half million dollars on dischargeable judgment of a federal court against my client edward mendell normally this would be a question of fact entitle to a very deferential standard normally i think an appeal would even be out of them were like this which is why it's my job to demonstrate the multiple errors of law that the bankruptcy court committed in the process and of course as your owners know from my brief there is a matter of first impression under the bankruptcy code that is of importance which the court may or may not need to get im allow me to make a few general points one i've already mentioned that i'm not arguing errors of fact i'm arguing errors of law and i will point out to you why the second point is that it was at all times dared to claim his burden of proof and persuasion both under texas law of receivership under the bankruptcy code and third the district court was a little bit unhappy with me because i could not quantify in my briefing what percentage of the four hundred ninety thousand dollars  fees and expenses i contested on various bases and i asked this court not to repeat that because the bankruptcy court looked at the fees in cambra the bankruptcy court review defeat statements in camera i appeared at the hearing from the bankruptcy judge some six or maybe seven years ago now this case has been up and down to the fifth circuit before and the day before i appeared on what i thought was one hundred fifty thousand dollar trial they amended their claims to almost half a million dollars that happens in bankruptcy that's fine we proceeded with trial and did not contest that but i did contest the bankruptcy courts review of the key evidence in this case in camera the bankruptcy court might have been entitled to do so but as a result i well then do you do you agree that the documents from the district court appeal are part of the the record on appeal of say we're kind of the law is set off in some weird place and it was very difficult to access the record because in her mind and i understand why she's an attorney in her mind she doesn't know when she's acting as a lawyer which is that as a receiver do you appeal that the bankruptcy court didn't let you review the unredacted time sheets or do you not appeal that i well your honor i'm not sure how to answer that question i objected at the trial and i preserve my my my my i guess my objection point but i don't think it's a specific issue that i mentioned in my notice of appeal it goes it goes it ultimately doesn't matter your honor whether it was five dollars or five hours spent on this matter fifteen hours spent on this matter if the matter is not compensable because it is outside the scope of the receiver support of that if i ask a question if we decide that the second receivable or no one is a substitute or not and not supplementary to the first order then it would be clearly within the second order if it is a substitute forty from a court to hire an attorney and i have briefed at some length so so jolly whether it's a substitute or an amendment so no permission was sought let me make a move to the second and and permission was required in either of you i believe so your honor in fact that is what happened when this orenstein retained the services of m s m so so if if under state practice she did you to forty to retain counsel didn't then why did she do that why did the state court judge affirmatively approve dislike not allowed the series back to the state court so it would have been the state court ended would have had any kind of ongoing jurisdiction but let me move to a second more fundamental point judge jolly which is that both of these claimants were acting in t capacities one they were acting as creditors against my client because there were owed pre partition else to hadn't paid no problem they're allowed to act in their own interests they're not allowed to bill my client for it but the second capacity they were acting in was in fact representing white nile but they were representing white nile in the bankruptcy case in your honour's no where were they off arised to represent white nile in the bankruptcy case the bankruptcy case was nothing but a merit marrow of the state court action  no your honor because the bankruptcy case was follows a chapter eleven of the time it was a large bankruptcy case with many moving pieces and then either fix what it or removal of the white nile adversary to the bankruptcy quickly what was the difference from your point of view or your client point of view so so they were appointed to represent the interests of white nolen litigation fine no problem they took it upon themselves to do and also represent white now as a creditor into bankruptcy case that is done that is dealt qualitative difference judge shelley the day took it upon themselves to no charge and the fees for the orange thing which we start your honor we start with with texas law which has two general kinds of receivers as a general receiver a general receiver is one the supplants of the pre receivership management and basically becomes the management can the supreme court of texas law she has limited it for a forty two what is in the receiver supporter here the receiver supporter both of them give her to forty to do funny things to take over the books and records well that doesn't apply then to two to represent white nile in quote unquote this litigation i would argue the death does not extend to a subsequent bankruptcy filed the same medication mentioned point that i'm trying to get it wasn't oh well you haven't told me at different well because my client called the chapter eleven bankruptcy ca order of the state colin the litigation in the state court not in the bankruptcy matter which has a lot more white now we just had an opinion recently about white nile and it's it's liabilities beason the credit z be your client i try to not only that but it was not contemplated at this time that there would be a future bankruptcy so again i suggest that this order is limited texas law is clear that the receiver doesn't have some ability to generally protect or resort to generally act in the interests so isn't happening implicit powers and i give you proof positive dollars because what we saw in this is clear in the record is that after debris mynd the multi year remained back to the state court the receiver did go and seek a forty from the state district court judge and she said give me a forty please to sue the former lawyers introducers alike now in the state court refused he said no so why would she need a forty to go sue other potential targets of what now and why would he say no would like a ruling the final six b excludes printers and secure creditors to cynthy's because i'm a bankruptcy expert and i see that issue every day knowing the debt is a difficult issue and that the court prefers to decide issues that are supposed that are easier to  cide i would prefer that the court reverse points x y and z and remain to the bankruptcy court with instructions that the bankruptcy court shall not allow fees incurred for these lawyers that were never authorized ok and reversed points x y and z i don't know what  then representing white nile in the bankruptcy case itself as a creditor hiring lawyers including herself odd court of forty failing to segregate time between acting as a receiver and acting as a lawyer and then the fees incurred representing their own interests as creditors of my client as opposed to represent interests of what now those are the four fundamental points and there is no dispute the fact that some large number of these fees were incurred for each of those four i don't know what number but miss or easily any of those categories are arguable yes of course the arguable i believe that the question of whether they're entitled to see is unsecured creditors is arguable that again that's that's the important one in this case and i noted some cases of help otherwise and it meaningful questions to your ultimate determination i think you've hit it right on the head each of you judge jolly judge al rod the question the drove to the core of the dispute what's really before you what's really before you was a  disguised respectfully collateral attack upon the terminations multiple times of the court with primary jurisdiction that would be the honorable judge eric moyet in the fourteenth district court in dallas texas he determined in may of two thousand and nine the mr orenstein would be appointed to receiver and he gave her broad and specific powers he said her fee at a discount to the market discount to or own rate and is accepted by the app he divided it which imposed a reasonable on this obligation and fifty two point seven m forty seven point five which were there stipulated percentages and he effectively said go forth and do this work which was to control and manage white naleo which should not matter geographically where it takes place why did orenstein not segregate or time when she was representing your interest as a creditor in the bankruptcy case white niall's interest as a creditor as its receiver and acting as an attorney in the bankruptcy case she's going three hats there so why didn't she segregate or time we're not acting respectfully judge as a trustee or as a professional appointed in the bankruptcy estate we are pointed the state law you would have had to say i used to be a state district judge and if she was going to try to get those fees in state court she would have to tell what parts of the job they were done for each one of those there rickets you have to segregate your fees and state court i honestly believe they were the same discrete services with one narrow exception for all white nile as they were for her no matter what had she was wearing on which side of her brain on having any given day the actual preparation of her own physical claim would be the only service that was discreetly dissimilar from all the other general services seeking money for that to the court applied the reasonable discount that is available to it both under the receivership standard and under the arthur andersen factors when it discounted it doesn't have to tell us all the reasons or even any of the reasons that the district court did say that it wa theories that she was claiming or relating to the personal claims that she was making i think it did your honor and i think that's what i was addressing with judge that there is a discount that's available under the arthur andersen factors and  that she specifically said that she didn't go to the very next level of drill down and say i did it for that singular task of putting hand to paper to do the claim but it has to encompass the things that she did for herself which was to perfect the two claims number twenty seven and twenty eight which was a de minimus task in the totality of what's now eight years of services how does the word of four hundred ninety seven thousand that was what amounts are still do yes your honor if any of it and i know they're not actually collected at all that's right was gutting if any of this is actually collected and and i would consider that a pipe dream given the thin nominally successful efforts mr man dela has exposed us all to to separate us by time distance and travel from any assets but if we ever got there it would go into a pool that would be reported to judge moyet that would be available for all creditors doesn't come to meet doesn't come to miss ornstein it is reported in the counted for the judge more yank who will then create a scale in the end parsing of payment of the creditors i assume he would take care of the professionals that he appointed to go collect it but i wouldn't presume to judge more you wouldn't apply equity into the extent there are other creditors would take that and apply it appropriately if simming arguing that we were to conclude that he should have been segregated what texas authority says that you can go back and segregate after the fact which is what the briefing says what we could do that well there was a stipulation on the record that allowed us to provide a couple of exhibits that were accepted into evidence and that the court considered there were summary exhibits the broke the claims down as to pre imposed petition and i want to go back to that because respectfully mr rubina both in his briefing and before you made a missta t the misstatement was that there was a large amount of the more than the percentage that would be a pliable pre partition or post petition to mr mandela that is not accurate mr mandela was given full credit for every payment that he may prepared titian and he made zero to the attorney's fees even though he now stipulates they were properly earned under the state order pre partition of serums i'm sorry i act preset that's helpful information it's not the answer to my question what texas authority says that you can go back after the fact in segregate if you need to rather than you just because you failed secret you don't get anything which is there's a lot more authority that says that is your hon remained if we weren't a real man yes i mean think it's not it's commingled then what texas authority says you can try to segregate after the fact and recreate which was sort of done in those examples that would have to be done across the board respectfully your honor i think the materials that would allow for it are already before the court for purposes of a remained where because what was stipulated without objection and which created  presumption the presumption that applies was created by the stipulated admission of the multitude of exhibits that would have been satisfactory under the receiver substantiate satisfactory ends of the political receivership six elements and would have been factors and the different discrete categories her detailed invoices as well as mine we don't have those but your honor the trial court does have them and if you were to remain and if you did determine that he was entitled to have some segregation applied that is the segregations already in those invoices because we know that if you didn't segregate we have to take your word for it that you segregated because we don't have the documents that show you did that's i mean i'm not saying i wouldn't want to take your word for your able counsel i'm not the thing for george of there but that's not in the record and i don't understand why that's not in the record your honor i can't account for the time period between two thousand and eleven and today we had katrina that intervened we had a change in computer systems at the courthouses that intervened and it's the scanning and the conversion of hard copy to digital that has been the issue both for mr z not in the six boxes which you're talking about is not in we could get the sealed envelope from the distort where we allowed a look at that yes your honor ok and opposing counsel shaking his head yes as well so the let the record reflect we can look at that if we weren't able to get it and the honorable bankruptcy judge did look at which is how she made  issue that's of interest i cannot your honor on this orenstein stime was entirely devoted to the addressing of that issue in the new case law that we believe controls that distinction in the ability for this court eight to award the fees as they've been awarded in the jurisdiction of both under the bankruptcy code and all other authority to do so and i would defer to her i see my time is winding up are there any questions that i haven't resolved on happy to do so thank you your hon for this matter i saw the record was not complete from every think that both mr huckabee now and i had designated on the record not peel from the district court i proceeded to contact the clerk here and say the records not complete we need to make sure it gets taken care of i was sent to the district clerk's record to clerk to make sure that was done they sent me to the bankruptcy clerk because that's where the record invoices because i kept track of my time at the tenth of it out throughout the time period and in i delivered that to the bankruptcy court personally because i was meeting a lawyer up there anyway for lunch and i went and took the fla drive up there to make sure that they had the record so the when we got to this point we wouldn't have that issue and i was surprised that until i think it was a few days before we came here i saw in the southern district of texas on february eighteenth twenty eighteen and that's why we didn't brief it because we didn't have it at the time your honor is with anything in the bankruptcy code you started with the texas section five two in the texas a text of section five zero six five zero two your honor is the primary bankruptcy code section that we look at to determine if they claim is going to be allowed  there are nine exceptions to the rule that says you shall allow a claim unless the following exceptions apply one of those exceptions your honor is an maturity interest which the united states supreme court addressed in the timbers case we don't have that here we don't have any exception under section five zero two that applies in this case therefore the starting position from the text itself  determination that pre partition agreed to let me rephrase that they've agreement that exists prepared to action that allows for the payment of attorneys fees  isn't forcible post petition the claims are still preposition claims and they're generally unsecured plame but travelers didn't decide that because that issue had not been brought up in the underlying chords two travelers insurance the post petition incurred attorneys fees that they incurred in fighting with p g any in the bankruptcy court in the same objection that you're hearing here today from  mccarthy now regarding that you can't have post petition attorney's fees incurred or charged in a bankruptcy case the supreme court said that just because as is p g and e objected these are purely bankruptcy issues the supreme court said it doesn't matter that they're purely bankruptcy issues you have a preposition agreement that says that you're entitled to have your attorney's fees paid we start with  proposition that creditors rights as well as debtors rights the ridglea start from state law and that's a contract and you have contractual right to those attorneys fees then that occurs and continues to apply post they are an liquidate it claims if you were to lose this argument we would need to remain and so that the court could deduct attorney's fees for posts petition work on behalf of  credit secured by a lien on property the purpose edition the air the first phrase is that you have been allowed to claim first that's how you look at section five zero two five all six helps determine the priority of claims because if you haven't allowed claim it's a cured by collateral then nobody can come in in front of you on your collateral up to the belly of your collateral that is also the exception code itself that determines that those rights should not be enforced otherwise the presumption is that they are enforceable yanar that is all i have and i will tell the court that the but pioneer carriers case which we added in our do not disappear just because somebody tells you we need to wait for that we don't need to we're here first right yes your honor i'm not saying to wait for that i'm to say that the issue is right for decision by this court  primarily a bankruptcy attorney but i did appear before going to euston and i do a practice in texas state court and i can tell you absolutely that a stick or judge would say the segregated your times i would suggest to you that there is no need to review the six boxes there's no need to review and even though envelopes and the answer including the fees are not segregated in that manner so your honor doesn't he discovered a record i would have done that for you if there was an from there that's fact one fact two opposing counsel phrased the state court receivership order i twenty one out of twenty three proceedings had into bankruptcy case twenty one of twenty three yet there was only a five percent adduction in fees my client as the prevailing party had to pay me which he hasn't by the way because he doesn't have a penny anyhow to pay his opponents fees that is unheard of it's unheard of that the prevailing party in twenty one of twenty three proceedings should pay and by the way we're not talking about very different proceedings we're talking about a motion to live state denied motion to reconsider the not second mo to reconsider the night third motion to have state finally granted some years later on down the road that my client has the pleasure of being forever now indebted to the non dischargeable judgment thirty eight point zero one of the texel procedures is clear if you want to czerny's fees you must prevail that is the sole basis on which they received fees for their post petition work that is the sole legal basis thirty eight point zero one to bankruptcy court said so you get they must prevail and in twenty one of twenty three proceedings they did not prevail and forth another fact or does that mean ultimate result good game did they not mean it means your honor that as a predicate matter so now i'm talking they got but they shouldn't be getting for the amount of time spent preparing for these proceedings that are unsuccessful and saying yes i'm saying two things and saying i'm saying under under any it's under any metric that the court look at one of the factors is the merits and the success of the fees incurred here there was a five percent reduction i would suggest a debt is on its face flat wrong but but i know i'm not going to win an argument on evidence so i'm saying that for those fees were there protecting their own interests as creditors the only legal basis to shift the award is section thirty eight point zero one which is what the bankruptcy court said and the bankruptcy court entered as a matter of law because the bankruptcy court said she said herself you don't have to prevail in  if you were successful in that argument so that would have to be remanded for those to be taken out is that is that the full impact of if you were to prevail in this five a six argument if i was to prevail if i was six argument then neither white nile