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Modanlo v. Rose

United States District Court, D. Maryland, Southern Division

July 2, 2018



          Paul W. Grimm United States District Judge

         In a protracted Chapter 7 bankruptcy proceeding in the United States Bankruptcy Court for the District of Maryland, Offit Kurman, P.A. (“Offit Kurman”) served as Special Counsel to Cheryl E. Rose, the Chapter 7 Trustee of the Estate of Final Analysis, Inc. (“Trustee”). In re Final Analysis, Inc., Bankr. No. 01-20139 TJC. Offit Kurman and the Trustee's prior special counsel filed a series of applications for compensation for services rendered, see, e.g., ECF Nos. 3-57, 3-70, 3-76, 4-79 (Seventh Application, Eighth Application, Ninth and Final Application, Tenth and Final Application), culminating in a July 13, 2017 Final Application for Compensation and Reimbursement of Expenses of Offit Kurman, P.A. as Special Counsel to Cheryl E. Rose, Chapter 7 Trustee, ECF No. 3-42. On August 21, 2017, the Bankruptcy Court signed an Order Granting Application for Compensation for Offit Kurman, P.A. as Special Counsel to Cheryl E. Rose, Chapter 7 Trustee (“Order Granting Application”), which was entered on the docket the next day. ECF No. 1-1.

         Nader Modanlo, a principal of the Debtor, has filed an appeal from that Order Granting Application, ECF No. 1, and Offit Kurman has filed a Motion to Dismiss Appeal, ECF No. 25, which the parties fully briefed, ECF Nos. 28, 29. Having reviewed the parties' briefs and the record, I find oral argument unnecessary. See Fed. R. Bankr. P. 8012; Loc. R. 105.6. I conclude that this Court has jurisdiction over the appeal and that Modanlo waived his right to challenge the compensation and fees awarded in the Order Granting Application. Accordingly, Offit Kurman's Motion IS GRANTED, and Modanlo's appeal IS DISMISSED.


         Offit Kurman argues that this Court lacks jurisdiction to hear Modanlo's appeal because the Order Granting Application was not a final, appealable order. Appellee's Mot. 1. Although Appellee presents this as a second, alternative argument, jurisdiction must be addressed as a threshold matter. See Steel Co. v. Citizens for a Better Envir., 523 U.S. 83, 94-95 (1998) (“‘Without jurisdiction the court cannot proceed at all in any cause. Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause.' Ex parte McCardle, 7 Wall. 506, 514, 19 L.Ed. 264 (1868). ‘On every writ of error or appeal, the first and fundamental question is that of jurisdiction, first, of this court, and then of the court from which the record comes. This question the court is bound to ask and answer for itself, even when not otherwise suggested, and without respect to the relation of the parties to it.' Great Southern Fire Proof Hotel Co. v. Jones, [177 U.S. 449');">177 U.S. 449, 453 (1900)]. The requirement that jurisdiction be established as a threshold matter ‘spring[s] from the nature and limits of the judicial power of the United States' and is ‘inflexible and without exception.' Mansfield, C. & L.M.R. Co. v. Swan, 111 U.S. 379, 382, 4 S.Ct. 510, 511, 28 L.Ed. 462 (1884).”).

         Pursuant to 28 U.S.C. § 158(a), this Court has jurisdiction to hear appeals

(1) from final judgments, orders, and decrees;
(2) from interlocutory orders and decrees issued under section 1121(d) of title 11 increasing or reducing the time periods referred to in section 1121 of such title; and
(3) with leave of the court, from other interlocutory orders and decrees; of bankruptcy judges [in this District] entered in cases and proceedings referred to the bankruptcy judges under section 157 of [Title 28].

28 U.S.C. § 158(a). “Thus, by statute, an appeal of right exists only from a final judgment, and any other appeal, i.e., from an interlocutory order, may lie only upon obtaining leave of the court.” Kore Holdings, Inc. v. Rosen (In re Rood), 426 B.R. 538, 546 (D. Md. 2010).

         In the context of a bankruptcy case, “the concept of finality . . . has traditionally been applied ‘in a more pragmatic and less technical way in bankruptcy cases than in other situations.'” A .H. Robins Co., Inc. v. Piccinin, 788 F.2d 994, 1009 (4th Cir. 1986). Indeed, “Congress has long provided that orders in bankruptcy cases may be immediately appealed if they finally dispose of discrete disputes within the larger case.” Bullard v. Blue Hills Bank, __ U.S. __, __, 135 S.Ct. 1686, 1692 (2015) (quoting Howard Delivery Serv., Inc. v. Zurich Am. Ins. Co., 547 U.S. 651, 657 n.3 (2006)). This is because “[a] bankruptcy case involves ‘an aggregation of individual controversies,' many of which would exist as stand-alone lawsuits but for the bankrupt status of the debtor.” Id. (quoting 1 Collier on Bankr. ¶ 5.08[1][b], at 5-42 (16th ed. 2014)). Under this more relaxed standard, a bankruptcy “order is final and appealable if it (i) finally determines or seriously affects a party's substantive rights, or (ii) will cause irreparable harm to the losing party or waste judicial resources if the appeal is deferred until the conclusion of the bankruptcy case.” Kore Holdings (In re Rood), 426 B.R. at 547.

         Here, the order appealed from is an order granting an application for compensation for a professional. It is true that “[t]h general rule is that interim awards of attorney's fees are interlocutory orders and therefore not immediately appealable as a matter of right under 28 U.S.C. § 158(a).” In re Glob. Marine, Inc., 108 B.R. 1009, 1010 (S.D. Tex. 1988) (emphasis added) (citing In re Int'l Envtl. Dynamics, Inc., 718 F.2d 322, 325 (9th Cir. 1983); Callister v. Ingersoll-Rand Financial Corp. (In re Callister), 673 F.2d 305, 307 (10th Cir. 1982); In re Den-col Cartage & Distribution, Inc., 20 B.R. 645 (D. Colo. 1982)). But, Offit Kurman's application was a “Final Application.”

         Certainly, Offit Kurman argues that, even though it titled its application as a “Final Application, ” after the application was filed, the Trustee learned of a new asset and, with Modanlo's consent,

the Estate performed additional work to bring more funds into the Estate from an unexpected source. Furthermore, the Estate incurred additional fees to address Modanlo's communication opposing the Application as well as to participate in the appeal of the Order. As a result of Modanlo's breach of the Agreement, the Estate may recover the fees expended to administer the Estate and to address the breach of the Agreement. The new, additional fees are damages permitted by contract to the Estate ...

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