               United States Court of Appeals
                           For the Eighth Circuit
                       ___________________________

                               No. 17-2192
                       ___________________________

             In re: Stephen D. McCormick; Karen A. McCormick

                           lllllllllllllllllllllDebtors

                          ------------------------------

                Stephen D. McCormick; Karen A. McCormick

                          lllllllllllllllllllllAppellants

                                        v.

                               Starion Financial

                           lllllllllllllllllllllAppellee
                                 ____________

                 Appeal from the United States Bankruptcy
                   Appellate Panel for the Eighth Circuit
                              ____________

                         Submitted: March 14, 2018
                            Filed: July, 3, 2018
                              ____________

Before GRUENDER, BEAM, and KELLY, Circuit Judges.
                          ____________

BEAM, Circuit Judge.
       Debtors, the McCormicks, appeal the ruling of the Eighth Circuit Bankruptcy
Appellate Panel (BAP), affirming the bankruptcy court's order that Starion Financial
was entitled to $83,122.95 in attorney fees and costs incurred to collect on its secured
debt in the course of the McCormicks' bankruptcy proceedings. We affirm.

I.    BACKGROUND

       This is the second appearance before this court by these parties with a
bankruptcy-generated attorney fees dispute. In the underlying financial arrangements,
the McCormicks and Starion entered into a series of loan transactions between 2004
through 2012. Pursuant to the various promissory notes and mortgages, the
McCormicks were liable for payment of Starion's attorney fees and costs engendered
in collection of the indebtedness. The McCormicks further executed personal
guarantees for these notes. The loans were secured by mortgages totaling over $20
million covering a residential development in Bismarck, North Dakota, known as
Misty Waters, as well as a deed of trust for $1.5 million on the McCormicks'
condominium in Arizona. All of these notes contained provisions stating that the
McCormicks would pay reasonable attorney fees incurred by Starion in the event it
was required to take action to collect upon the debt. When the McCormicks defaulted
on the loans, Starion and the McCormicks agreed upon a Workout Agreement
wherein Starion agreed to forbear on certain defaults that had already occurred, and
in return, the McCormicks executed and delivered confessions of judgments in the
respective amounts of $2,078,034.26 and $1,000,000 to be filed and entered if they
defaulted on the Workout Agreement. Not long after, the McCormicks defaulted on
the Workout Agreement; Starion filed the confessions of judgments in North Dakota
state court; and judgment liens for $2,078,034.26 and $1,000,000 were entered on
July 27, 2012.

      Shortly after the North Dakota state court judgment was entered, in August
2012, the McCormicks filed a voluntary Chapter 11 bankruptcy petition. After a

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second amended plan of reorganization was filed in August 2013, Starion objected
to confirmation, stating in relevant part that the plan did not provide for attorney fees
that it was entitled to as an oversecured creditor. As a result of that objection, the
McCormicks filed an addendum to the amended plan known as the Starion
Addendum in which the McCormicks again agreed to pay Starion's allowable attorney
fees and costs associated with the bankruptcy proceedings. Starion was required by
the plan to submit an itemized statement of its claim for fees and expenses "[a]t least
ten days prior to the Effective Date of the Plan." The bankruptcy plan containing this
addendum was confirmed by the bankruptcy court on September 13, 2013, and the
effective date of the plan was October 15, 2013. On October 3, Starion submitted an
itemized statement to the McCormicks for various costs including interest, late fees,
real estate taxes, and appraisal and engineering fees. On October 7, Starion submitted
an updated statement that included its attorney fees. The McCormicks took the
position that Starion was not entitled to attorney fees based upon the plan or 11
U.S.C. § 506(b),1 and refused to pay the fees requested. Starion filed a motion
requesting the bankruptcy court to compel payment of its fees in the amount of
$125,014.64. The McCormicks argued to the bankruptcy court that there was no
agreement for the payment of fees; the fee request was untimely; and the fees were
not reasonable.

       The bankruptcy court issued its order in March 2014, finding that while Starion
might well be oversecured (as required for payment of fees by § 506(b)), this status
arose from the judgments entered in North Dakota state court, and those judgments




      1
       11 U.S.C. § 506(b)(2) states: "To the extent that an allowed secured claim is
secured by property the value of which . . . is greater than the amount of such claim,
there shall be allowed to the holder of such claim, interest on such claim, and any
reasonable fees, costs, or charges provided for under the agreement or State statute
under which such claim arose."

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did not mention Starion's right to collect attorney fees.2 The court noted that while
Starion did have several secured claims in the form of properly perfected real estate
mortgages that provided for fees, the value of the real estate covered by those
particular mortgages did not exceed the debt owed to Starion. Because the court
concluded that the state judgment liens were not part of any "agreement," Starion
could not include these amounts to achieve oversecured status. Thus, it denied
Starion's request for fees.

       Starion appealed to the BAP, which reversed. In re McCormick (McCormick
I), 523 B.R. 151 (8th Cir. BAP 2014). The BAP held that the bankruptcy court
mistakenly relied upon the state court judgments as the "agreement" under which
Starion's right to payment of its fees arose. The BAP found it was undisputed that the
promissory notes, mortgages, Workout Agreement and the Starion Addendum
contained attorney fee provisions, and those were the provisions under which the
claim arose. Id. at 155. The court also noted that both the McCormicks and
the bankruptcy court erroneously "intermixed" the two requirements                   of
 § 506(b)–oversecured status and an agreement for fees–because the two requirements
need not be contained in the same document. Id. at 155-56. With regard to the
judgment liens, the BAP stated: "The terms of the Workout Agreement also
referenced Starion's right to claim its Fees. The confessions of judgment and
subsequent judgment liens merely served as the mechanism to perfect an interest in
additional collateral to secure payment of all obligations to Starion." Id. at 156. The
McCormicks appealed that BAP decision to us, and after briefing and argument, we
held that we lacked jurisdiction because the bankruptcy court's order was not final.
Instead it left the bankruptcy court with the non-ministerial tasks of resolving the


      2
        The parties and lower courts all seem to agree that Starion is an oversecured
creditor of the McCormicks when the two state court judgment liens are included. An
oversecured creditor is one whose collateral's value is worth more than the amount
of its claim. In re White, 260 B.R. 870, 880 (8th Cir. BAP 2001).

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timeliness and reasonableness of the fee request. In re McCormick (McCormick II),
812 F.3d 659, 661-62 (8th Cir. 2016).

        Upon remand, the bankruptcy court found that although the fee request was
late, the untimeliness of the request was not a material breach and thus not a bar to
Starion collecting fees. The court then reviewed the reasonableness of the fees
requested, and ultimately awarded Starion approximately $83,000 in fees. The
McCormicks appealed to the BAP, which affirmed. In re McCormick (McCormick
III), 567 B.R. 552 (8th Cir. BAP 2017). The McCormicks appeal, arguing that there
was no agreement for fees because Starion did not become oversecured other than by
operation of the nonconsensual judgment liens. They further argue the fee request
was untimely.3

II.   DISCUSSION

       We review a decision of the BAP as a second reviewing court under the same
standard as the BAP–reviewing the bankruptcy court's findings of fact for clear error
and its conclusions of law de novo. In re Treadwell, 637 F.3d 855, 863 (8th Cir.
2011). A secured creditor claiming entitlement to attorney fees and costs in a
bankruptcy proceeding pursuant to 11 U.S.C. § 506(b) must establish that it was
oversecured and that an agreement or state statute authorized the claim for attorney
fees. Further the fee must be reasonable. Finally, the claim must also involve an
allowed secured claim. In re White, 260 B.R. 870, 880 (8th Cir. BAP 2001); 11
U.S.C. § 506(b).




      3
        Although the McCormicks litigated the reasonableness of the fee in the lower
courts, as we read the briefing, it does not press this argument on appeal.

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      A.     Agreement for Fees

       The crux of the dispute in this case is whether there is an agreement providing
for fees for the purposes of § 506(b), as informed by the question of whether the two
state court judgment liens preclude such an agreement. The McCormicks argue that
those judgment liens arose "by operation of law" in state court as opposed to being
consensual, and as such, there is not an "agreement," which forecloses the right to
attorney fees under § 506(b). See In re Gledhill, 164 F.3d 1338, 1340-42 (10th Cir.
1999) (denying creditor's request for attorney fees under § 506(b) when the only basis
for the claim was a judgment lien that arose by operation of law after the note and
trust deed providing for fees was reduced to judgment following foreclosure).

        Unlike Gledhill, however, in the instant case there are many agreements in
which the McCormicks agreed to pay Starion's attorney fees. In addition to the fee
agreements in the original notes and mortgages, the Starion Addendum to the
bankruptcy plan is yet an another source of an agreement entitling Starion to recover
attorney fees. The Starion Addendum was added to the bankruptcy plan well after the
state court judgment liens were entered in July 2012; indeed the McCormicks had not
even filed bankruptcy at the time the judgment liens were entered. Thus, in addition
to the agreements in the notes, mortgages, and the Workout Agreement, an agreement
in the confirmed bankruptcy plan provided for the payment of attorney fees incurred
in conjunction with the bankruptcy proceeding. See McCormick I, 523 B.R. at 155
("It is undisputed that the promissory notes, mortgages, Workout Agreement and
other documents related to the loans that constitute Starion's claim do contain
appropriate attorney fee provisions. Those are the instruments under which Starion's
'claim arose.'").

      We disagree with any notion that the judgment liens are somehow not part of
Starion's secured claim. The judgment liens came about because of the Workout
Agreement wherein Starion agreed to forebear on various other (secured) loan

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defaults in return for the McCormicks' executing confessions of judgments and
providing additional collateral to Starion. Starion filed the confessions of judgments
in North Dakota state court, resulting in the judgment liens. Attorney fee provisions
were not allowed to be included in these judgment liens by operation of a North
Dakota state statute, see N.D. Cent. Code § 28-26-04, but these judgment liens did
not simply come out of left field. They were always part of the secured claim
between Starion and the McCormicks, and came into being because Starion attempted
to work with the debtors to collect on its secured debt, presumably to avoid what now
seems was inevitable–bankruptcy proceedings.

       The McCormicks argue that because the fee agreements in the original notes
and mortgages were reduced to judgment by the North Dakota court, the notes and
mortgages "merged" into the judgments, and the judgments entered by the North
Dakota state court did not provide for attorney fees. However, as mentioned the
North Dakota statute does not allow for fees in such state lien cases, which is why the
lien documents did not contain provisions for fees.4 The allowed secured claim here,
as distilled in the Starion Addendum, is the entirety of the dealings between Starion
and the McCormicks, and need not be parsed into each of the documents that
provided for fees, the Workout Agreement, or the judgment liens. Starion at all times
required collateral for the loans it provided to the McCormicks, including in the
Workout Agreement. In the final agreement between the parties, the McCormicks
again agreed to pay reasonable attorney fees in the Starion Addendum. Indeed, the
Starion Addendum is the instrument that most obviously reflects the intent of the
parties; it was created in 2013, in response to Starion's objection to the debtors' first


      4
        However, the North Dakota statute does not govern whether an award of fees
is available in this federal bankruptcy case, of course. See In re Schriock Constr.,
Inc., 104 F.3d 200, 201, 203 (8th Cir. 1997) (noting that the availability of attorney
fees was governed by federal, not state law in the bankruptcy proceeding and that
North Dakota law had no bearing on whether fees were available to an oversecured
creditor).

                                          -7-
bankruptcy plan, well after the judgment liens were entered in state court in 2012.
After agreeing to the Starion Addendum, "[i]t is disingenuous for the [McCormicks]
to now argue that Starion is not entitled to seek fees and costs under the plan after
agreeing to do so following a plan objection that specifically raised the issue."
McCormick III, 567 B.R. at 559. Accordingly, we find that Starion and the
McCormicks had an agreement for fees within the meaning of § 506(b).

      B.     Timeliness

       The only remaining issue, then, is the timeliness of the fee request.5 As noted,
the bankruptcy court found that even though the request for fees was submitted after
the plan deadline, this was not a material breach of the plan provisions. The court
looked to North Dakota law in so deciding, and followed the North Dakota Supreme
Court's guidance in relying upon Restatement (Second) of Contracts § 241 and
several of its factors to find that the breach was not material in this case because there
was no prejudice, the breach was cured almost immediately, and Starion was not
guilty of unfair dealing by submitting the request late. McCormick III, 567 B.R. at
559-60. The BAP agreed with this analysis, finding that the McCormicks had shown
no prejudice from the late submission and that the agreement did not expressly make
"time . . . of the essence." Id. Accordingly the BAP agreed with the bankruptcy
court's analysis that the untimely request for fees was excused and not a material
breach. Id. at 560.

      The McCormicks contest this finding, arguing that the bankruptcy court
erroneously relied upon § 241 to determine whether the breach was material. Instead,
they argue, the court should have focused on whether time was of the essence in


      5
        Although there are myriad dates involved in determining what was the
effective date of the plan and when the fee application was due, everyone seems to
agree that the fee application was submitted after the deadline.

                                           -8-
requiring Starion to submit the fee request by a date certain. Starion argues that
because the McCormicks have shown no prejudice from the late submission and
because time was not of the essence, their untimely application for fees was as a result
of excusable neglect. Starion asserts that its counsel reasonably misinterpreted
Federal Rule of Bankruptcy Procedure 9006 relating to calculation of time, and that
it acted in good faith in submitting its request.

      We review de novo the district court's construction of contract terms, including
whether time was of the essence. In re Cook, 504 B.R. 496, 502 (8th Cir. BAP 2014).
However, the bankruptcy court is in the best position to interpret its own orders. In
re Apex Oil Co., 406 F.3d 538, 542 (8th Cir. 2005). We find no error in the
bankruptcy court's finding (and the BAP's agreement with the same) that the
application for attorney fees, while untimely, was not abusively so, and because no
prejudice to the debtors resulted, the fee application was properly allowed.

III.   CONCLUSION

       We affirm the judgment of the BAP affirming the bankruptcy court.
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