Credit Solutions SC

Filing 4

ORDER signed by Judge J P Stadtmueller on 12/29/14 AFFIRMING the decision of the bankruptcy court and DISMISSING this Appeal. See Order. (cc: all counsel)(nm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
In re: SHARON C. WARD.
Case No. 14-CV-882-JPS
CREDIT SOLUTIONS,
Appellant.
In re: CANDACE R. SIMPSON.
Case No. 14-CV-883-JPS
CREDIT SOLUTIONS, S.C.,
Appellant.

ORDER

Credit Solutions, S.C. (“Credit Solutions”), the appellant and sole
party in these two separate bankruptcy appeals, served as counsel for the
debtors in two separate Chapter 13 actions before Bankruptcy Judge Michael
Halfenger. See In re Ward, 511 B.R. 909, 911 (Bankr. E.D. Wis. 2014).1 Judge
Halfenger eventually dismissed both bankruptcy cases on motion by the
trustee, because the debtors in both cases failed to make pre-confirmation
payments, as 11 U.S.C. § 1326(a)(1) requires. Id.
Prior to the dismissal of the cases, though, Credit Solutions filed fee
applications with the Bankruptcy Court. Id. This presented a strange
situation. Generally, the Bankruptcy Court must order that the trustee return
all of a debtor’s funds to the debtor whenever a bankruptcy case is dismissed
prior to confirmation. See id. (citing 11 U.S.C. § 1362(a)(2); 11 U.S.C.

1

The Court addresses these two separate appeals together, because Credit
Solutions is the only party in each and the appeals present practically identical
issues. Judge Halfenger recognized this, and issued a single order addressing
motions for reconsideration in the separate bankruptcy cases before him. See In re
Ward, 511 B.R. at 911.

§ 349(b)(3)). Predictably, Credit Solutions did not favor this approach because
it would place Credit Solutions in a much more tenuous position: receipt of
its fees for completed work would hinge entirely on the debtors’ respective
decisions to pay or not pay those fees from the funds returned to them by the
trustee. See In re Ward, 511 B.R. at 911. “In effect,” Credit Solutions’ fee
applications were an “effort to change the [Bankruptcy] Code’s default rule
that a trustee must return ‘to the debtor’ payments held by the trustee when
a case is dismissed before confirmation.” Id. (citing 11 U.S.C. § 1362(a)(2); 11
U.S.C. § 349(b)(3)).
Credit Solutions filed those fee applications near “the end of the
objection period on the dismissal motions,” meaning that “counsel’s
applications were not ripe for decision when the cases were dismissed.” In
re Ward, 511 B.R. at 911. Accordingly, Judge Halfenger dismissed both cases
without taking action on the fee applications. Id.
Thereafter, Judge Halfenger held hearings on the fee applications,
ultimately denying them.2 Id. In spite of the fact that the petitions had been
filed prior to dismissal of the cases and that there were no objections to the
fee applications, Judge Halfenger determined that the plain language of 11
U.S.C. § 1326(a)(2) required that the trustee return the funds to the debtors
and that 11 U.S.C. § 349(b)(3) revested the right to those funds in the debtors.
In re Ward, 511 B.R. at 911–12.
Credit Solutions then moved for reconsideration under Federal Rules
of Civil Procedure 59 and 60 and for a stay of the return of funds pending

2

He held separate hearings in the cases, but reached practically identical
conclusions, In re Ward, 511 B.R. at 911–12, so the Court treats them as one.

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appeal. In re Ward, 511 B.R. at 911–12, 914 (citing Fed. R. Civ. P. 59, 60; Fed.
R. Bankr. P. 8005, 9023, 9024)).
Judge Halfenger denied the reconsideration portion of those motions
at a May 27, 2014 hearing.3 In re Ward, 511 B.R. at 912. He found that Rule 60
could not afford relief on the basis of a misapplication of the law. Id. (citing
United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 270–71 (2010)).
He also held that Rule 59 did not afford relief, because there was not a
manifest error of law: while certain case law supported Credit Solutions’
position—although Credit Solutions had not raised some of that authority
until the motion for reconsideration—there was also case law to the contrary.
In re Ward, 511 B.R. at 912–913 (citing a variety of cases, some supporting
Credit Solutions’ position and some opposing it). Judge Halfenger also
pointed out that Credit Solutions could have, but did not, filed their
applications earlier, requested an earlier ruling on them, or sought to stay
dismissal pending decision on the applications. Id., at 913. The fact that they
did not take those courses militated against a finding of manifest injustice. Id.,
at 913–14 (citing Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 954 (7th Cir.
2013); Moro v. Shell Oil Co., 91 F.3d 872, 876 (7th Cir. 1996)). Last, he noted
that it was unclear whether Credit Solutions had actually provided any
benefit to the debtor, as required under 11 U.S.C. § 330(a)(3–4), seeing as the
debtors’ plans were not confirmed. In re Ward, 511 B.R. at 914.
Though he denied the motions for reconsideration, Judge Halfenger
did issue a stay regarding the disbursement of funds. See, e.g., id., at 922. He
3

Judge Halfenger described the reasons for this denial in a later-issued
order, which seems to have expanded upon the reasoning provided at the hearings.
See In re Ward, 511 B.R. at 911–14. The Court has nonetheless cited to that order, as
it provides the best overview of the posture of the case.

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found that Credit Solutions has some chance of prevailing on appeal and that
the balance of potential harms weighed in favor of staying disbursement. Id.,
at 921 (citations omitted).
Credit Solutions appealed both cases, and those appeals are now
before the Court. (See, e.g., Case No. 14-CV-882, Docket #1; Case No.
14-CV-883, Docket #1). Credit Solutions is the only party in either appeal,4
and briefing is complete. (See, e.g., Case No. 14-CV-882, Docket #1, #3; Case
No. 14-CV-883, Docket #1, #3).
1.

STANDARD OF REVIEW
In reviewing this appeal, the Court must first address the standard of

review that it must apply. Judge Halfenger identified two procedural
irregularities that could potentially affect that standard. See In re Ward, 511
B.R. at 914–916.
First, he pointed out that Credit Solutions’ notice of appeal related
only to the denials of reconsideration. Id. (citing notices of appeals in
bankruptcy cases). That being the situation, these appeals are arguably
limited to Judge Halfenger’s denials of reconsideration. See In re Ward, 511
B.R. at 914–15 (citing Fed. R. Bankr. P. 8001(a); Fed. R. App. P. 3(c); Fadayiro
v. Ameriquest Mortg. Co., 371 F.3d 920, 921–22 (7th Cir. 2004); United States v.

4

The Court pauses to note that the debtors did not appear or file briefs in
these appeals. Perhaps they determined that they did not wish to oppose Credit
Solutions’ position (but then why would they not agree to simply pay Credit
Solutions out of the reimbursed funds). Perhaps more likely, they were never
advised of this appeal or its potential impact on them. Credit Solutions is taking a
position that may be adverse to the debtors, and may therefore have required
withdrawal as counsel. The Court does not rule that is the case—that may be an
issue for disciplinary authorities to resolve if there is a dispute—but the Court
would hope that Credit Solutions took proper steps to advise the debtors and shield
itself from ethical violations.

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Arkison, 34 F.3d 756, 761 (9th Cir. 1994)). And, if that were the case, then the
Court would be constrained to review the denial of the motions for
reconsideration using an abuse of discretion standard, which—the Court
agrees with Judge Halfenger—would make it impossible for Credit Solutions
to prevail on appeal, in light of the lack of controlling authority and
disagreement amongst other courts on the underlying issue. See In re Ward,
511 B.R. at 915.
That is likely the case, here. In Fadayiro, Judge Posner stated that it was
likely that Fed. R. Bankr. P. requires an appellant to explicitly list any order
being appealed. See Fadayiro, 371 F.3d at 921–22. The Court finds that
persuasive and this, alone, would be a basis to affirm Judge Halfenger.
On the other hand, Fadayiro made that statement in dicta and is
contrary to other circuits’ law. The firmest guidance on the topic has come
from the Ninth Circuit, which has held that appellants do not need to
specifically mention in their notice of appeal every order that they intend to
appeal. See, e.g., In re Dudly, 249 F.3d 1170, 1174 (9th Cir. 2001) (citing Arkison,
34 F.3d at 761). The Third Circuit has also allowed jurisdiction over appeals
of unspecified orders where there is a connection between the specified and
unspecified orders, the appellant intended to appeal the unspecified order,
and the appellee has not been prejudiced. See, e.g., In re Mushroom Transp. Co.,
Inc., 382 F.3d 325, 334 (3d Cir. 2004) (citing Elfman Motors, Inc. v. Chrysler
Corp., 567 F.2d 1252, 1254 (3d Cir. 1977)). All of those elements are present in
this case.
Accordingly, in light of the tenuous nature of Fadayiro’s guidance,
which conflicts with the law of other circuits, the Court will address the
issues, as though they are not limited to the motions for reconsideration.
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Second, Judge Halfenger noted that Credit Solutions waited until it
filed its motions for reconsideration to raise any substantive argument on the
issue that it asserts on appeal, and, therefore, may have forfeited or waived
such argument. In re Ward, 511 B.R. at 915–16 (citing Brooks v. City of Chicago,
564 F.3d 830, 833 (7th Cir. 2009); Pond v. Michelin N. Am. Inc., 183 F.3d 592,
597 (7th Cir. 1999); Puffer v. Allstate Ins. Co., 675 F.3d 709, 718 (7th Cir. 2012)).
On this point, the Court departs from Judge Halfenger’s analysis. As
Judge Halfenger acknowledged, the Seventh Circuit has treated forfeiture of
statutory interpretation issues fairly liberally, allowing parties to raise those
issues on appeal, even if not previously presented. In re Ward, 511 B.R. at 916
(citing Amcast Indus. Corp. v. Detrex Corp., 2 F.3d 746, 749–50 (7th Cir. 1993)).
In this case, Credit Solutions raised its argument generally at the first hearing
on the petition for attorney fees. At the time, Credit Solutions was
unprepared; this lack of preparation was arguably justifiable, because no one
had objected to Credit Solutions’ fee petition, and so Credit Solutions may
not have anticipated a substantive hearing on the issue. (See, e.g., Case No.
14-CV-882, Docket #3, 3; Case No. 14-CV-883, Docket #3, 3). When Judge
Halfenger ultimately denied the fee petition, Credit Solutions diligently filed
a more substantive motion for reconsideration.
For these reasons, the Court finds it best to determine that Credit
Solutions did not forfeit or waive its arguments.
Having made these determinations, the Court ultimately concludes
that it must review Judge Halfenger’s conclusions of law de novo. See, e.g., In
re Berman, 629 F.3d 761, 765–66 (7th Cir. 2011) (citing Ojeda v. Goldberg, 599
F.3d 712, 716 (7th Cir. 2010); In re Frain, 230 F.3d 1014, 1019 (7th Cir. 2000); In
re Scott, 172 F.3d 959, 966 (7th Cir. 1999)).
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2.

ANALYSIS
There is only one issue to determine in this case: whether bankruptcy

judges “can consider requests to allow an administrative expense claim after
a case is dismissed.” In re Ward, 511 B.R. at 912. If so, then the Court must
remand this case to Judge Halfenger to determine whether Credit Solutions
is entitled to receive attorneys’ fees as an administrative expense claim. If not,
then the Court must affirm Judge Halfenger’s decision.
As Judge Halfenger recognized, there is a split of authority on the
issue. Id., at 912–13 (citing In re Garris, 496 B.R. 343, 354–55 (Bankr. S.D.N.Y.
2013) (post-dismissal consideration allowed); In re Matthews, No. 12-CV-414,
2012 WL 3263599, at *5 (E.D. Pa. Aug. 9, 2012) (post-dismissal consideration
allowed; applying In re Lewis, 346 B.R. 89, 103–105 (Bankr. E.D. Pa. 2006), and
vacating Bankruptcy Judge’s finding that it lacked jurisdiction to hear postdismissal fee petition); In re Lewis, 346 B.R. at 103–05 (post-dismissal
consideration allowed); In re Kent Funding Corp., 290 B.R. 471, 478 (Bankr.
E.D.N.Y. 2003) (post-dismissal consideration allowed); Iannini v. Winnecour,
487 B.R. 434, 443 (W.D. Pa. 2012) (post-dismissal consideration not allowed);
In re Ragland, No. 05-18142, 2006 WL 1997416, at *5–6 (Bankr. E.D. Pa. May
25, 2006) (post-dismissal consideration not allowed).
2.1

The Statutory Scheme

Reading the statutes on this issue according to their plain terms, the
Court comes away firmly believing that the statutes simply cannot be read
in harmony with one another. On one hand—favoring Credit Solutions’
position—is the text of 11 U.S.C. § 1326 and its related statutes. 11 U.S.C.
§ 1326 provides that, when “a plan is not confirmed, the trustee shall return”
the res of the bankruptcy estate “to the debtor, after deducting any unpaid
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claim allowed under [11 U.S.C. §] 503(b).” 11 U.S.C. § 503(b)(2), in turn,
allows for payment of attorneys’ fees if they are found to be allowed
administrative expenses under 11 U.S.C. § 330(a)(1)(A). This seems to
indicate that the trustee should return the bankruptcy estate to the debtor
only after paying attorneys’ fees (as approved under 11 U.S.C. § 330(a)(4)(B)).
On the other hand—weighing heavily against Credit Solutions’ position—is
the text of 11 U.S.C. § 349(b)(3). That statute states that “[u]nless the court, for
cause, orders otherwise, a dismissal of a case…revests the property of the
estate in the entity in which such property was vested immediately before the
commencement of the case.” 11 U.S.C. § 349(b)(3). In other words, the
dismissal itself causes the estate to immediately revest in the pre-bankruptcy
owner—in this case, the debtor. The trustee would have to convey the estate
back immediately, without providing for attorneys’ fees.
Courts have landed all over the map in attempting to construe these
phrases.
In re Lewis held that 11 U.S.C. § 1362(a)(2) would apply only in cases
where the bankruptcy court denied confirmation but did not dismiss the case
(and thus would not apply in cases like In re Lewis or this one, in which the
bankruptcy case was dismissed). See 346 B.R. at 111. Thus, it relied on 11
U.S.C. § 349(b)(3), instead, holding that 11 U.S.C. § 349(b)(3) should apply.
Id. at 110–11. In spite of some problems, 11 U.S.C. § 349(b)(3) offered
“flexibility” to the Court, which could use “the ‘for cause’ provision in § 349”
to consider fee applications post-dismissal. Id.
The In re Garris court, after closely considering In re Lewis’ holding,
reached precisely the opposite conclusion. In re Garris, 496 B.R. at 352–53. In
re Garris began by noting the issues with In re Lewis’ holding. In re Garris, 496
Page 8 of 15

B.R. at 350–51. Perhaps most important among those issues is the fact that,
by its plain terms, 11 U.S.C. § 349(b)(3) applies only to the pre-petition estate,
having no effect on post-petition plan payments. In re Garris, 496 B.R. at 350
(discussing the recognition of the court in In re Lewis, 346 B.R. at 108–109, that
11 U.S.C. § 349(b)(3)’s terms are difficult to apply to post-petition payments).
In re Garris went on to squarely disagree with In re Lewis’ finding that 11
U.S.C. § 1362(a)(2) could only apply to non-dismissed cases. In re Garris, 496
B.R. at 352–53. It held that the language of 11 U.S.C. § 1362(a)(2) was clear
and would apply to dismissed cases, such as In re Lewis and the case at hand:
“The language in the third paragraph of section 1326(a)(2) was likely
broadened to encompass dismissal as well as denial of confirmation, as the
two often occur together.” In re Garris, 496 B.R. at 353. In re Garris found that
this reading could also square with 11 U.S.C. § 349(b)(3), insofar as 11 U.S.C.
§ 349(b)(3) should be read to apply to the pre-petition estate while 11 U.S.C.
§ 1362(a)(2) should be read to apply to post-petition plan payments. See In re
Garris, 496 B.R. at 353 (“This reading of section 1326(a)(2) is consistent with
section 349(b)(3). Plan payments typically come from postpetition earnings;
there is no party vested in the property as of the petition date. See Lewis, 346
B.R. at 107. Section 1326(a)(2) supplements section 349(b)(3) in dismissed
cases to deal with this different type of property.”).
In re Lewis and In re Garris, however, do have one common trait: both
find that the bankruptcy court can consider attorneys’ fee petitions postdismissal. See In re Lewis, 346 B.R. at 110–14; In re Garris, 496 B.R. at 354–55.
The nature of the post-dismissal review differed in minor ways. In re Lewis
found it appropriate to review the petition under 11 U.S.C. § 349(b)’s “for
cause” standard, finding jurisdiction existed and a fee award was
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appropriate where the petition had been filed pre-dismissal (but concluding
otherwise where the petition was filed post-dismissal). 346 B.R. at 111–14. In
re Garris, on the other hand, simply found that bankruptcy courts can retain
ancillary jurisdiction over fee requests in spite of dismissal. 496 B.R. at 354
(citing In re Parklex Associates, Inc., 435 B.R. 195, 208 (Bankr. S.D.N.Y. 2010)
(itself citing In re Elias, 188 F.3d 1160, 1164 (9th Cir. 1999), among other cases,
for the proposition that bankruptcy courts retain post-dismissal jurisdiction
to dispose of ancillary matters such as fee petitions); In re Fox, 140 B.R. 761,
764 (Bankr. D.S.D. 1992) (noting that “[n]o Code provision moots fee
applications filed after a case is dismissed,” and that some bankruptcy courts
employ local rules to avoid the “‘case dismissed-application moot’
objection.”); In re Brown, 371 B.R. 486, 494 (Bankr. N.D. Okla. 2007) (“[t]he
Court's jurisdiction to review such fees is not dependent on whether the
status of the case stands as open, closed, pending, or dismissed.”); In re Kent
Funding Corp., 290 B.R. 471, 477–78 (Bankr. E.D.N.Y. 2003) (declining to hear
post-dismissal fee dispute, despite having discretion to exercise ancillary
jurisdiction).
In the end, the Court finds In re Garris’ approach to be most sound.
The Court finds that case’s review of the statutory language to be more
persuasive than the reasoning in In re Lewis. 11 U.S.C. § 1326(a)(2) applies, by
its plain terms, applies much more closely to this case than 11 U.S.C.
§ 349(b)(3), which would apply only to the pre-petition estate. In turn, 11
U.S.C. § 1326(a)(2) calls for the trustee to disburse the funds after deducting
allowed administrative expenses, such as attorneys’ fees. Because Judge
Halfenger did not allow those expenses prior to dismissal, the trustee should
have disbursed the funds to the debtor without deducting attorneys’ fees.
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This, however, leaves open the question of whether Judge Halfenger
could have or should have retained jurisdiction over the issue to determine
whether the fees were allowed administrative expenses.
2.2

Exercise of Jurisdiction

So, the Court still must determine whether Judge Halfenger erred in
finding that he could not exercise jurisdiction. Perhaps he did, but—even if
so—it was harmless error.
The Court says that “perhaps” Judge Halfenger erred, because the law
on retained jurisdiction is unclear. There are four different retainedjurisdiction regimes that the Court has identified:
(1)

Ancillary Jurisdiction. There is some general acceptance of the
proposition that a bankruptcy court can retain at least ancillary
post-dismissal jurisdiction over fee petitions. See, e.g., In re
Garris, 496 B.R. at 354 (collecting a number of cases allowing
ancillary jurisdiction); In re Elias, 188 F.3d at 1164.

(2)

Ancillary Jurisdiction only for Reasonableness
Determination. This position limits ancillary jurisdiction to
determinations of reasonableness, see, e.g., Dery v. Cumberland
Cas. & Surety Co., 468 F.3d 326, 330–31 (6th Cir. 2006); Tsafaroff
v. Taylor, 884 F.2d 478, 481 (9th Cir. 1989); Dahlquist v. First
Nat’l Bank in Sioux City, 751 F.2d 295, 298 (8th Cir.).

(3)

Express Grant. Other courts limit jurisdiction further, finding
that, absent a decision by the bankruptcy court to retain
jurisdiction, the bankruptcy court has no post-dismissal
jurisdiction over fee petitions. See, e.g., In re Westgate Nursing
Homes, Inc., 518 B.R. 520 (Bankr. W.D.N.Y. 2014) (noting that 11
U.S.C. § 349(b) causes the post-dismissal “disappearance” of
the bankruptcy estate, leaving no “case or controversy”
regarding attorneys’ fees for a court to decide) (citing Iannini
v. Winnecour, 487 B.R. 434, 438–39 (W.D. Pa. 2012); In re
Sweports, Ltd., 511 B.R. 522, 525 (Bankr. N.D. Ill. 2014); In re
Garnett, 303 B.R. 274, 278 (E.D.N.Y. 2003)).
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(4)

Party Request. In re Lewis can be viewed as expanding the
express-grant regime, allowing retained jurisdiction on the
basis of a party request. 346 B.R. at 103 (“the Lewis Motion,
which was considered at the dismissal hearing, functioned as
a request that the court order that the dismissal not result in
the automatic revesting of estate property in the Debtor and
was denied by separate order,” thus bifurcating the issues, and
leaving open the fees issue).

Even if the Court were to adopt the position of the second or third
regime, it would not mean that Judge Halfenger erred. Frankly, neither
situation applies, here: there was no reasonableness determination left nor
did Judge Halfenger expressly grant retained jurisdiction. Meanwhile, the
Court finds that the fourth regime is inconsistent with the plain language of
the statutes. That is, upon dismissal of the case—absent an express retention
of jurisdiction—when there is no bankruptcy estate remaining, 11 U.S.C.
§ 349(b)(3), and no finding of allowed expenses, 11 U.S.C. § 1326(a)(2), there
is simply no question left to resolve and a party request or implicit court
action based on that request does not create jurisdiction. See, e.g., In re
Westgate Nursing Homes, 518 B.R. at 256–57 (“[w]here jurisdiction is not
expressly retained, the court ‘presumptively lacks jurisdiction over the
issue’”) (quoting Iannini, 587 B.R. at 439; citing In re Ragland, 2006 WL
1997416, at *6).
That leaves the issue of ancillary jurisdiction. Indeed, if the Court were
to find that Judge Halfenger had the ability to exercise ancillary jurisdiction,
then it should find that he erred, because he did not believe that he had any
authority to retain jurisdiction. Ultimately, the Court need not decide
whether he could have retained ancillary jurisdiction, though, because—even
if he had authority to do so—he has made clear that he would not have
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exercised such authority, making any legal misunderstanding harmless. The
exercise of ancillary jurisdiction is, of course, left to the discretion of the
judge. See, e.g., In re Elias, 188 F.3d at 1164. And, seeing as Judge Halfenger
flatly rejected the exercise of ancillary jurisdiction, In re Ward, 511 B.R. at 920
(“it appears inappropriate to assert ancillary jurisdiction to act on fee
applications after dismissal, as counsel proposes in these cases, even if the
court has the authority to do so”) (citing In re Ragland, 2006 WL 1997416, at
*8),5 it is clear that he would not have taken that step, even if had found that
it was an option. In other words, even if Judge Halfenger erred in not finding
ancillary jurisdiction to be an appropriate option in rendering his initial
rulings,6 that error was ultimately harmless and does not form the basis for
reversal on appeal. He had the discretion to make that decision, and the
Court does not find that he abused that discretion.
Finally, the Court points out that this is the best outcome in terms of
serving the goals of the statutes and swift administration of bankruptcy
cases. As to the first point, Judge Halfenger correctly pointed out that “the

5

The Court recognizes that Judge Halfenger issued this order after Credit
Solutions had filed its notice of appeal, which is unorthodox. Nonetheless, even if
the Court were to ignore the order, there is ample evidence in the transcript of
Judge Halfenger’s hearing that he would not have exercised ancillary jurisdiction
(See, e.g., Case No. 14-CV-882, Docket #1, Ex. 2, 68–69, 73 (internal transcript pages
12–13, 17); Case No. 14-CV-882, Docket #1, Ex. 2, 60–61, 65 (internal transcript pages
12–13, 17)).
6

And, again, the Court does not necessarily find that to be the case. The case
law on this topic is diverse, and the Court does not ultimately need to reach a
decision on the issue to reach a disposition in this case. Moreover, Judge Halfenger
explicitly considered authority on the issue and found that ancillary jurisdiction
should not be exercised. (See, e.g., Case No. 14-CV-882, Docket #1, Ex. 2, 68–69, 73
(internal transcript pages 12–13, 17); Case No. 14-CV-882, Docket #1, Ex. 2, 60–61,
65 (internal transcript pages 12–13, 17)).

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general purpose of § 349(b)…is to ‘restore all property rights, as far as
practicable, to the positions they occupied at the commencement of a case
that was dismissed.’” (In re Ward, 511 B.R. at 918 (quoting 3 Collier on
Bankruptcy, ¶ 349.03, at 349–12 (Alan N. Resnick & Henry J. Sommer eds.,
16th ed. 2014)). This approach certainly accomplishes that goal. Perhaps
attorneys will have to reach fee agreements with clients or even obtain a
judgment against former clients, but certainly all of the property rights are
restored to their original owner: the client. As to the second point—the swift
administration of justice—the Court notes that this outcome could allow for
bankruptcy judges to exercise ancillary jurisdiction , see In re Elias, 188 F.3d
at 1164, In re Garris, 496 B.R. at 354, or expressly retain jurisdiction, see In re
Westgate Nursing Homes, 518 B.R. 520; In re Sweports, Ltd., 511 B.R. at 525, if
they find such authority to be persuasive and wish to exercise their authority
in appropriate cases. That flexibility, as opposed to the (ultimately unclear)
approach of Lewis best leaves bankruptcy judges to act upon these cases as
they see fit.
3.

CONCLUSION
For all of these reasons, the Court is obliged to affirm Judge

Halfenger’s decisions on these cases. Even if the matter is before the Court
on Judge Halfenger’s initial rulings, rather than his denials of Credit
Solutions’ motions for reconsideration, there still is no basis to reverse. Under
the statutory scheme and principles of jurisdiction, Judge Halfenger was
correct that he did not have jurisdiction to act on Credit Solutions’ fee
petition; perhaps he could have exercised ancillary jurisdiction, but he did not
find that to be appropriate, and the Court can find no abuse of discretion in
that decision.
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Accordingly,
IT IS ORDERED that the decision of the bankruptcy court be and the
same is hereby AFFIRMED; and
IT IS FURTHER ORDERED that this appeal be and the same is
hereby DISMISSED.
The Clerk of Court is directed to enter judgment accordingly.
Dated at Milwaukee, Wisconsin, this 29th day of December, 2014.
BY THE COURT:

J.P. Stadtmueller
U.S. District Judge

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