# Petition for Writ of Certiorari — LeBlanc v. Salem, 121 S. Ct. 385 (2000) (No. 00-371) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386019_1534%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2000 ## Text Supreme Court of the GQnited States GARY R. LEBLANC, Petitioner, v. RICHARD P. SALEM, Respondent. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT. PETITION FOR A WRIT OF CERTIORARI. GARY R. LEBLANC Counsel of Record 20 Cross Street Gardner, Massachusetts 01440 (978) 630-3300 Pro Se Petitioner Dated: September 5, 2000 BATEMAN & SLADE, INC. BOSTON, MASSACHUSETTS QUESTION PRESENTED I. Whether U.S. Bankruptcy Court’s, Queenan, J., allowance of Trustee’s Motion to Abandon Right of Revocation of Contingent Settlement was an abuse of discretion, when creditor raised issue of fraud in the settlement and trustee conducted no investigation into creditor’s allegations and pre- sented no evidence of a fair and reasonable settle- ment, and the Court placed burden of proving fraud on creditor, in direct conflict with other federal ju- risdictions. li PARTIES The parties to the proceedings below were the pe- titioner, Gary R. LeBlanc, acting pro se, and the re- spondent Richard P. Salem, acting pro se. ili TABLE OF CONTENTS QUESTION PRESHAN IED cecscscrccvcscscccscccscssscsvscscse i TEA COP AU TERRE E ERD ccccsnscccscsnsveccscansossense iv PUMPER RIEE canasucahdncbesacssssessctecsasscsvuaccensasesestovenscsies li PP RUMGIETED MEURAP ON cascccescnsssarccacvcthsccsvesconcaccsossans 1 PENN TEIED Anvaasdscasbensionsccececunsvsabsoccccniactessece 1 STATEMENT OF THE CASE ................sececseeseees 2 PPIAPMEET Ecc csyssccetesrecenscncsenseseses anbsanackhastonssaions 9 INE GnsvndsdAnsnennstnnnddcnneuasanassacnsscaaceneces 11 PIU, scbavandaccvecdsnnissonanesenccsns follows page 12 iv TABLE OF AUTHORITIES CASES: In re Chicago Art Glass, Inc., 155 B.R. 180 (Bkrtcy. N.D.I11.1993) . In re Melenyzer, 140 B.R. 143 (Bkrtcy.W.D.Tex. 1992) In re Morse Tool, Inc., 140 B.R. 143 (Bkrtcy.D.Mass. 1992) In re Worcester Quality Foods, Inc., 152 B.R. 494 Bkrtcy.D.Mass.1993) . Kowal v. Malkemus, 965 F.2d 1136 (1st Cir.1992) .......... STATUTES AND RULES: United States Code 1 UO OOM oe 28 U.S.C. §§ 158(d) & 1334 wc... Federal Rules of Bankruptcy Procedure Pe Fe skccccccnabbincccalniseeetecccksis PETITION FOR WRIT OF CERTIORARI The petitioner, Gary R. LeBlanc, respectfully prays that a writ of certiorari issue to review the judgment and opinion of the United States Court of Appeals for the First Circuit, entered in the above- entitled proceeding on June 5, 2000. OPINIONS BELOW The opinion of the Court of the Appeals for the First Circuit is published at and re- printed in the Appendix hereto (“App. A”) at page App. la. By order entered June 5, 2000, The First Circuit denied LeBlanc’s petition for rehearing. A copy of the order denying rehearing is reprinted in the Appendix at page App. 14a. The Memorandum decision of the United States District Court for the District of Massachusetts, dismissing the appeal is reprinted in the Appendix hereto at page App. 16a. JURISDICTION Invoking federal jurisdiction under 28 U.S.C. § 1334, and 28 U.S.C. § 158(d), the petitioner brought this suit in the United States District Court for the District of Massachusetts. On June 25, 1999, after remand, the United States District Court entered judgment granting summary judg- ment to the Respondent. On May 16, 2000, the United States Court of Ap- peals for the First Circuit affirmed the decision of the United States District Court entering judgment in favor of the respondent. 2 On June 5, 2000, the United States Court of Ap- peals for the First Circuit denied Petitioner’s Peti- tion for Panel Rehearing. STATEMENT OF CASE In October 1990, the Petitioner, Attorney Gary R. LeBlanc won a judgment in the Supreme Judicial Court of Massachusetts against Alfred Lizotte in ex- cess of $450,000.00, on behalf of his client, Mail- man Steam Carpet Cleaning, Corp. The judgment was secured by a real estate attachment on a parcel of land and buildings owned by Lizotte and upon which he controlled a small corporation entitled Al’s Service Station, Inc. Said corporation was severely in debt to creditors. All of the debt was accumu- lated after the judgment secured by LeBlanc in 1990. An appeal ensued and in 1993, the judgment was affirmed by the Supreme Judicial Court of Massa- chusetts. Pending the appeal, LeBlanc’s client, Mailman, slid into bankruptcy and the Lizotte judgment became the principle asset of the bank- ruptcy estate. On September 18, 1995, the trustee appointed in Bankruptcy notified the Court and creditors of his . intention to compromise the Lizotte judgment, now in excess of $500,000.00, down to $100,000.00. - LeBlanc, as a creditor, objected. On October 19, 1995, the Bankruptcy Court conducted a hearing on the proposed settlement in which the trustee introduced an appraisal, which valued the business and real estate to have a total 3 fair market value of $350,000.00. LeBlanc argued the appraisal included assets of the corporation that were partially and or fully leveraged, yet, the trustee assigned a $75,000.00 value to them. Also, the sale of the business was added to the appraisal and was valued at $75,000.00. Subsequently, the corporation, which was severely in debt, went bank- rupt and was sold, therefore, excluding these al- leged assets. All that remained, as assets of the corporation, was “garage machinery” with an ap- praised auction value of only $22,000.00. The real estate had an assigned value of $175,000.00. LeBlanc asserted the property and buildings and pumps thereon had a fair market value far in ex- cess of $500,000.00. However, LeBlanc was unable to present a written appraisal as Lizotte refused to allow LeBlanc’s appraiser or. the property. At the conclusion of the hearing, the Court or- dered the approved compromised settlement, sub- ject to the following condition: If the gas station is sold within two years the trustee may move for revocation of this approval. Depending on the facts of the sale the Court will then either confirm or revoke its ap- proval. Approximately seven months later, Lizotte sold the real estate and alleged business assets for $560,000.00. Lizotte maintained the increase of over $350,000.00, above the value of the real estate 4 was all business assets, but provided no disclosure of these alleged assets. LeBlanc immediately alleged the sale of unidenti- fied business assets was a sham and that Lizotte was fraudulently diverting these assets from Lizotte’s creditors, specifically the contingent set- tlement. LeBlanc demanded trustee provide a complete accounting of the assets of the sale and full disclo- sure to rule out fraud. When the trustee refused to investigate LeBlanc’s allegations, LeBlanc moved to compel the trustee to seek revocation of the contin- gent settlement. Said motion was continued gener- ally and the Court approved very limited discovery by LeBlanc. LeBlanc’s request to conduct a Rule 2004 examination of the buyer, Peterborough Oil, was denied over LeBlanc’s objection. “ The Court severely limited LeBlanc’s discovery of the alleged fraud to Alfred Lizotte and Gulf Oil, a creditor of Lizotte. The 2004 examinations were further limited to the terms of the sale. Lizotte postponed the discovery for alleged medical rea- sons, then upon examination, claimed amnesia and could not recall any assets allegedly sold to the buyer, Peterborough Oil. No examination was ever conducted of Gulf Oil, as they were not a party to the sale and could add no information regarding the “terms of the sale”. Therefore, without an accounting of the assets al- legedly sold, by Lizotte, LeBlanc turned to the trus- tee to perform his duty to investigate the sale. The trustee refused to investigate the sale and instead moved the Court to abandon his right to seek revo- 5 cation of the settlement. LeBlanc objected to the abandonment. On April 15, 1998, the Court held a hearing on the abandonment in which LeBlanc presented the results of his severely restricted discovery as fol- lows: (1) The Purchase and Sales Agree- ment explicitly stated that the buyer, Peterborough Oil, was purchasing the “real estate only”. (2) The Purchase and Sales Agree- ment also stated “all other as- sets remain with seller’. (3) The Purchase and Sales Agree- ment listed a sales price for the real estate of $200,000.00, which was in line with the trus- tee appraisal of $175,000.00. Yet, the actual deed listed the sales price of the real estate at $300,000.00. (4) Both Lizotte and his attorney failed and/or refused to inform the Court or the trustee of the $100,000.00 gain in the sale of the real estate, either prior to or, subsequent to the sale, despite the language of the prior contin- gent settlement order. (S) (6) (7) (8) 6 Lizotte applied the additional $100,000.00 of real estate funds, not to the settlement, but to the debts of the corporation, which debts were acquired over three years subsequent to the real estate attachment and judg- ment. Lizotte claimed the Purchase and Sales Agreement required him to pay his corporate debt with the proceeds of the sale including the sale of the real estate, de- spite the clearly superior judg- ment and attachment. The Purchase and Sales Agree- ment required Lizotte to pay the corporate debt from the sale proceeds, yet, the corporation was never sold to the buyer, Peterborough Oil. Therefore, the buyer had no legitimate interest in the debts of the corporation, as none of the debts were appur- tenant to the land and the cor- poration remained with the seller, Lizotte. In the Purchase and Sales Agreement, Lizotte was allegedly selling over $350,000.00 worth of business/corporate assets to the buyer, Peterborough Oil. Yet, neither one single asset is 7 listed in the Purchase and Sales Agreement, nor have these al- leged assets ever been accounted for, or even described in any document. (9) Upon examination of the seller, Lizotte, by LeBlanc, Lizotte could not recall one single asset sold to Peterborough Oil. Lizotte al- leged that he was on oxygen, which caused complete amnesia as to the facts of the sale. (10) LeBlanc moved the Court to al- low an examination of the buyer, Peterborough Oil, as to the as- sets allegedly sold by Lizotte. Said motion was denied over LeBlanc’s objection. (11) Subsequent to the sale, Lizotte reopened his business, with his business assets, less than three miles from his original location. (12) Subsequent to the sale, Peter- borough Oil completely remod- eled the real estate with none of Lizotte’s corporate assets, but rather their own “Mr. Mikes” franchise. (13) Over a year prior to the sale, Peterborough Oil orally repre- sented to LeBlanc’s private in- vestigator that the real estate 8 alone had a value of between $500,000.00 to $700,000.00 (without any of Lizotte’s corpo- rate assets. The final purchase price was $560,000.00 (14) Subsequent io the sale, Peter- borough Oil represented orally to LeBlanc that the contract for the sale was set up by Lizotte and his attorney, because “That’s the way they wanted it. We don’t care, so long as we got the land”. (15) According to the Purchase and Sales Agreement, sixty thousand dollars of the sales proceeds were paid directly to Alfred Lizotte, personally, and were therefore subject to the contin- gent settlement. Yet, trustee never tried to recoup even these assets for the estate. These are just some of the arguments raised by LeBlanc at the April 15, 1998 hearing. Despite this overwhelming evidence, the Court approved the abandonment and LeBlanc appealed the ruling; first to the United States District Court and then to the First Circuit Court of Appeals, who both upheld the ruling from the First Circuit’s denial of LeBlanc’s Petition for rehearing. He now applies for Writ of Certiorari. 9 ARGUMENT In the case at hand, the First Circuit held, in part, quoting Kowal v. Malkemus (In re Thompson), 965 F.2d 1136, 1145 (1st Cir. 1992), “that a Chap- ter 7 Trustee is required to reach an informed judg- ment, after diligent investigation, as to whether it would be prudent to eliminate the inherent risks, delays and expenses of prolonged litigation in an uncertain cause. Balancing the trustce’s obligation to obtain...the maximum return for the creditors(on whose behalf he toils).” Jd. at page 6, line 4. The court goes on to state “LeBlanc mounts a claim of fraud — a claim that, after earnest investigation, he cannot substantiate. In order to probe the claim more thoroughly, the trustee would have to deplete the estate’s (already slim) assets in exploring what might well prove to be a dry hole...” (Id. at page 6, lines 15-20). These statements could not be further from the truth. They are totally erroneous factual findings and a misapplication of a properly stated rule of law. To the contrary, LeBlanc presented overwhelming indicia of fraud. Although LeBlanc is an attorney, in this case he was acting solely as a creditor, rais- ing an issue of Lizotte’s fraudulent real estate transaction. The Court erroneously puts the burden on LeBlanc, a creditor, to investigate and substantiate the fraud. Clearly this duty lies with the trustee who did absolutely nothing to investigate LeBlanc’s allegations. Therefore, how could he possibly have 10 reached an “informed judgment after diligent inves- tigation. On page 7 of the First Circuit’s opinion, the Court states in relevant part, “Nor was Salem’s (trustee) position rubber stamped. The Bankruptcy Court conducted no fewer than four hearings to scrutinize the Appellant’s claims...” This is also a gross misstatement of the facts. Although the Court conducted hearings, not once did the Bank- ruptcy Court, or any other Court order the trustee to investigate LeBlanc’s allegations of fraud. Not once did any of these Court’s question what assets were allegedly sold to Peterborough Oil. Not once did the Court order full and complete disclosure. The First Circuit quotes Judge Harrington of the United States District Court that appellant had, “neither introduced any contrary expert testimony nor proffered any hard evidence, that Lizotte ma- nipulated the valuation of the real estate (page 8). To the contrary, Lizotte’s own expert appraisal of the real estate valued the property at -$20,000.00. the Purchase and Sales Agreement stated $200,000.00 and the actual deed and secret sale was for $300,000.00. The circumstantial evidence of fraud presented by LeBlanc is so overwhelming, it is a slap in the face of justice to determine the trustee need not in- vestigate further. The First Circuit’s ruling is in direct conflict with other jurisdictions, such as In re Chicago Art Glass, Inc., 155 B.R. 180 (Bkrtcy N.D.Ill. 1993), which held that although a trustee does not “have an obligation to investigate every matter brought to his/her at- tention, the trustee is statutorily required to look 11 into [allegations] of the concealment of assets, fraudulent conduct, or any other wrong doing, by the debtors or other third parties. Id. at 188. See also In re Melenyzer, 140 BR. 143, 155 (Bkrtcy.W.d.Tex. 1992). Further, in the case of In re Morse Tool, Inc., 148 B.R. 97 (Bkrtcy.D.Mass. 1992), citing the Uniform Fraudulent Conveyance Act, 11 U.S.C. § 548, and its counterpart, the Massachusetts Uniform Fraudulent Conveyance Act, Massachusetts Gen- eral Laws, Chapter 109A, Section 13, there must be at least a reasonable equivalence, between the pur- chase price and the value of the property received, for there to be fair consideration for the transfer of assets. Therefore, the “...focus is on ascertaining whether the price paid was fair and reasonable or, on the other hand, was so high as to have been, a gift or give away; it also asks whether in fairness and good faith to creditors, consideration paid can be deemed reasonable’. Supra. See also In re Worcester Quality Foods, 152 B.R. 494 (Bkrtcy. D.Mass. 1993). CONCLUSION In failing to present any accounting of the assets sold of the sale, the trustee breached his statutory duty, as herein stated, to investigate the conceal- ment of assets, fraudulent conduct or any other wrongdoing by Lizotte. To blindly recommend abandonment was wanton negligence by the Trus- tee. For the Court to accept his uninformed opinion without any investigation, in violation of its own 12 contingent settlement, is not diligent investigation and is clearly an abuse of discretion. How little ef- fort would have been required to shake a potentially fruitful bush. Instead, the Court accepted the trustee’s recom- mendation in a vacuum, with no facts to support its conclusion. The Court erroneously put the burden on creditor LeBlanc to produce concrete evidence of fraud beyond a reasonable doubt, rather than com- pel the trustee to investigate and produce an ac- counting to determine if the sale was “fair and rea- sonable”. For the compelling reasons set forth above, the Petition for Writ of Certiorari should be allowed. WHEREFORE, based upon the foregoing, the Pe- titioner, Gary R. LeBlanc, respectfully moves this Honorable Court to allow his Writ of Certiorari and reverse the decision of the U.S. Court of Appeals for the First Circuit and rule accordingly. Respectfully submitted, Gary R. LeBlanc, Pro Se Counsel of Record, Gary R. LeBlanc 20 Cross Street Gardner, Massachusetts 01440 (978) 630-3300 BBO #543081 APPENDIX TABLE OF CONTENTS APPENDIX A Opinion of the Court of Appeals for the OIE GUIRIIG Scsleccncudscticeiseiie ce ab oe la APPENDIX B The First Circuit Denial of the Petition for SUSIE sincsixisnnsionieinpinedcesaleasuadancnee l4a APPENDIX C The Memorandum decision of the United States District Court for the District of Massachusetts, dismissing the OIG estiknintiissisvictiateissangslinas choad 16a iia [This page is intentionally left blank. ] APPENDIX A United States Court of Appeals For the First Circuit No. 99-1865 IN RE MAILMAN STEAM CARPET CLEANING CORP., Debtor. GARY R. LEBLANC, Appellant, v. RICHARD P. SALEM, TRUSTEE, ETC., Appellee. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Edward F. Harrington, U.S. District Judge] 2a Before Selya, Circuit Judge, Bownes, Senior Circuit Judge, and Boudin, Circuit Judge. Gary R. LeBlanc, pro se ipso, for appellant. Richard P. Salem, pro se ipso, for appellee. May 16, 2000 SELYA, Circuit Judge. This appeal requires us to revisit the final resting place of Mailman Steam Carpet Cleaning Corp. (the debtor). An earlier opin- ion of this court adumbrates the relevant back- ground, see LeBlanc v. Salem (In re Mailman Steam Carpet Cleaning Corp.), 196 F.3d 1, 2-4 (1st Cir. 1999) (Mailman I), and an abbreviated version, bor- rowing heavily from the original, suffices here.! In October 1990, the debtor, represented by At- torney Gary R. LeBlanc, won a verdict in excess of $450,000 against Alfred C. Lizotte in an environ- mental suit. An appeal ensued. Betimes, the debtor attached a parcel of commercial real estate (upon which Al’s Service Station, a corporation controlled 1 We previously warned that the record in this case “lacks crucial documents” and requires us to use approximate num- bers throughout. Mailman I, 196 F.3d at 2. That warning still applies. iti ci 3a by Lizotte, operated a Gulf station) in an effort to secure the judgment. Before collecting any sums from Lizotte, the debtor slid into bankruptcy. See 11 U.S.C. §§ 701- 766 (1994 & Supp. 1999). The Lizotte judgment thus became a principal asset of the bankruptcy es- September 18, 1995, the trustee in bankruptcy, Richard P, Salem, notified the court and creditors of his intention to compromise the judgment for $100,000. LeBlanc, qua creditor, objected. The bankruptcy court held a hearing during which Salem introduced an appraisal that esti- mated the fair market value of the property, includ- ing the fixtures and equipment associated with Al’s Service Station (the Corporation), at $390,000, and then assigned $175,000 of this total to the “[ljand, buildings and installations” owned personally by Lizotte (and, thus, subject to the attachment). The appraiser also pointed out that the real estate was encumbered by a prior first mortgage that secured nearly $100,000 in debt. LeBlanc asserted that the real estate was worth much more than the estimate but offered no concrete evidentiary support for a different valuation. No other creditor objected to the anticipated settlement. In the end, the bankruptcy court approved the Proposal, subject to the following condition: If the gas station is sold within two years from [October 19, 1995], the 4a trustee may move for revocation of this approval. Depending on the facts of the sale, the court will then either confirm or revoke its approval. The court denied LeBlanc’s subsequent motion to alter or amend and ordered Salem to deliver an exe- cuted discharge of the lien, to be held in escrow pending payment of $100,000 to the bankruptcy estate. Approximately seven months later, Lizotte and the Corporation sold the real property and the business assets of the Corporation for an aggregate price of $560,000. Lizotte maintained that the business assets represented most of the value; thus, he proposed to satisfy the first mortgage, re- mit $100,000 to Salem to complete the settlement, and pay the remaining net proceeds to the Corpora- tion’s creditors (the largest of which apparently was Gulf Oil or its distributor, New England Petroleum). Contending that this allocation was a sham and would fraudulently divert $360,000 from Lizotte’s creditors (including the debtor), LeBlanc moved to compel Salem to seek revocation of the order condi- tionally approving the settlement. The bankruptcy court granted LeBlanc permission under Fed. R. Bankr. P. 2004 to examine Lizotte, Gulf, and the Corporation, limited, however, to information con- cerning the terms of the sale and to whom the pro- ceeds had gone.? 2 The court subsequently denied LeBlanc permission to ex- amine the buyer, Peterborough Oil Co. LeBlanc gripes about 5a The permitted discovery moved at a snail’s pace. Finally, the depositions concluded and Salem sought leave to abandon the reserved right to seek revocation of the settlement. LeBlanc -- and LeBlanc alone -- opposed abandonment. At a hear- ing held on April 15, 1998, LeBlanc recounted his version of the pertinent facts and the conclusions that he had drawn from his investigation. See Mailman I, 196 F.3d at 3-4 (describing LeBlanc’s contentions). Apparently unimpressed, the bank- ruptcy court overruled his objection and authorized Salem to surrender the right to seek revocation. LeBlanc appealed both this order and a collateral order dealing with the allowance of his claim.3 After some skirmishing -- including a remand for further findings -- the district court upheld both determina- tions. See In re Mailman Steam Carpet Cleaning, Civ. No. 99-40083-EFH (D. Mass. June 25, 1999) (Mailman II). LeBlanc then prosecuted this appeal. In it, he presses two assignments of error. this ruling in passing, but has neither assigned error to it nor made any suitably developed argumentation in regard to it. 3 Striking on a different front, LeBlanc simultaneously filed an adversary proceeding against Salem, in which he alleged negligence and breach of fiduciary duty stemming from Sa- lem’s failure to seek revocation of the settlement. The bank- ruptcy court rejected this initiative, granting summary judg- ment in Salem’s favor. The district court affirmed, and so did we. See Mailman I, 196 F.3d at 4-9. \ 6a The Abandonment Order The appellant first solicits our intervention in re- spect to the order approving abandonment of the right to seek revocation of the settlement. As the appellant acknowledges, the standard of review is abuse of discretion. See Prebor v. Collins (In_re I Don’t Trust), 143 F.3d 1, 3 (lst Cir. 1998). The abuse of discretion rubric is not hard and fast. See 1 Steven Alan Childress & Martha S. Davis, Federal Standards of Review § 4.21, at 4-131 to -139 (3d ed. 1999). Here, we apply it against the background understanding that “[c]lompromises are favored in bankruptcy.” Hicks, Muse & Co. v. Brandt (In_re Healthco Int'l, Inc.), 136 F.3d 45, 50 n.5 (1st Cir. 1998) (quoting 9 Collier on Bankruptcy J 9019.01, at 9019-2 (15th ed. 1995)). A chapter 7 trustee is entrusted to marshal an estate’s assets and liabilities, and proceed in set- tling its accounts on whatever grounds he, in his informed discretion, believes will net the maximum return for the creditors (on whose behalf he toils). When augmentation of an asset involves protracted investigation or potentially costly litigation, with no guarantee as to the outcome, the trustee must tread cautiously -- and an inquiring court must ac- cord him wide latitude should he conclude that the game is not worth the candle. See, e.g., id. at 50-52. After all, “a chapter 7 trustee is required to reach an informed judgment, after diligent investigation, as to whether it would be prudent to eliminate the inherent risks, delays and expense of prolonged liti- gation in an uncertain cause.” Kowal v. Malkemus | ere 7a (In re Thompson), 965 F.2d 1136, 1145 (1st Cir. 1992). These principles are dispositive here. LeBlanc mounts a claim of fraud -- a claim that, after ear- nest investigation, he cannot substantiate. In order to probe the claim more thoroughly, the trustee would have to deplete the estate’s (already slim) as- sets in exploring what might well prove to be a dry hole. Given the known facts, a decision to go no fur- ther seems easily defensible. Lizotte is now in bankruptcy, with no visible as- Sets apart from the real estate which is at issue in this proceeding. The sale to Peterborough Oil re- portedly was contingent on the payment of roughly $200,000 to Gulf Oil /New England Petroleum, and a further payment of $60,000 for a covenant not to compete. The mortgage -- a priority lien -- had a balance of nearly $100,000. Backing these sums out of the sales price left only $200,000 on the table -- some of which obviously would have to be de- voted to closing costs, taxes, attorneys’ fees, and ~ the like. Under those circumstances, accepting a $100,000 settlement rather than either frustrating the sale (by attempting to block the $200,000 pay- ment) or prolonging the squabble about how to allo- cate the sales price between real property and busi- ness assets does not appear unreasonable. Trustees must take care not to throw good money after bad, and, on this somewhat Opaque record, Salem’s in- clination to embrace the settlement is a choice which appears deserving of some deference. 8a Nor was Salem’s position rubber-stamped. The bankruptcy court conducted no fewer than four hearings to scrutinize the appellant’s claims. Upon considering all the available evidence, the court elected, as its discretion fully allowed, to accept the trustee’s recommendation. The situation thus is reminiscent of In re Thompson, in which we wrote: [T]he baseline for appellants’ opposi- tion to the proposed settlement rests in their readiness to second-guess the in- formed judgment of the chapter 7 trus- tee, as well as the discretionary deter- mination of the bankruptcy court, that continued litigation would not result in a net benefit to the chapter 7 estate. ... The important policy favoring effi- cient bankruptcy administration nor- mally will warrant judicial recognition that the chapter 7 trustee, .. . rather than ... an individual creditor, is the more appropriate arbiter of the “best interests” of the chapter 7 estate. 965 F.2d at 1145 (citations omitted). The district court also reviewed the facts. In an abundance of caution, it remanded for further find- ings and ultimately affirmed the decision of the bankruptcy court. See Mailman il, slip op. at 3. The court stated that “the record simply does not reflect that the land owned by Lizotte and secured by the real estate attachment was valued at more than the $200,000 [originally] estimated by the independent real estate appraiser.” Id. It then noted that the ap- 9a pellant had neither introduced any contrary expert testimony nor proffered any hard evidence “that Lizotte [had] manipulated the valuation of his real estate.” Id. Consequently, the district court con- cluded that the bankruptcy court had not abused its discretion. See id. We appreciate that, notwithstanding the district court’s imprimatur, we must independently review the bankruptcy court’s determination. See Palmacci v. Umpierrez, 121 F.3d 781, 785 (1st Cir. 1997). But that review should not occur in a vacuum. In this instance, the decision whether to seek revoca- tion of the settlement has been poked, prodded, and probed at some length. For present purposes, the acid test of the bankruptcy court’s decision is not whether pressing onward might have produced more funds for the estate but, rather, whether ac- cepting the settlement (and thereby forgoing the risks inherent in intransigence) fell within the uni- verse of reasonable alternatives. The ascertained facts, as revealed by the record, convince us that the bankruptcy court did not exceed the wide boundaries of its discretion in determining that a bird in the hand was worth more than continued shaking of a potentially barren bush. The Claim Allowance We turn next to LeBlanc’s second assignment of error. The facts are these. The debtor Originally re- tained LeBlanc to handle the environmental suit pursuant to a written retainer agreement, dated June 20, 1988, that specified a one-third contin- 10a gent fee based on the “verdict, jury award or settle- ment.” LeBlanc succeeded in obtaining a verdict against Lizotte in mid-1990. With an appeal in prospect, he prepared a neoteric fee agreement that provided, in substance, that he would handle the appeal and receive an aggregate fee equal to the greater of 43% of any recovery or his overall time charges (based on specifiea billing rates). The debtor signed this agreement in November 1990. When the debtor later filed for bankruptcy and LeBlanc served a proof of claim based on the No- vember 1990 fee agreement, the agreement proved as much necrotic as neoteric; the bankruptcy court struck it down as violative of Rule 3:05(5)(e) of the Rules of the Supreme Judicial Court of Massachu- setts (which at the time provided, in pertinent part, . that a contingent fee shall not “exceed stated maximum percentages of the amount collected”).* The court did not disallow LeBlanc’s claim entirely, however, but allowed it to the extent of one-third of the amount of the litigation proceeds ultimately col- lected. The district court affirmed these twin deter- minations, holding (1) that the bankruptcy court did not err in finding the November 1990 fee agreement unenforceable, and (2) that the bank- ruptcy court’s allowance of the claim in an amount equal to one-third of the actual recovery was “rea- * In the District of Massachusetts, both the federal district court and the bankruptcy court have incorporated the Su- preme Judicial Court's ethical standards into their own rules. See D. Mass. R. 83.6(4)(B); Bankr. Mass. R. 9020-3. At the times relevant hereto, that incorporation embraced former S.J.C. R. 3:05 (since stricken). er lla sonable and do[es] not constitute an abuse of dis- cretion.” Mailman II, slip op. at 4. Like the district court, we review de novo the bankruptcy court’s rulings of law and test its find- ings of fact for clear error. See BayBank-Middlesex v. Raylar Distributors, Inc., 69 F.3d 1200, 1202 (1st Cir. 1995). We think it is significant here that the claim under review is essentially a claim for an at- torney’s fee. The bankruptcy court’s role is preemi- nent in determining the reasonableness of fees claimed in bankruptcy proceedings, and the court’s determinations in that wise are reviewed with great deference. See In re I Don’t Trust, 143 F.3d at 3; In re Martin, 817 F.2d 175, 182 (1st Cir. 1987); Rome v. Braunstein (In re Chestnut Hill Mortgage Corp.), 158 B.R. 547, 549 (D. Mass. 1993), aff'd, 19 F.3d 54 (1st Cir. 1994). With these tenets in mind, we consider the particulars of the appellant’s claim. We most assuredly cannot fault the bankruptcy court for refusing to honor the November 1990 fee agreement. By leaving open the possibility of fees in excess of the stated percentage, that agreement plainly ran afoul of the then-applicable ethical canon, S.J.C. R. 3:05(5)(e). The court therefore had the right -- and, arguably, the duty -- to refuse to enforce it. See Berman v. Linnane, 424 Mass. 867, 871-72 & n.7 (1997). This brings us to the reasonableness of the al- lowance. Since the November 1990 fee agreement had purported to supplant, not merely supplement, the original fee agreement, the bankruptcy court determined that it would consider not only the 12a original agreement, but also equitable doctrines. In the end, it approved LeBlanc’s claim to the extent of one-third of the amounts actually realized on the judgment against Lizotte. We glean from the record that the court thought this sum reasonable in rela- tion to the services rendered and to the result achieved and believed that such an award would prevent unjust enrichment of the bankruptcy es- tate. Indeed, the court expressly found that “one- third of the recovery, plus expenses” constituted a “typical compensation arrangement for matters such as this” and was “[flair” in the circumstances of this case. In our view, the allowance of the claim passes the test of reasonableness with flying colors. Because we do not wish to belabor the obvious, we add only a brief comment. Having found that the November 1990 fee agree- ment violated ethical precepts, the bankruptcy court likely could have denied LeBlanc compensa- tion altogether. See, e.g., Rome, 19 F.3d at 58; cf. Culebras Enters. Corp. v. Rivera-Rios, 846 F.2d 94, 97 (lst Cir. 1988) (stating, in a non-bankruptcy context, that “[djenial of attorneys’ fees may be a proper sanction for violation of an ethical canon”). The fact that the court elected to take less draco- nian measures does not mean that it could attach no significance to the violation -- and this is so even though it seems to have regarded the ethical short- fall as resulting from a good-faith blunder. In all events, assessing the reasonableness of claims for counsel fees is a matter “in which the court of first instance enjoys particularly great leeway,” In re I iceman 15 140 2 13a Don’t Trust, 143 F.3d at 3, and there is no sign that the bankruptcy court’s allowance of LeBlanc’s claim in a sum less than he had hoped outstripped that leeway. The proof of the pudding is in the tasting. The es- sence of LeBlanc’s engagement by the debtor cen- tered around the notion that his compensation would be commensurate to the monies realized by the client. The bankruptcy court’s resolution of LeBlanc’s claim was faithful to this central concept; it found that LeBlanc’s work had produced a recov- ery and that he was entitled to compensation pro- portionate to the size of that recovery. So viewed, LeBlanc’s complaint reduces to a quarrel over the percentage that the court deemed appropriate. That ends the matter. Whether or not a higher percent- age might have been sustainable, it cannot seri- ously be argued that the court’s decision to approve ~ the claim based on a conventional percentage (33%) constituted an abuse of discretion. We need go no further. At long last, the lower courts appear to have laid this tangled and conten- tious matter to rest. We discern no error in their administration of these last rites. Affirmed. l4a APPENDIX B United States Court of Appeals For the First Circuit No. 99-1865 IN RE MAILMAN STEAM CARPET CLEANING CORP., Debtor GARY R. LEBLANC, Appellant, V. RICHARD P. SALEM, TRUSTEE, ETC.., Appellee. BEFORE SELYA, CIRCUIT JUDGE, BOWNES, SENIOR CIRCUIT JUDGE AND BOUDIN, CIRCUIT JUDGE. ORDER OF COURT Entered: June 5, 2000 Upon consideration of petition for panel re- hearing from judgment of May 16, 2000, ammenities 15a It is ordered that said petition be, and the same hereby is, denied. By the Court Phoebe D. Morse, Clerk By: JANICE M. O’NEIL Chief Deputy Clerk [cc: Messrs. LeBlanc and Salem] 16a APPENDIX C UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS No. 99-40083-EFH IN RE: MAILMAN STEAM CARPET CLEANING, Debtor MEMORANDUM AND ORDER June 25, 1999 HARRINGTON, D.J. This matter is before the Court on appeal from the United States Bankruptcy Court. The Appellant Attorney Gary LeBlanc, here representing himself, represented Mailman Steam Carpet Cleaning, Inc., In a lawsuit against Alfred Lizotte In which Mailman obtained a judgment against Lizotte In excess of $400,000, secured by a real estate attachment of certain commercial property owned by Lizotte. Later, Mailman went into bankruptcy; the sole sig- nificant asset in the bankruptcy estate was the judgment against Lizotte. Basec on an appraisal valuing the land securing the judgment at approximately $200,000 and per- ceived problems In the collectability of the judg- ment, the Trustee In the bankruptcy proceeding, Appellee Richard Salem, recommended that the claim against Lizotte be settled for $100,000. The Bankruptcy Court allowed the settlement, over Ap- 17a pellant LeBlanc’s objections, but provided that, if the property was sold within two years, the Trustee could move to revoke the settlement. At the hearing on LeBlanc’s motion to revoke, the Bankruptcy Court clarified that it would allow a revocation if there was evidence that established that “the set- tlement agreement had been negotiated by Mr. Lizotte fraudulently; that is, Mr. Lizotte did not dis- close...that he had a buyer willing to purchase the real estate...for significantly more than the $100,000 settlement.” When, in six months, a third party paid $560,000 for the property, the business assets of the gas station on the property, and a covenant by Lizotte not to compete, LeBlanc alleged fraud on the part of Lizotte and requested that the Court revoke the’ settlement. The Bankruptcy Court held a hear- ing on the motion but, finding insufficient evidence to sustain LeBlanc’s allegations, refused, in its dis- cretion, to revoke the settlement and instead al- lowed the Trustee’s motion to \abandon the claim. LeBlanc has appealed that decision and, accord- ingly, the first issue before this Court is whether the Bankruptcy Court’s refusal to revoke the set- tlement, in light of LeBlanc’s allegations of fraud, constituted an abuse of discretion. The second issue before this Court concerns the Bankruptcy Court’s award of attorney’s fees to LeBlanc. In the underlying suit against Lizotte, LeBlanc and Mailman had a one-third contingency fee agreement. When LeBlanc later agreed to de- fend the judgment on appeal, LeBlanc and Mailman executed a subsequent contingency fee agreement, 18a providing that LeBlanc would be entitled to the greater of 43 percent of the amount ultimately col- lected or compensation based on his hourly rate. The Bankruptcy Court struck down this subse- quent agreement as violative of then-applicable Rule 3:05(5) of the Supreme Judicial Court. The Court allowed LeBlanc, however, a claim for attor- ney’s fees In the amount of one-third the amount ultimately collected, pursuant to the original agreement between the parties, plus some ex- penses. LeBlanc appealed this decision as well and, accordingly, the second issue before this Court is whether the Bankruptcy Court award of attorney’s fees to LeBlanc constituted an abuse of discretion. After hearing oral argument and reviewing the record before it, including the Bankruptcy Court’s decisions with respect to each of these two issue, the Court finds no abuse of discretion by the Bank- ruptcy Court with respect to either matter. With respect to the first issue, the record simply does not reflect that the land owned by Lizotte and secured by the real estate attachment was valued at more than the $200,000 estimated by the inde- pendent real estate appraiser. LeBlanc did not in- troduce any expert testimony regarding the real es- tate’s valuation either at the original proceeding before the Bankruptcy Court nor later after remand to it from this Court. Moreover, there is no evi- dence that Lizotte manipulated the valuation of his real estate nor any evidence that he had any poten- tial buyer at the time he entered into his settlement with Mailman’s Estate. Accordingly, this Court cannot say that the Bankruptcy Court’s refusal to 19a revoke that settlement constituted an abuse of dis- cretion. Similarly, with respect to the second issue, the Court holds that the Bankruptcy Court did not err in refusing to enforce the subsequent contingency fee agreement. Moreover, the Court finds that the attorney’s fees and expenses awarded by the Bank- ruptcy Court, amounting to $44,950.61 of the $147,000 ultimately collected for Mailman, are rea- sonable and do not constitute an abuse of discre- - tion by the Bankruptcy Court. Accordingly, this appeal is dismissed. SO ORDERED. /s/EDWARD F. HARRINGTON United States District Judge --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386019_1534%3A1. Public record. Not legal advice.