In re Polanco

• Decision Date: 22 March 2021
• Docket Number: Case No. 18-43399-ESS
• Citation: 626 B.R. 12
• Parties: IN RE: Yanaira POLANCO, Debtor
• Court: U.S. Bankruptcy Court — Eastern District of New York

626 B.R. 12

IN RE: Yanaira POLANCO, Debtor,

Case No. 18-43399-ESS

United States Bankruptcy Court, E.D. New York.

Signed March 22, 2021

Linda A Tirelli, Esq. Tirelli Law Group, LLC 50 Main Street (Suite 1265) White Plains, NY 10606 Attorneys for the Debtor.

Marianne DeRosa, Esq. Chapter 13 Trustee Nathan Z. Kaufman, Esq. Staff Attorney Office of the Standing Chapter 13 Trustee 100 Jericho Quadrangle (Suite 127) Jericho, NY 11753 Attorneys for the Standing Chapter 13 Trustee.

MEMORANDUM DECISION ON APPLICATION FOR FINAL ALLOWANCE OF COMPENSATION AND EXPENSES

HONORABLE ELIZABETH S. STONG, UNITED STATES BANKRUPTCY JUDGE

Introduction

Before the Court is the application for final allowance of compensation and expenses of Tirelli Law Group, LLC ("Tirelli"), for legal services provided to Yanaira Polanco, the debtor in this Chapter 13 case (the "Fee Application"). ECF No. 73. Tirelli seeks professional fees of $23,489.50 and reimbursement of actual and necessary expenses of $147.66, incurred over a period of some two and a half years, from the petition date of June 11, 2018, to December 2, 2020, the date of the Fee Application. The fees requested are in addition to a base fee of $6,500 (the "Base Fee") that the firm received from Ms. Polanco before this case was filed.

The Chapter 13 Trustee, Marianne DeRosa (the "Trustee"), opposes the Fee Application on several grounds (the "Opposition"). ECF No. 75. As a threshold matter, she points out that Tirelli did not serve it on Ms. Polanco's creditors, and for this reason alone, it cannot be granted. The Trustee also argues that the professionals' time records are not separated into project categories, as required by this Court's General Order 613. Tirelli promptly addressed these two matters, and service and project category information are now part of the record.

In addition, the Trustee argues that the amounts billed by Tirelli for two tasks – participation in this Court's loss mitigation program to address Ms. Polanco's first mortgage on her home, and an adversary proceeding to Ms. Polanco's second mortgage, are excessive, and outside the "standard fee range" for such matters in this District. The Trustee also points to the Base Fee collected by the firm, and argues that some of the tasks for which compensation is sought should come within that fee.

The issues presented by this Fee Application and the Trustee's objection lie at the intersection of several key considerations in bankruptcy law and practice. Chapter 13 is a fundamental tool for debtors with regular income to repay their creditors as much as they are able over time. In many cases, including this one, Chapter 13 permits a debtor to save the family home. But it is rare that a Chapter 13 debtor can succeed alone, without the assistance of skilled and persistent counsel. Chapter 13 debtor's counsel, in turn, needs to have some assurance that, eventually, if the circumstances of the case permit, they too will be paid. And in the context of all of this, the Chapter 13 Trustee has a critical role to play, with a panoply of statutory duties under Bankruptcy Code Section 1302, including to "advise ... and assist the debtor in performance under the plan." 11 U.S.C. § 1302(b)(4).

This Fee Application calls for the Court to weigh these interests, which are both competing and complementary, and to apply the Bankruptcy Code to assess the Fee Application on its merits and in light of the Trustee's thoughtful concerns.

Jurisdiction

This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157(b)(2)(A), (B) and (O), and 1334(b), and the Standing Order of Reference dated August 28, 1986, as amended by the Order dated December 5, 2012, of the United States District Court for the Eastern District of New York. This is a core proceeding pursuant to 28 U.S.C. § 157(b) and venue is proper before this Court pursuant to 28 U.S.C. § 1409.

Background

The Filing of this Bankruptcy Case

On May 7, 2018, Ms. Polanco retained Ms. Tirelli and her firm to assist her in filing a Chapter 13 bankruptcy case, and paid $6,500 in a base fee to the firm. Just over one month later, on June 11, 2018, Tirelli filed a Chapter 13 bankruptcy case for Ms. Polanco. As stated in the Fee Application, Ms. Polanco's goals in her bankruptcy case were "to reorganize her financial situation" and, in particular, to "resolve issues with non-payment and/or foreclosure of TWO (2) mortgages on her home." Fee App. ¶ 3. Two weeks later, on June 25, 2018, Tirelli filed Schedules A/B, C, G, H, I, and J, and on June 28, 2019, Tirelli filed an amended Schedule J.

On July 3, 2018, Tirelli filed an initial Chapter 13 plan on behalf of Ms. Polanco. That plan was amended from time to time as the case progressed, and Tirelli filed amended Chapter 13 plans on September 7, 2018, June 28, 2019, and September 8, 2020.

Ms. Polanco's Motion To Extend the Automatic Stay

The present case is not Ms. Polanco's first bankruptcy filing, and her prior filing has consequences for the protection of the automatic stay here. Specifically, Ms. Polanco filed a previous Chapter 13 bankruptcy case on October 24, 2017. That case had several deficiencies, and three months later, on January 24, 2018, those deficiencies led to a motion to dismiss by the Trustee. The Court heard that motion on February 12, 2018, and Ms. Polanco, by her then-counsel, indicated that she did not oppose the dismissal of her case. Her first case was dismissed by order entered on March 7, 2018. See In re Yanaira Polanco , Case No. 17-45510. This case, filed by Tirelli, followed on June 11, 2018.

On June 14, 2018, within a few days of filing this second case, Tirelli filed a motion to extend the full protection of the automatic stay for the duration of Ms. Polanco's case under Bankruptcy Code Section 362(c)(3)(B) (the "Motion to Extend Stay"). On July 9, 2018, the Court held a hearing on the Motion to Extend Stay, at which Ms. Polanco, by her counsel Ms. Tirelli, appeared and was heard, and the Court granted the motion and directed Ms. Tirelli to submit a proposed order. Ms. Tirelli submitted the proposed order and on July 12, 2018, the Court entered an order extending the full protection of the automatic stay until further order of the Court or its expiration by operation of law.

Ms. Polanco's Participation in Loss Mitigation

On July 9, 2018, less than a month after this bankruptcy case was filed, Ms. Polanco, by her counsel Tirelli, filed a request to enter into this Court's loss mitigation program with respect to her home located at 25-22 96th Street, East Elmhurst, NY 11369 (the "Property").

On July 30, 2018, the Court entered an order directing Ms. Polanco and the secured creditor, Bayview Loan Services ("Bayview"), to participate in loss mitigation. Over the course of nearly a year and a half, the Court held loss mitigation status conferences, at which Ms. Tirelli, on behalf of Ms. Polanco, and Bayview appeared and were heard. On January 28, 2020, Bayview filed a motion on presentment to approve a loan modification agreement for the Property. No opposition to that motion was filed, and on March 2, 2020, the Court entered an order approving the parties' loan modification agreement with respect to Ms. Polanco's home mortgage.

The Trustee's First Motion To Dismiss

On August 21, 2018, the Trustee filed a motion to dismiss this case (the "First Motion to Dismiss") and objection to the confirmation of Ms. Polanco's plan on grounds, among others, that her proposed plan payment was insufficient to pay her secured claims in full as required by Bankruptcy Code Section 1325(a)(5), and that she had not provided the Trustee with certain required documents.

The Court scheduled several hearings on the First Motion to Dismiss, including on September 10, 2018, December 17, 2018, March 25, 2019, and June 3, 2019, and the docket indicates that these hearings were adjourned from time to time without the matter being called or the motion being heard. At the last scheduled hearing date on the motion, on July 22, 2019, the Trustee withdrew the First Motion to Dismiss, indicating, in substance, that the matters addressed in the motion had been resolved.

Ms. Polanco's Action Against Real Time Solutions, Inc. and RRA CP Opportunity Trust 1

On September 9, 2018, Ms. Polanco commenced an adversary proceeding (the "RTS Action") against the junior secured creditor Real Time Solutions, Inc. as agent for RRA CP Opportunity Trust 1 (the "Defendants"), stating several counts or claims for relief. See Polanco v. Real Time Solutions, Inc. , Case No. 18-01101, ECF No. 1 (Complaint). In that action, Ms. Polanco asks the Court to disallow Proof of Claim 3-1, to bar the Defendants from filing an amended claim, to cancel and discharge the alleged arrearages set forth in the proof of claim, to declare the Defendants' asserted security interest to be void, and for an award of fees and expenses, among other relief. See Polanco v. Real Time Solutions, Inc. , Complaint at p. 14.

The Court held an initial pre-trial conference in the RTS Action on November 6, 2018, at which Ms. Polanco, by her counsel Ms. Tirelli, appeared and was heard, and the Defendants did not appear. From time to time thereafter, the Court scheduled continued pre-trial conferences, and many of these were adjourned on consent of all of the parties, as the parties presumably worked to address the issues identified in the Complaint.

Some time later, on April 14, 2020, and again on June 1, 2020, the Court held continued pre-trial conferences in the RTS Action at which Ms. Polanco, by her counsel Ms. Tirelli, and the Defendants, by their counsel, appeared and were heard. At the June 1, 2020 conference, the parties advised the Court that they had resolved the dispute, and would submit a proposed consent order for the Court's review and entry. And on June 26, 2020, the Court entered an order, on consent of the parties, reclassifying the Defendants' Proof of Claim 3-1 as wholly unsecured during the pendency...