Court Opinion

ID: 158173
Source: CourtListenerOpinion
Date Created: 2010-08-14 05:17:33+00
Date Added: 2024-06-11T15:02:25.899737
License: Public Domain

F I L E D
                                                                 United States Court of Appeals
                                                                         Tenth Circuit
                      UNITED STATES COURT OF APPEALS
                                                                          JUL 2 1999
                             FOR THE TENTH CIRCUIT
                                                                    PATRICK FISHER
                                                                             Clerk

    In re:

    RIVERMEADOWS ASSOCIATES,
    LTD., a California limited partnership,

                Debtor.                                No. 98-8072
                                                  (D.C. No. 98-CV-56-B)
                                                        (D. Wyo.)
    JEFF WANAMAKER,

                Appellant,

    v.

    THOMAS M. FALCEY, TOM H.
    CONNOLLY, trustees; DONALD
    H. ALBRECHT,

                Appellees.

                             ORDER AND JUDGMENT         *

Before LUCERO , BARRETT , and McKAY , Circuit Judges.

*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
       After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination

of this appeal.   See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.

       This appeal arises from the district court’s affirmance of the bankruptcy

court’s order denying appellant Jeff Wanamaker’s application for reimbursement

of attorney fees and costs. The history of litigation between these parties is

lengthy and complex, and much of the background was set out by this court in

Wanamaker v. Albrecht , No. 95-8061, 1996 WL 582738 (10th Cir. Oct. 10, 1996).

       Pursuant to a settlement agreement, Donald Albrecht executed a promissory

note in favor of Wanamaker for $3,500,000. Albrecht defaulted, and Wanamaker

obtained a judgment on the note in a California court against Albrecht and his

wife. Both the note and the California judgment on the note provided for

recovery of post-judgment attorney fees and costs. Wanamaker domesticated the

judgment in Wyoming. In an attempt to execute on the judgment, Wanamaker

filed suit in Teton County, Wyoming, against, among others, the Albrechts and

an entity in which Albrecht had a large ownership interest, Rivermeadows

Associates, Ltd. Some time after that suit was filed, Rivermeadows and the

Albrechts filed Chapter 11 bankruptcy petitions.

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      Wanamaker filed proofs of claim in both bankruptcy estates, and, after

extensive negotiations, Wanamaker entered into a settlement agreement with the

Chapter 11 trustees of the Albrecht and Rivermeadows bankruptcy estates. The

settlement agreement provided for payment in full of Wanamaker’s claims against

the Albrechts and the claims that Wanamaker asserted against Rivermeadows in

his attempt to satisfy the judgment against the Albrechts. The agreement

provided that payment to Wanamaker was to be made out of the Rivermeadows

estate in exchange for his assignment of the California judgment against Albrecht

and other rights and interests he had obtained in enforcing the judgment. The

settlement agreement specified that Wanamaker’s claim included “all principal,

interest, attorneys’ fees and costs recoverable pursuant to the California

Judgment, regardless of when incurred, through the date of payment in full on

the Wanamaker Claim.” Appellant’s App. at 22.

      Pursuant to Fed. R. Bankr. P. 9019(a), the parties moved the bankruptcy

court for approval of the settlement agreement, and the bankruptcy court entered

an order approving the settlement agreement subject to one exception. With

regard to the provision to pay Wanamaker’s post-petition attorney fees and costs,

the bankruptcy court ordered that “the trustees do not have the ability to bargain

away the court’s authority under [11 U.S.C.] § 506(b) [to review and allow

attorney fees sought as part of a secured claim], even if they can negotiate their

                                         -3-
own assessment of a claim.”    Id. at 61. The bankruptcy court ordered that it

would entertain an application under § 506(b) for attorney fees and costs.

      Wanamaker filed an application for attorney fees and costs pursuant to

§ 506(b). Both Albrecht and the trustee of the Albrecht estate, and the

Rivermeadows estate trustee commented on the application. The bankruptcy court

denied the application, finding that Wanamaker was not entitled to fees and costs

under § 506(b). The court considered relevant Supreme Court and bankruptcy

court case law and interpreted that statute as allowing fees and costs to an

oversecured creditor only when fees and costs are provided for “under      the

agreement under which the allowed secured claim arose. (Emphasis provided).”

Appellant’s App. at 161 (citing § 506(b)). The bankruptcy court found that the

allowed secured claim arose out of a judgment, which is a nonconsensual lien.     Id.

      On appeal, the district court affirmed the bankruptcy court’s denial of

the application for attorney fees and costs. The district court agreed with the

bankruptcy court’s interpretation of § 506(b) and held that fees and costs were

not allowable under that section because the secured claim arose from the

nonconsensual state court judgment, and not from the consensual settlement

agreement. We review the district court’s interpretation of a federal statute

de novo . See F.D.I.C. v. Canfield , 967 F.2d 443, 445 (10th Cir. 1992). “When

an issue concerns a question of law, the standard of review on appeal is the same

                                          -4-
as that applied by the trial court in making its initial ruling. Thus, we afford no

deference to the district court’s opinion.”       Gledhill v. State Bank of S. Utah (In re

Gledhill) , 164 F.3d 1338, 1340 (10th Cir. 1999) (citations omitted). Guided by

these standards, we affirm.

       The statute we are called upon to interpret, 11 U.S.C. § 506(b), provides:

       To the extent that an allowed secured claim is secured by property
       the value of which, after any recovery under subsection (c) of this
       section, is greater than the amount of such claim, there shall be
       allowed to the holder of such claim, interest on such claim, and any
       reasonable fees, costs, or charges provided for under the agreement
       under which such claim arose.

We recently interpreted this statute in       In re Gledhill , 164 F.3d at 1340-43.

Guided by the Supreme Court’s decision in             United States v. Ron Pair Enters.,

Inc., 489 U.S. 235 (1989) , we held that “only creditors having oversecured

consensual claims may recover attorney fees, costs, or other charges under

§ 506(b).” In re Gledhill , 164 F.3d at 1342. We agree with the district court that

the allowed secured claim in this case arose from the state court judgment, and,

as such, it is not a consensual claim. Wanamaker sued Rivermeadows seeking

satisfaction of his judgment lien; his judgment lien was the basis of his claim on

property owned by Rivermeadows. After Rivermeadows and Albrecht filed for

bankruptcy, Wanamaker and the trustees of the two bankruptcy estates began

negotiations to settle the claims against Rivermeadows, which arose from the

state court judgment against Albrecht. Because the genesis of the claim against

                                                -5-
Rivermeadows was the nonconsensual judgment against Albrecht, § 506(b) does

not provide for fees and costs from the Rivermeadows estate.      See id.

      Wanamaker argues that the settlement agreement was the only agreement

between himself and Rivermeadows, and, therefore, that is the agreement under

which his claim arose. We disagree with his contention that the district and

bankruptcy courts ignored this argument. To the contrary, it is clear that the

district court understood Wanamaker’s position on this point, but it declined to

view the settlement agreement in a vacuum and ignore the events that led to the

settlement agreement.

      We also agree with the district court that the parties “do not have the ability

to bargain away the court’s authority under § 506(b), even if they can negotiate

their own assessment of a claim.” Appellant’s App. at 176 (quoting bankruptcy

court order at 6). For this reason, the bankruptcy court did not abuse its

discretion in approving the settlement agreement with the exception of the

attorney fees and costs provision, in order that the court fulfill its statutory

obligation to consider the payment of attorney fees and costs pursuant to § 506(b).

Wanamaker cites Continental Airlines, Inc. v. Air Line Pilots Ass’n, Int’l (In re

Continental Arilines Corp.) , 907 F.2d 1500 (5th Cir. 1990), in support of his

argument that the bankruptcy court did not have discretion to modify the material

terms of the agreement. The holding of that case does not support his argument.

                                           -6-
The Fifth Circuit held in that case that Bankruptcy Rule 9019(a) did not give the

bankruptcy court “the power to condition its approval of a settlement upon

judicial modification of what it perceives to be an ‘unfair’ negotiated labor

settlement when those labor grounds are unrelated to the substantive provisions

of the Bankruptcy Code. ” Id. at 1508 (emphasis added). The court determined

that, because the labor grounds were unrelated to the substantive provisions of

the statutes, “the settlement [agreement] itself [was] the source of the bankruptcy

court’s authority with respect to the labor provisions of the settlement.”      Id.

       Unlike the situation in    In re Continental Airlines Corp.   , here the exception

the bankruptcy court made to its approval of the settlement agreement is anything

but unrelated to the Bankruptcy Code; it is, in fact, directly related. The

bankruptcy court’s obligation to assess and approve payment by the estate of

attorney fees and costs is dictated by the Code under § 506(b). In fact, if

anything, In re Continental Airlines Corp.       implies that the bankruptcy court in

this case did have authority under Rule 9019(a) to approve the settlement

agreement with the exception of the provision for attorney fees and costs, the

propriety of which it was obligated to evaluate under § 506(b). That particular

“modification” had direct bearing on and was, in fact, necessitated by “the court’s

duties to preserve the estate and to protect its creditors.”    In re Continental

Airlines Corp. , 907 F.2d at 1509.

                                              -7-
    The district court’s affirmance of the bankruptcy court’s decision is

AFFIRMED.

                                                 Entered for the Court

                                                 James E. Barrett
                                                 Senior Circuit Judge

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