United States Court of Appeals

For the First Circuit

No. 00-1222

IN RE: PETER P. IANNOCHINO, PAULA M. IANNOCHINO

Debtors

__________________

PETER P. IANNOCHINO, et al.,

Plaintiffs, Appellants,

v.

STEPHAN M. RODOLAKIS; CARL D. AFRAME,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Nathaniel M. Gorton, U.S. District Judge]

Before

Torruella, Chief Judge,

Stahl and Lipez, Circuit Judges.

Thomas W. Duffey with whom James P. Keane and Keane & Klein

were on brief for appellant.

Stephen J. Duggan with whom Lynch & Lynch were on brief for

appellee Stephan M. Rodolakis.

Neva Kaufman Rohan with whom John E. Garber and Robinson

Donovan Madden & Barry were on brief for appellee Carl D.

Aframe.
March 12, 2001
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LIPEZ, Circuit Judge. We decide here whether an award of

fees in bankruptcy to a debtor's attorney will act as a bar under claim

preclusion principles to a later suit filed by the debtor alleging

professional malpractice arising from the bankruptcy representation.

Peter and Paula Iannochino, the debtors in this action, filed a

malpractice suit in the Massachusetts courts two years after their

former attorneys, defendants Carl Aframe and Stephen Rodolakis, had

received a fee award from the bankruptcy court. After their complaint

was removed to the bankruptcy court, the court granted the defendants'

motions for summary judgment, reasoning that under the circumstances

present here, the malpractice claims were barred by the principles of

res judicata. The Iannochinos appealed to the district court, which

affirmed. They continue their appeal here, arguing that res judicata

is inapplicable because none of the requirements of that doctrine are

present. After having carefully considered their contentions, we

affirm.

I. Background

As this case comes before us following summary judgment, we

summarize the relevant facts in the light most favorable to the nonmovants, the Iannochinos. In 1979, the Iannochinos began operation of

a copy center on Main Street in Worcester, Massachusetts, as

franchisees of Kwik Kopy. Despite occasional disputes, the

relationship was relatively stable through 1988. Then, the Iannochinos
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gradually fell behind on their obligations under the franchise

agreement. By 1991, the past due amount had grown to $49,000, but the

Iannochinos entered into an agreement with Kwik Kopy to resolve the

issue.

During that same year, the Iannochinos began to expand their

business by entering into a contract with Clark University to open a

second copy center on the Clark campus. Although the written contract

is silent on the issue, the Iannochinos claimed that Clark agreed to

deal with them exclusively for all of its copying work, an arrangement

the Iannochinos estimated would allow the Clark copy center to gross

between $325,000 and $375,000 per year. In return, the Iannochinos

obligated themselves to make various payments, either to Clark directly

or to third parties on its behalf, for such things as royalties and

rent. Shortly after the execution of the written contract with Clark,

the Iannochinos executed a second franchise agreement with Kwik Kopy to

cover the Clark copy center. 

Business at this center was initially good, though gross

revenues did not meet the Iannochinos' expectations. The Iannochinos

blamed the poor revenues on Clark, concluding that it was not abiding

by the exclusivity agreement and was instead using other providers for

its copying services. By mid-1993, sales were so poor that the

Iannochinos closed the Clark copy center. Shortly thereafter, Clark

filed suit against the Iannochinos, alleging that the closure of the
1 It appears from the record that neither Aframe nor Rodolakis

entered an appearance at any time in the Clark University lawsuit,

though, as discussed herein, Rodolakis did offer the Iannochinos legal

advice connected with the suit and their counterclaim.

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store was a breach of contract. The Iannochinos, acting through

counsel,1 answered the complaint and filed a counterclaim alleging that

Clark breached the exclusivity agreement.

By this time, however, the Iannochinos' problems were not

limited to the now closed Clark copy center. Between June and

September of 1993, the Iannochinos sought the advice of an accountant

to assist them with other business problems that included cash flow

difficulties at their Main Street store. The accountant suggested that

the Iannochinos consider filing for Chapter 13 bankruptcy protection.

In September, the Iannochinos first approached Rodolakis, ostensibly

for legal advice regarding the Clark University lawsuit and

counterclaim. At that time, Rodolakis was a partner with Aframe in the

law firm of Aframe & Rodolakis. The Iannochinos retained Rodolakis as

their attorney shortly after this first meeting, granting him a $6,000

security interest in their car to secure his services.

For the next three months, the Iannochinos' financial

problems worsened. Rodolakis advised the Iannochinos that they could

unilaterally reject their franchise agreements with Kwik Kopy and begin

operations under a new corporate name, Action Press, after removing all

Kwik Kopy signs and materials from their Main Street store. The
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Iannochinos followed this advice, though it brought a quick response

from Kwik Kopy, which informed the Iannochinos in December of 1993 that

it believed the act of removing its name from the store and commencing

operations under a new corporation was in violation of a non-compete

clause in the franchise agreement. In the same letter, Kwik Kopy also

terminated the franchise for insolvency. 

It was in this context that Rodolakis advised the Iannochinos

to file a Chapter 13 bankruptcy petition. Rodolakis informed the

Iannochinos that they might be able to reject the franchise agreements-

-and in particular, the non-compete provisions of those contracts--on

the basis that they were executory contracts. The Iannochinos agreed

to file for bankruptcy, and in late December, after receiving Kwik

Kopy's letter, they filed a Chapter 13 petition. In addition to their

potential liability for breach of the non-compete provision, the

Iannochinos also owed Kwik Kopy $79,383.82. Rodolakis did not,

however, initiate negotiations with Kwik Kopy prior to filing for

bankruptcy, either to settle this past due amount or otherwise attempt

to resolve the problems between the Iannochinos and Kwik Kopy. 

From the time of filing until April of 1994, the dispute

between the Iannochinos and Kwik Kopy over the broken franchise

agreement continued. Kwik Kopy sought to litigate the non-compete

provision on several occasions, both in the state courts and in the

bankruptcy court through adversary proceedings. These efforts were
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interspersed with short-lived settlements. In April, the Iannochinos

converted their case to a Chapter 7 proceeding. The dispute with Kwik

Kopy was eventually resolved when the parties entered into an agreement

allowing the Iannochinos to continue operation as Action Press despite

the non-compete provision, provided that they gave a local Kwik Kopy

center the right of first refusal for certain jobs. 

Throughout this time, the Clark University lawsuit was

continuing. The Iannochinos had originally been represented by another

attorney in that matter, but that attorney withdrew and they turned to

Rodolakis for advice about how to continue. Though Rodolakis refused

to represent them in that action, he advised them not to take any

action in their own defense. Instead, they were to ignore the lawsuit

and their counterclaim and deal with an adverse judgment as with any

other debt in bankruptcy. The Iannochinos had reservations about this

advice. They continued to believe that they had a valid counterclaim

that should have, at the least, prevented the entry of judgment against

them. Nonetheless, the Iannochinos followed Rodolakis's advice and a

default judgment was entered against them.

By November of 1994, the relationship between the Iannochinos

and Rodolakis had deteriorated to the point that Rodolakis petitioned

the bankruptcy court for permission to withdraw as the Iannochinos'

counsel. This motion was granted on December 5th. In January, Aframe

filed an administrative fee application for compensation for services
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that the law firm of Aframe & Rodolakis had provided the Iannochinos.

The Iannochinos filed an opposition to this application, alleging,

among other things, that Aframe was not entitled to any fees because he

was not their attorney. Despite the breakdown of their relationship

and their unease about some of the advice Rodolakis had given them, the

Iannochinos never alleged that the services included within the

application had been of poor quality or had caused either them or the

estate harm. 

In March, after a hearing that the Iannochinos did not

attend, the bankruptcy court allowed, in part, an award of fees to

Aframe. The amount awarded, $6,420.24 in fees and $571.73 in costs,

represented payment for services rendered prior to April 8, 1994, the

date of the conversion from Chapter 13 to Chapter 7. No fees or costs

for services performed after that date were allowed. Eventually, and

some time after this award of fees, the Iannochinos again retained

Rodolakis in connection with the ongoing bankruptcy. 

Approximately two years later, the Iannochinos filed the

current action in Massachusetts state court. This action was removed

to the bankruptcy court in November of 1996. The Iannochinos'

complaint was grounded upon the legal services the defendants had

provided during the bankruptcy and alleged that, through those

services, Rodolakis and Aframe had committed professional malpractice

and had engaged in unfair trade practices in violation of Mass. Gen.
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Laws ch. 93A. The defendants moved for summary judgment in 1998. The

bankruptcy court granted the motion, holding that the Iannochinos'

claims were barred by the res judicata effect of the 1994 order on the

fee application. The Iannochinos appealed this judgment to the

district court, which affirmed. Their appeal from the district court

is now before us.

III. Res Judicata

Federal res judicata principles govern the res judicata

effect of a judgment entered in a prior federal suit, including

judgments of the bankruptcy court. See FDIC v. Shearson-American

Express, Inc., 996 F.2d 493, 496 (1st Cir. 1993); In re El San Juan

Corp., 841 F.2d 6, 9 (1st Cir. 1988). "In an appeal from district

court review of a bankruptcy court order, the court of appeals

independently reviews the bankruptcy court's decision, applying the

clearly erroneous standard to findings of fact and de novo review to

conclusions of law." In re SPM Manuf. Corp. (Official, Unsecured

Creditors Committee v. Stern), 984 F.2d 1305, 1310-11 (1st Cir. 1993).

Our direct review of the bankruptcy court's judgment, as well as of the

underlying question of whether res judicata applies to bar the

malpractice claim, is de novo. See Suarez v. Pueblo Int'l, Inc., 229
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F.3d 49, 53 (1st Cir. 2000); Monarch Life Ins. Co. v. Ropes & Gray, 65

F.3d 973, 978 (1st Cir. 1995). 

A. The malpractice counterclaim

As an initial matter, we must address whether the doctrine

of res judicata applies to this case. The Iannochinos argue that res

judicata is inappropriate here because they "have never pursued a prior

remedy or suit against the defendants [or] engaged in multiple attempts

to obtain relief." Though this argument is strikingly undeveloped, it

adverts to an important issue. At the time of the fee application, the

Iannochinos' malpractice claims were counterclaims and/or defenses to

that application. The failure to interpose a counterclaim does not

necessarily act as a bar to later actions. See, e.g., Restatement

(Second) of Judgments § 22(1) (1982); see also Rowland v. Harrison, 577

A.2d 51, 56 (Md. 1990) (refusing to find preclusion for failure to

raise counterclaim under Maryland's permissive counterclaim rule).

This principle protects putative counterclaimants from the inadvertent

loss of their claim. Carried too far, however, this principle would

undermine the protective purpose of res judicata. See, e.g., Bay State

HMO Mgmt., Inc. v. Trigley Sys., Inc., 181 F.3d 174, 181 (1st Cir.

1999) ("The policy behind res judicata is to relieve parties of the

cost and vexation of multiple lawsuits, conserve judicial resources,

and, by preventing inconsistent decisions, encourage reliance on

adjudication.") (internal quotations omitted). Consequently, this
2 Contested matters can become adversary proceedings when "an

objection to a claim is joined with a demand for relief of the kind

specified in Rule 7001." See Fed. R. Bankr. P. 3007. Such relief

includes demands for monetary damages. See Fed. R. Bankr. P. 7001(1).

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principle is subject to two important exceptions that narrow its

applicability and reduce the potential waste of judicial resources and

costs to the parties associated with multiple suits based upon the same

facts. See Restatement (Second) of Judgments § 22(2) (1982).

The first of these exceptions applies to compulsory

counterclaims. See id. § 22(2)(a). But for the bankruptcy setting of

this case, the Iannochinos' malpractice counterclaims would be subject

to this exception. A fee application in bankruptcy is akin to an

action to recover a debt. Under ordinary federal rules of civil

procedure, if a counterclaim "arises out of the transaction or

occurrence that is the subject matter of the opposing party's claim and

does not require for its adjudication the presence of third parties of

whom the court cannot acquire jurisdiction," the counterclaim is

compulsory and must be raised. Fed. R. Civ. P. 13(a). As both the fee

application and the malpractice counterclaim concern the same

transaction, the counterclaim would have been subject to Rule 13.

Moreover, the compulsory counterclaim rule is applicable in certain

bankruptcy contexts. Thus, if the fee application had changed from a

contested matter to an adversary proceeding,2 the Iannochinos'

malpractice counterclaims would also have been compulsory and subject
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to res judicata. See Fed. R. Bankr. P. 7013 (making Fed. R. Civ. P. 13

applicable to adversary proceedings). Alternatively, the bankruptcy

court could have ordered Rule 7013 applicable to the fee application,

again subjecting the counterclaims to res judicata under this

exception. See Fed. R. Bankr. P. 9014 (allowing the bankruptcy court

"at any stage in a particular [contested] matter [to] direct that one

or more of the" rules applicable to adversary proceedings apply).

Nothing in the record indicates, however, that the fee application ever

became an adversary proceeding or that the bankruptcy court ever

directed that Rule 7013 apply. Therefore, the Iannochinos' malpractice

counterclaim to the fee application was not compulsory and cannot be

res judicata under this exception.

The second exception is applicable when the "relationship

between the counterclaim and the plaintiff's claim is such that

successful prosecution of the second action would nullify the initial

judgment or would impair rights established in the initial action."

Restatement (Second) of Judgments § 22(2)(b) (1982). In the normal

course of civil litigation, the Iannochinos' malpractice counterclaim

could not affect a prior judgment assessing fees. See Rowland, 577

A.2d at 57 (holding claim for professional malpractice against

veterinarian would not nullify prior judgment establishing debt for the

allegedly substandard services). In bankruptcy, however, a successful

malpractice action could impair rights that Aframe and Rodolakis had
3 Section 330(a)(4) provides:

(A) Except as provided in subparagraph (B), the court shall

not allow compensation for–

(i) unnecessary duplication of services; or

(ii) services that were not–

(I) reasonably likely to benefit the debtor's

estate; or 

(II) necessary to the administration of the case.

(B) In a chapter 12 or chapter 13 case in which the debtor

is an individual, the court may allow reasonable

compensation to the debtor's attorney for representing the

interests of the debtor in connection with the bankruptcy

case based on a consideration of the benefit and necessity

of such services to the debtor and the other factors set

forth in this section.

11 U.S.C. § 330(a)(4).

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gained from the order awarding them fees. Under the relevant section

of the bankruptcy code governing fee awards, a finding of malpractice

would mean that the attorneys were not entitled to compensation for

those services found to be substandard. See 11 U.S.C. § 330(a)(4)3; see

also In re Southmark, 163 F.3d 925, 931 (5th Cir. 1999) ("It is evident

that a court-appointed professional's dereliction of duty could

transgress both explicit Code responsibilities and applicable

professional malpractice standards."). Nor does it matter that the

fees may already have been awarded by the time of the malpractice

judgment. Fed. R. Civ. P. 59 and 60 are applicable in bankruptcy, thus

giving bankruptcy courts broad authority to reconsider judgments. See

Fed. R. Bankr. P. 9023 (Fed. R. Civ. P. 59); Fed. R. Bankr. P. 9024

(Fed. R. Civ. P. 60); see also Fed. R. Bankr. P. 3008 (allowing parties

in interest to "move for reconsideration of an order allowing or
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disallowing a claim against the estate"). Furthermore, a bankruptcy

court can order professionals to disgorge fees that it had previously

awarded them. See 11 U.S.C. § 105(a) ("The court may issue any order,

process, or judgment that is necessary or appropriate to carry out the

provisions of this title."); In re Hot Tin Roof, Inc., 205 B.R. 1000

(1st Cir. Bankr. App. Panel 1997) (upholding disgorgement for failure

to disclose conflict of interest); In re Capgro Leasing Assocs., 169

B.R. 305, 317 (E.D.N.Y. 1994) (ordering disgorgement of fees because

services did not benefit the estate in any way). 

The "successful prosecution" of the Iannochinos' malpractice

claims in the action here has the potential, therefore, to provide the

basis for a later order, following a motion to reconsider, forcing

Aframe and Rodolakis to disgorge the fees that the bankruptcy court

awarded them. Thus, the second exception in section 22 of the

Restatement is applicable here. See Restatement (Second) of Judgments

§ 22 Rptr. Notes (1982) (noting that the exception is applicable where

"a defendant, having failed to interpose a defense or counterclaim in

a prior action which terminated in a judgment for plaintiff, now seeks

in a subsequent action to obtain relief which, if granted, would permit

recovery of the amount paid pursuant to that judgment on a restitution

theory"). The Iannochinos cannot escape res judicata on the ground
4 We note that even if a counterclaim would, as here, be

subject to res judicata under this second exception, preclusion of that

claim would nonetheless be inappropriate if the claim could not have

been raised in the first proceeding. See Kale v. Combined Ins. Co. of

America, 924 F.2d 1161, 1167 (1st Cir. 1991). As we discuss below, the

Iannochinos could have raised their malpractice claims as a

counterclaim to the fee application. See Section III.B.3.b., infra.

5 The Iannochinos also contend on appeal that they were denied

a full and fair opportunity to litigate their claims during the fee

application. They have raised this issue for the first time on appeal

and therefore it is waived. See Higgins v. New Balance Athletic Shoe,

Inc., 194 F.3d 252, 259-60 (1st Cir. 1999).

6 We reject the Iannochinos' suggestion that their case falls

within the narrow exception to the applicability of res judicata for

cases involving an "unusual hardship." See Rose v. Town of Harwich,

778 F.2d 77, 82 (1st Cir. 1985). We see nothing in this case that

would indicate that the ordinary application of res judicata to the

Iannochinos would be "plainly inconsistent with the fair and equitable

implementation of a statutory or constitutional scheme." Id. (quoting

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that their malpractice claims were only counterclaims to the fee

application.4

B. The three requirements of res judicata

Having determined that res judicata is generally applicable

in this situation, we next evaluate whether the specific res judicata

requirements are present. For the fee award to bar the Iannochinos'

malpractice claim, there must be "(1) a final judgment on the merits in

an earlier suit, (2) sufficient identicality between the causes of

action asserted in the earlier and later suits, and (3) sufficient

identicality between the parties in the two suits."5 Mass. School of

Law v. American Bar Assoc., 142 F.3d 26, 37 (1st Cir. 1998). The

Iannochinos contend that each of these requirements is absent.6
Restatement (Second) of Judgments § 26(1)(d)). 

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1. Finality of the judgment

The question of whether the fee award was a final or an

interim judgment presents an unusual degree of difficulty because, in

contrast to most other civil litigation, finality in bankruptcy is a

more elusive concept. See In re Am. Colonial Broad. Corp., 758 F.2d

794, 801 (1st Cir. 1985). To be final, a bankruptcy court order "need

not resolve all the issues raised by the bankruptcy[, though it] must

completely resolve all of the issues pertaining to a discrete claim,

including issues as to the proper relief." In re Integrated Res.,

Inc., 3 F.3d 49, 53 (2d Cir. 1993) (emphasis in original). A

bankruptcy court order must leave nothing to be done with respect to

the claim except the ministerial supervision of the execution of the

order. See In re Am. Colonial Broad. Corp., 758 F.2d at 801. An

application for an award of fees for professional services is precisely

such a discrete claim. Consequently, in this context, "an interim

award of attorney's fees under 11 U.S.C. § 330(a)(1) and 331 is not

final" because the order does not fully resolve the attorney's claim,

leaving open the possibility that the claim will later be enlarged

through future fee applications. In re Spillane, 884 F.2d 642, 644

(1st Cir. 1989). On the other hand, a fee award that determines all of

the compensation owed to an attorney under section 330 may be

considered final. See id. The determination of whether an award was
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or was not final, by its nature, "depends upon the circumstances of the

case." In re Dahlquist, 751 F.2d 295, 297 (8th Cir. 1985).

The Iannochinos argue that Aframe created a genuine issue of

material fact by indicating on the fee application that he was seeking

only an interim rather than a final award. The application begins with

Aframe's assertion that he was the attorney of the debtor in the

Chapter 13 bankruptcy. By this statement, the Iannochinos contend,

Aframe admitted that he was continuing to represent them. Because

representation was continuing, a factfinder could reasonably conclude

that there would be future requests for compensation. This conclusion

is bolstered, they argue, by the reference in the application to

section 331, which is the section of the bankruptcy code applicable

solely to interim compensation.

Stripped of their context, these two references in the fee

application render superficial support for the Iannochinos' position.

We cannot, however, simply examine isolated fragments from a fee

application to create a factual dispute if none reasonably exists when

the application is viewed in its full context. After examining the

full circumstances surrounding the fee application, we conclude that a

reasonable factfinder could only determine that the order here was

final. 

In his fee application, Aframe sought reimbursement for

services that extended into August, even though his application was
7 The Iannochinos also alleged that the fee application was in

violation of Rodolakis's assurances to them that he would not seek

payment for his representation of them "in your Chapter 7." The record

does not offer any explanation for the bankruptcy court's refusal to

award fees for the Chapter 7 services. In doing so, however, the

bankruptcy court effectively enforced Rodolakis's promise as reported

by the Iannochinos.

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captioned "Chapter 13" and the bankruptcy had been converted to Chapter

7 in April. The bankruptcy court, however, explicitly denied the

application insofar as it sought fees for services provided after the

conversion. This approach suggests that even if representation had

continued, neither defendant would have been entitled to further fee

awards. In the present case, however, representation did not continue.

Despite Aframe's assertion in the fee application that he was the

attorney of the debtor, the only reasonable conclusion from the record

is that Aframe was not the Iannochinos' attorney at the time of the

application. The Iannochinos themselves lend support to this

conclusion. Their opposition to the fee application was based in part

upon the assertion that they owed no fees to Aframe because, though

they had hired Rodolakis, they "never retained Carl D. Aframe as

counsel." Indeed, they claimed an express understanding at the time of

Rodolakis's retention that Rodolakis–and not Aframe–was their attorney.7

Moreover, when read in context, the fee application does not

indicate that Aframe was continuing to represent the Iannochinos.

Aframe asserted that he was the attorney for the debtor "in this

proceeding," which the caption references as the Chapter 13 bankruptcy
8 The Iannochinos also argue that Rodolakis's later re-entry

into the case must mean that the fee award was an interim judgment, as

least as to Rodolakis. There is no merit to this contention. A

reasonable factfinder could only conclude from this record that

Rodolakis's re-entry was neither contemplated at the time of the fee

application nor in any way a continuation of the original

representation. Such an unrelated subsequent event has no bearing upon

whether the award was or was not a final judgment.

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action. The Chapter 13 action had concluded upon the conversion to

Chapter 7 several months prior to the application. Although Aframe did

seek fees for services performed after the conversion of the case, he

did not seek any fees for the time after Rodolakis, and by extension,

his firm had withdrawn from the case. In this context, Aframe's

recitation of his employment status is simply a statement that he was

entitled to an award of attorney's fees because he had been employed by

the Iannochinos at the time the services had been rendered. Indeed,

the only reasonable conclusion from the record evidence is that Aframe

represented the Iannochinos purely through his partnership relationship

with Rodolakis. When Rodolakis withdrew from the case, Aframe's

professional relationship with the Iannochinos also terminated. The

discharge of an attorney prior to an order approving a fee application

indicates that no further services will be rendered and consequently

that no further applications will be made.8 See In re Spillane, 884

F.2d at 645. 

The mere reference to section 331 also does not undercut the

finality of the order on attorney's fees. Though the Iannochinos are
9 Section 331, entitled "Interim compensation," provides:

A trustee, an examiner, a debtor's attorney, or any

professional person employed under section 327 or 1103 of

this title may apply to the court not more than once every

120 days after an order for relief in a case under this

title, or more often if the court permits, for such

compensation for services rendered before the date of such

an application or reimbursement for expenses incurred before

such date as is provided under section 330 of this title.

After notice and a hearing, the court may allow and disburse

to such applicant such compensation or reimbursement.

11 U.S.C. § 331 (1993).

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correct that section 331 only applies to interim compensation,9 and thus

there is no reason to reference it in an application for a final award

of fees, we decline to allow a mere statutory reference to determine

the actual nature of the fee request, particularly when section 331 was

mentioned here in conjunction with the more general, final compensation

provisions of section 330. See In re Yermakov, 718 F.2d 1465, 1469

(9th Cir. 1983) (holding fee order was final despite explicit reference

in the order to future fee applications). As the bankruptcy court's

order determined all issues related to the defendants' claim for fees,

the order was final and may be given res judicata effect.

2. Identity of the parties

The Iannochinos' challenge to the identity of the parties is

confined to Rodolakis. They note that Rodolakis had withdrawn from the

case by the time of the fee application and award and that Aframe

applied for the fees in his name only. Therefore, they contend,

Rodolakis was not in privity with Aframe and cannot now gain any
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benefit from whatever res judicata effect might attach to the fee

award.

The record does indicate that Rodolakis and Aframe ceased to

be law partners at some point after Rodolakis stopped representing the

Iannochinos and withdrew from the case. Though the precise date of

that split is unclear, the fee application came from Aframe's solo

practice rather than from the firm of Aframe and Rodolakis. We can

reasonably infer, therefore, favorably to the Iannochinos, that

Rodolakis was not a party to the fee application. This inference,

however, does not stretch as far as the Iannochinos urge. Nonparties

may gain the benefit of a prior litigation if they were in privity with

a party to the previous action. See Gonzales v. Banco Central Corp.,

27 F.3d 751, 756 (1st Cir. 1994). Though privity is an elusive

concept, we have found privity "if a nonparty either substantially

controlled a party's involvement in the initial litigation or,

conversely, permitted a party to the initial litigation to function as

his de facto representative." Id. at 758. 

Even drawing all reasonable inferences in favor of the

Iannochinos, a reasonable factfinder could only conclude on this record

that Aframe and Rodolakis were in privity because Aframe was acting as

Rodolakis's de facto representative in pursuit of the legal fees. See,

e.g., In re Belmont Realty Corp., 11 F.3d 1092, 1097; In re Medomak

Canning, 922 F.2d 895, 901 (1st Cir. 1990). Aframe and Rodolakis were
10 After this meeting, Rodolakis agreed to represent the

Iannochinos for a second time, though this period of representation was

relatively short, lasting less than six months.

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law partners during the time that the services detailed in the fee

application were provided to the Iannochinos. Rodolakis was

potentially entitled to payment from the estate for those services.

See 11 U.S.C. § 330. Aframe's fee application, though submitted from

his office, did not limit itself to a claim for the services Aframe had

rendered, but instead sought reimbursement for all services provided to

the Iannochinos, irrespective of which attorney had provided the

services. The amount sought was nearly $10,000. The overwhelming

majority of this work had been performed by Rodolakis, who billed sixty

hours to Aframe's six. Moreover, at some point shortly after the fee

application was granted in March 1995, Rodolakis had a chance meeting

with the Iannochinos in the bankruptcy court during which they

discussed the ongoing bankruptcy.10 Peter Iannochino testified in

deposition that Rodolakis told the Iannochinos at this meeting that he

was due to receive twenty percent of the compensation awarded pursuant

to the fee application. This statement confirms that Aframe was

Rodolakis's de facto representative in filing the fee application.

Consequently, the defendants have established the identity of parties

element of res judicata.

3. Identity of the causes of action.
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In determining whether "causes of action are sufficiently

related to support a res judicata defense," we have "adopted a

transactional approach." Mass. Sch. of Law, Inc. v. American Bar

Assoc., 142 F.3d 26, 38 (1st Cir. 1998). We have relied upon the three

factors set forth in the Restatement to guide our analysis of whether

two claims are actually part of a single cause of action. See Porn v.

Nat'l Grange Mut. Ins. Co., 93 F.3d 31, 34 (1st Cir. 1996). Though

none of these factors is determinative, and the three factors do not

exhaust all factors that may be considered, they provide a helpful

framework for analyzing the Iannochinos' contentions. See id. First,

we look to "whether the facts are related in time, space, origin or

motivation," second, to "whether they form a convenient trial unit,"

and third, to "whether their treatment as a unit conforms to the

parties' expectations." Id. (quoting Restatement (Second) of Judgments

§ 24 (1982)). 

Before turning to a discussion of those elements, however,

we note that the Fifth Circuit has found identity of cause of action

upon facts that are essentially identical to those in this case. See

In re Intelogic Trace, Inc., 200 F.3d 382, 387 (5th Cir. 2000). In

Intelogic Trace, a Chapter 11 debtor had hired an accounting firm to

assist it in various accounting matters connected with the bankruptcy.

See id. at 384. Shortly after the reorganization plan was confirmed

and before the firm's fee application was approved, the debtor
11 Section 330 provides in pertinent part:

-24-

discovered errors in the services the firm provided. See id. The

debtor nonetheless declined to proceed on a malpractice claim,

preferring instead to negotiate a reduction in the fees from the firm.

See id. The bankruptcy court approved the application, with the

negotiated reduction. See id. at 385. When, months later, the

reorganization plan failed and the debtor again entered bankruptcy

under Chapter 7, the Chapter 7 trustee initiated a malpractice action

in state court against the accounting firm. See id. After this action

was removed to the bankruptcy court, it agreed that res judicata barred

the malpractice claim and granted summary judgment. See id. at 385-86.

The Fifth Circuit affirmed. See id. at 387. The Intelogic Trace

court's reasoning on these issues is persuasive and we refer to it

throughout our discussion of the Restatement factors.

a. The factual relationship between the fee application and the

malpractice claim.

The Iannochinos do not mount a serious challenge to the

factual similarities between the two claims. Nor could they. As the

Intelogic Trace court noted, the bankruptcy court must undertake a

comprehensive evaluation of the services listed in a fee application

when determining whether to award fees. Under section 330, the

bankruptcy court must consider "the nature, the extent, and the value

of such services." 11 U.S.C. § 330(a)(3)(A).11 A bankruptcy court
(a)(3)(A) In determining the amount of reasonable

compensation to be awarded, the court shall consider the

nature, the extent, and the value of such services, taking

into account all relevant factors, including--

(A) the time spent on such services;

(B) the rates charged for such services;

(C) whether the services were necessary to the

administration of, or beneficial at the time at which

the service was rendered toward the completion of, a

case under this title;

(D) whether the services were performed within a

reasonable amount of time commensurate with the

complexity, importance, and nature of the problem,

issue, or task addressed; and

(E) whether the compensation is reasonable based on the

customary compensation charged by comparably skilled

practitioners in cases other than cases under this

title.

11 U.S.C. § 330(a)(3)(A).

-25-

therefore makes an implied "finding of quality and value" in the

professional services provided to the Iannochinos during the

bankruptcy. Intelogic Trace, 200 F.3d at 387. Likewise, the

Iannochinos' malpractice claim entails the same concern, as their

allegations of malpractice arise from the defendants' legal advice

relating to the bankruptcy. It was this legal advice that formed the

basis of Aframe's fee application. Thus, the central factual question

in both claims is the same: What advice did the defendants give to the

Iannochinos during the bankruptcy, and what was the quality and value

of that advice?

b. The two claims as a convenient trial unit.

We examine whether the two claims form a convenient trial

unit with an eye towards the conservation of judicial resources by
-26-

preventing needless duplication of litigation. See Porn, 93 F.3d at

36. In contrast to the evaluation of the factual relationships we

undertook above, this inquiry focuses upon what would happen at trial.

See Restatement (Second) of Judgments § 24 cmt. b (1982). We determine

whether the witnesses or proofs required to prove the factual basis of

both claims substantially overlap. See Mass. Sch. of Law, 142 F.3d at

38 ("[W]here the witnesses or proof needed in the second action overlap

substantially with those used in the first action, the second action

should ordinarily be precluded.") (quoting Porn, 93 F.3d at 36). The

Iannochinos argue that the proof is different, pointing primarily to

the necessity of expert witnesses for their malpractice claims. This

contention, however, ignores the essential nature of the bankruptcy

court's examination of the fee application. Although no experts are

called in a fee hearing, this does not mean that there is no expert

evaluation of the services rendered in this case. The bankruptcy court

has directly seen the results of the attorney's work for which a fee

award is requested. Moreover, a "judge is presumed knowledgeable as to

the fees charged by attorneys in general and as to the quality of legal

work presented to him by particular attorneys; these presumptions

obviate the need for expert testimony such as might establish the value

of services rendered by doctors or engineers." In re W.J. Servs.,

Inc., 139 B.R. 824, 828 (S.D. Tex. 1992). To the extent that the

malpractice claim would require an expert witness or witnesses not
-27-

required by the fee hearing, this difference in proof does not

eliminate the substantial overlap of the remaining proofs required to

determine the essential issue in both claims, namely the quality of the

defendants' legal services to the Iannochinos. 

Of course, this substantial overlap between the proof

required for each claim would not matter for the purposes of res

judicata if the Iannochinos could not have brought their malpractice

claim in opposition to Aframe's fee application. See Kale v. Combined

Ins. Co. of Am., 924 F.2d 1161, 1167 (1st Cir. 1991) (noting that res

judicata cannot bar a claim that could not have been raised in the

first action). Though the Aframe fee application was a contested

matter in bankruptcy, this does not mean, as the Iannochinos contend,

that the bankruptcy court's evaluation of the fee application would be

limited to a purely administrative analysis of the fees, leaving it no

authority to undertake a full trial--including a potential award of

damages--on the malpractice claim. Indeed, the Intelogic Trace court

has directly addressed the powers of the bankruptcy court in this

context: "Although the fee hearing was a contested matter [the] fee

application was a claim against [the debtor]. Had [the debtor]

objected to the fee application and included with its objection a claim

for affirmative relief on account of alleged malpractice, the matter

would have become an adversary proceeding." In re Intelogic Trace,

Inc., 200 F.3d at 389-90 (citations omitted). The bankruptcy rules
-28-

specifically provide for objections "to the allowance of a claim," a

provision that the Iannochinos used by filing their initial objection

to the application. See Fed. R. Bankr. P. 3007. Furthermore, when an

objection is combined with a demand for monetary damages under this

rule, as in a professional malpractice claim, the fee hearing "becomes

an adversary proceeding" in which these issues may be addressed. Fed.

R. Bankr. P. 3007 (providing for an adversary proceeding when "an

objection to a claim is joined with a demand for relief of the kind

specified in Rule 7001"); see also Fed. R. Bankr. P. 7001(1) (defining

"a proceeding to recover money or property" as an adversary

proceeding). The fact that the Iannochinos did not take advantage of

these procedures does not alter the fact that they could have done so

and thus tried the malpractice claim at the time of the fee

application.

c. The parties' expectations at the time of the fee application.

Finally, we examine whether treating these two claims as a

single trial unit would conform to the parties' expectations. In

assessing the parties' litigation expectations, we look to the parties'

knowledge at the time of the first suit on the underlying facts. See

Porn, 93 F.3d at 37. The Iannochinos contend that at the time of the

fee application they did not know that Rodolakis and Aframe might have

violated their duty of care towards them. As laypersons, they say,

they would have little idea about the standards governing the legal
-29-

profession, and thus they had no way of knowing whether the defendants

had breached those standards. Without this knowledge of a breach of

duty, the Iannochinos contend, they could not have known that they had

a malpractice claim against the defendants. We disagree. When

evaluating the parties' expectations, we are guided by the principle

that, where "two claims arose in the same time frame out of similar

facts, one would reasonably expect them to be brought together." Id.

Therefore, rather than considering whether the Iannochinos knew of the

precise legal contours of their malpractice claim at the time of the

fee application, we must instead determine whether they knew of the

factual basis of that claim. 

The Iannochinos point to three areas in which they claim

Rodolakis gave them substandard advice: his advice to repudiate the

Kwik Kopy franchise agreement, to ignore the Clark University lawsuit,

and to enter into the bankruptcy. Although the Iannochinos may not

have had any reason to question this advice when given, their situation

at the time of the fee application necessarily changed the reasonable

perception of these events. By that time, their relationship with

their attorney had broken down. Indeed, Rodolakis withdrew from the

case because "there [was] no effective attorney/client relationship

between counsel and the Debtors." In each instance, the advice the

Iannochinos now claim was improper resulted in almost immediate

negative results. After the Iannochinos removed all Kwik Kopy indicia
-30-

from the Iannochinos' print store and opened under another name, Kwik

Kopy took aggressive actions to enforce its rights under the franchise

agreement, including requesting relief on multiple occasions from the

automatic stay so that it might enforce the non-compete provision of

the contract. Likewise, their inaction on the Clark University lawsuit

quickly resulted in a default judgment. Indeed, the record indicates

that the Iannochinos were upset about the Clark lawsuit and felt that

they should not ignore what they thought were their valid counterclaims

to that action. Furthermore, by the time of the fee application, the

bankruptcy had been converted from Chapter 13 to Chapter 7. This

conversion surely brought with it a similar reevaluation of whether it

had been appropriate to file for bankruptcy in the first instance.

Accordingly, the Iannochinos knew all "the facts necessary for

bringing" their malpractice claim at the time of the fee application,

and we think it reasonable for Aframe and Rodolakis to expect that all

concerns about the quality of their services would have been raised in

response to the fee application. See Porn, 93 F.3d at 37 ("Defendants

may reasonably demand that disposition of the first suit establish

repose as to all matters that ordinary people would intuitively count

part of a single basic dispute.") (quoting 18 Charles A. Wright &

Arthur R. Miller, Federal Practice and Procedure § 4407 at 56 (1981)).

We are mindful that the Iannochinos were unrepresented at the

time of the fee award. The Iannochinos emphasize this fact, arguing
-31-

that this distinguishes them from the debtor in Intelogic Trace.

Although the debtor in that case was represented at the time of the

accounting firm's fee application, that fact is not determinative.

Indeed, the breakdown of the attorney/client relationship here is

further evidence that the Iannochinos should have raised their

malpractice claims as objections to the fee award. We reject the

suggestion implicit in their argument that parties can ignore facts

indicating that they should assert a malpractice claim solely because

of a lack of representation.

IV. Conclusion

Because all of the elements of res judicata are present here,

the bankruptcy court was correct in holding that the Iannochinos'

malpractice claim was barred.

Affirmed.