In re: Jorge Barajas ( 2013 )

FILED
JUL 03 2013
1 SUSAN M SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
2
3
UNITED STATES BANKRUPTCY APPELLATE PANEL
4
OF THE NINTH CIRCUIT
5
In re: ) BAP No. CC-12-1642
6 )
JORGE BARAJAS, ) Bankr. No. 11-34851-BB
7 )
Debtor. )
8 ___________________________________)
)
9 MICHAEL A. RIVERA, )
)
10 Appellant, )
)
11 v. ) M E M O R A N D U M1
)
12 EDWARD M. WOLKOWITZ, Chapter 7 )
Trustee, )
13 )
Appellee. )
14 ___________________________________)
15 Argued and Submitted on June 20, 2013
at Pasadena, California
16
Filed - July 3, 2013
17
Appeal from the United States Bankruptcy Court
18 for the Central District of California
19 Honorable Sheri Bluebond, Bankruptcy Judge, Presiding
20
Appearances: Michael A. Rivera and Edward M. Wolkowitz argued
21 pro se.
22
23 Before: PAPPAS, DUNN and KIRSCHER, Bankruptcy Judges.
24
25
26
1
This disposition is not appropriate for publication.
27 Although it may be cited for whatever persuasive value it may have
(see Fed. R. App. P. 32.1), it has no precedential value. See 9th
28 Cir. BAP Rule 8013-1.
-1-
1 Michael A. Rivera (“Rivera”) appeals the orders of the
2 bankruptcy court: (1) requiring him to disgorge a $10,000 retainer
3 paid to Rivera prepetition by debtor Jorge Barajas (“Debtor”); and
4 (2) denying reconsideration of that order. We AFFIRM.
5 FACTS
6 Debtor filed a petition for relief under chapter 112 on
7 June 8, 2011. Rivera signed the petition as his attorney.
8 Attached to the schedules filed on June 22, 2011, was the
9 Disclosure of Compensation of Attorney for Debtor, signed by
10 Rivera, indicating that Debtor had paid him a $10,000 retainer
11 before filing the petition.
12 On July 7, 2011, Rivera filed three identical applications
13 with the bankruptcy court to obtain approval of his employment as
14 attorney for the Debtor. Rivera filed a fourth identical
15 employment application on July 11, 2011. Rivera represents that
16 these multiple filings were caused by computer problems at his
17 office, which after our review of the docketed entries appears to
18 be a reasonable explanation. However, none of the four
19 applications was accompanied by a Notice of Application as
20 required by Bankr. C.D. Cal. Local R. 2014-1(b).
21 On September 15, 2011, the bankruptcy court granted the
22 motion of the United States Trustee to convert Debtor’s bankruptcy
23 case to a case under chapter 7. Appellee herein, Edward M.
24 Wolkowitz, was appointed chapter 7 trustee (“Trustee”) on
25 October 18, 2011.
26
27 2
Unless otherwise indicated, all chapter, section and rule
references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
28 to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
-2-
1 Rivera was replaced as Debtor’s counsel by Ronald F.
2 Michelman on November 22, 2011.
3 Rivera filed a fifth Employment Application on December 13,
4 2011. Although the bankruptcy case had by then been converted to
5 chapter 7, and Rivera was no longer Debtor’s attorney, the
6 application was identical to his previous four, as though the case
7 were still pending under chapter 11; the application did not
8 request nunc pro tunc approval of Rivera’s employment. Again,
9 there was no Notice of Application as required by Local R. 2014-
10 1(b).
11 A creditor, Jack S. Brandon, filed an opposition to Rivera’s
12 fifth application on December 28, 2011. Brandon observed that
13 Rivera had submitted the application six months after the case was
14 commenced, Rivera was no longer attorney for the Debtor, and the
15 Employment Application failed to state any exceptional
16 circumstances required to grant nunc pro tunc relief. Brandon
17 asked the bankruptcy court to deny the Employment Application and
18 direct Rivera to turn over the $10,000 retainer to the chapter 7
19 trustee. Rivera did not respond to Brandon’s arguments, and still
20 did not set a hearing on the fifth application.
21 Trustee sent Rivera a letter on July 12, 2012, demanding that
22 he turn over of the $10,000 retainer because the bankruptcy court
23 had never authorized his employment. Rivera, on July 23, 2012,
24 requested a two-week extension so that he could seek clarification
25 from the bankruptcy court regarding his employment status. There
26 is no indication in the record that Rivera contacted the
27 bankruptcy court about his predicament at any time in the next two
28 months.
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1 On September 24, 2010, Trustee filed a Motion for
2 Disgorgement of Fees and for Determination of the Reasonable Value
3 of Services Rendered by Counsel. In the motion, Trustee argued
4 that disgorgement and turnover of the funds in Rivera’s possession
5 was proper because Rivera’s employment had never been approved as
6 required by § 327(a) and Rule 2014. Even if the bankruptcy court
7 would somehow retroactively approve Rivera’s employment, Trustee
8 pointed out that his claim for compensation and expenses would be
9 subordinated to payment of chapter 7 administrative expenses.
10 § 726(b) (providing that administrative claims incurred after
11 conversion have priority over administrative claims incurred
12 before conversion).
13 Rivera filed an opposition to the disgorgement motion on
14 October 19, 2012. His principal argument was that the
15 disgorgement motion was a request to recover money from someone
16 other than the debtor which could only be prosecuted as an
17 adversary proceeding. See Rule 7001(1). Rivera also noted that
18 it was “unclear” why his five employment applications had not been
19 “signed and entered[;] however, a declaration requesting signature
20 and entry of the order, or a hearing thereon, will be submitted
21 forthwith and prior to the hearing on this matter.”
22 Rivera filed a Declaration Regarding Lack of Timely Response
23 on October 29, 2012. In it, Rivera asserted that there was no
24 opposition filed to his employment applications that had been
25 filed on July 7 and 11, 2011, and so he had “uploaded” a proposed
26 Order to the bankruptcy court approving the applications on
27 July 19, 2011. Attached to his declaration was what appears to be
28 a confirmation from the bankruptcy court that the order had been
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1 uploaded. However, the docket has no indication that the order
2 was ever either uploaded or signed. Additionally, Rivera does not
3 dispute that no Notice of Application had ever been filed
4 respecting any of the five employment applications.
5 The day before the hearing on the Disgorgement Motion on
6 October 31, 2012, Rivera filed his a sixth identical employment
7 application. This time, he did file a Notice of Application and
8 attempted to set a hearing date for approval of the application
9 for November 28, 2012.
10 The bankruptcy court conducted the hearing on the
11 Disgorgement Motion on October 31, 2012. Rivera and Trustee
12 appeared and were heard. As to Rivera’s argument that an
13 adversary proceeding was required for the disgorgement request,
14 the court ruled that because this was not a turnover proceeding,
15 but rather a motion concerning disgorgement of Rivera’s attorney
16 fees, Trustee’s request was properly before the court by motion.
17 As to Rivera’s contention, first raised at the hearing, that
18 he had performed a significant portion of his services
19 prepetition, the bankruptcy court observed that this was not
20 disclosed in his employment applications, or his Rule 2014
21 Verified Statement. Finally, as to Rivera’s general contention
22 that he had timely submitted orders for approval of his
23 employment, the court noted that Rivera had failed in his duty of
24 diligence to make sure the orders were not only submitted but
25 acted upon by the court.
26 The bankruptcy court orally granted the Disgorgement Motion
27 and, on November 7, 2012, entered an order requiring Rivera to pay
28 over the retainer to Trustee (the “Disgorgement Order”).
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1 Rivera requested reconsideration of the Disgorgement Order on
2 November 21, 2012. In the motion, Rivera conceded that he was
3 mistaken in arguing that a disgorgement motion under these
4 circumstances required an adversary proceeding. However, he
5 suggested that it was the bankruptcy court’s oversight that had
6 prevented orders from being entered authorizing his employment.
7 And he provided information to the court that $6,750 of the
8 retainer had been earned prepetition. Rivera therefore asked “in
9 the interests of fairness and equity the Disgorgement Order should
10 be altered to take into account the fees earned prepetition
11 . . . , the employment of the debtor’s attorney should be approved
12 nunc pro tunc, and relief should be granted, in whole or in part.”
13 The bankruptcy court entered an order denying reconsideration
14 on December 4, 2012. The court noted that all of the arguments
15 made by Rivera had been previously considered and rejected by the
16 court at the hearing on October 31, 2012. The bankruptcy court
17 further observed that Rivera had failed to act with sufficient
18 diligence in taking steps to ensure that his employment was
19 considered and approved by the court. Finally, the court observed
20 that Rivera had failed to disclose in his statements made under
21 penalty of perjury in the employment applications and his
22 Rule 2014 Verified Statement that most of the retainer had been
23 earned prepetition, but instead described the entire retainer as
24 an advance against future fees and costs.
25 Rivera filed a timely appeal of the Disgorgement Order and
26 the order denying reconsideration.
27 JURISDICTION
28 The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334-6-
1 and 157(b)(2)(A). We have jurisdiction under 28 U.S.C. § 158.
2 ISSUE
3 Whether the bankruptcy court abused its discretion in issuing
4 the Disgorgement Order by requiring Rivera to disgorge the $10,000
5 retainer paid to him by Debtor.
6 Whether the bankruptcy court abused its discretion in
7 declining to reconsider its Disgorgement Order.
8 STANDARD OF REVIEW
9 A bankruptcy court’s disgorgement order directed to a
10 debtor’s attorney is reviewed for abuse of discretion. Hale v.
11 U.S. Tr. (In re Byrne), 208 B.R. 926, 930 (9th Cir. BAP 1997);
12 aff’d, 152 F.3d 924 (9th Cir. 1998).
13 A denial of a motion for reconsideration is reviewed for
14 abuse of discretion. Smith v. Pac. Props. & Dev. Corp., 358 F.3d
15 1097, 1100 (9th Cir. 2004); Branam v. Crowder (In re Branam),
16 226 B.R. 45, 51 (9th Cir. BAP 1998).
17 A bankruptcy court abuses its discretion if it applies the
18 wrong legal standard or its factual findings are illogical,
19 implausible or without support in the record. TrafficSchool.com
20 v. Edriver Inc., 653 F.3d 820, 832 (9th Cir. 2011).
21 DISCUSSION
22 I.
23 The bankruptcy court did not abuse its discretion
in granting the Disgorgement Order.
24
25 This appeal poses a straightforward question: May a
26 bankruptcy court order the disgorgement of a retainer paid before
27 the filing of the petition by a chapter 11 debtor to an attorney
28 when the attorney, through his own lack of diligence, did not
-7-
1 obtain approval of his employment? The bankruptcy court did not
2 abuse its discretion when it decided to order disgorgement under
3 these facts.
4 Section § 327(a) provides that: "Except as otherwise
5 provided in this section, the trustee [or, as here, the debtor in
6 possession under § 1107], with the court's approval, may employ
7 one or more attorneys . . . that do not hold or represent an
8 interest adverse to the estate, and that are disinterested
9 persons, to represent or assist the trustee in carrying out the
10 trustee's duties under this title." Rule 2014(a) provides that
11 the approval of the employment of counsel under § 327 requires a
12 verified statement by the person to be employed setting forth his
13 or her connections with the debtor and certain parties in interest
14 and their professionals.
15 Approval of employment under § 327(a) is not optional before
16 an attorney for a chapter 11 debtor can be compensated. Indeed,
17 approval of employment under § 327 is a “condition precedent” to
18 the bankruptcy court’s authority to grant or deny compensation in
19 any form to a debtor in possession’s attorney. In re CIC
20 Investment Corp., 192 B.R. 549, 553 (9th Cir. BAP 1996); DeRonde
21 v. Shirley (In re Shirley), 134 B.R. 940, 943—44 (9th Cir. BAP
22 1992) ("Failure to receive court approval for the employment of a
23 professional in accordance with § 327 and Rule 2014 precludes the
24 payment of fees."); see also Lamie v. United States, 540 U.S. 526,
25 538 (2004) (the Bankruptcy Code "does not authorize compensation
26 awards to debtors' attorneys from estate funds, unless they are
27 employed as authorized by § 327.").
28 The Ninth Circuit has addressed failure to obtain approval of
-8-
1 employment by debtor’s counsel in a decision not cited by either
2 party in this appeal. Law Offices of Nicholas A. Franke v.
3 Tiffany (In re Lewis), 113 F.3d 1040, 1044 (9th Cir. 1997).
4 In Lewis, the debtor retained Franke, who agreed to represent the
5 debtor in a bankruptcy case for a retainer of $10,000, plus
6 $30,000 to be paid postpetition. Franke alleged that he submitted
7 an application for employment under § 327(a) to the U.S. Trustee
8 and the bankruptcy court. However, the bankruptcy court found no
9 evidence that an application had ever been filed. Id. at 1040.
10 Several months after commencement of the chapter 11 case, Franke
11 discovered that his employment application had not been filed. So
12 Franke submitted another application seeking retroactive approval
13 of employment. However, before the hearing on the second
14 employment application, the bankruptcy court granted the
15 U.S. Trustee’s motion for appointment of a chapter 11 trustee. At
16 the hearing, the court approved Franke’s employment application,
17 but required Franke to remit all funds he had received from the
18 debtor to the chapter 11 trustee until a proper disposition of the
19 funds could be made. Franke paid $6,636.15 to the trustee,
20 representing the $10,000 he was paid prepetition, less $3,363.85
21 for prepetition services and expenses; Franke did not remit the
22 $30,000 that was paid postpetition. After reviewing the
23 accounting provided by Franke, the bankruptcy court ordered Franke
24 to disgorge the remaining retainer and postpetition payments made
25 to him. The district court on appeal affirmed the bankruptcy
26 court’s decision.
27 The Ninth Circuit affirmed the district court. Concerning
28 the $3,363.85 of the prepetition retainer that was not required to
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1 be disgorged, the court found that the bankruptcy court made the
2 appropriate findings that the services were performed and
3 reasonable. However, the Court of Appeals rejected Franke’s
4 argument that the bankruptcy court was required to perform a
5 reasonableness and effectiveness analysis before ordering
6 disgorgement of fees. “The bankruptcy court's authority to deny
7 completely these attorney's fees was grounded in the inherent
8 authority over the debtor's attorney's compensation. . . . We do
9 not mean to say that the excessiveness or reasonableness of those
10 fees is irrelevant in all cases; in appropriate circumstances, a
11 bankruptcy court should inquire into these subjects as part of
12 deciding whether and to what extent to order disgorgement.”
13 In re Lewis, 113 F.3d at 1045.
14 The court of appeals also noted that disgorgement of a
15 retainer to a trustee is not necessarily a determination that the
16 retainer is property of the estate. The bankruptcy court had made
17 no such determination or ruling as to the ultimate disposition of
18 the funds.
19 Although there are some distinctions between Lewis and the
20 case on appeal, there are sufficient similarities to justify our
21 conclusion that the bankruptcy court here did not abuse its
22 discretion in ordering Rivera to disgorge the retainer he had been
23 paid by Debtor.
24 Franke, originally, and Rivera, repeatedly, failed to confirm
25 that their employment applications had been acted on by the
26 bankruptcy court. But when Franke discovered that his application
27 had not been approved (albeit several months late), he filed a
28 nunc pro tunc application, which was conditionally approved
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1 provided that he account for his stewardship of the retainer
2 funds.
3 In our appeal, while Rivera filed six identical applications,
4 all seeking employment as counsel to a debtor in possession in
5 chapter 11, Rivera apparently made no effort to confirm if the
6 first four applications had ever been approved by the bankruptcy
7 court. And Rivera’s fifth application was filed on December 13,
8 2011, three months after the case was converted to chapter 7 and
9 one month after Rivera had been terminated as Debtor’s counsel,
10 yet he still was using the identical application seeking
11 employment under § 327 as a chapter 11 debtor’s counsel. His
12 sixth application, submitted the day before the hearing on the
13 disgorgement motion, was again precisely the same as the first
14 five applications, even bearing the same date of the signature,
15 July 5, 2011.3 Moreover, although Rivera’s fifth and sixth
16 applications were submitted after the case was converted to
17 chapter 7 and Rivera had been terminated as debtor’s counsel, they
18 still sought appointment as chapter 11 counsel and did not request
19 nunc pro tunc appointment.4
20
3
21 At the hearing before the Panel, Rivera suggested that he
had withdrawn the sixth application. We find nothing in the
22 transcript of the argument on October 31, 2012 or anywhere in the
record or docket to support this statement.
23
4
The first and only time Rivera requested nunc pro tunc
24 approval of his employment was in his motion for reconsideration
of the Disgorgement Order. It was also the first and only time
25 that Rivera asserted that he paid himself from the retainer
prepetition. As discussed below, the court was under no
26 obligation to consider in a reconsideration motion information and
evidence that should have been presented in Rivera’s opposition to
27 the Disgorgement Motion. Moreover, nunc pro tunc employment is
granted only in “extraordinary or exceptional circumstances.”
28 (continued...)
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1 As the bankruptcy court noted, Rivera’s first five
2 applications were not accompanied by the necessary Notice of
3 Application required by the Local Bankruptcy Rules of the Central
4 District of California:
5 (A) Notice of an application by the . . . debtor in
possession or trustee to retain a professional person
6 must be filed and served, in accordance with LBR
2002-2(a) and LBR 9036-1 on the United States trustee,
7 the creditors committee or the twenty largest creditors
if no committee has been appointed, counsel for any of
8 the foregoing, and any other party in interest entitled
to notice under FRBP 2002. . . .
9
(C) The notice must be filed and served not later than
10 the day the application is filed with the court.
11 Bankr. C.D. Cal. Local R. 2014-1(b)(2) (2012).
12 It is not disputed that Rivera did not send the Notice of
13 Application for the first five applications to the United States
14 Trustee, or the twenty largest unsecured creditors (no committee
15 was appointed), as required by Local R. 2014-1(b). Rivera does
16 not discuss this failure to file and serve the notices of
17 application in this appeal. This is perplexing since all six
18 employment applications specifically seek employment under Local
19
20 4
(...continued)
Mehdipour v. Marcus & Millichap (In re Mehdipour), 202 B.R. 474,
21 479 (9th Cir. BAP 1996). Professionals seeking nunc pro tunc
employment “must (I) satisfactorily explain their failure to
22 receive prior judicial approval; and (ii) demonstrate that their
services benefitted the bankruptcy estate in a significant
23 manner.” Atkins v. Wayne (In re Atkins), 69 F.3d 970, 974 (9th
Cir. 1995). Simply requesting nunc pro tunc approval in a
24 reconsideration motion, without submitting the mandatory nunc pro
tunc application, does not demonstrate the extraordinary or
25 exceptional circumstances required for nunc pro tunc consideration
by the bankruptcy court. Indeed, as Trustee suggests, Rivera’s
26 submission of a chapter 11 petition for his client that was
converted almost immediately after filing, as well as his
27 termination as debtor’s counsel shortly thereafter, do not
demonstrate that his services “benefitted the bankruptcy estate in
28 a significant manner.”
-12-
1 R. 2014-1(b), and thus, he cannot argue that he was unaware of the
2 requirement to send notices along with the employment
3 applications.
4 The bankruptcy court ruled that it would not approve an
5 employment application that was not accompanied by the required
6 notice of application, as required by the local rules. It is not
7 an abuse of discretion for the bankruptcy court to enforce its
8 local rules. Judges should adhere to their court's local rules,
9 which have the force of federal law. Hollingsworth v. Perry,
10 558 U.S. 183, 130 S.Ct. 705, 710 (2010) (per curiam); Prof'l
11 Programs Grp. v. Dep't of Commerce, 29 F.3d 1349, 1353 (9th Cir.
12 1994) (explaining that "a departure from local rules . . . is
13 justified only if the effect is so slight and unimportant that the
14 sensible treatment is to overlook [it]."). Here, Rivera’s failure
15 to provide required notices of an employment application for
16 counsel to the debtor to the United States Trustee and the largest
17 unsecured creditors is not a slight and unimportant departure from
18 the local rules.
19 Besides the absence of the required notice of the filing of
20 Rivera’s applications, the bankruptcy court was most concerned
21 that, for all six employment applications, Rivera had not acted
22 with diligence in seeking approval of his employment. All
23 litigants are expected to prosecute their cases with diligence,
24 and that requires the regular monitoring of the court’s docket.
25 In re Sweet Transfer & Storage, Inc., 896 F.2d 1189, 1193 (9th
26 Cir. 1990) (lack of access to the court docket is never an
27 excuse).
28 Finally, the bankruptcy court noted that, had Rivera taken
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1 appropriate steps after Trustee filed the Disgorgement Motion to
2 obtain nunc pro tunc approval of his employment application, “we
3 would not be here today.” Hr’g Tr. 14:23-24. The court was
4 particularly concerned that Rivera had requested a two-week
5 extension from Trustee to seek bankruptcy court approval for his
6 employment. However, two months passed with no action from Rivera
7 except the filing of an objection to the Disgorgement Motion.
8 Indeed, Rivera then filed yet a sixth application without seeking
9 nunc pro tunc approval.
10 Thus, unlike the situation in Lewis, Rivera simply did not
11 diligently pursue his employment application.
12 A second difference between Lewis and this appeal is that, at
13 the time the court in Lewis ordered disgorgement of the retainer,
14 the bankruptcy court received evidence from Franke about the
15 prepetition services he had provided to the debtor. With that
16 information, the bankruptcy court could conduct a § 329(b)
17 analysis to determine if prepetition services should be excluded
18 from the disgorgement.
19 In this appeal, the bankruptcy court was given contradictory
20 information by Rivera concerning his prepetition services for
21 Debtor. Although Rivera argued at the hearing that the majority
22 of his fees were earned prior to the commencement of the
23 bankruptcy case, the court noted that this contention could not be
24 squared with the contents of his many employment applications and
25 the Rule 2014 verified statement. That statement represented
26 that:
27 3. The terms and source of the proposed compensation
and reimbursement of the Professional are: Ten thousand
28 ($10,000) initial retainer in light of complex
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1 litigation history. $300 per hour for legal services of
Michael A. Rivera and of counsel consultant Norma E.
2 Ortiz. Reimbursement of actual costs and $1.00 per page
for faxes and $.25 per page for copies.
3
4. The nature and terms of retainer (i.e.,
4 nonrefundable versus an advance against fees) held by
the Professional are: Retainer is an advance against
5 fees and costs arising in connection with debtor's
bankruptcy and related civil matters subject to the
6 approval of the court.
7 At the time of hearing on the Disgorgement Motion, the bankruptcy
8 court had no evidence from Rivera regarding the specific tasks he
9 had allegedly performed prepetition.5
10 Contrary to Rivera’s position in this appeal that the
11 bankruptcy court was required to make a determination of the
12 reasonableness of attorney fees for prepetition services, the
13 Lewis court ruled that the court may, but is not required to, make
14 such determinations: “We do not mean to say that the excessiveness
15 or reasonableness of those fees is irrelevant in all cases; in
16 appropriate circumstances, a bankruptcy court should inquire into
17 these subjects as part of deciding whether and to what extent to
18 order disgorgement." In re Lewis, 113 F.3d at 1045. Here there
19 was no specific evidence that there were prepetition services
20 provided, so a § 329(b) analysis of those services as a
21 precondition for disgorgement would not be required.
22 For all these reasons, we conclude that the bankruptcy court
23 did not abuse its discretion in ordering that the retainer paid by
24 Debtor to Rivera should be disgorged. An experienced bankruptcy
25
5
As discussed above and below, Rivera did present evidence
26 of the tasks performed prepetition in his motion for
reconsideration. However, such evidence could (and should) have
27 been provided at the original hearing. Consequently, the
bankruptcy court was not required to consider it after ordering
28 disgorgement.
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1 attorney who fails to timely obtain approval of his employment as
2 counsel for the chapter 11 debtor may not retain compensation paid
3 to him, including a retainer. Rivera’s employment as Debtor’s
4 counsel was never approved by the court because he did not comply
5 with the local rules governing employment, nor did he exercise the
6 due diligence that is required in pursuing authorization for
7 employment as Debtor’s counsel in this case. In addition, Rivera
8 did not timely provide the bankruptcy court the sort of specific
9 evidence of his alleged prepetition services required under
10 § 329(b) to justify an exception to protect his reasonable
11 prepetition fees from disgorgement.
12 II.
13 The bankruptcy court did not abuse its discretion by
denying reconsideration of the Disgorgement Order.
14
15 A motion for reconsideration submitted within fourteen days
16 of an order is reviewed under Civil Rule 59(e), incorporated in
17 Rule 9023. United Student Funds, Inc. v. Wylie (In re Wylie),
18 349 B.R. 204, 209 (9th Cir. BAP 2006) (discussing an earlier
19 ten-day rule that was changed in 2008 to fourteen days). The
20 Ninth Circuit has held that relief under Civil Rule 59(e) is not
21 available absent newly discovered evidence, clear error committed
22 by the trial court, or if there is an intervening change in
23 controlling law. Reconsideration is not justified if the
24 proffered new evidence could have reasonably been discovered prior
25 to the court’s earlier ruling. Hopkins v. Andaya, 958 F.2d 881,
26 887 (9th Cir. 1992). Here, as discussed above, the bankruptcy
27 court did not commit any clear error, nor has there been any
28 change in controlling law. Therefore, Rivera’s hopes for
-16-
1 reconsideration must be founded upon what he alleged to be newly
2 discovered evidence or arguments. Rivera’s arguments lack merit.
3 The bankruptcy court concluded that, with one exception, all
4 of the arguments raised by Rivera in the reconsideration motion
5 had been reviewed and rejected at the Disgorgement Motion hearing.
6 The one element of supposedly “new” evidence offered by Rivera
7 consisted of the time records he submitted purportedly documenting
8 the prepetition services he had provided to Debtor. However, such
9 information could have been provided to the bankruptcy court at
10 the time of the hearing on the Disgorgement Motion, thus was not
11 “new” evidence and the bankruptcy court was not required to
12 consider it. Id. Thus, it was not an abuse of discretion for the
13 bankruptcy court to reject this “new” evidence and to decline to
14 reconsider the Disgorgement Order.6
15 CONCLUSION
16 We AFFIRM the orders of the bankruptcy court.
17
18
19
20
21 6
In this appeal and at argument before the Panel, Rivera
suggests that the bankruptcy court erred by ordering disgorgement
22 of the retainer to Trustee instead of the source of the funds, a
relative. Rivera’s argument is not consistent with the statements
23 in all six applications: “The retainer was paid to [Rivera] by the
Debtor from non-estate assets. The Debtor informed [Rivera] that
24 he obtained the funds from a family member.” Application for
Employment at ¶ 12. In short, Rivera’s own statement shows that
25 he had no contact with a third party and that he got the funds
directly from his client. The bankruptcy court did not err in
26 directing the funds disgorged to Trustee. In re Lewis, 113 F.3d
at 1046 (“The Bankruptcy Court may order the return to the Debtor
27 of any payment made to an attorney representing the Debtor or in
connection with a bankruptcy proceeding, irrespective of the
28 source of payment.").
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