In Re ANGELA DABBRACCIO-TITUS, Debtor.
UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF NEW YORK UTICA DIVISION, Appellee. CRAIG C. HUMPLEBY, Appellant,
DECISION and ORDER
LAWRENCE E. KAHN, District Judge.
Appellant Craig Humpleby ("Appellant"), counsel for Angela Debbraccio-Titus ("Debtor"), the Chapter 13 Debtor below, appeals a decision of the U.S. Bankruptcy Court for the Northern District of New York denying Appellant's application for compensation ("AFC"). Dkt. No. 1-2 at 1. Debtor's Chapter 13 case was not "confirmed" by the New York State Department of Taxation and Finance ("NYSDTF"), and Appellant did not meet his burden of proving that he is entitled to compensation above what he was paid at the outset of the case. AFC Transcript from June 28, 2011 (Dkt. No. 2-9) ("Tr. B") at 3. The Court affirms the bankruptcy court's ruling and denies Appellant's appeal to recover additional fees.
A. Factual History
On October 26, 2011, Appellant submitted a Chapter 13 bankruptcy plan to the NYSDTF on behalf of his client, Dabbraccio-Titus. Dkt. No. 2-3 at 1. Debtor owns a pizzeria in Norwich, New York, and filed a plan for Chapter 13 bankruptcy agreeing to pay the Trustee "not less than $120, 000.00" as a result of unpaid New York State taxes totaling $89, 136.29 and interest of 14 percent. Id . On January 5, 2012, a confirmation hearing was held by the NYSDTF, which submitted that Debtor's plan should not be confirmed. Dkt. No. 2-4 at 1.
Debtor agreed to pay Appellant a total flat fee of $3, 700.00 by the end of the case for all legal services. Dkt. No. 2-2 at 4. Debtor paid Appellant $1, 226.00 of the fee prior to filing. Dkt. No. 2-2 at 4. After the NYSDTF denied confirmation of the plan, Appellant requested that the Trustee pay him the remaining $2, 474.00. Dkt. No. 2-1 at 9. Maxsen Champion, staff attorney for the Trustee, requested that Appellant's "motion for additional attorneys fees be supplemented with time records." Dkt. No. 2-11 at 2. As a result, Appellant filed an AFC with the bankruptcy court. AFC Transcript from May 31, 2012 (Dkt. No. 2-10) ("Tr. A") at 2. On May 31, 2012, the Honorable Diane Davis, U.S. Bankruptcy Judge, adjourned the initial AFC proceeding so that: (1) Appellant and the NYSDTF might be able to revise and present a confirmable plan to the court; and (2) Appellant could present time records or an hourly breakdown of his work to the court. Id . After the adjournment, Appellant reported that negotiations with NYSDTF were unsuccessful and that confirmation of Debtor's Chapter 13 plan was "not going to happen." Tr. B at 2. Appellant provided no time records. See Tr. B. Judge Davis therefore denied Appellant's AFC pursuant to 11 U.S.C. § 330. AFC Denial Order (Dkt. No. 2-5) ("AFC Denial") at 1. Appellant then appealed Judge Davis's decision. Dkt. No. 1-3 at 1.
B. Decision Below
At the initial AFC proceeding on May 31, 2009, Judge Davis explained that when an attorney accepts a flat fee, the maximum allowable legal fee for services rendered to the debtor when "a Chapter 13 case is filed in the Utica Division of the Northern District of New York" is $3, 700.00. Dkt. No. 2 at 1. She then observed "[t]he $3, 700.00 is from cradle to grave and we've barely got up walking." Tr. A at 9. Because Debtor's plan was not confirmed, Appellant's fee was not automatically approved by the bankruptcy court and was subject to scrutiny by Judge Davis, who ultimately denied the flat fee. 11 U.S.C. § 330; Local Bankruptcy Rule 2016-2; see also Tr. B.
In a Chapter 13 case, "[t]he [c]ourt may set a hearing sua sponte to review the attorney's fee requested, which may be scheduled at the same time as the confirmation hearing." Local Bankruptcy Rule 2016-2(a). Judge Davis did just that and instructed Appellant to provide time records at the subsequent AFC proceeding. Tr. A at 9. Judge Davis explained to Appellant that in an unconfirmed case the court determines whether a fee is reasonable. Tr. B at 11; Local Bankruptcy Rule 2016-2. "If such compensation exceeds the reasonable value of any such services, the court may cancel any such agreement or order the return of any such payment to the extent excessive." 11 U.S.C. § 329(b). Judge Davis did not order Appellant to return any of the $1, 226.00 he had received initially. See Tr. B.
After the AFC proceeding was adjourned for the two reasons listed supra, Appellant submitted no time records to the court. Tr. B at 3. As a result, Judge Davis said, "[t]he court provided you with an opportunity to give it time records because this is an unconfirmed case... so under [11 U.S.C. § 330] I need to know that what has been done so far was reasonable and necessary. You chose not to do that." Id. at 11. Judge Davis then denied Appellant's motion for compensation. AFC Denial at 1.
III. STANDARD OF REVIEW
On appeal, a district court reviews a bankruptcy court's factual findings for clear error and its legal conclusions de novo. County of Clinton v. Warehouse at Van Buren St., Inc., No. 12-CV-1636, 2013 WL 2145656, at *1 (N.D.N.Y. May 15, 2013) (citing R2 Invs., LDC v. Charter Commc'ns, Inc. (In re Charter Commc'ns, Inc.) , 691 F.3d 476, 483 (2d Cir. 2012)). "A finding is clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." United States v. U.S. Gypsum Co. , 333 U.S. 364, 395 (1948). Following review, a ...