in re: imani fe, lp, aka abs bricker, llc, aka abs hollywood, llc, aka abs imani fe, llc, aka abs...

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

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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


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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.

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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


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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.

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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


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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


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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


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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.

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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


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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


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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


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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


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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


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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.

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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:


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( 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


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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.


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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.

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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


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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


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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.


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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.


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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.

in re: imani fe, lp, aka abs bricker, llc, aka abs hollywood, llc, aka abs imani fe, llc, aka abs...

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