In re Braddy

• Decision Date: 09 May 1996
• Docket Number: Bankruptcy No. 95-45987-R.
• Parties: In re Ronald Steven BRADDY, Debtor.
• Court: United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — Eastern District of Michigan

195 B.R. 365 (1996)

In re Ronald Steven BRADDY, Debtor.

Bankruptcy No. 95-45987-R.

United States Bankruptcy Court, E.D. Michigan, Southern Division.

May 9, 1996.

Thomas Budzynski, Clinton Township, Michigan, for Debtor.

David W. Ruskin, Trustee, Southfield, Michigan.

ORDER GRANTING APPLICATION FOR ALLOWANCE OF ATTORNEY FEES

STEVEN W. RHODES, Chief Judge.

In this case, the issue is whether debtor's counsel should be allowed his full hourly rate for travel time. The Court concludes that the full hourly rate should be allowed.

I.

The debtor's attorney has filed an application for allowance of attorney fees in the amount of $4,095, for 23.4 hours of work at $175 per hour. In addition, counsel seeks costs of $405.06.

The only objection was filed by the Chapter 13 Standing Trustee. The primary focus of the trustee's objection is upon the applicant's request for fees for travel time. The applicant travelled from his office in Clinton Township, Michigan, to downtown Detroit on three occasions in connection with this case. On July 17, 1995, the applicant spent three hours of time for the meeting of creditors, including travel time. On August 31, 1995, the applicant expended 2.5 hours for the confirmation hearing, including travel time. On September 14, 1995, the applicant spent 4 hours for the adjourned confirmation hearing including travel time. The application does not separately identify the travel time on these occasions, but given the distance it was probably about 45 minutes to one hour each way depending on traffic.

The trustee asserts that under 11 U.S.C. § 330, as interpreted in prior cases, the applicant should be permitted 50% of his standard hourly rate for travel time. The basis of this conclusion is that while travelling, the applicant is not productively providing "legal services." See e.g., In re Hamilton Hardware Co., Inc., 11 B.R. 326, 331 (Bankr. E.D.Mich.1981). However, at the same time the applicant is obviously not available to provide billable legal services for other clients. It thus appears that allowing an attorney 50% of his normal hourly rate for travel is a kind of compromise in an effort to determine a "reasonable fee," as required by the Bankruptcy Code. See e.g., In re Automobile Warranty Corp., 138 B.R. 72, 78 (Bankr.D.Colo.1991) (surveying the cases); In re Spanjer Bros., Inc., 191 B.R. 738, 755 (Bankr.N.D.Ill.1996); In re Lowe, 169 B.R. 436, 440 (Bankr.E.D.Okla.1994); In re Bob's Supermarket's, Inc., 146 B.R. 20, 23 (Bankr. D.Mont.1992), aff'd in part, rev'd in part, 165 B.R. 339 (9th Cir. BAP 1993).

The applicant asserts that he is entitled to his full hourly rate for his travel time on the grounds that the time spent travelling is a reasonable and necessary component to the legal services provided. See e.g., In re Amdura Corp., 139 B.R. 963, 982-83 (Bankr. D.Colo.1992); In re Cano, 122 B.R. 812, 814 (Bankr.N.D.Ga.1991); In re Bank of New England Corp., 134 B.R. 450, 455 (Bankr. E.D.Mass.1991), aff'd, 142 B.R. 584 (D.Mass. 1992); In re The Landing, Inc., 122 B.R. 701, 703-05 (Bankr.N.D.Ohio 1990); In re Carter, 101 B.R. 170, 171-74 (Bankr.D.S.D.1989). He specifically notes that his attendance at the meeting of creditors and at the confirmation hearings was required. He further notes that if his travel time is not awarded in full, he will be placed at a competitive disadvantage in the marketplace of chapter 13 legal services, compared to attorneys whose offices do not require any significant travel time. He adds that locating his office in Clinton Township, although some distance from the Court, results in a substantial convenience to the clients in the geographic area that he serves, and facilitates access to the bankruptcy court, whose jurisdiction covers a wide geographical area.

II.

11 U.S.C. § 330(a) provides in pertinent part:

(a)(1) After notice to the parties in interest and the United States Trustee and a hearing, and subject to sections 326, 328, and 329, the court may award to a trustee, an examiner, a professional person employed under section 327 or 1103 —

(A) reasonable compensation for actual, necessary services rendered by the trustee, examiner, professional person, or attorney and by an paraprofessional person employed by any such person; and

(B) reimbursement for actual, necessary expenses.

....

(3) In determining the amount of reasonable compensation to be awarded, the court shall consider the nature, the extent, and the value of such services, taking into account all relevant factors, including —

(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.

(4)(A) Except as provided in subparagraph (B), the court shall not allow compensation for —

(i) unnecessary duplication of services; or

(ii) services that were not —

(I) reasonably likely to benefit the debtor\'s estate; or

(II) necessary to the administration of the case.

(B) In a chapter 12 or chapter 13 case in which the debtor is an individual, the court may allow reasonable compensation to the debtor\'s attorney for representing the interests of the debtor in connection with the bankruptcy case based on a consideration of the benefit and necessity of such services to the debtor and the other factors set forth in this section.

Under 11 U.S.C. § 330, the focus of the Court's inquiry is on determining a reasonable compensation for actual, necessary services. See §§ 330(a)(1)(A) and 330(a)(4)(B). In this case, it is undisputed that the applicant actually spent the time he claims to have spent on travel. See § 330(a)(3)(A). It is also undisputed that the applicant's travel and attendance was both necessary to the administration of the case and beneficial toward completion of the case. See § 330(a)(3)(C). It is further undisputed that the services, including the travel, were performed in a reasonable amount of time. See § 330(a)(3)(D). Finally, although there is no evidence of record in this case on this point, in the Court's experience, it is customary in the legal services market in this area for attorneys in non-bankruptcy cases to charge the full hourly rate for travel time. See § 330(a)(3)(E). See also In re Cano, 122 B.R. at 814.

In addition, in determining reasonable compensation, the Court concludes that it should also consider which result would best facilitate competition in the market for legal services in bankruptcy, and especially in chapter 13 cases. It is clear that granting full compensation for travel time will allow the greatest number of attorneys to offer their services to the public in chapter 13 cases. This benefits the public in its access not only to attorneys but also to the Court itself. In addition, to the extent a debtor decides that it is unreasonable to pay an attorney for travel time, that debtor is free to retain an attorney who agrees not to charge for travel time or whose office is close in proximity to the Court. Moreover, allowing the public the greatest access to attorneys throughout the district will likely reduce the compensation for travel time in particular cases, for two reasons. First, the increased competition should result in lower fees generally. Second, each attorney will be required to pro-rate such travel time when travelling for more than one case. See In re Navis Realty, Inc., 126 B.R. 137, 144-45 (Bankr.E.D.N.Y.1991); In re Carter, 101 B.R. at 173.

Based on these considerations, the Court concludes that under 11 U.S.C. § 330, the compensation to which an attorney in this district¹ is entitled includes compensation at the attorney's full hourly rate for travel time that is: (1) actually spent for travel; (2) a reasonable time considering the distance travelled; (3) necessary in the sense that the travel was required in connection with the bankruptcy court process; and (4) beneficial in the sense that the legal services for which the travel was undertaken advanced the administration of the estate. Because the record in this case establishes that the applicant's travel time meets these tests, full compensation for the travel time will be allowed.

Finally, the Court must note that the trustee's argument concerning the lack of productivity while travelling proves too much. Every week the Court witnesses a massive lack of productivity by the numerous chapter 13 attorneys attending the chapter 13 calendar call. Such calendar calls can take up to four to six hours, but the case load is such that an individual attorney may spend just a few minutes productively providing legal services in addressing the Court or negotiating with other attorneys. Yet there is no suggestion that the debtors' attorneys are not entitled to compensation at the full hourly rate for time waiting in court. Indeed, it would severely curtail the supply and availability of competent chapter 13 legal services if full compensation were awarded only for the time spent actually arguing or negotiating the case, and not for non-productive waiting time. See Stanley B. Bernstein, Collier Bankruptcy Compensation Guide ¶ 4.06, at 4-40-40.1 (Lawrence P. King ed., 1995).

III.

The conclusion reached in Part II above, and the Court's consideration of "local practice" in resolving this issue, is consistent with Perotti v. Seiter, 935 F.2d 761 (6th Cir.1991). In that case, the Court considered an award of attorney fees under the Civil Rights Attorney's Fees Awards Act of 1976, 42 U.S.C. § 1988(b). On the issue of compensation for travel time, the Court stated:

D

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