In re Holub
| Decision Date | 19 July 1991 |
| Docket Number | Bankruptcy No. 89-3195-BKC-6C7. |
| Citation | 129 BR 293 |
| Parties | In re Jerry Lee HOLUB et ux., Debtors. |
| Court | U.S. Bankruptcy Court — Middle District of Florida |
Jerry L. Brewer, Orlando, Fla., for debtors.
Jerald I. Rosen, Longwood, Fla., for trustee.
ORDER ALLOWING FEES FOR THE ATTORNEY FOR THE TRUSTEE
THIS CASE came on for consideration of the application for allowance of attorney's fees for the attorney for the Chapter 7 trustee (Document No. 40). In this case, the court has approved the retention of the person of the trustee as attorney for the trustee. Thus, the trustee and the attorney are one and the same.
This case involved the simple joint administration of the estates of the debtor husband and debtor wife. The estates consisted of some $44,700 that was generated by three private sales of the debtors' property. The trustee sold to the debtors their interest in a family partnership and personal property, sold to the maker at a discount a promissory note receivable, and sold to a brokerage firm at a discount a second note receivable. The trustee also objected to a few claims. After administrative claims and costs of administration, there are some $4,600 in priority claims and some $473,000 in unsecured claims. Unfortunately, no meaningful dividend will be paid to unsecured creditors.
In the application, the attorney for the trustee seeks approval of a fee of $4,005 representing some 26.7 hours at an hourly rate of $150. Notice of the application, including the amount sought, has been given to all creditors (Document No. 42), and no objection has been made to the approval of the fee requested.
Despite the fact that no objection has been made to this application, it is fundamental that the court has an independent duty to review fee applications for reasonableness and to allow only reasonable compensation for actual, necessary services rendered by the attorney, all pursuant to Section 330(a)(1) of the Bankruptcy Code and Bankruptcy Rule 2016(a). In re Cuisine Magazine, Inc., 61 B.R. 210 (Bankr.S.D.N.Y.1986).
Having performed such an independent review in this case, it appears that the amount sought by the attorney for the trustee is excessive in three ways. First, the attorney is seeking compensation for services that were not performed in his capacity as an attorney. These services were instead performed in the applicant's capacity as trustee. The trustee has separately sought compensation for these services pursuant to Section 330(b) and (c) of the Bankruptcy Code (Document No. 41), and the court has allowed those amounts in full. Second, the attorney seeks compensation for time that is excessive and that exceeds the amount of time the services should have taken to perform. Third, the attorney seeks compensation at an hourly rate that is excessive.
Turning first to the issue of claiming compensation for services that were performed by the applicant in his capacity as trustee, as distinguished from his capacity as attorney for the trustee, it appears that the trustee has simply logged all of his time, regardless of whether performed as trustee or attorney, and claimed it as compensable attorney time.
The court generally considers the following kinds of services to be those to be performed by the trustee and are not compensable as professional services rendered to the trustee:
1. Preliminary review of the debtor's schedules and examination of the debtor at the Section 341 meeting.
2. Preparation of the report of no distribution and the report of conclusion of Section 341 meeting.
3. Telephone conversations or written communications with the debtor, creditors, or attorneys regarding the general status of the case.
4. Preparation of all required reports for the United States Trustee.
5. Performance of all routine trustee banking matters, including deposits of funds, issuance of checks, and reconciliation of bank accounts.
6. Distribution of funds to creditors.
7. Basic negotiation for recovery of assets.
8. Examination of simple proofs of claim and the making of routine objections to claims. The preparation of objections to claims raising legal, as distinguished from routine, objections can be compensable to a professional. An example of a routine but not legal objection is an objection for lack of documentation. A complex proof of claim, the examination of which may be compensable, might be a proof of claim asserting several kinds of priorities for different components of the claim as might be filed by an employee.
9. Initial review of the debtor's financial affairs or records. After legal issues or problems are identified, in depth analysis of the debtor's financial affairs or records can be compensable if properly documented.
10. Supervision of professionals (other than self).
11. Preparation of the trustee's preliminary report except in the truly extraordinary case.
In general, professional time is limited to those tasks performed while representing the trustee in the prosecution of contested matters and adversary proceedings, attendance at court hearings in the capacity of attorney or other professional when the trustee has an interest, the preparation of professional related applications, and the performance of other specialized services that cannot be performed practically or lawfully by the trustee without engaging the services of a professional.
Of course, the need for the professional must be clear from the description of the services set forth in the fee application. In other words, if the service is simply described as "telephone conference with debtor's attorney," the services will not be compensable as professional services. On the other hand, if the services are described as "telephone conversation with debtor's attorney regarding discovery schedule in X adversary proceeding," the services can be so compensated. In addition, if an otherwise generally noncompensable service is deemed compensable by the professional and included in the fee application because of the complexity of the matter involved, the professional must describe the service and the complexity in sufficient detail so the court can see on the face of the application that the service indeed requires the use of the professional.
As to the content and format of professional fee applications generally, the court has already informed the bar as to what it expects to see. In re Braniff, Inc., 117 B.R. 702, 705-06 (Bankr.M.D.Fla.1990).
A review of the services claimed here as shown in Exhibit A to the application reveals that the only arguably legal services performed as shown in the entire schedule are the following:
DATE SERVICE
9/29/89 Preparation of application to
employ attorney
10/16/89 Receiving and reviewing order
authorizing employment
of attorney
7/26/90 Preparing objections to
claims, preparing proposed order
disallowing claims, and
preparing motion and proposed
order allowing secured
claims
11/15/90 Preparation of notice of sale
11/19/90 Preparation of second objections
to claims and proposed
order
12/19/90 Receiving and reviewing order
on objections to claims
1/31/91 Receiving and reviewing order
disallowing claims
2/18/91 Preparing amended motion to
approve sale
2/21/91 Receiving letter from bank's
attorney and telephone conversation
in response
3/24/91 Preparing order approving
sale
4/1/91 Receiving and reviewing order
approving sale
4/3/91 Preparing attorney's fee application
None of the descriptions of the other services contained on the schedule reflect the performance of any legal services whatsoever. Accordingly, all services claimed other than the ones listed above are disallowed. The court therefore disallows on this basis 19.2 hours of the 26.7 hours claimed.
With regard to the 7.5 hours of services reflected in this application that the court considers to represent professional services and therefore to be compensable, the court of appeals has taught us that:
In an ordinary attorney\'s fee case, the court arrives at a fee by multiplying the attorney\'s reasonable hourly rate by the number of hours reasonably expended. Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40 (1983). Footnote omitted. A calculation of the reasonableness of the rates and hours usually involves consideration of the twelve Johnson v. Georgia Highway Exp., Inc., 488 F.2d 714 (5th Cir. 1974) factors. Id. 461 U.S. at 434 n. 9, 103 S.Ct. at 1940 n. 9.
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