Opinion
Case No. 01-30522
August 12, 2002
MEMORANDUM OPINION AND ORDER
Debtors' counsel Lee R. Arzt filed a timely proof of claim for services provided as attorney for the debtors. He seeks payment of legal fees as an administrative claim in the amount of $1,927.00 (8.2 hours at $235.00 per hour). Trustee filed objection to the claim on the ground that claimant's services were for the debtors, not the trustee, and that claimant's activities did not result in any benefit to the estate that would warrant an administrative claim. Claimant filed a response asserting that there would be no funds in the estate without his efforts.
The parties agreed to submit the matter to the court without oral argument.
On May 10, 2002, trustee sent a letter to the court indicating the amounts available for distribution in debtors' estate:658.23
Total assets in the estate: $2,775.73 Total administrative expenses exclusive of claim #2: Balance available for general unsecured creditors: $2,072.50 Balance to unsecured creditors if claim #2 is allowed: $145.50. The allowance of administrative expenses is governed by 11 U.S.C. § 503, which provides for the payment of various categories of expenses incurred in administering a bankruptcy estate. Section 503(b)(2) allows a second priority of administrative expense for compensation awarded under § 330(a) of the Code. Thus a claimant may not recover compensation as an administrative expense except as the claim is allowable under § 330(a).As has been noted in many recent case decisions, Congress, apparently inadvertently, omitted reference to "the debtor's attorney" when § 330(a) was amended in 1994. See 3 Alan N. Resnick Henry J. Sommer, Collier On Bankruptcy ¶ 330.LH[5] (15th Ed. Rev. 2002). Because the section no longer contains specific language authorizing payment of debtor's counsel from a chapter 7 estate, courts have split on the question of whether chapter 7 debtor's counsel may be compensated from the estate.
The split of authority over this issue has now been resolved in the Fourth Circuit, which recently ruled that the 1994 revisions of Bankruptcy Code § 330(a) unambiguously "delete any provision for the award of compensation to a debtor's attorney in . . . a Chapter 7 . . . case." United States Tr. v. Equip. Servs., Inc. (In re Equip. Servs., Inc.), 290 F.3d 739, 745 (4th Cir. 2002) (quoting Inglesby, Falligant, Horne, Courington, Nash, P.C. v. Moore (In re Am. Steel Prod., Inc.), 197 F.3d 1354, 1356 (11th Cir. 1999)).
This ruling by our Court of Appeals precludes the award of the administrative expense sought here. Therefore, although the court agrees with the trustee's opposition to the claim, it is unnecessary to consider whether the attorney's services were of benefit to the estate.
Accordingly,
IT IS ORDERED that trustee's objection to proof of claim No. 2 filed by Lee R. Artz in the amount of $1,927.00 for administrative expense priority under 11 U.S.C. § 503 (b)(1)(A) is sustained, and the claim is denied.