United States District Court, W.D. Louisiana, Shreveport Division
MAURICE HICKS, JR. UNITED STATES DISTRICT JUDGE.
the Court is an appeal of the Bankruptcy Court's denial
of requested attorney's fees by appellant Simmion Bashon
Demery (“Demery”). See Record Document
4. For the reasons contained in the instant Memorandum
Ruling, the Bankruptcy Court's ruling denying
Demery's Application for Compensation by Attorney for
Debtor and Motion to Reconsider is REVERSED AND REMANDED.
AND PROCEDURAL BACKGROUND
April 3, 2013, Demery filed a voluntary Chapter 13 bankruptcy
petition in the Bankruptcy Court in Shreveport, Louisiana.
See Record Document 1-3 (Bankruptcy Court docket
sheet). The original plan called for payments of $420.00 per
month for a term of 60 months. See Record Document 4
at 6. However, because all of the parties apparently believed
that Demery owed money to at least two state or local taxing
entities, the Bankruptcy Court rejected the original plan and
confirmed an amended plan calling for $560.00 monthly
payments. See id.; see Record Document 1-3.
April 14, 2015, Demery met with his counsel, David Welch
(“Welch”), to discuss his financial situation.
See Record Document 4 at 6-7. Demery informed Welch
that his financial situation had worsened due to rising
expenses, forcing him to borrow against his 401(k) plan to
cover his monthly expenses. See id. Demery also
informed Welch that he expected furloughs in the near future
from his employer Schlumberger as a result of the decline in
oil prices. See id. Welch discovered that none of
the taxing entities to whom Demery ostensibly owed money had
ever filed a proof of claim with the Bankruptcy Court.
See id. Welch advised Demery that he could file a
modified plan on his behalf that would reduce Demery's
required payments and remove future payments to be made to
these taxing entities, though those taxing entities could
object to the plan and assert their claims against Demery.
See id. Welch also advised Demery that even if these
entities were to object to the plan, it was possible that
Demery's payments could be suppressed temporarily until
his income stabilized. See id. at 8. Demery
requested that Welch file a modified plan with the Bankruptcy
Court, and Welch filed the modified plan and accompanying
materials on April 24, 2015. See id.; see
Record Document 1-3.
27, 2015, without consulting Welch first, Demery left his job
with Schlumberger, paid off his 401(k) loans, cashed out the
remaining balance of his 401(k), and began searching for a
new job. See Record Document 4 at 8. On June 3,
2015, the Chapter 13 Trustee filed an objection to
confirmation of Demery's modified plan. See Id.
On June 4, 2015, Welch reviewed the Trustee's objection,
took notes regarding the objection, and discussed the matter
with a partner in the firm. See id. Welch later
began drafting the response to the objection. See
id. Welch met with Demery on June 24, 2015 to discuss
the objection. See id. At this meeting, Demery
informed Welch for the first time of the fact that he had
left his job and cashed out his 401(k). See id.
Welch informed Demery that he had converted an exempt asset
to a non-exempt asset, a fact that would have to be disclosed
to the Bankruptcy Court and that would likely prompt the
Chapter 13 Trustee to assert an interest in the 401(k)
proceeds. See id. at 8-9.
response to this new situation, Welch informed Demery that he
essentially had two options: (1) disclose the liquidation of
the 401(k) and deposit the bulk of the remaining proceeds
into a tax deferred retirement account within 60 days of the
withdrawal, reserving only enough to cover Demery's
reasonable and necessary expenses and fund his plan payments
while searching for a job; or (2) retain the proceeds,
voluntarily dismiss his case, and request that the dismissal
of the case be without prejudice to his ability to re-file a
subsequent bankruptcy petition. See id. at 9. On
July 10, 2015, Demery requested that his case be dismissed.
See id. On July 15, 2015, Welch filed an Ex Parte
Motion to Voluntarily Dismiss Demery's case, a Motion
that the Bankruptcy Court granted later the same day. See
the voluntary dismissal of the case, one of Welch's
paralegals sent an email to the Chapter 13 Trustee and two
paralegals working for the Trustee requesting that funds be
retained in the Trustee's possession for payment of
Welch's fee. See id. at 9-10. Welch obtained
Demery's consent to a fee application requesting a fee of
$350.00, and Welch filed the Application for Administrative
Compensation/Expenses (the “fee application”) on
July 28, 2015. See id. at 10. On July 29, 2015, the
Bankruptcy Court denied the fee application without
explanation. See id. Welch's paralegal again
contacted the Chapter 13 Trustee and the Trustee's two
paralegals requesting that the $350.00 be retained in the
Trustee's account until the Bankruptcy Court could decide
a Motion to Reconsider its denial of the fee application.
See id. Despite this request, the Trustee mistakenly
disbursed the funds to Demery's creditors in early August
2015. See id. On August 7, 2015, Welch filed a
Motion to Reconsider the denial of the fee application and
requested a hearing. See id. The Bankruptcy Court
denied the Motion without a hearing, holding that the matter
was moot. See id.; see Record Document 1-2.
filed the instant appeal of the denial of the fee application
and the Motion to Reconsider on August 24, 2015. See
Record Document 1. On March 3, 2016, Demery filed a
“Notice of Statement Regarding Change in Facts”
and a Chapter 13 Trustee Report in which he confirmed that
the amount of funds necessary to pay the requested fees that
are the subject of the instant appeal had been refunded to
the Chapter 13 Trustee. See Record Document 6. The
Chapter 13 Trustee never filed a brief with the Court.
United States Bankruptcy Court has the authority to issue
final orders pursuant to 28 U.S.C. § 157(b). This United
States District Court for the Western District of Louisiana,
Shreveport Division has subject matter jurisdiction, pursuant
to 28 U.S.C. § 158(a)(1) and 28 U.S.C. § 1334(b),
to hear appeals from a final order of the Bankruptcy Court.
“Final orders” of a Bankruptcy Court under 28
U.S.C. § 158 include both (1) “a final
determination of the rights of the parties to secure the
relief they seek” and (2) “a final disposition of
a discrete dispute within the larger bankruptcy case.”
Bartee v. Tara Colony Homeowners Ass'n (In re
Bartee), 212 F.3d 277, 282 (5th Cir. 2000). This is an
appeal of the final order entered from the United States
Bankruptcy Court for the Western District of Louisiana,
Shreveport Division on July 29, 2015, denying Demery's
fee application, a “discrete dispute within the larger
bankruptcy case.” Id.; see Record
Standard of Review
District Court reviews a Bankruptcy Court's decision on a
fee application by a debtor's attorney under an abuse of
discretion standard of review. See Cahill v. Walker &
Patterson, P.C., 428 F.3d 536, 539 (5th Cir. 2005).
“An abuse of discretion occurs where the bankruptcy
court (1) applies an improper legal standard or follows
improper procedures in calculating ...