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In re Handel

February 18, 2009

IN RE: MELINDA HANDEL, DEBTOR
BINDER & BINDER, P.C. APPELLANT
v.
MELINDA HANDEL, AND JO ANNE BARNHART, COMMISSIONER OF THE SOCIAL SECURITY ADMINISTRATION APPELLEES



On Appeal of a Decision of the United States District Court for the District of New Jersey (No. 2:07-02588 (DMC)) District Judge: Dennis M. Cavanaugh.

The opinion of the court was delivered by: Pollak, District Judge.

PRECEDENTIAL

Submitted under Third Circuit L.A.R. 34.1(a) January 13, 2009

Before: SLOVITER and BARRY, Circuit Judges, and POLLAK, District Judge*fn1

OPINION OF THE COURT

Appellant Binder & Binder, P.C. (Binder), appeals from a March 28, 2008 order of the United States District Court for the District of New Jersey affirming earlier grants of summary judgment from the United States Bankruptcy Court, District of New Jersey, in favor of the appellees, Melinda Handel and the Commissioner of the Social Security Administration. Binder sought payment, from Handel herself or from the Social Security Administration, of an outstanding debt for legal fees owed by Handel. We have jurisdiction pursuant to 28 U.S.C. §§ 158(d), 1291 and exercise the same standard of review as the District Court when it reviewed the original appeal from the Bankruptcy Court. In re Woskob, 305 F.3d 177, 181 (3d Cir. 2002). Thus, we review the Bankruptcy Court's findings of fact for clear error and exercise plenary review over the Bankruptcy Court's legal determinations. Id.

I.

In September 1996, Melinda Handel, a resident of New Jersey, became disabled and sought benefits from the Social Security Administration. In January 1998, she engaged the New York law firm of Binder & Binder to represent her in seeking benefits. Handel signed a retainer agreement stating, inter alia, that if "the litigation is successful at any stage of the administrative process, the CLAIMANT will pay [attorney's fees of] 25% of the past due benefits or $1,000, whichever is greater." J. Appx. at 27.

On March 6, 2002, the Social Security Administration issued a notice of award to Handel, granting her disability benefits from March 1997. Her past due benefits from March 1997 through November 2001 were calculated at $68,150. The notice of award stated the following (J. Appx. at 31):

We have approved the fee agreement between you and your lawyer. Your past-due benefits are $68,150.00 for March 1997 through November 2001. Under the fee agreement, the lawyer cannot charge you more than $4,000.00 for his or her work . . . . Because of the law, we usually withhold 25 percent of the total past-due benefits or the maximum payable under the fee agreement to pay an approved lawyer's fee. We withheld $4,000.00 from the past due benefits to pay the lawyer.

Handel and Binder each had fifteen business days from the date of receipt of the award notice to contest the fee as too high or too low. At some point (the record does not reveal exactly when), the Social Security Administration issued a fee payment of $4,000 to Binder and issued the remaining past-due benefits to Handel.

Binder filed a challenge to the fee determination as too low. The record contains no evidence regarding whether Binder objected within the fifteen-day deadline. In its Reply Brief on this appeal, Binder has included an affirmation by attorney Charles Binder contending that the firm objected in a timely fashion.*fn2 On September 9, 2002, an administrative law judge increased the fee to $9,908.40. On October 2, 2002, Binder contested this determination. In April 2003, a different administrative law judge approved a fee amount of $14,000 for Binder. The record does not establish what steps, if any, Binder then took to obtain the $10,000 difference in fees from Handel or from the Social Security Administration.

On September 2, 2003, Handel filed a voluntary petition for bankruptcy under Chapter 7 of the Bankruptcy Code. The petition listed Binder as "an unsecured, nonpriority creditor holding a claim in the amount of $10,000." J. Appx. at 102. The Bankruptcy Court issued notices to creditors on Sept. 6 for a meeting on October 2, 2003. It is unclear whether Binder attended the meeting or pursued its listed debt through the regular bankruptcy process. Appellees contend that Binder did neither. On October 28, 2003, the bankruptcy trustee reported that Handel had no property available to satisfy her outstanding debts; the trustee recommended discharge of all remaining obligations. The Bankruptcy Court issued an order discharging Handel's debts on December 5, 2003.

On November 21, 2003, Binder filed a complaint in the Bankruptcy Court against Handel and the Commissioner of the Social Security Administration. Binder sought a determination that Handel's outstanding $10,000 debt to the firm was ...


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