Matter of El Paso Refinery, LP

United States Court of Appeals,
Fifth Circuit.
No. 94-50265
Summary Calendar.
In the Matter of EL PASO REFINERY, LP, Debtor.
ANDREWS & KURTH L.L.P., Appellant,
v.
WRIGHT KILLEN & CO., INC., Appellee.
Nov. 9, 1994.
Appeal from the United States District Court for the Western
District of Texas.
Before DUHÉ, WIENER and STEWART, Circuit Judges.
PER CURIAM:
This case involves the issue of whether a bankruptcy debtor's
former counsel has standing under Fed.R.Civ.P. 60(b) to have a
bankruptcy court's published memorandum opinion withdrawn based
upon its assertion that the court's findings of fact and other
comments therein are erroneous and injurious to the firm's
reputation. Because we conclude that Debtor's former law firm does
not have standing to file such a motion, we affirm the denial of
counsel's motion.
BACKGROUND
On May 26, 1993, the United States Bankruptcy Court for the
Western District of Texas entered a memorandum opinion granting
Debtor's application to employ Wright Killen as an industry
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consultant nunc pro tunc.1 This opinion was published at In re El
Paso Refinery, L.P., 155 B.R. 418 (Bankr.W.D.Tex.1993). Debtor's
former counsel, Andrews & Kurth ("A & K") law firm, read the
opinion in the advance sheets and took exception to some of the
language in it, claiming that it is erroneous and wrongly casts the
firm in an unfavorable light.
The gist of the bankruptcy judge's opinion was that he granted
Debtor's nunc pro tunc application, over the Internal Revenue
Service's objection, based upon his conclusion that Wright Killen
was not at fault for the delay in filing its employment
application. Instead, the bankruptcy court found that it was A &
K's fault that the application had not been filed sooner.
Accordingly, the judge decided not to penalize Wright Killen for
what it viewed as A & K's error. A & K did not participate in the
hearing on the application, as it was no longer serving as Debtor's
counsel.
Months later, after reading the opinion in the advance sheets,
A & K filed a Rule 60(b) motion to revoke the order approving
Wright Killen's employment because of its quarrel with the
bankruptcy court's findings and comments about A & K, which it
claims are wrongfully injurious to the firm's reputation.
1
Wright Killen had not obtained prior court authorization of
its employment, although it had already performed services for
Debtor. Thus, its employment application was sought nunc pro
tunc, meaning "now for then." BLACK'S LAW DICTIONARY 964 (5th ed.
1979). Nunc pro tunc orders are allowed in bankruptcy
proceedings where the judge feels that circumstances require it,
as a result of a previous oversight or omission. In re
MortgageAmerica Corp., 831 F.2d 97 (5th Cir.1987).
2
In particular, A & K objects to the bankruptcy judge's finding
of fact that Wright Killen had provided copies of its employment
contract to A & K so that counsel could file an application seeking
authorization to employ Wright Killen. The firm asserts that this
finding is erroneous, that no employment contract ever was provided
to A & K by Wright Killen. A & K claims that the court's finding
was based upon untrue testimony given by Wright Killen at the nunc
pro tunc hearing.
The firm also objects to language in the opinion whereby the
court found that Wright Killen performed services for the Debtor
from approximately October 14, 1992 through the first week of
December 1992, "[i]n reliance on counsel's representations and
assurances that they would take care of filing the application to
employ." In re El Paso Refinery, L.P., supra, at 419. A & K
contends that even if the employment contract and other documents
needed to obtain court approval were delivered to A & K during the
first week of November 1992, as Wright Killen's representative
testified at the hearing, the court's statement that Wright Killen
relied on A & K's assurances beginning October 14th is clearly
erroneous. A & K claims that its attorneys did not even meet Mr.
Dudley, Wright Killen's representative, prior to October 23, 1992.
Moreover, A & K asserts that it told Wright Killen that it would
have to have a copy of the employment contract and a certificate of
disinterestedness, as required by the Bankruptcy Code, before it
could file the employment application.
The firm also quibbles with the bankruptcy court's finding of
3
fact that A & K was replaced on January 20, 1993 by Debtor's
current counsel, Kemp, Smith, Duncan & Hammond ("Kemp Smith"). A
& K acknowledges that this finding is technically accurate, because
January 20, 1993 is the date the order approving Kemp Smith was
entered. However, A & K contends that Kemp Smith was involved in
this case from the outset and had already taken over as Debtor's
primary bankruptcy attorney by early November 1992. A & K also
takes offense at other language in the opinion whereby the
bankruptcy court, in approving the nunc pro tunc employment
application, noted that:
The reason [the application] was never filed was due solely to
the failure of [A & K] to act as they represented they
would.... Wright Killen was not responsible for their
application not being filed. [A & K] was. It would be unjust
and improper to penalize Wright Killen for the failure of [A
& K] to perform their duties.
In re El Paso Refinery, L.P., supra, at 421.
The A & K firm asserts that these comments are erroneous and
severely injurious. It claims that up to now A & K has enjoyed a
reputation as an excellent and highly capable bankruptcy firm, but
now its reputation has been damaged as a result of the published
opinion criticizing it. A & K claims that the opinion could be
used in the future to prevent the firm from being hired in
bankruptcy cases, as court approval is usually required for a
firm's employment to represent a bankrupt.
The bankruptcy court denied A & K's Rule 60(b) motion to
revoke the employment order and published opinion, noting that A &
K is not an interested party, nor was it affected by the order in
question. The judge stated that the motion was "at best an attempt
4
to appeal and/or collaterally attack an order previously entered
which has no direct effect upon the movant." A & K appealed to the
district court for the Western District of Texas, which affirmed
the bankruptcy court's order denying the motion. This appeal
followed.
STANDARD OF REVIEW
We review a denial of a Rule 60(b) motion only for abuse of
discretion. Latham v. Wells Fargo Bank, 987 F.2d 1199 (5th
Cir.1993); First Nationwide Bank v. Summer House Joint Venture,
902 F.2d 1197 (5th Cir.1990); Aucoin v. K-Mart Apparel Fashion
Corp., 943 F.2d 6 (5th Cir.1991).
ANALYSIS
At issue is whether Debtor's former counsel, A & K, has
standing to file a Rule 60(b) motion. A & K contends that it does
have standing. It makes three separate arguments in support of its
view that it has standing to file a Rule 60(b) motion.
A & K contends that it qualifies as "a party's legal
representative," as that term is used in Fed.R.Civ.P. 60(b),
enabling it to file such a motion.2 A & K also claims that it is
2
Federal Rule of Civil Procedure 60(b) provides that "[o]n
motion and upon such terms as are just, the court may relieve a
party or a party's legal representative from a final judgment,
order, or proceeding (emphasis added)" in certain situations,
including inter alia: (1) mistake, inadvertence, surprise, or
excusable neglect; ... (3) fraud (whether heretofore denominated
intrinsic or extrinsic), misrepresentation, or other misconduct
of an adverse party; ... or (6) any other reason justifying
relief from the operation of the judgment (emphasis added).
Fed.R.Bankr.P. 9024 makes Fed.R.Civ.P. 60 applicable to
bankruptcy proceedings. Thus, a party or a party's legal
representative may file a Rule 60(b) motion in a bankruptcy
5
a "party in interest" under 11 U.S.C. § 1109(b) and has status to
intervene in the proceedings via a Rule 60(b) motion because it is
debtor's former counsel and therefore a creditor of the debtor's
estate.3 Moreover, A & K argues that it is entitled to standing
under principles of justice.
We are not persuaded by any of A & K's arguments that it has
standing to file a Rule 60(b) motion. This opinion will separately
address each of the three theories under which A & K claims to
derive standing.
1. "A party's legal representative"
A & K claims that it meets the definition of "a party's legal
representative" for purposes of Rule 60(b) because it served as
Debtor's counsel. We reject this argument. The phrase "a party's
legal representative" means one who stands in the place and stead
of another, such as an heir at law. Mobay Chemical Co. v. Hudson
Foam Plastics Corp., 277 F. Supp. 413 (S.D.N.Y.1967).
The term was intended to reach "only those individuals who
were in a position tantamount to that of a party or whose legal
rights were otherwise so intimately bound up with the parties that
their rights were directly affected by the final judgment." Kem
Mfg. Corp. v. Wilder, 817 F.2d 1517 (11th Cir.1987).4 The Kem
proceeding.
3
Section 1109(b) provides, in pertinent part, that "[a]
party in interest, including ... a creditor ... may raise and may
appear and be heard on any issue in a case under this chapter."
4
A & K contends that under Kem, an attorney for a party may
qualify as a legal representative under Rule 60(b); however, we
disagree. The court in Kem analyzed whether the movant had
6
definition of "legal representative" was cited with approval by
this Court in Harrell v. DCS Equipment Leasing Corp., 951 F.2d 1453(5th Cir.1992). Other courts have taken a very similar approach to
Kem in analyzing standing issues under Rule 60(b).5
We conclude that the phrase "legal representative" as used in
Rule 60(b) does not include counsel within the context of the
attorney-client relationship. We cannot say that A & K was in a
position "tantamount" to Debtor's, nor were its rights so
intimately bound up with Debtor's that A & K's rights were directly
affected by the judgment.
At least three courts, including our colleagues of the Tenth
Circuit and the District of Columbia Circuit, have specifically
held that an attorney does not qualify as a "legal representative"
standing by considering whether the final judgment therein
directly affected any property or other legal right of the
movant. Andrews & Kurth relies on language therein which
suggests that an attorney may qualify as representative of a
party. However, the movant in Kem was not an attorney;
therefore, the Court's comments are merely dicta.
5
See e.g., In re Ewing, 54 B.R. 952 (D.C.Co.1985) (real
estate broker did not have standing to file a motion to
reconsider denial of Debtor's motion to have broker appointed as
exclusive broker for sale of real property); Screven v. United
States, 207 F.2d 740, 741 (5th Cir.1953) (alleged realty owners
did not have standing to set aside judgment in original
condemnation proceeding because they were not parties to such
proceeding); United States v. West Willow Apartments, Inc., 245
F. Supp. 755, 757 (E.D.Mich.1965) (purchaser at a mortgage
foreclosure sale lacked standing under 60(b) to move to reopen
the foreclosure decree to seek removal of the period of
redemption). But cf. In re Casco Chemical Co., 335 F.2d 645, 651
(5th Cir.1964) (trustee in bankruptcy had standing to bring
action to set aside judgment in interpleader action ordering
distribution of funds allegedly owed to bankrupt.)
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of a party for purposes of Rule 60(b).6 Rule 60(b) on its face
makes no provision for a motion otherwise to be brought by a
party's counsel. In addition, A & K has produced no Fifth Circuit
authority on point indicating that the rule notwithstanding its
literal language should be read to include one in A & K's position.
Moreover, even if we were to conclude that an attorney-at-law
may in some circumstances have standing to file a Rule 60(b)
motion, it must not be overlooked that A & K was not Debtor's
counsel at the time of the filing of either the nunc pro tunc
application of the Debtor or the 60(b) motion of A & K, but was the
Debtor's former counsel. Even if the term "legal representative"
were construed to include a party's attorney-at-law, the term
certainly should not extend to a party's former counsel. In light
of these facts, we cannot say that the bankruptcy judge abused his
discretion in denying A & K's motion.
2. Status as a creditor
A & K also claims that it has standing as a creditor to
challenge the nunc pro tunc appointment of Wright Killen under 11
U.S.C. § 1109(b). We reject this contention as well, finding it to
be both specious and disingenuous. A & K does not really challenge
the appointment of Wright Killen per se; instead, it merely
6
Mobay Chemical Co. v. Hudson Foam Plastics Corp., supra;
Ratner v. Bakery and Confectionery Workers Intl. Union of
America, 394 F.2d 780 (D.C.Cir.1968) (attorneys did not have
standing to file 60(b) motion for supplementary fees and expenses
in litigation which had been settled and dismissed); Western
Steel Erection Co. v. United States, 424 F.2d 737, 739 (10th
Cir.1970) (attorney may not use Rule 60(b) as a vehicle to
resolve his private controversy with a party over his fee).
8
objects to the court's comments about A & K in the published
opinion. Thus, A & K's 60(b) motion did not really seek to assert
its rights as a creditor; instead, it sought to remedy the court's
characterization of A & K's performance in its role as Debtor's
prior counsel.7 Had A & K opposed the appointment of Wright Killen
because it was afraid its position as a creditor might be
compromised, i.e., that funds expended toward Wright Killen's
employment would jeopardize A & K's chance of being paid, it could
have done so; however, A & K did not oppose the appointment at the
hearing—only the IRS did. A & K merely quibbles with the reasons
enunciated by the bankruptcy judge in his approval of Wright
Killen's employment. In light of these facts, we reject as
meritless A & K's argument that it is entitled to file a Rule 60(b)
motion seeking revocation of the order by virtue of its status as
a creditor.
3. "Interests of justice"
We also reject A & K's argument that the interests of justice
require that their Rule 60(b) motion be granted. The bankruptcy
judge was in an optimal position to determine whether the arguments
forwarded by A & K in its motion warranted relief under Rule 60(b).
7
See, e.g., Ratner, supra, in which former attorneys sought
to reopen dismissed litigation in order to obtain additional fees
and expenses. The Court noted that, although former counsel
contended they should be allowed to file a 60(b) motion because
"notice of the settlement and dismissal was not given to them,
they [did] not assert entitlement to notice as a party or as
counsel for any party to the case, but only because of their
interest in additional fees and expenses (emphasis added)."
Ibid., at 782. Similarly, A & K is not seeking to have the
opinion withdrawn in behalf of the Debtor, but only because of
its own interest in its reputation.
9
We cannot say it was an abuse of discretion for the court to deny
the motion, or that the interests of justice require that the
district court be reversed. To the contrary, as a matter of
policy, it would not be in the interest of justice or judicial
economy for federal courts to have to entertain motions from every
individual who quarrels with the wording of an opinion or claims
offense at some language contained therein.
The bankruptcy court's order and opinion had no real operative
effect upon A & K in this case. Although A & K clearly was blamed
for the delay in filing the employment application, the firm was
not fined or forced to pay Wright Killen's fees as part of the
court's order. It was not directly penalized at all by the judge's
ruling. In fact, A & K admittedly did not even know about the
opinion until months after it was issued. Whether the judge's
characterization of A & K's performance regarding the employment
application in this case might have some negative effect on the
firm in the future is speculative at best. We are not persuaded
that this is a situation in which the interests of justice require
that the opinion be withdrawn. Accordingly, A & K's "interests of
justice" argument fails as well.
CONCLUSION
Finding no abuse of discretion, we AFFIRM the denial of A &
K's Rule 60(b) motion.
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