In re Automobile Warranty Corp.

Decision Date14 May 1991
Docket NumberBankruptcy No. 90-B-02815-A.
Citation138 BR 72
PartiesIn re AUTOMOBILE WARRANTY CORPORATION, Employer's Tax I.D. XX-XXXXXXX, Debtor.
CourtU.S. Bankruptcy Court — District of Colorado

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Joseph Rosania, Denver, Colo., for trustee, Andrea Berger.

Leo M. Weiss, Denver, Colo., for U.S. Trustee.

Glenn Merrick, David Garfield, Davis, Graham & Stubbs, Denver, Colo., for Davis, Graham & Stubbs.

Maria Flora, Gorsuch, Kirgis, Campbell, Walker and Grover, Denver, Colo., for Dependable Ins. Co., Inc.

MEMORANDUM OPINION AND ORDER

SIDNEY B. BROOKS, Bankruptcy Judge.

THIS MATTER comes before the Court upon Davis, Graham and Stubbs' First Application for Interim Allowance and Payment of Professional Fees and Disbursements for Debtor's Counsel filed November 20, 1990. Dependable Insurance Co., Inc. and Dependable Warranty Co., Inc. (collectively "Dependable"), as well as the United States Trustee and the Chapter 7 Trustee, objected thereto. Applicant filed an Omnibus Response to the objections. A hearing was held on the matter. The Court, having reviewed the file and being advised in the premises, makes the following findings of fact and conclusions of law.

Briefly, the Court has reviewed the Application under its obligation to examine the propriety of fees and expenses. This Court concludes that the fees and costs requested must be reduced by the amount of $82,599.35 for the reasons set forth hereinbelow.

I. BACKGROUND.1

Automobile Warranty Corporation ("AWC" or "Debtor") filed a Voluntary Petition pursuant to Chapter 11 of the Bankruptcy Code on March 13, 1990. On March 16, 1990, Davis, Graham and Stubbs ("Applicant") filed an Application to be employed as attorney for Debtor. The Court authorized employment of Applicant on April 13, 1990. The Court also approved the $65,000.00 retainer previously provided Applicant by AWC.

Debtor propounded its First Joint Plan of Reorganization of Debtor and Insurance Specialists, Inc. and its first Disclosure Statement on October 26, 1990. On October 30, 1990, however, Dependable's Motion to Convert the case to a Chapter 7 was granted by the Court and Andrea Berger ("Berger") was appointed interim Chapter 7 Trustee.

Applicant filed a Motion to Withdraw on January 15, 1991. The Motion was granted on January 31, 1991.

The instant Application seeks interim compensation for the period of March 12, 1990 through October 31, 1990. Fees in the amount of $94,941.50 and expense reimbursement of $6,342.54, for a total request of $101,284.04, is sought thereby.

II. THE APPLICATION.

Dependable, the U.S. Trustee, and Ms. Berger objected to the Application on several bases. The Court will address the merit of each of the general categories of objections herein.

A. "Lumping."

Applicant has consistently "lumped" or "clumped" all activities performed by a specific person on a given date under one block of time. While the descriptions are quite extensive,2 no attempt was made to set forth, parenthetically or otherwise, the time expended on each individual task or categories of like or similarly related tasks. Applicant maintains that

simple common sense dictates that an attorney should not bill for each task. . . . Rather, the professional must use discretion and fundamental horse sense to group the tasks in a reasonable manner that will permit the Court to provide an adequate review. The daily time entries in the Fee Application are such an approach.
Omnibus Response, p. 4 ¶ 14.

This Court does not agree.3

The Tenth Circuit has held that it is the responsibility of the party seeking fees to submit fee applications which enable the Court to make an informed determination concerning the reasonableness of the hours claimed and the nature of the services performed. Ramos v. Lamm, 713 F.2d 546, 553 (10th Cir.1983). See also, Matter of Permian Anchor Services, Inc., 649 F.2d 763, 768 (10th Cir.1981) (adopting the 12 factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974) including an examination of the reasonableness of time spent and the necessity of each service).

The first step in calculating fee awards is to determine the number of hours reasonably spent. . . . Counsel must keep meticulous, contemporaneous time records. . . . These records must reveal, for each lawyer . . . all hours for which compensation is requested and how those hours were allotted to specific tasks. . . . The . . . court should distinguish `raw\' time from . . . `billable\' time. . . . The amount of time actually expended does not necessarily mean the amount of time reasonably expended.
Ramos v. Lamm, supra, at 553 (emphasis added).

"Applicants may not circumvent the minimum time requirement or any of the requirements of detail by `lumping' a bunch of activities into a single entry. Citation omitted. Each type of service should be listed with the corresponding specific time allotment." In re Wildman, 72 B.R. 700, 709 (Bankr.N.D.Ill.1987).

"Lumping" is a practice universally disapproved by bankruptcy courts for two reasons. One, it permits an applicant to claim compensation for rather minor tasks which, if reported individually, would not be compensable. Two, it prevents the Court from determining whether individual tasks were expeditiously performed within a reasonable period of time because it is impossible to separate into components the services which have been lumped together.
In re Leonard Jed Co., 103 B.R. 706, 713 (Bankr.D.Md.1989).4

Applicant contends that "such grouping is standard in the practice of law in this community."5 Omnibus Response, p. 5 ¶ 18. "Lumping a day's activities in one entry may be an honest and complete summary but is of absolutely no value for any analytical purpose." In re WHET, Inc., 58 B.R. 278, 280 (Bankr.D.Mass.1986).

The Court does not require a fee application the size of a boring victorian novel. However, in light of the fact that every dollar expended on legal fees results in a dollar less that is available for distribution to the creditors, the Court believes that a justification of such fees in the application for compensation is not an overly burdensome task. . . . The Court feels that the burden is on the attorney seeking compensation to establish the amount. The Court will not delve through the record of an extensive case, such as this one, in order to justify legal fees which counsel has not adequately documented in his application.
In re Hotel Associates, Inc., 15 B.R. 487, 488 (Bankr.E.D.Pa.1981). Accord, e.g., Matter of Affinito & Son, Inc., 63 B.R. 495, 498 (Bankr.W.D.Pa.1986) ("This Court should not be required to guess the amount of time expended on each activity; neither should we be expected to indulge in extensive labor to justify a fee for an attorney who has not done so himself.")

This Court feels that disallowing clumping of time and requiring specificity and accountability in billing records and fee applications is particularly important when, as here, attorneys are billing — and being paid — $150.00 to $200.00 per hour. It is, after all, not insignificant that this Circuit has held that $150.00 per hour is a more than generous hourly fee. See, Smith v. Freeman, 921 F.2d 1120 (10th Cir.1990).

The Court commends the amount of detail contained in the daily activity paragraphs. Such a practice, however, is permissible only if there is a designation, usually in parentheses, of the amount of time spent on each task or, at least, categories of like, or similarly related tasks. See, Matter of Bilgutay, 108 B.R. 333, 342 (Bankr.M.D.Fla.1989). Rather than totally disallow compensation for these services, this Court will reduce the requested fees by 10% across the board (or $9,494.15). Such a reduction is indeed generous in view of the standards set forth in the case law.

B. Travel Time.

The U.S. Trustee questions the propriety of billing for Mr. Merrick's travel time to Florida. Applicant contends that Mr. Merrick flew cross-country at night after a full work day, conducted negotiations and attended conferences during the next day, and flew back at night. Applicant maintains that In re Frontier Airlines, Inc., 74 B.R. 973 (Bankr.D.Colo. 1987), "unequivocally dictates that travel time may appropriately be billed at full rates." Omnibus Response, p. 6.

The fact is that business travel is seldom pleasurable. It is tiring, trying and dangerous. This is particularly true when a cross-country flight takes place at night after a full day in court or in negotiations. It is not `soft\' time in this Court\'s view.
Frontier Airlines, supra at 979. Accord, Matter of Cano, 122 B.R. 812, 814 (Bankr.N.D.Ga.1991).

This Court does not dispute that a certain amount of travel time is necessary, but it is rarely totally productive. Consequently, "it is unreasonable to tax the estate at the professional's full hourly rate for the time spent travelling. The professional can be reimbursed fully for expenses related to travel, but not for the actual travel time." In re Microwave Products of America, Inc., 104 B.R. 900, 908 (Bankr. W.D.Tenn.1989). Accord, Matter of Pothoven, 84 B.R. 579, 585 (Bankr.S.D.Iowa 1988).

Courts have taken various approaches to the issue of compensating travel time. Some have allowed no compensation (see, Jungkurth v. Eastern Financial Services, Inc., 87 B.R. 333, 337 (E.D.Pa.1988); In re Seneca Oil Co., 65 B.R. 902, 909 (Bankr. W.D.Okla.1986)), others have allowed compensation at 50% of the normal rate (see, In re Robertson Companies, Inc., 123 B.R. 616, 621 (Bankr.D.N.D.1990); In re Landing, Inc., 122 B.R. 701, 704 (Bankr. N.D.Ohio 1990); Matter of Environmental Waste Control, 122 B.R. 341 (Bankr. N.D.Ind.1990); Matter of Pothoven, supra at 585; In re Taylor, 66 B.R. 390, 397 (Bankr.W.D.Pa.1986); In re WHET, Inc., 61 B.R. 709, 712 (Bankr.D.Mass.1986); In re Watson Seafood & Poultry Co., Inc., 40 B.R. 436, 443 (Bankr.E.D.N.C.1984)), 75% of the normal rate (see, In...

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