PETER McNIFF, United States Bankruptcy Judge.
Stephen R. Winship's supplemental application for approval of attorney fees is before the court. In the application Mr. Winship seeks approval of $9,849.00 in fees for services performed in connection with various litigation.
The supplemental application was filed pursuant to the court's request that Mr. Winship provide further information concerning some of the services performed and originally requested in his fee application of June 20, 1996. The United States trustee objected to that application for, among other things, the questionable benefit to the estate of services related to defending a dischargeability proceeding and a creditor's objection to the debtor's claims of exemption; services associated with contempt proceedings held in the United States District Court against Mr. Zwerin; and the services relating to negotiations with the debtor's only significant creditor, Northwestern Mutual Life Insurance Company.
The court has reviewed the applicable law, the case law cited by Mr. Winship and the supplemental information provided, and being fully advised, finds that $7,465.50 should be allowed.
All parties correctly recognize that in the Tenth Circuit, the threshold question in granting an award of fees is whether the performed services benefitted the bankruptcy estate. In re Lederman Enterprises , 997 F.2d 1321, 1323 (10th Cir. 1993). However, Mr. Winship directs the court's attention the case of In re Office Products of America, Inc . , 136 B.R. 964, 973 (Bankr.W.D.Tex. 1992). That court held that if the services were necessary, they were presumptively beneficial. The analysis is based on considerations relevant to employment of counsel by the estate in a chapter 7 case and to that extent, is irrelevant here. The services Mr. Winship performed may well have been necessary to the debtor, but the questions are whether they were beneficial and necessary to the estate, and whether they should be compensated from the estate.
Mr. Winship also recognizes that almost without exception, counsel may not be compensated from the estate for services incurred which only benefit the debtor individually. In re Hanson , 172 B.R. 67 (B.A.P. 9th Cir. 1994). However, he cites case law holding that dischargeability litigation may be, in some circumstances, so intertwined with other estate matters that the fees may be compensable from the estate and that each case should be reviewed on its own merits.
The court agrees that a per se rule of nonpayment from the estate is not prudent. Thus, a review of each separate litigation category is necessary.
Regarding the services performed in connection with the contempt matters in the United States District Court, the court finds that these fees should be allowed. Mr. Winship's role in that litigation was to provide advice to other counsel and the court concerning the effect of the bankruptcy on that litigation and with respect to the estate's assets. Special counsels' fees have been allowed for services incurred in connection with the same claim litigation. To deny Mr. Winship his fees in this regard would be somewhat anomalous.
Likewise, the court finds that the fees incurred for settlement negotiations with other counsel and mediation sessions conducted within the Tenth Circuit appellate process should be allowed. These services also relate to claim litigation and the effect of the bankruptcy on the proceedings. As such, they are a benefit to the estate.
However, the court does not view the dischargeability and exemption matters as beneficial to the estate. These services were intended to protect the individual debtor from liability and to enhance the debtor's non-estate property at the expense of the estate. Counsel has not shown that the position taken on these issues enhanced the estate or resulted in benefit to the estate, or that their resolution will further the reorganization process.
Although these fees are subject to the court's scrutiny under 11 U.S.C. § 329, the court's ruling does not preclude counsel from being compensated by Mr. Zwerin personally. See, e.g. , In re Stromberg , 161 B.R. 510, 515 (Bankr.D.Colo. 1993). In this case, the likelihood is more than. theoretical that Mr. Zwerin can personally compensate Mr. Winship from non-estate property, Mrs. Zwerin's property, or postpetition wages.
Finally, counsel requests that the court order the chapter 11 trustee to pay the allowed fees from the estate funds over which the trustee has control. On representations of all counsel, the court believes that there are insufficient funds to compensate all fees incurred by all counsel to date. Additionally, the chapter 11 trustee has other administrative matters which must be funded. Bearing in mind that these attorney fee awards are interim, and that the attorneys may be required to repay funds in the event that the estate is not administratively solvent, the court believes that Mr. Winship should receive some payment on the allowed fees.
It is, therefore, ORDERED that Mr. Winship is allowed fees for services rendered on behalf of the estate in the amount of $7,465.50; and further
ORDERED that the chapter 11 trustee is authorized to pay Mr. Winship an amount on his allowed fees which is equivalent to a prorata share based on the funds already paid to other counsel from estate property, including any retainers; and further
ORDERED that the chapter 11 trustee is authorized to pay any fee awards to the extent that in his sole discretion sufficient funds are available in the estate; and further
ORDERED that in the future Mr. Winship shall separately categorize the entries on his fee applications as described in the United States Trustee Fee Guidelines.