Inglesby, Falligant, Horne v. Moore , 197 F.3d 1354 ( 1999 )

PUBLISH
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
12/15/99
THOMAS K. KAHN
No. 98-8831 CLERK
________________________
D. C. Docket No. CV-697-102
IN RE: AMERICAN STEEL PRODUCT, INC.,
Debtor.
INGLESBY, FALLIGANT,
HORNE, COURINGTON & NASH, P.C.,
Plaintiff-Appellant,
versus
ANNE R. MOORE, Chapter 7 Trustee,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Georgia
_________________________
(December 15, 1999)
Before BLACK and WILSON, Circuit Judges, and RONEY, Senior Circuit Judge.
WILSON, Circuit Judge:
This case involves an issue of statutory interpretation. We consider whether a
Chapter 7 debtor’ s attorney is entitled under the Bankruptcy Code to compensation
from the debtor’s bankruptcy estate. The district and bankruptcy courts, interpreting
11 U.S.C. § 330, determined that the debtor’s attorney is not so entitled. We agree
and affirm.
BACKGROUND
Debtor, American Steel Products, Inc. (“ASP”), was placed in involuntary
Chapter 7 bankruptcy by its creditors. The bankruptcy court subsequently converted
it to a Chapter 11 proceeding and then reconverted it back to a Chapter 7. Although
ASP was initially a debtor in possession,1 Anne R. Moore (“Trustee”) was appointed
as Chapter 11 Trustee and remained as trustee when the case was reconverted to a
Chapter 7. Inglesby, Falligant, Horne, Courington & Nash, P.C., (“the Inglesby
firm”), a law firm, was subsequently appointed as counsel.
At the conclusion of the bankruptcy proceedings, the Inglesby firm submitted
for court approval its application for compensation for services provided to the
bankruptcy estate in the total amount of $30,141.87. A part of that proposed fee,
$19,600.00, had been paid in the form of a retainer prior to the filing of the initial
petition. The bankruptcy court entered an order permitting payment of $10,541.87,
the difference between the fee application and the retainer fee initially paid, but
1
A debtor in possession has (with a few exceptions) the rights and duties of a Chapter
11 Trustee. See 11 U.S.C. § 1107(a).
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reserved ruling on whether that payment should be derived from the bankruptcy estate
itself or from the initial retainer. After receiving authority on the effect of the 1994
Amendments to 11 U.S.C. § 1330, the bankruptcy court vacated its prior order and
disallowed attorney’s fees out of the estate. The bankruptcy court found that the plain
language of § 330 precluded an award of attorney’s fees to a debtor’s attorney in both
Chapter 7 and Chapter 11 cases. The district court affirmed. We now have
jurisdiction to consider this matter pursuant to 28 U.S.C. § 158(d).
STANDARD OF REVIEW
In bankruptcy proceedings, we review factual findings for clear error and
conclusions of law de novo. See General Trading, Inc. v. Yale Materials Handling
Corp., 119 F.3d 1486, 1494 (11th Cir. 1997).
DISCUSSION
The district court’s ultimate denial of Ingelesby’s compensation request was
based on a plain reading of § 330 barring compensation to debtor’s counsel in a
Chapter 7 or 11 proceeding. In the Bankruptcy Reform Act of 1994, Congress
amended § 330 to eliminate the former authorization for payment of debtor’s counsel
from estate assets in a Chapter 7 and Chapter 11 case. Prior to the 1994 amendments,
§ 330(a) provided in pertinent part:
(a) After notice to any parties in interest and to the United States trustee
and a hearing, and subject to sections 326, 328, and 329 of this title, the
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court may award to a trustee, to an examiner, to a professional person
employed under section 327 or 1103 of this title, or to the debtor’s
attorney--
(1) reasonable compensation for actual, necessary services
rendered by such trustee, examiner, professional person, or attorney, as
the case may be, and by any paraprofessional persons employed by such
trustee, professional person, or attorney, as the case may be, based on the
nature, the extent, and the value of such services, the time spent on such
services, and the cost of comparable services other than in a case under
this title;
(emphasis added).
As a result of the amendments, Bankruptcy Code § 330(a) now provides in
pertinent part:
(a)(1) After notice to the parties in interest and the United States Trustee
and a hearing, and subject to sections 326, 328, and 329, the court may
award to a trustee, an examiner, a professional person employed under
section 327 or 1103--
(A) reasonable compensation for actual, necessary services
rendered by the trustee, examiner, professional person, or attorney and
by any paraprofessional person employed by any such person; and
(B) reimbursement for actual, necessary expenses
...
(4)(A) Except as provided in subparagraph (B), the court shall not
allow compensation for--
(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.
(B) In a Chapter 12 or Chapter 13 case in which the debtor is an
individual, the court may allow reasonable compensation to the debtor’s
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attorney for representing the interests of the debtor in connection
with the bankruptcy case based on a consideration of the benefit and
necessity of such services to the debtor and other factors set forth in this
section . . . . (emphasis added)
We agree with the district court that the plain reading of § 330 precludes an
award of attorney’s fees to a debtor’s attorney in a Chapter 7 or Chapter 11
proceeding. The Inglesby firm attempts to avoid the plain meaning of the statute by
suggesting that the statute contains a drafting error or is ambiguous since the
amendment specifically authorizes the bankruptcy court to award reasonable
compensation to the debtor’s attorney in a Chapter 12 or Chapter 13 in cases where
the debtor is an individual. We must presume, however, that Congress intended what
it said when it revised § 330 to delete any provision for the award of compensation to
a debtor’s attorney in either a Chapter 7 or a Chapter 11 case.
It is well-settled that courts are required to apply the plain meaning canon of
statutory construction in interpretation of the Bankruptcy Code. “[A]s long as the
statutory scheme is coherent and consistent, there generally is no need for a court to
inquire beyond the plain language of the statute.” United States v. Ron Pair
Enterprises, Inc., 489 U.S. 235, 240 (1989). We are thus obligated in this instance to
apply the plain meaning of § 330 precluding an award of attorney’s fees to a debtor’s
attorney in a Chapter 7 or Chapter 11 case. The statute is clear textually on its face
and the plain meaning of the statute is conclusive.
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Both the Fifth and the Ninth Circuits have considered this identical issue and
have reached contrary results. In In re Pro-Snax Distributors Inc., 157 F.3d 414, 425
(5th Cir. 1998), the Fifth Circuit rejected the argument that a literal application of §
330(a) would produce a result demonstrably at odds with the intentions of its drafters,
stating:
Although the legislative history and, indeed, a brief syntactical
evaluation of the clause at issue suggest that Congress inadvertently
neglected to include attorneys, our cannons of construction do not
require–nay, do not permit–us to consider these exogenous sources
when the statute is clear textually on its face.
Pro Snax, 157 F.3d at 425. On the other hand, the Ninth Circuit in In re Century
Cleaning Services, Inc., 9th Cir. 1999, __ F.3d __ (No. 98-35027, November 18,
1999), found the statutory language of § 330(a) “substantially ambiguous”,
concluding that “Congress made a drafting error of some kind”. Id. The divided
Ninth Circuit panel attributes the deletion of attorneys from the first list of
compensable persons as “an unintended slip of the pen and not from a deliberate
change.” Id. We do not believe that it is within our province to make such an
assumption in this case. We agree with the In re Century dissent by Judge Thomas
who reasoned, as we do, that the unambiguous statutory language “should end the
discussion, as it did for the Fifth Circuit.” Id. Where the statute’s language is plain,
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as here, our sole function is to enforce it according to its terms. See Ron Pair, 489
U.S. at 241.
The Inglesby firm suggests that, at the very least, it is entitled to compensation
for “professional services” rendered while representing the debtor prior to the
appointment of the Chapter 11 trustee. We will not reach the merits of this issue
because it was not considered by the district court. See Ochran v. U.S., 117 F.3d 495,
502 (11th Cir. 1997). Moreover, this case does not present compelling circumstances
which warrant departure from this general rule. See id. at 502-503.
CONCLUSION
We conclude that the plain language of 11 U.S.C. § 330 precludes an award of
a attorney’s fees to the debtor’s attorney from the Chapter 7 bankruptcy estate.
AFFIRMED.
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