1997 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-21-1997

Shareholders v. Sound Radio Inc

Precedential or Non-Precedential:

Docket 95-5174,95-5174

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Recommended Citation

"Shareholders v. Sound Radio Inc" (1997). 1997 Decisions. Paper 69.

http://digitalcommons.law.villanova.edu/thirdcircuit_1997/69
 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 

 No. 95-5174 

 

 SHAREHOLDERS; 

 SHERIDAN BROADCASTING CORP., 

v. 

 SOUND RADIO, INC. 

 ta WNJR, RADIO 1430; 

 DANIEL E. ROBINSON; 

 JEROME J. LA PENNA, ESQ. 

 SOUND RADIO, INC. 

 ta WNJR RADIO, 1430 

 Debtor 

 (D.C. No. 94-cv-00754) 

 

 SHERIDAN BROADCASTING CORP. 

v. 

 SOUND RADIO, INC.; 

 JEROME J. LA PENNA 

 SOUND RADIO, INC., 

 Debtor 

 (D.C. No. 94-cv-04638) 

 *Jerome J. LaPenna & 

 Associates, P.C., 

 Appellant 

 *(Pursuant to F.R.A.P. 12(a)) 

 Appellant. 

 

 On Appeal from the United States District Court 

 for the District of New Jersey 

 (D.C. Civil Action No. 94-cv-00754) 
2

 

 Argued June 4, 1996 

Before: SCIRICA and ROTH, Circuit Judges

and O'Neill1, District Judge

 (Opinion Filed March 21,1997 ) 

 

Harry Heher, Jr., Esq. (Argued) 

Heher, Clarke & St. Landau 

5 Independence Way 

Princeton, NJ 08540 

 Attorney for Appellee Shareholders 

Sherry A. Vetterlein, Esq. (Argued) 

Buchanan Ingersoll Professional Corporation 

1835 Market Street 

Eleven Penn Center, 14th Floor 

Philadelphia, PA 19103 

 Attorney for Sheridan Broadcasting Corporation 

 

 Honorable Thomas N. O'Neill, Jr., United States District 

Court Judge for the Eastern District of Pennsylvania, sitting by 

designation. 
3

John C. Kennedy, Esq. (Argued) 

O'Donnell, Kennedy, Vespole, Piechta & Trifiolis 

414 Eagle Rock Avenue 

West Orange, NJ 07052 

 Attorney for Jerome J. LaPenna & Associates, P.C. 

 

 OPINION OF THE COURT 

 

ROTH, Circuit Judge: 

 Jerome J. LaPenna asks us to review a decision of the 

district court, reducing substantial fee awards granted him by 

the bankruptcy court in a protracted Chapter 11 proceeding. 

LaPenna was the beneficiary of more than $600,000 in fees, 

awarded for his services in the three capacities in which he 

acted during the Chapter 11 reorganization of Sound Radio, Inc. 

The district court found that the total amount of the fees was 

unreasonable. In this appeal, we have had to determine, first of 

all, whether there was any timely appeal of the bankruptcy 

court’s fee awards. We concluded that one of the appellees did 

file a timely appeal. This conclusion then permitted us to 

inquire whether the bankruptcy court should have considered as a 

whole the fees awarded to one person, acting in three capacities, 

rather than considering each award separately, and also to 

inquire whether the district court properly reduced LaPenna's 

fees without remanding the case to the bankruptcy court for that 
4

court to perform such a review. Because of the unusual nature of 

the role played by LaPenna, in his performance of three different 

functions in the reorganization, we conclude that his fees should 

be viewed as a whole with a comprehensive evaluation of the 

extent and nature of the various tasks he undertook in his three 

capacities. We will remand this case to the district court with 

instructions to remand it to the bankruptcy court to make an 

overall determination of the reasonableness of the fees. 

 I. FACTS

 On November 30, 1984, Sound Radio, Inc., an AM radio 

station broadcasting under the call letters WNJR, filed its 

Chapter 11 bankruptcy petition. Twelve years later, the 

bankruptcy court closed the case. In re Sound Radio, Inc., No. 

84-6261 (Bankr. D.N.J. Apr. 29, 1996). The proceedings have 

already produced four published opinions and countless 

unpublished rulings. See In re Sound Radio, 103 B.R. 521 (D.N.J. 

1989) (affirming plan confirmation); In re Sound Radio, 145 B.R. 

193 (Bankr. D.N.J. 1992) (considering applications for fees and 

expenses by parties other than LaPenna); In re Sound Radio, 93 

B.R. 849 (Bankr. D.N.J. 1988) (confirming plan of 

reorganization); In re Sound Radio, 59 B.R. 87 (Bankr. D.N.J. 

1986) (refusing to lift stay). Mindful of this extensive record, 

we will limit our discussion to events linked directly to the 

LaPenna fee dispute. 

 The Sound Radio bankruptcy was filed in 1984. After 
5

bitter infighting among the shareholders, the reorganization plan 

was confirmed on January 5, 1989. During the same period, the 

shareholder disputes were the subject of litigation in the New 

Jersey courts. The shareholders continued to cause difficulties 

in the operation of Sound Radio after the plan confirmation. As 

a consequence, the Official Unsecured Creditors Committee moved 

for the appointment of a trustee. In October 1989, the 

bankruptcy court agreed to name a trustee to manage the day-today operations of Sound Radio. Sound Radio appealed this 

decision to the district court, which modified the bankruptcy 

court's order and provided for the appointment of a "Managing 

Agent in lieu of a Trustee." In re Sound Radio, Inc., No. 84-

6261 (D.N.J. Dec. 22, 1989). The position of Managing Agent was 

created to avoid the impact of 11 U.S.C. § 1104(a), which 

arguably prevents the bankruptcy court from appointing an 

operating trustee after a plan of reorganization has been 

confirmed.2

 On February 5, 1990, the bankruptcy court appointed 

LaPenna as Managing Agent for Sound Radio. The appointment was 

made pursuant to 11 U.S.C. § 327, which provides for the 

employment of professional persons to represent or assist the 

trustee in carrying out the trustee’s duties. Two days later, 

 

 Section 1104(a) provides in its opening sentence: “At any time after the commencement 

of the case but before confirmation of a plan, on request of a party in interest or the United States 

trustee, and after notice and a hearing, the court shall order the appointment of a trustee-- . . ..” 
6

the court approved LaPenna's decision to act as his own counsel, 

naming him Attorney for the Managing Agent. On September 19, 

1990, the bankruptcy court clarified the powers and authority of 

the Managing Agent, stating that the Managing Agent “has, and 

since his appointment has had, all of the powers and authority of 

a Trustee under Chapter 11 of the Bankruptcy Code.” On October 

2, 1992, the court presented LaPenna with a third hat, making him 

Sound Radio's Disbursing Agent. 

 The record is clear that the bankruptcy court was of 

the opinion that LaPenna performed all of his duties with 

considerable ability. However, LaPenna also sought substantial 

compensation for his services. 

 During his tenure, LaPenna filed eleven fee 

applications with the bankruptcy court. Four sought interim fees 

as Attorney for the Managing Agent. Three sought supplemental 

fees and one sought final fees in the same capacity. LaPenna 

also filed for interim fees and final fees as Managing Agent, as 

well as for final fees as Disbursing Agent. 

 The dates, substance, and dispositions of the eleven 

fee petitions create a baffling trail of documents and docket 

entries. LaPenna’s first series of applications for fees were 

filed in his capacity as Attorney for the Managing Agent. An 

application, requesting $17,050.00 in interim fees, was docketed 

on July 13, 1990. It was awarded in full on September 27, 1990. 

 The next application, requesting $23,537.50 in fees and $72.25 
7

in expenses, was docketed on December 6, 1990. It was granted in 

full on March 21, 1991. A third application, requesting 

$27,937.50 in interim fees and $329.08 in expenses, was docketed 

on August 7, 1991. It was granted in full on October 17, 1991. 

 LaPenna next submitted a series of fee applications as 

both Managing Agent and Attorney for the Managing Agent. On 

November 20, 1991, LaPenna filed an application for interim 

compensation as Managing Agent, seeking $65,000.00 in fees. The 

court granted that application in full on December 16, 1991. On 

January 24, 1992, LaPenna's filed his fourth application for 

interim compensation as Attorney for the Managing Agent, seeking 

$32,242.50 in fees and $845.02 in expenses. That request was 

granted on March 31, 1992. On May 28, 1992, LaPenna applied for 

final compensation in his capacity as Managing Agent, and on June 

1, 1992, he applied for final compensation as Attorney for the 

Managing Agent. The May 28 application sought $205,000.00 in 

compensation in addition to the amounts already granted. The 

June 1 application sought $75,357.50 in fees and $894.53 in 

expenses, again in addition to what he had already received. 

 Certain of the Sound Radio shareholders objected to the 

May 28 application as “premature.” On July 1, the bankruptcy 

court granted the May 28 application but held back $30,000 of the 

allowed compensation until the Managing Agent filed his final 

report.3 On July 29, 1992, the court granted the June 1 

 

 Because non-final allowances of compensation are always subject to the court’s 
8

application in full. Both orders were entitled “Order For Final 

Compensation To Managing Agent.” No mention was made in either 

order of final compensation to LaPenna in his capacity as 

Attorney for the Managing Agent. 

 This omission was prescient. Over the next two years, 

LaPenna filed three additional applications for fees as Attorney 

for the Managing Agent. On December 11, 1992, LaPenna sought 

$92,535.00 in "supplemental fees" and $2,481.55 in expenses. 

After shareholder objection, this application was granted in the 

reduced sum of $82,500 on March 31, 1993. On April 14, 1993, 

LaPenna sought $55,830.00 in supplemental fees and $1,510.40 in 

expenses. It was granted on June 9, 1993. On October 19, 1993, 

in a “third interim supplemental” application, LaPenna sought 

$18,250.00 in fees and $1,264.88 in expenses. On December 6, 

1993, before the bankruptcy court ruled on the previous fee 

application, LaPenna filed an application for final fees as 

Disbursing Agent, seeking $10,485.12 and $32.80 in expenses. On 

December 14, 1993, the bankruptcy court granted the October 19 

request. The December 14 order bears the word "final," written 

 

reexamination and adjustment at the conclusion of the case, the deferral of the completion of 

payments to the Managing Agent until the filing of his final report would seem to preclude the 

July 1, 1992, order from being regarded as a final, and thus appealable, order. See Matter of 

Taxman Clothing Co., 49 F.3d 310, 314 (7th Cir. 1995) (“all awards of interim compensation are 

tentative, hence reviewable--and revisable--at the end of the case”); 3 LAWRENCE P. KING,

COLLIER ON BANKRUPTCY (15th Ed. Rev. 1996) ¶ 331.04[1] (interim allowances are subject to 

reexamination because all administrative expenses “must receive the court’s final scrutiny and 

approval.”); ¶ 331.041[2] (“a party seeking to challenge an interim award is not entitled to an 

immediate appeal.”) 
9

in what appears to be the bankruptcy judge’s handwriting, above 

the title, "Order Granting Allowances."4 On January 19, 1994, 

the bankruptcy court granted the December 6 request for the final 

fees as Disbursing Agent. 

 Prior to the current appeal, Sound Radio’s shareholders 

had made only two challenges to the applications for fees. The 

first, by a group of shareholders “Shareholders”) represented by 

Harry Heher, Jr., Esq., was to the application of May 28, 1992, 

as being premature. The second, by Sheridan Broadcasting 

Corporation (“Sheridan”), was based on LaPenna’s failure to have 

lesser paid associates undertake some of his duties as attorney 

for the Managing Agent. This challenge resulted in the March 

31, 1993, reduction of the allowance of fees from $92,535 to 

$82,500. 

 The appellees are these two groups of Sound Radio’s 

shareholders, Sheridan and Shareholders. Although the district 

court consolidated their challenges in a single appeal, Sheridan 

and Shareholders have reached this court by very different paths. 

 Shareholders’ appeal began with the bankruptcy court's 

order of December 14, 1993, awarding LaPenna final fees as 

Attorney for the Managing Agent. Harry Heher filed a Notice of 

Appeal from that order on December 27, 1993. The district court 

dismissed the appeal as untimely. In his brief before this 

 

 As we note above, the October 19, 1992, petition which requested this allowance was an 

application for “interim supplemental” fees and expenses. 
10

court, Heher explained the late filing by the fact that LaPenna 

never distributed copies of the order to counsel. Joel R. 

Glucksman, counsel to Sound Radio's former minority shareholder 

and Board Chairman Daniel E. Robinson, eventually distributed the 

order on December 30, 1993. It arrived at Heher's office on 

January 5, 1994, nearly two weeks after the time for appeal had 

expired. Heher, however, had not relied on LaPenna to distribute 

the order. When no order arrived within a week of its entry, 

Heher visited the Clerk's Office on December 22, 1993, and 

obtained a copy. He circulated it among his clients, who 

requested an appeal. Heher promptly prepared a Notice of Appeal, 

intending to file it on the afternoon of Friday, December 24, 

1993. Because of the Christmas holiday, Heher telephoned the 

Clerk's Office to see if it was open. He received no answer. 

Heher filed the Notice of Appeal at the start of business on 

Monday morning, December 27. It bears a time stamp of 9:31 a.m. 

 On January 27, 1994, Heher filed an Amended Notice of 

Appeal on behalf of Shareholders, changing the subject of the 

appeal from the bankruptcy court's December 14 Order to its 

January 19 Order, granting LaPenna fees as Disbursing Agent. The 

district court treated this filing as a timely Notice of Appeal 

from the January 19 Order. 

 Sheridan followed a different course. It did not file 

any appeals from “final” fee orders. However, on May 23, 1994, 

Sheridan filed a pleading styled 

Motion of Sheridan Broadcasting for an Order (I) Determining the 
11

Final Allowed Compensation to Managing Agent, Attorney 

for Managing Agent and to Disbursing Agent, (II) 

Directing Mr. LaPenna to Reimburse Debtor's Estate for 

Unreasonable and Excessive Interim Compensation Paid to 

Managing Agent, Attorney for Managing Agent, and 

Disbursing Agent, (III) Providing for Final Accounting 

and Distribution of Debtor's Estate and (IV) 

Discharging Managing Agent, Attorney for Managing 

Agent, and Disbursing Agent. 

The bankruptcy court denied the motion on August 31, 1994. 

Sheridan filed a timely Notice of Appeal. 

 The district court assumed jurisdiction over both 

appeals. In an opinion filed December 9, 1994, the district 

court explained its assertion of jurisdiction, consolidated the 

cases, and directed the parties to file supplemental briefs on 

the reasonableness of LaPenna's fees. By Opinion and Order of 

February 10, 1994, the district court reduced those fees by 

$101,195.00. LaPenna appealed. 

 I. JURISDICTION AND SCOPE OF REVIEW

 The bankruptcy court exercised jurisdiction over this 

case pursuant to 28 U.S.C. § 157. The district court asserted 

appellate jurisdiction pursuant to 28 U.S.C. § 158(a). We have 

jurisdiction over the appeal from the district court pursuant to 

28 U.S.C. § 158(d). We exercise plenary review over the district 

court's determinations and over the bankruptcy court's 

conclusions of law. We review the bankruptcy court's findings of 

fact for clear error. Fellheimer, Eichen & Braverman v. Charter 

Technologies, Inc., 57 F.3d 1215, 1223 (3d Cir. 1995). 

 II. DISCUSSION
12

 Put simply, this case is a comedy of errors. The 

parties have repeatedly missed deadlines, misidentified important 

facts, and filed cryptic and unhelpful pleadings. The bankruptcy 

court struggled to maintain control over this twelve-year fiasco, 

but its orders have not focussed on the overall performance of 

Lapenna in his three capacities. 

 Although we would like to resolve this case cleanly and 

put an end to twelve years of litigation, we cannot so easily cut 

the Gordian knot. First, we have had to determine whether there 

was a timely appeal to the district court. Having done so, we 

next considered the manner in which the district court dealt with 

the fee awards. Like the district court, we are concerned about 

the total amount of fees awarded to LaPenna. In coming to this 

conclusion, the district court correctly focussed on the 

requirement that LaPenna’s professional services, in all 

capacities, as a person appointed under § 327, be reasonable 

under § 330: That they be “reasonable compensation for actual, 

necessary services rendered by such trustee, examiner, 

professional person, or attorney, as the case may be . . . based 

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

time spent on such services, and the cost of comparable services 

. . ..” 

 Nevertheless, we believe the district court overstepped 

its bounds by reducing the fee award without a remand to the 

bankruptcy court. Section 330(a) appears to permit a fee 
13

applicant an opportunity to supplement a questioned application 

and, in the face of an impending reduction by the court, to have 

the opportunity for a hearing.5 See In re Busy Beaver Bldg. 

Ctrs., Inc., 19 F.3d 833, 845 (3d Cir. 1994). The district court 

reduced LaPenna’s awards without permitting him the opportunity 

for a hearing to oppose the reduction or to establish the 

reasonableness of his compensation. We will therefore reverse 

the judgment of the district court and remand this case to the 

district court to remand it to the bankruptcy court for a 

detailed examination of LaPenna's fees and an assessment of their 

overall reasonableness. 

 A. The Timeliness of the Appeals

 We begin our examination of the merits of this appeal 

with the question whether there was a timely appeal filed by 

either appellant. We conclude that Shareholders' first appeal 

was untimely but that their second appeal supported appellate 

jurisdiction in the district court. We reject, however, 

Sheridan's efforts to conjure up a novel mechanism for fee 

review. 

1. 

 Shareholders filed their first Notice of Appeal on 

December 27, 1993. This appeal was untimely, an issue of law 

that we have reviewed de novo. See In re Saunders, 31 F.3d 767, 

 

 Section 330(a) provides in part: “[a]fter notice . . . and a hearing . . ., the court may award . . . 

reasonable compensation for actual, necessary services . . ..” 
14

767 (9th Cir. 1994) (per curiam). 

 Shareholders' December 27 Notice appealed the order 

filed on December 14, 1993. Bankruptcy Rule 8002(a) states, "The 

notice of appeal shall be filed with the clerk within 10 days of 

the date of the entry of the judgment, order, or decree appealed 

from." Bankr. Rule 8002(a). This deadline is strictly 

construed. In re Universal Minerals, Inc., 755 F.2d 309, 311 (3d 

Cir. 1985). The failure to file a timely notice of appeal 

creates a jurisdictional defect barring appellate review. Id. at 

312. 

 The shareholders concede the December 24 deadline, 6

instead arguing that their failure to file was the product of 

excusable neglect. The term “excusable neglect” appears in 

Bankruptcy Rule 8002(c), which governs extensions of time for the 

notice of appeal deadline. Rule 8002(c) provides: 

The bankruptcy judge may extend the time for filing the notice of 

appeal by any party for a period not to exceed 20 days 

from the expiration of the time otherwise prescribed by 

this rule. A request to extend the time for filing a 

notice of appeal must be made before the time for 

filing a notice of appeal has expired, except that a 

request made no more than 20 days after the expiration 

of the time for filing a notice of appeal may be 

granted upon a showing of excusable neglect . . .. 

Bankr. Rule 8002(c). 

 

 Had the argument been made, we might have been receptive to a suggestion that an early

closing of the Clerk's Office on Christmas Eve would constitute "other conditions [making] the 

clerk's office inaccessible." This would extend the filing deadline until December 27. The 

shareholders, however, have not made this argument, nor do we think they have established the 

factual predicate to support it. Beyond counsel's claim of a single unanswered 

phone call, there is no evidence that the office was in fact closed. 
15

 We believe the facts in this case could support a 

finding of excusable neglect for the following reasons: The 

finality (and hence appealability) of the December 14 order is a 

handwritten addition, no copy of the order was sent to counsel, 

counsel himself contacted the Clerk's Office and obtained a copy, 

and, once the order was obtained by counsel, the Notice of Appeal 

was filed without undue delay. See Pioneer Investment Servs. Co. 

v. Brunswick Assocs., ___ U.S. ___, 113 S.Ct. 1489, 1496, 1499-

1500 (1993) (characterizing excusable neglect as an elastic 

concept that encompasses inadvertence, mistake, or carelessness, 

as well as circumstances beyond a party's control). Rule 

8002(c), however, requires that even in cases of excusable 

neglect, the issue must be raised and the appeal filed within the 

30-day window of Rule 8002 (Rule 8002(a)’s 10 days for the appeal 

+ 8002(c)’s 20 days for the extension). See, e.g., Dyotherm 

Corp. v. Turbo Machine Co., 434 F.2d 65 (3d Cir. 1970; In re 

Botany Indus. Inc., 19 B.R. 599 (Bkrtcy. Pa. 1982). The rule 

does not allow a party to claim excusable neglect after the 30 

days have expired. 

 Here, Shareholders did not raise excusable neglect in 

connection with an appeal within the time limits of Rule 8002(c). 

 We cannot find excusable neglect when that issue is raised for 

the first time after the expiration of Rule 8002's 30 day period. 

 The December 27 appeal was untimely, and as a consequence we 

lack jurisdiction over it. 
16

1. 

 We reach a different conclusion regarding Shareholder's 

second attempt at appeal. The Notice filed on January 27, 1994, 

appealed the bankruptcy court's January 19 order. It was 

therefore filed at the eight-day mark, within Rule 8002(a)'s 

requirements. Although counsel styled it an "Amended Notice of 

Appeal," this title description is not determinative. It is 

clear from the language of the notice that Shareholders were 

appealing the January 19 Order. We hold, therefore, that the 

appeal of the January 19 Order was timely. 

2. 

 We now turn to Sheridan's appeal. While Shareholders 

attempted to secure appellate review through traditional methods, 

Sheridan blazed its own procedural trail. On May 23, 1994, 

Sheridan filed the "Motion for Order Determining the Final 

Allowed Compensation to Managing Agent, Attorney for Managing 

Agent, and Disbursing Agent . . .." It then appealed the denial 

of that order. 

 Sheridan cited no rule, statute, precedent, or other 

authority supporting the use of such a motion as a vehicle to 

challenge the perviously awarded fees. The motion seems to have 

appeared out of nowhere with no warning that it was coming and no 

procedural basis upon which to justify its appearance. 

Sheridan's brief on appeal adds nothing to explain the basis for 

the motion. Sheridan's motion appears to be little more than an 
17

attempt to circumvent established procedures of appellate review. 

 Aside from certified interlocutory appeals, an issue 

not raised by this case, the appellate jurisdiction of the 

district court and the court of appeals in bankruptcy matters is 

limited by statute to final decisions, judgments, orders, and 

decrees of the bankruptcy courts. See 28 U.S.C. § 158(a) 

(district court); 28 U.S.C. § 158(d) (court of appeals). Appeals 

from final orders are governed by the time periods of Rule 8002. 

 Our examination of Sheridan’s appeal convinces us that 

it is improper. On the one hand, if Sheridan's motion sought an 

independent determination on fees from the bankruptcy court, the 

denial of that motion was not a final order appealable under 28 

U.S.C. § 158. On the other hand, if Sheridan's motion sought to 

challenge earlier orders purporting to be final orders awarding 

fees, then the motion was untimely. In either case, the district 

court had no jurisdiction to hear the appeal. 

 Rather than responding to these problems directly, 

however, Sheridan makes two arguments in favor of its novel 

procedure. First, it claims that the filing of eleven fee 

applications by one individual wearing three different hats 

prevented any challenge until all fees had been awarded. Only 

then could Sheridan review the applications, compare them, and 

ensure that LaPenna had not double-billed for the same services 

on multiple applications. The district court found this argument 

persuasive. We disagree with the district court’s conclusion, 
18

however, because LaPenna had received “final” awards for all his 

services more than ten days prior to the filing of Sheridan’s 

motion. 

 Although we are sympathetic to Sheridan's difficulties-

-the fee applications and allowances in this case will never be 

cited as models of clarity--we cannot endorse the route that 

Sheridan took. Sheridan's proper course was to file a notice of 

appeal from any order, denominated a final order, to which 

Sheridan had objections. Final usually does mean final. A 

party foregoes such an appeal at its peril. Far from preventing 

a challenge, the entry of an order, entitled “final,” which 

grants a confusing fee application, should have suggested the 

filing of an appeal. 

 This brings us to Sheridan's second argument. Sheridan 

claims that none of the orders entered in this case were final 

orders; hence, its method of appeal was not barred. Sheridan's 

belief, however, that the bankruptcy court's orders were not 

final does not justify its resort to a novel motion. Certain of 

the orders were labeled final, and Sheridan should have 

challenged those orders as they appeared. Sheridan's subjective 

belief in the finality of the orders has no bearing on the 

jurisdictional determination. 

 In reaching these conclusions, we have considered the 

practical problems that Sheridan faced. We believe that Sheridan 

could have addressed these problems by objections to interim 
19

allowances and by an appeal of the final award. Sheridan could 

easily have addressed its concerns about over-billing and doublebilling by objecting to the fee applications that it found 

problematic. If the bankruptcy court rejected its arguments, 

Sheridan could have filed a timely appeal to the district court 

and ultimately to us. Sheridan cannot obtain review at its 

leisure by crafting a novel pleading that lacks any basis in law. 

 B. The Scope of the Appeal

 Having concluded that Shareholders did file a timely 

appeal of the January 19 Order, we now turn to the question of 

the scope of that appeal. As we discuss above, LaPenna acted in 

three different capacities during the Sound Radio reorganization: 

 Managing Agent, Attorney to the Managing Agent, and Disbursing 

Agent. At the time that the fee applications were filed, none of 

the shareholders asked for an overall review of LaPenna’s 

performance of those functions or of the fee awards for them. 

Nor did the bankruptcy court perform such a review sua sponte. 

In January 1993, when the last of the awards was made, we had not 

specifically ruled on the question of whether such an independent 

review by the bankruptcy court was necessary, or even 

permissible. In March 1994, however, we issued our opinion in In 

re Busy Beaver Bldg. Ctrs., Inc., 19 F.3d 833 (3d Cir. 1994). In 

Busy Beaver, we not only clarified the authority of the 

bankruptcy court to review fee requests sua sponte, we went 

further and held that 

the bankruptcy court has a duty to review fee applications, 
20

notwithstanding the absence of objections by the . . . 

creditors, or any other interested party, a duty which 

the Code does not expressly lay out but which we 

believe derives from the court’s inherent obligation to 

monitor the debtor’s estate and to serve the public 

interest. 

19 F.3d at 841. In light of such a duty to review, it would have 

been appropriate for the bankruptcy court on its own initiative 

to have examined the fee awards, including whether LaPenna, in 

fulfilling three different functions in the Sound Radio 

reorganization, correctly allocated his different tasks to the 

proper function and whether the fee for each function, as well as 

the total fees awarded, accurately reflected LaPenna’s various 

responsibilities.7 Moreover, in light of our determination, 

since Busy Beaver, that Shareholder’s appeal of the last of the 

orders awarding compensation to LaPenna was a valid appeal, we 

find that it is proper now to direct the bankruptcy court to 

perform a Busy Beaver review of all the interim allowances La 

Penna received in order that the court may evaluate LaPenna’s 

overall performance of his three functions. In addition, because 

of the interrelationship of the roles LaPenna performed, we 

conclude that a Busy Beaver review of his fees must consider his 

overall performance, its contribution to the resolution in the 

case, and the correct attribution of each role to the fee awarded 

for it. 

 

 Although we decided Busy Beaver after January 19, 1993, the basis for the duty we 

described in Busy Beaver was extant in 1993. As we discussed in Busy Beaver, Bankruptcy Rule 

2017(b), 11 U.S.C. § 330(a), and 11 U.S.C. § 105(a) provide “clear and compelling authority for 

the bankruptcy court’s sua sponte review of fee or expense applications.” 19 F.3d at 841. 
21

 In coming to a conclusion that a review is needed, we 

note that the record before us reveals at least four orders that 

purport to be final fee awards. Two of these orders, dated July 

1 and July 29, 1992, claim to award LaPenna final fees in his 

role as Managing Agent. Although the July 1 order is designated 

“Final’ in its title, a handwritten addition delays completion of 

the payment to the Managing Agent until he has submitted his 

final report. As Sheridan has complained in its fee motion, as 

of May 20, 1994, a final accounting had not been submitted by 

LaPenna. In regard to the July 29 order, LaPenna argues on 

appeal that it is actually a final order awarding him final fees 

as Attorney for the Managing Agent. If so, then it conflicts 

with the December 14, 1993, order that purports to accomplish the 

same thing. The finality of the December 14 order is itself 

undermined because the word "final" is written in by hand above 

the title. We thus might have two final orders for LaPenna as 

Managing Agent and two final orders as Attorney for the Managing 

Agent. We might also have no final orders for LaPenna in either 

capacity. In addition, as a practical matter, many of the 

allegedly final orders do not appear to be truly final. For 

example, following the July 29, 1992, "final" order, which 

LaPenna now claims granted him final fees as Attorney for the 

Managing Agent, he continued to perform services and received 

four additional fee awards in that role. We have difficulty 

viewing an order as final when the subject of that order remains 
22

an active participant in a still very active case. 

 Fortunately, we have only one final order for LaPenna 

as Disbursing Agent. This January 19, 1993, order for the 

Disbursing Agent fee is also the last of the awards made by the 

bankruptcy court, and apparently the last one it intended to 

make. For that reason, under the facts of this unusual case, we 

have determined it to be the “final” order which permits an 

appeal of the overall compensation allowed to LaPenna in his 

triple capacities. 

 For the above reasons, we find the bankruptcy court's 

approach to the so-called final orders inconsistent with the 

procedures it should have followed prior to entering a truly 

final order. A given fee application must be examined not only 

on its own terms but also in light of prior awards. See 11 

U.S.C. § 330(a)(5) ("[t]he court shall reduce the amount of 

compensation awarded . . . by the amount of any interim 

compensation awarded under section 331, and, if the amount of 

such interim compensation exceeds the amount of compensation 

awarded under this section, may order the return of the excess to 

the estate"); see also In re Leedy Mortgage Co., 126 B.R. 907 

(Bankr. E.D. Pa. 1991) (examining total fee at conclusion of 

case; revisiting interim awards); cf. In re Public Service Co., 

138 B.R. 660 (Bankr. D.N.H. 1992) (explaining that interim fees 

are an allowance to be credited as part of final fee award for 

entire case). Moreover, when a professional agent or attorney is 
23

performing multiple functions, it may be advisable to examine 

each of the fees awarded to such an applicant to ensure that they 

are properly attributed to the appropriate function. Before 

awarding a final fee, the bankruptcy court should evaluate the 

services performed by the professional in toto to make an overall 

determination of the awards which are merited by the entire 

course of services. No such calculation took place in this case. 

 An additional concern that we have with the total 

amount of the fee awards arises from the fact that LaPenna was in 

effect a trustee, albeit he was titled Managing Agent. LaPenna 

appears to concede that his fees as Managing Agent should be 

computed according to the provisions of 11 U.S.C. § 326 which 

sets limitations on the compensation of trustees. His November 

19, 1991, and the May 27, 1992, applications for compensation for 

the Managing Agent were based on the trustee’s commissions set 

forth in § 326(a). There is disagreement among the parties, 

however, as to whether the $8,100,000 basis upon which these 

commissions were computed was the appropriate figure. This 

element of the basis for the Managing Agent fee would also be 

appropriate to consider in a review of the fees. 

 Because of these problems, we have doubts regarding 

LaPenna's overall fee award. The district court shared our 

concern, and it took steps to review and reduce the fee. While 

we agree with the district court's assessment of the case, we 

cannot agree with the procedure it followed. The district court 
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reviews the proceedings of the bankruptcy court in an appellate 

capacity. A Busy Beaver fee examination, which may entail the 

taking of evidence, including testimony and fact-finding by the 

court, is inappropriate for an appellate tribunal. Nor can such 

a fee dispute be resolved on the briefs. Once the district court 

found the bankruptcy court's treatment of the fee issue 

inadequate, its proper course was to remand the case to the 

bankruptcy court with instructions to perform a Busy Beaver

evaluation. Because the district court relied on supplemental 

briefing to reach an independent determination on the 

reasonableness of LaPenna's fees, we will vacate its judgment. 

 I. CONCLUSION

 We will remand this case to the district court with 

instructions to remand it to the bankruptcy court to undertake a 

Busy Beaver evaluation of the propriety of LaPenna's total fee 

award. In making this calculation, the bankruptcy court must 

consider all fees awarded to LaPenna in each of his three 

capacities. The bankruptcy court should then enter a final award 

that delineates LaPenna's appropriate compensation in his various 

capacities based on his performance throughout the case.