed its final fee application for compensation for services rendered and reimbursement of expenses as counsel to debtors for the period from August 21, 2006 through and including September 28, 2012. (Id. at D.I. 1989) On December 26, 2012 appellant filed an objection to the fee application.
In undertaking a review of the issues on appeal, the court applies a clearly erroneous standard to the bankruptcy court's findings of fact and a plenary standard to that court's legal conclusions. See American Flint Glass Workers Union v. Anchor Resolution Corp., 197 F.3d 76, 80 (3d Cir. 1999). A factual finding is clearly erroneous when "the reviewing court on
With mixed questions of law and fact, the court must accept the bankruptcy court's "finding of historical or narrative facts unless clearly erroneous, but exercise[s] `plenary review of the [bankruptcy] court's choice and interpretation of legal precepts and its application of those precepts to the historical facts.'" Mellon Bank, N.A. v. Metro Commc'ns, Inc., 945 F.2d 635, 642 (3d Cir. 1991) (citing Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 101-02 (3d Cir. 1981)). The district court's appellate responsibilities are further informed by the directive of the United States Court of Appeals for the Third Circuit, which effectively reviews on a de novo basis bankruptcy court opinions. See In re Hechinger Inv. Co. of Delaware, 298 F.3d 219, 224 (3d Cir. 2002); In re Telegroup, Inc., 281 F.3d 133, 136 (3d Cir. 2002).
Appellant raises the following issues for review (D.I. 2):
"A debtor in possession . . . may, with bankruptcy court approval, employ one or more attorneys to represent it and to assist it in fulfilling its duties." In re Pillowtex, Inc., 304 F.3d 246, 250 (3d Cir. 2002) (citing 11 U.S.C. § 327). "[T]he power of a debtor in possession to employ. . . professionals is the same as that of a trustee. The extent of this power is specified by Section 327(a). . . ." U.S. Trustee v. Price Waterhouse, 19 F.3d 138, 141 (3d Cir. 1994) (citations omitted). Section 327(a) provides that a court may approve the employment of attorneys only if they "do not hold or represent an interest adverse to the estate" and they are "disinterested persons." 11 U.S.C. § 327(a). These two prohibitions on employment set forth two separate standards for disqualification. Pillowtex, 304 F.3d at 252 n. 4.
The Court of Appeals for the Third Circuit has interpreted § 327(a) "to impose[ ] a per se disqualification . . . of any attorney who has an actual conflict of interest;" to permit a court to exercise "its discretion . . . [to] disqualify an attorney who has a potential conflict of interest;" and to forbid a court from "disqualify[ing] an attorney on the appearance of conflict alone." In re Marvel Entertainment Group, Inc., 140 F.3d 463, 476 (3d Cir. 1998). While the term "actual conflict of interest" has not been defined in the Code, the Third Circuit has explained that "a conflict is actual, and hence per se disqualifying, if it is likely that a professional will be placed in a position permitting it to favor one interest over an impermissibly conflicting interest." Pillowtex, 304 F.3d at 251. "Courts have been accorded considerable latitude in using their judgment and discretion in determining whether an actual conflict exists in light of the particular facts of each case." In re BH & P, Inc., 949 F.2d 1300, 1315 (3d Cir. 1991) (internal quotation marks omitted). Although a court may initially authorize the employment of counsel, it must disqualify counsel upon learning of an actual conflict, and it may exercise its discretion to remove counsel if there is a potential conflict. See id. at 1314-17.
Section 330(a) (1) of the Bankruptcy Code provides that a court may award to a professional person reasonable compensation "[a]fter notice to the parties in interest and the United States Trustee and a hearing." 11 U.S.C. § 330(a)(1). When a bankruptcy court orders a hearing on a fee application, in addition to considering the fee application itself, "the court should carefully consider relevant, competent evidence submitted with the fee application, provided as a supplement to the fee application, or presented at a hearing." In re Busy Beaver Bldg. Centers, 19 F.3d 833, 854 (3d Cir. 1994). "What evidence is `relevant' and `competent' will be determined by applying ordinary evidentiary rules, because with limited supplementation in the Bankruptcy Rules, `[t]he Federal Rules of Evidence . . . apply in cases under the Code.' In re Grasso, 2014 WL 3389119 (E.D.Pa. July 11, 2014) (quoting Fed. R. Bankr.P. 9017). "[T]he court may deny allowance of compensation for services and reimbursement of expenses of a professional person employed under section 327. . . if, at any time during such professional person's employment under section 327. . ., such professional person is not a disinterested person, or represents or holds an interest adverse to the interest of the estate with respect to the matter on which such professional person is employed." 11 U.S.C. § 328(c).
Appellant contends that the bankruptcy court erred in granting Skadden's final fee application because Skadden failed to accurately and fully disclose direct investments by its partners in Tennenbaum funds, Skadden failed to fully disclosure its ongoing representation of Tennenbaum funds, and the bankruptcy court refused to require Skadden to disclose
In ruling on the final fee application, the bankruptcy court considered: (1) Skadden's three disclosure declarations (August 29, 2006, September 18, 2006, December 19, 2007); (2) that Skadden did not block or hinder the Trustee from investigating and objecting to debtors' retention of Skadden as their bankruptcy counsel; (3) disclosures made by then Skadden partner Gregg M. Galardi ("Galardi") at a September 20, 2006 hearing; (4) testimony elicited from Galardi and appellant during the May 1 and 2, 2013 final fee hearing; (5) exhibits submitted during the May 2013 hearing, including a full waiver from Tennenbaum of any conflicts posed by Skadden's representation of debtors; (5) evidence of the percentage of billable hours, percentage of revenue and nature of legal work Skadden had performed for Tennenbaum;
The bankruptcy court gave no weight to certain testimony provided by appellant, found appellant lacked credibility with regard to other testimony, and found that appellant made numerous assertions devoid of specific facts to support his position. The bankruptcy court reaffirmed that the percentage of Skadden's revenues attributed to Tennenbaum and its affiliates was not a material percentage. It concluded that Tennenbaum was not a significant client of Skadden, that Skadden's revenue
The court finds no error was committed by the bankruptcy court in granting Skadden's final fee application. A fair reading of the record and the thorough and reasoned memorandum opinion and order demonstrates that the bankruptcy court properly considered and exercised its discretion to weigh the evidence. The challenged findings hinged, in part, on a credibility determination regarding the evidence presented to the bankruptcy court. As the trier of fact, the bankruptcy court was in a better position to evaluate the credibility of the witnesses than is this court. See In re Myers, 491 F.3d 120, 126 (3d Cir.2007) ("The bankruptcy court is best positioned to assess the facts, particularly those related to credibility. . ."). Accordingly, the court defers to the bankruptcy court's factual findings, which are not clearly erroneous and are supported by the record. See DiFederico v. Rolm, 201 F.3d 200, 208 (3d Cir.2000).
Appellant's last issue is whether the bankruptcy court committed error in adopting findings of fact and conclusions of law, prior to discovery being conducted, affecting a related adversary case, Radnor Holdings Corp. v. Skadden, Arps, Slate, Meagher & Flom LLP. (See D.I. 2 at ¶ 4) Appellant discusses the issue in his reply brief (D.I. 16, ¶ III), but failed to argue the issue in his opening brief. Because appellant failed to clearly raise the foregoing issue in his opening brief, the court need not consider the issue. See United States v. Pelullo, 399 F.3d 197, 222 (3d Cir.2005) ("It is well settled that an appellant's failure to identify or argue an issue in his opening brief constitutes waiver of that issue on appeal."); accord United States v. Vas, 497 Fed.Appx. 203 n. 4 (3d Cir.2012) (unpublished) (appellate court stated that it need not consider issue addressed in reply brief when appellant failed to raise it clearly in the opening brief). Appellant waived this last issue by failing to address it in his opening brief, and it is not considered by the court.
For the reasons discussed, the bankruptcy court's June 20, 2013 order will be affirmed, and the appeal will be dismissed.