Court Opinion

ID: 4180824
Source: CourtListenerOpinion
Date Created: 2017-06-26 20:04:05.561621+00
Date Added: 2024-06-11T14:38:58.928624
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS
                                                                           FILED
                           FOR THE NINTH CIRCUIT
                                                                            JUN 26 2017
In re: MORRY WAKSBERG M.D., INC.,                No. 16-60004           MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

          Debtor.                                B.A.P. No. CC-15-1109-TaKuKi
_________________________

THE BANKRUPTCY LAW FIRM, P.C.,                   MEMORANDUM*

              Appellant,
 v.

ALFRED H. SIEGEL, Chapter 7 Trustee,

          Appellee.
_________________________

DANIEL A. LEV; DANIEL JOSEPH
MCCARTHY; UST - UNITED STATES
TRUSTEE, LOS ANGELES.

                           Appeal from the Ninth Circuit
                            Bankruptcy Appellate Panel
             Taylor, Kurtz, and Kirscher, Bankruptcy Judges, Presiding

                        Argued and Submitted June 6, 2017
                              Pasadena, California

      *
        This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: GRABER, SACK,** and MURGUIA, Circuit Judges.

      The Bankruptcy Law Firm, PC (“BLF”), appeals an order issued by the

bankruptcy court and affirmed by the Bankruptcy Appellate Panel partially

granting BLF’s request for administrative expenses under 11 U.S.C.

§ 503(b)(1)(A). We affirm in part, reverse in part, and remand with instructions to

modify the administrative-expenses award.

      1. The bankruptcy court correctly determined that BLF was not entitled to

“expenses” – in this context, legal fees – related to its defense of its fee application.

Because § 503(b)(1)(A)(i) neither contains fee-shifting language nor otherwise

abrogates the so-called American Rule that each party to litigation ordinarily bears

its own legal expenses, BLF was not entitled to legal fees related to the defense of

its fee application under that provision. See Baker Botts L.L.P. v. ASARCO LLC,

135 S. Ct. 2158, 2166 (2015).

      2. The bankruptcy court erred, however, by denying BLF’s request for

expenses related to the preparation – as opposed to the defense – of its fee

application. Section 503(b)(1)(A)(i) permits an award of administrative expenses

for “services rendered.” 11 U.S.C. § 503(b)(1)(A)(i). The “preparation of a fee

       ** The Honorable Robert D. Sack, United States Circuit Judge for the
Court of Appeals for the Second Circuit, sitting by designation.

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application is best understood as a ‘servic[e] rendered.’” Baker Botts, 135 S. Ct. at

2167. We therefore reverse that part of the bankruptcy court’s fee award declining

BLF’s request for expenses related to the preparation of its fee application.

Although it denied this request, the bankruptcy court nonetheless determined that

those fees and costs amounted to $4,000.00. See Memorandum Decision Granting

in Part Request for Allowance and Payment of Administrative Claim by the

Bankruptcy Law Firm at 21 n.11, In re Morry Waksberg MD Inc., No. 2:06-bk-

16101-BB (C.D. Cal. Bankr. Apr. 1, 2015), ECF No. 755 (hereinafter “Fee

Award”). That amount was reasonable. We therefore remand this case to the

bankruptcy court with instructions to modify its order as to the Fee Award

accordingly.

      3. The bankruptcy court’s assessment of expenses otherwise owed to BLF

was not an abuse of discretion. See Burlington N. R.R. Co. v. Dant & Russell, Inc.

(In re Dant & Russell, Inc.), 853 F.2d 700, 707 (9th Cir. 1988) (discussing the

standard of review). “We will not disturb a bankruptcy court’s award of attorney’s

fees absent an abuse of discretion or an erroneous application of the law.” Law

Offices of David A. Boone v. Derham-Burk (In re Eliapo), 468 F.3d 592, 596 (9th

Cir. 2006) (internal quotation marks omitted). “A compensation award based on a

reasonable hourly rate multiplied by the number of hours actually and reasonably

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expended is presumptively a reasonable fee.” Burgess v. Klenske (In re Manoa

Fin. Co.), 853 F.2d 687, 691 (9th Cir. 1988). The bankruptcy court explained its

decision to downwardly adjust BLF’s requested fees with reference to, inter alia,

the work actually and reasonably performed, the value of that work to the estate,

the performance of BLF’s attorneys, and the reasonable hourly rates for such work

with reference to several factors including prevailing community rates. See Fee

Award at 12-20. The Fee Award was not an abuse of discretion.

      4. BLF argues that it is entitled to a fee award under Reading Co. v. Brown,

391 U.S. 471 (1968). Because we agree with the bankruptcy court’s order partially

granting BLF’s fee request under 11 U.S.C. § 503(b)(1)(A), we need not, and

therefore do not, reach this issue.

      5. Finally, the Trustee argues that BLF was not entitled to fees under 11

U.S.C. § 503(b)(1)(A) because it acted in its own self-interest. The Trustee did not

cross-appeal the order partially granting BLF’s request for administrative

expenses. See Engleson v. Burlington N. R.R. Co., 972 F.2d 1038, 1041 (9th Cir.

1992) (“Generally, a cross-appeal is required to support modification of the

judgment . . . .” (internal quotation marks omitted)). Accordingly, we conclude

that this argument was waived and therefore do not reach the issue on appeal.

      AFFIRMED IN PART; REVERSED AND REMANDED IN PART.

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The parties shall bear their own costs on appeal.

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