IN RE DBH LIMITED, INC., (W.D.Tenn. 1999)

JAMES TODD, Chief Judge, District

Appellant DBH Limited, Inc. ("Debtor") has appealed the order of the United States Bankruptcy Court denying the Debtor's Motion for attorney fees and costs. Pursuant to 28 U.S.C. § 158, this court has jurisdiction to hear this appeal. For the reasons set forth below, this action is REMANDED for further findings.

On May 16, 1997, three petitioning creditors filed an involuntary chapter 7 petition against the Debtor in the United States Bankruptcy Court for the Middle District of Tennessee. The case was subsequently transferred, on December 30, 1997, to the United States Bankruptcy Court for the Western District of Tennessee because the debtor's primary place of business was located in the Western District. On July 7, 1997, the Debtor filed a successful motion to dismiss the involuntary petition. An appeal has resulted from that decision and is currently in this Court as Civil No. 98-1303. Subsequent to the dismissal of the involuntary petition, the Debtor moved the Bankruptcy Court for recovery of attorney fees and expenses pursuant to 11 U.S.C. § 303(i). In a Memorandum Opinion and Order, the Bankruptcy Court denied the Debtor's Motion for attorney fees and costs by stating:

In looking at the totality of the circumstances in this case, the Court does not feel that it is proper to award the debtors attorney's fees and costs under § 303(i)(1). When this case was first transferred to this Court, the Court had to order the debtors to provide the petitioners with a list of creditors. The debtor drug its feet in so doing. As a result of this delay, the Court had to postpone the trial on the motion to dismiss. This continuance caused not only the debtors additional costs and fees but also the creditors. Had the debtor been forthright and provided the list when first requested, the case would have concluded more quickly and the fees and costs would have been substantially less.

The Debtor filed a Motion for Reconsideration on February 26, 1999. The Creditors filed an objection to the motion on March 15, 1999. The Bankruptcy Court denied the Debtor's Motion for Reconsideration. On April 7, 1999 the Debtor filed a Notice of Appeal from the Bankruptcy Court's order denying attorney fees and expenses and order denying motion for reconsideration. No response has been filed.

A fee determination by a bankruptcy judge will not be disturbed absent an abuse of discretion. Such an abuse of discretion "can only occur when the bankruptcy judge fails to apply the proper procedures in making the determination, or bases an award upon findings of fact that are clearly erroneous." In re AA Energy Properties, Ltd., 1988 WL 135910 (6th Cir.) (citing Matter of U.S. Golf Corp., 639 F.2d 1197, 1201 (5th Cir. 1981).

The Appellant contends that the ruling of the Bankruptcy Court was an abuse of discretion because it was based on the erroneous finding that "the Court had to order the debtors to provide the Petitioners with a list of creditors. The debtor drug it's feet in so doing. As a result of this delay, the Court had to postpone the trial of the Motion to Dismiss." Since that finding of fact appears to be erroneous, the ruling of the Bankruptcy Court was an abuse of discretion in that specific regard. However, the Bankruptcy Court stated that it based its ruling upon "the totality of circumstances," although the Bankruptcy Court did not mention any other factor in its determination. What is unclear from the Memorandum and Opinion re Debtor's Motion for Attorney's Fees and Costs filed on January 29, 1999 is what other circumstances, if any, the Bankruptcy Court relied upon when it referred to the "totality of circumstances".

Thus, this cause is REMANDED to the United States Bankruptcy Court for the limited purpose of describing what other circumstances, if any, were relied upon when the Bankruptcy Court referred to the "totality of circumstances." Jurisdiction will be retained in this court pending receipt of the supplemental opinion of the Bankruptcy Court.

IT IS SO ORDERED.