In re Frazier

569 B.R. 361

IN RE: Quintavious B. FRAZIER, Debtor.

Number 16–40382–EJC

United States Bankruptcy Court, S.D. Georgia, Savannah Division.

Signed March 28, 2017

Barbara B. Braziel, Savannah, GA, for Debtor.

O Byron Meredith, III, Savannah, GA, for Trustee.

OPINION¹ ON BARBARA B. BRAZIEL'S AMENDED MOTION TO ALLOW POST–PETITION CLAIM

Edward J. Coleman, III, Judge, United States Bankruptcy Court, Southern District of Georgia

Pending before the Court is the Amended Motion to Allow Post–Petition Claim For the Preservation of the Estate (the "Amended Motion") (dckt. 48) filed by the Debtor's attorney, Barbara B. Braziel ("Brazier"). In this Chapter 13 case, the Court granted the Debtor's application to pay the filing fee in installments, allowing him to pay such fee within 120 days from his petition date. However, on the last day set for paying that fee, the Debtor informed his counsel, Braziel, that he was unable to pay the fee. Rather than seeking additional time pursuant to Federal Rule of Bankruptcy Procedure 1006(b), Braziel elected to pay the filing fee to the clerk and then seek reimbursement as an administrative expense. The Court is now called upon to determine whether Braziel may seek reimbursement for her advance of the filing fee through the Debtor's Chapter 13 plan.

I. JURISDICTION

The Court has subject-matter jurisdiction over this proceeding pursuant to 28 U.S.C. § 1334(a), 28 U.S.C. § 157(a), and the Standing Order of Reference signed by then Chief Judge Anthony A. Alaimo on July 13, 1984. This is a "core proceeding" under 28 U.S.C. § 157(b)(2)(B) (providing that core proceedings include "allowance or disallowance of claims against the estate ... ").

II. PROCEDURAL BACKGROUND

A. The Debtor's Chapter 13 Plan

The Debtor filed his Chapter 13 bankruptcy petition and plan on March 7, 2016. (Dckts. 1, 2). In his plan, the Debtor proposed to make 60 monthly payments of $362.00 and pay unsecured creditors a 0% dividend or a prorata share of $100.00, whichever is greater. (Dckt. 2). To date, nine (9) claims have been filed in this case: one (1) secured claim for $14,219.70, seven (7) general unsecured claims totaling $28,197.83 and Braziel's priority claim for the $310.00 Chapter 13 filing fee.

On March 14, 2016, the Trustee issued a Notice to Commence Wage Withholding and subsequently began to receive the Debtor's proposed monthly plan payments. A confirmation hearing was held on June 1, 2016. On June 3, 2016, the Trustee filed his Motion on Plan Confirmation (dckt. 28) which provided:

Trustee moves that debtor(s)' plan be confirmed, subject to payment of the filing fee. The plan commits Debtor(s)' disposable income to the plan for a period of at least thirty-six (36) months and otherwise conforms to the requirements of Title 11. The plan will pay $100.00 or more to unsecured creditors, but in any event will pay not less than 0.00% of the total allowed unsecured claims.

On June 8, 2016, the Court entered its Order on Confirmation (dckt. 30) conditioning confirmation of the Debtor's plan upon the payment of the $310.00 Chapter 13 filing fee.

B. Filing Fee Installments

Along with his petition, the Debtor filed an Application to Pay Filing Fee in Installments (dckt. 4), which was granted by this Court's order dated March 9, 2016 (dckt. 9). Pursuant to this order, the Debtor was required to pay the $310.00 Chapter 13 filing fee on or before July 5, 2016² in no more than four installment payments. (Dckt. 9). The Debtor failed to pay his filing fee by the July 5, 2016 deadline and did not seek a 60–day extension of such deadline as allowed by Bankruptcy Rule 1006(b)(2). As a result, on July 7, 2016, the Court entered its Order To Pay Filing Fees requiring the Debtor to pay his filing fee in full, or provide a written request to be heard on or before July 21, 2016, to avoid dismissal of his case. (Dckt. 32)

C. The Advance by Braziel

According to Braziel, after the Court filed its Order to Pay Filing Fees, she spoke with the Debtor by telephone regarding his need to pay the filing fee to prevent dismissal of his bankruptcy case. (Dckt. 48, ¶ 8). After determining that the Debtor did not have sufficient funds to pay the filing fee, Braziel asserts that she "agreed to advance the $310.00 expense, pay the filing fee to the Court, and thereafter seek allowance of an administrative expense claim in the Debtor's case." Id. On July 21, 2016, Braziel electronically paid the filing fee on the Debtor's behalf. Because the filing fee was paid, the Court granted confirmation of the Debtor's plan on August 3, 2016. (Dckt. 35).

D. Braziel's Proof of Claim

Shortly after paying the filing fee, on July 26, 2016, Braziel filed a proof of claim (Official Form 410) for a $310.00 claim based on "[s]ervices performed." (Claims Register 9–1). Braziel made the following representations in her proof of claim:

1) Paragraph 9 of Official Form 410 asks: Is all or part of the claim secured? Braziel checked "Yes" and described the nature of the property securing her claim as "Administrative Fees."

2) Paragraph 12 of Official Form 410 asks: Is all or part of the claim entitled to priority under 11 U.S.C. § 507(a) ? Braziel checked "No."

3) Part 3 of Official Form 410 asks who is the person completing the proof of claim. Braziel checked "I am the trustee, or the debtor, or their authorized agent."

(Claims Register 9–1).

Braziel then filed her Motion to Allow Claim 9³ ("Motion to Allow Claim") seeking an order from this court allowing her $310.00 claim to be added to the Debtor's case as an "administrative claim" and directing the Trustee "to fund this claim in accordance with the terms of the confirmed plan." (Dckt. 34). Braziel's Motion to Allow Claim did not invoke any section of the Bankruptcy Code or a Bankruptcy Rule in support of her claim. Nor did Braziel attach or reference any document specifying the Debtor's obligation to repay this advance.

On August 30, 2016, the Trustee objected to Braziel's Motion to Allow Claim on the following basis:

The claim is for the post-petition payment of the filing fees due the Court for the filing of the Chapter 13 petition. The motion circumvents the provisions of the General Order 2015–5⁴ providing for the payment of the filing fees directly to the Clerk. The provisions of Title 11 allowing for the payment of compensation and reimbursement awarded under 11 U.S.C. § 330(a) do not contemplate reimbursement for the filing fees due the Court in order to file a Chapter 13 petition. The filing of a claim for the reimbursement of the filing fee indicates that the attorney is no longer a disinterested person and may have an interest adverse to the estate as a creditor in the case with an administrative claim. See 11 U.S.C. § 327. The motion to allow the administrative claim filed by [Braziel] for Debtor was served only on the Trustee, with no notice to all Creditors in the case with timely filed, allowed claims even though the Creditors are impacted by the allowance of such a claim. Notice to all parties in interest and a hearing are needed to resolve the matter. See 11 U.S.C. § 503(b).

(Dckt. 37).

E. The Hearing

On October 13, 2016, the Court held a hearing⁵ on Braziel's Motion to Allow Claim and the Trustee's related objection. Notably, the Debtor did not appear. At the hearing, Braziel's co-counsel, James B. Wessinger, III ("Wessinger"), stated that Braziel's employment contract with the Debtor gave her sufficient authority to pay the filing fees on the Debtor's behalf and obligated the Debtor to repay Braziel for the advance of the filing fee⁶ . Thus, Wessinger argued that it was appropriate for Braziel to file a proof of claim in this Debtor's case. At the conclusion of the hearing, the Court took the matter under advisement and instructed Braziel to amend her Motion to Allow Claim and proof of claim to set forth the specific Code provision that serves as the basis for her administrative expense claim. Further, because Braziel's claim was clearly unsecured, the Court requested Braziel amend her proof of claim accordingly.

F. Amended Proof of Claim

After the hearing, on October 21, 2016, Braziel amended her proof of claim to reflect a $310.00 unsecured claim based on the "[c]ourt filing fee advanced post-petition." Braziel also made the following changes:

1) Paragraph 12 of Official Form 410 now indicates that Braziel's claim is entitled to priority under 11 U.S.C. § 507(a)(2)⁷ .

2) On Part 3 of Official Form 410 Braziel checked "I am the creditor."

(Claims Register 9–2). In addition, Braziel filed the instant Amended Motion, which invokes 11 U.S.C. § 503(b)(1)(A) as the sole basis for her claim to be allowed as an administrative expense. (Dckt. 48).

III. CONCLUSIONS OF LAW

By her Amended Motion, Braziel seeks to be reimbursed through the Debtor's plan for the $310.00 filing fee she advanced in this case. Braziel's motion has changed from a Motion to Allow Claim to the more provocatively entitled Amended Motion to Allow Post–Petition Claim for the Preservation of the Estate. What was first characterized as a pre-petition debt filed after the claims bar date is now characterized as a post-petition debt. Braziel initially filed her claim as a secured claim with no priority. She now asserts that she holds an unsecured priority claim. Finally, Braziel first filed her proof of claim and Motion to Allow Claim on behalf of the Debtor. Braziel now asserts the claim on behalf of herself, as a creditor.

These changes to Braziel's position reflect a certain amount of confusion about the precise basis upon which she seeks reimbursement of the filing fee advanced by her. There are several ways to characterize what Braziel is really seeking to accomplish in her Amended Motion. The first option, urged by Braziel, is to consider the "claim" a request for allowance of an administrative expense under § 503(b)(1)(A), on the theory that advancing the filing fee was an "actual and necessary cost or expense of preserving the estate." Secondly, the filing fee might...