Court Opinion

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Opinions of the United
1997 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

3-21-1997

Shareholders v. Sound Radio Inc
Precedential or Non-Precedential:

Docket 95-5174,95-5174

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Recommended Citation
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        UNITED STATES COURT OF APPEALS
            FOR THE THIRD CIRCUIT

                 No. 95-5174

                 SHAREHOLDERS;
         SHERIDAN BROADCASTING CORP.,

                      v.

               SOUND RADIO, INC.
             ta WNJR, RADIO 1430;
              DANIEL E. ROBINSON;
           JEROME J. LA PENNA, ESQ.

               SOUND RADIO, INC.
              ta WNJR RADIO, 1430

                                         Debtor

            (D.C. No. 94-cv-00754)

          SHERIDAN BROADCASTING CORP.

                      v.

              SOUND RADIO, INC.;
              JEROME J. LA PENNA

              SOUND RADIO, INC.,

                                         Debtor

            (D.C. No. 94-cv-04638)

                       *Jerome J. LaPenna &
                        Associates, P.C.,

                                         Appellant

                       *(Pursuant to F.R.A.P. 12(a))

                                         Appellant.

On Appeal from the United States District Court
         for the District of New Jersey
      (D.C. Civil Action No. 94-cv-00754)
                       Argued June 4, 1996

            Before: SCIRICA and ROTH, Circuit Judges
                  and O'Neill1, District Judge

                 (Opinion Filed March 21,1997 )

Harry Heher, Jr., Esq. (Argued)
Heher, Clarke & St. Landau
5 Independence Way
Princeton, NJ 08540

          Attorney for Appellee Shareholders

Sherry A. Vetterlein, Esq. (Argued)
Buchanan Ingersoll Professional Corporation
1835 Market Street
Eleven Penn Center, 14th Floor
Philadelphia, PA 19103

          Attorney for Sheridan Broadcasting Corporation

     Honorable Thomas N. O'Neill, Jr., United States District
Court Judge for the Eastern District of Pennsylvania, sitting by
designation.

                                                                   2
John C. Kennedy, Esq. (Argued)
O'Donnell, Kennedy, Vespole, Piechta & Trifiolis
414 Eagle Rock Avenue
West Orange, NJ 07052

          Attorney for Jerome J. LaPenna & Associates, P.C.

                        OPINION OF THE COURT

ROTH, Circuit Judge:

          Jerome J. LaPenna asks us to review a decision of the

district court, reducing substantial fee awards granted him by

the bankruptcy court in a protracted Chapter 11 proceeding.

LaPenna was the beneficiary of more than $600,000 in fees,

awarded for his services in the three capacities in which he

acted during the Chapter 11 reorganization of Sound Radio, Inc.

The district court found that the total amount of the fees was

unreasonable.   In this appeal, we have had to determine, first of

all, whether there was any timely appeal of the bankruptcy

court’s fee awards.    We concluded that one of the appellees did

file a timely appeal.   This conclusion then permitted us to

inquire whether the bankruptcy court should have considered as a

whole the fees awarded to one person, acting in three capacities,

rather than considering each award separately, and also to

inquire whether the district court properly reduced LaPenna's

fees without remanding the case to the bankruptcy court for that

                                                                    3
court to perform such a review.    Because of the unusual nature of

the role played by LaPenna, in his performance of three different

functions in the reorganization, we conclude that his fees should

be viewed as a whole with a comprehensive evaluation of the

extent and nature of the various tasks he undertook in his three

capacities.   We will remand this case to the district court with

instructions to remand it to the bankruptcy court to make an

overall determination of the reasonableness of the fees.
                             I.   FACTS

          On November 30, 1984, Sound Radio, Inc., an AM radio

station broadcasting under the call letters WNJR, filed its

Chapter 11 bankruptcy petition.    Twelve years later, the

bankruptcy court closed the case.    In re Sound Radio, Inc., No.

84-6261 (Bankr. D.N.J. Apr. 29, 1996).    The proceedings have

already produced four published opinions and countless

unpublished rulings.   See In re Sound Radio, 103 B.R. 521 (D.N.J.

1989) (affirming plan confirmation); In re Sound Radio, 145 B.R.

193 (Bankr. D.N.J. 1992) (considering applications for fees and

expenses by parties other than LaPenna); In re Sound Radio, 93

B.R. 849 (Bankr. D.N.J. 1988) (confirming plan of

reorganization); In re Sound Radio, 59 B.R. 87 (Bankr. D.N.J.
1986) (refusing to lift stay).    Mindful of this extensive record,

we will limit our discussion to events linked directly to the

LaPenna fee dispute.

          The Sound Radio bankruptcy was filed in 1984.      After

                                                                     4
bitter infighting among the shareholders, the reorganization plan

was confirmed on January 5, 1989.                       During the same period, the

shareholder disputes were the subject of litigation in the New

Jersey courts.           The shareholders continued to cause difficulties

in the operation of Sound Radio after the plan confirmation.                                    As

a consequence, the Official Unsecured Creditors Committee moved

for the appointment of a trustee.                     In October 1989, the

bankruptcy court agreed to name a trustee to manage the day-to-

day operations of Sound Radio.                    Sound Radio appealed this

decision to the district court, which modified the bankruptcy

court's order and provided for the appointment of a "Managing

Agent in lieu of a Trustee."                  In re Sound Radio, Inc., No. 84-

6261 (D.N.J. Dec. 22, 1989).                  The position of Managing Agent was

created to avoid the impact of 11 U.S.C. § 1104(a), which

arguably prevents the bankruptcy court from appointing an

operating trustee after a plan of reorganization has been

confirmed.2

               On February 5, 1990, the bankruptcy court appointed

LaPenna as Managing Agent for Sound Radio.                          The appointment was

made pursuant to 11 U.S.C. § 327, which provides for the

employment of professional persons to represent or assist the

trustee in carrying out the trustee’s duties.                              Two days later,

        Section 1104(a) provides in its opening sentence: “At any time after the commencement
of the case but before confirmation of a plan, on request of a party in interest or the United States
trustee, and after notice and a hearing, the court shall order the appointment of a trustee-- . . ..”

                                                                                                     5
the court approved LaPenna's decision to act as his own counsel,

naming him Attorney for the Managing Agent.   On September 19,

1990, the bankruptcy court clarified the powers and authority of

the Managing Agent, stating that the Managing Agent “has, and

since his appointment has had, all of the powers and authority of

a Trustee under Chapter 11 of the Bankruptcy Code.”      On October

2, 1992, the court presented LaPenna with a third hat, making him

Sound Radio's Disbursing Agent.

           The record   is clear that the bankruptcy court was of

the opinion that LaPenna performed all of his duties with

considerable ability.   However, LaPenna also sought substantial

compensation for his services.

           During his tenure, LaPenna filed eleven fee

applications with the bankruptcy court.   Four sought interim fees

as Attorney for the Managing Agent.   Three sought supplemental

fees and one sought final fees in the same capacity.     LaPenna

also filed for interim fees and final fees as Managing Agent, as

well as for final fees as Disbursing Agent.

           The dates, substance, and dispositions of the eleven

fee petitions create a baffling trail of documents and docket

entries.   LaPenna’s first series of applications for fees were

filed in his capacity as Attorney for the Managing Agent.     An

application, requesting $17,050.00 in interim fees, was docketed

on July 13, 1990.   It was awarded in full on September 27, 1990.

  The next application, requesting $23,537.50 in fees and $72.25

                                                                      6
in expenses, was docketed on December 6, 1990.                      It was granted in

full on March 21, 1991.           A third application, requesting

$27,937.50 in interim fees and $329.08 in expenses, was docketed

on August 7, 1991.         It was granted in full on October 17, 1991.

            LaPenna next submitted a series of fee applications as

both Managing Agent and Attorney for the Managing Agent.                          On

November 20, 1991, LaPenna filed an application for interim

compensation as Managing Agent, seeking $65,000.00 in fees.                            The

court granted that application in full on December 16, 1991.                            On

January 24, 1992, LaPenna's filed his fourth application for

interim compensation as Attorney for the Managing Agent, seeking

$32,242.50 in fees and $845.02 in expenses.                    That request was

granted on March 31, 1992.            On May 28, 1992, LaPenna applied for

final compensation in his capacity as Managing Agent, and on June

1, 1992, he applied for final compensation as Attorney for the

Managing Agent.       The May 28 application sought $205,000.00 in

compensation in addition to the amounts already granted.                          The

June 1 application sought $75,357.50 in fees and $894.53 in

expenses, again in addition to what he had already received.

            Certain of the Sound Radio shareholders objected to the

May 28 application as “premature.”                On July 1, the bankruptcy

court granted the May 28 application but held back $30,000 of the

allowed compensation until the Managing Agent filed his final

report.3   On July 29, 1992, the court granted the June 1

     Because non-final allowances of compensation are always subject to the court’s

                                                                                             7
application in full.            Both orders were entitled “Order For Final

Compensation To Managing Agent.”                   No mention was made in either

order of final compensation to LaPenna in his capacity as

Attorney for the Managing Agent.

              This omission was prescient.                Over the next two years,

LaPenna filed three additional applications for fees as Attorney

for the Managing Agent.             On December 11, 1992, LaPenna sought

$92,535.00 in "supplemental fees" and $2,481.55 in expenses.

After shareholder objection, this application was granted in the

reduced sum of $82,500 on March 31, 1993.                      On April 14, 1993,

LaPenna sought $55,830.00 in supplemental fees and $1,510.40 in

expenses.       It was granted on June 9, 1993.                 On October 19, 1993,

in a “third interim supplemental” application, LaPenna sought

$18,250.00 in fees and $1,264.88 in expenses.                        On December 6,

1993, before the bankruptcy court ruled on the previous fee

application, LaPenna filed an application for final fees as

Disbursing Agent, seeking $10,485.12 and $32.80 in expenses.                               On

December 14, 1993, the bankruptcy court granted the October 19

request.      The December 14 order bears the word "final," written

reexamination and adjustment at the conclusion of the case, the deferral of the completion of
payments to the Managing Agent until the filing of his final report would seem to preclude the
July 1, 1992, order from being regarded as a final, and thus appealable, order. See Matter of
Taxman Clothing Co., 49 F.3d 310, 314 (7th Cir. 1995) (“all awards of interim compensation are
tentative, hence reviewable--and revisable--at the end of the case”); 3 LAWRENCE P. KING,
COLLIER ON BANKRUPTCY (15th Ed. Rev. 1996) ¶ 331.04[1] (interim allowances are subject to
reexamination because all administrative expenses “must receive the court’s final scrutiny and
approval.”); ¶ 331.041[2] (“a party seeking to challenge an interim award is not entitled to an
immediate appeal.”)

                                                                                                8
in what appears to be the bankruptcy judge’s handwriting, above

the title, "Order Granting Allowances."4                    On January 19, 1994,

the bankruptcy court granted the December 6 request for the final

fees as Disbursing Agent.

              Prior to the current appeal, Sound Radio’s shareholders

had made only two challenges to the applications for fees.                             The

first, by a group of shareholders “Shareholders”) represented by

Harry Heher, Jr., Esq., was to the application of May 28, 1992,

as being premature.           The second, by Sheridan Broadcasting

Corporation (“Sheridan”), was based on LaPenna’s failure to have

lesser paid associates undertake some of his duties as attorney

for the Managing Agent.              This challenge resulted in the March

31, 1993, reduction of the allowance of fees from $92,535 to

$82,500.

              The appellees are these two groups of Sound Radio’s

shareholders, Sheridan and Shareholders.                     Although the district

court consolidated their challenges in a single appeal, Sheridan

and Shareholders have reached this court by very different paths.

              Shareholders’ appeal began with the bankruptcy court's

order of December 14, 1993, awarding LaPenna final fees as

Attorney for the Managing Agent.                 Harry Heher filed a Notice of

Appeal from that order on December 27, 1993.                      The district court

dismissed the appeal as untimely.                 In his brief before this

       As we note above, the October 19, 1992, petition which requested this allowance was an
application for “interim supplemental” fees and expenses.

                                                                                                9
court, Heher explained the late filing by the fact that LaPenna

never distributed copies of the order to counsel.    Joel R.

Glucksman, counsel to Sound Radio's former minority shareholder

and Board Chairman Daniel E. Robinson, eventually distributed the

order on December 30, 1993.    It arrived at Heher's office on

January 5, 1994, nearly two weeks after the time for appeal had

expired.     Heher, however, had not relied on LaPenna to distribute

the order.    When no order arrived within a week of its entry,

Heher visited the Clerk's Office on December 22, 1993, and

obtained a copy.    He circulated it among his clients, who

requested an appeal.    Heher promptly prepared a Notice of Appeal,

intending to file it on the afternoon of Friday, December 24,

1993.   Because of the Christmas holiday, Heher telephoned the

Clerk's Office to see if it was open.    He received no answer.

Heher filed the Notice of Appeal at the start of business on

Monday morning, December 27.    It bears a time stamp of 9:31 a.m.

           On January 27, 1994, Heher filed an Amended Notice of

Appeal on behalf of Shareholders, changing the subject of the

appeal from the bankruptcy court's December 14 Order to its

January 19 Order, granting LaPenna fees as Disbursing Agent.      The

district court treated this filing as a timely Notice of Appeal

from the January 19 Order.

           Sheridan followed a different course.   It did not file

any appeals from “final” fee orders.     However, on May 23, 1994,

Sheridan filed a pleading styled
Motion of Sheridan Broadcasting for an Order (I) Determining the

                                                                     10
           Final Allowed Compensation to Managing Agent, Attorney
           for Managing Agent and to Disbursing Agent, (II)
           Directing Mr. LaPenna to Reimburse Debtor's Estate for
           Unreasonable and Excessive Interim Compensation Paid to
           Managing Agent, Attorney for Managing Agent, and
           Disbursing Agent, (III) Providing for Final Accounting
           and Distribution of Debtor's Estate and (IV)
           Discharging Managing Agent, Attorney for Managing
           Agent, and Disbursing Agent.

The bankruptcy court denied the motion on August 31, 1994.

Sheridan filed a timely Notice of Appeal.

           The district court assumed jurisdiction over both

appeals.   In an opinion filed December 9, 1994, the district

court explained its assertion of jurisdiction, consolidated the

cases, and directed the parties to file supplemental briefs on

the reasonableness of LaPenna's fees.   By Opinion and Order of

February 10, 1994, the district court reduced those fees by

$101,195.00.   LaPenna appealed.
               I.   JURISDICTION AND SCOPE OF REVIEW

           The bankruptcy court exercised jurisdiction over this

case pursuant to 28 U.S.C. § 157.   The district court asserted

appellate jurisdiction pursuant to 28 U.S.C. § 158(a).   We have

jurisdiction over the appeal from the district court pursuant to

28 U.S.C. § 158(d).   We exercise plenary review over the district

court's determinations and over the bankruptcy court's

conclusions of law.   We review the bankruptcy court's findings of

fact for clear error.   Fellheimer, Eichen & Braverman v. Charter

Technologies, Inc., 57 F.3d 1215, 1223 (3d Cir. 1995).
                          II.   DISCUSSION

                                                                   11
          Put simply, this case is a comedy of errors.    The

parties have repeatedly missed deadlines, misidentified important

facts, and filed cryptic and unhelpful pleadings.    The bankruptcy

court struggled to maintain control over this twelve-year fiasco,

but its orders have not focussed on the overall performance of

Lapenna in his three capacities.

          Although we would like to resolve this case cleanly and

put an end to twelve years of litigation, we cannot so easily cut

the Gordian knot.    First, we have had to determine whether there

was a timely appeal to the district court.     Having done so, we

next considered the manner in which the district court dealt with

the fee awards.    Like the district court, we are concerned about

the total amount of fees awarded to LaPenna.    In coming to this

conclusion,    the district court correctly focussed on the

requirement that LaPenna’s professional services, in all

capacities, as a person appointed under § 327, be reasonable

under § 330:     That they be “reasonable compensation for actual,

necessary services rendered by such trustee, examiner,

professional person, or attorney, as the case may be . . . based

on the nature, the extent, and the value of such services, the

time spent on such services, and the cost of comparable services

. . ..”

          Nevertheless, we believe the district court overstepped

its bounds by reducing the fee award without a remand to the

bankruptcy court.    Section 330(a) appears to permit a fee

                                                                    12
applicant an opportunity to supplement a questioned application

and, in the face of an impending reduction by the court, to have

the opportunity for a hearing.5                     See In re Busy Beaver Bldg.

Ctrs., Inc., 19 F.3d 833, 845 (3d Cir. 1994).                              The district court

reduced LaPenna’s awards without permitting him the opportunity

for a hearing to oppose the reduction or to establish the

reasonableness of his compensation.                        We will therefore reverse

the judgment of the district court and remand this case to the

district court to remand it to the bankruptcy court for a

detailed examination of LaPenna's fees and an assessment of their

overall reasonableness.
                         A.     The Timeliness of the Appeals

                We begin our examination of the merits of this appeal

with the question whether there was a timely appeal filed by

either appellant.             We conclude that Shareholders' first appeal

was untimely but that their second appeal supported appellate

jurisdiction in the district court.                          We reject, however,

Sheridan's efforts to conjure up a novel mechanism for fee

review.

                                                  1.

                Shareholders filed their first Notice of Appeal on

December 27, 1993.              This appeal was untimely, an issue of law

that we have reviewed de novo.                     See In re Saunders, 31 F.3d 767,

   Section 330(a) provides in part: “[a]fter notice . . . and a hearing . . ., the court may award . . .
reasonable compensation for actual, necessary services . . ..”

                                                                                                     13
767 (9th Cir. 1994) (per curiam).

              Shareholders' December 27 Notice appealed the order

filed on December 14, 1993.               Bankruptcy Rule 8002(a) states, "The

notice of appeal shall be filed with the clerk within 10 days of

the date of the entry of the judgment, order, or decree appealed

from."     Bankr. Rule 8002(a).            This deadline is strictly

construed.       In re Universal Minerals, Inc., 755 F.2d 309, 311 (3d

Cir. 1985).        The failure to file a timely notice of appeal

creates a jurisdictional defect barring appellate review.                             Id. at

312.
                                                                                         6
              The shareholders concede the December 24 deadline,

instead arguing that their failure to file was the product of

excusable neglect.           The term “excusable neglect” appears in

Bankruptcy Rule 8002(c), which governs extensions of time for the

notice of appeal deadline. Rule 8002(c) provides:
The bankruptcy judge may extend the time for filing the notice of
          appeal by any party for a period not to exceed 20 days
          from the expiration of the time otherwise prescribed by
          this rule. A request to extend the time for filing a
          notice of appeal must be made before the time for
          filing a notice of appeal has expired, except that a
          request made no more than 20 days after the expiration
          of the time for filing a notice of appeal may be
          granted upon a showing of excusable neglect . . ..

Bankr. Rule 8002(c).

        Had the argument been made, we might have been receptive to a suggestion that an early
closing of the Clerk's Office on Christmas Eve would constitute "other conditions [making] the
clerk's office inaccessible." This would extend the filing deadline until December 27. The
shareholders, however, have not made this argument, nor do we think they have established the
factual predicate to support it. Beyond counsel's claim of a single unanswered
phone call, there is no evidence that the office was in fact closed.

                                                                                             14
          We believe the facts in this case could support a

finding of excusable neglect for the following reasons:   The

finality (and hence appealability) of the December 14 order is a

handwritten addition, no copy of the order was sent to counsel,

counsel himself contacted the Clerk's Office and obtained a copy,

and, once the order was obtained by counsel, the Notice of Appeal

was filed without undue delay.   See Pioneer Investment Servs. Co.

v. Brunswick Assocs., ___ U.S. ___, 113 S.Ct. 1489, 1496, 1499-

1500 (1993) (characterizing excusable neglect as an elastic

concept that encompasses inadvertence, mistake, or carelessness,

as well as circumstances beyond a party's control).   Rule

8002(c), however, requires that even in cases of excusable

neglect, the issue must be raised and the appeal filed within the

30-day window of Rule 8002 (Rule 8002(a)’s 10 days for the appeal

+ 8002(c)’s 20 days for the extension).   See, e.g., Dyotherm

Corp. v. Turbo Machine Co., 434 F.2d 65 (3d Cir. 1970; In re

Botany Indus. Inc., 19 B.R. 599 (Bkrtcy. Pa. 1982).   The rule

does not allow a party to claim excusable neglect after the 30

days have expired.

          Here, Shareholders did not raise excusable neglect in

connection with an appeal within the time limits of Rule 8002(c).

 We cannot find excusable neglect when that issue is raised for

the first time after the expiration of Rule 8002's 30 day period.

 The December 27 appeal was untimely, and as a consequence we

lack jurisdiction over it.

                                                                  15
                                  1.

          We reach a different conclusion regarding Shareholder's

second attempt at appeal.    The Notice filed on January 27, 1994,

appealed the bankruptcy court's January 19 order.    It was

therefore filed at the eight-day mark, within Rule 8002(a)'s

requirements.    Although counsel styled it an "Amended Notice of

Appeal," this title description is not determinative.    It is

clear from the language of the notice that Shareholders were

appealing the January 19 Order.    We hold, therefore, that the

appeal of the January 19 Order was timely.

                                  2.

          We now turn to Sheridan's appeal.    While Shareholders

attempted to secure appellate review through traditional methods,

Sheridan blazed its own procedural trail.    On May 23, 1994,

Sheridan filed the "Motion for Order Determining the Final

Allowed Compensation to Managing Agent, Attorney for Managing

Agent, and Disbursing Agent . . .."    It then appealed the denial

of that order.

          Sheridan cited no rule, statute, precedent, or other

authority supporting the use of such a motion as a vehicle to

challenge the perviously awarded fees.    The motion seems to have

appeared out of nowhere with no warning that it was coming and no

procedural basis upon which to justify its appearance.

Sheridan's brief on appeal adds nothing to explain the basis for

the motion.   Sheridan's motion appears to be little more than an

                                                                    16
attempt to circumvent established procedures of appellate review.

          Aside from certified interlocutory appeals, an issue

not raised by this case, the appellate jurisdiction of the

district court and the court of appeals in bankruptcy matters is

limited by statute to final decisions, judgments, orders, and

decrees of the bankruptcy courts.     See 28 U.S.C. § 158(a)

(district court); 28 U.S.C. § 158(d) (court of appeals).       Appeals

from final orders are governed by the time periods of Rule 8002.

          Our examination of Sheridan’s appeal convinces us that

it is improper.     On the one hand, if Sheridan's motion sought an

independent determination on fees from the bankruptcy court, the

denial of that motion was not a final order appealable under 28

U.S.C. § 158.    On the other hand, if Sheridan's motion sought to

challenge earlier orders purporting to be final orders awarding

fees, then the motion was untimely.     In either case, the district

court had no jurisdiction to hear the appeal.

          Rather than responding to these problems directly,

however, Sheridan makes two arguments in favor of its novel

procedure.    First, it claims that the filing of eleven fee

applications by one individual wearing three different hats

prevented any challenge until all fees had been awarded.       Only

then could Sheridan review the applications, compare them, and

ensure that LaPenna had not double-billed for the same services

on multiple applications.     The district court found this argument

persuasive.     We disagree with the district court’s conclusion,

                                                                      17
however, because LaPenna had received “final” awards for all his

services more than ten days prior to the filing of Sheridan’s

motion.

           Although we are sympathetic to Sheridan's difficulties-

-the fee applications and allowances in this case will never be

cited as   models of clarity--we cannot endorse the route that

Sheridan took.   Sheridan's proper course was to file a notice of

appeal from any order, denominated a final order, to which

Sheridan had objections.   Final usually does mean final.    A

party foregoes such an appeal at its peril.   Far from preventing

a challenge, the entry of an order, entitled “final,” which

grants a confusing fee application, should have suggested the

filing of an appeal.

           This brings us to Sheridan's second argument.    Sheridan

claims that none of the orders entered in this case were final

orders; hence, its method of appeal was not barred.    Sheridan's

belief, however, that the bankruptcy court's orders were not

final does not justify its resort to a novel motion.   Certain of

the orders were labeled final, and Sheridan should have

challenged those orders as they appeared.   Sheridan's subjective

belief in the finality of the orders has no bearing on the

jurisdictional determination.

           In reaching these conclusions, we have considered the

practical problems that Sheridan faced.   We believe that Sheridan

could have addressed these problems by objections to interim

                                                                   18
allowances and by an appeal of the final award.    Sheridan could

easily have addressed its concerns about over-billing and double-

billing by objecting to the fee applications that it found

problematic.   If the bankruptcy court rejected its arguments,

Sheridan could have filed a timely appeal to the district court

and ultimately to us.    Sheridan cannot obtain review at its

leisure by crafting a novel pleading that lacks any basis in law.
                    B.   The Scope of the Appeal

           Having concluded that Shareholders did file a timely

appeal of the January 19 Order, we now turn to the question of

the scope of that appeal.   As we discuss above, LaPenna acted in

three different capacities during the Sound Radio reorganization:

 Managing Agent, Attorney to the Managing Agent, and Disbursing

Agent.   At the time that the fee applications were filed, none of

the shareholders asked for an overall review of LaPenna’s

performance of those functions or of the fee awards for them.

Nor did the bankruptcy court perform such a review sua sponte.

In January 1993, when the last of the awards was made, we had not

specifically ruled on the question of whether such an independent

review by the bankruptcy court was necessary, or even

permissible.   In March 1994, however, we issued our opinion in In
re Busy Beaver Bldg. Ctrs., Inc., 19 F.3d 833 (3d Cir. 1994).     In

Busy Beaver, we not only clarified the authority of the

bankruptcy court to review fee requests sua sponte, we went

further and held that
the bankruptcy court has a duty to review fee applications,

                                                                    19
              notwithstanding the absence of objections by the . . .
              creditors, or any other interested party, a duty which
              the Code does not expressly lay out but which we
              believe derives from the court’s inherent obligation to
              monitor the debtor’s estate and to serve the public
              interest.

19 F.3d at 841.         In light of such a duty to review, it would have

been appropriate for the bankruptcy court on its own initiative

to have examined the fee awards, including whether LaPenna, in

fulfilling three different functions in the Sound Radio

reorganization, correctly allocated his different tasks to the

proper function and whether the fee for each function, as well as

the total fees awarded, accurately reflected LaPenna’s various

responsibilities.7          Moreover, in light of our determination,

since Busy Beaver, that Shareholder’s appeal of the last of the

orders awarding compensation to LaPenna was a valid appeal, we

find that it is proper now to direct the bankruptcy court to

perform a Busy Beaver review of all the interim allowances La

Penna received in order that the court may evaluate LaPenna’s

overall performance of his three functions.                      In addition, because

of the interrelationship of the roles LaPenna performed, we

conclude that a Busy Beaver review of his fees must consider his
overall performance, its contribution to the resolution in the

case, and the correct attribution of each role to the fee awarded

for it.

       Although we decided Busy Beaver after January 19, 1993, the basis for the duty we
described in Busy Beaver was extant in 1993. As we discussed in Busy Beaver, Bankruptcy Rule
2017(b), 11 U.S.C. § 330(a), and 11 U.S.C. § 105(a) provide “clear and compelling authority for
the bankruptcy court’s sua sponte review of fee or expense applications.” 19 F.3d at 841.

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             In coming to a conclusion that a review is needed, we

note that the record before us reveals at least four orders that

purport to be final fee awards.    Two of these orders, dated July

1 and July 29, 1992, claim to award LaPenna final fees in his

role as Managing Agent.    Although the July 1 order is designated

“Final’ in its title, a handwritten addition delays completion of

the payment to the Managing Agent until he has submitted his

final report.    As Sheridan has complained in its fee motion, as

of May 20, 1994, a final accounting had not been submitted by

LaPenna.    In regard to the July 29 order, LaPenna argues on

appeal that it is actually a final order awarding him final fees

as Attorney for the Managing Agent.    If so, then it conflicts

with the December 14, 1993, order that purports to accomplish the

same thing.    The finality of the December 14 order is itself

undermined because the word "final" is written in by hand above

the title.    We thus might have two final orders for LaPenna as

Managing Agent and two final orders as Attorney for the Managing

Agent.   We might also have no final orders for LaPenna in either

capacity.    In addition, as a practical matter, many of the

allegedly final orders do not appear to be truly final.   For

example, following the July 29, 1992, "final" order, which

LaPenna now claims granted him final fees as Attorney for the

Managing Agent, he continued to perform services and received

four additional fee awards in that role.    We have difficulty

viewing an order as final when the subject of that order remains

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an active participant in a still very active case.

            Fortunately, we have only one final order for LaPenna

as Disbursing Agent.   This January 19, 1993, order for the

Disbursing Agent fee is also the last of the awards made by the

bankruptcy court, and apparently the last one it intended to

make.   For that reason, under the facts of this unusual case, we

have determined it to be the “final” order which permits an

appeal of the overall compensation allowed to LaPenna in his

triple capacities.

           For the above reasons, we find the bankruptcy court's

approach to the so-called final orders inconsistent with the

procedures it should have followed prior to entering a truly

final order.    A given fee application must be examined not only

on its own terms but also in light of prior awards.    See 11

U.S.C. § 330(a)(5) ("[t]he court shall reduce the amount of

compensation awarded . . . by the amount of any interim

compensation awarded under section 331, and, if the amount of

such interim compensation exceeds the amount of compensation

awarded under this section, may order the return of the excess to

the estate"); see also In re Leedy Mortgage Co., 126 B.R. 907
(Bankr. E.D. Pa. 1991) (examining total fee at conclusion of

case; revisiting interim awards); cf. In re Public Service Co.,

138 B.R. 660 (Bankr. D.N.H. 1992) (explaining that interim fees

are an allowance to be credited as part of final fee award for

entire case).   Moreover, when a professional agent or attorney is

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performing multiple functions, it may be advisable to examine

each of the fees awarded to such an applicant to ensure that they

are properly attributed to the appropriate function.    Before

awarding a final fee, the bankruptcy court should evaluate the

services performed by the professional in toto to make an overall

determination of the awards which are merited by the entire

course of services.   No such calculation took place in this case.

          An additional concern that we have with the total

amount of the fee awards arises from the fact that LaPenna was in

effect a trustee, albeit he was titled Managing Agent.    LaPenna

appears to concede that his fees as Managing Agent should be

computed according to the provisions of 11 U.S.C. § 326 which

sets limitations on the compensation of trustees.   His November

19, 1991, and the May 27, 1992, applications for compensation for

the Managing Agent were based on the trustee’s commissions set

forth in § 326(a).    There is disagreement among the parties,

however, as to whether the $8,100,000 basis upon which these

commissions were computed was the appropriate figure.    This

element of the basis for the Managing Agent fee would also be

appropriate to consider in a review of the fees.

          Because of these problems, we have doubts regarding

LaPenna's overall fee award.   The district court shared our

concern, and it took steps to review and reduce the fee.    While

we agree with the district court's assessment of the case, we

cannot agree with the procedure it followed.   The district court

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reviews the proceedings of the bankruptcy court in an appellate

capacity.     A Busy Beaver fee examination, which may entail the

taking of evidence, including testimony and fact-finding by the

court, is inappropriate for an appellate tribunal.     Nor can such

a fee dispute be resolved on the briefs.      Once the district court

found the bankruptcy court's treatment of the fee issue

inadequate, its proper course was to remand the case to the

bankruptcy court with instructions to perform a Busy Beaver

evaluation.    Because the district court relied on supplemental

briefing to reach an independent determination on the

reasonableness of LaPenna's fees, we will vacate its judgment.
                            I.   CONCLUSION

            We will remand this case to the district court with

instructions to remand it to the bankruptcy court to undertake a

Busy Beaver evaluation of the propriety of LaPenna's total fee

award.   In making this calculation, the bankruptcy court must

consider all fees awarded to LaPenna in each of his three

capacities.    The bankruptcy court should then enter a final award

that delineates LaPenna's appropriate compensation in his various

capacities based on his performance throughout the case.

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