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Arter & Hadden LLP v. Meronk
Citation: 24 F. App'x 737Docket: No. 00-55996; BAP No. CC-99-01628-KDB
Court: Court of Appeals for the Ninth Circuit; December 5, 2001; Federal Appellate Court
Arter Hadden, LLP appeals the Bankruptcy Appellate Panel's (BAP) reversal of a bankruptcy court's award of a $50,000 bonus for their services as special counsel for Frank and Evelyn Meronk's bankruptcy estate. Arter asserts that the bonus is justified due to results achieved that exceed those accounted for by their standard hourly rate and hours worked. The appellate court affirms the BAP’s decision, concluding that the bankruptcy court abused its discretion in granting the bonus. The court reviews the bankruptcy court's decisions independently, emphasizing that fee awards are generally upheld unless there is an abuse of discretion or misapplication of law. A presumption exists that an attorney's standard hourly rate reflects reasonable compensation. While bonuses may be warranted in specific instances, Arter failed to provide sufficient evidence that the results obtained were extraordinary enough to warrant a bonus beyond the standard hourly compensation. The bankruptcy court did not find specific facts to counter the presumption of reasonableness regarding Arter's hourly fee. The court noted that Arter's claim of having achieved "extraordinary" results contradicted the bankruptcy court's own characterization of the outcome as merely "fine." Arter's arguments regarding the risk of nonpayment and the challenges of obtaining counsel were rejected, as the Supreme Court has ruled that enhancements based on risk or contingency are impermissible. Additionally, Arter's assertion that a bonus is necessary to align the fee with typical construction litigation practices was undermined by their decision to reject a contingency fee arrangement in favor of an hourly fee structure. Since no evidence was presented to challenge the reasonableness of the agreed hourly rate and hours billed, the appellate court reverses the bankruptcy court's judgment, affirms the BAP's decision to deny the bonus, and leaves Arter with its standard hourly rate. The opinion is not for publication and is not to be cited except as permitted by Ninth Circuit Rule 36-3.