Case No. 99-51514-WS.United States Bankruptcy Court, E.D. Michigan, Southern Division.
February 8, 2007
OPINION ALLOWING COOK GOETZ FEE APPLICATION
WALTER SHAPERO, Bankruptcy Judge
This is the Court’s Opinion incident to the Order of this Court of September 29, 2006, (Reconsideration Order) Granting the Motion of Cook Goetz, et. al. (“Applicant” or “Cook Goetz”) for Reconsideration of this Court’s prior Order denying fees and costs arising out of their involvement in hearings held on August 5 and 13, 2002, in the amount of $10,294.30, that denial of those fees having been set forth in this Court’s Opinion of November 24, 2003. A hearing was held on February 1, 2007.
As this Court’s Order of September 29, 2006, indicated, it was primarily occasioned by the Court’s failure to have previously considered the impact, if any, of M.R.P.C. 1.14 on the issue, though that reference did not, nor was it intended to, limit the grounds for reconsideration, including those previously raised.
Applicant filed an extensive Response to the Reconsideration Order, reviewing facts underlaying the matter. On July 11, 2002, the relevant situation was that a number of matters, including the Cook Goetz application for fees incurred in previously representing the Debtor, were scheduled to be heard. Applicant’s representation of the Debtor had formally ended some six months previously and its appearance at that hearing was strictly in pursuance of its fee application. Just
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before that hearing the Debtor, through his then attorney (not Applicant), filed Emergency Motions for Adjournment of all pending matters, together with a notice of inability to proceed, and a request for a scheduling order which would take into account that inability to proceed. Those emergency motions were accompanied by a doctor’s affidavit and were also scheduled for hearing on that date. The result of that hearing was adjournment of the scheduled matters including the emergency adjournment motions to another date to wit: August 5, 2002, pursuant to an order requiring the affidavit doctor’s appearance at that date. At the July 11, 2002, hearing, the Court had also indicated the possibility of a next friend or guardian ad litem being appointed by the Court as an inquiry and possible result of the scheduled future hearing. The Debtor’s adjournment motion was the latest similar motion or actions in a long series of such over a substantial period of time, as reference to the Court’s ultimate opinion appointing the guardian ad litem shows. The need for something to be done to move the administration of this bankruptcy estate had been building slowly but steadily for a long time and the Debtor’s adjournment motion essentially set the stage and the time for the Court to address not only the adjournment motion itself, but the larger issue of how to best deal with the Debtor’s recalcitrances and continuous requests for delay and adjournment and other acts adverse to proper administration of the bankruptcy estate. The doctor appeared at the August 5, 2002, hearing and commenced testifying, but when cross-examination commenced, questions of privilege and privilege waiver were raised with the result that these hearings were adjourned to August 13, 2002, primarily to afford the doctor the opportunity to consult with his attorney on the privilege and related issues.
Cook Goetz attended the August 5, 2002, hearing (and the August 13, 2002 hearing as well) because the Court had indicated to the Trustee after July 11, 2002, and before the August 5th hearing
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that it thought Cook Goetz should be present, and the Trustee had passed that on to Cook Goetz. At that point, the evidence was being taken both in the context of the Debtor’s initial adjournment motion, and, the possibility raised by the Court, of there being appointed a guardian ad litem. Cook Goetz filed a brief outlining an objective view of the law and the Court’s authority in respect to such an appointment (and without taking sides on the issue), either at the direct invitation of the Court to do so, or in furtherance and clarification of what was for it an ambiguous and somewhat awkward position it was put in by the Court, arising from the facts that (a) it no longer represented the Debtor but was merely seeking fees for prior representation, but was faced with an “invitation” (it felt it could not refuse) from the Court to be present and participate. The doctor did not appear at the August 13th hearing which ended with the Court putting into effect a procedure eventually leading to the Court’s Opinion and Order appointing a guardian ad litem for the Debtor generally, and, deferring the hearings on the various other matters including the Cook Goetz fee application. The latter was eventually granted, but it was by then augmented to include a request for fees involved in its preparation for and attendance at, the August 5th and 13th hearings, fees for which the Court initially denied. That denial is what is now before the Court for reconsideration.
Applicant essentially makes two major points: (1) the services performed by Applicant on those dates were not, as the Court in its previous opinion characterized them, undertaken and performed on behalf of Applicants themselves, but rather were undertaken, after Applicants had ceased their representation of Debtor and at the request of the Court. As such they were for the benefit of the bankruptcy estate and thus compensable out of that bankruptcy estate; and (2) M.R.P.C. 1.14 is really not applicable to the issue under the indicated facts and thus not appropriately a consideration in any event in the resolution of the fee allowance question.
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The guardian ad litem of Debtor does not oppose the fee application, nor does the case Trustee, nor does anyone else with standing to object On that ground alone and without more the application might well be granted. However, since what is before the Court is a request that the Court reverse its prior ruling, and because the Court has decided to do so, it behooves the Court to set out its reasons.
In substance and by specific and iterated statements, Cook Goetz was not acting as the attorney for the Debtor nor anyone else during the hearings in question. In one somewhat narrow sense it can be said it was initially acting on its own behalf incident pursuing its application for fees and hearings on that application including adjournment of the hearings. However, what started out as a motion to adjourn the hearing on its fee application evolved into the much broader and more pervasive issue of the potential appointment of a guardian ad litem for the Debtor. At that point, the Court in effect handed Cook Goetz the mantle of being an officer of the Court in relation to the broader guardian appointment issue. In retrospect it has become clearer than it was previously that Applicant’s activities as reflected in its fee application for the indicated two days, were essentially performed in that officer of the Court capacity. While its expressed views were essentially neutral on what the outcome or procedure should be, its participation was certainly helpful, and afforded some valuable insights into the unusual, if not almost unique, question before the Court, and in a situation where (a) that larger guardian ad litem issue was not precipitated or initially brought to the table by any specific party, (b) no specific party was the principal advocate for any one particular result it being the Court which primarily felt it was an appropriate issue of concern to the administration of the case. The reason the Court decided to ultimately appoint the guardian ad litem was so that the administration of the bankruptcy estate could proceed properly and as efficiently as
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the issues involved would allow — for the benefit of Debtor and his prepetition and administrative creditors, including Applicant. Seen in that context, it can be fairly said that Cook Goetz’s efforts ought to be seen, and are more properly characterized, as part of that process and thus in the best interest of all those who would benefit from an improved administration of the bankruptcy estate which the Court later concluded would be the result of a guardian ad litem appointment.
The Court can point to no specific section of the Code which specifically deals with this precise issue, nor any particularly helpful case law. Rather the recited facts and the Court’s properly exercised inherent power over the administration of a case, pursuant to Section 105, require the conclusion that the fees sought here should be allowed, essentially on the basis of the capacity in which applicant performed the services at issue and their contribution to the Court’s determination that proper administration of the bankruptcy estate required the appointment of a guardian ad litem.
Given the indicated rationale for the decision one might then argue that at least the portion of the fees sought which can be purely attributed to efforts to resist adjournment of the hearing on its fee application, should be denied applicant. The problem with that is that any attempt to make that evaluation would be purely arbitrary and not able to be based on any feasible analysis of what essentially was or became an indivisible matter dominated in any event by the guardian ad litem inquiry.
The Court further notes (since the Court referred to it in granting reconsideration) that as Applicant points out, M.R.P.C. 1.4 by its terms really applies only to existing and current client/attorney relationships and a client disability issue that is put forward and becomes an issue during the existence of that relationship. After that relationship had ceased (which is the case here) whatever attorney responsibilities the rule implicates are not really applicable and by that token are
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not relevant to this fee application inquiry. The fact that the disability in question or facts relating to it may have arguably existed when the attorney/client relationship was previously in effect does not change that conclusion.
Finally, it should be noted that the decision in Lamie v. U.S.Trustee, 540 U.S. 526 (2004), does not require a different result than that reached here. The holding in that case was that § 330(a)(1) does not authorize compensation awards to a debtor’s attorney from estate funds, unless the attorney was employed under § 327. In this case, it is clear that insofar as the particular fees at issue here are concerned, applicant was not acting as the Debtor’s attorney, and the basis for the award, is other than for services rendered as Debtor’s attorney.
For the stated reasons, the Court has reconsidered its prior denial of the fees sought and now will enter an order allowing those fees.