STEPHEN MITCHELL, Bankruptcy Judge
On October 29, 2001, this court issued a memorandum opinion and order which partially granted the debtor's motion to disallow certain fees claimed by his bankruptcy attorney, Robert B. Patterson. Presently before the court is the motion filed on November 8, 2001, by the debtor and by intervenors James and Louise Hooper to amend the findings of fact, make additional findings of fact, and amend the order. Mr. Patterson filed a response generally opposing the requested relief but raising an argument of his own that could be construed as a request for reconsideration of what was described as the court's "core" ruling. For the reasons stated, the findings will be amended and supplemented in part, but the terms of the October 29, 2001, order will remain unchanged.
On November 7, 2001, Mr. Patterson filed a notice of appeal with respect to the October 29, 2001, order. Under F.R.Bankr.P. 8002(b), the filing of a notice of appeal prior to the disposition of a timely-filed motion to amend or make additional findings under F.R.Bankr.P. 7052 or to alter or amend the judgment under F.R.Bankr.P. 9023 "is ineffective to appeal from the judgment, order, or decree . . . specified in the notice of appeal, until the entry of the order disposing of the last such motion outstanding." The present motion was filed on the tenth day after entry of the order in question and is therefore timely. Thus, the court has jurisdiction to decide the present motion notwithstanding the intervening filing of the notice of appeal.
Discussion
Under Fed.R.Civ.P. 52(b), as incorporated by F.R.Bankr.P. 7052, "[o]n a party's motion, filed no later than 10 days after entry of judgment, the court may amend its findings — or make additional findings — and may amend the judgment accordingly." Additionally, under Fed.R.Civ.P. 59(e), as incorporated by F.R.Bankr.P. 9023, a motion to alter or amend a judgment may be filed within 10 days of the entry of the judgment. Although Rule 59(e) does not state the grounds that will support the altering or amending of a judgment, the Fourth Circuit has held that such relief is proper (1) to accommodate an intervening change in controlling law; (2) to account for new evidence not available at trial; or (3) to correct a clear error of law or prevent manifest injustice. Hutchinson v. Staton, 994 F.2d 1076, 1081 (4th Cir. 1993).
A "judgment," for the purpose of applying the Federal Rules of Civil Procedure in the bankruptcy context, means "any order appealable to an appellate court." F.R.Bankr.P. 9002(5).
In this case, the movants specifically seek to modify a finding as to the extent of the debtor's ownership interest in the family limited partnerships that now own the Cullowhee Cafe, Longbranch, and Biltmore properties; to amend the finding that the Longbranch assignment secured future as well as existing attorneys fees; to amend the order to limit the effectiveness of the Longbranch assignment to the same dollar amount as the reformed $150,000 note; to further modify the order to provide that the reformed principal balance of the note is "no more than" $53,979.16; to modify a finding as to the amount due on the Riggs judgment; to make an additional finding that the $53,200 payment to Mr. Patterson in March 1996, was a credit against the Biltmore assignment; to delete a finding that Mr. Patterson had not brought any court proceeding to enforce the Longbranch assignment; and, in general, to modify the order to expressly state that any issues not ruled upon based on this court's lack of jurisdiction was without prejudice to the litigation of those issues in other forums. Mr. Patterson, in his response, has suggested that a key component of the court's ruling was in error because, he argues, the literal language of Rule 2016 never fixed a time for him to file a fee disclosure. These issues will each be addressed in turn.
A. The Debtor's Ownership Interest in the Limited Partnerships.
At the hearing, the debtor plainly and unambiguously testified that he owned one percent of the family limited partnerships to which he had conveyed his interests in the Cullowhee Cafe, Longbranch, and Biltmore properties, and that otherwise his five children "own all of the percentage." The court's findings tracked that testimony. Now, however, the debtor offers an affidavit to the effect that he was "incorrect and/or confused" regarding the extent of his ownership interest, and he offers as exhibits copies of the limited partnership agreements for the Cafe Family Limited Partnership, Biltmore E.N.H. Family Limited Partnership, and Brown/Bryson Family Limited Partnership reflecting that he is the sole general partner, with a 1% interest, as well as a 98% limited partner, with his five children each being 1/5% limited partners.
Ordinarily, the court would be highly disinclined to allow a witness, following a decision on the merits, to contradict his own sworn trial testimony on the ground that he was "confused" when he testified. However, the precise extent of the debtor's ownership interest in the partnerships does not materially affect the court's analysis of the issues. The fact remains that the debtor's ownership interests in the properties were conveyed to family limited partnerships, with the result that the debtor no longer has a direct interest in the real estate that is the subject of the deed of trust and the assignments. In light of the debtor's concern that the court's finding, if left unconnected, might cause mischief in other contexts, the court will modify its findings to reflect that the debtor is the owner of a 1% general partnership interest and 98% limited partnership interest in the partnerships, and that his five children each own a 1/5% limited partnership interest.
B. The Reach of the Longbranch Assignment.
The debtor urges that the language in the Longbranch assignment reciting that it was given "to assure full payment of all amounts owed by [the debtor] to [Mr. Patterson]" (emphasis added) means that the assignment must be construed to have been given as security only for amounts actually due on the date it was signed, November 30, 1995, and not for future legal fees.
The court disagrees. The language in question contains no words of limitation and can easily be understood in the sense of "owed, now or in the future." That this was the sense intended by the parties seems likely from the context. At the time the assignment was executed, Mr. Patterson had agreed to continue representing the debtor on an ongoing basis in number of legal matters and was obviously concerned about being paid, given the debtor's pattern up to that point of making only relatively small payments against much larger invoices. Additionally, had the assignment been intended to secure only a sum certain that was due on the date it was signed, it is curious that it did not recite that sum. Accordingly, the court declines to find that the assignment secured only those fees owed as of November 30, 1995, or to reform the assignment to reflect such a limitation.
C. The Reformed Amount of the Cullowhee Cafe Note.
After backing out the disallowed bankruptcy-related fees, the court determined that the maximum claim Mr. Patterson had against the debtor for legal fees was $53,979.16 on the date the $150,000.00 note was signed. Accordingly, the court ordered reformation of the note to reflect an original principal balance in that amount. The debtor now asks that the order be amended to provide that the original principal balance of the note "is no more than" $53,979.16.
The court declines to do so. A promissory note is an unconditional obligation to pay the sum stated. At the time he signed the note, the debtor was fully competent to manage his affairs and to obligate himself. The only challenge presented to the note was that it secured bankruptcy-related fees that had never been disclosed. This court has the power under 11 U.S.C. § 329(b) to order disgorgement of bankruptcy-related fees that the court determines are excessive. In the exercise of that power, this court disallowed all the bankruptcy-related fees. To give effect to that ruling, the court subtracted the disallowed legal fees from the amounts that had been billed by Mr. Patterson and limited the $150,000 note to that amount. The court made no further rulings. In particular, the court made no findings as to the value of any legal services provided to the debtor by Mr. Patterson following the dismissal of the bankruptcy case. Whether the note, as reformed, is subject to challenge on any additional grounds, is simply not an issue that the court has decided. Accordingly, there is no need for the court to amend its judgment.
D. The Balance Due on the Riggs Judgment.
The court, while declining to rule whether the amount due on the Riggs judgment could be used to compel release of the assignments and deed of trust, stated in passing that the balance due on the judgment, as of September 20, 2001, was $466,119.84. As the debtor correctly observes, that finding was not essential to the court's ruling. However, the debtor is concerned that the statement may be given preclusive effect in other forums and seeks to have the statement either deleted or corrected to reflect a judgment payoff "in excess of $550,000.
As an initial matter, the court notes that the principal amount of the Riggs judgment is $250,000.00, not $253,946.12, as erroneously stated in the opinion. Judgment was entered in favor of Riggs against Mr. Patterson in that amount, "together with interest at the rate of eight (8%) per annum from April 15, 1991, until paid." The language of the judgment does not expressly provide for the compounding of interest. Accordingly, the court's computation assumed simple interest at the rate of 8% per annum on the judgment principal from April 15, 1991, through September 20, 2001, or 3,811 days. Using the corrected principal amount of $250,000.00, the per diem interest accrual would be $250,000.00 times 0.08 divided by 365, or $54.7495. That figure, multiplied by 3,811 days, would give $208,821.92 in interest. That sum, added to the judgment principal, would give a total payoff of $458,821.92 using a simple interest calculation.
The debtor's motion incorrectly refers to the judgment as one for "fraud." While it is true that the Riggs complaint sought a determination of nondischargeabiliry on theories both of fraud and of willful and malicious injury, the judgment determined the debt to be nondischargeable solely on the ground of willful and malicious injury under § 523(a)(6), Bankruptcy Code.
April 15, 1991, was the date of the trial and of the bench ruling in Riggs's favor.
The debtor, however, argues that interest on the Riggs judgment should be compounded annually. This position is supported by the language of 28 U.S.C. § 1961, which governs the allowance of interest on money judgments entered by Federal courts in civil cases and which provides in relevant part, "Interest shall be computed daily to the date of payment . . . and shall be compounded annually." 28 U.S.C. § 1961(b) (emphasis added). Accordingly, the court agrees that a correct calculation of the payoff does require the annual compounding of interest. The result, as shown by the following table, is a corrected payoff of $558,422.22 as of September 20, 2001: Start End Days Interest Balance $250,000.00 04/15/1991 04/15/1992 366 $ 20,000.00 $270,000.00 04/15/1992 04/15/1993 365 $ 21,600.00 $291,600.00 04/15/1993 04/15/1994 365 $ 23,328.00 $314,928.00 04/15/1994 04/15/1995 365 $ 25,194.24 $340,122.24 04/15/1995 04/15/1996 366 $ 27,209.78 $367,332.02 04/15/1996 04/15/1997 365 $ 29,386.56 $396,718.58 04/15/1997 04/15/1998 365 $ 31,737.49 $428,456.07 04/15/1998 04/15/1999 365 $ 34,276.49 $462,732.55 04/15/1999 04/15/2000 366 $ 37,018.60 $499,751.16 04/15/2000 04/15/2001 365 $ 39,980.09 $539,731.25 04/15/2001 09/20/2001 158 $ 18,690.97 $558,422.22 As already noted, a determination of the amount due on the judgment was not essential to the rulings made concerning Mr. Patterson's fees. Nevertheless, to the extent there may be some question, and given that the judgment was rendered in this court, it seems appropriate for this court to compute the payoff so as to avoid the incongruity of another court doing so. Accordingly, the memorandum opinion will be amended to state the correct amount of the judgment principal and the payoff.
E. The Biltmore Refinance.
As discussed in the original opinion, the debtor signed on December 1, 1995, an instrument entitled "Irrevocable Assignment of Proceeds" assigning to Mr. Patterson his one-half interest in the Biltmore Garden Apartments "to assure the payment to Robert B. Patterson, Trustee," of $150,000.00 "or such lesser amount as Hooper is entitled to receive from any refinance," with the assignment thereafter remaining in place as to distributions due the debtor "until all sums due from [the debtor] to Robert B. Patterson are fully paid." In March 1996, the debtor made one or more payments to Mr. Patterson totaling $53,200.00. The debtor asks this court to make an express finding that the $53,200.00 is a credit against the Biltmore assignment.
While the testimony was not always easy to follow, it seems clear that $50,000.00 of the amount paid to Mr. Patterson in March 1996 came from a refinance of Biltmore. However, the evidence is insufficient for the court to determine the "amount Hooper [was] entitled to receive from the refinance." The debtor, of course, was in the best position to offer evidence (such as the settlement statement) on that point but did not do so. Accordingly, although the court will make an additional finding that $50,000.00 has been paid to Mr. Patterson from the proceeds of the Biltmore refinance, the court is unable to make a finding as to whether that sum represented the entire amount that the debtor was entitled to receive from the refinance.
F. Enforcement of the Longbranch Assignment.
In its memorandum opinion, the court stated that any dispute as to the legal interest, if any, that was conveyed to NMFB as a result of the deed from Mr. Patterson of a purported one-have interest in Longbrach would have to be determined in another forum. The court then noted that the Longbranch assignment, although given as security "to assure full payment" of all amounts the debtor owed to Mr. Patterson, did not include a power of sale, and that the record did not reflect "that any court proceeding was brought by Mr. Patterson to enforce the security interest." As the debtor points out, this is not entirely correct. While no court proceeding was brought that in literal terms sought to enforce a security interest in the Longbranch property, Mr. Patterson — on the apparent theory that the assignment, coupled with the debtor's default, made him the owner of the debtor's half-interest — did initiate a partition proceeding in the Superior Court of Jackson County, North Carolina, on June 23, 1999, seeking to have the Longbranch property sold. The court will correct the memorandum opinion to so state, but expresses no opinion as to whether a partition proceeding would be a proper method of enforcing a collateral assignment.
G. The Preclusive Effect of the Court's Ruling.
As a final matter, the debtor requests that the October 29, 2001, order be amended to expressly state that, as to any issues not ruled upon based on lack of jurisdiction, the order was without prejudice to the litigation of those issues in other forums. The court has carefully reviewed the original memorandum opinion and believes that the opinion clearly distinguishes between those matters with respect to which the court had jurisdiction and was ruling, and those with respect to which it did not have jurisdiction and was not ruling. Accordingly, the court is of the opinion that no further clarification is required.
H. The Applicability of § 329 and Rule 2016 to Mr. Patterson.
Mr. Patterson did not file a motion to alter or amend the October 29, 2001, ruling, and instead chose to file a notice of appeal. In his response to the debtor's motion, however, he raises an argument that the requirement in Section 329 and Rule 2016 for a debtor's attorney to file a disclosure of compensation paid or to be paid in connection with bankruptcy representation did not in literal terms apply to him because he did not represent the debtor at the commencement of the case and was never formally substituted for the law firm of Docter Docter. He also suggests that the language in Section 329 requiring disclosure of agreements made "after one year before the date of the filing of the [bankruptcy] petition" only refers to agreements made within the one-year period prior to the filing of the petition, not to post-petition agreements.
Suffice it to note that Section 329 by its terms applies to " [a]ny attorney representing a debtor in . . . or in connection with" a bankruptcy case. (Emphasis added). There is no question that Mr. Patterson represented the debtor in and in connection with the debtor's bankruptcy case. He entered an oral appearance at the hearing on the trustee's objection to the debtor's claimed exemptions and participated actively in that hearing as counsel for the debtor. He thereafter entered a written appearance as attorney for the debtor. He negotiated the terms of the settlement with creditors and was the actual scrivener of the order ultimately entered dismissing the case, which he endorsed as counsel for the debtor. The fact that Docter Docter were never formally relieved as counsel does not make Mr. Patterson any less counsel for the debtor.
It is true, as counsel for Mr. Patterson observes, that Mr. Patterson could not in literal terms have complied with the requirement of Rule 2016(b) that a disclosure be filed "within 15 days after the order for relief," because Mr. Patterson did not begin representing the debtor until approximately one year after the case was initially commenced under chapter 11 and ten months after the case had been converted to chapter 7. It is also true that the court did not specifically fix "another time" for the filing of the disclosure. The court believes, however, that a fair reading of Rule 2016 would require the filing of a disclosure within 15 days after an attorney's initial appearance in the case unless the court fixed some other time. But even if this were not the case, the requirement that a "supplemental" statement be filed within 15 days "after any payment or agreement not previously disclosed" plainly applies to Mr. Patterson. The August 29, 1994, bonus agreement had not been "previously disclosed" and therefore required the filing of a disclosure statement. The argument that Rule 2016's use of the term "supplemental" to describe such a statement means that no statement is required unless the court has fixed a time for filing an initial disclosure, while semantically clever, does complete violence to the obvious intent of the rule, particularly in light of the clear statutory mandate that "Any attorney representing a debtor . . . shall file with the court a statement of the compensation paid or agreed to be paid." § 329(a), Bankruptcy Code (emphasis added). Even if one were to indulge in the most hypertechnical reading of Rule 2016 as to the timing of such filing, it is clear that the rule does not attempt to abrogate the underlying requirement of Section 329 that the disclosure be filed, which means that it must be filed at some time prior to the closing of the case. In the present case, no disclosure was ever filed.
The Local Bankruptcy Rules for this district now address this issue and require that the attorney's disclosure statement be filed "not later than fifteen days after the later of the filing of the petition or the date that counsel is engaged." LBR 2016-1(B) (emphasis added). Thus, the court, through the local rules, does now "direct" when attorneys retained post-petition must file their disclosure statements. The local rule in effect at the time Mr. Patterson entered his appearance, however, did not include language specifically addressing the possibility that counsel might be engaged after the filing of the petition. Former LBR 308(B) (January 1, 1992) ("The Disclosure Statement, if not filed with the petition, shall be filed not later than fifteen days after the filing of the petition").
The court also rejects the reading by which Mr. Patterson attempts to limit Section 329 to agreements made within one year before the filing of the petition. That is not what the statute says. It says, " after one year before the date of the filing" (emphasis added). Thus, the look-back period is limited to one year prior to the filing, but any agreement after that date, whether before or after the filing of the bankruptcy petition, clearly falls within the purview of the statute. Accordingly, the court declines to revisit its ruling invalidating the fees.
A separate order will be entered consistent with this opinion.