Evangeline Refining Co., Matter of, 88-4661

Decision Date11 December 1989
Docket NumberNo. 88-4661,88-4661
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.
CourtU.S. Court of Appeals — Fifth Circuit

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

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)
                

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...

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