McCoy v. Hardeman (In Re Tahah) , 330 B.R. 777 ( 2005 )

OPINION

CLARK, Bankruptcy Judge.

Appellant Kenneth C. McCoy (“McCoy”) appeals an Order of the United States Bankruptcy Court for the Western District of Oklahoma partially denying his request for attorney’s fees in a dismissed Chapter 13 case. We REVERSE the bankruptcy court’s Order, and REMAND for proceedings consistent with this Opinion.

I. Background

On December 24, 2003, the Debtors filed a petition under Chapter 13 of the Bankruptcy Code (“2003 case”). McCoy was their attorney. The 2003 case was dismissed on April 21, 2004, prior to the confirmation of a Chapter 13 plan. On the following day, the Debtors again filed for Chapter 13 relief with McCoy as their attorney (“2004 case”). The bankruptcy court confirmed a plan in the 2004 case on May 27, 2004.

Both the 2003 case and the 2004 case were assigned to the same bankruptcy court judge, who has issued “Chapter 13 Guidelines.” In the Guidelines, which were applicable during both of the Debtors’ eases, the following relevant fees were “presumed to be reasonable”: (1) $1,500 for pre-confirmation services rendered in a case where a Chapter 13 plan is confirmed; and (2) $800 for services rendered in cases dismissed or converted to Chapter 7 prior to the confirmation of a Chapter 13 plan. Chapter 13 Guidelines ¶ X.A.iii, X.B.i, X.D.i, in Appendix at 30, 31, 33. Because these fees are presumed to be reasonable, an itemized fee application is not necessary when a debtor’s attorney seeks the presumptive fee. However, if an attorney requests fees in addition to the relevant presumptive fee, he or she must file an itemized fee application. Specifically, the Chapter 13 Guidelines provide:

However, in cases where an attorney believes extraordinary circumstances justify an award of additional fees, the attorney may submit a written fee application together with attorney time records complying with the requirements set forth in In re Seneca Oil Co., 65 B.R. 902 (Bankr.W.D.Okla.1986). Such application will be set for hearing by the Court, and if granted, the manner of payment will be determined by the Court.

Id. ¶ X.A.iii, in Appendix at 30. The Chapter 13 Guidelines state that: “All requests for fees or compensation by Chapter 13 debtors’ attorneys shall be approved by the Court.” Id. ¶ X.A.iv (emphasis in the original), in Appendix at 30.

Under the Chapter 13 Guidelines, any fees up to $800 were presumed to be reasonable in the Debtors’ 2003 case, because that case was dismissed prior to the confirmation of a Chapter 13 plan. McCoy claimed that he rendered services to the Debtors in the 2003 case that resulted in fees in excess of $800. Thus, in compliance with the Chapter 13 Guidelines, McCoy filed an Application for Allowance of Compensation under 11 U.S.C. § 330¹ in the 2003 case, seeking approval of fees in the amount of $2,027.00 (Application). His Application included itemized billing statements setting forth the services that he rendered in that case. The Chapter 13 Trustee objected to the Application, but later withdrew his objection and approved a proposed order allowing the fees in full.

On August 24, 2004, the bankruptcy court held a hearing on McCoy’s Application. At the hearing, the bankruptcy court orally ruled that because McCoy had received attorney’s fees of $1,440 in the 2004 case, it would only award a presumptive fee of $800 in the 2003 case, stating: “this is one of those cases that balances out.” Transcript at 17, in Appendix at 58. No other factual findings were made.

On August 26, 2004, the bankruptcy court entered an order memorializing its oral ruling (“Fee Order”). In the Fee Order, the bankruptcy court held that McCoy had failed to meet his burden of establishing the existence of “extraordinary circumstances” that would justify an award of fees in excess of the $800 presumptive fee. The court also made the following statement: “In addition, when examining the facts of this case in light of the requirements of § 330, the Court finds insufficient benefit to the estate to justify awarding fees in excess of $800.” Fee Order at 5-6, in Appendix at 15-16.

This appeal of the Fee Order followed.

II. Appellate Jurisdiction and Standard of Review

We have jurisdiction over this appeal. The bankruptcy court’s Fee Order is a “final” order under 28 U.S.C. § 158(a)(1). See, e.g., Quackenbush v. Allstate Ins. Comr., 517 U.S. 706, 712, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996). McCoy timely filed his Notice of Appeal from the Fee Order. Fed. R. Bankr.P. 8002(a). Finally, the parties have consented to this Court’s jurisdiction because they have not elected to have the appeal heard by the United States District Court for the Western District of Oklahoma. 28 U.S.C. § 158(b)-(c); Fed. R. Bankr.P. 8001(e); 10th Cir. BAP L.R. 8001-1.

The bankruptcy court’s interpretation of § 330 is reviewed de novo. Its factual findings concerning compensation under § 330 are reviewed under a clearly erroneous standard. See Fed. R. Bankr.P. 8013. A decision to allow or disallow compensation under § 330 is reviewed for abuse of discretion. In re Commercial Fin. Servs., Inc., 298 B.R. 733, 747 (10th Cir. BAP 2003) (quoting In re Miniscribe Corp., 309 F.3d 1234, 1244 (10th Cir.2002)).

III. Discussion

An attorney representing the interests of a Chapter 13 debtor may apply for compensation under § 330(a)(4)(B) of the Bankruptcy Code. A court may award “reasonable compensation to the debtor’s attorney ... based on a consideration of the benefit and necessity of such services to the debtor and the other factors set forth in this section.” 11 U.S.C. § 330(a)(4)(B). In determining “reasonable compensation,” § 330(a)(3) states that the bankruptcy court “shall consider the nature, the extent, and the value of such services,” taking into account the following five nonexclusive factors:

(A) the time spent on such services;

(B) the rates charged for such services;

(C) whether the services were necessary to the administration of, or beneficial at the time in which the service was rendered toward the completion of, a case under this title;

(D) whether the services were performed within a reasonable amount of time commensurate with the complexity, importance, and nature of the problem, issue, or task addressed; and

(E) whether the compensation is reasonable, based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title.

11 U.S.C. § 330(a)(3)(A)-(E). Section 330(a)(4) further provides that certain services are not compensable. Specifically, a court may not allow compensation for the following:

(i) unnecessary duplication of services; or

(ii) services that were not-

(I) reasonably likely to benefit the debtor’s estate; or

(II) necessary to the administration of the case.

11 U.S.C. § 330(a)(4)(A)® — (ii). It is well-established that bankruptcy courts have a duty to independently evaluate the propriety of the compensation requested under § 330. See, e.g., 3 Collier on Bankruptcy ¶ 330.04[4][e] (Lawrence P. King, ed., 15th ed. rev.2008). This is true whether a presumptive fee is being applied or not. See, e.g., In re Yates, 217 B.R. 296, 301 (Bankr.N.D.Okla.1998) (“The use of ‘flat’ or ‘customary’ fees [to be awarded without a detailed fee application] does not relieve the bankruptcy court of its statutory duty to review the fees incurred to determine their reasonableness.”).

In this case, McCoy submitted his itemized Application in the dismissed 2003 case, seeking allowance of $2,027.00 in fees. The bankruptcy court disallowed the portion of requested fees exceeding the $800 presumptive fee because McCoy did not show “extraordinary circumstances” as required under the Chapter 13 Guidelines. Alternatively, the court concluded that the fees in excess of the $800 presumptive fee were not reasonable within the meaning of § 330.

Because the bankruptcy court applied § 330, the law undisputably applicable to the allowance of McCoy’s fees, the only issue in this case is whether the bankruptcy court abused its discretion in disallowing a portion of McCoy’s fees in the Debtors’ dismissed 2003 case. “An abuse of discretion occurs when the [trial] court bases its ruling on an erroneous conclusion of law or relies on clearly erroneous fact findings,” Kiowa Indian Tribe v. Hoover, 150 F.3d 1163, 1165 (10th Cir.1998), or “ fails to consider ... the facts upon which the exercise of its discretionary judgment is based.” Ohlander v. Larson, 114 F.3d 1531, 1537 (10th Cir.1997). In this case, the bankruptcy court made no factual findings either on the record or in its Fee Order in support of its decision to disallow a portion of the fees requested in McCoy’s Application under § 330. See Fed. R.Civ.P. 52. Accordingly, we cannot conduct appellate review of the Fee Order.

Granted, the analysis under § 330 does not require a detailed review and discussion of the line by line entries. The court may make a subjective judgment based on the entire circumstances presented. Mares v. Credit Bureau of Raton, 801 F.2d 1197, 1203 (10th Cir.1986). However, in this case, the bankruptcy court did not provide any basis for this Court to determine whether the fee award was an abuse of discretion. When fees are sought that exceed the amount of a presumptively reasonable fee, those fees must be reviewed under § 330, regardless of the “extraordinary circumstances” standard contained in the bankruptcy court’s Chapter 13 Guidelines.

McCoy argues that the bankruptcy court erred when it did not award him the full amount he requested because it impermis-sibly evaluated his Application under the “extraordinary circumstances” standard set in the Chapter 13 Guidelines, rather than § 330(a)(4)(B). We need not address this argument, because, as discussed above, the bankruptcy court alternatively disallowed fees in excess of the $800 presumptive fee under § 330.² The only error made by the bankruptcy court was its failure to provide findings of fact to allow review of its decision under § 330.

McCoy did not challenge the $800 presumptive fee in the bankruptcy court or in this Court. Accordingly, unlike the concurring Opinion, we refuse to address the appropriateness of the presumptive fee because there is no record or legal argument to review. See, e.g., 19 James Wm. Moore, Moore’s Fed. P. § 205.05[1] (LexisNexis 3rd ed.2003) (recognizing “long-standing rule” that a claim or issue must have been raised or passed on in trial court to be renewable on appeal because it is “not a sensible exercise” to analyze an issue without the benefit of a full record) (quoting United States v. Williams, 504 U.S. 36, 41, 112 S.Ct. 1735, 118 L.Ed.2d 352 (1992); Yee v. City of Escondido, 503 U.S. 519, 538, 112 S.Ct. 1522, 118 L.Ed.2d 153 (1992)); accord Lytle v. Household Mfg., Inc., 494 U.S. 545, 552 n. 3, 110 S.Ct. 1331, 108 L.Ed.2d 504 (1990).

IV. Conclusion

For the reasons set forth above, we REVERSE the bankruptcy court’s Fee Order, and REMAND for proceedings consistent with this Opinion.

1 . Unless otherwise stated, all future statutory references are to title 11 of the United States Code.

2 . See, e.g., In re Keener, 2004 WL 2255123, BAP No. WO-04-045 (10th Cir. BAP Sept. 20, 2004) (per curiam) (another panel of this Court refused to address McCoy's "extraordinary circumstances" argument because the bankruptcy court had disallowed a portion of McCoy’s fees under § 330).