OPINION AND ORDER
NEKOOSA PORT EDWARDS STATE BANK,
Case: 3:13-cv-00092-wmc Document #: 5 Filed: 07/30/13 Page 1 of 12
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
Pro se appellant Veronika McCarthy appeals from a decision of the Bankruptcy
Court for the Western District of Wisconsin pursuant to 28 U.S.C. § 158(a) dismissing
her Chapter 13 petition on the grounds that the proposed plan cannot be confirmed.
McCarthy does not challenge the merits of the bankruptcy court’s decision rather she
challenges the court’s award of attorney’s fees incurred by Appellee Nekoosa Port
Edwards State Bank (“NPESB”) during the course of appellate proceedings in its
foreclosure action and bankruptcy proceedings on its secured claim. In addition,
McCarthy challenges the bankruptcy court’s decision denying her application to employ
an interpreter during the confirmation hearing. For the reasons explained below, the
court will affirm the bankruptcy court’s decisions in both respects.1
Also before the court is NPESB’s request for attorney’s fees incurred in this court
pursuant to Rule 8020 of the Federal Rules of Bankruptcy Procedure, because
McCarthy’s appeal is frivolous and should be sanctioned. (Appellee’s Br. (dkt. #3) 23-
25.) While the court affirms the bankruptcy court’s decision, it does not find the appeal
to be frivolous, warranting sanctions. Accordingly, the court will deny NPESB’s request
Case: 3:13-cv-00092-wmc Document #: 5 Filed: 07/30/13 Page 2 of 12
The debtor-appellant Veronika McCarthy immigrated from Slovakia to the United
States in 1998. That same year, she and her late husband obtained financing for their
home by executing a three-year mortgage note in favor of NPESB. In relevant part,
McCarthy agreed to:
pay all reasonable costs and expenses before and after
judgment, including without limitation, attorneys’ fees, fees
and expenses for environmental assessments, inspections and
audits, and fees and expenses for obtaining title evidence
incurred by Lender [NPESB] in protecting or enforcing its
rights under this Mortgage.
(Bankr. Claim 8 (dkt #1-4) Ex. B.) After renewing the mortgage note in 2001 and 2004,
NPESB refused to renew the mortgage note in 2007.
Despite this, McCarthy continued to make mortgage payments consistent with
the terms of the note until June of 2010. Only after McCarthy stopped making mortgage
payments, did NPESB initiate a foreclosure action in Adams County Circuit Court on
November 15, 2010.
In response, McCarthy asserted several counterclaims. The Adam County Circuit
Court ruled in favor of NPESB on February 17, 2011, and McCarthy appealed. On April
9, 2012, Wisconsin Court of Appeals affirmed the lower court’s decision with respect to
NPESB’s foreclosure action, but remanded for further proceeding with respect to
McCarthy’s counterclaims. On March 20, 2013, the Adam County Circuit Court
dismissed all of McCarthy’s counterclaims.
During the pendency of the foreclosure proceedings, McCarthy filed two
bankruptcy petitions to protect her homestead. She filed her first Chapter 13
Case: 3:13-cv-00092-wmc Document #: 5 Filed: 07/30/13 Page 3 of 12
bankruptcy petition on September 19, 2011, which she voluntarily dismissed on March
5, 2012. After the Wisconsin Court of Appeals affirmed the trial court’s foreclosure
ruling, McCarthy filed her second Chapter 13 bankruptcy petition.
In McCarthy’s second bankruptcy petition, NPESB filed a proof of claim in the
amount of $52,187.12 with interest at 7.5%. McCarthy objected, arguing that the
amount due should be $41,411 after excluding attorney’s fees not reasonably incurred in
connection with NPESB’s debt collection. In her Chapter 13 plan, McCarthy proposed
to repay NPESB in this lesser amount through a monthly payment of $498 for 60
months and a lump-sum payment for the balance, which was to be refinanced during the
life of the plan.
After the final hearing on the proposed plan had been scheduled, McCarthy filed
an application to employ an interpreter for the first time. NPESB objected on the
grounds that McCarthy is proficient in English. The bankruptcy court held a preliminary
hearing on October 1, 2012, but reserved the question as to the need for an interpreter
until the day of the final hearing, October 4, 2012.
That day, the bankruptcy court conducted an examination of McCarthy and
found her grasp of English sufficient to proceed without an interpreter. At the end of the
trial, the court issued an oral opinion dismissing McCarthy’s Chapter 13 petition, finding
that a plan with a final balloon payment could not be confirmed under 11 U.S.C §
1325(a)(5)(B)(iii)(I). The court also found NPESB’s attorney fees reasonable, awarding
the full amount of its claim ($52,187.12).
Case: 3:13-cv-00092-wmc Document #: 5 Filed: 07/30/13 Page 4 of 12
This court reviews a bankruptcy court’s findings of fact deferentially for clear error
and its legal conclusions de novo. See In re Doctors Hosp. of Hyde Park, Inc., 474 F.3d 421,
426 (7th Cir. 2007) (citing Fed. R. Bankr. P. 8013 and In re Crosswhite, 148 F.3d 879,
881 (7th Cir. 1998)). The court reviews the bankruptcy court’s decision to deny
McCarthy’s request to employ an interpreter under an abuse of discretion standard. See
United States v. Johnson, 248 F.3d 655, 662 (7th Cir. 2001). Similarly, the court reviews
the bankruptcy court’s ruling with respect to attorney’s fees under an abuse of discretion
standard. See Spegon v. Catholic Bishop of Chi., 175 F.3d 544, 550 (7th Cir. 1999).
Under these differential standards, this court finds that the bankruptcy court
neither erred in denying McCarthy an interpreter, nor in finding reasonable the
attorney’s fees incurred in enforcing NPESB’s rights.
With respect to her first challenge, McCarthy argues that: (1) NPESB had
effectively waived any right to object to McCarthy’s application to employ an interpreter
because it did not object to the same request in a previous proceeding; (2) holding an
accommodation hearing on the same day as a substantive hearing was unfair; (3) the
finding that McCarthy’s English skills were sufficient to understand the bankruptcy
proceeding is erroneous; and (4) because she could not understand the proceeding
without an interpreter, the denial of McCarthy’s request for an interpreter was prejudicial
and violated her fundamental rights.
Case: 3:13-cv-00092-wmc Document #: 5 Filed: 07/30/13 Page 5 of 12
A party is only statutorily entitled to appointment of an interpreter if the court
determines that (1) the party speaks only or primarily a language other than English; and
(2) this fact inhibits the party’s comprehension of the proceedings or communication
with counsel. 28 U.S.C. § 1827(d)(1). The United States Supreme Court has yet to
recognize the right to a court-appointed interpreter as a constitutional one. United States
v. Johnson, 248 F.3d 655, 661 (7th Cir. 2001) (“[T]he CIA [Court Interpreter Act] was
not enacted to create new constitutional rights for defendants or expand existing
constitutional safeguards.” (internal citation and quotation marks omitted)). The
appointment of an interpreter is a matter resting largely in the discretion of the trial
court. Perovich v. United States, 205 U.S. 86, 91(1907).
McCarthy argues that the bankruptcy court erred in allowing NPESB to object to
her application for an interpreter given its failure to raise such an objection in the
previous foreclosure proceedings. McCarthy does not cite, nor did this court’s research
reveal, any precedent or statute supporting an argument that NPESB somehow waived its
right to object to the interpreter application simply because it did not raise an objection
in a previous proceeding. Regardless of NPESB’s reason for not objecting in the prior
state foreclosure action, that decision did not bar it from objecting in the bankruptcy
Moreover, NPESB’s objection was timely. McCarthy filed the application to
employ an interpreter on September 18, 2012. NPESB filed its objection on September
25, 2012, giving McCarthy sufficient time to respond to NPESB’s objection, which she
did on September 26, 2012.
Case: 3:13-cv-00092-wmc Document #: 5 Filed: 07/30/13 Page 6 of 12
Second, McCarthy argues that the bankruptcy court erred in holding the
accommodation hearing on the same day as the confirmation hearing and that this error
constitutes an abuse of discretion under Strook v. Kendinger, 2009 WI App 31, 316 Wis.
2d 548, 766 N.W.2d 219. Strook, however, is factually and legally distinguishable from
the present case. In Strook, the plaintiff, who was deaf, filed the lawsuit pro se and sought
appointment of a sign language interpreter. 316 Wis. 2d 548, 552. The Wisconsin
Court of Appeals held that the trial court abused its discretion by hearing the interpreter
issue and the substantive issue simultaneously for judicial efficiency reasons. Id. at 566-
67. The court reasoned that it is inefficient because “the court runs the risk that the
(substantive) hearing will have to be postponed should it be determined that an
accommodation is needed.” Id. at 566. In addition, the court worried that it would
cause “fear and confusion to a person with a disability if he or she is required to appear at
an important proceeding not knowing whether the request for accommodation is going to
be granted.” Id. at 567.
In the present case, McCarthy is not disabled. In the best position to do so, the
bankruptcy court found that she possesses sufficient English skills to understand spoken
English, as well as the legal proceedings. Unlike Strook, McCarthy was also represented
by counsel throughout the bankruptcy proceedings. The Strook court’s special
consideration for unrepresented, disabled people simply does not apply to the case at
hand. In addition, unlike the trial court in Strook, the bankruptcy court held a
preliminary proceeding on the interpreter issue on October 1, 2012, three days before the
final confirmation hearing. Finally, even if these findings were somehow even arguably in
Case: 3:13-cv-00092-wmc Document #: 5 Filed: 07/30/13 Page 7 of 12
error, McCarthy has failed to identify any actual prejudice caused by the bankruptcy
court issuing its final decision on her interpreter request on the same day as the
Next, McCarthy challenges the bankruptcy court’s determination that her English
skills are sufficient under 28 U.S.C. § 1827. Here, too, the record amply supports the
bankruptcy court’s finding that McCarthy possessed sufficient English skills to
understand the bankruptcy proceeding. At the time of the hearing, McCarthy had
resided in the United States for more than 14 years. (Bankr. Court Tr. (Bankr. dkt.
#73) 7:1-2.) In 2004, she received a bachelor degree in psychology from University of
Steven Point where most of her courses were taught in English. (Id. at 7:14-25.) Three
years later, she completed her master degree in education from Grand Canyon
University. (Appellant’s Obj. (Bankr. dkt. # 46) Ex. D.)
Moreover, during the confirmation hearing, McCarthy responded to Judge
Martin’s questions, testified in English and responded to the opposing counsel’s cross-
examination without significant difficulties. At times, she may have needed the judge
and the attorneys to rephrase the questions but that did not appear to prevent her from
understanding the proceeding. At the very least, the bankruptcy court’s finding that she
was capable of understanding the bankruptcy proceeding is not clearly erroneous and, in
turn, the bankruptcy court did not abuse its discretion in denying her application to
employ an interpreter.
Lastly, McCarthy argues that bankruptcy court’s denial of her application for an
interpreter is a violation of due process, infringes her fundamental rights, and amounts to
Case: 3:13-cv-00092-wmc Document #: 5 Filed: 07/30/13 Page 8 of 12
a structural error requiring automatic reversal. Having found that the bankruptcy court
did not abuse its discretion in denying her request, this basis for relief is a nonstarter.
Even if her claim had factual support, as noted above, the United States Supreme Court
has recognized no constitutional right to a court-appointed interpreter. See Johnson, 248
F.3d at 661.
II. Attorney’s Fees
With respect to her second challenge, McCarthy alleges that attorney’s fees
incurred by NPESB after February 17, 2011, on her appeal from the state circuit court’s
grant of foreclosure and in bankruptcy were unreasonable.2 McCarthy argues that: (1)
courts must use the “lodestar method” to determine a reasonable attorney’s fee; and (2)
because both the hourly rate and the hours NPESB’s attorney spent in the state court
appeal proceeding and bankruptcy actions are unreasonable, this portion of NPESB’s
award should not be allowed.
The first question is whether the bankruptcy court abused its discretion by not
applying the lodestar analysis proposed by McCarthy. The lodestar analysis is typically
required in determining whether an attorney’s fee award is reasonable under a statutory
fee-shifting scheme. Pickett v. Sheridan Health Care Ctr., 664 F.3d 632, 639 (7th Cir.
2011). In a contractual fee-shifting case, however, courts are not required to engage in a
2 McCarthy does not challenge the attorney’s fees included in the Adams County Circuit
Court’s February 17, 2011, award, which was also affirmed by the appellate court. She
challenges only the attorney’s fees incurred in the appellate proceeding and in both of the
Case: 3:13-cv-00092-wmc Document #: 5 Filed: 07/30/13 Page 9 of 12
detailed, hour-by-hour review of a prevailing party’s billing records. See Medcom Holding
Co. v. Baxtar Travenol Labs, Inc., 200 F.3d 518, 521 (7th Cir. 1999). In such a case, the
proper standard is a “commercially reasonable” standard. Balcor Real Estate Holdings, Inc.
v. Walentas-Phoenix Corp., 73 F.3d 150, 153 (7th Cir. 1996) (holding that fee-shifting
contracts require “reimbursement for commercially-reasonable fees no matter how the
bills are stated”).
In determining whether the attorney’s fees are commercially reasonable, a court
will look to the aggregate costs in light of the stakes of the case and opposing party’s
litigation strategy. See Matthews v. Wis. Energy Corp., Inc., 642 F.3d 565, 572 (7th Cir.
2011) (citing Medcom, 200 F.3d at 521). Here, no statutory fee-shifting provision is
involved. Instead, the bankruptcy court properly relied on Paragraph 17 of the NPESB’s
mortgage, which requires McCarthy to pay attorney’s fees incurred by NPESB in the
enforcement of its mortgage. (Bankr. Claim 8 (dkt #1-4) Ex. B.) Therefore, the
bankruptcy court did not abuse its discretion by rejecting a more detailed lodestar
analysis in favor of a commercially-reasonable standard. On the contrary, the court used
the best measure of value by awarding the actual, market-driven fees NPESB incurred in
collection. See RK Co. v. See, 622 F.3d 846, 854 (7th Cir. 2010) (“[T]he best evidence of
whether attorney’s fees are reasonable is whether a party has paid them.” (internal
citation and quotation marks omitted)).
The second question is whether the bankruptcy court abused its discretion in
finding commercially reasonable NPESB’s costs of enforcement claim incurred in the
bankruptcy proceedings. The bankruptcy court’s analysis supports its determination that
Case: 3:13-cv-00092-wmc Document #: 5 Filed: 07/30/13 Page 10 of 12
this portion of NPESB’s fee award is allowed as well. The bankruptcy court correctly
ruled that NPESB had the burden to prove the validity of these additional attorney’s
fees. The attorney’s fees incurred during the appellate proceeding of the foreclosure
action and the bankruptcy proceeding were clearly related to the protection and
enforcement of NPESB’s rights under the mortgage. NPESB also presented the actual
invoices incurred to support its claim.
McCarthy challenges NPESB’s claim by pointing out errors with respect to the
hours recorded in NPESB attorney’s time sheets. Since there are errors in the time
sheets, McCarthy reasons, the amount of the attorney’s fees charged must be
unreasonable. The blatant errors in NPESB counsel’s time records are certainly
troubling. However, as previously discussed, the bankruptcy court is not required to
engage in detailed, hour-by-hour review of the bill records. Medcom, 200 F.3d at 521.
The question, rather, is whether the overall attorney’s fees were commercially reasonable.
Id. Therefore, the errors in the time sheets do not make the overall amount of the
attorney’s fees actually incurred by NPESB per se unreasonable.
McCarthy also argues that the hourly rate NPESB’s attorney charged was higher
than the typical rate in a routine foreclosure action. However, McCarthy did not provide
any evidence showing that the NPESB attorney’s hourly rate was in fact higher than that
typically charged for comparable work. In addition, NPESB was required to defend its
rights under the mortgage in both the state appellate court and the bankruptcy court.
The bankruptcy court did not abuse its discretion in concluding that NPESB had
Case: 3:13-cv-00092-wmc Document #: 5 Filed: 07/30/13 Page 11 of 12
engaged in more than a routine foreclosure action or that the higher attorney’s fees
incurred were commercially reasonable.
III. NPESB’s Request for Sanctions
Finally, NPESB requests in its appellate brief that McCarthy be ordered to pay its
attorney’s fees related to this appeal under Rule 8020 of Federal Rules of Bankruptcy
Procedure. A request for sanctions in an appellate brief is procedurally improper because
it fails to provide the opposing party a sufficient notice and opportunity to respond to
the request. See Fed. R. Bankr. P. 8020; In re Torres Martinez, 397 B.R. 158 (B.A.P. 1st
Cir. 2008); In re Marino, 234 B.R. 767, 770 (B.A.P. 9th Cir. 1999). Since NPESB did
not file a separate motion, the request for sanctions is denied. Even if considered, fees do
not appear warranted since McCarthy’s challenge while ultimately without merit, was not
IT IS ORDERED that:
1) the bankruptcy court’s denial of appellant Veronika McCarthy’s application to
employ an interpreter is AFFIRMED;
2) the bankruptcy court’s ruling allowing appellee NPESB to incorporate its
attorney’s fees in its secured claim is AFFIRMED; and
Case: 3:13-cv-00092-wmc Document #: 5 Filed: 07/30/13 Page 12 of 12
3) Appellee Nekoosa Port Edwards State Bank’s request for sanctions pursuant to
Fed. R. Bankr. P. 8020 is DENIED.
Entered this 30th day of July, 2013.
BY THE COURT:
WILLIAM M. CONLEY