Lavender v. Wood Law Firm

785 F.2d 245 | 8th Cir. | 1986

PER CURIAM.

The Wood Law Firm appeals a district court’s ¹ summary affirmance of a bankruptcy court’s² order directing it to reimburse the bankruptcy estate for fees it had received. We affirm.

Appellant made this application for compensation pursuant to Bankruptcy Rule 2016 for services provided to J.L. Lavender and Mary Lavender, individually, and J.L. Lavender d/b/a Lavender Construction Company. The Lavenders are seeking reorganization under Chapter XI of the Bankruptcy Code. 11 U.S.C. §§ 1101 et seq. The bankruptcy court had authorized the Lavenders to employ appellant to represent them as debtors-in-possession. Appellant sought $23,951.00 in fees for work done between October 1, 1982 and November 16, 1983. Appellant admitted having been previously paid $16,022.33 by the Lavenders. These payments were made without notice to creditors and without specific court approval. The bankruptcy court denied appellant’s application and ordered it to reimburse the estate for funds received without authorization. The bankruptcy court did authorize appellant to receive $8,337.27 in fees and expenses to be paid once appellant reimburses the estate. The district court summarily affirmed the bankruptcy court’s order.

An attorney hired to represent a debtor-in-possession must give notice to creditors and receive court approval prior to being compensated by the estate. 11 U.S.C. § 330; Bankruptcy Rule 2016. Without such prior approval, ordinarily subsequent applications for fees should be denied and the funds received should be ordered returned to the estate. However, in limited circumstances, the bankruptcy court as a matter of fundamental fairness may exercise its discretion and enter a nunc pro tunc order authorizing compensation. See In re Triangle Chemicals, Inc., 697 F.2d 1280, 1284-85 (5th Cir.1983). This discretion arises from the bankruptcy court’s powers as a court of equity. See Johnson v. First National Bank of Montevideo, 719 F.2d 270, 273 (8th Cir.1983), cert. denied, 465 U.S. 1012, 104 S.Ct. 1015, 79 L.Ed.2d 245 (1984).³

Here, appellant clearly failed to comply with the notice and application requirements of the Bankruptcy Code and Rules. The bankruptcy court refused to exercise its discretion to retroactively authorize appellant’s request. The facts of this ease support the court’s restraint. Appellant had sufficient experience to know of the Code’s notice and application requirements. Moreover, the record indicates a general lack of activity and success on the part of the appellant in moving the case forward. Therefore, we affirm the court’s direction to the appellant to reimburse the estate for fees received without approval.

1 . The Honorable Elsijane T. Roy, United States District Judge, Eastern and Western Districts of Arkansas.

2 . The Honorable James G. Mixon, United States Bankruptcy Judge, Eastern and Western Districts of Arkansas.

3 . Such exercise of discretion is not barred by this court’s decision in Albers v. Dickinson, 127 F.2d 957 (8th Cir.1942). That decision was explicitly limited to interpretation of Supreme Court orders promulgated under the old Bankruptcy Act. Moreover, Albers did not address the question whether nunc pro tunc orders could be issued in proper circumstances.