MEMORANDUM DECISION AND ORDER
In this сonsolidated appeal involving twenty-six Chapter 7 bankruptcy estates
1
Erie C.
Thе second order, entered January 12, 1998 following a January 8, 1998 hearing, denied Kurtzman’s application for retention of the law firm of Stein Riso Haspel & Jacobs LLP as attorneys for Kurtzman as trustee under 11 U.S.C. § 327(a) in eighteen cases 2 because the firm would not reduce its hourly rate to what the Court concluded was the prevailing $200.00 maximum charged by similar firms for comparable legal services within the Court’s seven-county venue.
For the reasons stated below, both orders of the Bankruptcy Court are affirmed.
DISCUSSION
Under 28 U.S.C. § 158(a) and (c), the District Court is authorized to exercise appellate jurisdiction over final orders of the Bankruptcy Court.
See
Bankr.Rule 7052 (incorporating Fed.R.Civ.P. 52); Bankr.Rule 8013. Aсcordingly, this Court reviews the Bankruptcy Court’s conclusions of law
de novo
and its factual findings under a “clearly erroneous” standard.
In re Maxwell Newspapers, Inc.,
With respect to the January 28, 1998 Order declining to appoint Kurtzman’s firm to represent him as trustee, Kurtzman has not demonstrated that the Court below abused its discretion in declining to allow the representation. The Judge’s findings, that retention of Kurtzman’s firm under 11 U.S.C. § 327(d) would not be in the best interest of the estates, were set forth in considerable detail at the October 14, 1997 hearing. (See, e.g., Transcript pp. 14-39.) The Court’s findings were based upon extensive dealings with that firm over the prior two years. The Court gave a number of general examples of prior problems involving time records, billing errors, professional conduct, and overall costs of legal services that had led to its conclusion of loss of confidence in the firm.
Appellant argues that the procedures followed below in reaching these conclusions did not comport with due process, because inadequate specificity with respect to the particular deficiencies the Court relied upon precluded any meaningful response. The contours of the notice and the formality of the hearing required by due process are not fixed, but depend on the character of the proceeding in question.
See, e.g., Mathews v. Eldridge,
Although at oral argument counsel sharply alluded to the taint of bias or personal animosity on the proceedings below, no evidence of any consideration other than professional conduct was presented at the October 14, 1997 hearing and none is apparent from the record. Although Appellant points to the fact that the United States Trustee did not oppose the application, thе decision as to what comports with “the best interest of the estate” rests with the Court, not with the United States Trustee. See 11 U.S.C. § 327(d). Based on the record presented, this Court is unable to conclude that the lower Court’s findings were clearly еrroneous or that it abused its discretion in declining to appoint the Trustee’s firm as his counsel. The January 28,1998 Order is therefore affirmed.
The January 12,1998 Order declining to appoint the Stein Riso firm was entered pursuant to 11 U.S.C. § 327(a). That provision provides:
(a) Except as otherwise provided in this section, the trustee, with the court’s approval, may employ one or more attorneys, ... that do not hold or represent an interest adverse to the еstate, and that are disinterested persons, 4 to represent or assist the trustee in carrying out the trustee’s duties under this title.
Appellant argues that under this provision, the Bankruptcy Court’s denial of Kurtzman’s application to rеtain the Stein Riso firm to represent Kurtzman as trustee was also erroneous. Joseph Haspel of that firm insisted on receiving $295 per hour for his work. The Bankruptcy Court determined that the proposed $295 hourly fee for Haspel was excessive in light of the modest assets of the estates involved, the work to be performed, and the prevailing rates within the geographic area of the Bankruptcy Court, and indicated that it would apprоve the application only if the work were done at the rate of $200 per hour. Haspel refused the reduction, contending he would lose money at that rate.
Section 327(a) provides that court apprоval is necessary before a trustee can retain counsel. While the test of the disinterestedness of the attorney is one consideration for the court in determining whether to approve a trustee’s choiсe of attorney, nowhere in the statute is the court’s discretion limited to determinations of disinterestedness. Indeed, the purpose of § 327 is: “to insure
in advance
both that the person’s employment is necessary to the estate and thаt the person employed is disinterested and able to serve the best interests of the estate.”
In re That’s Entertainment Mar-
Appellant cites In re Marvel Entertainment Group, Inc., supra, in support of his argument that the bankruptcy court’s analysis is limited to determining questions of disinterestedness. Marvel, however, concеrned an analysis of § 327(a) with respect to potential conflicts of counsel. In that case, the trustee moved for an order authorizing employment of a law firm as counsel for the trustee. Id. at 470. Because the firm hаd represented a creditor in the bankruptcy in unrelated proceedings, the court denied the trustee’s motion after a hearing. Id. The Court of Appeals reversed, holding that under § 327(a), only an actual or potеntial conflict of interest allowed a district court to disqualify an attorney as trustee’s counsel. Marvel, however, did not bar considerations other than conflict of interest in a court’s determination of whether to appoint an attorney as trustee’s counsel under § 327. Thus, while disinterestedness and the absence of conflicts may be central to the inquiry, they are by no means exclusive. Indeed, section 327(a) vests the authority for “approval” within the sound discretion of the Court. That authority would be eviscerated were the Court required to approve counsel who met the technical test for disinterest but was ill-suited for other reasons such as, for example, inexperience. See 11 U.S.C. § 101(14).
Moreover, 11 U.S.C. § 328(a) suggests a broader understanding of the scope of the court’s discretion in approving or disapproving a trustee’s choice of attorney:
(a) The trustee, ... with the court’s approval, may employ or authorize the employment of a professional person under section 327 ... of this title, as the case may be, on any reasonable terms and conditions of employment, including on a retainer, on an hourly basis, or on a contingent fee basis.
By implication, then, under 11 U.S.C. § 328(a) a court may disapprove a trustee’s choice of counsel if the proposed rate of compensation is not reasonable.
Appellant disputes the Bankruptcy Court’s determination of the excessiveness of the hourly rate, and contends that local billing rates should not factor into the fees the Court is willing to entertain. On thе record presented, however, there is no evidence that the Court’s understanding of the maximum geographic hourly rate is clearly erroneous. Further, bankruptcy courts are permitted to take into account the local billing rates in determining the proper compensation for attorneys.
See, e.g., In re Palm Beach Cruises, S.A.,
CONCLUSION
For the foregoing reasons, the January 12, 1998 and January 28, 1998 Orders of the Bankruptcy Court are affirmed.
SO ORDERED.
Notes
.
In re: Rory G. Pilcher and Joanne Pilcher,
98 Civ. 1416(BDP);
In re: Carlos Montoya,
98 Civ. 1417(BDP);
In re: Richard J. Cimino, Sr. and Judith N. Cimino,
98 Civ. 1419(BDP);
In re: Carol P. Collins,
98 Civ. 1420(BDP);
In re: Glen T. Mitchell,
98 Civ. 1421(BDP);
In re: Scott M. Lash and Caren D. Lask,
98 Civ. 1423(BDP);
In re: Dorothea A. Judson,
98 Civ. 1424(BDP);
In re: Jonathan Kern,
98 Civ. 1428(BDP);
In re: Feti Canpolat,
98 Civ. 1431(BDP);
In re: Charles
. Five cases affected by the two orders are apparently not being appealed.
. More to the point, in order to establish a valid claim for deprivation of procedural due process, Appellant must show that he was deprived of some sort of property interest.
Dwyer v. Regan, 777
F.2d 825, 829 (2d Cir.1985). In order "to have a proрerty interest in a benefit, a person clearly must have more than an abstract need or desire for it.”
Bd. of Regents of State Colleges
v.
Roth,
. 11 U.S.C. § 101(14) includes in its definition of "disinterested person” a "person that — (4)27 (E) does not have an interest materially adverse to the interest of the estate or of any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the debtor or an investment banker specified in subparagraph (B) or (C) of this paragraph, or for any other reason(4)27”