Erik John Findley and Amy Jean Findley

In re
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF WYOMING
ERIK JOHN FINDLEY
AMY JEAN FINDLEY
Debtors.
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Case No. 	12-21217
CHAPTER 13
OPINION ON AMENDED RULE 59(e) MOTION TO ALTER
OR AMEND FINAL ORDER
On November 14, 2013, this Amended Rule 59(e) Motion to Alter or Amend
Final Order ("Motion") filed by applicant George Arnold, ("Arnold") and the Trustee's
objection came before the court for a telephonic hearing. At the conclusion of the
hearing, the court took the matter under advisement. Upon reviewing the record and
parties' arguments, the court is prepared to rule.
Facts
Debtors retained Arnold to represent them in their Chapter 13 bankruptcy case
paying a retainer in the amount of$1,200.00 and signing a representation agreement.
They agreed to pay Arnold the amount of$3,500.00 in attorney's fees, plus the filing fee
and expenses.
Mr. Arnold filed his application for approval of attorney's fees in the amount of
$3,500.00 and reimbursement of expenses in amount of$138.80. Mr. Arnold requested
that $2,419.80 be paid through the debtors' confirmed plan. On June 5, 2013, the court
entered its order allowing the fees and expenses and granted Arnold's request that the
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balance due be paid through the plan. 	Subsequently, on July 9, 2013, the court dismissed
the case based on the Trustee's motion to dismiss, as the debtors failed to pay plan
payments. The Trustee paid Arnold the amount of$533.50 from the funds held in the
bankruptcy estate.
Mr. Arnold then filed his Motion for Order Nunc Pro Tunc Allowing Attorneys
Fees requesting that the order entered by the court on June 5, 2013 be "amended or
corrected" to order the debtors to pay the unpaid balance in the amount of$1,888.30
directly to him. The court denied the request. Mr. Arnold filed this Motion.
Discussion
The Court entered its order denying Arnold's request to alter or amend the fee
application order on September 9, 2013. Mr. Arnold filed this Motion, asserting: (1) the
original motion was unopposed, i.e., no objections were filed; (2) Mr. Arnold was not
afforded an opportunity to be heard on the motion through oral argument or
memorandum; (3) Mr. Arnold was unaware that this court does not allow payment of
attorney fees outside the plan that have been earned, if the case has been dismissed as
there is no local rule pertaining to this issue; (4) there are circumstances where payment
outside the plan or where payment after the final plan payment or after dismissal would
be advantageous to the debtor and debtor's attorney; and, (5) the court's ruling that
debtors may voluntarily pay the fees, is tantamount to determining that the movant's
administrative fees approved by the court is discharged.
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The Trustee filed a response, arguing that: 	(1) Mr. Arnold seeks the same relief
which was previously requested and denied; (2) Mr. Arnold does not present any new
evidence, only re-argues his previous motion; and, (3) failed chapter 13 cases are not
unusual. Experienced Bankruptcy attorneys understand the risks and take that into
account in setting the retainer that they require in each case.
Discussion
A motion to alter or amend the judgment should be granted only to correct
manifest errors of law or to present newly discovered evidence. 1 A manifest error is an
error that is planned and indisputable and that amounts to a complete disregard of the
controlling law or the credible evidence in the record. 2 A court should grant a motion to
alter or amend a judgment only "if there is clear error of law, newly discovered evidence,
an intervening change in controlling law or to prevent manifest injustice." 3
The Tenth Circuit Bankruptcy Appellate Panel ("BAP") in the Gantz case, 4 which
is cited by both parties, determined that the fees that the attorney sought to collect from
the debtor were disallowed in the bankruptcy case and counsel could not collect the fees
directly from the debtor after the bankruptcy was completed and closed. The BAP stated,
1 Lamb v. Rizzo, 391 F.3d 1133 (lOth Cir. 2004), Phelps v. Hamilton, 122 F.3d 1309, 1324 (lOth Cir. 1997).
2 Black's Law Dictionary 563 (7th ed. 1999).
3 Keenan v. Bagley, 262 F. Supp. 2d 826,930 (quoting GenCorp, Inc., v. Am. Inti' Underwriters, Co., 178
F.3rd 804, 834 (6th Cir. 1999).
4 In re Gantz, 209 B.R. 999 (lOth Cir. BAP, 1997)
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in dicta, "Experienced bankruptcy counsel are well aware of the limitations of 11 U.S.C.
§ 330 on compensation ... and generally factor these problems into the retainer they extract
pre-petition." 5 	The BAP succinctly stated, "there is a distinction between disallowing
fees as an administrative expense and simply allowing the fees." 6 Applying that
distinction to the case before the court, the court approved the attorney fees as an
administrative expense to be paid through the plan.
The Bankruptcy Court for the Western District of Arkansas, discussed this further,
stating,
"the court has no power to approve... amount[ s] except as they may
be drawn against actual cash proceeds now existing in the estate. The court
can confer no lien on estate property or prospective estate property which
will inure to the benefit of counsel in the future. 	If there is not, as of the
date, ready cash in the estate to pay these awards, then they must go unpaid.
The court cannot project an award into a future in which the bankruptcy
proceedings may no longer be pending. " 7
In conclusion, the court finds that it has not made a manifest error of law or that
newly discovered evidence was presented by Arnold's motion. Mr. Arnold has now had
the opportunity to argue his motion and file a memorandum oflaw for the court's
consideration. The court is aware that there may be "circumstances where payment
outside the plan may be advantageous to the debtor and debtor's attorney." However,
5 Gantz, id, citing 1 Keith Lundin, Chapter 13 Bankruptcy § 1.113 (2d ed 1994)].
6 Gantz at 1002.
7 In re Westfall, 73 B.R. 186 (Bankr. W.D.Ark, 1986).
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this court has previously held that any attempt to circumvent plan approval by eliminating
attorney fees to attain feasibility is not a legitimate circumstance. However, this is all
speculative and irrelevant to the issue presented in this motion.
The court ordered that the attorney fees be paid as an administrative expense as
part of the plan. 	Counsel is an experienced bankruptcy attorney and aware of the
inherent risks of plan failures. 	Mr. Arnold has the ability to address this issue upon
retention by debtors filing their bankruptcy petition. The court finds that there is not
ready cash available in the estate to pay the awarded fees and they must go unpaid.
This opinion constitutes the Court's findings of fact and conclusions oflaw. A
separate order shall be entered pursuant to Fed. R. Bankr. P. 9021.
DATED thisc;¥Qday ofNovember, 2013.
Service to:
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George Arnold
Mark Stewart
By the Court
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