Court Opinion

ID: 3165600
Source: CourtListenerOpinion
Date Created: 2015-12-24 21:00:55.991234+00
Date Added: 2024-06-11T12:27:10.996001
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                           DEC 24 2015
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

In re: GROTH BROTHERS                            No. 13-60111
OLDSMOBILE, INC., dba Groth Brothers
Chevrolet,                                       BAP No. 12-1482

              Debtor.
                                                 MEMORANDUM*

GROTH BROTHERS OLDSMOBILE,
INC., dba Groth Brothers Chevrolet,

              Appellant,

 v.

JOHN T. KENDALL; et al.,

              Appellees.

                           Appeal from the Ninth Circuit
                            Bankruptcy Appellate Panel
               Dunn, Jury, and Pappas, Bankruptcy Judges, Presiding

                           Submitted December 9, 2015**
                             San Francisco, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: GRABER, WARDLAW, and MURGUIA, Circuit Judges.

      Groth Brothers Oldsmobile, Inc. (Groth) appeals the Bankruptcy Appellate

Panel’s (BAP) decision affirming the bankruptcy court’s denial of William L.

Needler and William F. Ghiringhelli’s motion for retroactive approval of

employment as Groth’s chapter 11 counsel. We have jurisdiction under 28 U.S.C.

§ 158(d). We review decisions of the BAP de novo. Atkins v. Wain, Samuel & Co.

(In re Atkins), 69 F.3d 970, 973 (9th Cir. 1995). We affirm.

      1. The bankruptcy court did not abuse its discretion in declining to hear

Needler’s employment application until Ghiringhelli’s application as local

co-counsel had been approved or set for a hearing. Local rules of the Bankruptcy

Court for the Northern District of California require out-of-district counsel for

chapter 11 debtors to associate local co-counsel. See Bankr. N.D. Cal. R.

9010-1(a); N.D. Cal. Civ. R. 11-3(a). The bankruptcy court’s decision to condition

its consideration of Needler’s employment application upon its consideration of

local co-counsel’s application was a reasonable application of these local rules.

See Nunez v. Nunez (In re Nunez), 196 B.R. 150, 157 (B.A.P. 9th Cir. 1996) (“The

bankruptcy court has broad discretion to apply its local rules strictly or to overlook

any transgressions.”).

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      2. The bankruptcy court did not abuse its discretion in denying Needler’s

and Ghiringhelli’s employment nunc pro tunc as Groth’s chapter 11 counsel.

Professionals seeking retroactive approval of employment by a chapter 11 debtor

must “(1) satisfactorily explain their failure to receive prior judicial approval; and

(2) demonstrate that their services benefitted the bankrupt estate in a significant

manner.” In re Atkins, 69 F.3d at 974. Needler and Ghiringhelli failed to satisfy

these requirements. First, their failure to receive prior judicial approval of their

employment resulted from their own failure to comply with the court’s instructions

for applying. Second, neither rendered services that significantly benefitted the

Groth estate. Ghiringhelli’s sole legal service was to sign Groth’s chapter 11

petition. Needler played a more substantial role but performed deficiently.

Specifically, Needler did not effectively assist Groth in complying with the

requirements of chapter 11. Moreover, Needler’s efforts to secure floor plan

financing and to sell the Groth franchise were unsuccessful and did not provide any

benefit to the Groth estate. The bankruptcy court properly determined that Needler

and Ghiringhelli did not meet the requirements for employment nunc pro tunc as

Groth’s chapter 11 counsel.

      3. The bankruptcy court did not abuse its discretion in denying

compensation and reimbursement of expenses to Needler. “Failure to receive court

                                          -3-
approval for the employment of a professional . . . precludes the payment of fees.”

DeRonde v. Shirley (In re Shirley), 134 B.R. 940, 944 (B.A.P. 9th Cir. 1992).

Needler did not receive court approval for his employment. As a result, Needler is

not entitled to compensation or reimbursement of expenses as Groth’s chapter 11

counsel.

      AFFIRMED.

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