Evangeline Refining Co., Matter of, No. 88-4661

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtBefore KING, GARWOOD and DAVIS; KING; Bernard; Judge Boe's findings of consistent and systematic overbilling, and unrealistic hours charged by Wooten in light of his other cases, could be read to suggest that Wooten intentionally falsified fee applic
Citation890 F.2d 1312
Parties21 Collier Bankr.Cas.2d 1491, 20 Bankr.Ct.Dec. 99 In the Matter of EVANGELINE REFINING COMPANY, Debtor. CONTINENTAL ILLINOIS NATIONAL BANK & TRUST COMPANY OF CHICAGO, Plaintiff-Appellee, Cross-Appellant, v. CHARLES N. WOOTEN, LTD. and Charles N. Wooten, Sr., Defendants-Appellants, Cross-Appellees.
Docket NumberNo. 88-4661
Decision Date11 December 1989

Page 1312

890 F.2d 1312
21 Collier Bankr.Cas.2d 1491, 20 Bankr.Ct.Dec. 99
In the Matter of EVANGELINE REFINING COMPANY, Debtor.
CONTINENTAL ILLINOIS NATIONAL BANK & TRUST COMPANY OF
CHICAGO, Plaintiff-Appellee, Cross-Appellant,
v.
CHARLES N. WOOTEN, LTD. and Charles N. Wooten, Sr.,
Defendants-Appellants, Cross-Appellees.
No. 88-4661.
United States Court of Appeals,
Fifth Circuit.
Dec. 11, 1989.

Page 1314

Hamilton J. Chauvin, Jr., Lafayette, La., for defendants-appellants, cross-appellees.

Charles N. Wooten, Lafayette, La., pro se.

Philip K. Jones, Liskow & Lewis, New Orleans, La., for Continental Illinois Nat. Bank & Trust Co.

Appeal from the United States District Court for the Western District of Louisiana.

Before KING, GARWOOD and DAVIS, Circuit Judges.

KING, Circuit Judge:

Both sides appeal from the district court's reduction of the bankruptcy court's grant of fees and expenses to the Trustee and Attorney for the Trustee, raising numerous grounds. 90 B.R. 226 (W.D.La.). We vacate the district court's judgment and remand to the district court with instructions to remand to the bankruptcy court for further findings.

I.

Evangeline Refining Co., Inc. (Evangeline), a refining company with retail outlets, instituted a Chapter 11 bankruptcy proceeding on January 6, 1983. Continental Illinois National Bank & Trust Company of Chicago (Continental) was the principal lender to and secured creditor of Evangeline. Continental filed a motion for the appointment of a trustee. Charles N. Wooten (Wooten or Trustee) was appointed Trustee and his law firm became Attorney for the Trustee. The service stations and refinery owned by Evangeline were sold in November and December of 1983, respectively. Wooten and his firm served as Trustee and Attorney for the Trustee until

Page 1315

January 8, 1987 when the matter was converted to a proceeding under Chapter 7.

Over the four year period of Wooten's administration, he filed three interim fee applications and a final application on behalf of himself as Trustee and separate interim and final applications for his firm as Attorney for the Trustee. The interim applications were initially heard by Bankruptcy Judge Rodney Bernard, Jr. (Judge Bernard). Each of the fee applications was opposed by Continental.

The first applications covered a period from March 14, 1983 through July 31, 1983. Wooten sought $52,575.43 as Trustee--an amount at or near the maximum allowable amount under 11 U.S.C. § 326(a) 1 for the funds disbursed over the time frame of the first application. Additionally, Wooten's firm sought $74,706.25 as Attorney for the Trustee. Wooten also sought $14,452.71 in expenses for the Trustee. The application for Wooten as Trustee did not itemize services actually performed or the amount of time expended by Wooten and was based primarily upon the statutory maximum for funds disbursed, with a brief, general description of tasks performed. The application of Wooten's firm listed hours worked by senior attorneys, senior staff attorneys, paralegals and secretaries over the time frame of the first application. The application also contained descriptions of tasks performed and total time devoted to each project. However, the application did not specify what employee performed which task, or what that employee's position was. Excerpts from that application are provided below:

ITEMIZED TIME SCHEDULE OF ATTORNEYS FOR TRUSTEE

DATE NATURE OF SERVICES PERFORMED HOURS

07-18-83 Prepared for upcoming depositions and obtained additional 13.00

documents for use during depositions; supervised copying

said documents and marking for exhibits.

07-27-83 Travel to Houston, Texas for review of records located in 22.25

storage; telephone call to representative of Fields Energy

Resources to be present at opening of storage warehouses

(4).

07-28-83 Continued review and packing of records from storage; compiled 20.00

report thereof for trustee.

07-29-83 Continued research of records in Houston, Texas and returned 20.00

to Lafayette, La., filing report of investigation with

trustee.

* * * *

SENIOR ATTORNEY " $135.00 per hour
                 @ 337.50 hours: $45,562.50
                SENIOR STAFF ATTORNEY " $125.00 per hour
                 @ 147.25 hours: $18,406.25
                PARALEGALS " $50.00 per hour @ 193.75 9,687.50
                EXECUTIVE LEGAL SECRETARY " $50.00 per hour
                 @ 21.00 hours: 1,050.00
                 ----------
                 TOTAL $74,706.25
                 ----------
                 ----------
                

----------

Page 1316

The second interim applications covered a period from August 1, 1983 to November 30, 1983. Wooten sought $50,000 as Trustee, $58,477.50 for his firm as Attorney for the Trustee and $7,926.43 in expenses for the Trustee. In the Trustee's application, Wooten alleged that he and his staff had spent 460.75 hours in performance of the Trustee's duties. Wooten submitted an exhibit reflecting time spent by employees on a daily basis for Evangeline projects and a very brief discussion of the tasks performed during the period encompassing the second application. Wooten failed to provide any information as to who performed specific tasks or the time devoted to each task. An excerpt from the Trustee's second interim application is provided below: 2

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 Charles N. Wooten, Sr.
                 Trustee Time Employed
                 Computer Records
                 Total Charles Dan Keith Jim Exner Julius Steve Other
                 Time N. Keefe Rodrigues Lopez Pierce
                 Wooten
                08/01/83 7.00 2.00 5.00
                08/02/83 6.50 5.75 0.75
                08/03/83 6.25 1.25 5.00
                08/04/83 7.75 5.25 2.50
                08/05/83 2.00 2.00 0
                

----------

The second application of the Attorney for the Trustee contained an exhibit similar to that submitted in the first application and a chart of hours similar to that provided by the Trustee in the second application.

Wooten's third interim applications covered a period from December 1, 1983 to December 31, 1984. Wooten requested $50,000 as Trustee, $58,192.50 as Attorney for the Trustee and $22,861.42 in expenses for the Trustee. Wooten attached an exhibit to the Trustee's application providing an itemized breakdown of the hours expended daily in performance of the Trustee's duties by each person following the form of the second application of the Trustee. In addition, the tasks performed on each day were identified by activity, person and length of time devoted to each activity. An excerpt from the Trustee's third application follows:

 DETAILED TIME SCHEDULES OF TRUSTEE
                DATE DESCRIPTION HOURS
                12/12/83 Computed and made payroll for refinery personnel, paid bills, 13.25
                 traveled to Jennings to prepare for auction sale and
                 discussion with employees concerning things to accomplish
                 for the sale.
                 (CNW " 3.75 Hrs; JE " 9.50 Hrs)
                12/13/83 Went to refinery and continued preparation for auction, 12.00
                 prepared brochure listing of property to be offered at
                 auction sale.
                 (CNW " 1.00 Hr; JE " 9.00 Hrs; RR " 2.00 Hrs)
                12/14/83 Traveled to Jennings, La. for finishing preparations of sale 5.50
                 including removal of remaining records to be delivered to
                 Trustee's office. (JE " 5.50 Hrs)
                

----------

Page 1317

The Attorney for the Trustee's third application followed the form of the Trustee's application.

Judge Bernard granted compensation on the three interim applications as follows:

APPLICATION PERIOD TRUSTEE ATTORNEY EXPENSES
                 First March 14, 1983 " $ 25,000 $ 53,362.25 $ 3,262.50
                 July 31, 1983
                 Second August 1, 1983 " $ 50,000 $ 51,202.50 $11,661.42
                 Nov. 30, 1983
                 Third Dec. 1, 1983 " $ 25,000 $ 53,073.75 $ 7,926.43
                 -------- ----------- ----------
                 Dec. 31, 1984
                TOTALS $100,000 $157,638.50 $22,850.35
                

----------

Orders were filed without findings of fact or conclusions of law. The tapes of the proceedings on these interim applications were destroyed after two years according to a practice of the clerk's office and no transcripts of those proceedings were made.

The fourth and final applications of the Trustee and his firm came before Bankruptcy Judge W. Donald Boe (Judge Boe). 3 In these applications, Wooten sought final approval of the interim awards as well as additional compensation of $32,857.54 for Wooten as Trustee and $27,032.50 as Attorney for the Trustee from January 1, 1985 to December 31, 1986. A hearing was held. Wooten's final applications were denied and Judge Boe reduced the awards on the interim applications. Judge Boe read his findings into the record.

Time records were not kept contemporaneously by Wooten. As Judge Boe found, records were compiled as a result of a "post hoc process of going back, sometimes a considerable length of time after the billing event occurred, and attempting to reconstruct them." Often, this reconstruction was not done until Wooten prepared his application--possibly as much as two years after tasks were performed. Time records were occasionally kept on an IBM System Six computer but in most cases "no notations of time were maintained at all" and those time records that were kept were admittedly "totally incomplete." In the usual case where no time entries were available, Wooten would "assess the time as to what [he] thought was reasonable." Primary sources of hours for Wooten and his firm were records of Monday mornings meetings, files, letters and pleadings. Judge Boe found that "after getting the System Six [time] reports together, the results of the Monday morning agenda, going

Page 1318

through files and looking at letters and pleadings, [Wooten] would then assess the time as to what he thought was reasonable." Judge Boe concluded that Wooten's applications were "essentially estimates."

During the course of Wooten's work for Evangeline, Wooten was also trustee in 250 to 300 Chapter 7 cases, standing Chapter 13 trustee for the Lake Charles and Lafayette-Opelousas Divisions of the Western District of Louisiana and served in what Judge Boe termed "a number of fairly large Chapter 11 cases." Judge Boe...

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192 practice notes
  • In re Count Liberty, LLC, RS 04-19353 PC.
    • United States
    • United States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — Central District of California
    • May 4, 2007
    ...is a fiduciary of the estate."); Continental Ill. Nat'l Bank & Trust Co. of Chi. v. Charles N. Wooten, Ltd. (In re Evangeline Ref. Co.), 890 F.2d 1312, 1323 (5th Cir.1989) (stating that "trustees and attorneys for trustees are held to high fiduciary standards of conduct"); Pierson & Gaylen ......
  • In re Food Management Group, LLC, Bankruptcy No. 04-22880 (ASH).
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York
    • January 23, 2008
    ...is a fiduciary of the estate."); Continental Ill. Nat'l Bank & Trust Co. of Chi. v. Charles N. Wooten, Ltd. (In re Evangeline Ref. Co.), 890 F.2d 1312, 1323 (5th Cir.1989) (stating that "trustees and attorneys for trustees are held to high fiduciary standards of conduct"); Pierson & Gaylen ......
  • In re NWFX, Inc., 86-15148F.
    • United States
    • United States Bankruptcy Courts. Eighth Circuit. U.S. Bankruptcy Court — Western District of Arkansas
    • June 22, 2001
    ...is appropriate. Continental Illinois Nat'l Bank & Trust Co. of Chicago v. Charles N. Wooten, Ltd. (In re Evangeline Refining Co.), 890 F.2d 1312, 1323 (5th Cir.1989); see also Lincorp v. Herzog (In re Endeco, Inc.), 675 F.2d 166, 167 (8th Cir.1982). The Court will disgorge the trustee fees ......
  • In re NETtel Corp., Case No. 00-01771
    • United States
    • United States Bankruptcy Courts. District of Columbia Circuit
    • April 28, 2020
    ...they are 'always subject to the court's reexamination and adjustment during the course of the case.'" (citing In re Evangeline Ref. Co., 890 F.2d 1312, 1321 (5th Cir. 1989) (quoting 2 Collier on Bankruptcy ¶ 331.03 (15th ed.)). In Specker Motor Sales Co. v. Eisen, 393 F.3d 659 (6th Cir. 200......
  • Request a trial to view additional results
192 cases
  • In re Count Liberty, LLC, RS 04-19353 PC.
    • United States
    • United States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — Central District of California
    • May 4, 2007
    ...is a fiduciary of the estate."); Continental Ill. Nat'l Bank & Trust Co. of Chi. v. Charles N. Wooten, Ltd. (In re Evangeline Ref. Co.), 890 F.2d 1312, 1323 (5th Cir.1989) (stating that "trustees and attorneys for trustees are held to high fiduciary standards of conduct"); Pierson & Gaylen ......
  • In re Food Management Group, LLC, Bankruptcy No. 04-22880 (ASH).
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York
    • January 23, 2008
    ...is a fiduciary of the estate."); Continental Ill. Nat'l Bank & Trust Co. of Chi. v. Charles N. Wooten, Ltd. (In re Evangeline Ref. Co.), 890 F.2d 1312, 1323 (5th Cir.1989) (stating that "trustees and attorneys for trustees are held to high fiduciary standards of conduct"); Pierson & Gaylen ......
  • In re NWFX, Inc., 86-15148F.
    • United States
    • United States Bankruptcy Courts. Eighth Circuit. U.S. Bankruptcy Court — Western District of Arkansas
    • June 22, 2001
    ...is appropriate. Continental Illinois Nat'l Bank & Trust Co. of Chicago v. Charles N. Wooten, Ltd. (In re Evangeline Refining Co.), 890 F.2d 1312, 1323 (5th Cir.1989); see also Lincorp v. Herzog (In re Endeco, Inc.), 675 F.2d 166, 167 (8th Cir.1982). The Court will disgorge the trustee fees ......
  • In re NETtel Corp., Case No. 00-01771
    • United States
    • United States Bankruptcy Courts. District of Columbia Circuit
    • April 28, 2020
    ...they are 'always subject to the court's reexamination and adjustment during the course of the case.'" (citing In re Evangeline Ref. Co., 890 F.2d 1312, 1321 (5th Cir. 1989) (quoting 2 Collier on Bankruptcy ¶ 331.03 (15th ed.)). In Specker Motor Sales Co. v. Eisen, 393 F.3d 659 (6th Cir. 200......
  • Request a trial to view additional results

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