CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 02-693. Argued November 10, 2003--Decided January 26, 2004

Before 1994, §330(a) of the Bankruptcy Code authorized a court to "award to a trustee, to an examiner, to a professional person employed under section 327 ... , or to the debtor's attorney" "(1) reasonable compensation for ... services rendered by such trustee, examiner, professional person, or attorney ... ." (Emphasis added to highlight text later deleted.) In 1994 Congress amended the Code with a reform Act. The Act altered §330(a) by deleting "or to the debtor's attorney" from what was §330(a) and is now §330(a)(1). This change created apparent legislative drafting error in the current section. The section is left with a missing "or" that infects its grammar. And its inclusion of "attorney" in what was §330(a)(1) and is now §330(a)(1)(A) defeats the neat parallelism that otherwise marks the relationship between current §§330(a)(1) ("trustee, ... examiner, [or] professional person") and 330(a)(1)(A) ("trustee, examiner, professional person, or attorney"). In this case, petitioner filed an application with the Bankruptcy Court seeking attorney's fees under §330(a)(1) for the time he spent working on a behalf of a debtor in a chapter 7 proceeding. The Government objected to the application. It argued that §330(a) makes no provision for the estate to compensate an attorney who is not employed by the estate trustee and approved by the court under §327. Petitioner admitted he was not employed by the trustee and approved by the court under §327, but nonetheless contended §330(a) authorized a fee award to him because he was a debtor's attorney. In denying petitioner's application, the Bankruptcy Court, District Court, and Fourth Circuit all held that in a chapter 7 proceeding §330(a)(1) does not authorize payment of attorney's fees unless the attorney has been appointed under §327.

Held: Under the Code's plain language, §330(a)(1) does not authorize compensation awards to debtors' attorneys from estate funds, unless they are employed as authorized by §327. If the attorney is to be paid from estate funds under §330(a)(1) in a chapter 7 case, he must be employed by the trustee and approved by the court. Pp. 5-15.

Full Text of Opinion