Case No. 03-10501.United States Bankruptcy Court, M.D. Alabama.
May 9, 2007
MEMORANDUM DECISION
WILLIAM SAWYER, Bankruptcy Judge
This Chapter 7 bankruptcy case came before the Court for a telephonic hearing on April 24, 2007, upon the Application for Compensation filed by R. Scott Williams. (Doc. 1153). The Bankruptcy Administrator filed notice that she recommends that the application be approved. (Doc. 1165). Nissan North America, Inc., filed an objection. (Doc. 1166). Williams filed a response to the objection of Nissan. (Doc. 1167). Williams was present at the April 24 hearing, and Nissan was present by counsel Thomas M. O’Hara and Charles M. Tatelbaum.
Williams seeks fees in the amount of $58,061.50 and expenses in the amount of $13,205.19. Nissan objects to that portion of the fees attributable to Williams’ defense of Chapter 7 Trustee Susan S. DePaola in the Nissan litigation. Nissan filed a motion seeking Rule 11 sanctions against DePaola, contending that her lawyer should not be compensated out of property of the estate.
In its objection, Nissan correctly observes that attorney’s fees may not be paid out of property of the estate unless they are “necessary.” 11 U.S.C. § 330(a). The Trustee is of the view that it is necessary for the estate to pursue its breach of contract claim against Nissan. Nissan complains that her decision is flawed because she stated that she did not have first hand knowledge of the contract claim in an answer to an interrogatory. This answer is unremarkable in that in the vast majority of cases, Chapter 7 Trustees will not have first had knowledge concerning claims of the estate. Indeed, in most cases, the Trustee’s knowledge is derivative.
To be sure, Nissan would prefer that the Trustee direct her attention elsewhere. Whether the Trustee’s claim against Nissan ultimately has merit is a question to be determined by another court on another day. However, it would be exceedingly poor policy to permit parties such as Nissan to control the Trustee’s activities by way cutting off payment of the Trustee’s lawyer. The Trustee is under a duty to investigate and pursue meritorious claims. 11 U.S.C. § 704(a)(1). Based upon this Court’s review of the record before it, it appears that the Trustee is acting in good faith in her pursuit of this claim. For this reason, Williams’ fees are “necessary” and, therefore, should be paid. The Court will enter an order by way of a separate document granting the application as filed.