Opinion ID: 1577466
Heading Depth: 1
Heading Rank: 10

Heading: Absence of Controlling Authority

Text: Cohn next argues that because the Bankruptcy Code contains no explicit provision governing post-confirmation fees in Chapter 13 cases, his use of section 1305 to collect post-confirmation fees was a good-faith attempt to extend the law. As the trial court observed, prior to the bankruptcy court's opinion in In re Phillips , there was no definitive rule in the United States Code or in the case law governing post-confirmation fees in Chapter 13 cases. Indeed, [t]he status of a post-petition claim under Chapter 13 [was] somewhat ambiguous. In re Perkins, 304 B.R. 477, 481 (Bankr.N.D.Ala.2004); cf. In re Bottone, 226 B.R. 290, 296-97 (Bankr.D.Mass.1998) (discussing whether attorney's fees incurred in Chapter 7 proceeding are payable upon conversion to Chapter 13); In re Hanson, 223 B.R. 775, 780 (Bankr.D.Or.1998) (following In re Phillips and holding that section 1305 may not be used for post-confirmation attorney's fees). While we agree that the Bankruptcy Code is not a model of clarity on the subject of post-confirmation Chapter 13 attorney's fees, we note that the provisions of the code that do address attorney's fees evince an overarching concern for disclosure. In concluding that section 1305 was an improper vehicle for collecting post-confirmation attorney's fees, the bankruptcy court emphasized the fact that Cohn's procedure evaded meaningful review by the bankruptcy court, the creditors, and his clients. In re Phillips, 219 B.R. at 1008. The court explained that because there is always a potential conflict of interest between the attorney and the debtor when a debtor's attorney seeks additional fees, the code's requirements of full disclosure, notice and a hearing are critical to protect the debtor by assuring review of the attorney's application by both the chapter 13 trustee and the bankruptcy judge, as well as by the debtor. Id. at 1010. Additionally, the testimony before the hearing panel as to local practice and procedures weighs heavily against a finding of good faith as to controlling authority. Judge Brown, Trustee Stevenson, and two expert witnesses testified that when the court granted bankruptcy practitioners the initial fee (based on the presumption of reasonableness), all understood that the fee was intended to cover the entire representation, not just pre-confirmation proceedings. [8] This understanding that the initial fee was to cover the entire case is bolstered by testimony that filing for additional fees was extremely rare. Although we recognize that the Bankruptcy Code is not crystal clear with regard to post-confirmation attorney's fees, we agree with the bankruptcy court and with the hearing panel that inherent in all of the workings of the bankruptcy court is a controlling principle that a full review of all attorney's fees must occur. See also In re Kisseberth, 273 F.3d 714, 721 (6th Cir.2001) (The provisions of the Bankruptcy Code and the Bankruptcy Rules that regulate attorney fees are designed to protect both creditors and the debtor against overreaching attorneys.); 11 U.S.C. § 329 (requiring fee disclosure) and § 330(a)(4)(B) (permitting courts to approve reasonable attorney's fees only upon a determination of benefit and necessity to the debtor). Cohn's procedure subverted this controlling principle and cannot be said to have been in good faith.