United States District Court, E.D. Missouri, Eastern Division
MEMORANDUM AND ORDER OF REMAND
L. WHITE, UNITED STATES DISTRICT JUDGE.
matter is before the Court on Creditor-Appellant DMS
Contracting, Inc.'s Appeal from the bankruptcy
court's Order Granting Reorganized Debtors-Appellees
Peabody Energy Corporation, et al.'s Motion for
Attorneys' Fees and Expenses and the bankruptcy
court's entry of Judgment awarding such fees and expenses
against DMS Contracting, Inc. ("DMS") (ECF No. 14).
April, 2015, Creditor-Appellant DMS entered into an Agreement
Between Owner and Design-Builder ("Contract") with
Peabody Gateway North Mining, LLC ("Gateway").
Gateway operates an underground mine in Coulterville,
Illinois. As the coal is mined, it is loaded onto a conveyer,
which takes the coal to a preparation plant where the coal is
washed to remove non-coal refuse. Gateway disposes of the
fine and course refuse in large cells created by building
earthen embankments that cordon off an area. In 2015, Gateway
sought bids to expand the existing refuse disposal site and
selected DMS to build a new refuse disposal cell ("Cell
5"). The Contract dated April 23, 2015 provided that DMS
would be compensated on a unit of work basis and not on a
time and material basis, as well as the amount of
compensation not to exceed $5, 986 million. Under the
Contract, DMS also agreed to fully complete the work by
October 15, 2015. Any claims for adjustments to the sum and
time under the Contract could only be made in limited
circumstances. In early 2016, Gateway became concerned about
delays in the Cell 5 project, which DMS attributed to some
risks out of DMS's control which created increases in
time and costs, for which DMS sought additional compensation.
DMS completed Cell 5 in July 2016.
April 13, 2016, Peabody Gateway North Mining, LLC and Peabody
Energy Corporation (collectively "Peabody") filed
Voluntary Petitions for Bankruptcy under Chapter 11 of the
United States Bankruptcy Code and the cases were procedurally
consolidated. On August 19, 2016, DMS filed an administrative
claim against Peabody for services performed after the
Petition date allegedly due to unforeseen conditions at the
construction site. The bankruptcy court disallowed DMS's
claim on May 18, 2017, after which DMS filed a motion for
rehearing. The bankruptcy court granted the motion for
rehearing, but on October 12, 2017, the bankruptcy court held
that DMS waived its claim under the terms of the Contract and
thus DMS's claim was disallowed.
November 16, 2017, 35 days after the bankruptcy court's
order, Peabody filed a Motion for Attorneys' Fees and
Expenses ("motion for fees") seeking an award of
its attorneys' fees and expenses incurred in defending
the DMS Claim pursuant to the terms of the
Contract. Following a hearing on the motion for
fees, the bankruptcy court entered an Order and Judgment
granting the motion and awarding attorneys' fees and
expenses to Peabody and against DMS in the amount of $433,
102.78. (Bk. 16-42529 ECF Nos. 3668 and 3669) On January 12,
2018, DMS filed an appeal from the Order and Judgment in the
United States District Court for the Eastern District of
Missouri. The parties also requested oral argument, which the
Court finds is not warranted in this matter.
Court has jurisdiction over this bankruptcy appeal pursuant
to 28 U.S.C. § 158(a)(1). On appeal, "the district
court reviews the bankruptcy court's legal conclusions de
novo and its findings of fact for clear error." In
re Tasic, No. 4:13CV00474 ERW, 2013 WL 2425130, at *4
(E.D. Mo. June 4, 2013) (citing In re O'Brien,
351 F.3d 832, 836 (8th Cir. 2003)). "Under this
standard, [the court's] review focuses upon whether there
was a failure to apply the proper legal standard or whether
the findings of fact are clearly erroneous." In re
Carter, 502 B.R. 333, 335 (B.A.P. 8th Cir. 2013)
(citation omitted). De novo review of a bankruptcy
court's legal conclusions also applies to the
interpretation of state law. In re Dittmaier, 806
F.3d 987, 989 (8th Cir. 2015) (citation omitted).
the Court reviews issues committed to the bankruptcy
court's discretion for an abuse of that discretion.
In re Tasic, 2013 WL 2425130, at *4. (citing In
re Zahn, 526 F.3d 1140, 1142 (8th Cir. 2008)). "An
abuse of discretion occurs when the bankruptcy court fails to
apply the proper legal standard or bases its order on
findings of fact that are clearly erroneous."
Id. (citation omitted).
DMS raises five points on appeal: 1) the bankruptcy court
erred in finding Peabody's motion for fees timely and
unbarred despite Peabody's failure to comply with the
14-day requirement of Fed.R.Civ.P. 54; 2) the bankruptcy
court erred in finding Peabody's motion for fees timely
and unbarred under Missouri state law despite Peabody's
failure to plead or request fees during the DMS claim
proceedings; 3) the bankruptcy court erred in determining
that Peabody was not required to assume or reject the
executory contract to preserve recovery of a benefit
thereunder; 4) the bankruptcy court erred in determining that
the fee provision in the contract was enforceable against DMS
post-confirmation despite its rejection; and 5) the
bankruptcy court abused its discretion in determining that
Peabody's fees were reasonable despite Peabody's
failure to itemize the time entries to reflect work
exclusively pertaining to the DMS claim. Upon careful
consideration of the briefs and the relevant documents from
the bankruptcy proceedings, the Court will reverse the
bankruptcy court's Order and Judgment and remand the case
for further proceedings.
asserts that the bankruptcy court clearly erred in finding
Peabody's motion for fees timely because Peabody failed
to file the motion within 14 days as required by Rule 54 of
the Federal Rules of Civil Procedure. Rule 54 provides,
"[a] claim for attorney's fees and related
nontaxable expenses must be made by motion unless substantive
law requires those fees to be proved at trial as an element
of damages." Fed.R.Civ.P. 54(d)(2)(A). Further,
"the motion must be filed no later than 14 days after
the entry of judgment" unless otherwise provided by
statute or court order. Fed.R.Civ.P. 54(d)(2)(B)(i).
contends that Peabody's motion was filed more than 14
days after the bankruptcy court's final order on
DMS's claim and was therefore untimely under Rule 54.
Peabody, on the other hand, asserts that Missouri substantive
law applies, which treats attorneys' fees sought pursuant
to a contract as an element of damages. Thus, Peabody argues
that Rule 54's time limits do not apply, and the motion
for fees was timely. DMS responds that the exception to Rule
54 does not apply here because Peabody's fees were
incurred during the litigation of DMS' claim and not
prior to initiating the contested hearing. In addition, even
if Rule 54's exception did apply, Peabody failed to
petition for its fees in accordance with the requirements of
applicable substantive law.
the hearing on Peabody's motion for attorneys' fees,
the bankruptcy court stated that it was not convinced that
Rule 54's 14-day requirement applied and instead adopted
the case authority cited in Peabody's reply brief to its
motion for fees, document number 3651. (Bk. 16-42529 ECF No.
3666 pp. 31-33) The bankruptcy ...