ANQUILLARE, LIPNICKI, RUOCCO AND COMPANY v. VCR REALTY ASSOCIATES ET AL.

Pursuant to the United States Bankruptcy
Code, if a Bankruptcy Court authorizes an accounting
firm to provide professional services, the firm may
request payment of its fees during the administration
of the bankrupt estate. 11 U.S.C. § 503 (b).1 If the firm
has not received payment before the dismissal of the
bankruptcy proceedings, it becomes a general creditor
of the debtor who initiated bankruptcy proceedings. 11
U.S.C. § 349 (b).2 In this case, we must determine how
long the firm may wait to assert its claim against that
person. Specifically, we must decide when the firm's
claim accrued for the purpose of a statute of limitations.

The trial court held that the claim accrued at the time when the firm completed its services for the bankruptcy
estate. The firm argues, however, that the claim accrued
at the time when the bankruptcy petition was dismissed
without any distribution of the assets of the bankruptcy
estate. We agree with the firm and reverse the judgment
of the trial court.

The plaintiff, Anquillare, Lipnicki, Ruocco & Company,
an accounting firm, brought an action for breach
of contract against the defendant partnership, VCR
Realty Associates.3 The plaintiff alleged that the defendant
had filed a petition for protection against creditors
pursuant to chapter 11 of the Bankruptcy Code, 11
U.S.C. § 1101 et seq., and that, two years later, the defendant
had obtained a dismissal of the petition. The plaintiff
further alleged that, during this interval, it had
performed accounting services for the bankruptcy
trustee, the debtor in possession,4 for which the plaintiff
had not been paid during the pendency of the bankruptcy
proceedings. The plaintiff sought to recover its
fees, interest and attorney's fees.

The defendant did not dispute the plaintiff's factual
allegations. Furthermore, it did not dispute that, after
the dismissal of the bankruptcy petition, the bankruptcy
estate revested in the defendant; 11 U.S.C. § 349 (b);
and that the defendant thereupon became liable for
costs associated with postpetition transactions. In re
Safren, 65 B.R. 566, 571 (Bankr. C.D. Cal. 1986); 3 W.
Collier, Bankruptcy (15th Ed. Rev. 2000) § 349.03.
Instead, the defendant filed an affirmative defense
based on the alleged expiration of the applicable statute
of limitations.5 The trial court rendered a judgment in
favor of the defendant on that issue.

The parties stipulated to most of the relevant facts.

On November 30, 1992, the defendant sought chapter 11
protection. Thereafter, until July 16, 1993, the plaintiff
performed accounting services worth $4013.46.6 On
November 23, 1994, in response to a motion by the
defendant, the bankruptcy petition was dismissed. On
March 31, 2000, the plaintiff brought the present cause
of action.

The trial court made two additional findings. First,
it implicitly found that the plaintiff's fees were administrative
expenses of the bankruptcy estate when it stated
that the plaintiff might have filed a claim pursuant to
11 U.S.C. § 503 (b). That section deals only with recovery
for administrative expenses. Second, it found that
‘‘according to the plaintiff . . . [its services] were provided
with the approval of the [Bankruptcy] Court.''
Significantly, the court did not say that the defendant
contested this allegation.7

In its appellate brief, the defendant disputes these
findings. The defendant did not dispute them at trial.
It filed no motion for articulation to clarify the court's
opinion. See Practice Book § 66-5. In its appeal, the defendant has not raised any claim of alternate grounds
for affirmation of the trial court's judgment. All that we
have before us are repeated assertions in the defendant's
brief that ask us to ignore the court's findings.
In effect, the defendant would have us decide this case
on facts directly opposite to those found by the trial
court. It is axiomatic that this court cannot find facts.
This case must be reviewed on the facts found by the
trial court.

The trial court concluded that General Statutes § 52-
576 (a) barred the plaintiff's claim for relief. This statute
provides, in relevant part: ‘‘No action for an account
. . . shall be brought but within six years after the right
of action accrues . . . .'' The court rejected the argument
of the plaintiff that its cause of action accrued
on the date on which the bankruptcy petition was dismissed.
Instead, it agreed with the defendant that the
claim accrued on the date on which the plaintiff completed
the accounting services that it rendered to the
defendant in its role as bankruptcy trustee.

In coming to its conclusion, the court held that ongoing
bankruptcy proceedings did not toll the accrual of
the plaintiff's postpetition claim. In the court's view,
the statute of limitations began to run when the plaintiff
completed its services to the bankruptcy estate because
the plaintiff could have, and inferentially should have,
sought payment from the bankruptcy trustee while the
bankruptcy proceedings were pending.

In its appeal, the plaintiff challenges the validity of
the court's conclusion of law.9 Our review of the issues,
therefore, is plenary. Pequonnock Yacht Club, Inc. v.
Bridgeport, 259 Conn. 592, 598, 790 A.2d 1178 (2002);
Olson v. Accessory Controls & Equipment Corp., 254
Conn. 145, 156, 757 A.2d 14 (2000); Shoreline Communications,
Inc. v. Norwich Taxi, LLC, 70 Conn. App.
60, 65, 605, 797 A.2d 1165 (2002).

We agree with the trial court that there are no provisions
in the federal Bankruptcy Code that allow a debtor's
filing of a bankruptcy petition to toll the running of
the statute of limitations with respect to a postpetition
claim. See Rogers v. Corrosion Products, Inc., 42 F.3d
292, 297 (5th Cir. 1995); Bennett v. United States Lines,
Inc., 64 F.3d 62, 66 (2d Cir. 1995); Aslanidis v. United
States Lines, Inc., 7 F.3d 1067, 1073 (2d Cir. 1993).
Likewise, a postpetition creditor is not entitled to suspension
of a statute of limitations because 11 U.S.C.
§ 108 (c)10 provides protection only for prepetition creditors.
11 Accordingly, we must decide this case with the
understanding that the six year time limitation stated
in § 52-576 (a) was in no way extended by the bankruptcy
proceeding.

The conclusion that bankruptcy proceedings did not
toll or suspend the running of the statute of limitations
does not, however, determine the date on which the cause of action accrued. Unless an applicable statute
provides to the contrary, ‘‘[t]he true test [for accrual]
is to establish the time when the plaintiff first could have
successfully maintained an action.'' (Internal quotation
marks omitted.) Polizos v. Nationwide Mutual Ins. Co.,
255 Conn. 601, 609, 767 A.2d 1202 (2001);Wynn v. Metropolitan
Property & Casualty Ins. Co., 30 Conn. App.
803, 808, 623 A.2d 66 (1993), aff'd, 228 Conn. 436, 635
A.2d 814 (1994).

The trial court held that the plaintiff's cause of action
accrued upon the completion of its services to the bankruptcy
estate because, in the court's view, the plaintiff
had a right to payment at that time. It relied on a nonbankruptcy
case for the proposition that a commonlaw
right of action accrues upon the completion of the
services rendered. See R.A. Civitello Co. v. New Haven,
6 Conn. App. 212, 215–16, 504 A.2d 542 (1986). The
court concluded that bankruptcy law was to the same
effect. It held that, upon completion of its services, the
plaintiff could have obtained immediate payment from
the Bankruptcy Court. For this proposition, the court
relied on 11 U.S.C. § 503 (b), which permits administrative
creditors to seek immediate allowance of their
claims. It held that the plaintiff's contract claim was
time barred because, as a result of 11 U.S.C. § 503 (b),
it accrued upon the plaintiff's completion of its professional
services. The plaintiff contests the validity of the
court's conclusion.

On its face, 11 U.S.C. § 503 (b) appears to support
the reasoning of the trial court. In relevant part, 11
U.S.C. § 503 (b) provides: ‘‘After notice and a hearing
[before the Bankruptcy Court], there shall be allowed
administrative expenses . . . including - (1) (A) the
actual, necessary costs of preserving the estate, including
wages, salaries, or commissions for services rendered
after the commencement of the case . . . .''
(Emphasis added.)12 This statute does not, however,
describe the consequences that attach to the allowance
of a claim for payment.

The meaning of ‘‘shall be allowed'' in 11 U.S.C. § 503
(b) is clarified by 11 U.S.C. § 331, entitled ‘‘Interim compensation.''
13 That statute addresses the right of compensation
of an administrative creditor who has been
authorized to provide professional services for the
bankruptcy estate. For such a claimant, a Bankruptcy
Court ‘‘may allow and disburse . . . compensation or
reimbursement.'' (Emphasis added.) Indeed, federal
cases hold that even ‘‘[i]nterim fee awards are not final
determinations intended to put a matter to rest. Rather,
they are interlocutory and reviewable.'' 11 U.S.C. § 331.

In re Evangeline Refining Co., 890 F.2d 1312, 1322 (5th
Cir. 1989); see also In re Anolik, 207 B.R. 34, 37 (Bankr.
D. Mass. 1997) (interim compensation awards are interlocutory
and subject to disgorgement).

Two principles flow logically from the juxtaposition of §§ 503 (b) and 331. First, bankruptcy law distinguishes
between the allowance of a claim and the disbursement
of moneys for its payment. Second,
bankruptcy law leaves any decision about disbursements
to the discretion of the Bankruptcy Court.

It follows from these principles that, although the
plaintiff might have presented its bills to the debtor in
possession, acting as bankruptcy trustee, it had no duty
to do so. It had no right to require the Bankruptcy Court
to pay these bills at that time.

There was no event before the dismissal of the bankruptcy
petition that would have triggered an obligation
to request timely payment. During bankruptcy proceedings,
there is ‘‘no bar date to filing requests for the
allowance of administrative expenses under § 503
. . . .'' In re Megafoods Stores, Inc., 163 F.3d 1063, 1071
(9th Cir. 1998). ‘‘Neither the Bankruptcy Code nor the
Federal Rules of Bankruptcy Procedure . . . set forth
a deadline within which administrative claims must be
filed . . . .'' (Internal quotation marks omitted.) In re
Southern Soya Corp., 251 B.R. 302, 311 (Bankr. D.S.C.
2000). The timing for filing a request for payment of
administrative expenses is a matter to be determined
within the discretion of the Bankruptcy Court. 4 W.
Collier, Bankruptcy, supra, § 503.02 [2].

This case would have been different if the bankruptcy
proceedings had resulted in a distribution plan. The
plaintiff would then have been required to seek payment
as a priority claimant to the bankrupt's assets. 11
U.S.C. § 1107.14 Indeed, even earlier, if the plaintiff had
been notified of a claim bar date, it would have been
required to file a proof of claim with the Bankruptcy
Court before the deadline established by the court. 11
U.S.C § 1111 (a);15 Rules of Bankruptcy Procedure, Rule
3003 (c) (2);16 Pioneer Investment Services Co. v.
Brunswick Associates Ltd. Partnership, 507 U.S. 380,
383, 113 S. Ct. 1489, 123 L. Ed. 2d 74 (1993). Under the
circumstances of this case, these requirements are inapplicable.

On the present record, upon the completion of its
accounting services, the plaintiff had the right to request
payment but no right to require payment. The test for
the accrual of a cause of action is not met by a demonstration
that a claimant had a right to request payment.
The statute does not begin to run before the time ‘‘when
the plaintiff first could have successfully maintained an
action.'' (Internal quotation marks omitted.) Polizos v.
Nationwide Mutual Ins. Co., supra, 255 Conn. 609. The
first time that the plaintiff could have maintained an
action was the date of the dismissal of the bankruptcy
petition.

In sum, the trial court improperly concluded that the
plaintiff's cause of action accrued before the dismissal
of the bankruptcy petition filed by the defendant. The plaintiff's complaint was timely. Because the defendant
has not claimed that the court's judgment should be
affirmed on any other ground, the plaintiff is entitled
to be paid for the services that it rendered to the bankruptcy
trustee during the pendency of the bankruptcy
petition.

The amount of the plaintiff's damages have, however,
not yet been determined with respect to interest and
fees. Upon remand, the trial court must make this determination.

* * *

Click the case caption above for the full text of the Court's opinion free.

The judgment is reversed and the case is remanded
with direction to render judgment for the plaintiff on
the merits of its claim and for further proceedings to
determine the amount of the judgment.

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Reported by G. Davis.