In re Johnson

• Decision Date: 28 December 2017
• Docket Number: Case No. 14–57104
• Citation: 580 B.R. 742
• Parties: IN RE: John Joseph Louis JOHNSON, III, Debtor.
• Court: U.S. Bankruptcy Court — Southern District of Ohio

580 B.R. 742

IN RE: John Joseph Louis JOHNSON, III, Debtor.

Case No. 14–57104

United States Bankruptcy Court, S.D. Ohio, Eastern Division, Eastern Division At Columbus.

December 28, 2017

Daniel A. DeMarco, Rocco I. Debitetto, Cleveland, OH, Marc J. Kessler, Hahn Loeser & Parks LLP, Columbus, OH, for Debtor.

OPINION AND ORDER AWARDING HAHN LOESER & PARKS LLP COMPENSATION FOR SERVICES RENDERED AND REIMBURSEMENT FOR EXPENSES (DOC. 788)

John E. Hoffman, Jr., United States Bankruptcy Judge

I. Introduction

This matter is before the Court in the Chapter 11 case of John Joseph Louis Johnson, III (the "Debtor") on the request of Hahn Loeser & Parks LLP ("Hahn Loeser") for an award of compensation for services rendered, and reimbursement for expenses incurred, during the more than two-year period the Debtor was a debtor in possession (the "Compensation Period"). Cobalt Sports Capital LLC ("Cobalt"), Pro Player Funding LLC ("Pro Player") and RFF Family Partnership, LP ("RFF" and, together with Cobalt and Pro Player, the "Objectors") oppose Hahn Loeser's request for an award of fees and expenses totaling $2,538,189.28 on multiple grounds. For the reasons set forth below, Hahn Loeser is awarded final compensation for services rendered during the Compensation Period in the amount of $1,860,619.44 and final reimbursement of expenses incurred during the Compensation Period in the amount of $49,497.74, for a total of $1,910,117.18.

II. Jurisdiction and Constitutional Authority

The Court has jurisdiction to hear and determine this contested matter under 28 U.S.C. §§ 157 and 1334 and the general order of reference entered in this district. This is a core proceeding. See 28 U.S.C. § 157(b)(2)(A) and (O) ; Saker v. Luper (In re Holiday Towers) , No. 91–3854, 1992 WL 107063, at *2 (6th Cir. May 15, 1992) ("Determinations of attorney's fees are core proceedings because such determinations are obviously matters concerning the administration of the estate."). And because the award of compensation and reimbursement of expenses under § 330 of the Bankruptcy Code"stems from the bankruptcy itself," Stern v. Marshall , 564 U.S. 462, 499, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011), the Court also has the constitutional authority to enter a final order on requests for those fees and expenses, as the Sixth Circuit recognized long before Stern . See Holiday Towers , 1992 WL 107063, at *2 (rejecting argument that the bankruptcy court did not have constitutional authority to enter a final order on the fee application of Chapter 11 debtor's counsel).

III. Background

Many of the facts relevant to the adjudication of this dispute are set forth in detail in the Court's prior opinions on various contested matters, and the findings in those opinions are incorporated by reference. See In re Johnson , 546 B.R. 83 (Bankr. S.D. Ohio 2016) (opinion and order denying the Debtor's motion to convert his Chapter 11 case to Chapter 7) (the " Conversion Opinion "); In re Johnson , 548 B.R. 770 (Bankr. S.D. Ohio 2016) (opinion and order holding that RFF violated the automatic stay) (the " Stay Opinion "), appeal dismissed for lack of jurisdiction , No. 16–8016 (6th Cir. BAP Jan. 17, 2017); Johnson v. RFF Family P'ship, LP (In re Johnson) , 554 B.R. 448 (Bankr. S.D. Ohio 2016) (opinion and order holding that RFF does not have a security interest in the Debtor's NHL player contract) (the " Security Interest Opinion "), aff'd , No. 16–8035, 2017 WL 2399453 (6th Cir. BAP June 2, 2017) ; In re Johnson , No. 14–57104, 2016 WL 8853601 (Bankr. S.D. Ohio Nov. 10, 2016) (bench decision confirming the Debtor's Chapter 11 plan) (the " Confirmation Decision "). In brief, the Debtor is a professional hockey player with the Columbus Blue Jackets, playing under a seven-year $30.5 million contract (the "Player Contract") that extends through the 2017–18 season. See Conversion Op. , 546 B.R. at 100. Following the Debtor's filing of a voluntary Chapter 11 petition for relief on October 7, 2014 (the "Petition Date"), some $21 million in claims—many disputed—were filed against his estate. See id. at 101 & n. 18. Over $14 million of these claims were held by a group of eight creditors, colloquially referred to by the parties in this case as the "Big Eight," which includes the Objectors, as well as Capital Financial Holdings, LLC ("Capital Financial"), Capital Holdings Enterprises, LLC ("Capital Holdings"), CapStar Bank ("CapStar"), EOT Advisors, LLC ("EOT") and Rodney Blum ("Blum"). Following more than two years of extensive legal battles, the Debtor settled with all but one of the Big Eight and obtained confirmation of his Third Amended Chapter 11 Plan of Reorganization (the "Plan") (Doc. 657) on November 23, 2016. Confirmation Decision , 2016 WL 8853601, at *2 ; Doc. 757 (order confirming Plan). The Compensation Period spans the roughly 26 months from the Petition Date to the effective date of the Plan, which occurred on December 8, 2016. Doc. 770 (notice of effective date).

A. The Fee Applications

Hahn Loeser has filed six interim fee applications (Docs. 307, 408, 487, 664, 733 & 788)¹ and, together with the sixth interim, a final fee application (the "Final Application") (Doc. 788) (collectively, the "Fee Applications"). The following chart shows the amount of fees and expenses incurred during the Compensation Period:

 Application Period Covered Fees Incurred Expenses Incurred
                First (Doc. 307)      10/7/14-5/31/15       $724,244.50     $18,549.61
                Second (Doc. 408)     6/1/15-9/30/15        $639,138.75     $31,915.56
                Third (Doc. 487)      10/1/15-1/31/16       $305,909.50      $3,776.78
                Fourth (Doc. 664)     2/1/16-5/31/16        $550,199.00      $4,421.49
                Fifth (Doc. 733)      6/1/16-9/30/16        $483,055.50      $8,147.64
                Sixth (Doc. 788)      10/1/16-12/8/16       $149,751.00        $716.53
                Final (Doc. 788)      10/7/14-12/8/16     $2,852,298.25     $67,527.61
                

Although the total amount of the fees incurred is $2,852,298.25, Hahn Loeser does not seek allowance of that amount. As detailed in its interim applications, Hahn Loeser made certain reductions to its fees—first deducting the fees attributable to particular time entries or reducing fees relating to certain categories of services, and then applying an across-the-board 10% reduction to the remaining amounts for each interim Fee Application except for the First Application. The voluntary reductions were taken to "help moderate the impact of fees on the chapter 11 estate ... as well as take into account any actual or potential inefficiencies attendant to representing clients in complex matters such as [the] Debtor's case." Doc. 408 at 2. The chart below summarizes the amounts of the voluntary reductions—which total $314,108.97, or approximately an 11% discount to the total fees incurred:

                Total
                App. Fees Incurred Itemized 10% Voluntary Net Fees
                Reductions Reduction Reduction Sought
                First        $724,244.50       $5,944.00           $0.00       $5,944.00       $718,300.50
                Second       $639,138.75      $17,067.00      $62,207.18      $79,274.18       $559,864.57
                Third        $305,909.50      $29,236.00      $27,667.35      $56,903.35       $249,006.15
                Fourth       $550,199.00      $20,803.40      $52,939.56      $73,742.96       $476,456.04
                Fifth        $483,055.50      $23,068.80      $45,998.67      $69,067.47       $413,988.03
                Sixth        $149,751.00      $15,779.90      $13,397.11      $29,177.01       $120,573.99
                Final      $2,852,298.25 $111,899.10 $202,209.87 $314,108.97 $2,538,189.28
                

Thus, the net amount of fees sought by Hahn Loeser is $2,538,189.28. Doc. 809 at 2.

The Court carefully reviewed the voluntary reductions, particularly those that were itemized,² to ensure that the further reductions, which are detailed below, deduct only the amount of fees Hahn Loeser is actually seeking. For example, if a $1,000 charge in the "HLP Retention/Fee Application" category was subject to disallowance, the Court would only reduce Hahn Loeser's total fees sought by $180. This is because Hahn Loeser already discounted the fees incurred in the "HLP Retention/Fee Application" category by 80% (leaving only $200 of the $1,000 entry) and then discounted the remainder by 10% pursuant to its across-the-board fee reduction (subtracting an additional $20). So, of the $1,000 entry, Hahn Loeser would only be seeking allowance of $180.

B. The Objections and the Fee Hearing

The objections to the Fee Applications and Hahn Loeser's replies are listed below for reference:

                Application Objections/Replies
                First (Doc. 307)             Cobalt, RFF, Pro Player, Capital Financial, Capital Holdings, EOT
                                             & Blum Objection (Doc. 333), CapStar Objection (Doc. 334)
                                             Hahn Loeser Reply (Doc. 344)
                Second (Doc. 408)            Cobalt, RFF, Pro Player, Capital Financial, Capital Holdings, EOT
                                             & Blum Objection (Doc. 424), CapStar Objection (Doc. 425)
                                             Hahn Loeser Reply (Doc. 434)
                Third (Doc. 487)             CapStar Objection (Doc. 524), RFF Objection (Doc. 525), Hahn
                                             Loeser Reply (Doc. 532)
                Fourth (Doc. 664)            RFF Objection (Doc. 692), Cobalt Objection (Doc. 694), Pro
                                             Player Objection (Doc. 695), Hahn Loeser Reply (Doc. 713)
                Fifth (Doc. 733)             Cobalt Objection (Doc. 763), RFF Objection (Doc. 764), Pro
                                             Player Objection (Doc. 765), Hahn Loeser Reply (Doc. 769)
                Sixth & Final (Doc. 788)     RFF Objection (Doc. 804), Cobalt Objection (Doc. 805), Pro
                                             Player Objection (Doc. 806), Hahn Loeser Reply (Doc. 809)
                

Although each of the Big Eight objected to the First and Second Applications (and CapStar also objected to the Third), only the three Objectors objected to the subsequent Fee Applications and continued to prosecute their objections.³

Hahn Loeser has received a total of $1,007,656.84 in fees and expenses on an interim basis. Of this...