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Despite German Decisional and Statutory Authority, Bankruptcy Court Must Still Review Debtorʼs Professional Fees for Reasonableness

In re Solar Trust of America, LLC, No. 12-11136 (KG) (Bankr. D. Del. Jan. 12, 2015)

In this Memorandum Opinion issued by the Honorable Kevin Gross in the chapter 11 cases of Solar Trust of America, LLC (“STA”) and its affiliated debtors, the Delaware Bankruptcy Court determined that a post-petition decision of a German appellate court violated the automatic stay and thus, was void as a matter of law.  Despite contrary arguments, the Court did not find the issuance of the decision ministerial—a usual exception to the automatic stay—not only because the ruling was issued by a judge but also because it qualified as a “qualitative and quantitative determination[.]”  More specifically, the German appellate court affirmed a German lower courtʼs dismissal of a lawsuit pending against STA but valued the dismissed suit €29,975,000 higher than the lower German court.  This fact is critical to the Memorandum Opinion because the Court was faced with an objection to an unsecured claim for legal fees submitted by the counsel who represented STA in the German lower court proceeding, Krammer Jahn Rechtsanwälte PartG mbB (“Krammer Jahn”).  Under German law, the amount of legal fees that may be requested by German counsel is determined by a statutory calculation dependent upon the amount in controversy.  As a result of the German appellate courtʼs post-petition decision, the amount of legal fees that could be sought by Krammer Jahn for its services rendered on behalf of STA in the German lower court proceeding increased by 600%.

According to the Court, not only did the ruling violate the automatic stay, but it also could not serve to conclusively establish the amount of Krammer Jahnʼs claim for legal fees because section 502(b)(4) of the Bankruptcy Code “explicitly mandates a review of the reasonableness of attorneys fees” claimed by an attorney of a debtor.  Although Judge Gross highlighted that “deference [is] given to decisions by competent international courts”, His Honor ruled that the “Court cannot simply ignore its own responsibility to review the reasonableness of attorneys’ fees when the fees directly affect the bankruptcy case.”

In the case before the Court, the reasonableness of Krammer Jahnʼs claim was indeed held in question as the fees requested were not based on any additional services provided to STA by Krammer Jahn in the lower court proceeding, but rather solely on the German appellate courtʼs revaluation of the lawsuitʼs amount in controversy—an appellate proceeding in which STA was not present or represented.  Ultimately, despite additional arguments posited by Krammer Jahn based on the Rooker-Feldman Doctrine and international comity, the Court held the German appellate court fee calculation void and denied summary judgment on the reasonableness of Krammer Jahn’s claimed attorneys fee amount, which will be determined following a future evidentiary hearing.