Groth Brothers Oldsmobile, Inc V. , 635 F. App'x 365 ( 2015 )

FILED
NOT FOR PUBLICATION
DEC 24 2015
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: GROTH BROTHERS No. 13-60111
OLDSMOBILE, INC., dba Groth Brothers
Chevrolet, BAP No. 12-1482
Debtor.
MEMORANDUM*
GROTH BROTHERS OLDSMOBILE,
INC., dba Groth Brothers Chevrolet,
Appellant,
v.
JOHN T. KENDALL; et al.,
Appellees.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Dunn, Jury, and Pappas, Bankruptcy Judges, Presiding
Submitted December 9, 2015**
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: GRABER, WARDLAW, and MURGUIA, Circuit Judges.
Groth Brothers Oldsmobile, Inc. (Groth) appeals the Bankruptcy Appellate
Panel’s (BAP) decision affirming the bankruptcy court’s denial of William L.
Needler and William F. Ghiringhelli’s motion for retroactive approval of
employment as Groth’s chapter 11 counsel. We have jurisdiction under 28 U.S.C.
§ 158(d). We review decisions of the BAP de novo. Atkins v. Wain, Samuel & Co.
(In re Atkins), 69 F.3d 970, 973 (9th Cir. 1995). We affirm.
1. The bankruptcy court did not abuse its discretion in declining to hear
Needler’s employment application until Ghiringhelli’s application as local
co-counsel had been approved or set for a hearing. Local rules of the Bankruptcy
Court for the Northern District of California require out-of-district counsel for
chapter 11 debtors to associate local co-counsel. See Bankr. N.D. Cal. R.
9010-1(a); N.D. Cal. Civ. R. 11-3(a). The bankruptcy court’s decision to condition
its consideration of Needler’s employment application upon its consideration of
local co-counsel’s application was a reasonable application of these local rules.
See Nunez v. Nunez (In re Nunez), 196 B.R. 150, 157 (B.A.P. 9th Cir. 1996) (“The
bankruptcy court has broad discretion to apply its local rules strictly or to overlook
any transgressions.”).
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2. The bankruptcy court did not abuse its discretion in denying Needler’s
and Ghiringhelli’s employment nunc pro tunc as Groth’s chapter 11 counsel.
Professionals seeking retroactive approval of employment by a chapter 11 debtor
must “(1) satisfactorily explain their failure to receive prior judicial approval; and
(2) demonstrate that their services benefitted the bankrupt estate in a significant
manner.” In re Atkins, 69 F.3d at 974. Needler and Ghiringhelli failed to satisfy
these requirements. First, their failure to receive prior judicial approval of their
employment resulted from their own failure to comply with the court’s instructions
for applying. Second, neither rendered services that significantly benefitted the
Groth estate. Ghiringhelli’s sole legal service was to sign Groth’s chapter 11
petition. Needler played a more substantial role but performed deficiently.
Specifically, Needler did not effectively assist Groth in complying with the
requirements of chapter 11. Moreover, Needler’s efforts to secure floor plan
financing and to sell the Groth franchise were unsuccessful and did not provide any
benefit to the Groth estate. The bankruptcy court properly determined that Needler
and Ghiringhelli did not meet the requirements for employment nunc pro tunc as
Groth’s chapter 11 counsel.
3. The bankruptcy court did not abuse its discretion in denying
compensation and reimbursement of expenses to Needler. “Failure to receive court
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approval for the employment of a professional . . . precludes the payment of fees.”
DeRonde v. Shirley (In re Shirley), 134 B.R. 940, 944 (B.A.P. 9th Cir. 1992).
Needler did not receive court approval for his employment. As a result, Needler is
not entitled to compensation or reimbursement of expenses as Groth’s chapter 11
counsel.
AFFIRMED.
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