In re Welch

647 B.R. 673

IN RE: Tiffany Marie WELCH, Debtor(s).

C/A No. 21-02884-EG

United States Bankruptcy Court, D. South Carolina.

Signed January 4, 2023

Linda Barr, Office of United States Trustee, Columbia, SC, for U.S. Trustee.

Jason T. Moss, Moss & Associates, Attorneys, P.A., Columbia, SC, for Debtor.

ORDER DENYING MOTION TO RECONSIDER

Elisabetta G. M. Gasparini, US Bankruptcy Judge THIS MATTER is before the Court on the Motion to Reconsider, Alter, or Amend This Court's December 6, 2022 Order Granting in Part and Denying in Part Request for Allowance of Fees Pursuant 11 U.S.C. §§ 330(a) & 503(b)(2) ("Motion to Reconsider") filed by Jason Moss ("Moss") of Moss and Associates Attorneys, P.A. (the "Firm"), counsel for Tiffany Marie Welch ("Debtor"),¹ asking the Court to alter or amend the Order Granting in Part and Denying in Part Request for Allowance of Fees Pursuant to 11 U.S.C. §§ 330(a) & 503(b)(2) ("Order")² pursuant to Fed. R. Bankr. P. 9023 and Fed. R. Civ. P. 59(e). The findings of fact and conclusions of law made in the Order are incorporated as if fully set forth herein.³

FACTS

On December 6, 2022, the Court entered the Order which, among other things, denied the award of fees charged by the Firm as an administrative expense to be paid through the chapter 13 plan for services in connection with helping the Debtor apply for modification or forgiveness of her student loans—beyond any relief available pursuant to 11 U.S.C. § 523(a)(8) or other provisions of the Bankruptcy Code or Rules—through an online portal outside of the chapter 13 plan process. In the Order, the Court concluded the student loan assistance services were not "in connection with the bankruptcy case" under 11 U.S.C. § 330(a)(4)(B) for the reasons stated therein. To be clear, the Court did not conclude that the Firm could not collect such fees; rather, the Court concluded that the fees could be paid outside the chapter 13 plan but would not be awarded as an administrative priority claim through the expedited fee approval process contemplated by SC LBR 2016-1(b)(2).

Having determined that the services failed to meet this threshold requirement to be compensable as administrative claims under the Bankruptcy Code, the Court noted that these services do "not fit squarely within the existing expedited fee procedure of SC LBR 2016-1(b)," stated that "[e]ven if they were deemed to be in connection with the case, the Supplemental Fee Statement falls short of the requirements of SC LBR 2016-1(b)(2), as it does not appear that all factors as set forth above have been met," and held that the fees requested for the student loan services "do not meet the standards of SC LBR 2016-1(b)(2)."

The Motion to Reconsider requests the Court (1) find the legal services and expenses incurred in connection with the services the Firm performed under the "Student Loanify" program to be beneficial and necessary to the Debtor in representing her interests "in connection with the bankruptcy case;" (2) determine a reasonable amount to be awarded for those services as an administrative expense pursuant to 11 U.S.C. § 503(b)(2) ; and (3) permit the Firm to file another Supplemental Fee Statement for those services. In support of this request, Moss argues that the student loan services were "in connection with the bankruptcy case" and compensable under 11 U.S.C. § 330(a)(4)(B) because obtaining a cancellation of the Debtor's student loan debt will satisfy the student loan claims filed in the case and paid through the confirmed plan, free up funds for the payment of other claims and expenses, facilitate completion of the confirmed plan, and provide the Debtor significant debt relief. Moss also asserts, without explanation, that the student loan services are compensable under SC LBR 2016-1(b)(2) as "additional work necessary as a result of any matters involving...other complicating factors not present in the typical chapter 13 case."

CONCLUSIONS OF LAW

Motions to Reconsider are governed by Federal Rule of Bankruptcy Procedure 9023⁴ and Federal Rule of Civil Procedure 59(e). " Rule 59 allows a party to seek an alteration or amendment of a previous order of the court." Progressive Church of Our Lord Jesus Christ, Inc. v. Progressive Church of Our Lord Jesus Christ-Tallahassee, Inc. , C/A No. 3:19-cv-03541, 2021 WL 2418493, at *1 (D.S.C. June 14, 2021) (citation omitted). Under Rule 59(e), a court may " ‘alter or amend the judgment if the movant shows either (1) an intervening change in the controlling law, (2) new evidence that was not available at trial, or (3) that there has been a clear error of law or a manifest injustice.’ " Id. (quoting Robinson v. Wix Filtration Corp. LLC , 599 F.3d 403, 407 (4th Cir. 2010) ). "In order to obtain relief under Rule 59(e), the burden rests on the moving party to establish one of these three grounds. Id. (citing Loren Data Corp. v. GXS, Inc. , 501 F. App'x 275, 285 (4th Cir. 2012) ).

Rule 59 motions cannot be used to make arguments that could have been made before the entry of a judgment, nor are they "opportunities to rehash issues already ruled upon because a litigant is displeased with the result." Id. (citation omitted). Said differently, "reconsideration of a judgment after its entry is an extraordinary remedy which should be used sparingly." Doe v. Spartanburg Cnty. Sch. Dist. Three , 314 F.R.D. 174, 176 (D.S.C. 2016) (quoting Pac. Ins. Co. v. Am. Nat. Fire Ins. Co. , 148 F.3d 396, 403 (4th Cir. 1998) ).

The Firm has not met its burden to establish that the extraordinary remedy of altering or amending the Order is warranted. The Motion to Reconsider does not demonstrate an intervening change in the controlling law, put forth new evidence that was not available at trial, or show that there has been a clear error of law or a manifest injustice. While the Firm disagrees with the conclusion reached by the Court, it has not demonstrated appropriate grounds to warrant the requested relief. The Court acknowledges that to the extent the Debtor's student loan debt is modified or forgiven, that could free up payments to other unsecured creditors. However, these services are akin to representing a debtor in family court to modify his or her domestic support obligations, which, like student loan obligations, are ordinarily non-dischargeable in bankruptcy and must remain current through the life of the plan. In both cases, such services may be beneficial to the debtor and may lead to a modification of the plan, but they must be paid for outside of the chapter 13 plan. The Firm has not advanced any argument it could not have made prior to the entry of the Order, an intervening change in the law, or any new evidence that would alter the Court's prior ruling, and its arguments fail on the merits. Accordingly, the Motion to Reconsider will be denied.

The Court, however, will take this opportunity to further emphasize that given the facts of this case, the services the Firm performed in seeking a cancellation of the Debtor's student loan debt are not compensable under SC LBR 2016-1(b)(2) even if they were "in connection with the bankruptcy case" under 11 U.S.C. § 330(a)(4)(B) —which the Court concluded they are not. As set forth in the Order, supplemental fees in addition to the $4,000 expedited fee can be awarded if certain factors are met, which can be summarized as follows: (1) the fees must be for "additional work necessary as a result of any matters involving the default under or variance from the terms of the confirmed plan, adversary proceedings, appeals, or other complicating factors not present in the typical chapter 13 case;" (2) the statement must be filed within "a reasonable time after completion of the additional services;" (3) the supplemental fees must be "authorized by a conspicuous provision of a written fee agreement filed with the B2030 Form;" and (4) the description of services provided in the Supplemental Fee Statement must contain sufficient information to determine whether the supplemental fee charged is fair and reasonable. See SC LBR 2016-1.

First, the Firm's services in seeking cancellation of the Debtor's student loan debt outside of the chapter 13 plan process cannot reasonably be described as being "necessary as a result of any matters involving the default under or variance from the terms of the confirmed plan, adversary proceedings, appeals, or other complicating factors not present in the typical chapter 13 case." The record before the Court does not indicate the Debtor is in default of the plan terms nor are the fees the Firm is seeking for the modification of the confirmed plan. Moreover, while the Firm argues that providing legal services to determine methods to address otherwise nondischargeable student loan debt requested by Debtor post confirmation fits within the local rules allowance for fees and expenses associated with "complicating factors not...