In Re Magar E. Magar, Case No. 301-33525-tmb11BAP No. OR-02-1580-CRyMa Affirming Judge Brown

8/8/03 tmb Unplublished

Debtor filed objection to claim filed by law firm whichrepresented him in litigation with Idaho Department ofEnvironmental Quality. During the course of that representationthe debtor attempted to terminate his contract with the firm, butthe Idaho State Court Judge refused to allow the firm towithdraw, finding that the firm’s representation was necessary toan orderly resolution of the dispute. The debtor conceded thathe was indebted to the firm for services rendered before heattempted to terminate its services, but contended that he had noobligation to pay for services rendered after that time. Hefurther contended that the fees were unreasonable in that he haddone much of the legal work upon which the firm’s filings werebased and that a portion of the fees should be denied because thefirm had failed to adequately itemize its fee statements. Inaddition, he contended that the firm was not entitled toprepetition interest on its claim.

The bankruptcy court overruled the objection, finding thatthe parties continued to be bound by the terms of their originalengagement letter despite the debtor’s unsuccessful attempt toterminate his relationship with the firm. It found that the feeswere reasonable, despite any work done by the debtor, because thefirm had a duty to conduct its own independent legal research andanalysis rather than relying upon that provided by the debtor. The bankruptcy court rejected the debtor’s contention that feesshould be denied due to the firm’s failure to itemize its feestatements, noting that there was no evidence that the debtor hadever objected to the form of the statements and that the debtorhad failed to show that such itemization was required by Idaholaw. Finally, the bankruptcy court found that the debtor hadtacitly agreed to imposition of interest on the unpaid balance ofhis account by failing to object to such interest during thependency of the firms representation and that, in any event, thefirm was entitled to interest on its account under Idaho law.

The BAP affirmed the bankruptcy court on all counts. Itconcurred with the bankruptcy court’s conclusion that the partiesremained bound by the terms of their original contract despitethe debtor’s attempts to terminate that contract and with thebankruptcy court’s conclusion that the firm’s fees werereasonable. It also agreed that, under Idaho law, the firm wasentitled to prepetition interest on its claim.

P03-6(21)