Sylvester v. Chaffe McCall ( 2023 )

Case: 23-30003 Document: 00516887966 Page: 1 Date Filed: 09/08/2023
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
____________ FILED
September 8, 2023
No. 23-30003 Lyle W. Cayce
____________ Clerk
In the Matter of Sharon Sylvester,
Debtor,
Sharon Sylvester,
Appellant,
versus
Chaffe McCall, L.L.P.,
Appellee.
______________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:22-CV-2065
______________________________
Before Smith, Southwick, and Higginson, Circuit Judges.
Stephen A. Higginson, Circuit Judge:*
Sharon Sylvester filed for bankruptcy. At the conclusion of her Chap-
ter 7 proceedings, the bankruptcy court approved a fee application submitted
by the law firm that assisted the Chapter 7 trustee. Sylvester appealed the
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*
This opinion is not designated for publication. See 5th Cir. R. 47.5.
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No. 23-30003
award. Our court held that the bankruptcy court applied the incorrect legal
standard, vacated the award of attorneys’ fees, and remanded the case for
further proceedings consistent with that opinion. In re Sylvester, 23 F.4th 543(5th Cir. 2022). On remand, the bankruptcy court granted the law firm’s fee
application in part, and the district court affirmed. Because the bankruptcy
court did not abuse its discretion, we AFFIRM.
I.
As explained more fully in our court’s previous opinion,1 Sharon Syl-
vester filed for Chapter 13 bankruptcy in 2018. The bankruptcy converted her
case into a Chapter 7 proceeding in 2019 and appointed Barbara Rivera-Ful-
ton as the trustee. The bankruptcy court granted Rivera-Fulton’s application
to employ Chaffe McCall as general counsel to assist with reviewing and liq-
uidating Sylvester’s real property. The trustee paid all of Sylvester’s debts,
with some remaining funds expected to be distributed to Sylvester at the con-
clusion of the case.
In 2020, Chaffe submitted a fee application seeking $16,185 in attor-
neys’ fees. Sylvester opposed, arguing that most of the services performed by
Chaffe were duties statutorily assigned to the trustee that did not require le-
gal expertise. The bankruptcy court granted the fee application in full, finding
that the demarcation between what tasks should solely be performed by the
trustee and those that could be delegated to counsel were “not black and
white.” Because of this difficulty, the bankruptcy court granted Chaffe “lee-
way” and assumed that the work performed by Chaffe required legal exper-
tise in light of the positive outcome of the bankruptcy proceeding. Sylvester
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1
In re Sylvester, 23 F.4th 543 (5th Cir. 2022).
2
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appealed to the district court, which affirmed. Sylvester then appealed to our
court.
Our court addressed the appropriate legal standard for the award of
attorneys’ fees under § 330(a) of the Bankruptcy Code. In re Sylvester, 23
F.4th 543 (5th Cir. 2022). Section 330(a) allows courts to award “reasonable
compensation for actual, necessary services rendered” by professional per-
sons, such as attorneys, employed under § 327 of the Code; however, §
330(a) does not define “necessary.” Interpreting interrelated provisions of
the Bankruptcy Code, our court held that “a court may compensate an attor-
ney under § 330(a) only for services requiring legal expertise that a trustee
would not generally be expected to perform without an attorney’s assis-
tance.” Id. at 548–49. Our court also emphasized that the attorney requesting
compensation under § 330(a) bears the burden of justifying the services ren-
dered. Id. at 549–50.
Our court then determined that the bankruptcy court erred in two
ways when it granted Chaffe’s application for fees in full. Id. at 549. First, the
bankruptcy court failed to identify and separate Chaffe’s non-compensable
services because of the stated difficulty in delineating between legal and non-
legal services and in light of the successful bankruptcy result. Id. Second, the
bankruptcy court ignored that the attorney requesting compensation bears
the burden of justifying the services rendered when it assumed that the tasks
performed by Chaffe required legal expertise. Id. at 549–50. Our court then
vacated the fee award and remanded the case for further proceedings con-
sistent with that opinion. Id. at 550.
II.
We apply the same standard of review as the district court in reviewing
the bankruptcy court’s decision. In re Woerner, 783 F.3d 266, 270 (5th Cir.
2015) (en banc). We review the bankruptcy court’s award of attorneys’ fees
3
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No. 23-30003
for abuse of discretion. Id. “An abuse of discretion occurs where the bank-
ruptcy court (1) applies an improper legal standard, reviewed de novo, or fol-
lows improper procedures in calculating the fee award, or (2) rests its deci-
sion on findings of fact that are clearly erroneous.” Id. at 270–71 (quotation
omitted). “A bankruptcy court is entitled to substantial deference in its de-
termination as to whether a particular service required attorney expertise.”
In re Sylvester, 23 F.4th at 549. We will only overturn the factual findings of
the bankruptcy court if “we are left with a ‘firm and definite conviction’ that
the bankruptcy court committed a mistake.” In re Bradley, 960 F.2d 502, 507
(5th Cir. 1992) (quoting in part United States v. U.S. Gypsum Co., 333 U.S.
364, 395 (1948)).
III.
On June 21, 2022, the bankruptcy court issued a new memorandum
opinion and order, granting Chaffe’s fee application in large part. Chaffe
sought $16,185 in attorneys’ fees and $338 in associated costs. After detailing
the factual and procedural background of the case, the bankruptcy court re-
cites the proper legal standard for reviewing a request for attorneys’ fees un-
der § 330(a) as set forth by our court in our 2022 decision. The bankruptcy
court found that three of Chaffe’s time entries, totaling $605, “fall into the
broad categories identified as §704(a) trustee duties and could have been per-
formed by the Trustee herself without legal assistance,”2 but that the remain-
der of the entries are “reasonable and necessary and rendered toward the
completion of the case.”
In its new opinion, the bankruptcy court does not address specific time
entries beyond the three it identifies as not compensable, but writes that
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2
As required by our court’s mandate, see In re Sylvester, 23 F.4th at 549, the
bankruptcy court identified and separated out Chaffe’s non-compensable services.
4
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No. 23-30003
Chaffe’s attempt to craft a deal that would pay off all the claims of the estate
and allow the primary real property at issue to stay in the debtor’s family took
skill and required Chaffe to handle “legal matters including analyzing and
resolving tax, insurance, and title issues on behalf of the Trustee.”
While the bankruptcy court should have provided more detail sup-
porting its conclusion that the majority of the time claimed by Chaffe McCall
was “necessary” under § 330(a), we are not left with a “firm and definite
conviction” that its factual finding is incorrect. See In re Bradley, 960 F.2d at
507 (citation omitted).
AFFIRMED.
5