Opinion
No. 06-3386-bk (Lead) 06-3389-bk (Con).
June 28, 2007.
UPON DUE CONSIDERATION of this appeal from a final decision of the United States District Court for the Western District of New York (Arcara, C.J.), it is hereby ORDERED, ADJUDGED, AND DECREED, that the judgment of the District Court is AFFIRMED.
APPEARING FOR APPELLANTS: PHILIPPE L. GUARINO, Mougins, France (Krista Gottlieb, Of Counsel, Mattar, D'Agostino Gottlieb, LLP, Buffalo, NY, on the brief) for Intervenor-Appellant L. Andrew Bernheim; DAVID B. SMITH, Feuerstein Smith, LLP, Buffalo, NY for Debtor-Appellant D.A. Elia Construction Corp.
APPEARING FOR APPELLEE: DANIEL F. BROWN, Of Counsel, Damon Morey, LLP, Buffalo, NY.
PRESENT: HON. ROBERT D. SACK, HON. BARRINGTON D. PARKER, HON. PETER W. HALL, Circuit Judges.
Debtor-Appellant D.A. Elia Construction Corp. ("Debtor") appeals from that portion of the June 20, 2006 judgment of the Honorable Richard J. Arcara, United States District Judge for the Western District of New York, affirming the October 19, 2004 decision of the Honorable Michael J. Kaplan, United States Bankruptcy Judge for the Western District of New York, awarding in full the attorney fees requested by Appellee Damon Morey, LLP ("D M") in its sixth and final fee application. Intervenor-Appellant L. Andrew Bernheim ("Bernheim") appeals from that portion of the June 20, 2006 judgment denying Bernheim's motion to intervene in the District Court's review of the Bankruptcy Court's fee award. We assume the parties' familiarity with the facts, procedural history of the case, and issues presented on appeal.
I. The Approval in Full of D M's Final Fee Application
"Bankruptcy courts enjoy wide discretion in determining reasonable fee awards, which discretion will not be disturbed by an appellate court absent a showing that it was abused." In re JLM, Inc., 210 B.R. 19, 23 (B.A.P. 2d Cir. 1997) (citing Dickinson Indus. Site v. Cowan, 309 U.S. 382, 389 (1940)). "`An abuse of discretion arises where (1) the bankruptcy judge fails to apply the proper legal standard or follows improper procedures in determining the fee award, or (2) bases an award on findings of fact that are clearly erroneous.'" Id. (quoting In re Hunt, 196 B.R. 356, 358 (N.D. Tex. 1996)). The inquiry is focused on "whether there is a reasonable basis in the record to support the propriety of the bankruptcy judge's decision," not on whether "the appellate court might have ruled differently if presented with the same evidence." Id. (citing Anderson v. City of Bessemer, 470 U.S. 564, 574 (1985)).
A. D M's Alleged Conflicts of Interest and Negligence
Judge Kaplan refused to reduce D M's fee award in the face of the Debtor's allegations that D M rendered conflicted and negligent representation. Judge Kaplan refused because the Debtor's allegations were inconsistent with both Judge Kaplan's first hand observation of the quality of D M's performance in this surplus Chapter 11 case and the Debtor's continued retention of D M throughout the duration of the case. Based, inter alia, on those inconsistencies, Judge Kaplan found the Debtor's allegations incredible. Because the record substantially supports Judge Kaplan's findings, we cannot say that he abused his discretion in approving in full D M's final fee application. The fact that D M admitted to having labored temporarily under one of the conflicts alleged by the Debtor does not compel a holding to the contrary. See 11 U.S.C. § 328(c) (providing that a bankruptcy court " may deny compensation" to a professional found to have been laboring under a conflict of interest (emphasis added)); In re Angelika Films 57th, Inc., 246 B.R. 176, 179 (S.D.N.Y. 2000) (explaining that the decision to deny fees due to conflicted representation is within the discretion of the bankruptcy court); see also Gray v. English, 30 F.3d 1319, 1324 (10th Cir. 1994) (stating that section 328(c) "was intended to give the bankruptcy court some discretion with respect to attorney fee awards when the attorney loses his disinterested status during the course of administering a bankrupt's estate. The permissive `may deny' language does not require the court to deny legal fees or disgorge previously paid fees in all cases").
B. Reasonableness of D M's Fee Calculation
Under the circumstances presented in this case, we conclude that the Bankruptcy Court did not abuse its discretion in approving as reasonable D M's final fee application. Judge Kaplan presided over this bankruptcy for its duration and had the opportunity to evaluate first-hand both the quality of D M's performance and the contributions made by the firm to a rarity — a Chapter 11 case in which all general creditors were paid in full. See New York, N. H. H. R. Co. v. Iannotti, 567 F.2d 166, 179 (2d Cir. 1977) (stating that where the bankruptcy judge has presided over a reorganization continuously, was fully aware of all aspects of the complex proceedings, knew the attorneys and parties involved, and was thus uniquely well qualified to assess their respective contributions, the party challenging the bankruptcy judge's fee award bears a "heavy burden of demonstrating that th[e] experienced judge . . . abused his discretion" ).
C. Failure to Conduct an Evidentiary Hearing
Finally, the Debtor argues that Judge Kaplan abused his discretion by failing to conduct an evidentiary hearing regarding either the reasonableness of D M's fee application or the Debtor's allegations of D M's conflicted and negligent performance. Under 11 U.S.C. § 330(a), the bankruptcy court must provide notice and a hearing before awarding attorney fees. The Bankruptcy Code explains that the phrase "notice and a hearing" means notice and hearing "appropriate in the particular circumstances." 11 U.S.C. § 102(1)(A). Bankruptcy judges enjoy broad discretion as to the type of hearing to conduct. See In re Eliapo, 468 F.3d 592, 603 (9th Cir. 2006) (stating that hearing requirement may be satisfied by written submission that allows the applicant a "reasonable opportunity to present legal argument and/or evidence to clarify or supplement his Application") (internal quotation marks omitted); In re I Don't Trust, 143 F.3d 1, 3 (1st Cir. 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."); cf. In re Blaise, 219 B.R. 946, 949 (B.A.P. 2d Cir. 1998) (holding, in the context of the bankruptcy court's ability to convert a Chapter 13 case to a Chapter 7 after notice and a hearing under 11 U.S.C. § 1307(c), that under § 102(1)(A), in light of the ample opportunity afforded to the appellant to contest the motion to convert, an evidentiary hearing was not required). Here, by allowing the Debtor both to file its detailed objection and to rebut D M's response to that objection, Judge Kaplan gave the Debtor more than ample opportunity to present its arguments to the Court, thus fulfilling the "hearing" requirement of 11 U.S.C. § 330(a).
II. Denial of Bernheim's Motion to Intervene
Timeliness is an essential element of a motion to intervene and "[n]either section 1109 nor [ In re Caldor Corp., 303 F.3d 161 (2d Cir. 2002)] . . . relieves a party in interest of the obligation to exercise any right of intervention on a timely basis." In re Iridium Operating, LLC, 329 B.R. 403, 405 (S.D.N.Y. 2005). Here, Bernheim did not file his motion to intervene until August 12, 2005, seven weeks after the District Court heard oral argument, and three months after Bernheim first learned of the Debtor's appeal of the fee award to the District Court. Bernheim argues that an order of the Bankruptcy Court prevented him from recovering documents necessary to prepare his motion. Bernheim offers, however, no explanation for his failure to have at least timely apprised the District Court of his intention to intervene and his difficulty in securing any necessary documents. See United States v. Pitney Bowes, Inc., 25 F.3d 66, 71 (2d Cir. 1994) (affirming denial of motion to intervene as untimely, even though delay was caused by pending event that may have prevented the need to intervene, because intervenor failed to file the motion "as an anchor to windward" as soon as it became aware of its interest). As Bernheim has failed to justify his three month delay in filing his motion to intervene, we cannot say that the District Court abused its discretion in denying that motion as untimely. We need not and do not address the District Court's determinations that Bernheim's failure to object at the bankruptcy level was not excused, and that Bernheim lacks standing to intervene.
For the foregoing reasons, the judgment of the District Court is hereby AFFIRMED.