EDWARD J. COLEMAN, III, Bankruptcy Judge.
Pending before the Court is the Motion to Allow Administrative Priority Claim (the "Motion") (dckt. 59) filed by the Debtor's attorney, Judson C. Hill ("Hill"). In this Chapter 13 case, the Court granted the Debtor's application to pay the filing fee in installments, allowing her to pay such fee within 120 days from her petition date. However, prior to the deadline set for paying that fee, the Debtor informed her counsel, Hill, that she was unable to pay the fee. Rather than seeking additional time pursuant to Federal Rule of Bankruptcy Procedure 1006(b), Hill elected to pay the filing fee to the clerk and then seek reimbursement as an administrative expense. The Court is now called upon to determine whether Hill may seek reimbursement for his advance of the filing fee through the Debtor's Chapter 13 plan.
The Court has subject-matter jurisdiction over this proceeding pursuant to 28 U.S.C. § 1334(a), 28 U.S.C. § 157(a), and the Standing Order of Reference signed by then Chief Judge Anthony A. Alaimo on July 13, 1984. This is a "core proceeding" under 28 U.S.C. § 157(b)(2)(B) (providing that core proceedings include "allowance or disallowance of claims against the estate . . .").
The Debtor filed her Chapter 13 bankruptcy petition and plan on April 1, 2016. (Dckts. 1, 4). In her plan, the Debtor proposed to make 60 monthly payments of $750.00 and pay unsecured creditors a 0% dividend or a prorata share of $1,000.00, whichever is greater. (Dckt. 4). To date, nine (9) claims have been filed in this case: two (2) secured claims totaling $29,429.70, six (6) unsecured claims totaling $80,097.01, and Hill's $310.00 priority unsecured claim.
On April 12, 2016, the Trustee issued a Notice to Commence Wage Withholding (dckt. 19) and subsequently began to receive the Debtor's proposed monthly plan payments. A confirmation hearing was held on June 2, 2016. On June 6, 2016, the Trustee filed his Motion on Plan Confirmation which provided:
(Dckt. 29). The Court granted confirmation of the Debtor's plan on August 30, 2016. (Dckt. 45).
Along with her petition, the Debtor filed an Application to Pay Filing Fee in Installments (dckt. 2), which was granted by this Court's order dated July 13, 2016 (dckt. 34). Pursuant to this order, the Debtor was required to pay the $310.00 Chapter 13 filing fee on or before August 1, 2016
Shortly after paying the filing fee, on August 25, 2016, Hill filed a proof of claim (Official Form 410) for a $310.00 claim based on "[a]dvance for Court's filing fee
(Claims Register 8-1). On September 1, 2016, the Trustee filed an Objection to Claim, which provided, in pertinent part:
(Dckt. 37).
On October 13, 2016, the Court held a hearing on the Trustee's Objection to Claim. Notably, the Debtor did not appear. At the hearing, Hill stated that the Debtor suffered fire damage to her apartment after filing her petition, which left her unable to pay the filing fee by the Court's deadline. As a result, Hill made the decision to advance the expense and seek reimbursement as an administrative expense pursuant to 11 U.S.C. § 503(b)(1)(A). Hill also argued that as a debtor's attorney, he may apply to the Court for reimbursement of expenses incurred (i.e. the filing fee) under 11 U.S.C. § 331. At the conclusion of the hearing, the Court took the matter under advisement and instructed Hill to file a motion to allow claim to set forth the specific Code provisions that serve as the basis for his administrative expense claim. On October 18, 2016, Hill filed the instant Motion setting forth his arguments made at the hearing. (Dckt. 59).
There are several ways to characterize what Hill is really seeking to accomplish in his Motion. The first option urged by Hill is to consider the claim a request for allowance of an administrative expense under § 503(b)(1)(A), on the theory that advancing the filing fee was an "actual and necessary cost or expense of preserving the estate." Secondly, Hill appears to assert that his claim is an administrative claim under § 503(b)(2) relating to the compensation and expenses awarded under § 330(a)
Pursuant to 11 U.S.C. § 503(a), "an entity may timely file a request for payment of an administrative expense, or may tardily file such request if permitted by the court for cause." Section 503(b) provides a non-exclusive list
In his Motion, Hill argues that his filing fee advance was "actual and necessary, and served to preserve the bankruptcy estate." The Court does not find this argument persuasive. First, Hill's "advance" arises out of a transaction with the Debtor, not her estate. While it is true that the Debtor's bankruptcy estate was in existence at the time Hill advanced the filing fees, the obligation to pay the filing fee under 28 U.S.C. § 1930 is not an obligation of the estate. Rather, 28 U.S.C. § 1930, requires the party commencing a bankruptcy case (here, the Debtor) to pay the appropriate filing fee. Accordingly, Hill's "advance" benefitted the Debtor personally by satisfying her obligation to pay the required filing fee.
Second, Hill's "advance" does not provide a direct or substantial benefit to the estate. Generally, claims predicated on the actual and necessary costs and expenses of preserving the estate involve, for example, outlays for repairs, upkeep, rent, insuring the value of property, or other goods and services incidental to protecting, conserving, maintaining and rehabilitating the estate. 4 Collier on Bankruptcy 503.06[1] (16th ed. 2015). Such expenses provide a benefit to the estate, and its creditors, by maintaining or adding to the value of the assets of a debtor's estate. The advancement of the Debtor's filing fee does not provide such a benefit to her estate. Rather, it only serves to satisfy the Debtor's requirement to pay a filing fee under 28 U.S.C. § 1930.
Because Hill's advance fails both prongs of the two-prong test under 11 U.S.C. § 503(b)(1)(A), he is not entitled to an administrative expense under that code section.
Section 503(b) of the Bankruptcy Code also allows as an administrative expense "compensation and reimbursement awarded under section 330(a) of this title." 11 U.S.C. § 503(b)(2). Although Hill does not specifically invoke § 503(b)(2), he does appear to argue in his Motion that the payment of the Debtor's filing fee is a reimbursable expense contemplated by 11 U.S.C. § 330. (Dckt. 59).
Section 330(a) provides the statutory authority for compensating the services and reimbursing the expenses of officers of the estate, including debtors' attorneys. A Chapter 13 debtor's attorney may be paid by the estate only pursuant to § 330(a)(4)(B), which provides:
11 U.S.C. § 330(a)(4)(B); See In re Lamie v. United States Trustee, 540 U.S. 526 (2004)(stating, in dicta, that the Bankruptcy Reform Act of 1994, which deleted the phrase "the debtor's attorney" from § 330(a)(1), did not affect compensation for Chapter 13 debtor's attorney because their compensation is provided for by § 330(a)(4)(B)).
Many courts addressing the propriety of fee applications have allowed Chapter 13 debtor's attorneys to not only seek compensation for the value of their services, but also reimbursement for expenses under § 330(a)(4)(B). See, e.g. In re Powell, 538 B.R. 615, 617 (Bankr. D. Mass. 2015) ("[section] 330(a)(4)(B) permits counsel for a chapter 13 debtor to seek an award of fees and expenses . . ."); In re Pastran, 462 B.R. 201, 213 (Bankr. N.D. Tex.2011); In re Marvin, 2010 WL 2176084 (Bankr. N.D. Iowa 2010); In re Williams, 384 B.R. 191, 194 (Bankr. N.D. Ohio 2007).
On the other hand, at least one bankruptcy court has held that the plain meaning of "compensation" and the absence of "reimbursement" in § 330(a)(4)(B) eliminates the basis for reimbursing a Chapter 13 debtor's attorney for his or her expenses. In re Marotta, 479 B.R. 681, 90 (Bankr. M.D. N.C. 2012). Using the conventional rules of statutory construction, the Marotta court found:
Marotta, 479 B.R. at 689-90.
Respectfully, this Court disagrees that the omission of the words "reimbursement of expenses" from § 330(a)(4)(B) means that a Chapter 13 debtor's attorney can never seek reimbursement for his or her expenses. It is easy to imagine contested matters that may arise in a Chapter 13 case that would require a debtor's attorney to incur expenses, such as deposition costs or witness fees. To suggest that such direct expenses of representing the debtor are not reimbursable seems contrary to the concepts of reasonableness and necessity encompassed in § 330(a)(4)(B). Moreover, that subsection refers back to the "other factors set forth in this section," which are the factors relating to other professionals compensated under § 330(a)(1).
This Court, as well as many other courts, have adopted a "no-look" fee which obviates the need, in most cases, to address whether the expenses of a Chapter 13 debtor's attorney are reimbursable under § 330(a)(4)(B). This Court's General Order 2010-3 provides that "a claim for attorney's fees for services rendered and expenses advanced to a Chapter 13 debtor will be deemed automatically approved by the Court, in the absence of an objection, so long as said claim does not exceed the sum of three thousand dollars ($3,000.00)." Bankr. S.D. Ga. Gen. Order 2010-3 (emphasis added). Thus, this Court acknowledges that a Chapter 13 debtor's attorney may incur certain reimbursable expenses, but these expenses are included in the Court's "no-look" fee.
If, however, a Chapter 13 debtor's attorney seeks compensation or reimbursement of expenses above the Court's "no-look" fee, General Order 2010-3 provides:
Bankr. S.D. Ga. Gen. Order 2010-3.
In this case, Hill appears to argue that the payment of the Debtor's filing fee is a reimbursable expense contemplated by 11 U.S.C. § 330, and thus may be paid as an administrative expense under § 503(b)(2). However, Hill has not met the necessary procedural requirements provided by this Court's General Order 2010-3 to seek compensation (or reimbursement of expenses) above this Court's $3,000.00 "no-look" fee. Regardless, the Court finds that the advance of a Chapter 13 debtor's filing fee is not properly reimbursable under 11 U.S.C. § 330(a)
At the October 13, 2016 hearing, Hill tendered into evidence his employment contract with the Debtor, which he argues obligates the Debtor to repay him for the filing fee advanced.
Section 1305 of the Bankruptcy Code governs the filing and allowance of post-petition claims in a Chapter 13 case:
11 U.S.C. § 1305 (emphasis added).
Here, since Hill's claim is not for taxes payable to a governmental unit, it must fall within the purview of § 1305(a)(2) to be allowed. Hill's $310.00 advance is likely a "consumer debt,
Regardless, even if Hill's claim fell within the purview of § 1305(a)(2), the Court must disallow his claim under § 1305(c). For a post-petition claim to be eligible for allowance, one of three conditions must be satisfied: 1) prior approval of the Chapter 13 trustee was obtained; 2) the claim holder did not know and should not have known of the need to get prior approval of the trustee; or 3) the prior approval of the trustee was not practicable. Id.
Here, the first condition has clearly not been met because the Trustee has objected to Hill's claim. Second, the Court finds it unlikely that Hill, as the Debtor's attorney, did not know of the need to obtain approval of the trustee to incur a post-petition debt. Third, the Debtor and Hill were presumably aware of the filing fee deadline of August 1, 2016 at the time the Debtor filed her petition and had the ability to seek an additional 60 days to pay the filing fee under Bankruptcy Rule 1006(b). However, the Debtor never made such a request. Thus, Hill's decision to advance the filing fee was not prompted by an emergency situation that rendered obtaining the Trustee's approval impracticable. Because the Court "shall" disallow a post-petition claim which fails to meet the requirement of § 1305(c), Hill's Motion, to the extent it seeks allowance of a post-petition claim, is denied.
Congress enacted a statute setting forth the filing fees which debtors must pay to file under the various chapters of the Bankruptcy Code. 28 U.S.C. § 1930. In that same statute, Congress provided that a Chapter 7 individual debtor may seek a waiver of the filing fee based on certain income criteria. 28 U.S.C. § 1930(f)(1). Congress did not provide for the waiver of the filing fee in a Chapter 13 case. However, Congress did provide that an individual debtor, including a Chapter 13 debtor, may pay his or her filing fee in installments. 28 U.S.C. § 1930(a). Indeed, the Debtor took advantage of this latter provision and was granted leave to pay the filing fee in installments by a given deadline. What Congress did not provide for was what happened in this case — the payment of the filing fee by debtor's counsel followed by a request to be reimbursed through the Debtor's plan.
The Court finds that Hill's advance of the Debtor's filing fee may give rise to a post-petition claim against the Debtor. However, to the extent Hill holds a valid claim, it is not allowable in this case under 11 U.S.C. § 1305. Further, the Court finds that Hill is not entitled to reimbursement of the Debtor's filing fee as an administrative expense under 11 U.S.C. § 503(b)(1)(A) or (b)(2). While the Court recognizes that certain expenses of a Chapter 13 debtor's attorney may give rise to an administrative expense claim, it does not find that the advance of a debtor's filing fee is such an expense. Accordingly, the Court will enter a separate order DENYING Hill's Motion to Allow Administrative Priority Claim (dckt. 59).
