Amdura National v. Amdura Corporation ( 1997 )

No. 95-1495, In re Amdura Corp.
Attachment (District Court Judge’s Memorandum and Order) is not available
electronically.
UNITED STATES COURT OF APPEALS
Filed 1/10/97
TENTH CIRCUIT
In re: AMDURA CORPORATION; AMDURA
NATIONAL DISTRIBUTION COMPANY,
formerly known as FOK; COASTAMERICA
CORPORATION; COAST TO COAST
HOLDINGS, INC.; COAST TO COAST
STORES, INC.; INTERTRADE CARGO, INC.;
AMDURA CORPORATION, INC.,
Debtors.
No. 95-1495
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(D.C. No. 94-M-2119)
(D. Colo.)
AMDURA NATIONAL DISTRIBUTION
COMPANY,
Appellant,
v.
AMDURA CORPORATION, INC.
Appellee.
ORDER AND JUDGMENT *
Before SEYMOUR, Chief Judge, ANDERSON and BRORBY, Circuit Judges.
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
Amdura National Distribution Company ("Amdura National") appeals the
District Court of Colorado's affirmation of the Bankruptcy Court of Colorado's
judgment granting Amdura Corporation's Motion for Payment of Administrative
Obligations in the amount of $276,063. We affirm the district court's judgment.
Amdura Corporation was a holding company which owned all the
outstanding stock of a number of corporate subsidiaries, including Amdura
National. On April 2, 1990, Amdura Corporation, Amdura National, and other
Amdura Corporation subsidiaries filed for Chapter 11 reorganization.
After disqualifying two law firms that had been representing the debtors
collectively, the bankruptcy judge ordered separate counsel for each debtor.
Amdura Corporation hired the law firm of Thompson & Knight, and Amdura
National hired Mr. Joel Laufer, a sole practitioner. The legal representation of
the other debtor entities is not relevant to the issues on appeal.
On May 15, 1992, subsequent to the bankruptcy judge's confirmation of a
joint plan of reorganization applicable to all of the debtor entities, Amdura
Corporation filed a Motion for Payment of Administrative Obligations pursuant to
11 U.S.C. §§ 503(b)(3)(D) and (b)(4) (1994). In this motion, Amdura
Corporation sought to recover from Amdura National a portion of the fees paid by
Amdura Corporation to Thompson & Knight for tasks that Thompson & Knight
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had performed to the alleged joint benefit of Amdura Corporation and Amdura
National. Amdura Corporation contended that, as the parent corporation, it had
ordered its counsel to "take the lead" in resolving a number of problems common
to the interrelated debtors, and in so doing had provided Amdura National with, in
the terms of § 503, a "substantial contribution" for which it was entitled to
reimbursement.
The bankruptcy court, after an evidentiary hearing, allowed Amdura
Corporation the requested administrative claim. The district court affirmed the
bankruptcy court's decision. Amdura National now appeals to the Tenth Circuit,
alleging the bankruptcy court failed to apply the "self-interest motive" test we
announced in In re Lister, 846 F.2d 55, 57 (10th Cir. 1988), in finding Amdura
Corporation provided the requisite "substantial contribution" to the Amdura
National estate. See 11 U.S.C. § 503(b)(3)(D). Amdura National contends
Amdura Corporation would have taken the actions it took regardless of whether
benefit accrued to Amdura National, and therefore its actions were motived by
self-interest, any benefit to Amdura National being merely incidental. Thus,
Amdura National claims Amdura Corporation did not make a substantial
contribution to the Amdura National estate, as § 503(b)(3)(D) requires. 1
1
Amdura National additionally claims Amdura Corporation wrongfully
circumvented 11 U.S.C. § 327 (1994) ("Employment of professional persons [by
the debtor-in-possession]") through use of § 503. That argument is meritless.
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An appellate court reviews a trial court's findings of fact using a clearly
erroneous standard, and its application of rules of law under a de novo standard.
Lister, 846 F.2d at 56 (citing In re Mullet, 817 F.2d 677, 678-79 (10th Cir.
1987)). The trial court has wide discretion in determining both whether to allow
administrative expenses under § 503 and the appropriate amount of expenses to so
award. Id. (citing In re Consolidated Bancshares, Inc., 785 F.2d 1249, 1252 (5th
Cir. 1986); In re Grynberg, 19 B.R. 621, 623 (Bankr. D. Colo. 1982)).
Accordingly, we review prior findings of fact for clear error, applications of law
under a de novo standard, and the bankruptcy court's overall decision to award
Amdura Corporation § 503 administrative expenses for abuse of discretion.
After review of pertinent legal authorities, we find ourselves in agreement
with the well-reasoned opinion of the district court judge, Chief Judge Matsch.
Accordingly, we affirm his holding for substantially the reasons set forth in his
opinion, a copy of which is attached hereto.
AFFIRMED.
Entered for the Court
Amdura Corporation was both a creditor and an equity security holder of Amdura
National, and therefore was eligible to seek recompense from Amdura National
via § 503 for expenses incurred in providing it professional services. 11 U.S.C.
§§ 503(b)(3)(D), 503(b)(4).
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WADE BRORBY
United States Circuit Judge
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