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OPINION AND ORDER



13-cv-0092-wmc

v.

Debtor-Appellant,

NEKOOSA PORT EDWARDS STATE BANK,


Creditor-Appellee.




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




VERONIKA McCARTHY,

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


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
for sanctions.

Case: 3:13-cv-00092-wmc Document #: 5 Filed: 07/30/13 Page 2 of 12

BACKGROUND

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



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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).



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OPINION

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.


I.

Interpreter

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.



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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

action.

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.



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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



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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

confirmation hearing.

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



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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
bankruptcy proceedings.



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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



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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



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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

frivolous.

IT IS ORDERED that:

ORDER

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



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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:

/s/
________________________________________
WILLIAM M. CONLEY
District Judge

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