Appeals from the United States District Court for the Southern District of Indiana, Indianapolis Division.
Nos. 96 C 129 and 95 C 1722 Larry J. McKinney, Judge.
Before CUMMINGS, BAUER and ROVNER, Circuit Judges.
DECIDED DECEMBER 22, 1997
These appeals are the continuation of an appeal we heard in 1994 and dismissed for want of jurisdiction because there was no final decision under 28 U.S.C. sec. 158(d) and because decisions relating to the appointment or disqualification of bankruptcy counsel are not immediately appealable as collateral orders. In re Firstmark Corporation, 46 F.3d 653 (7th Cir. 1995). On January 26, 1996, the Brouwer Group *fn1 appealed to the district court from the bankruptcy court's interim fee awards to the Indianapolis law firm of Bose McKinney & Evans ("Bose"), the bankruptcy court's final report, its order denying reconsideration and its final decree. On January 6, 1997, District Judge McKinney affirmed the bankruptcy court's entry of an order closing the Firstmark Corporation bankruptcy proceeding, and on January 14, 1997, entered an order dismissing as moot the Brouwer Group's appeal from the bankruptcy court's denials of plaintiffs' motions to reconsider. The issues now raised by the Brouwer Group concern allegedly improper conduct by Bose and its former partner Leonard Opperman. Appellants ask us to remand this case for a final fee hearing before a different bankruptcy judge or to reverse and remand this case with a direction that the bankruptcy court enter a judgment directing Bose to disgorge all fees and expenses that it received while acting as counsel for the Committee of Firstmark's Subordinated Noteholders ("Committee").
Each member of the Brouwer Group invested in subordinated promissory notes of Firstmark Corporation issued in 1988. Firstmark filed a Chapter 11 bankruptcy petition on August 26, 1988. Capitol Securities, Inc., which owned Firstmark, filed a Chapter 11 petition the same day. A few days later Bankruptcy Judge Otte authorized the employment of counsel for both corporations. On October 20, 1989, the court granted the application of the chairman of the Creditors' Committee to employ Leonard Opperman of the Bose law firm as its counsel.
When Bose filed its eighth application for interim compensation and reimbursement expenses, the Brouwer Group filed objections and sought to disqualify the Bose firm. Bankruptcy Judge Otte ruled against the Brouwer Group and his decision was affirmed by District Judge Dillin although he ordered Bose to disgorge $2,250, which was 10% of its eighth application fees, for its seemingly negligent failure to disclose a possible conflict of interest.
In January 1996 Judge Otte closed the bankruptcy case. His decision was affirmed a year later in an opinion by Judge McKinney. In this appeal the Brouwer Group seeks a final fee hearing before a different bankruptcy judge. In the alternative it asks us to reverse and remand this case with a direction that the bankruptcy court enter a judgment directing Bose to disgorge all fees ($215,722.02) and expenses ($13,940.54) received while acting as the Committee counsel. We affirm the decisions of the bankruptcy and district courts in favor of Bose.
Our 1995 opinion did not require the bankruptcy judge to conduct another hearing
Nothing in our opinion reported in 46 F.3d 653 required Bankruptcy Judge Otte to conduct another hearing. We agree with Judge McKinney that we imposed no such requirement in Firstmark I. We merely suggested that the bankruptcy court's interim fee orders could be re-examined. It was permissible for Judge Otte to determine that there was no need to revisit the earlier fee awards. The Brouwer Group has not cited any case or statute requiring a bankruptcy court to conduct a final hearing to review interim fee awards. No final hearing was mandated since the Brouwer Group intended to raise the same objections Judge Otte had heard and ruled against on six prior applications.
The bankruptcy court's findings regarding William Smith are not erroneous
Brouwer contends that Leonard Opperman of the Bose firm lied when he testified about the relationship between lawyers at Bose and former Firstmark president William Smith. Smith was terminated as an officer of Firstmark in June 1988. Four months later the bankruptcy court approved the application of the Committee to employ the Bose firm. Its partner Leonard Opperman executed an affidavit stating that Bose had no connection with the debtor. Opperman was then aware that his partner Wayne Ponader had represented Smith in the past. Later Opperman discovered that Bose was representing Smith as a John Doe potential defendant in another matter. Thereupon Bose discontinued representing Smith, and Opperman reported the matter to Judge Staton, who was chairman of Firstmark's creditors' committee. Judge Staton permissibly determined that Bose's past representation of Smith did not bar Opperman's future representation of the Committee.
Subsequently Firstmark's parent, Capitol Securities, asserted a fraudulent conveyance claim against Smith and eventually recovered $400,000 from him and his co-defendant, and this amount was approved by the Brouwer Group. In view of this favorable outcome, the Smith matter did not ...