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Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 

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UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT MAR2 4 1992 

ROBERT L. HOECKEE 

In Re: CFS NORTHWEST MINERALS, LTD., ) 

) 

Debtor, ) 

) 

V • ) 

) 

BRENT B. BIRKIN; CLAYTON CHING; DON L. ) 

CHRISTENSEN; STUART E. LANGDOC; RALPH ) 

J. LITTON; RODOLFO W. MORTENSEN; ) 

RICHARD E. NELSON; MERRILL C. OAKS; ) 

KYOO SANG RO; WALTER C. ROBERTS; ) 

ANDREW J. WELCH; ALAND. SACHEY; H. ) 

LINDSAY ASHTON; BARNEY NEWELL; ROBERT ) 

W. MILEY; KIN C. WONG; REID CARLSON; ) 

ROD ROMBOY; JOHN RUSH, ) 

) 

Appellants, ) 

) 

V • ) 

) 

ANDRES DIAZ; JEFFREY L. SHIELDS; ) 

RUSSELL C. KEARL, ) 

) 

Appellees. ) 

ORDER AND JUDGMENT* 

ClerY. · 

No. 90-4196 

(D.C. No. 90-CV-470) 

(Dist. of Utah) 

Before SEYMOUR and BARRETT, Circuit Judges, and BROWN, District 

Judge.* 

* The Honorable Wesley E. Brown, Senior Judge, United States 

District Court for the District of Kansas, sitting by designation. 

Birken Investors (Birken) appeal from an order of the· 

district court affirming two orders of the bankruptcy court 

* This Order and Judgment has no precedential value and shall not 

be cited, or used by any court within the Tenth Circuit, except 

for purposes of establishing the doctrines of the law of the case, 

res judicata, or collateral estoppel. 10th Cir. R. 36.3. 

Appellate Case: 90-4196 Document: 010110239042 Date Filed: 03/24/1992 Page: 1 
approving the appointment of special counsel and granting payment 

of attorney fees. The relevant facts may be briefly swnmarized. 

On December 12, 1988, Zions First National Bank (Zions), as 

Indenture Trustee, filed a motion for the appointment of a trustee 

in the bankruptcy case of CFS Northwest Minerals, Ltd. (Debtor). 

Bruce Wisan was appointed trustee on March 28, 1989. Thereafter, 

Kimball Mosier was appointed as Wisan's general counsel pursuant 

to 11 u.s.c. S 327(a). 1 Wisan subsequently filed an application 

pursuant to 11 U. S.C. 327(e) 2 for the employment of the law firm 

of Callister, Duncan & Nebeker (CD&N) as his special counsel . 

1 

Wisan's application asserted in part: 

6. The professional services CD&N has rendered and 

shall render on behalf of the Trustee includes any and 

all litigation including but not limited to actions 

against limited partners, acting agents and general 

partners of the Debtor and the lessor of certain 

property .... 

7. The Trustee does not have sufficient knowledge 

or expertise to represent himself in litigation ... . 

8 . It is in the best interest of the estate that 

CD&N be appointed as special legal counsel including, 

§ 327(a) provides: 

Except as otherwise provided in this section, the trustee, 

with the court's approval, may employ one or more attorneys, 

accountants, appraisers, auctioneers, or other professional 

persons, that do not hold or represent an interest adverse to the 

estate, and that are disinterested persons, to represent or assist 

the trustee in carrying out the trustee's duties under this title. 

2 § 327(e) provides: 

The trustee, with the court's approval, may employ, for a 

specified special purpose, other than to represent the trustee in 

conducting the case, an attorney that has represented the debtor, 

if in the best interest of the estate, and if such attorney does 

not represent or hold any inte rest adverse to the debtor or to the 

estate with respect to the matter on which such attorney is to be 

employed. 

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Appellate Case: 90-4196 Document: 010110239042 Date Filed: 03/24/1992 Page: 2 
but not limited to the following reasons: 

a. Zions represents approximately 35 

noteholders who are also the primary creditors in this 

case .. 

b. CD&N is familiar with the documents, 

history and relationship among the parties in this case, 

which could save the Trustee many hours in preparation 

time. 

c. CD&N has served as counsel to Zions, as 

Indenture Trustee, in other lawsuits against limited 

partners of partnerships sponsored by CFS Financial 

Corp. 

9. CD&N has previously represented and continues 

to represent Zions, as Indenture Trustee for the 

noteholders of the Debtor. In addition, CD&N continues 

to represent Zions in its capacity as Indenture Trustee 

in other partnerships. Zions has and will continue 

litigating actions against limited partners or investors 

that may be defendants in actions brought by the Trustee 

in this case. Zions, however, has consented to CD&N's 

representation of the Trustee in this bankruptcy case. 

10. The Trustee also consents to 

representation of CD&N in this case. 

the dual 

(Appendix, Vol . I, Exhibit 2, pp. 2-4) . CD&N was subsequently 

appointed special counsel for Wisan. As special counsel for 

Wisan, CD&N assisted in litigation, particularly agai nst limited 

partners, including Birken, which owed 

contributions to Debtor. 

outstanding capital 

Thereafter, CD&N filed an application for the allowance and 

payment of attorney fees. Birken filed an "[o]bjection to 

application for allowance and payment of attorneys' fees and 

objection to further appearances of special counsel," alleging 

that CD&N was not disinterested under§ 327(a) and that CD&N had 

an actual conflict of interest under§ 327(c). Further, Birken 

filed a motion to disqualify CD&N as special counsel . 

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Appellate Case: 90-4196 Document: 010110239042 Date Filed: 03/24/1992 Page: 3 
A hearing was held in the bankruptcy court on Birken's 

objections, its motion to disqualify CD&N as special counsel and 

CD&N's application for attorney fees. During the hearing, Birken 

acknowledged that, with the exception of a stipulation whereby 

Zions agreed to lend Wisan up to $40,000 in the event that he 

needed the money for administration, Zions was not a creditor of 

Debtor but was only a potential creditor as an Indenture Trustee. 

(Appellees' Supplemental Index, Tab B, p. 14). 

In denying Birken's objections and its motion to disqualify 

CD&N as special counsel, the bankruptcy court observed: 

But it appears to me in this case that those moving to 

disqualify may well have misunderstood the relationship 

between general counsel for a Trustee and special 

counsel and the impact of Section 327 of the Bankruptcy 

Code, specifically Subsection (e), which talks about the 

employment of special counsel for a special purpose so 

long as that special counsel does not represent or hold 

any interest adverse to the Debtor or to the estate with 

respect to the matter on which such attorney is 

employed. 

Whether any of us like it or not, the Code 

specifically authorizes special counsel that may have a 

conflict if that counsel were to be appointed general 

counsel but where there isn't a conflict with respect 

to the matter on which the attorney is employed as 

authorized. 

* * * 

There isn't a shred of evidence to show that there 

is a conflict as to the matter on which Mr. Diaz and his 

firm is employed. 

(Appellees' Supplemental Appendix, Tab B, pp. 53-55). 

The court approved CD&N's application for attorney fees after 

finding that the application was "both reasonable and necessary." 

Id. at p. 55. 

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Appellate Case: 90-4196 Document: 010110239042 Date Filed: 03/24/1992 Page: 4 
On appeal to the district court, Birken argued that "no one 

is questioning the competency of [CD&N] to pursue the 

litigation" but rather, that the "question here is whether they 

can do it within the standards of section 327(e)." (Appellees 

Supplemental Appendix, Tab C, p. 24). The district court 

affirmed the orders of the bankruptcy court after finding that no 

interest adverse to the Debtor appeared from CD&N's simultaneous 

representation of Wisan and of Zions as Indenture Trustee. 

On this appeal, Birken contends that CD&N must be 

disqualified from representing the trustee as special counsel and 

that CD&N is not entitled to compensation. We are bound by the 

factual findings of the bankruptcy court unless they are clearly 

erroneous. In Re Rasmussen, 888 F.2d 703, 704 (10th Cir. 1989). 

We review the legal conclusions of the bankruptcy court and 

district court de novo. Id. 

We hold that CD&N's simultaneous representation of Wisan and 

of Zion's as Indenture Trustee did not create an actual conflict 

of interest and that the bankruptcy court and the district court 

did not err in finding that CD&N's appointment was not in 

violation of§ 327. 

We also reject Birken's argument that CD&N is not eligible 

for compensation 

double billings, 

payment of many 

firm. 

because of its conflicts of interest, numerous 

non-particularized items, and requests for 

hours devoted to the self-interest of the law 

The bankruptcy court has broad discretion in awarding fees 

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Appellate Case: 90-4196 Document: 010110239042 Date Filed: 03/24/1992 Page: 5 
and costs. In Re Roberts, 75 B.R. 402, 412 (D. Utah 1987). 

Birken has failed to establish that the attorney fees awarded 

herein constituted an abuse of discretion. Accordingly, the award 

of attorney fees to CD&N as special counsel is affirmed. 

We AFFIRM. 

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Entered for the Court: 

James E. Barrett, 

Senior United States 

Circuit Judge 

Appellate Case: 90-4196 Document: 010110239042 Date Filed: 03/24/1992 Page: 6