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United States Bankruptcy Court, District of Rhode Island
Volume 9, Issue 1
ON THE DOCKET
January, February,
March 2008 Inner Workings: News and Advice
by Susan M. Thurston, Clerk of Court
Welcome to the first 2008 district of Rhode Island. In fact,
issue of our classic newsletter On the Judge Votolato is currently the
Docket. As usual, we have lots of longest serving active duty bank-
Inside this issue: news to report on happenings at the ruptcy judge in the entire country.
U. S. Bankruptcy Court since last Judge Votolato has handled thou-
fall. First, many of you surely no- sands of interesting cases during his
ticed our new Court Technology Spe- judgeship here, in addition to his
cialist, Mr. Samuel Nogueras, who work throughout the last four dec-
Inner Workings 1-2
commenced employment at the Court ades helping to educate the bar and
on January 7, 2008. Sam is an ex- public on bankruptcy and other le-
Team Coach 3 perienced audio system specialist and gal topics. This spring, in recogni-
has seamlessly transitioned to his tion of his outstanding contributions
Chambers 4 new role as the Court’s digital court to law related education in Rhode
Personnel Update recorder operator and sound system Island, Judge Votolato was
expert. As the amount of technology awarded the 2008 Giannini Award
Recent Court 5-6
Decisions in the courtroom has grown over the by the Rhode Island Legal/
years, it is a tremendous advantage to Educational Partnership. Please
have someone with Sam’s expertise join me in congratulating Judge
and knowledge running the automa- Votolato on his impressive forty
tion equipment during court proceed- year contribution to the federal
ings. Soon Sam will also be respon- bankruptcy sys-
sible for managing the videoconfer- tem in the dis-
encing component, which is nearly trict of Rhode
ready for prime-time. Island!
2008 also marks the 40th an- The start
niversary of Bankruptcy Judge Ar- of the year – January 1, 2008 –
thur N. Votolato’s continuous service
(Continued on page 2)
as the sole bankruptcy judge for the
ON THE DOCKET
Page 2
(Inner Workings Cont’d from pg. 1) which went into effect on Febru- Those of you who practice be-
ary 15, 2008, and a second update fore the Department of Labor
marked the debut of the Court’s to the Means Test forms, effective may well come before Judge
new and improved website to March 3, 2008. Detailed infor- Calianos in the near future!
the public. The site has been mation on these changes is posted Please join me in extending our
reorganized to better locate on the main page of the website heartfelt congratulations to Jon
critical bankruptcy information, under News and Announcements. on his professional success. As
has a much cleaner look and you can imagine, after all these
Lastly, I would like to an-
provides easier navigation years with the Court, both Cindy
nounce the upcoming departure of
through the use of hovering and Jon will be sorely missed by
two long time employees of the
menu buttons. We have also their court colleagues and the
Court – Cindy Cory, Courtroom
added certain content in the public they have so honorably
Deputy and Jonathan Calianos,
Spanish language as this need served.
Career Law Clerk. Cindy will be
has grown considerably since
retiring on June 1, 2008 after al-
BAPCPA. Also, we have
most 37 years of service with the
added an extensive Self Help/
federal government. If you see
Pro Se section to answer fre-
Cindy in the courtroom between
quently asked questions and to
now and June 1, please join me in
provide detailed information on
congratulating her on her amazing
the procedural requirements for
service to the federal judiciary
different chapter filings. As
and wish her a well deserved re-
usual, we strongly welcome
tirement! Jonathan, on the other
your comments and sugges-
hand, will be transferring to the
tions. A Pro Se survey to col-
Executive Branch on May 9,
lect your feedback has been
2008, to begin service as an Ad-
added to the homepage Please
ministrative Law Judge for the
visit the main page to complete
Department of Labor in Boston.
the on-line survey. Other re-
Jon has served as Judge Voto-
cent changes include three
lato’s distinguished Career Law
amendments to our local rules
Clerk for the past fifteen years.
CONGRATULATIONS AND BEST WISHES TO JON AND CINDY!
Volume 9, Issue 1
Page 3
Team Coach
by Lucinda Cory, Courtroom Deputy
It’s been a little over a new party. Many filers seem easy: always choose the initiating
year since the implementation reluctant to add another party motion/document. For example,
of Mandatory Electronic Case when they see this screen - when filing a motion to continue a
Filing. We now have nearly thinking that they’ve done confirmation hearing, link your mo-
100% of the bankruptcy bar e- something wrong. Simply tion to continue to the plan, not the
filing. Congratulations to all of leave the “association” boxes hearing notice.
you on your continued success unchecked and click into the
REMINDERS:
with the electronic filing sys- next screen.
tem! Still, new members of the A large number attorneys and credi-
Choosing the right event is im-
e-filing community must take tors are now making use of the No-
portant. The “Motion” and
some time getting used to the tice of Appearance (text only) event
“Other” categories are popu-
system. This column seeks to which allows an entry of appearance
lated with many events from
help neophytes (and veterans) without a pdf form. Electronic no-
which to choose. Do not try to
navigate through the events tices go to the parties and attorneys
use ‘document’ when you are
with ease and comfort. in the case so a certificate of service
filing schedules, payment ad-
is not necessary on this particular
The questions most commonly vices, or a means test. Many
event. This event is a time-saver for
faced by ECF users are those events have special functions,
e-filers.
involving choosing party filers, e.g. payment advices, which are
event codes and associating the private entries and cannot be Remember those deadlines! Finan-
filing to the appropriate docu- seen by PACER users who are cial Management Certificates must
ment (“linking”). not parties to a case. be filed within 45 days after the first
meeting of creditors in order to not
When filing a jointly-signed Some have deadlines, linking
hold up a debtor(s) discharge. All
pleading with a party who has screens, and occasional ques-
P.3 and P.4 Declarations are due 15
not previously appeared in a tions to be answered. By trying
days after the underlying document
case, the ECF user will find to use ‘document’ or an inap-
is e-filed. A checklist for each case
that the second signatory is not propriate event, the proper
might be a way to ensure that all
in the “pick list”. The new deadlines and linkages may not
necessary paperwork, declarations
party must then be added. Us- be available. If in doubt, please
and certificates have been timely
ing the function ADD CRE- check out our list of events lo-
filed.
ATE NEW PARTY will allow cated on our website under CM/
you to add the joint filer - but ECF Info -> User Manual ->
please remember the system Events & Flowcharts.
will ask you to create the attor-
The rule of thumb for linking is
ney/client relationship with the
On The Docket
Page 4
Are you an attorney who would like to brush up on your efiling skills?
Do you have new support staff or existing support staff who could
benefit from ECF training? Our court conducts ECF Training Classes
every month. We welcome you to take advantage of this training op-
portunity either for yourself and/or your support staff. Please contact
Jennifer Davis at 626-3110 for more information or email her at jenni-
fer_l_davis@rib.uscourts.gov. We look forward to seeing you again!
Chambers Personnel Update
by Leah Waterman, Judicial Assistant
Chambers would sweet events, we are sad to see 18, although he will be visiting
like to make two announce- him leave, but delighted and Chambers during the next few
ments. First, as many of you wish him well in the next phase weeks to begin the process of
are aware, Jonathan Calianos, of his career. The good news is assuming his new duties with
who has been Judge Votolato’s that the Department of Labor the Court. Please join us in
Career Law Clerk for the past ALJs use our courtroom for Welcoming Jeffrey Dana to
15 years, will be leaving the hearings on a regular basis, so U.S. Bankruptcy Court!
Bankruptcy Court at the begin- Judge Calianos will be coming
Jonathan, Jeff and I would
ning of May. Jonathan has back to visit often in the future.
also like to take this opportunity
been appointed an Adminis- Congratulations, Jonathan!
to acknowledge Judge Voto-
trative Law Judge for the
We are also very pleased to lato’s upcoming anniversary of
U.S. Department of Labor in
announce that after an extensive 40 years on the bankruptcy
Boston. Needless to say it is
search, Jeffrey Dana, Esq., has bench. Best Wishes, Judge!
with mixed feelings that we
been appointed as Judge Voto-
say goodbye to Jonathan – it
lato’s Law Clerk. Many of us
has been a terrific experience
are familiar with Jeff as he has
to work with him, get to know
practiced law at Rhode Island
him personally and watch he
Legal Services for many years.
and his wife, Catherine, raise
His familiarity with bankruptcy
three beautiful children. We
law and our ECF system, as
applaud Jonathan’s achieve-
well as his fluency in Spanish,
ment in earning one of the
are an added bonus! Jeff will
highest scores on the ALJ Ex-
officially begin work on April
amination. As with all bitter-
ON THE DOCKET
Page 5
Recent Court Decisions
by Jonathan C. Calianos, Esq., Law Clerk
Here is a short digest of some noteworthy opinions cipals of the debtor paid a retainer of $25,000 to
from the Court. As always, the full text of Court the debtor’s attorney. During the bankruptcy,
opinions is available at our website counsel did not draw down on the retainer but
www.rib.uscourts.gov sought to return the retainer to the principals and
seek 100% of its compensation from the estate.
Is the Court required to approve stipulations
The Court denied the request to return the deposit
between debtors and creditors regarding as-
which would have diminished the pool of assets
sumption of leases under 11 U.S.C. § 365(p)(2)?
available for distribution to unsecured creditors
The Case: In Re Garbett, BK No. 07- under the Chapter 11 Plan. The Court also ques-
10404 (Bankr. D.R.I. June 11, 2007) tioned whether counsel to the DIP had a conflict of
interest. The debtor’s attorney argued that DIP
Short Answer: NO.
counsel has no fiduciary duty to the bankruptcy
The debtor attempted to assume two auto- estate because he cannot simultaneously represent
mobile leases under Section 365(p)(2) and the both the interests of the DIP and the estate, as such
creditor specifically asked the Court to approve the interests are inherently in conflict. The Court re-
stipulations as it did not want to run afoul of the viewed Section 1107(a) and disagreed, holding
reaffirmation provisions set forth in Section 524 of that counsel for the DIP does owe a fiduciary duty
the Code. While the Court found that it was not to the estate. In so holding, the court followed the
required to approve lease assumptions under Sec- path forged by the overwhelming majority of
tion 365(p)(2), it also held that the specific agree- courts that have considered this issue.
ments in question went too far by requiring the
Can a debtor include language in his or her
debtor to waive his discharge as part of the as-
Chapter 13 Plan that requires a mortgagee to
sumption. As such, the Court denied the stipula-
file a detailed fee application if it is seeking re-
tions, finding them to be incomplete attempts at
imbursement of attorney’s fees and costs from
reaffirmation.
the debtor or property of the estate for services
Does Counsel to the debtor in possession owe a rendered from the date of filing through confir-
fiduciary duty to the bankruptcy estate? mation?
The Case: In Re Hardman’s Hotel of The Case: In re Mihok, BK. No. 06-10062
Smithfield, Inc., BK No. 05-15700 (Bankr. D.R.I. and In re Trigo, 06-10589
August 6, 2007). (Bankr.D.R.I. March 14, 2007)
Short Answer: YES
Prior to filing the Chapter 11 petition, prin- (Continued on page 6)
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Page 6
Inside Story Headline
(Recent Court Decisions Cont’d from pg. 5)
Short Answer: YES– but the secured the creditor may be required to bear the expense
creditor will not actually be required to file a fee
of preparing the application, plus the fees and
application until the debtor challenges the claim
costs of the debtor incurred in successfully chal-
of the creditor.
lenging the request, all depending on the facts
These cases were consolidated for pur- and circumstance of the particular case.”
poses of the Court’s decision because the Chapter
For purposes of determining substantial
13 plans contained similar provisions requiring
abuse under 11 U.S.C. §707(b)(3), will the
the secured creditor to file detailed fee applica-
Court consider voluntary contributions made
tions if it was seeking reimbursement of attorney
to a debtor’s 401K plan or mandatory repay-
fees or costs from the debtor or property of the
ments on an outstanding 401K loan?
bankruptcy estate that accrued from the date of
filing through and including confirmation. The The Case: In re Mokri, BK No. 06-
secured creditor objected, arguing that it would be 11073(Bankr. D.R.I. April 27, 2007)
unduly burdensome and costly to produce fee ap-
Short Answer: Assuming no other facts
plications in all Chapter 13 cases. The creditor
are relevant, the Court will not count 401k con-
also contended that the provision impermissibly
tributions or loan repayments as disposable in-
modified the terms of their note and mortgage, in
come for determining substantial abuse under
violation of § 1322(b)(2). The Court disagreed,
Section 707(b)(3).
finding the plan provisions to be acceptable be-
cause the funds used to pay mortgagee’s attorney In this case, the Court was presented with
fees and costs were property of the bankruptcy the narrow question of whether voluntary 401k
estate and that triggered the fee application proc- contributions or mandatory 401k loan repay-
ess. The Court did make the following caveat ments would be considered disposable income
however: “Where the debtor does not challenge for purposes of determining substantial abuse
the amount sought, the creditor is not required to under Section 707(b). The Court found that be-
prepare and file an application, and the creditor is cause both of these 401k expenditures would not
not entitled to compensation for doing so. ... If the be considered disposable income available to pay
debtor does request that an application be filed, creditors in a Chap-
the creditor will be allowed a reasonable fee for ter 13 proceeding
preparing the application, provided the request is they should not be
not materially different, i.e., not a lot higher than counted for deter-
the amount allowed. ... If there is a material dif- mining substantial
ference between the request and the award, then abuse.
