In re: Rossini Alda v. ( 2010 )

By order of the Bankruptcy Appellate Panel, the precedential effect
of this decision is limited to the case and parties pursuant to 6th
Cir. BAP LBR 8013-1(b). See also 6th Cir. BAP LBR 8010-1(c).
File Name: 10b0012n.06
BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT
In re: ROSSINI M. ALDA AND )
AMELIA A. ALDA, ) No. 10-8037
)
Debtors. )
_____________________________________ )
Appeal from the United States Bankruptcy Court
for the Southern District of Ohio
Case No. 08-58713
Decided and Filed: December 2, 2010
Before: BOSWELL, FULTON, and McIVOR, Bankruptcy Appellate Panel Judges.
____________________
COUNSEL
ON BRIEF: Joseph M. Romano, THE ROMANO LAW FIRM, Hilliard, Ohio, for Appellants.
____________________
OPINION
____________________
G. HARVEY BOSWELL, Bankruptcy Appellate Panel Judge. In this appeal, Rossini and
Amelia Alda (“Debtors”) appeal the bankruptcy court’s order denying their attorney’s application
for allowance of attorney fees and the court’s order denying reconsideration of that order. For the
reasons that follow, we affirm the orders of the bankruptcy court.
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I. ISSUES ON APPEAL
The issues presented by this appeal are whether the bankruptcy court abused its discretion
in denying the application for attorney fees of Debtors’ counsel and in denying reconsideration
thereof.
II. JURISDICTION AND STANDARD OF REVIEW
The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal.
The United States District Court for the Southern District of Ohio has authorized appeals to the
Panel, and the appellants did not elect to have this appeal heard by the district court. 28 U.S.C.
§§ 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of right pursuant to
28 U.S.C. § 158(a)(1). For purposes of appeal, an order is final if it “ ‘ends the litigation on the
merits and leaves nothing for the court to do but execute the judgment.’ ” Midland Asphalt Corp.
v. United States, 489 U.S. 794, 798, 109 S. Ct. 1494, 1497 (1989) (citations omitted). A bankruptcy
court’s order regarding attorney compensation is a final, appealable order. In re Scarlet Hotels, LLC,
392 B.R. 698, 701 (B.A.P. 6th Cir. 2008) (citing Boddy v. U.S. Bankr. Court, W.D., Ky. (In re
Boddy), 950 F.2d 334, 336 (6th Cir. 1991)). The bankruptcy court’s order denying the appellants’
motion for reconsideration is also a final, appealable order. Hamerly v. Fifth Third Mortg. Co. (In
re J & M Salupo Dev. Co.), 388 B.R. 795, 800 (B.A.P. 6th Cir. 2008).
A bankruptcy court’s award or denial of fees will not be reversed unless there has been an
abuse of discretion. In re Scarlet Hotels, 392 B.R. at 701. The bankruptcy court’s denial of the
motion to reconsider its order denying Romano’s application for attorney fees is also reviewed for
an abuse of discretion. In re J & M Salupo Dev. Co., 388 B.R. at 801. An abuse of discretion is
established when the reviewing court is left with “ ‘a definite and firm conviction that the court
below committed a clear error of judgment.’ ” Mich. Division-Monument Builders of N. Am. v.
Mich. Cemetery Ass’n, 524 F.3d 726, 739 (6th Cir. 2008) (citation omitted). “An abuse of discretion
occurs only when the [trial] court relies upon clearly erroneous findings of fact or when it improperly
applies the law or uses an erroneous legal standard.” Kaye v. Agripool, SRL (In re Murray, Inc.),
392 B.R. 288, 296 (B.A.P. 6th Cir. 2008) (quoting Volvo Commercial Fin. LLC the Americas v.
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Gasel Transp. Lines, Inc. (In re Gasel Transp. Lines, Inc.), 326 B.R. 683, 685 (B.A.P. 6th Cir.
2005)). “The question is not how the reviewing court would have ruled, but rather whether a
reasonable person could agree with the bankruptcy court’s decision; if reasonable persons could
differ as to the issue, then there is no abuse of discretion.” Barlow v. M.J. Waterman & Assocs., Inc.
(In re M.J. Waterman & Assocs., Inc.), 227 F.3d 604, 608 (6th Cir. 2000).
III. FACTS
On September 11, 2008, Rossini and Amelia Alda (“Debtors”) filed a petition for relief under
chapter 13 of the Bankruptcy Code. On that same date, the Debtors filed their proposed chapter 13
plan. The Debtors were represented in their bankruptcy filing by Joseph M. Romano (“Romano”).
The chapter 13 trustee and the City of Columbus filed objections to confirmation on January
15 and 22, 2009, respectively. The City of Columbus objected on the grounds that the Debtors had
not filed all tax returns and tax reports due pre-petition. On August 11, 2009, a confirmation hearing
was held. At the time of the hearing, the objection of the City of Columbus to confirmation
remained unresolved. The bankruptcy court therefore denied confirmation and dismissed the case
pursuant to 11 U.S.C. § 1307(c). In its dismissal order, the court ordered that applications for
allowance of administrative expenses, including attorney fees, be filed within 10 days of the order.
On September 1, 2009, on behalf of the Debtors, Romano filed a motion to reinstate the
Debtors’ chapter 13 case on the grounds that they had resolved the objections to confirmation of the
City of Columbus and the chapter 13 trustee. On December 14, 2009, the bankruptcy court entered
an agreed order granting the Debtors’ motion to reinstate their chapter 13 case. On January 25, 2010,
the bankruptcy court issued an order confirming the Debtors’ chapter 13 plan. That order included
the following condition:
THE ATTORNEY FOR THE DEBTOR IS NOT ALLOWED
ANY COMPENSATION IN THIS ORDER, AND SHALL FILE
BY FEBRUARY 12, 2010, AN ITEMIZED FEE APPLICATION
FOR ALL SERVICES AND EXPENSES, ALONG WITH A
MEMORANDUM DETAILING WHY THIS CASE PENDED
FOR MORE THAN A YEAR WITHOUT CONFIRMATION.
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(B. Ct. Docket #64 at 2.)
On February 5, 2010, the Debtors filed an objection to a claim of Americredit Financial
Services, Inc. On February 18, 2010, Romano filed his Application for Allowance of Attorney Fees
in the amount of $5,427.50 and expenses of $255.28. The application included detailed time entries
from June 5, 2008 to January 21, 2010. It did not, however, include a memorandum detailing why
the case pended for more than one year without confirmation. On March 26, 2010, the bankruptcy
court issued an order denying the application, with prejudice, because it was not filed by February
12, 2010, and did not include a memorandum detailing why the case pended for more than one year
without confirmation as required by the court’s January 25, 2010, order.
On March 29, 2010, Romano filed a motion to reconsider the order denying the application
for allowance of attorney fees. The motion for reconsideration asserted that, pursuant to Federal
Rule of Civil Procedure 60(b), it was “excusable neglect” on the part of counsel to have not filed the
fee application within the time frame ordered or to include the required memorandum. Romano
explained that:
[N]ot filing the fee application was an oversight on [Romano’s] part.
Rather, [Romano] examined the claims register to determine whether
an objection to any claims would be filed prior to filing any fee
applications. Only after filing an Objection to Claim 2 . . . did
[Romano] file the fee application. Albeit, after this Court’s deadline.
Further, this case was only pending for one year since its filing, on
September 11, 2008, because the case had been dismissed from
August 11, 2009 to December 14, 2009 due to the Debtors’ inability
to resolve the objection of the City of Columbus. The inability to
resolve said objection to confirmation was the reason for denial of
confirmation and dismissal of the case. The objection was based on
the Debtors’ not filing certain [tax] returns. In the interim dismissal
period, the Debtors’ resolved the pending objection by filing the
appropriate tax returns and, then, moved for reinstatement, which this
Court granted.
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(B. Ct. Docket # 77 at 1-2.) On May 13, 2010, the bankruptcy court denied the motion to reconsider
because it determined that the motion did not assert sufficient basis to grant the request to reconsider
the order denying the request for fees.
On May 24, 2010, the Debtors filed a timely notice of appeal of the bankruptcy court’s order.
IV. DISCUSSION
11 U.S.C. § 330(a)(1)(A) provides that professionals may be awarded “reasonable
compensation for actual, necessary services rendered . . . .” Romano contends that the bankruptcy
court abused its discretion by denying his fee application based on his failure to comply with the
confirmation order and by not calculating the lodestar amount as mandated by the Sixth Circuit
Court of Appeals in Boddy. In Boddy, the Sixth Circuit held that the bankruptcy court abused its
discretion because it applied an improper legal standard, the “normal and customary” standard, rather
than calculating the lodestar amount which is calculated by multiplying the attorney’s reasonable
hourly rate by the number of hours reasonably expended. In re Williams, 357 B.R. 434, 440 (B.A.P.
6th Cir. 2007) (citing Boddy, 950 F.2d at 337).
Federal Rule of Bankruptcy Procedure 2016 requires an attorney seeking compensation from
the estate to file an application stating in detail the services rendered, the time expended, and
expense incurred as well as the amount requested. Local Bankruptcy Rule for the Southern District
of Ohio 2016-1(b) and (c) sets forth the content and form of the application required in the Southern
District of Ohio. Local Rule 2016-1(b)(2)(B) provides that such an application must be filed “no
later than sixty (60) days from the entry date of the confirmation order.”
Romano’s fee application complied with both Rule 2016 and Local Rule 2016-1(b) and (c).
However, it did not comply with the language set forth in the bankruptcy court’s confirmation order.
Romano contends that because the court did not rule on the reasonableness of his fees, but rather
denied his entire fee application based upon failure to comply with the confirmation order, the
bankruptcy court abused its discretion. He argues that a reasonable person would not have “agreed
with the decision of the bankruptcy court in denying the Application for Compensation in toto and
with prejudice for the failure to have filed the Application for Compensation within 17 days of
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Confirmation and without a Memorandum explaining why the case was pending for more than one
year.” (Appellant’s Br. at 3.) Romano cites a handful of cases which he asserts support his position
that no reasonable person could agree with the bankruptcy court’s decision in this case because even
in cases where error was committed by counsel courts have found that the complete denial of an
application for compensation would be inequitable. While Romano is correct that some of the cases
he cites rejected complete denial of fee applications, the cases he cites are nevertheless inapposite
as not one of them deals with an attorney missing a deadline by which to file his fee application as
the result of his own “oversight” and inadvertent actions. In fact, each of the cases cited by Romano
is a chapter 11 case, not a chapter 13 case, and all deal with issues surrounding appointment of
counsel for the debtor-in-possession.1
While Local Rule 2016-1 sets an outside deadline for an attorney to file his application, the
bankruptcy court is not prohibited from setting an earlier deadline pursuant to its inherent authority
to set deadlines. See 11 U.S.C. § 105(a); see also e.g., Riverview Trenton R.R. Co. v. DSC, Ltd. (In
re DSC, Ltd.), 486 F.3d 940 (6th Cir. 2007) (Bankruptcy Code provision allowing creditors to join
in involuntary petition up until “case is dismissed or relief is ordered” only established outside
1
See Laurent Watch Co. v. United States, 539 F.2d 1231 (9th Cir. 1976) (court remanded
case for consideration of whether nunc pro tunc order appointing counsel for chapter 11 debtor-
in-possession should be entered where attorney’s fee application was improperly denied on
grounds that earlier Ninth Circuit case prohibited such an order); Cle-Ware Indus., Inc. v.
Sokolsky (In re Cle-Ware Indus., Inc.), 493 F.2d 863 (6th Cir. 1974) (in case where bankruptcy
court had approved separate counsel for chapter 11 debtor and debtor-in-possession, Sixth
Circuit announced general rule that it would not approve practice of appointing and
compensating separate counsel for debtor-in-possession and simultaneously compensating
debtor’s privately retained counsel for legal services rendered after filing of petition; applying
rule prospectively while recognizing that application of new rule to attorneys in case before it
would be unjust; remanding for determination of fees to be allowed for each set of attorneys and
setting parameters for such determination); Stolkin v. Nachman (In re Stolkin), 472 F.2d 222 (7th
Cir. 1973) (finding failure of attorney for chapter 11 debtor to secure appointment upon verified
petition as required by rule did not preclude award of fees where, inter alia, all creditors were
paid in full, substantial amount was left for debtor, and issue raised for first time on appeal); In re
Franklin Savings Corp., 169 B.R. 212 (Bankr. D. Kansas 1994) (denying request to approve
application for appointment as counsel to chapter 11 debtor nunc pro tunc where application was
not timely filed).
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deadline by which creditors had to join in petition, and did not prevent bankruptcy court, in exercise
of its case management authority, from establishing and enforcing earlier deadline). Additionally,
in this Panel’s opinion, the 18 days which the confirmation order gave Romano to file his fee
application was not unreasonable when one considers that Federal Rule of Civil Procedure
54(d)(2)(B) provides that generally a motion for attorney fees shall be filed within 14 days after entry
of judgment.
Moreover, denial of a fee application on the grounds that it is untimely, without review of
the reasonableness of the fees, is not without precedent. See, e.g., Clendenin v. Burks, No. C-1-07-
059, 2007 WL 2029060 (S.D. Ohio July 10, 2007) (affirming bankruptcy court’s denial of fee
application on the basis that it was untimely). The Bankruptcy Court for the Southern District of
Ohio amended its Local Rules effective December 1, 2009. Prior to that amendment, Local Rule
2016-1 did not specify the time for filing a post-confirmation fee application. However, in In re
Newman, 270 B.R. 845 (Bankr. S.D. Ohio 2001), the bankruptcy court established a time bar,
holding that fee applications should be submitted within 30 to 45 days following completion of the
legal services rendered on a given issue. Id. at 848. Utilizing that time bar, the Newman court
denied an attorney’s fee application insofar as it sought compensation for services completed outside
that time bar. Id. at 849.
In Clendenin, the bankruptcy court again applied the 30 to 45 day time bar to deny an
attorney’s fee application on the ground that it was filed untimely. The district court affirmed.
Clendenin, 2007 WL 2029060 at *3. While the fee applications in both Newman and Clendenin
were much tardier than the application at issue in the case before us, these cases nevertheless
demonstrate that it is within the bankruptcy court’s authority to set a deadline for fee applications
and to deny any fee application filed after that deadline runs without addressing the reasonableness
of the fees. See, e.g,, In re Wilson, No. 04-65540, 2007 WL 4248134 (Bankr. N.D. Ohio Nov. 30,
2007) (adopting 30-45 day deadline after work completed to file fee application while reducing fee
requested by attorney by 50% in large part based upon untimeliness of application); In re Anderson,
253 B.R. 14 (Bankr. E.D. Mich. 2000) (denying fee applications filed eight days after deadline set
for such applications in show cause order).
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Following the bankruptcy court’s order denying the fee application, Romano filed a motion
for reconsideration pursuant to Federal Rule of Civil Procedure 60(b) asserting that it was “excusable
neglect” to have not filed the fee application within the time frame ordered or to include the required
memorandum. The bankruptcy court found that Romano had not asserted a sufficient basis under
Rule 60(b) for reconsideration of its order and denied the motion.
Federal Rule of Civil Procedure 60(b), made applicable to bankruptcy proceedings by Federal
Rule of Bankruptcy Procedure 9024, provides in pertinent part:
(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered
Evidence; Fraud, etc. On motion and upon such terms as are just,
the court may relieve a party or his legal representative from a final
judgment, order, or proceeding for the following reasons: (1) mistake,
inadvertence, surprise, or excusable neglect; (2) newly discovered
evidence that, with reasonable diligence, could not have been
discovered in time to move for a new trial under Rule 59(e) . . . .
Relief from a final judgment under Rule 60(b) is an “ ‘extraordinary remedy and is granted only in
exceptional circumstances.’ ” McAlpin v. Lexington 76 Auto Truck Stop, Inc., 229 F.3d 491, 502-03
(6th Cir. 2000) (citation omitted).
In his brief to this Panel, Romano now asserts that new evidence was presented to the
bankruptcy court. He explains:
In the Motion to Reconsider, the Debtors’ state not only the reason
why the Application for Compensation was untimely filed but also
include all of the information requested by the Trial Court in the
Confirmation Order as to why the case was pending for more than
one year. In the Motion To Reconsider, counsel for the Debtors’
explained that, while he inadvertently missed the requirements
outlined in Paragraph G, it was also because additional pleadings
were required to be filed in aid of prosecution of the Debtors’ case
before the Application could be filed. It was at that time that counsel
filed the Application with the Trial Court. Notwithstanding the
Confirmation Order, it would have been an abundant waste of time
and judicial economy for the Debtors’ to have filed the initial
Application on February 12 and then to file a Supplemental
Application for those additional services on February 18.
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Additionally, the Debtors’ outlined for the Trial Court why the case
had been pending for over one year. Namely, because the case had
been dismissed for 121 days between September 11, 2008, the filing
date, and January 25, 2010, the date of Confirmation. There are no
other reasons the Debtors could have provided - only the truth of the
matter - as the basis for the 60(b) motion. Finally, the Motion to
Reconsider was the only remedy available to the Debtors’ since the
Trial Court, by denying the Application for Compensation with
prejudice, took away any ability for the Debtors’ to purge the
deficiency.
(Appellants’ Br. at 6-7.) We must reject Romano’s new evidence argument for two reasons. First,
he did not raise the argument in the bankruptcy court and therefore it is waived. Moyer v. Dutkiewicz
(In re Dutkiewicz), 408 B.R. 103, 109 (B.A.P. 6th Cir. 2009) (citing United States v. Elder, 90 F.3d
1110, 1118 (6th Cir. 1996)) (argument not addressed is deemed waived). Second, even if we were
to consider the argument, it fails. In order to obtain relief under Rule 60(b)(2), a litigant must show,
among other things, that the new evidence is material and likely to change the outcome. Crawford
v. TRW Auto. U.S. LLC, 560 F.3d 607, 615 (6th Cir. 2009). Romano’s “new evidence,” the filing
of additional pleadings - an objection to confirmation - and the explanation of why the case was
pending for over one year, was not new or likely to change the outcome. The objection to
confirmation was filed on February 5, 2010. The fee application was filed on February 18, 2010.
The objection to confirmation was on the record of the bankruptcy court at the time it entered its
order denying the fee application. The dismissal of the case for 121 days was also of record at the
time the court entered its order. Neither of these are new evidence as required by Rule 60(b)(2) and,
because they were already of record at the time the bankruptcy court ruled, they certainly would not
have changed the outcome.
Romano also has not shown excusable neglect in order to obtain relief under Rule 60(b)(1).
He admitted to the bankruptcy judge, and admits to this Panel, that the failure to abide by the
bankruptcy court’s order and timely file his fee application was an “oversight on his part” and done
“inadvertently.” When determining whether relief should be afforded under Rule 60(b)(1), “neglect”
is given its ordinary meaning which includes late filings caused by inadvertence, mistake or
carelessness. Jinks v. AlliedSignal, Inc., 250 F.3d 381, 386 (6th Cir. 2001). The question is whether
the neglect is excusable. In addressing whether neglect is “excusable,” the United States Supreme
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Court has stated, “the determination is at bottom an equitable one, taking account of all relevant
circumstances surrounding the party’s omission.” Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd.
P’ship, 507 U.S. 380, 395, 113 S. Ct. 1489, 1498 (1993). The Supreme Court has identified several
factors to consider including the danger of prejudice to the opposition party, the length of the delay
and its potential impact on the proceedings, the reason for the delay, and whether the moving party
acted in good faith. Id.The bankruptcy judge is afforded discretion when determining whether an attorney’s neglect
is excusable for purposes of Rule 60(b)(1), and review of the court’s decision is “ ‘extremely
deferential.’ ” Harrington v. City of Chicago, 433 F.3d 542, 546 (7th Cir. 2006) (citation omitted).
We find no abuse of discretion here. The Supreme Court in Pioneer noted that “inadvertence . . .
does not usually constitute ‘excusable’ neglect.” Pioneer, 507 U.S. at 392. Additionally, “routine
carelessness by counsel leading to a late filing is not enough to constitute excusable neglect.”
Negron v. Celebrity Cruises, Inc., 316 F.3d 60, 62 (1st Cir. 2003); see also FHC Equities, L.L.C. v.
MBL Life Assur. Corp., 188 F.3d 678, 685 (6th Cir. 1999) (gross carelessness is insufficient basis
for Rule 60(b)(1) relief). “Put another way, ‘when inadvertent conduct leads to a judgment, a claim
of mistake or excusable neglect will always fail if the facts demonstrate a lack of diligence.’ ” B & D
Partners v. Pastis, No. 05-5954, 2006 WL 1307480, at *3 (6th Cir. May 9, 2006) (unpub.) (quoting
12 MOORE’S FEDERAL PRACTICE § 60.41[1][c] [ii] (3d ed. 2005)) (finding no excusable
neglect where lack of communication between co-counsel resulted in failure to timely respond to
motion for summary judgment).
While there does not appear to be any prejudice to the Debtors due to the delay, and the
sixday delay was relatively short, Romano’s reason for the delay is simply not credible. The
bankruptcy court set a deadline pursuant to its inherent powers to do so for counsel to submit a fee
application. Through “oversight” and “inadvertence,” counsel failed to abide by the court’s deadline.
Romano’s explanation that it would have been a waste of the court’s time to file by the deadline
because an additional objection to claim needed to be filed is simply disingenuous. The objection
to claim was filed on February 5, 2010, a week before the deadline for the fee application. There was
clearly time to include the work done in order to file the objection in the fee application and timely
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submit it. Moreover, the time allegedly spent reviewing the claims register and preparing the
objection was not included in the fee application which was ultimately filed after the deadline.
V. CONCLUSION
For the foregoing reasons, we find no abuse of discretion and the orders of the bankruptcy
court are, therefore, affirmed.
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