Union Home and Industrial, Inc.

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
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06/10/06
Union Home and Industrial, Inc.
04-15755
Memorandum Opinion and Order Granting in Part re: [97-1] Motion For new trial
(reconsideration of) April 1, 2005, Order and Memorandum to the Honorable James
S. Starzynski on Motion to Employ Counsel for debtor by Union Home and
Industrial, Inc. .
Received on: 2006-02-09 08:47:30.000
2006-02-09 00:00:00.000
2006-02-09 00:00:00.000
James Burke
Case 04-15755-s11 Doc 242 Filed 02/09/06 Entered 02/09/06 12:16:00 Page 1 of 9

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
UNION HOME AND INDUSTRIAL,
Debtor. 	NO. 11-04-15755 SR
MEMORANDUM OPINION AND ORDER
GRANTING IN PART DEBTOR IN POSSESSION’S
MOTION FOR RECONSIDERATION OF ORDER
DENYING APPLICATION TO EMPLOY COUNSEL
The Debtor filed its voluntary chapter 11 petition on August
9, 2004 (doc 1). 	A day later Debtor filed its Motion to Employ
Counsel (“Motion to Employ”) seeking approval of its hiring of
the Behles Law Firm, P.C. (“Firm”, whose principal is Jennie
Deden Behles – “Senior Counsel”) (doc 5), accompanied by the Rule
2016 disclosure of compensation (doc 4). 	No verified rule 2014
statement was filed at that time. 	The Court entered an interim
order approving the employment of the Firm and a billing rate of
$200 per hour for Senior Counsel and taking under advisement the
request for $250 per hour. 	Doc 38. 	The order approving the
employment contained the Court’s standard provision requiring the
Firm to make a separate showing of its entitlement to an hourly
rate of more than $200 per hour. 	Subsequently, on April 1, 2005
the Court entered an order and supporting memorandum opinion
setting aside the employment order and denying the request for
the $250 rate, and detailing the reasons therefor. 	Docs 85 and
87 respectively. 	The Court “unemployed” the Firm as the attorney
for the Debtor because of the Court discovered the Firm’s failure
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1 Although Senior Counsel promptly filed the Rule 2014
affidavit (doc 88), the Firm has yet to submit an order
(re)employing the Firm, as provided for by decretal paragraph 3
et seq. of the order “unemploying” the Firm. 	Doc 85.
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to file a Rule 2014 statement. 1 	The Court, assuming the Firm
would be again employed, also limited Senior Counsel’s rate to
$200 per hour based on the evidence of market rates and Senior
Counsel’s performance in this and other cases, and required
modifications to the Firm’s employment agreement with the Debtor.
The Debtor promptly filed its Motion for New Trial
(Reconsideration of) April 1, 2005 Order and Memorandum to the
Honorable James S. Starzynski on the Motion to Employ Counsel,
the Behles Law Firm, P.C. (Doc 97) (“Attorney Reconsideration
Motion”), as well as motions requesting reconsideration of other
orders. 	On the same date Debtor filed its Request for
Disqualification of Bankruptcy Judge in Proceeding or Proceedings
(“Disqualification Request”) (doc 98). 	Having now denied the
Disqualification Request, the Court will grant a portion of the
relief requested in the Attorney Reconsideration Motion.
The Attorney Reconsideration Motion argues several points,
several of which appear to repeat themselves:
(1) the Debtor (or the Firm) had no notice that the Court would
rule on the absence of a verified Rule 2014 statement and should
have been given the opportunity to do so before the Court ruled,
and in any event the Firm substantively complied with the
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2 What the Court is calling the Case Data is identified by
the Debtor as “Survey Evidence” in the Attorney Reconsideration
Motion.
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requirements of the filing of a Rule 2014 statement; (2) the
Court erred in not allowing the higher rate of compensation for
Senior Counsel because the Court relied in part on its erroneous
rulings denying the Debtor’s motions for extension of exclusivity
and hiring an accountant; (3) the evidence relied on by the Court
in part in making its decision on rates was compiled by the Court
on its own (“Case Data” 2) and the Firm had no opportunity to
contest it; (4) the Court improperly refused to consider the
evidence contained in the affidavits submitted by the Firm in
support of the higher rate and required evidence of non-
bankruptcy rates; (5) the Debtor was not given the opportunity to
contest the Case Data or demonstrate its inapplicability to the
Firm’s situation; (6) the Court improperly relied on and
misinterpreted the published cases concerning Senior Counsel; (7)
the Court improperly struck affidavits providing evidence on
issues such as skill, reputation, experience, credit risk, etc.,
(8) the Court improperly took into account its rulings on the
employment of the accountant and the extension of exclusivity,
(9) the Court ignored the expert attorneys’ opinions, and (10)
the Court incorrectly analyzed the “credit risk” issue.
The Court will allow the Debtor to address (or readdress)
all the legal and factual issues it wishes, in accordance with
Case 04-15755-s11 Doc 242 Filed 02/09/06 Entered 02/09/06 12:16:00 Page 4 of 9

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the following:
1. 	The Court finds the proposition that the Firm need not file
a Rule 2014 statement at all rather novel, but if the Firm
wishes to argue that point or something similar to it again,
it may do so. 	In the course of addressing that issue, the
Firm also needs to address the statement on page 10 of the
Attorney Reconsideration Motion: “Counsel, because of the
necessity of making the emergency filing determined to
comply with 11 U.S.C. § 327 and Rule 2-014 [sic] in the most
expeditious manner it could for the benefit of the Debtor,
the Debtor’s estate, and the Debtor’s creditors. 	This
involved combining pleadings under a reasonable
interpretation of the statute and the rules in one pleading,
and making only one statement, that there was compliance in
regard to the relationship provisions of 11 U.S.C. § 327.”
The Court reads these sentences to be Senior Counsel’s
statement that she intended the Motion to Employ and its
contents to function also as the equivalent of the Rule 2014
statement and did not intend to file a separate Rule 2014
statement. 	These sentences would seem to contradict the
language of the employment order, presumably drafted by
Senior Counsel, that recites in part that “...the Motion [to
Employ Attorneys] was filed on August 10, 2004, as was the
Disclosure Statement and Affidavit pursuant to Rules 2014
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and 2016.” 	Doc 38.
2. 	The Firm may again argue the issue of the quality of the
Firm’s work in this case as part of the Court’s decision-
making process.
3. 	The Firm is correct that it did not have the opportunity,
practically speaking, to address the Case Data; the Firm may
address that data, and the Court will take into account any
argument or supplemental or corrective data that the Firm
may produce.
4. 	The Court did not refuse to consider any of the affidavits
submitted by the Firm, and will again consider the
affidavits in ruling on the Firm’s further evidence and
argument.
5. 	The Court will give the Firm the opportunity to respond to
the Case Data (see no. 3 above).
6. 	The Court will allow the Firm to reargue the issue of
published cases concerning Senior Counsel’s work in other
cases (or repeat the text of its arguments in another brief)
if it wishes.
7. 	The Court clearly did not strike any affidavits submitted by
the Firm, and will consider the affidavits in ruling on the
Firm’s further evidence and argument (see no. 4 above).
8. 	The Firm may again argue the issue of the Firm’s work in
this case (see no. 2 above).
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Page -6-
9. 	The Court did not ignore the attorneys’ opinions of Senior
Counsel, and will consider the affidavits in ruling on the
Firm’s further evidence and argument (see nos. 4 and 7
above).
10. 	The Firm may argue the “credit risk” issue again.
It would be useful to the Court and any other party
reviewing the file for the Firm to put into a single brief all
the issues that it wants to argue or reargue. 	The Firm may,
through word processing technology, insert portions from previous
briefs into the single brief contemplated by this order.
IT IS THEREFORE ORDERED as follows:
1. 	Within ten (10) days of the entry of this order, the Firm
shall submit the (re)employment order required by the order
(doc 85) setting aside the original employment order. 	If
the Firm fails to submit such an order timely to the Court
for its approval and entry, the Court will not allow the
employment of the Firm retroactive to March 1, 2005.
2. 	The Motion for New Trial (Reconsideration of) April 1, 2005
Order and Memorandum to the Honorable James S. Starzynski on
the Motion to Employ Counsel, the Behles Law Firm, P.C. (Doc
97) (“Attorney Reconsideration Motion”) is granted in the
sense that the Firm may file another brief arguing any issue
concerning the Firm’s employment, including at what rate
Senior Counsel should be employed.
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Page -7-
3. 	If the Firm wishes to continue to contest the ruling arising
from the failure to file a Rule 2014 statement, the Firm
must also address the statement on page 10 of the Attorney
Reconsideration Motion, to confirm whether the Court’s
interpretation of the statement is correct, viz., that the
Motion to Employ and its contents was intended to function
also as the equivalent of the Rule 2014 statement and that
the Firm did not intend to file a separate Rule 2014
statement.
4. 	The Firm need not and may not refile any affidavits already
on file. 	However, if the Firm wishes to file additional
affidavits or other information, it may do so.
5. 	The Firm’s brief and any additional affidavits or
information shall be submitted for filing no later than
twenty (20) days from the date of the entry of this order.
6. 	Should the office of the United States Trustee (or, for that
matter, any other party in interest in this case) wish to
join in the briefing in support of any position whatever, it
may do so, but must also submit any brief or position
statement within twenty (20) days from the date of the entry
of this order.
Honorable James S. Starzynski
United States Bankruptcy Judge
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I hereby certify that on February 9, 2006, a true and correct
copy of the foregoing was electronically transmitted, faxed,
delivered, or mailed to the listed counsel and/or parties.
Jennie D Behles
PO Box 7070
Albuquerque, NM 87194-7070
Alice Nystel Page
PO Box 608
Albuquerque, NM 87103-0608
Michael Newell
PO Box 1599
Lovington, NM 88260-1599
Rod M Schumacher
PO Box 700
Roswell, NM 88202-0700
Stephen Stuart Shanor
PO Box 700
Roswell, NM 88202-0700
Michael R Enright
280 Trumbull St
Hartford, CT 06103-3509
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