-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
1/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
1 Thi s di sposi t i on i s not appr opr i at e f or publ i cat i on.Al t hough i t may be ci t ed f or what ever per suasi ve val ue i t mayhave ( see Fed. R. App. P. 32. 1) , i t has no pr ecedent i al val ue.See 9t h Ci r . BAP Rul e 8013- 1.
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
I n r e: ) BAP No. CC- 12- 1111- HHaMk)
I MANI FE, LP, AKA Abs Br i cker , ) Bk. No. 11- 20598- PCLLC, AKA Abs Hol l ywood, LLC, )AKA Abs I mani Fe, LLC, AKA Abs)Magnol i a, LLC, AKA Abs Mayer )Br i cker , LLC, AKA Abs )Pr oper t i es, I nc. , AKA Advanced)Busi ness Sol ut i ons, LLC, )
)Debt or . )
______________________________))
HI LROCK CORPORATI ON; ALBERTO )MAKABALI ; ROBERT BOGHOZI AN, )
)Appel l ant s, )
)v. ) M E M O R A N D U M1
)I MANI FE, LP, )
)Appel l ee. )
______________________________)
Ar gued and Submi t t ed on Sept ember 21, 2012
at Pasadena, Cal i f or ni aFi l ed - November 7, 2012
Appeal f r om t he Uni t ed St at es Bankrupt cy Cour tf or t he Cent r al Di str i ct of Cal i f or ni a
Honor abl e Pet er H. Car r ol l , Chi ef Bankrupt cy J udge, Pr esi di ng
Appear ances: Der ek L. Tabone, of t he Law Of f i ces of Tabone,APC, ar gued f or t he Appel l ant s; Loui s J . Ci sz,I I I , of Ni xon Peabody LLP, ar gued f or t heAppel l ee.
FILED
NOV 07 2012
SUSAN M SPRAUL, CLERKU.S. BKCY. APP. PANELOF THE NINTH CIRCUIT
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
2/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
2 Hon. M. El ai ne Hammond, Uni t ed St ates Bankr uptcy J udge f ort he Nor t her n Di st r i ct of Cal i f or ni a, si t t i ng by desi gnat i on.
-2-
Bef or e: HOLLOWELL, HAMMOND2 and MARKELL, Bankr upt cy J udges.
Thi s appeal st ems f r om t he bankrupt cy cour t s r ef usal t o
cont i nue a hear i ng on a mot i on t o di smi ss an i nvol unt ar y
bankrupt cy pet i t i on t hat t he appel l ant s br ought agai nst t he
appel l ee, and t he subsequent ent r y of an awar d of f ees i n t he
appel l ee s f avor . We AFFI RM.
I. FACTS
I mani Fe was or gani zed f or t he pur pose of acqui r i ng and
devel opi ng an af f or dabl e housi ng pr oj ect i n Sout h Cent r al Los
Angel es ( t he Pr oj ect ) . I mani Fe hi r ed Hi l r ock Cor por at i on
( Hi l r ock) as t he gener al cont r actor on t he Pr oj ect . Hi l r ock, i n
t ur n, hi r ed var i ous subcont r act or s, i ncl udi ng Coast t o Coast
Associ at es ( Coast t o Coast ) and KR El ect r i c. A di sput e ar ose
bet ween Hi l r ock and t he managi ng member of I mani Fe s gener al
par t ner . Hi l r ock cont ended t hat i t di d not r ecei ve f ul l payment
f or over head and pr of i t on t he Pr oj ect and t hat i t was not
r ei mbur sed f or advance cost s and change orders. As a r esul t ,
Hi l r ock r ecor ded a mechani c s l i en agai nst t he Pr oper t y. I nSept ember 2010, Hi l r ock br ought a st at e cour t act i on agai nst
I mani Fe f or br each of cont r act , al l egi ng damages i n excess of
$4. 9 mi l l i on and t o f or ecl ose on t he l i en.
On Mar ch 11, 2011, Toshi o Kat o aka Hi l r ock, al ong wi t h
Al bert o Makabal i aka Coast t o Coast , and Robert Boghozi an dba
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
3/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
3 Unl ess ot her wi se i ndi cat ed, al l chapt er and sect i onr ef er ences ar e t o t he Bankrupt cy Code, 11 U. S. C. 101- 1532. Al lRul e r ef er ences ar e t o t he Feder al Rul es of Bankrupt cyPr ocedur e, Rul es 1001- 9037. The Feder al Rul es of Ci vi l Pr ocedur ear e r ef er r ed t o as Ci vi l Rul es.
4 Hol di ng t he l ar gest cl ai m, Hi l r ock has been t he cr edi t ormost i nvol ved i n t he Pet i t i on. Hi l r ock s counsel i s al so counself or Coast t o Coast and KR El ect r i c. Thr oughout t he case, Hi l r ockhas t aken t he l ead on pr epar i ng br i ef s and appear i ng at hear i ngsf or t he Pet i t i oni ng Cr edi t or s.
-3-
KR El ect r i c (t he Pet i t i oni ng Cr edi t or s) f i l ed a chapt er 73
i nvol unt ar y pet i t i on ( Pet i t i on) agai nst I mani Fe. The
Pet i t i oni ng Cr edi t or s asser t ed cl ai ms f or unpai d cont r act or wor k
per f or med on t he Pr oj ect . Hi l r ock asser t ed a cl ai m of
$4, 950, 102. 43; Coast t o Coast asser t ed a cl ai m of $21, 500. 00 and
KR El ect r i c asser t ed a cl ai m of $22, 766. 69. 4
On March 30, 2011, I mani Fe f i l ed an answer cont est i ng t he
pet i t i on and denyi ng al l mat er i al al l egat i ons. I mani Fe asser t ed
t hat t he Pet i t i oni ng Cr edi t or s wer e i nel i gi bl e t o f i l e t he
Pet i t i on because they di d not hol d t hr ee separ at e and di st i nct
cl ai ms and hel d cl ai ms subj ect t o a bona f i de di sput e. A st at us
conf er ence on t he Pet i t i on was cont i nued sever al t i mes whi l e t he
par t i es conduct ed di scover y. Dur i ng t hat t i me, I mani Fe
successf ul l y def ended agai nst t wo mot i ons f or r el i ef f r om st ay
f i l ed by Wi l shi r e St at e Bank, whose cl ai m was secur ed by the
Pr oper t y.
Af t er concl udi ng di scover y, t he Debt or f i l ed, on Oct ober 11,
2011, a summary mot i on t o di smi ss t he Pet i t i on or summaryadj udi cat i on ( Mot i on t o Di smi ss) . I mani Fe asser t ed t hat
deposi t i on t est i mony f r om Coast t o Coast and KR El ect r i c
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
4/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
-4-
est abl i shed t hat t hey wer e not i t s credi t or s, but credi t or s of
Hi l r ock. I mani Fe al so asser t ed t hat Hi l r ock admi t t ed t hat par t
of i t s cl ai m was i nval i d. Ther ef or e, I mani Fe cont ended t hat
Hi l r ock s cl ai m was subj ect t o a bona f i de di sput e as t o
l i abi l i t y and amount . As a r esul t , I mani Fe ar gued t hat t he
Pet i t i oni ng Cr edi t or s wer e i nel i gi bl e t o f i l e t he Pet i t i on and
t hat t he Pet i t i on was f i l ed i n bad f ai t h. I mani Fe r equest ed
t hat t he bankrupt cy cour t di smi ss t he Pet i t i on and r et ai n
j ur i sdi ct i on t o deci de whet her t o awar d at t or neys f ees, cost s
and/ or puni t i ve damages. A hear i ng on t he Mot i on t o Di smi ss was
set f or November 22, 2011.
On November 1, 2011, Hi l r ock f i l ed an ex- par t e appl i cat i on
t o cont i nue the hear i ng on t he Mot i on t o Di smi ss f or 30 days
( Mot i on t o Cont i nue) . Hi l r ock asser t ed t hat i t s pr i nci pal ,
Ger al d Schnei der man, had been hospi t al i zed f r om Oct ober 8- 25
( wi t h hydr ocephal us, whi ch r equi r ed br ai n surger y) and was
r eadmi t t ed on Oct ober 31, 2011. Thus, Hi l r ock asser t ed t hat due
t o Mr . Schnei der man s unavai l abi l i t y, i t was unabl e t o dr af t anopposi t i on t o t he Mot i on t o Di smi ss.
Nei t her Coast t o Coast nor KR El ect r i c f i l ed a separ at e
opposi t i on t o t he Mot i on t o Di smi ss and I mani Fe f i l ed a not i ce
of t hei r non- opposi t i on on November 2, 2011. Hi l r ock f i l ed a
r epl y t o t he non- opposi t i on, st at i ng t hat t he Pet i t i oni ng
Cr edi t or s ant i ci pat ed f i l i ng a j oi nt opposi t i on t o t he Mot i on t o
Di smi ss, but wer e hamper ed by Mr . Schnei der man s hospi t al i zat i on.I mani Fe f i l ed an opposi t i on t o t he Mot i on t o Cont i nue, al l egi ng
t hat counsel f or Hi l r ock had not cont act ed i t r egar di ng a
st i pul at i on and had not suf f i ci ent l y expl ai ned why ot her member s
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
5/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
-5-
of Hi l r ock, Coast t o Coast , or KR El ect r i c coul d not assi st i n
f i l i ng an opposi t i on. No opposi t i on t o t he Mot i on t o Di smi ss was
ever f i l ed by any of t he Pet i t i oni ng Cr edi t or s; t he Mot i on t o
Di smi ss was t heref ore unopposed.
On November 8, 2011, t he bankrupt cy cour t ent ered an order
denyi ng t he Mot i on t o Cont i nue. The hear i ng on t he Mot i on t o
Di smi ss went f orward as schedul ed on November 22, 2011. Counsel
f or t he Pet i t i oni ng Cr edi t or s asser t ed t hat he was unawar e t hat
t he Mot i on t o Cont i nue had been deni ed unt i l he checked t he
docket bef or e t he hear i ng. The bankrupt cy cour t t hen r et r i eved
and r evi ewed t he case docket , and noted t hat i t wai t ed f or I mani
Fe s opposi t i on t o t he Mot i on t o Cont i nue bef or e rul i ng, t hat i t
docketed t he order denyi ng t he Mot i on t o Cont i nue, and t hat t he
cl er k s of f i ce sent , t he same day, bot h el ect r oni c and mai l
not i f i cat i ons of t he or der t o al l par t i es. The bankr upt cy cour t
al so not ed t hat t her e was no r esponse f i l ed t o the Mot i on t o
Di smi ss. Ther ef or e, t he bankrupt cy cour t oral l y r ul ed t hat :
t here bei ng no r esponse i n opposi t i on, and based upont he evi dence i n suppor t of t he [Mot i on t o Di smi ss] , t heCour t wi l l adopt t he st at ement of uncont r over t ed f act sand concl usi ons of l aw i n support of t he summary mot i ont o di smi ss and gr ant t he summary mot i on t o di smi ss , t hei nvol unt ar y pet i t i on agai nst t he al l eged Debt or I maniFe, L. P. and r eser ve j ur i sdi ct i on over any i ssueconcer ni ng at t or ney s f ees and cost s under Sect i on 303of t he Bankr upt cy Code.
Hr g Tr . ( Nov. 22, 2011) at 4: 2- 9.
The bankrupt cy cour t subsequent l y ent er ed i t s or der grant i ng
t he Mot i on t o Di smi ss ( Di smi ssal Or der ) and r et ai ni ngj ur i sdi ct i on t o det er mi ne any mot i on brought under 303( I ) on
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
6/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
5 The Pet i t i oni ng Cr edi t or s asser t t hat t hey wer e unabl e t opr epare a response t o t he Di smi ssal Or der due t oMr . Schnei der man s poor heal t h. He di ed on December 8, 2011.
-6-
November 28, 2011. The Pet i t i oni ng Cr edi t or s di d not appeal t he
Di smi ssal Or der . 5
On J anuar y 13, 2012, t he Debt or f i l ed a mot i on pur suant t o
303( I ) r equest i ng $373, 654. 69 i n at t or neys f ees and $200, 000
i n puni t i ve damages ( Fee Request ) .
The Pet i t i oni ng Cr edi t or s opposed t he Fee Request . I n t hei r
opposi t i on, t he Pet i t i oni ng Cr edi t or s asser t ed t hat t he Fee
Request was unt i mel y under t he Rul es because i t was not f i l ed
wi t hi n 14 days of t he Di smi ssal Or der . The Pet i t i oni ng Cr edi t or s
al so ar gued t he mer i t s of t he Pet i t i on and cont ended t her e was no
di sput e as t o I mani Fe s l i abi l i t y or t he amount of Hi l r ock s
cl ai m. The Pet i t i oni ng Cr edi t or s asser t ed t hat I mani Fe s
act i ons l ed t he Pet i t i oni ng Cr edi t or s t o i ni t i at e l i t i gat i on, not
any f r i vol ous mot i ves on t he par t of t he Pet i t i oni ng Cr edi t or s.
They al so asser t ed t hat t he amount of t he r equest ed at t or neys
f ees was excessi ve and unr easonabl e. Fi nal l y, t he Pet i t i oni ng
Cr edi t or s asser t ed t hat any f ees awar ded shoul d be of f set by the
amount I mani Fe owed t hem and that no puni t i ve or ot her damagesshoul d be awar ded.
A hear i ng on the Fee Request was hel d on Febr uary 7, 2012.
At t he hear i ng, t he Pet i t i oni ng Cr edi t or s r ei t er at ed t hei r
argument t hat t he Fee Request was unt i mel y, ci t i ng t he Local
Bankr upt cy Rul es ( LBR) . However , t he bankr upt cy cour t concl uded
t hat a bankrupt cy rul e coul d not abr i dge a subst ant i ve r i ght
pr ovi ded by t he Bankrupt cy Code. Addi t i onal l y, t he bankrupt cy
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
7/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
-7-
cour t det er mi ned t hat t he Pet i t i oni ng Cr edi t or s wer e not ent i t l ed
t o set of f . I t f ound t he amount of t he at t or neys f ees request ed
was not unr easonabl e and t hat t he cost s wer e act ual l y i ncur r ed
and necessar y i n def endi ng agai nst t he Pet i t i on. However , t he
bankrupt cy cour t di d not f i nd t hat t her e was bad f ai t h i n
conj unct i on wi t h t he f i l i ng of t he Pet i t i on, and t her ef or e, i t
deni ed I mani Fe s r equest f or puni t i ve damages.
An or der gr ant i ng, i n par t , t he Fee Request was ent er ed on
Febr uar y 15, 2012, awar di ng j udgment agai nst t he Pet i t i oni ng
Cr edi t or s j oi nt l y and sever al l y i n t he amount of $373, 654. 69 ( Fee
Award) . A j udgment was ent ered t he same day. The Pet i t i oni ng
Cr edi t or s t i mel y appeal ed.
II. JURISDICTION
The bankrupt cy cour t had j ur i sdi ct i on pur suant t o 28 U. S. C.
1334 and 157( b) ( 2) ( A) . We have j ur i sdi ct i on under 28 U. S. C.
158.
III. ISSUES
What i s t he scope of t he appeal ?Di d t he bankrupt cy cour t abuse i t s di scr et i on i n awar di ng
at t or neys f ees and cost s t o I mani Fe?
IV. STANDARDS OF REVIEW
We addr ess t he quest i on of our j ur i sdi ct i on de novo. Menk
v. Lapagl i a ( I n r e Menk) , 241 B. R. 896, 903 ( 9t h Ci r . BAP 1999) .
We revi ew t he bankrupt cy cour t s deci si on t o awar d f ees f or
an abuse of di scr et i on. Or ange Bl ossom Lt d. P shi p v. S. Cal .Sunbel t Devs. , I nc. ( I n r e S. Cal . Sunbel t Devs. , I nc. ) , 608 F. 3d
456, 464 n. 3 ( 9t h Ci r . 2010) ( The cour t r et ai ns br oad di scr et i on
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
8/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
-8-
t o f ashi on a f ee awar d under 303( I ) . ) ; Hi ggi ns v. Vor t ex
Fi shi ng Sys. , 379 F. 3d 701, 705 ( 9t h Ci r . 2004) .
A bankrupt cy cour t abuses i t s di scret i on i f i t bases a
deci si on on an i ncor r ect l egal r ul e, or i f i t s appl i cat i on of t he
l aw was i l l ogi cal , i mpl ausi bl e, or wi t hout suppor t i n i nf er ences
t hat may be dr awn f r om t he f act s i n t he r ecor d. Uni t ed St at es v.
Hi nkson, 585 F. 3d 1247, 1261- 62 & n. 21 ( 9t h Ci r . 2009) ( en banc) ;
El l swor t h v. Li f escape Med. Assocs. , P. C. ( I n r e El l swor t h) ,
455 B. R. 904, 914 ( 9t h Ci r . BAP 2011) .
V. DISCUSSION
A. Scope of the Appeal
The mai n ar gument present ed by t he Pet i t i oni ng Cr edi t or s on
appeal i s t hat t he bankrupt cy cour t abused i t s di scr et i on i n
denyi ng t he Mot i on t o Cont i nue and ent er i ng t he Di smi ssal Or der .
However , t he onl y or der t hat t he Pet i t i oni ng Cr edi t or s appeal ed
was t he Fee Awar d. Never t hel ess, t he Pet i t i oni ng Cr edi t or s
asser t t hat t he Mot i on t o Cont i nue and t he Di smi ssal Or der merged
i nt o t he onl y f i nal j udgment i n t he case f r om whi ch t o appeal ,namel y, t he Fee Award. They are i ncor r ect .
Bef ore the bankr upt cy cour t ent ered a j udgment agai nst t he
Pet i t i oni ng Cr edi t or s awar di ng I mani Fe at t or neys f ees and cost s
associ at ed wi t h chal l engi ng t he Pet i t i on, i t ent er ed an or der
di smi ssi ng t he Pet i t i on. A di smi ssal of an i nvol unt ar y
bankrupt cy pet i t i on i s a f i nal or der . See Coop. Suppl y I nc. v.
Cor n- Pr o Nonst ock Coop. , I nc. ( I n r e Cor n- Pr o Nonst ock Coop. ,I nc. ) , 317 B. R. 56, 58 ( 8t h Ci r . BAP 2004) . An or der i s f i nal i f
i t cont ai ns a compl et e act of adj udi cat i on, t hat i s, a f ul l
adj udi cat i on of t he i ssues at bar , and cl ear l y evi dences t he
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
9/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
-9-
j udge s i ntent i on t hat i t be t he cour t s f i nal act i n t he
mat t er . Br own v. Wi l shi r e Cr edi t Cor p. ( I n r e Br own) , 484 F. 3d
1116, 1120 ( 9t h Ci r . 2007) ( ci t i ng Sl i mi ck v. Si l va
( I n r e Sl i mi ck) , 928 F. 2d 304, 307 ( 9t h Ci r . 1990) ) .
Unl i ke f i nal or der s, i nt er l ocut or y or der s deci de mer el y one
aspect of t he case wi t hout di sposi ng of t he case i n i t s ent i r et y
on t he mer i t s. See U. S. v. Real Pr op. Locat ed at 475 Mar t i n Ln. ,
Bever l y Hi l l s, Cal . , 545 F. 3d 1134, 1141 ( 9t h Ci r . 2008) ; Am.
I r onwor ks & Er ect or s, I nc. v. N. Am. Const r . Cor p. , 248 F. 3d 892,
897 ( 9t h Ci r . 2001) . A cour t s rul i ng on a mot i on t o cont i nue
does not end t he l i t i gat i on. Ther ef or e, a deni al of a mot i on t o
cont i nue mer ges i nt o t he f i nal or der deci di ng t he mer i t s. I d. ;
Am. I r onworks, 248 F. 3d at 897 ( An i nt er l ocut ory or der becomes
appeal abl e when f i nal j udgment i s ent er ed. ) ; Munoz v. Smal l Bus.
Admi n. , 644 F. 2d 1361, 1364 ( 9t h Ci r . 1981) ( an appeal f r om a
f i nal j udgment dr aws i n quest i on al l ear l i er non- f i nal or der s and
al l r ul i ngs whi ch pr oduced t he j udgment ) . Consequent l y, t he
bankrupt cy cour t s deni al of t he Mot i on t o Cont i nue mer ged i nt ot he f i nal or der t hat ended t he i nvol unt ar y bankrupt cy case on i t s
mer i t s, t he Di smi ssal Or der .
Once an or der i s f i nal , i t t r i gger s t he t i me i n whi ch t o
appeal . Rul e 8002( a) . Our j ur i sdi ct i on ext ends onl y over
appeal s t hat have been f i l ed wi t hi n 14 days of ent r y of a f i nal
order . Rul e 8002( a) ; 28 U. S. C. 158. No appeal was t aken of
t he Di smi ssal Or der .The bankr upt cy cour t may not awar d at t or neys f ees and cost s
pr i or t o a det er mi nat i on of whet her di smi ssal of t he i nvol unt ar y
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
10/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
-10-
pet i t i on i s war r ant ed. 11 U. S. C. 303( i ) ; I n r e Cor n- Pr o
Nonst ock Coop. , I nc. , 317 B. R. at 58 ( The pl ai n l anguage of
[ 303( i ) ] r equi r es di smi ssal bef or e t he al l eged debt or becomes
ent i t l ed t o damages. ) . By i t s l anguage, 303( i ) cont empl at es
sanct i ons onl y af t er t he val i di t y of t he pet i t i on has been
determi ned and a di smi ssal has been ent ered. The i mposi t i on of
cost s, at t or neys f ees and or damages under 303( i ) r equi r es
i nqui r y i nt o and det er mi nat i on of a col l at er al i ssue onl y; i t
does not r equi r e any f ur t her j udgment on t he mer i t s of t he
act i on. I n r e Tobacco Rd. Assocs. , LP, 2007 WL 966507, *21
( E. D. Pa. Mar . 30, 2007) ; see al so, Hi ggi ns 379 F. 3d at 707 ( by
t he t i me a mot i on f or f ees i s deci ded, t he cour t has al r eady
hear d al l t he evi dence sur r oundi ng di smi ssal ) .
The Pet i t i oni ng Cr edi t or s ar gue t hat because t he bankrupt cy
cour t r et ai ned j ur i sdi ct i on af t er t he case was di smi ssed i n or der
t o rul e on a subsequent 303( i ) mot i on, t he Di smi ssal Or der was
not f i nal unt i l t he f ee i ssue was resol ved. However , t her e was
no pendi ng r equest f or f ees under 303( i ) at t he t i me thebankr upt cy cour t consi dered t he Mot i on t o Di smi ss . A cour t may
pr eser ve i t s j ur i sdi ct i on t o i ssue f ees when i t ot her wi se may be
di vest ed of j ur i sdi ct i on upon di smi ssal of a pr oceedi ng or due t o
an appeal . Li ndbl ade v. Knupf er ( I n r e Dyer ) , 322 F. 3d 1178,
1186 ( 9t h Ci r . 2003) ( [ W] e have hel d t hat unr esol ved i ssues
r el at ed t o at t or neys f ees do not def eat f i nal i t y, r egar dl ess of
whet her t he at t or neys f ees ar e avai l abl e under a st at ut e, bycont r act, or as a sancti on f or bad f ai t h l i t i gat i on. ) .
Because t he Pet i t i oni ng Cr edi t or s f ai l ed t o appeal t he
Di smi ssal Or der , we have no j ur i sdi ct i on t o r evi ew t he mer i t s of
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
11/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
6 At t he hear i ng, counsel f or t he Pet i t i oni ng Cr edi t or scoul d not speci f i cal l y i dent i f y whi ch LBR appl i ed. However , i nt hei r br i ef on appeal , t hey asser t i t i s LBR 7054- 1.
-11-
whether t he di smi ssal was appr opr i ate or whether t he bankr upt cy
cour t abused i t s di scr et i on i n denyi ng t he Mot i on t o Cont i nue.
Ther ef or e, we address bel ow onl y whet her t he bankrupt cy cour t
abused i t s di scr et i on i n ent er i ng t he Fee Awar d.
B. Timeliness of Fee Request
The Pet i t i oni ng Cr edi t or s ar gue t hat t he Fee Request was
unt i mel y. I n t he bankr upt cy cour t , t he Pet i t i oni ng Cr edi t or s
argued t hat t he Fee Request was unt i mel y under Rul e 7054,
i ncor por at i ng Ci vi l Rul e 54. They asser t ed t hat under Ci vi l
Rul e 54( d) , t he Fee Request was r equi r ed t o have been f i l ed
wi t hi n 14 days f r om t he ent r y of t he Di smi ssal Or der . At t he
hear i ng on t he Fee Request , and i n t hei r br i ef on appeal , t he
Pet i t i oni ng Cr edi t or s asser t ed t hat t he LBRs6 i mposed a deadl i ne
of 30- days af t er t he Di smi ssal Or der f or t he f i l i ng of t he Fee
Request . For t he r easons gi ven bel ow, we concl ude t hat nei t her
t i mef r ame const r ai ns a mot i on f or at t or neys f ees under
303( i ) ( 1) .
Ci vi l Rul e 54( d) pr ovi des t hat a cl ai m f or pr evai l i ngpart y s at t orneys f ees be made by mot i on no l ater t han 14 days
af t er ent r y of a j udgment . Rul e 7054 i ncor por at es par t of Ci vi l
Rul e 54 i n adver sary pr oceedi ngs, but does not i ncor por at e
subsect i on ( d) . Ther ef or e, Ci vi l Rul e 54( d) i s i nappl i cabl e t o
bankrupt cy proceedi ngs.
LBR 7054- 1 al l ows a pr evai l i ng part y t o seek an award of
cost s and at t or neys f ees:
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
12/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
-12-
( c) Bi l l of Costs
The prevai l i ng part y who i s awar ded cost s shal lhave 30 days af t er ent r y of j udgment t o f i l e and servea Bi l l of Cost s . . . .
( g) Mot i on f or At t or neys Fees
I f not pr evi ousl y det er mi ned at t r i al or ot herhear i ng, a par t y seeki ng an awar d of at t or neys f eeswher e such f ees may be awarded must f i l e and ser ve amot i on not l at er t han 30 days af t er t he ent r y ofj udgment or ot her f i nal or der , unl ess ot her wi se or der edby t he cour t . . . .
LBR 7054- 1.
I mani Fe s ent i t l ement t o f ees i s pr ovi ded by 303( I ) .
Sect i on 303( i ) ( 1) per mi t s an al l eged debt or t o br i ng a cl ai m f or
an awar d of f ees and cost s i f : ( 1) t he i nvol unt ar y pet i t i on was
di smi ssed by the cour t ; ( 2) t he di smi ssal was not st i pul at ed t o
by the debt or and al l t he pet i t i oni ng credi t or s; and ( 3) t he
debt or di d not wai ve i t s r i ght s t o j udgment . 11 U. S. C.
303( i ) ( 1) ( A) - ( B) . Addi t i onal l y, t he st at ut e pr ovi des t hat i n
t he event of bad f ai t h, actual and puni t i ve damages may be
awar ded. 11 U. S. C. 303( i ) ( 2) ; J af f e v. Wavel engt h, I nc.
( I n r e Wavel engt h, I nc. ) , 61 B. R. 614, 619 ( 9t h Ci r . BAP 1986) .Sect i on 303( i ) ( 1) does not pr ovi de a t i mef r ame i n whi ch t he
mot i on must be made. The Bankr upt cy Appel l at e Panel ( BAP) has
pr evi ousl y r evi ewed whet her t he t i mef r ames of Ci vi l Rul e 54( d)
and LBR 7054- 1 appl y t o 303( i ) mot i ons i n an unpubl i shed
memor andum deci si on, Kl ei n v. Cap. Fi n. , I nc. ( I n r e Cap. Fi n. ,
I nc. ) , 2007 WL 7535047 ( 9t h Ci r . BAP Nov. 14, 2007) ( unpubl i shed) .
The BAP det er mi ned t hat LBR 7054- 1 di d not appl y t o i nvol unt ar ypet i t i ons. I nst ead, i t r ecogni zed t hat at t or neys f ees under
303( i ) ar e i nher ent l y di f f er ent f r om a pr evai l i ng par t y
st at ut e because 303( i ) i s i nt ended t o be t he excl usi ve
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
13/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
-13-
r emedy f or r egul at i ng abuse of t he i nvol unt ar y bankr upt cy
pr ocess. I n r e Cap. Fi n. , I nc. , 2007 WL 7535047, at *6 ( ci t i ng
Wechsl er v. Macke I nt l Tr ade, I nc. ( I n r e Macke I nt l Tr ade,
I nc. ) , 370 B. R. 236, 249 ( 9t h Ci r . BAP 2007) ( emphasi s i n
or i gi nal ) ) . The key di st i ncti on i s t hat 303( I ) i s subst ant i ve
l aw pr ovi di ng an i ndependent cl ai m t o an al l eged debt or whenever
an i nvol unt ar y pet i t i on i s di smi ssed wi t hout t he al l eged debt or
havi ng wai ved t hat cl ai m. I d. at *5.
Fur t her mor e, i n maki ng i t s deci si on, t he BAP r ecogni zed t hat
i t woul d be i ncongr uous and i nef f i ci ent t o demand t hat a mot i on
f or at t or neys f ees under 303( i ) ( 1) be f i l ed wi t hi n a st r i ct
t i mef r ame, whi l e a mot i on f or damages under 303( i ) ( 2) i s not
subj ect t o a speci f i c deadl i ne. I d. at *6. Si mi l ar l y, t he BAP
not ed t hat i f an or der f or r el i ef had been ent er ed, t he
pet i t i oni ng cr edi t or s woul d be under no t i me const r ai nt i n
seeki ng f ees under 503( b) ( 3) ( A) and ( b) ( 4) . Thus, t he BAP
r easoned t hat i t woul d be unf ai r t o i mpose a deadl i ne on t he
al l eged debt or , who di d not wi l l i ngl y par t i ci pat e i n t hebankrupt cy pr ocess, but not on t he pet i t i oni ng cr edi t or s who
par t i ci pat ed on t hei r own accor d. I d.
We agr ee wi t h t he BAP s r easoni ng and concl usi on t hat
nei t her t he Rul es nor t he LBRs r egar di ng pr evai l i ng par t i es appl y
t o mot i ons f or f ees under 303( I ) . Sect i on 303( I ) pr ovi des the
al l eged debt or an i ndependent cause of act i on f or at t or neys f ees
when i t successf ul l y def ends agai nst an i nvol unt ar y pet i t i on.
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
14/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
7 Even i f t he LBRs di d appl y, LBR 1001- 1( d) al l ows t hebankrupt cy cour t t o wai ve t he appl i cat i on of any LBR i n i t sdi scret i on and i n t he i nt er est of j ust i ce.
-14-
Consequent l y, we concl ude that t he Fee Request was not unt i mel y
and t he bankrupt cy cour t di d not er r i n r ul i ng on i t s mer i t s. 7
C. Reasonableness of Fee Request
Sect i on 303( I ) st at es t hat t he bankrupt cy cour t may awar d
f ees and cost s, r ender i ng any awar d under 303( I ) di scr et i onar y.
Hi ggi ns, 379 F. 3d at 706. However , i n t he Ni nt h Ci r cui t t her e i s
a r ebut t abl e pr esumpt i on t hat a debt or who has successf ul l y
cont est ed an i nvol unt ar y pet i t i on wi l l be awar ded f ees and cost s.
I n r e S. Cal . Sunbel t Devs. , I nc. , 608 F. 3d at 462; I n r e Macke
I nt l Tr ade, I nc. , 370 B. R. at 250. I ndeed, because of t he
adver se i mpact on t he debt or and the need t o encour age di scr et i on
i n f i l i ng such cases, unsuccessf ul i nvol unt ar y pet i t i oner s shoul d
r out i nel y expect t o pay t he debt or s l egal expenses ar i si ng f r om
t he i nvol unt ar y f i l i ng. I d.
The presumpt i on i mposes on pet i t i oni ng cr edi t or s t he bur den
of pr esent i ng evi dence t o meet t he pr esumpt i on, but i t does not
shi f t t he bur den of pr oof . See Fed. R. Evi d. 301. Pet i t i oni ng
cr edi t ors may over come the pr esumpt i on by demonst r at i ng t hat anawar d of at t or neys f ees and cost s i s i nappr opr i at e gi ven t he
t ot al i t y of t he ci r cumst ances. Sof r i s v. Mapl e- Whi t wor t h, I nc.
( Mat t er of Mapl e- Whi t wor t h, I nc. ) , 556 F. 3d 742, 746 ( 9t h Ci r .
2009) ; Hi ggi ns, 379 F. 3d at 707. Under a t ot al i t y of t he
ci r cumst ances anal ysi s, t he bankr upt cy cour t may consi der :
( 1) t he r el at i ve cul pabi l i t y among t he pet i t i oner s, ( 2) t he
mot i ves or obj ect i ves of i ndi vi dual pet i t i oner s i n j oi ni ng t he
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
15/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
-15-
i nvol unt ar y pet i t i on, ( 3) t he r easonabl eness of t he r espect i ve
conduct of t he debt or s and pet i t i oner s, and ( 4) ot her
i ndi vi dual i zed f act or s. Hi ggi ns, 379 F. 3d at 707- 08. The l i st
i s not exhaust i ve. A bankr upt cy cour t may choose t o consi der
ot her mat er i al f act or s i t deems rel evant . I d.
The Pet i t i oni ng Cr edi t or s asser t ed t hat I mani Fe shoul d not
have been ent i t l ed t o f ees because I mani Fe mani pul ated t he
account i ng on t he Proj ect and shor t ed cont r actors on payment s,
t her eby causi ng t he Pet i t i oni ng Cr edi t or s t o f i l e t he Pet i t i on i n
order t o r ecover what t hey shoul d have been pai d. See Opposi t i on
t o Fee Request . When t he bankr upt cy cour t di smi ssed t he
Pet i t i on, i t adopt ed t he uncont r over t ed f act s and concl usi ons of
l aw submi t t ed by I mani Fe. Thus, t her e ar e no f act s t o suppor t
t he Pet i t i oni ng Cr edi t or s cont ent i on t hat I mani Fe act ed
i nappr opr i at el y. The oppor t uni t y t o r ebut t he pr esumpt i on of
f ees does not gi ve t he pet i t i oni ng credi t or l i cense t o . . .
pr esent evi dence on an i ssue t hat has al r eady been deci ded.
Hi ggi ns, 379 F. 3d at 707. Rat her , al l t he evi dence sur r oundi ngt he di smi ssal was al r eady pr esent ed t o t he bankrupt cy cour t and
t aken i nt o account i n deci di ng whet her t o awar d f ees. The mer i t s
of t he Pet i t i on were resol ved by summary j udgment i n f avor of
I mani Fe.
The Pet i t i oni ng Cr edi t or s al so asser t ed t hat I mani Fe s
at t orneys f ees were excessi ve and unr easonabl e and t hat I mani Fe
overworked t he case. They cont ended t hat t he amount of hour sexpended i n conduct i ng di scover y and pr epar i ng br i ef s i n t he case
was unr easonabl e. I mani Fe submi t t ed, wi t h i t s Fee Request ,
decl ar at i ons f r om i t s at t or neys st at i ng t hat t he ser vi ces
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
16/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
-16-
per f or med i n def endi ng t he Pet i t i on wer e necessary, i ncl udi ng
r esear chi ng t he i ssues r ai sed by t he Pet i t i on, r espondi ng t o
Wi l shi r e Bank s mot i ons f or st ay r el i ef , pr epar i ng mul t i pl e
br i ef s, r esponses, and r epl i es t o opposi t i ons, pr epar i ng f or and
at t endi ng mul t i pl e hear i ngs i n t he case, and al so i n conduct i ng
di scover y r egar di ng t he nat ur e and ext ent of t he Pet i t i oni ng
Cr edi t or s asser t ed cl ai ms.
The bankr upt cy cour t f ound t hat t he Pet i t i oni ng Cr edi t or s
of f ered no evi dence t hat t he l egal work per f ormed by I mani Fe was
not act ual l y per f or med or t hat i t was unnecessar y to def end
agai nst t he Pet i t i on. I ndeed, whi l e t he Pet i t i oni ng Cr edi t or s
asser t ed t hat t he pr act i ce of an at t or ney bi l l i ng f or anal yzi ng
t he wor k of anot her at t or ney r esul t ed i n what t hey consi der ed t o
be excessi ve hour s wor ked i n t he case, t hey f ai l ed t o poi nt t o
i t emi zed i nst ances or char ges t hat r equi r ed a speci f i c r educt i on
f r om t he over al l awar d. They si mpl y asser t ed t hat t he bankrupt cy
cour t shoul d r educe at l east by hal f t he amount of f ees r equest ed
by I mani Fe. They based t hi s asser t i on on case l aw, not on acal cul at i on that deduct ed what t hey consi der ed t o be unr easonabl e
charges. See Opposi t i on t o Fee Request .
The bankr upt cy cour t det er mi ned t hat t he Pet i t i oni ng
Cr edi t or s f ai l ed t o r ebut t he pr esumpt i on of t he awar d of f ees.
Fur t hermore, t he bankr upt cy cour t i ndependent l y r evi ewed I mani
Fe s Fee Request , whi ch was support ed by i t emi zed t i me recor ds
descr i bi ng t he work per f ormed by var i ous members of I mani Fe sat t or neys and t hei r st af f t hr oughout i n t he case. I t f ound t hat
t he hour l y rat es t hat wer e char ged f or t he wor k wer e wi t hi n t he
cust omar y r ange f or t he Cent r al Di st r i ct of Cal i f or ni a.
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
17/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
-17-
Addi t i onal l y, t he bankrupt cy cour t consi der ed t he mer i t s of
t he Pet i t i on and f ound no i mpr oper conduct on t he par t of I mani
Fe. Si mi l ar l y, t he bankr upt cy cour t di d not f i nd t hat t he
Pet i t i oni ng Cr edi t or s act ed i n bad f ai t h by br i ngi ng t he
Pet i t i on, al t hough i t not ed t hat Coast t o Coast and KR El ect r i c
may not have f ul l y under st ood t he consequences of f i l i ng t he
Pet i t i on. I t det er mi ned t hat :
t he mot i vat i ons and obj ect i ves behi nd t he f i l i ng of t hei nvol unt ar y pet i t i on [ di d not ] wei gh i n f avor of ar educt i on of f ees under t he ci r cumst ances of t hi s case,par t i cul ar l y i n l i ght of t he f i ndi ngs and concl usi onsmade by t he Cour t i n conj unct i on wi t h t he summaryj udgment ent er ed i n t hi s case, whi ch i s a f i nalj udgment of t he Cour t .
Hr g Tr . at 12: 10- 18. Based on i t s f i ndi ngs, t he bankrupt cy
cour t r ef used t o award puni t i ve damages.
The bankr upt cy cour t proper l y eval uat ed r el evant f act or s i n
i t s revi ew of t he t ot al i t y of t he ci r cumst ances. Based on our
r evi ew of t he r ecor d, we concl ude t hat t he bankrupt cy cour t s
deci si on was not i l l ogi cal , i mpl ausi bl e, or unsuppor t ed by the
r ecor d. As a r esul t , t he bankrupt cy cour t di d not abuse i t sdi scr et i on i n ent er i ng t he Fee Awar d.
The Pet i t i oni ng Cr edi t or s asser t t hat any awar d of f ees
shoul d be of f set by t he amount of debt t hat I mani Fe owes t hem.
The BAP has previ ousl y addressed whet her set of f i s appr opr i at e
under 303( i ) mot i ons and concl uded t hat because t he sect i on i s
r emedi al i n nat ur e, set of f i s i mper mi ssi bl e. I n r e Macke I nt l
Tr ade, I nc. , 370 B. R. at 255 ( ci t at i ons omi t t ed) . I f set of fwer e al l owed, t her e woul d be l i t t l e downsi de t o a cr edi t or s
r esor t t o an i nvol unt ar y bankrupt cy pet i t i on agai nst a debt or ,
even i f i t s conduct di d not r i se t o t he l evel of bad f ai t h.
-
7/25/2019 In re: IMANI FE, LP, AKA Abs Bricker, LLC, AKA Abs Hollywood, LLC, AKA Abs Imani Fe, LLC, AKA Abs Magnolia, LLC, AKA Abs Mayer Bricker, 9th Cir. BAP (2
18/18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
2526
27
28
-18-
I d. Mor eover , t he Bankrupt cy Code al l ows of f set onl y of a
mut ual debt owi ng by such cr edi t or t o the debt or t hat ar ose
bef or e t he commencement of t he case. . . . 11 U. S. C. 553( a) .
Ther e i s no evi dence i n t he r ecor d t hat t her e was a mutual debt
owi ng bef or e t he Pet i t i on was f i l ed. Ther ef or e, t he bankrupt cy
cour t di d not abuse i t s di scr et i on i n denyi ng any of f set of t he
Fee Awar d.
VI. CONCLUSION
For t he r easons gi ven above, we AFFI RM t he Fee Award.