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In re Brielle Associates

argued: July 27, 1982.

IN THE MATTER OF: BRIELLE ASSOCIATES, A PARTNERSHIP OF THE STATE OF NEW JERSEY, DEBTOR
v.
DANIEL J. GRAZIANO, JR., ATTORNEY FOR KIRSCHENBAUM, SHAPIRO & MARRO, A CREDITOR IN THE ABOVE MATTER, APPELLANT



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (TRENTON).

Gibbons, Hunter, Circuit Judges and Lord,*fn* District Judge.

Author: Hunter

Opinion OF THE COURT

HUNTER, Circuit Judge:

1. The law firm of Kirschenbaum, Shapiro & Marro ("Kirschenbaum," "creditor") has appealed from an order of the trial court which affirmed two orders of the Bankruptcy Court. For the reasons which follow, we will affirm.

Factual and Procedural Background

2. Brielle Associates ("debtor") filed a petition for reorganization under Chapter 11 of the Bankruptcy Code (11 U.S.C. §§ 1101-1174 (1979)) in June 1980. In its petition, Kirschenbaum was listed as a creditor in the amount of $44.15. In July 1980, Kirschenbaum filed a proof of claim with the Bankruptcy Court in the amount of $25,044.15. In September 1980, debtor filed a notice of motion objecting to some of the proofs of claim and listing $44.15 as its debt to Kirschenbaum. Debtor's notice of motion directed all claimants who wished to object to the amount listed in that notice to file written objections by September 22, 1980. A hearing on the objections was held on September 24, 1980.

3. The creditor did not respond to the notice of motion or appear at the September 24 hearing, and its claim was accordingly listed as $44.15 in written orders dated November 19, 1980. Pursuant to those orders, two distributions of funds were made, on November 21, 1980, and on February 23, 1981.

4. On March 19, 1981, the bankruptcy court issued a notice of a hearing to be held on April 6, 1981 for the purpose of setting the compensation to be paid to the attorneys for the debtor and the creditors' committee. The bankruptcy court entered an order setting the fees on the same day. On April 13, 1981, Kirschenbaum filed a notice of appeal from the fee order, and the district court affirmed.

5. Also on April 13, 1981, Kirschenbaum moved in the bankruptcy court for relief from the order setting Kirschenbaum's claim at $44.15. Kirschenbaum argued that, although it had received the debtor's notice of motion listing the debt to Kirschenbaum as $44.15, it had misplaced that notice and had not contested the $44.15 amount for that reason.

6. The bankruptcy court held a hearing on Kirschenbaum's motion seeking reinstatement of the $25,044.15 claim. The bankruptcy court noted that Kirschenbaum, which at the time of the misplacing of the debtor's motion had been acting pro se, was a law firm, i.e., a sophisticated party, that Kirschenbaum had received the notice of the debtor's motion and filed it without looking at it, and that a final plan of reorganization had been established before Kirschenbaum moved to have its claim reinstated. The bankruptcy court then denied Kirschenbaum's motion to have its claim reconsidered. Kirschenbaum appealed the denial to the district court, which affirmed the bankruptcy court's order.

7. Kirschenbaum has appealed to this court the district court's affirmance of the fee order and of the denial of Kirschenbaum's motion for reinstatement of its claim.

Discussion

8. The threshold question in connection with Kirschenbaum's appeal from the denial of its motion to reinstate its claim for $25,044.15 is whether the bankruptcy court had jurisdiction to reconsider Kirschenbaum's disallowed claim. Title 11 U.S.C. § 502(j) provides that "before a case is closed, a claim that has been allowed may be reconsidered for cause, and reallowed or disallowed according to the equities of the case." Section 502(j), however, makes no specific ...


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