In re Cahill

• Decision Date: 12 October 2005
• Docket Number: No. 05-20145 Summary Calendar.,05-20145 Summary Calendar.
• Parties: In the Matter of Bobby CAHILL, Janice Cahill, Debtors. Walker & Patterson, P.C., Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 536

428 F.3d 536

In the Matter of Bobby CAHILL, Janice Cahill, Debtors.

Walker & Patterson, P.C., Appellant.

No. 05-20145 Summary Calendar.

United States Court of Appeals, Fifth Circuit.

October 12, 2005.

Johnie Joe Patterson, II, Walker & Patterson, Houston, TX, for Appellant.

Appeal from the United States District Court for the Southern District of Texas.

Before KING, Chief Judge, and DAVIS and STEWART, Circuit Judges.

PER CURIAM:

Appellant law firm Walker & Patterson, P.C., represented debtors Bobby and Janice Cahill in a Chapter 13 bankruptcy proceeding. Walker & Patterson now appeals the district court's order affirming the bankruptcy court's award of reduced attorneys' fees in that proceeding. For the following reasons, we AFFIRM.

I. FACTUAL AND PROCEDURAL BACKGROUND

On September 11, 2003, Walker & Patterson filed a Chapter 13 case on behalf of Bobby and Janice Cahill in the United States Bankruptcy Court for the Southern District of Texas. Walker & Patterson initially filed with the petition a Chapter 13 plan proposing sixty monthly payments of $226.34 to the trustee to pay three secured claims, two Internal Revenue Service priority claims, and $2500 of attorneys' fees.¹ The plan also allotted $382.53 to unsecured creditors (roughly a one-percent payment of the unsecured claims) and proposed that the Cahills continue to make monthly payments on their mobile home and on a fishing boat used purely for recreational purposes. After responding to motions from various creditors and moving to postpone the confirmation hearing, Walker & Patterson filed an amended plan that, among other things, increased the balance of attorneys' fees to be paid under the plan to $3000.

After the bankruptcy court confirmed the Cahills' amended Chapter 13 plan, Walker & Patterson filed a fee application together with contemporaneous time records. According to the time records, Walker & Patterson spent 13.20 attorney hours on the case, 2.05 paralegal hours, and $12.33 in out-of-pocket expenses. Based on its hourly rates, Walker & Patterson claimed a total amount of $3758.08.

Although no objection was filed to the fee request, the bankruptcy court sua sponte entered an order for a hearing on the request. After the hearing, the bankruptcy court found that Walker & Patterson's initial fee request was unreasonably high given that "[t]here was nothing terribly unusual about the case," and, "[i]f anything, the case appear[ed] to involve less activity than most." In re Cahill, Order Allowing Fees for Debtors' Counsel, No. 03-43024-H2-13, at 2 (Bankr.S.D.Tex. Sept. 19, 2004).

Applying the criteria for "reasonable compensation" enumerated in 11 U.S.C. § 330(a)(3) (2000) and the factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.1974), the bankruptcy court awarded Walker & Patterson $1737² in attorneys' fees plus $12.33 in expenses based on the following findings: (1) the time spent by Walker & Patterson greatly exceeded that spent by other counsel in a typical Chapter 13 case, and in some cases Walker & Patterson's attorneys duplicated each other's efforts; (2) the rates that Walker & Patterson charged exceeded the reasonable and customary hourly rate for Chapter 13 practitioners in the area; (3) Walker & Patterson performed unnecessary work pertaining to the payment of a secured claim to keep a boat used solely for recreational purposes; (4) Walker & Patterson did not adequately prepare the case for the first confirmation hearing and did not perform its services in a particularly timely manner; (5) the proposed fee amount substantially exceeded the customary compensation for comparably skilled non-bankruptcy practitioners, and no adequate basis for a premium was shown; (6) the case was less novel, less complicated, and less undesirable than most; (7) the fee was not contingent; (8) neither the case nor the client imposed exceptional time constraints; (9) the attorney-client relationship was not a factor in this case; and (10) the typical attorneys' fee award in similar cases totaled $1737. The bankruptcy court determined that, given the totality of these findings, $1737 was a reasonable fee for a "typical" Chapter 13 proceeding such as this one. The bankruptcy court made this determination relying on the lodestar calculation in General Order 2004-5, "Order Regarding Chapter 13 Debtors' Counsel's Fees," U.S. Bankr.Ct. Rules S.D. Tex., 427-36 (as entered Apr. 14, 2004) (West 2005), a per curiam order setting forth standards to guide bankruptcy courts in awarding Chapter 13 attorneys' fees in "typical" cases.³

Walker & Patterson appealed the bankruptcy court's award of fees to the district court, contending that the bankruptcy court erred by relying on the General Order 2004-5 "typical case" lodestar calculation to determine the total fee awarded instead of using the traditional lodestar approach, and that Walker & Patterson should have received the full amount requested in its fee application. The district court affirmed the bankruptcy court's fee award. This appeal followed.

II. DISCUSSION

A. Standards of Review

We review the district court's decision by applying the same standard of review to the bankruptcy court's conclusions of law and findings of fact that the district court applied. In re Jack/Wade Drilling, Inc., 258 F.3d 385, 387 (5th Cir.2001). We therefore review the bankruptcy court's award of attorneys' fees for abuse of discretion. In re Coho Energy, Inc., 395 F.3d 198, 204 (5th Cir.2004); In re Barron, 325 F.3d 690, 692 (5th Cir.2003). An abuse of discretion occurs where the bankruptcy court (1) applies an improper legal standard or follows improper procedures in calculating the fee award, or (2) rests its decision on findings of fact that are clearly erroneous. In re Evangeline Refining Co., 890 F.2d 1312, 1325 (5th Cir.1989). Accordingly, we review the bankruptcy court's legal conclusions de novo and its findings of fact for clear error. Coho Energy, 395 F.3d at 204; Barron, 325 F.3d at 692.

B. Analysis

Walker & Patterson argues that the district court erred by: (1) affirming the bankruptcy court's use of a "typical case" lodestar calculation as provided in General Order 2004-5 rather than a traditional lodestar calculation for analyzing its fee request under 11 U.S.C. § 330; (2) affirming the factual finding that Walker & Patterson's attorneys duplicated each other's efforts in preparing the case, a factor which justified a reduction of the fee request; and (3) affirming the factual finding that Walker & Patterson had not adequately prepared the case for confirmation. We consider each of these arguments in turn.

1. Calculation of Attorneys' Fees

Section 330 of the Bankruptcy Code gives bankruptcy courts discretion to award reasonable compensation to debtors' attorneys in bankruptcy cases. 11 U.S.C. § 330(a)(1)(A). This authority includes the discretion, upon motion or sua sponte, to "award compensation that is less than the amount requested." Id. § 330(a)(2). Section 330(a)(3) further directs courts to "consider the nature, the extent, and the value of" the legal services provided when determining the amount of reasonable compensation to award, taking into account "all relevant factors," including, but not limited to:

(A) the time spent on such services;

(B) the rates charged for such services;

(C) whether the services were necessary to the administration of, or beneficial at the time at which the service was rendered toward the completion of, a case under this title;

(D) whether the services were performed within a reasonable amount of time commensurate with the complexity, importance, and nature of the problem, issue, or task addressed; and

(E) whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title.

Id. § 330(a)(3).

The Fifth Circuit has traditionally used the lodestar method to calculate "reasonable" attorneys' fees under § 330. In re Fender, 12 F.3d 480, 487 (5th Cir.1994). A court computes the lodestar by multiplying the number of hours an attorney would reasonably spend for the same type of work by the prevailing hourly rate in the community. Shipes v. Trinity Indus., 987 F.2d 311, 319 (5th Cir.1993). A court then may adjust the lodestar up or down based on the factors contained in § 330 and its consideration of the twelve factors listed in Johnson, 488 F.2d at 717-19.⁴ See Fender, 12 F.3d at 487. While the bankruptcy court has considerable discretion in applying these factors, In re First Colonial Corp. of America, 544 F.2d 1291, 1298 (5th Cir.1977), it must explain the weight given to each factor that it considers and how each factor affects its award. Fender, 12 F.3d at 487; Evangeline Refining Co., 890 F.2d at 1327-28 ("If a court awards fees but fails to explain why compensation was awarded at the level it was given, it is difficult, if not impossible, for an appellate court to engage in meaningful review of a fee award.").

We find nothing improper in the bankruptcy court's use of the precalculated lodestar amount contained in General Order 2004-5 in this case. General Order 2004-5 attempts to clarify and streamline bankruptcy courts' review of Chapter 13 attorneys' fee applications, addressing the need for both efficiency and flexibility in handling the large number of Chapter 13 cases that bankruptcy courts in the Southern District of Texas review each year.⁵ General Order 2004-5 at 427; cf. Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983) (noting that "[a] request for attorneys' fees should not result in a second major litigation."). To this end, General Order 2004-5 provides bankruptcy courts with reasonable attorney time estimates for completing a "typical" Chapter 13 case and customary rates for Chapter 13 services in the Southern District of Texas, which, when multiplied together, yield a...