ROBERT SUMMERHAYS, Bankruptcy Judge.
The present matter involves an objection to the proof of claim of an attorney who provided legal services to the debtor and his affiliated entities. Kenneth Michael Wright filed two proofs of claim in the above-captioned bankruptcy case: (1) Claim Number 12 in the amount of $374,817.68, and (2) Claim Number 13 for $74,363.00. Claim Number 12 allegedly represents pre-petition services provided to the debtor, R. Alan Kite. Claim Number 13 allegedly represents post-petition services. The Trustee and two creditors, Kite Bros., LLC, and Robert J. Kite objected to both claims. At a hearing on these objections, the court sustained the objections to Claim Number 13 on the ground that it was an attempt to assert an untimely administrative expense claim. The court took the objections to claim Number 12 under advisement following the hearing. After reviewing the record, the parties' arguments, and the relevant authorities, the court rules as follows.
The court has jurisdiction over the matters asserted in this adversary proceeding pursuant to 28 U.S.C. §§1334 and 157(a). This matter is a core proceeding in which this court may enter a final order pursuant to 28 U.S.C. §157(b)(2)(I) and (J) and
The present dispute over the legal fees of Kenneth Michael Wright marks only the latest dispute in a long line of disputes that has divided members of the Kite family for over a decade. This fee dispute originated in three related state court proceedings. These proceedings involved Robert J. Kite and his two sons, R. Alan Kite (the debtor) and Jeffery Kite. In 2006, Robert Kite terminated the debtor from the family's RV sales business, Kite Bros., LLC. In response, the debtor and Jeffery Kite formed their own competing business, Kite RV, LLC. Two competing state court lawsuits were then filed by members of the Kite family and their respective companies:
Alan Kite filed for relief under Chapter 11 of the Bankruptcy Code on April 1, 2013. The case was subsequently converted to a case under Chapter 7 of the Bankruptcy Code, and Rudy Young was duly appointed as trustee (the "Trustee"). Mr. Wright's engagement as special counsel for the debtor was approved by the court and Wright provided services to the Chapter 11 debtor-in-possession before conversion to Chapter 7. Mr. Wright filed two proofs of claim in this bankruptcy case: Claim Number 12 totaling $374,817.68, and Claim Number 13 totaling $74,363.00. (Exhibit No. 11). Attached to Claim No. 12 are billing invoices by Wright dated April 1, 2013, with a reference line of "Kite RV, LLC Liquidation." (
The Trustee filed objections to both of Mr. Wright's claims. In addition, Robert Kite and Kite Bros., LLC, filed objections to these claims. The court sustained the Trustee's objection to Claim Number 13 on the grounds that it was an attempt to assert an administrative expense claim beyond the deadline for asserting such claims. The court held an evidentiary hearing on the objections to Claim Number 12, which reflects solely pre-petition legal services.
Under 11 U.S.C. § 502(a), a proof of claim properly filed pursuant to 11 U.S.C. § 501(a)and the applicable rules of bankruptcy procedure is prima facie evidence of the validity and amount of the claim.
The crux of the Trustee's objection is that the pre-petition legal work performed by Mr. Wright in connection with the Kite RV, LLC liquidation was performed for Kite RV and Alan Kite in his capacity as liquidator. The Trustee asserts that the debtor was not personally liable for the fees incurred by counsel for the liquidator in connection with the administration of the Kite RV liquidation. Accordingly, the Trustee contends that the debtor's estate is not liable for these fees. The Trustee's objection satisfies his initial burden and Mr. Wright must, therefore, prove his right to recovery by a preponderance of the evidence.
Louisiana law governing the dissolution of limited liability companies and the appointment of liquidators supports the Trustee's distinction between fees incurred by the debtor individually and fees incurred by the debtor as the liquidator of Kite RV. In general, court-appointed liquidators are not personally liable for the debts of the limited liability company or the costs of the liquidation, including attorneys' fees, as long as the liquidator complies with its duties and the requirements of the statute.
Mr. Wright, however, argues that all of the fees are the responsibility of Mr. Kite's bankruptcy estate. He argues that, despite his role as counsel for the liquidator, he had an oral agreement with the debtor that the debtor would be personally liable for Wright's legal fees in connection with the liquidation proceeding. The record does not support any such an arrangement. While the record reflects some payments made to Mr. Wright by the debtor, it also reflects payments to Mr. Wright from other entities as well as payments that originated from proceeds of the Kite RV liquidation. (
For the foregoing reasons, the court