In re Poseidon Pools of America, Inc.
| Decision Date | 29 March 1995 |
| Docket Number | Bankruptcy No. 191-10935. |
| Citation | 180 BR 718 |
| Parties | In re POSEIDON POOLS OF AMERICA, INC., Debtor. |
| Court | U.S. Bankruptcy Court — Eastern District of New York |
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Parker, Chapin, Flattau & Klimpl, New York City, for debtor.
Fischbein, Badillo, Wagner & Itzler, New York City, for Creditors' Committee.
Alan Nisselson, Chapter 7 Trustee, Brauner, Baron, Rosenzweig & Klein, New York City.
This matter comes before this Court on the final application (hereinafter "Final Application") of Parker Chapin Flattau & Klimpl (hereinafter "Applicant"), counsel to the debtors, for allowance of compensation and reimbursement of expenses. For the reasons set forth herein, a final allowance is granted in an amount substantially less than that which was requested.
The debtors, Poseidon Pools of America, Inc., S & V Pools, Inc., Poseidon Pools, U.S.A., Inc., Poseidon Manufacturing Corp., Poseidon Pools of Allentown, Inc., Poseidon Pools of Marlboro, Inc. and Poseidon Pools of Route 110, Inc. (hereinafter, the "Debtors") originally filed separate petitions for relief under Chapter 11 of the Bankruptcy Code on February 13, February 15, and March 6 of 1991, respectively. These cases were consolidated for procedural purposes only by order of this Court dated February 22, 1991. On September 15, 1992 it became apparent that reorganization was not feasible and these cases were converted to chapter 7.
By application dated February 19, 1992 (hereinafter, the "Interim Application"), Applicant sought an interim award of legal fees of $43,750.00 and reimbursement of expenses of $6,838.46 for services rendered pre-petition and $157,738.93 in legal fees and $23,676.981 for reimbursement of expenses for services rendered by the Applicant from the period of February 13, 1991 to November 30, 1991. By order dated April 10, 1992, this Court, without then fixing the fair and reasonable value of Applicant's services, permitted an advance "towards post-petition services and expenses" in the amount of $133,000.00 against fees and expenses to be awarded upon a final application. By order dated June 16, 1992, this Court authorized further payment of the sum of $50,588.46, representing the fees requested and expenses incurred for the pre-petition services rendered by the Applicant, from the $100,000.00 retainer that the Applicant received pre-petition. This payment was also an advance pending approval of a final fee application.
On October 2, 1992, the Applicant filed this Final Application seeking a total of $281,497.84 in fees and expenses representing (1) $99,004.372 for fees and expenses previously sought in the Interim Application but not awarded nor permitted as an advance, (2) $27,684.003 for fees and expenses claimed to have been inadvertently excluded from the Interim Application, and (3) $154,809.344 in fees and expenses for the final period not otherwise covered.5
Hearings on the Final Application were held on October 14, 19926 and October 28, 19927; decision was reserved.
On May 28, 1993, this Court, without then fixing the fair and reasonable value of Applicant's services, permitted a further advance, in the amount of $140,748.92 against fees and expenses to be awarded pursuant to this Court's decision regarding the Final Application.
By this final application, we are called upon to make a final determination concerning the request for fees and reimbursement of expenses in the amount of $414,497.71 representing (1) $50,588.46 for services rendered pre-petition, (2) $209,099.91 ($181,415.91 of which was requested as part of the Interim Application and $27,684.00 of which was inadvertently omitted from such) for services rendered during the period covered by the Interim Application, and (3) $154,809.34 for services rendered during the period covered by the Final Application, against which a total of $324,337.38 has already been permitted as an advance, subject to final determination of this Final Application. Applicant still retains the remainder of the pre-petition retainer in the amount of $49,411.54.
This Court has jurisdiction of this application as a core proceeding pursuant to 28 U.S.C. §§ 157(2)(A) and 1334 and the Standing Order of Referral of Cases to Bankruptcy Judges for the Eastern District of New York dated August 28, 1986.
It is a curious fact that attorneys who during the course of a trial spring to a gladiatorial posture and strain to inundate an adversary with a surfeit of testimonial or documentary evidence and who later mire a court in a superabundance of repetitive proposed findings of fact and conclusions of law are strikingly parsimonious with evidence of that which is required to establish the elements of their claim of compensation for professional services rendered in a bankruptcy proceeding. Lawyers may never forget that in all judicial proceedings there exists a burden of proof. Evidentiary facts properly placed before the court to demonstrate entitlement to each item of relief sought are no less essential in a hearing to fix fees than they would be in the most heavily contested of trials.
The starting point in any determination regarding fee applications is 11 U.S.C. § 330(a)8 which provides in relevant part:
Since 11 U.S.C. § 330(a) only authorizes this Court to award compensation and reimbursement for actual and necessary services and expenses, their existence must be established in the same manner as any other element essential to the granting of relief notwithstanding the absence or flaccidity of opposition. A bankruptcy court has an affirmative duty to examine the propriety of fees and expenses even where no objections are raised. See In Matter of Ferkauf, Inc., 42 B.R. 852, 853 (Bankr.S.D.N.Y.1984), aff'd, 56 B.R. 774 (S.D.N.Y.1985) (); In re Copeland, 154 B.R. 693, 697 (Bankr.W.D.Mich.1993) (); accord, In re J.F. Wagner's Sons Co., 135 B.R. 264, 266 (Bankr.W.D.Ky. 1991); In re Esar Ventures, 62 B.R. 204, 205 (Bankr.D.Haw.1986). Thus, the fact that no objections to the reasonableness of the fees requested have been raised in this case, is of consequence only to the extent that we are required to undertake the unperformed obligations which Congress has imposed upon the trustee and upon the U.S. Trustee. Their failure to fulfill their statutory obligation does not excuse us from fulfilling ours.
The burden of proving that services were actual and necessary and that the compensation sought is reasonable is on the Applicant. In re Beverly Mfg. Corp., 841 F.2d 365 (11th Cir.1988); In re U.S. Golf Corp., 639 F.2d 1197, 1207 (5th Cir.1981); In re Navis Realty, Inc., 126 B.R. 137, 145 (Bankr. E.D.N.Y.1991). "This burden is not to be taken lightly, as every dollar expended on professional fees results in a dollar less that is available for distribution to creditors." In re Gillett Holdings, 137 B.R. 462, 466 (Bankr. D.Colo.1992) (quoting, In re Chicago Lutheran Hospital Ass'n, 89 B.R. 719, 732 (Bankr. N.D.Ill.1988)); see also In re Huhn, 145 B.R. 872, 874 (W.D.Mich.1992) ( ).
In this regard, 11 U.S.C. § 330(a) is implemented by Fed.R.Bankr.P. 2016(a) which defines the requirements for applying for compensation for professional services and reimbursement of expenses:
To satisfy this burden, "the extensive case law interpreting 11 U.S.C. § 330(a) and Rule 2016(a) make it clear that a claimant must justify its charges with detailed, specific, item-by-item documentation ...". In re Gold Seal Products Co., Inc., 128 B.R. 822, 827 (Bankr.N.D.Ala.1991) ().
This Court has previously held that "the party who seeks payment must keep records in sufficient detail that a neutral judge can make a fair evaluation of the time expended, the nature and need for the service, and the reasonable fees to be allowed." In...
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