Bethea v. Robert J. Adams & Associates

352 F.3d 1125 (2003)

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Bethea v. Robert J. Adams & Associates

United States Court of Appeals for the Seventh Circuit
352 F.3d 1125 (2003)

Facts

Albert Bethea and others (collectively, the clients) (debtors) hired law firms (collectively, the lawyers) (creditors) to represent them in bankruptcy cases. The clients hired the lawyers before filing their bankruptcy petitions and agreed to pay retainers to the lawyers over time in installments. The clients received discharges, and their bankruptcy cases were closed. The lawyers subsequently tried to collect still-unpaid installments of the retainers, and the clients commenced adversary proceedings against the lawyers. The clients argued that the lawyers had violated 11 U.S.C. § 524’s injunction against further collection efforts against a debtor following a discharge. The bankruptcy court found that if legal fees were reasonable under 11 U.S.C. § 329(b), those fees were not subject to discharge. The bankruptcy court reasoned that although 11 U.S.C. § 727 generally governed discharge, § 329(b) allowed bankruptcy courts to order the return of unreasonably excessive legal fees. The bankruptcy court concluded that § 329(b) must supersede § 727 because otherwise, § 329(b) would be rendered superfluous. The clients conceded that the retainer fees were reasonable, so the bankruptcy court dismissed the adversary proceedings. The district court affirmed, and the clients appealed.

Rule of Law

Issue

Holding and Reasoning (Easterbrook, J.)

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Casebooks

Debtors and Creditors

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