Turner v. Avery

198 B.R. 192 (1996)

Jean O. TURNER, Trustee, v. Gregory J. AVERY, et al.

Civil Action No. 95-1823.

United States District Court, E.D. Louisiana.

June 13, 1996.

COPYRIGHT MATERIAL OMITTED

Gregory J. Avery, Metairie, LA, pro se.

Gregory J. Avery, Law Office of Gregory J. Avery, Metairie, LA, for Kathleen R. Avery.

Emile Louis Turner, Jr., Turner, Young, Hebbler & Babin, New Orleans, LA, for Turner.

ORDER AND REASONS

FALLON, District Judge.

Before the Court is an appeal from a final order of the United States Bankruptcy Court, Eastern District of Louisiana, granting partial summary judgment in favor of Jean O. Turner, Trustee for $89,793.17. This sum represents the amount of money received by the appellant as a result of the prepetition agreement dissolving the partnership of appellant Gregory Avery and Ray Orrill. For the following reasons, the judgment of the Bankruptcy Court is AFFIRMED.

BACKGROUND

In 1982, the appellant, Gregory Avery¹, and Ray Orrill formed the law partnership of Orrill & Avery. The partnership was a continuing concern until May 1, 1985 when both men agreed to end their business association. The dissolution was amicably handled by the two parties who reached various oral and written agreements prior to and including a final agreement on May 1, 1985. The part of the agreement which is at issue here concerned the assignment of all the pending partnership cases. To that end, Avery and Orrill created a master list of pending cases and assigned each case to a partner who was to handle that case from May 1 forward. After May 1, 1985 both lawyers began practicing law separately while sharing space and splitting overhead expenses equally.

Those cases, which can be classified as partnership cases, assigned to a specific partner went on to generate funds after May 1, 1985. This money was handled pursuant to the partnership dissolution agreement. 10% of the proceeds from the partnership cases were placed in a special account in order to retire the partnership debt which remained after the dissolution. The rest of the fee was split 50/50 between the lawyer handling the case and the former partner regardless of the fact that the former partner did not have a role in the matter after May 1, 1985.

On May 22, 1985, Avery and his wife filed a voluntary bankruptcy petition pursuant to Chapter 7 of the Bankruptcy Code. After filing, Avery listed his interest in the partnership and estimated its value at zero dollars. This estimation triggered an investigation by the trustee which resulted in the present action before this Court.²

The current motion for partial summary judgment was filed by the trustee on August 27, 1993. The trustee sought to have made part of the bankruptcy estate certain funds received by Avery from Orrill per the terms of the partnership dissolution agreement of May 1, 1995. The amounts concerned are as follows: $79,695.00 representing the amount given to Avery by Orrill as Avery's share of the professional fees earned by Orrill on Orrill's partnership cases; $8,577.75 for advanced costs made by Avery on partnership cases prior to May 1, 1985; and $1,520.42 for monies from the liquidation of partnership bank accounts. The bankruptcy court granted the trustee's motion for partial summary judgment on the above amounts and a judgment was signed on April 11, 1995. It is from this judgment the Averys appeal.

ANALYSIS

The appellants assert several grounds for appeal which can be classified as follows: 1) did the bankruptcy court fail to follow the Fifth Circuit's holding in Turner v. Avery, 947 F.2d 772 (5th Cir.1991) in violation of the mandate rule; 2) did the bankruptcy court commit clear error or an abuse of discretion when it refused to grant Avery's motion for a new trial on the basis of inadvertence and excusable neglect; and 3) whether the trustee failed to make a showing of quantum meruit and, if so, was such a failure fatal to her motion for partial summary judgment. "Although this Court reviews conclusions of law de novo, the Bankruptcy Court's findings of fact may not be set aside unless found to be clearly erroneous." In re Dibert, Bancroft & Ross Co., Ltd., 192 B.R. 688, 690 (E.D.La.1996); Fed.R.Bankr.P. 8013.

A. Did the bankruptcy court fail to follow the mandate of the appellate court?

The mandate rule is an application of the law of the case doctrine which applies when a higher court has passed on an issue or issues and then remanded the matter for further proceedings in the lower court. "It is well-established that a district court must adhere to the mandate and the law of the case as it is established on appeal." Taylor v. United States, 815 F.2d 249, 252 (3rd Cir.1987). The mandate rule acts to "`preclude a re-examination of issues of law decided on appeal, explicitly or by necessary implication, either by the district court on remand or by the appellate court in a subsequent appeal.'" Marine Overseas Services v. Crossocean Shipping, 791 F.2d 1227, 1232 (5th Cir.1986) (quoting, Chapman v. NASA, 736 F.2d 238, 241 (5th Cir.1984)). The appellants contend that the appellate court's prior ruling in Turner v. Avery³ mandated that the trustee prove the value of Avery's services on each partnership case prior to May 22, 1985 and that the bankruptcy court's failure to place this burden on the trustee when considering this motion was at odds with the Fifth Circuit's mandate.

While this Court is cognizant of a lower court's duties on remand under the mandate rule, it must also carefully avoid implementing the mandate in a fashion which surpasses the breadth of the appellate decision. Texas Oil & Gas Corp. v. Hodel, 654 F.Supp. 319, 323 (D.D.C.1987). The mandate rule does not apply to issues which could have been but were not decided by the earlier appellate proceeding. Taylor v. United States, 815 F.2d 249, 252 (3rd Cir.1987); In re Wonder Corp. of America, 109 B.R. 18, 30 (Bankr.D.Conn.1989).

With the above legal principles in mind, the Court turns to the Fifth Circuit previous pronouncement in Turner v. Avery, supra. (Turner I) to see if the bankruptcy court's present decision violated the mandate of the earlier ruling. As stated above⁴, Turner I dealt with the executory nature of contingency fee contracts and what amount of the fees generated by an attorney/debtor pursuant to these contracts were assignable to the bankruptcy estate. The Fifth Circuit clearly stated,

the sole issue presented by this case is the question of entitlement to fees generated by Avery in the completion of contingent fee contracts which predate his filing in bankruptcy where the securing of the representation and some of the work occurred prior to the filing and some of the work, including closure and distribution of proceeds, occurred after the bankruptcy filing. (emphasis added) Turner, 947 F.2d at 774.

Turner I held that the trustee must show, on a quantum meruit basis, the work done by Avery pre-petition and can only recover that amount on behalf of the estate. Unquestionably, Turner I involved only partnership cases handled by Avery and the fees those cases generated. The prior appellate decision did not address, expressly or implicitly, those cases handled by Orrill or the fees generated by the work product of someone other than the attorney/debtor.

The only remaining question raised by this appeal with regard to the mandate rule is whether the bankruptcy court violated its mandate by allowing the trustee to adopt and rely on the bankruptcy courts prior findings of fact. The appellants argue that the Fifth Circuit vacated the entire lower court ruling, findings of fact included. This is not the case. The Fifth Circuit in Turner I merely vacated the money judgment in that case as a matter of law and did not address the actual facts of the matter. The bankruptcy court was not required to make new findings of fact, or conclusions of law, in this instance where those findings and conclusions are not inconsistent with the prior appellate ruling and are still relevant and uncontradicted. United States v. Bd. of Education of City of Chicago, 621 F.Supp. 1296, 1323 (N.D.Ill. 1985), vacated on other grounds, 799 F.2d 281 (7th Cir.1986).

The bankruptcy court did not violate the mandate of the Fifth Circuit's ruling in Turner v. Avery. Turner I concerned a specific legal issue which was not raised in the present motion for summary judgment. While Turner I necessarily lends guidance to the Court on similar legal questions, it does not control or mandate a certain result in this instance.

B. Did the Bankruptcy Court abuse its discretion or commit clear error in denying the appellants' motion for a new trial on the basis of inadvertence and excusable neglect?

The appellants contend that the bankruptcy court committed error when it refused to find inadvertence and excusable neglect upon the appellants' motion for a new trial. A motion for a new trial is left to the sound discretion of the trial court. 11 Charles A. Wright, Arthur R. Miller & Mary K. Kane, Federal Practice and Procedure: Civil 2d §§ 2803 & § 2857 (1995). In their motion for a new trial, the appellants sought relief from the bankruptcy courts' judgment on the basis that their failure to file any opposition, or present any evidence, to the motion for partial summary judgment should be excused on the grounds of inadvertence and excusable neglect. See Fed.R.Civ.P. 59 & 60(b). Thus, the appellants argue that under Fed.R.Civ.P. 60(b)(1), which allows a court to grant a party relief from a final judgment on the grounds of "mistake, inadvertence, surprise, or excusable neglect....," the bankruptcy court should have dismissed the judgment signed April 11, 1995 because the bankruptcy court did not have the benefit of Avery's opposition.

A brief review of a portion of the facts surrounding the motion for partial summary judgment is necessary to consider this aspect of the appellants appeal. The present motion for partial summary...