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rom: Supreme Court robot Date: Mon Jan 26, 2004 10:20:11 AM
America/New_York Subject: LIIBULLETIN, Monday January 26 (2 cases)
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AN E-BULLETIN
LEGAL INFORMATION INSTITUTE -- CORNELL LAW SCHOOL
lii\@lii.law.cornell.edu
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LAMIE V. UNITED STATES TRUSTEE (02-693) Web-accessible at:
http://supct.law.cornell.edu/supct/html/02-693.ZS.html
Argued November 10, 2003
-- Decided January 26, 2004
Opinion author: Kennedy
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Before 1994, sect. 330(a) of the Bankruptcy Code authorized a court to
"award to a trustee, to an examiner, to a professional person employed
under section 327 ... , or to the debtor's attorney" "(1) reasonable
compensation for ... services rendered by such trustee, examiner,
professional person, or attorney ... ." (Emphasis added to highlight
text later deleted.) In 1994 Congress amended the Code with a reform
Act. The Act altered sect. 330(a) by deleting "or to the debtor's
attorney" from what was sect. 330(a) and is now sect. 330(a)(1). This
change created apparent legislative drafting error in the current
section. The section is left with a missing "or" that infects its
grammar. And its inclusion of "attorney" in what was sect. 330(a)(1) and
is now sect. 330(a)(1)(A) defeats the neat parallelism that otherwise
marks the relationship between current sects.330(a)(1) ("trustee, ...
examiner, [or] professional person") and 330(a)(1)(A) ("trustee,
examiner, professional person, or attorney"). In this case, petitioner
filed an application with the Bankruptcy Court seeking attorney's fees
under sect. 330(a)(1) for the time he spent working on a behalf of a
debtor in a chapter 7 proceeding. The Government objected to the
application. It argued that sect. 330(a) makes no provision for the
estate to compensate an attorney who is not employed by the estate
trustee and approved by the court under sect. 327. Petitioner admitted
he was not employed by the trustee and approved by the court under sect.
327, but nonetheless contended sect. 330(a) authorized a fee award to
him because he was a debtor's attorney. In denying petitioner's
application, the Bankruptcy Court, District Court, and Fourth Circuit
all held that in a chapter 7 proceeding sect. 330(a)(1) does not
authorize payment of attorney's fees unless the attorney has been
appointed under sect. 327.
Held: Under the Code's plain language, sect. 330(a)(1) does not
authorize compensation awards to debtors' attorneys from estate funds,
unless they are employed as authorized by sect. 327. If the attorney is
to be paid from estate funds under sect. 330(a)(1) in a chapter 7 case,
he must be employed by the trustee and approved by the court. Pp. 5-15.
(a) Petitioner argues that this Court must look to legislative history
to determine Congress' intent because the existing statutory text is
ambiguous in light of its predecessor.He claims that subsection
(A)'s "attorney" is facially irreconcilable with the section's first
part since the two parts' lists were previously parallel.He claims
also that only a drafting error can explain the missing conjunction "or"
between "an examiner" and "a professional person" since the text was
previously grammatically correct.The starting point in discerning
congressional intent, however, is the existing statutory text, Hughes
Aircraft Co. v. Jacobson, 525 U.S. 432, and not predecessor statutes.
So this Court begins with the present statute. Pp. 5-6. (b) That
the present statute is awkward, and even ungrammatical, does not make it
ambiguous on the point at issue. A debtor's attorney not engaged under
sect. 327 does not fall within the eligible class of persons that the
first part of sect. 330(a)(1) authorizes to receive compensation:
trustees, examiners, and sect. 327 professional persons.Subsection
(A) allows compensation for services rendered by four types of persons
(the same three plus attorneys), but unless an applicant is in one of
the classes named in the first part, the kind of service rendered is
irrelevant. The missing "or" does not change this conclusion. Numerous
federal statutes inadvertently lack a conjunction, but are read for
their plain meaning. Here, the missing "or" neither alters the text's
substance nor obscures its meaning. Subsection (A)'s nonparalleled
fourth category also does not cloud the statute's meaning. "Attorney"
can be straightforwardly read to refer to those attorneys who qualify as
sect. 327 professional persons. Likewise, neighboring sect. 331, which
permits both debtors' attorneys and sect. 327 professional persons to
receive interim compensation, most straightforwardly refers to sect. 327
debtors' attorneys. This reading may make "attorney" in sect.
330(a)(1)(A) surplusage, but surplusage does not always produce
ambiguity. When there are two ways to read the text--either attorney is
surplusage, which makes the text plain, or attorney is nonsurplusage,
which makes the text ambiguous--applying a rule against surplusage is
inappropriate. Pp. 6-9. (c) The plain meaning that sect. 330(a)(1)
sets forth does not lead to absurd results. Petitioner's arguments--
that this Court's interpretation will lead to a departure from the
principle of prompt and effectual administration of bankruptcy law and
attributes to Congress an intent to eliminate compensation essential to
debtors' receipt of legal services--overstate sect. 330(a)(1)'s effect.
Compensation remains available through various permitted means.
Compensation for debtors' attorneys in chapter 12 and 13 bankruptcies,
for example, is not much disturbed by sect. 330 as a whole. Moreover,
compensation for debtors' attorneys in chapter 7 proceedings is not
altogether prohibited. Sections 327 and 330, taken together, allow
chapter 7 trustees to engage attorneys, including debtors' counsel, and
allow courts to award them fees. Section sect. 327's limitation on a
debtor's incurring debts for professional services without the trustee's
approval also advances the trustee's responsibility for preserving the
chapter 7 estate. Add to this the apparent sound functioning of the
bankruptcy system in the Fifth and Eleventh Circuits, which have both
adopted the plain meaning approach, and petitioner's arguments become
unconvincing. And sect. 330(a)(1) does not prevent a debtor from
engaging in the common practice of paying counsel compensation in
advance to ensure that a bankruptcy filing is i
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