In re Mason
| Decision Date | 22 August 1986 |
| Docket Number | Bankruptcy No. 82-05456. |
| Citation | 66 BR 297 |
| Parties | In re Frank Joseph MASON, t/a Joe's Luncheonette, Debtor. |
| Court | U.S. Bankruptcy Court — District of New Jersey |
Kasen & Kasen by David A. Kasen, Cherry Hill, N.J., for debtor.
United States Trustee for the Districts of Delaware and New Jersey by Joseph J. Mania, III, Staff Atty., Newark, N.J.
The matter presently before the Court is an Application for the nunc pro tune Appointment of the Attorneys for the Debtor-in-Possession (debtor) and for payment of compensation to the attorneys for the debtor. The facts leading up to this matter are as follows.
On August 10, 1982, the debtor, Frank Joseph Mason, filed a voluntary petition under Chapter 11 of the Bankruptcy Code. On May 13, 1985, the debtor filed a plan of reorganization. By order of this court dated October 18, 1985, the debtor's plan of reorganization was confirmed. On October 1, 1985, David A. Kasen, Esquire, of the firm of Kasen & Kasen, filed an Application for Allowance to Counsel for the debtor. By way of that application, Mr. Kasen represented to the court that his firm had received a $3,500.00 retainer fee, plus a $200.00 filing fee from the debtor. Mr. Kasen further indicated that his hourly rate for services rendered is $125.00, and that the rate charged by his firm for services rendered by Robert N. Braverman, Esquire, a member of the firm, is $90.00 per hour. Mr. Kasen stated in his application that the reorganization of the debtor's estate involved the sale of a business which required Mr. Kasen to prepare and review significant documentation. Further, Mr. Kasen noted that the debtor's estate involved a considerable number of tax claims which required verification.
The firm of Kasen & Kasen seeks compensation in the sum of $10,000.00 for the services it rendered in connection with the debtor's estate. Additionally, the firm is seeking reimbursement of postage expenses in the amount of $75.36, and photocopying expenses in the amount of $138.45. Against this amount, the firm of Kasen & Kasen has applied the retainer of $3,500.00 which was received by the firm at the commencement of the Chapter 11 case. Accordingly, the applicant is presently seeking payment of the sum of $6,500.00, plus reimbursement for expenses in the sum of $213.81. Attached to Mr. Kasen's application for allowances is a statement of services rendered which indicates that the firm of Kasen & Kasen has expended 79.7 hours in connection with the debtor's estate.
On November 27, 1985 the United States Trustee for the Districts of Delaware and New Jersey1 filed an objection to the application for allowances submitted by the firm of Kasen & Kasen. The United States Trustee listed three bases for its objection. First, the United States Trustee noted that the applicants request compensation for an estimated additional 10 hours of work. The United States Trustee asserts that, pursuant to 11 U.S.C. § 330(a)(1), compensation may be paid only for services actually rendered. Second, the United States Trustee contends that the application for allowances fails to reflect the billing rate charged for services rendered in 1982 and 1983. Third, the United States Trustee notes that the applicants seek reimbursement of photocopying fees, and contends that such fees are a cost of doing business which may not be charged to a bankruptcy estate.
On December 18, 1985 a hearing was held before this court on the instant application for allowances. At that time the United States Trustee withdrew its third objection to the application. Also at that hearing, it was noted that Mr. Kasen has failed to obtain an order appointing his firm attorneys for the debtor. Mr. Kasen expressed surprise upon learning that he had failed to obtain the order and he stated that at his law firm, obtaining such an order is "typically a routine task." He indicated that since he is the head of the firm, he is responsible for the failure to obtain the order.
Mr. Kasen argued that the bankruptcy court, as a court of equity, may enter a nunc pro tunc order, approving his firm attorneys for the debtor. In support of this argument, Mr. Kasen stated that an order approving his firm's employment, "would have routinely been entered in the beginning of the case had I submitted it." Thus, Mr. Kasen concluded that he, or his office merely forgot to perform a "ministerial act." This court, at the December 18, 1985 hearing, gave counsel the opportunity to submit legal memoranda or briefs on the nunc pro tunc issue.
On January 6, 1986, Mr. Kasen filed an application to have his firm appointed as attorneys for the debtor. On that same date, an order prospectively appointing the firm of Kasen & Kasen attorneys for the debtor, was entered by this court.
On January 7, 1986, Mr. Kasen filed an affidavit in support of his motion to appoint Kasen & Kasen attorneys for the debtor nunc pro tunc. In that affidavit, Mr. Kasen stated that the work which must be done in order to be appointed attorney for a debtor is "typically a secretarial function" in his office. He noted that at the time the application in the instant matter should have been prepared, his regular secretary was on vacation and a substitute secretary was working on the file. Mr. Kasen concluded that because the substitute secretary was working on the file, the work to obtain an order appointing Kasen & Kasen as counsel for the debtor was not done.
On March 14, 1986, the debtor, Mr. Frank Joseph Mason, filed an affidavit in support of the application of Kasen & Kasen for allowance of compensation. The debtor, in his affidavit, states that he is satisfied with counsel's services and that in his opinion the fee requested by Kasen & Kasen is fair and reasonable.
In support of his firm's application for approval nunc pro tunc, Mr. Kasen emphasized that the debtor's case has been successful, and that Kasen & Kasen has acted in good faith in representing the debtor and has used its best efforts. Mr. Kasen also stated that there was no conflict of interest which would prevent the court from approving the employment of Kasen & Kasen as attorneys for the debtor nunc pro tunc.
On January 10, 1986, the United States Trustee filed a letter in opposition to the application of Kasen & Kasen for attorneys' fees and expenses. The basis for the opposition was Kasen & Kasen's failure to obtain an order authorizing its employment as attorneys for the debtor. The United States Trustee noted that the bankruptcy court may exercise its discretion in entering nunc pro tunc orders authorizing the employment and compensation of attorneys. However, the United States Trustee contended that such discretion may be exercised only in exceptional situations where good cause exists for an attorney's failure to timely file an application and order authorizing his or her employment. The United States Trustee argued that the equities do not fall in the favor of Kasen & Kasen's obtaining a nunc pro tunc order. The United States Trustee based this conclusion upon the argument that, in the case at bar experienced bankruptcy attorneys, familiar with the requirements of the bankruptcy code, simply failed to take any steps to assure that an order authorizing their employment had been obtained.
On March 7, 1986, Mr. Kasen filed a supplemental letter brief in support of his application to appoint Kasen & Kasen attorneys for the debtor nunc pro tunc. Mr. Kasen argued that it would be extraordinarily harsh and inequitable to deny his law firm compensation for the services it has rendered to the debtor. He indicated that he and the firm of Kasen & Kasen are now forewarned about the necessity of making timely applications for employment authorization. Mr. Kasen suggested that if the court nonetheless feels that a deterrent is necessary, a monetary sanction by way of a reduction of the fees sought should be imposed. Mr. Kasen concluded that reducing the amount of compensation sought would be more equitable than completely denying compensation to his firm since valuable services have been rendered to the debtor's estate. In support of this assertion, Mr. Kasen noted that he is aware of no other instance in which a failure to perform a "ministerial" task results in the denial of an attorney's right to compensation. He concluded that denying the instant application is placing "form over substance."
On March 14, 1986 a second hearing was conducted before this court on the application to appoint the firm of Kasen & Kasen attorneys for the debtor nunc pro tunc. At that hearing, Mr. Kasen again argued that applying to the bankruptcy court for an order authorizing the employment of the firm of Kasen & Kasen is generally a ministerial function handled by the secretaries in his office. He also again advised the court that his regular secretary was on vacation at the time the application papers for the instant matter should have been prepared.
At the March 14, 1986 hearing, Mr. Kasen indicated that a companion case, Jarmay, Inc., t/a Mason's Restaurant was commenced simultaneously with the instant matter. In that case, Mr. Kasen also failed to obtain an order of the court appointing his firm attorneys for the debtor. In the Jarmay, Inc. matter, Mr. Kasen indicated that when he made an application for compensation, counsel fees were awarded. The Jarmay case has since been closed. None of the parties in interest in the Jarmay, Inc. matter questioned whether Mr. Kasen had obtained an order appointing his firm counsel for the debtor.2
At the March 14, 1986 hearing, Mr. Kasen stated that he has conducted approximately 95% of his bankruptcy practice before the bankruptcy court in Camden, New Jersey. He also noted that he commenced practicing law in 1970, and appeared before the bankruptcy court for approximately 14 years. Mr. Kasen indicated that he had not had a nunc pro tunc application for approval as counsel denied in the...
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