The Bankruptcy Law Firm, P.C. v. Alfred Siegel

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FILED
FOR THE NINTH CIRCUIT
JUN 26 2017
In re: MORRY WAKSBERG M.D., INC., No. 16-60004 MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
Debtor. B.A.P. No. CC-15-1109-TaKuKi
_________________________
THE BANKRUPTCY LAW FIRM, P.C., MEMORANDUM*
Appellant,
v.
ALFRED H. SIEGEL, Chapter 7 Trustee,
Appellee.
_________________________
DANIEL A. LEV; DANIEL JOSEPH
MCCARTHY; UST - UNITED STATES
TRUSTEE, LOS ANGELES.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Taylor, Kurtz, and Kirscher, Bankruptcy Judges, Presiding
Argued and Submitted June 6, 2017
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: GRABER, SACK,** and MURGUIA, Circuit Judges.
The Bankruptcy Law Firm, PC (“BLF”), appeals an order issued by the
bankruptcy court and affirmed by the Bankruptcy Appellate Panel partially
granting BLF’s request for administrative expenses under 11 U.S.C.
§ 503(b)(1)(A). We affirm in part, reverse in part, and remand with instructions to
modify the administrative-expenses award.
1. The bankruptcy court correctly determined that BLF was not entitled to
“expenses” – in this context, legal fees – related to its defense of its fee application.
Because § 503(b)(1)(A)(i) neither contains fee-shifting language nor otherwise
abrogates the so-called American Rule that each party to litigation ordinarily bears
its own legal expenses, BLF was not entitled to legal fees related to the defense of
its fee application under that provision. See Baker Botts L.L.P. v. ASARCO LLC,
135 S. Ct. 2158, 2166 (2015).
2. The bankruptcy court erred, however, by denying BLF’s request for
expenses related to the preparation – as opposed to the defense – of its fee
application. Section 503(b)(1)(A)(i) permits an award of administrative expenses
for “services rendered.” 11 U.S.C. § 503(b)(1)(A)(i). The “preparation of a fee
** The Honorable Robert D. Sack, United States Circuit Judge for the
Court of Appeals for the Second Circuit, sitting by designation.
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application is best understood as a ‘servic[e] rendered.’” Baker Botts, 135 S. Ct. at
2167. We therefore reverse that part of the bankruptcy court’s fee award declining
BLF’s request for expenses related to the preparation of its fee application.
Although it denied this request, the bankruptcy court nonetheless determined that
those fees and costs amounted to $4,000.00. See Memorandum Decision Granting
in Part Request for Allowance and Payment of Administrative Claim by the
Bankruptcy Law Firm at 21 n.11, In re Morry Waksberg MD Inc., No. 2:06-bk-
16101-BB (C.D. Cal. Bankr. Apr. 1, 2015), ECF No. 755 (hereinafter “Fee
Award”). That amount was reasonable. We therefore remand this case to the
bankruptcy court with instructions to modify its order as to the Fee Award
accordingly.
3. The bankruptcy court’s assessment of expenses otherwise owed to BLF
was not an abuse of discretion. See Burlington N. R.R. Co. v. Dant & Russell, Inc.
(In re Dant & Russell, Inc.), 853 F.2d 700, 707 (9th Cir. 1988) (discussing the
standard of review). “We will not disturb a bankruptcy court’s award of attorney’s
fees absent an abuse of discretion or an erroneous application of the law.” Law
Offices of David A. Boone v. Derham-Burk (In re Eliapo), 468 F.3d 592, 596 (9th
Cir. 2006) (internal quotation marks omitted). “A compensation award based on a
reasonable hourly rate multiplied by the number of hours actually and reasonably
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expended is presumptively a reasonable fee.” Burgess v. Klenske (In re Manoa
Fin. Co.), 853 F.2d 687, 691 (9th Cir. 1988). The bankruptcy court explained its
decision to downwardly adjust BLF’s requested fees with reference to, inter alia,
the work actually and reasonably performed, the value of that work to the estate,
the performance of BLF’s attorneys, and the reasonable hourly rates for such work
with reference to several factors including prevailing community rates. See Fee
Award at 12-20. The Fee Award was not an abuse of discretion.
4. BLF argues that it is entitled to a fee award under Reading Co. v. Brown,
391 U.S. 471 (1968). Because we agree with the bankruptcy court’s order partially
granting BLF’s fee request under 11 U.S.C. § 503(b)(1)(A), we need not, and
therefore do not, reach this issue.
5. Finally, the Trustee argues that BLF was not entitled to fees under 11
U.S.C. § 503(b)(1)(A) because it acted in its own self-interest. The Trustee did not
cross-appeal the order partially granting BLF’s request for administrative
expenses. See Engleson v. Burlington N. R.R. Co., 972 F.2d 1038, 1041 (9th Cir.
1992) (“Generally, a cross-appeal is required to support modification of the
judgment . . . .” (internal quotation marks omitted)). Accordingly, we conclude
that this argument was waived and therefore do not reach the issue on appeal.
AFFIRMED IN PART; REVERSED AND REMANDED IN PART.
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The parties shall bear their own costs on appeal.
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