Memorandum of Decision Re: Fee Application

FOR THE NORTHERN DISTRICT OF CALIFORNIA In re BRENDA MILLER,                                       No. 1-87-01525      Debtor. ___________________________/
     Debtor Brenda Miller is one of the least cooperative debtors to have ever invoked this court's jurisdiction. She has filed several bankruptcy petitions, and gone through several lawyers. The only reason this case has not been dismissed is that the court declined to once again dismiss the case as a sanction, realizing that such an action would probably result in merely another filing.      Because the court could see that the debtor had considerable equity in her home, the court gave her quite a bit of time to find a buyer for it even though she had had a previous bankruptcy petition dismissed for cause. Nonetheless, the debtor failed to take any action to sell her property and the holders of the junior deed of trust were finally given leave to foreclose.      After foreclosure, attorney Neil Jon Bloomfield suddenly appeared on the debtor's behalf and filed an adversary proceeding seeking to set aside the foreclosure sale. At that time, the court warned Bloomfiled in open court that the debtor had a long history of lack of cooperation with her lawyers and failure to pay them.      Bloomfield attacked the case vigorously, but was undercut by both the debtor's lack of cooperation and the fact that the property turned out to be worth less than he had at first believed. The foreclosing creditors, Edward and Diane Voss, were able to turn around and sell the property for considerably more than they were owed, but not the hundreds of thousands of dollars the debtor had claimed in equity.      On the day of trial, the debtor made one of her rare appearances and a settlement was reached for $14,000.00, which was essentially nuisance value. The Vosses were still left with a healthy profit.      The debtor has never appeared again. She failed to execute the settlement documents, resulting in the court converting the case to Chapter 7 so that a trustee could consummate the settlement. The court granted the Voss' motion to order a consummation notwithstanding the debtor's failure to execute the documents, and awarded the Vosses attorneys' fees out of the settlement proceeds for bringing the motion.      Now before the court is Bloomfield's fee application, as well as an absurd request from the Voss' attorney for more fees.      The Voss' attorney makes the argument that he should be awarded fees pursuant to section 503(b)(4) because his clients made a substantial contribution to the case by selling the property. This is absolute nonsense. The Vosses were the sole beneficiaries of the sale. From the proceeds, they were able to recover everything that was owed to them, settle the lawsuit brought by Bloomfield, pay their attorney's fees, and still have a tidy profit left over. They sold the property for themselves, not the estate. This application is nothing more than an attempt to get back part of the settlement amount they paid. Moreover, the award of fees the court made to them for enforcing the settlement was not an "estimate," nor was it ever stated as such.      The court finds the Vos fee application to be frivolous in the extreme, and not justified by existing law or a good faith argument. Moreover, when Vos announced his intention to seek additional fees, the court warned him from the bench that such an application might be looked upon as frivolous. Accordingly, pursuant to Bankruptcy Rule 9011 the court assesses a sanction of $250.00 against attorney John Vos, to be paid to the trustee forthwith.      The Bloomfield application is more problematic. The court hates to award fees for an ill-founded action which ends up benefitting nobody except bankruptcy professionals. If the court awards more than a few thousand dollars to Bloomfield, then all of the settlement proceeds will end up with the trustee and his counsel (it is not their fault) or Bloomfield. Neither the debtor (who is certainly not deserving of anything) nor her creditors will end up with anything. Thus, the court will be rewarding Bloomfiled for bringing an ill-founded action which took up considerable amounts of court time and benefitted nobody.      Nonetheless, upon reflection the court finds that it must award something to Bloomfield so that zealous representation of debtors is not discouraged. Not every case brought on behalf of a debtor is meritless, and the action Bloomfield filed had at least enough merit to withstand an attack for frivolousness.      Accordingly, the court awards Bloomfield fifty percent of the settlement, or $7,000.00, on account of his fees and expenses. Provided, however, that such fees are subordinate to the fees and expenses of the trustee and his counsel.      SO ORDERED.
Dated: November 10, 1990                                                                        _______________________                                                                                                                      Alan Jaroslovsky                                                                                                                      U.S. Bankruptcy