Smith v. Edwards & Hale, Ltd.

Darrel D. Smith, a Chapter 7 debtor, is appealing the decisions of the district courts affirming: (1) the bankruptcy court’s award of attorneys’ fees to the law firm of Edwards & Hale, Ltd. (E & H), debtor’s special counsel in a 1992 state court action; (2) the bankruptcy court’s award of certain administrative fees and costs to Smith’s chapter 11 counsel, John Peter Lee, Ltd., (JPL); and (3) the bankruptcy judge’s refusal to recuse himself. Under the somewhat convoluted facts of this case, we affirm the various awards of attorneys’ fees. We also affirm the denial of the recusal motion. Although these lawsuits present some valid issues, much of the fee litigation was occasioned by a stubborn refusal of the debtor to recognize valid claims by attorneys; his continuing battles with his lawyers have been extraordinarily wasteful of the resources available in bankruptcy.

I.

A. General Background

Smith filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on March 21, 1991. He retained JPL as Debtor’s counsel. On January 11, 1994, the bankruptcy court approved Smith’s Third Plan of Reorganization. The Plan provided for three avenues for the payment of claims.…