Court Opinion

ID: 37105
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:49:04+00
Date Added: 2024-06-11T17:15:33.738378
License: Public Domain

United States Court of Appeals
                                                                  Fifth Circuit
                                                               F I L E D
              IN THE UNITED STATES COURT OF APPEALS
                                                              December 16, 2004
                      FOR THE FIFTH CIRCUIT                 Charles R. Fulbruge III
                                                                    Clerk

                           No. 03-30949

In The Matter Of: HAMPTON VILLAGE, INC.

                                          Debtor.

------------------

DWIGHT SMITH; ATLAS ASSOCIATES,

                                          Appellants-Cross-Appellees,

                               versus

JOHN HAAS WEINSTEIN,

                                         Appellee-Cross-Appellant.
                       ____________________

In The Matter Of: HAMPTON VILLAGE, INC.

                                          Debtor.

------------------

DWIGHT SMITH; ATLAS ASSOCIATES,

                                          Appellants-Cross-Appellees,

                               versus

H. KENT AGUILLARD,

                                          Appellee-Cross-Appellant.
                    Appeals from the United States District Court for
                            the Middle District of Louisiana
                              (USDC No. 03-CV-212-D)
           _________________________________________________________

Before REAVLEY, DAVIS and WIENER, Circuit Judges.

REAVLEY, Circuit Judge:*

       We affirm the district court’s ruling which affirmed the bankruptcy court’s order

granting in part the fee applications, for the following reasons:

       1. We apply the same standards of review to a bankruptcy court decision that the

district court applies. In re Pro-Snax Distributors, Inc., 157 F.3d 414, 419-20 (5th Cir.

1998). A bankruptcy court has broad discretion in granting or denying applications for

attorney’s fees. In re Prudhomme, 43 F.3d 1000, 1003-04 (5th Cir. 1995). We review its

ultimate decision approving attorney’s fees for abuse of discretion and its underlying fact

findings for clear error. In re Anderson, 936 F.2d 199, 203 (5th Cir. 1991).

       2. Appellants do not persuade us that the bankruptcy court abused its discretion in

awarding some but not all fees requested by Appellees John Weinstein and H. Kent

Aguillard (the Attorneys). Regarding to the alleged nondisclosures and conflicts of

interest, the bankruptcy court found that “there was a discussion early on in the case

       *
        Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should
not be published and is not precedent except under the limited circumstances set forth in
5TH CIR. R. 47.5.4.

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during a status conference about the way in which Mr. Weinstein and Mr. Aguillard were

going to get paid and I do recall a discussion that Mr. Shaffet[t] was going to be a player

in that equation at some point.” The court noted that while “disclosures could have been

clearer at the commencement of the case,” the representation that a retainer had come

from Richard Shaffett rather that Shaffett, Inc. was to some extent a “red herring.” We

essentially agree with the bankruptcy court’s analysis concerning the retainer payments

and the guaranty and appellants do not persuade us that the court’s order was based on a

clearly erroneous determination of relevant facts or a misunderstanding of the relevant

law. See Esmark Apparel, Inc. v. James, 10 F.3d 1156, 1163 (5th Cir. 1994) (“A district

court abuses its discretion if it bases its decision on an erroneous view of the law or on a

clearly erroneous assessment of the evidence.”). In particular, we agree with the courts

below insofar as they recognized that in a case such as this one, where the debtor is a

closely held corporation, some overlap of interests between the shareholder, Mr. Shaffett,

and the closely held corporations (Shaffett, Inc. and the debtor, Hampton Village, Inc.) is

unavoidable and should be assumed by the parties. The bankruptcy court correctly noted

that in these circumstances the shareholder is necessarily the client contact for debtor’s

counsel. And as the district court aptly noted in summarizing the bankruptcy court’s

reasoning, “it is the nature of small Chapter 11 cases that the interest of the debtor and the

interest of the debtor’s principal are parallel and the Appellees, as the debtor’s counsel,

acted prudently and properly when they advised Mr. Shaffett to retain independent

counsel.”

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       3. In this context, we think the question of whether the Attorneys conferred a

benefit on the estate under Pro-Snax is a mixed question of law and fact, subject to abuse

of discretion review, and appellants do not persuade us that the bankruptcy court abused

its discretion in concluding that the Attorneys had conferred a benefit on the estate

sufficient to justify an award of some fees.

       4. To the extent that the district court remanded to the bankruptcy court the

essentially clerical matter of whether Weinstein’s fee application and the fees awarded to

him properly reflected all the deductions previously ordered by the bankruptcy court, we

agree with the district court that this issue is best remanded to the bankruptcy court, and

to ensure that this issue is not left in a legal limbo by this appeal, we also remand it to the

bankruptcy court.

       5. The Attorneys argue that they are entitled to fees for their efforts in defending

their fee award on appeal. The bankruptcy court did not squarely rule on this question,

but did rule that under Pro-Snax it could not “allow any time, even application time, for

time spent after appointment of the Chapter 11 Trustee.” The Attorneys did not bring a

cross appeal to the district court by filing a notice of appeal in the bankruptcy court. We

will not consider an issue that was not preserved for appeal to the district court. See FED.

R. BANKR. P. 8001(a) (establishing prerequisite of filing notice of appeal to bring appeal

of bankruptcy court order to district court). However, the bankruptcy court may

reconsider this issue on remand if it chooses. The bankruptcy court may also consider the

related question of whether the Attorneys are entitled to fees incurred in litigating the

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appeals to the district court and this court. We do not believe that this question was

squarely decided by Pro-Snax.

       Accordingly, the district court’s ruling is AFFIRMED, and final fee orders are

REMANDED for such further proceedings, consistent with this opinion, as the

bankruptcy court deems necessary.

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