Prebor v. Collins, 143 F.3d 1, 1st Cir. (1998)

143 F.
3d 1
32 Bankr.Ct.Dec. 686
IN RE: I DON'T TRUST, Debtor.

Robert M. PREBOR, Appellant,
v.
Joseph B. COLLINS, Trustee, et al., Appellees.
No. 97-2216.
United States Court of Appeals,

First Circuit.
Heard April 8, 1998.
Decided April 27, 1998.
Carlos M. Gomez, with whom Law Offices of Carlos M. Gomez, P.C.,

Springfield, MA, was on brief, for appellant.
Joseph H. Reinhardt, with whom Hendel, Collins & Newton, P.C.,
Springfield, MA, was on brief, for appellees.
Before SELYA, BOUDIN and LYNCH, Circuit Judges.
PER CURIAM.
On June 24, 1996, Robert M. Prebor, the settlor and beneficiary of the
prophetically named I Don't Trust (the Trust), a Massachusetts business trust,
commenced a voluntary Chapter 11 proceeding on behalf of the Trust. See 11
U.S.C. 1101 et seq. (1993 & Supp.1998). The bankruptcy court approved the
appointment of Joseph B. Collins as trustee and authorized a law firm in which
Collins is a partner, Hendel, Collins & Newton (HCN), to serve as counsel to
the trustee.
Prebor subsequently became dissatisfied with the manner in which the

bankruptcy estate was being administered and moved to dismiss the Chapter 11
case. Collins and HCN responded by filing (i) a motion for expedited
determination based on the fact that the estate had insufficient funds to pay an
upcoming insurance premium, and (ii) a limited objection requesting that
dismissal be contingent upon full payment of administrative expenses incurred

to date, including attorneys' fees and the trustee's commission. The bankruptcy
court granted both motions without holding a hearing and awarded Collins and
HCN compensation (including reimbursed expenses) in the amounts of $534.79
and $12,206.68, respectively.1
3
Prebor moved for reconsideration and for the first time requested a hearing.
The bankruptcy court agreed to rethink the matter but, after hearing oral
arguments, refused to alter its earlier order; to the contrary, the court
determined that the fees it had awarded were neither unreasonable nor
duplicative. In rapid sequence, Prebor paid the award, the bankruptcy court
dismissed the Chapter 11 case, and Prebor appealed.
Following a hearing, the district court affirmed the bankruptcy court's decision.
While noting that the parties disagreed as to the appropriate standard of review,
the district court treated the matter as an appeal from an award of fees and
therefore scrutinized the bankruptcy court's ruling for abuse of discretion. The
court observed however, that it would have upheld the ruling as easily on
plenary review.
Prebor again appeals, arguing that the lower courts misapplied the proper
standards and, in effect, compensated HCN for services that the bankruptcy
trustee ought to have performed without the assistance of counsel; that the fee
requests were not appropriately segregated; that the amounts awarded are
unreasonable because the applicants' services yielded no benefit to the
bankruptcy estate; and that the bankruptcy court should have held an earlier
hearing and permitted the examination of witnesses.2 Discerning no reversible
error, we affirm.
The threshold dispute between the parties concerns the applicable standard of
review. The appellant urges a de novo standard because, in his estimation, the
bankruptcy court did not apply proper legal principles, that is, the court blurred
the distinction between the appropriate duties of a Chapter 11 trustee and the
trustee's counsel. In an appeal from a bankruptcy court decision, this court--like
the district court or the bankruptcy appellate panel--affords de novo review to
the bankruptcy court's conclusions of law. See In re Healthco Int'l, Inc., 132
F.3d 104, 107 (1st Cir.1997); In re DN Assocs., 3 F.3d 512, 515 (1st Cir.1993).
Here, however, the pivotal issue involves the bankruptcy court's award of
reasonable fees--an area in which the court of first instance enjoys particularly
great leeway. See Dickinson Indus. Site, Inc. v. Cowan, 309 U.S. 382, 389, 60
S.Ct. 595, 599, 84 L.Ed. 819 (1940); In re DN Assocs., 3 F.3d at 515; In re
Botelho, 8 B.R. 305, 306 (1st Cir.B.A.P.1981). Apart from the appellant's self-
serving speculation, there is nothing in the record to suggest that the

bankruptcy court did not appreciate the controlling legal rules, or, appreciating
them, defied their dictates. Consequently, we uphold the district court's
determination that abuse of discretion is the applicable standard of review. See
Reliance Steel Prods. Co. v. National Fire Ins. Co., 880 F.2d 575, 577 (1st
Cir.1989) (noting that an appellant cannot avoid a deferential standard of
review by the simple expedient of dressing factual disputes or judgment calls in
"legal costumery").
7
We turn next to the appellant's contention that the bankruptcy court's failure to
hold an immediate, evidentiary hearing undermines the ensuing fee awards.
Under the Bankruptcy Code, the bankruptcy court may, "after notice to the
parties in interest and the U.S. Trustee and a hearing ... award to a trustee, an
examiner, [and] a professional person employed [in compliance with statutory
prerequisites], reasonable compensation for [their] actual, necessary services
rendered." 11 U.S.C. 330(a)(1)(A) (Supp.1998). The words "after notice and
hearing" denote notice and an opportunity for a hearing as appropriate in the
particular circumstances, but a hearing--much less an evidentiary hearing--is
not required in every instance. See 11 U.S.C. 102(1)(A)-(B) (1993)
(providing that a hearing is not necessary if, after proper notice, a hearing is not
seasonably requested by a party in interest, or if there is insufficient time for a
hearing); In re Sullivan Ford Sales, 2 B.R. 350, 354 (Bankr.D.Me.1980)
(applying statute); see also Aoude v. Mobil Oil Corp., 862 F.2d 890, 894 (1st
Cir.1988) (explaining that many matters can be adequately "heard" on the
papers as long as the parties had "a fair opportunity" to offer relevant facts and
arguments to the court and to confront their adversaries' submissions).
In the case at hand, the request for payment of the administrative claims, sent to
the appellant, comprised the requisite notice. Prebor argues that he did not have
an opportunity for a hearing at that time--but any error in failing to convene a
hearing was harmless: Prebor promptly requested reconsideration and the court
unquestionably afforded him an opportunity to be heard with respect to the fee
awards at that time. The holding of that hearing, even if belated, absolved any
error.3 See, e.g., Viqueira v. First Bank, 140 F.3d 12, 16-17 (1st Cir.1998)
(citing other cases). That the hearing did not involve live testimony is beside
any relevant point, for Prebor never specifically requested that the bankruptcy
court hold an evidentiary hearing.
The bankruptcy court's ruling on the merits, too, is supportable. In considering

the administrative claims, the bankruptcy court examined thirteen pages of
detailed, itemized statements that described the work performed by both the
Chapter 11 trustee and HCN to preserve, maintain, collect, and enhance the
estate's assets. This document consists of two separate sections, one

enumerating the trustee's efforts and the other enumerating the law firm's
efforts. The document lists the dates and descriptions of each service, the
identity of the person who performed the service, and the time expended.
10
We have examined the submissions and find them, prima facie, to be in order.
The opposite pan of the scale is empty: the appellant offered no specifics in
rebuttal; he did not identify a single supposedly misclassified item; he did not
produce evidence that cast doubt upon the rates employed. On this rather onesided record, we can hardly fault the bankruptcy court for finding the requested
fees to be reasonable, properly differentiated as between trustee and counsel
services, and beneficial to the bankruptcy estate.
11
The primary thrust of the appellant's remaining asseverations is that the

demarcation between the services performed by Collins, qua trustee, and by
HCN, qua counsel, is not clear, and that, consequently, the aggregate fees are
inflated.4 We do not agree. It is, of course, the fee applicant's burden to
demonstrate that the services for which remuneration is sought involve
compensable service. See In re Shades of Beauty, Inc., 56 B.R. 946, 949-50
(Bankr.E.D.N.Y.1986); In re Four Star Terminals, Inc., 42 B.R. 419, 429
(Bankr.D.Alaska 1984); see also In re Smuggler's Beach Properties, Inc., 149
B.R. 740, 743 (Bankr.D.Mass.1993). The services must be "sufficiently
identified and explained." In re First Software Corp., 79 B.R. 108, 111
(Bankr.D.Mass.1987). But where, as here, the applicant satisfies that entrylevel burden, the objecting party relies on rhetoric as his sole rejoinder at his
peril.
12
To sum up, we agree with the lower courts' assessment that the fee awards are
reasonable and that the supporting documentation offers no evidence of
misclassification or duplication of effort between the trustee and his counsel.
We descry nothing in the record that would lead us to conclude that the lower
courts committed any prejudicial error or abuse of discretion in arriving at their
respective determinations. See In re Martin, 817 F.2d 175, 182 (1st Cir.1987)
("The bankruptcy judge is on the front line, in the best position to gauge the
ongoing interplay of factors and to make the delicate judgment calls which [a
discretionary] decision entails.").
13
One final matter requires our attention. The appellees beseech us to find
Prebor's appeal frivolous and sanction him pursuant to Fed. R.App. P. 38. We
decline to consider the request. A party may not invoke Rule 38 by a reference
in his brief, but, in the words of Rule 38, must initiate "a separately filed
motion." Because the appellees failed to file such a motion, we need go no
further.
14
Affirmed.
We note in passing that the Code subjects trustees' commissions (but not
counsel fees) to a statutory cap. See 11 U.S.C 326(a) (Supp.1998). The
ceiling is computed as a percentage of the assets marshaled by the trustee for
the benefit of creditors. In this instance, the statutory ceiling is approximately
$1260, and the commission awarded is well below it
The appellees argue that Prebor's inartfully drafted notice of appeal targets only
the bankruptcy court's denial of his reconsideration motion, not the fee awards
themselves, and that our review should be limited accordingly. See Fed. R.App.
P. 3(c) (stating that the notice of appeal must designate the challenged order or
judgment); see also Kotler v. American Tobacco Co., 981 F.2d 7, 11 (1st
Cir.1992) (explicating operation of rule). Like the district court, we see no need
to address this argument
Prebor posits that the impetuous granting of fees without a hearing

disadvantaged him because, on a motion for reconsideration, he had the burden
to convince the bankruptcy court that it had erred. This asseveration lacks
force. While the bankruptcy court theoretically might have placed such a
burden on Prebor, as the movant, see In re Sun Pipe Line Co., 831 F.2d 22, 25
(1st Cir.1987), the bankruptcy court here took no such step. As we read the
record, the court applied exactly the same burdens and legal standards at the
reconsideration hearing as were called for in connection with an original fee
award proceeding
This line of argument focuses on the statutory cap applicable to trustees'

commissions, see supra note 1, and suggests that the appellees subverted the
cap by "loading up" the counsel fee side of the ledger

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143 F.

IN RE: I DON'T TRUST, Debtor.

United States Court of Appeals,

Carlos M. Gomez, with whom Law Offices of Carlos M. Gomez, P.C.,

Prebor subsequently became dissatisfied with the manner in which the

dismissal be contingent upon full payment of administrative expenses incurred

serving speculation, there is nothing in the record to suggest that the

The bankruptcy court's ruling on the merits, too, is supportable. In considering

estate's assets. This document consists of two separate sections, one

The primary thrust of the appellant's remaining asseverations is that the

Prebor posits that the impetuous granting of fees without a hearing

This line of argument focuses on the statutory cap applicable to trustees'

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