In re Auto-Train Corp.
| Decision Date | 03 November 1981 |
| Docket Number | Bankruptcy No. 80-00391. |
| Parties | In re AUTO-TRAIN CORPORATION, Debtor. |
| Court | United States Bankruptcy Courts. District of Columbia Circuit |
(Fee Applications)
In this Chapter 11 Railroad Reorganization case, the trustee's counsel have filed their applications for compensation pursuant to 11 U.S.C. § 329. The fee applications request that the attorneys employed by the trustee, namely, the firms of Webster & Sheffield, and Docter, Docter & Salus, be paid for services rendered during the liquidation phase of the case. The fees presently under consideration only deal with the time period from May 4, 1981 to August 31, 1981.1
The fee applications fully comply with the requirements of 11 U.S.C. § 329. The time record documentations in support of the fee applications are presently held in camera pursuant to two orders of this Court. The time records contain very detailed documentation both as to the amount of time expended as well as to what work was accomplished during that time period. After an exhaustive review of these applications, as well as the time records, the Court finds that it cannot award the full amounts requested to the trustee's attorneys.
Bankruptcy judges have wide discretion in determining attorney's fees in cases before them. However, judges are bound to apply the proper legal standard and to follow certain procedures in the awarding of fees. In re First Colonial Corp. of America, 544 F.2d 1291 (5th Cir.), cert. denied, 431 U.S. 904, 97 S.Ct. 1696, 52 L.Ed.2d 388 (1977). In determining what is a reasonable fee, many factors must be considered. In Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974), twelve factors are set forth for the judge to consider when awarding fees. Accordingly, this Court has weighed these factors in determining the appropriate fees in this case.
Johnson v. Georgia Highway Express, Inc., supra, 488 F.2d at 717-19.
In accordance with the requirements of the Johnson factors, this Court will briefly summarize its analysis of the twelve factors in relation to this case.
this does not mean that attorneys, professionals or paraprofessionals are entitled to be paid for services delegated to them by a trustee if it was already the duty of the trustee to perform them and he was already being reimbursed for them under 11 U.S.C. § 326.2 An attorney may not be compensated for tasks which are properly the responsibility of the trustee . . . and may not be compensated at a rate applicable to legal work for tasks which properly could have been performed by less costly non-legal employees. In re U.S. Golf Corporation, 639 F.2d 1197, 1201-1202 (5th Cir. 1981), citing In re First Colonial Corp. of America, 544 F.2d 1291, 1299 (5th Cir. 1977).
Second, this Court follows a two-tier rate system. The Court allowed billing at the full rate (the rate determined to be fair by this Court, not the amounts requested by the attorneys) for work that was done which involved complex, difficult or legal issues or work which required a legal background. However, time spent on routine or ordinary tasks were only allowed to be billed at the low rate figure. As stated in the Johnson case:
Johnson v. Georgia Highway Express Co., Opinion on Rehearing, Fee for Attorney for Receiver-Trustee, May 11, 1978, cited at In re U.S. Golf Corp., supra, 639 F.2d at 1202.
Further, in this case, the Court applied this two-tier rate approach to the paralegal time billed by the firm of Webster & Sheffield. If the work performed by the paralegal (i.e., a LEXIS search) involved legal research, full time was allowed. However, if what the paralegal was doing involved items such as filing, answering phone calls involving questions about claims, etc., then this Court only allowed billing at the lower rate.3
While liquidation of an estate does not appear on its face to be a particularly novel or difficult area of the law, in this case the Court finds that because of the size and amount of assets, many difficult issues had to be resolved before the assets could be liquidated. Probably one of the most difficult questions that had to be resolved involved the question of what assets belonged to Auto-Train. This involved spending time researching and in some instances litigating the questions of liens, priorities, and security interests. Further, there were issues that involved relatively difficult questions of law.
Bankruptcy law is a particularly complex area of the law. Both the trustee, the firm of Webster & Sheffield and the firm of Docter, Docter & Salus are particularly seasoned veterans in the bankruptcy field. The liquidation phase of this case required that counsel be attorneys who were familiar with the Bankruptcy Code. The potential of assets being sold at rates far below their liquidation value is always a possibility if inexperienced people liquidate the estate. Also, the attorneys had to liquidate within the bounds of the Bankruptcy Code, so they had to be experienced practitioners familiar with the limitations and scope of the Code. Further, this case was particularly difficult in that it was the first railroad liquidation under the new Code.
It is clear from the time records and the hours expended that a substantial number of the attorneys from Webster & Sheffield, as well as Charles Docter from the firm of Docter, Docter & Salus were precluded from working on any other case during the time of Auto-Train's liquidation. This factor was considered in determining the hourly rate.
Based on the experience of the Court, the customary fee in a bankruptcy case ranges anywhere from $50.00 an hour for a relatively simple case to $150.00 an hour for a very complex case. Based on this fact, the Court has allocated each attorney a different fee based on his or her experience, and has further considered the usual and customary hourly rates assessed in reorganization cases in contiguous Metropolitan areas.
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