In re Robinson, 06-10618-SSM.
| Decision Date | 17 May 2007 |
| Docket Number | No. 06-10618-SSM.,06-10618-SSM. |
| Citation | 368 B.R. 492 |
| Court | U.S. Bankruptcy Court — Eastern District of Virginia |
| Parties | In re Susan A. ROBINSON, Debtor. |
Tommy Andrews, Jr., Esquire, Tommy Andrews, Jr., Alexandria, VA, for Debtor.
A hearing was held on March 9, 2007, on the application of Tommy Andrews, Jr., P.C., for approval and payment of supplemental compensation as attorney for the debtor in the amount of $13,351.20. The debtor, who filed a written opposition to the application, was present in person. The chapter 13 trustee, who filed a response stating that the plan did not have sufficient funds to pay the requested fees, was likewise present.
Susan A. Robinson ("the debtor") filed a voluntary petition in this court on June 12, 2006, for adjustment of her debts under chapter 13 of the Bankruptcy Code. The petition, schedules, and plan were prepared by the law firm of Tommy Andrews, Jr., P.C., whose attorneys are experienced consumer bankruptcy practitioners. The disclosure of compensation filed with the petition stated that the agreed fee to represent the debtor was $3,000.00, of which $600.00 had been paid prior to the filing of the petition, and $2,400.00 remained due. Among the services covered by the fee were:
Analysis of the debtor's financial situation, and rendering advice to the debtor in determining whether to file a petition in bankruptcy, including: preparation and filing of any petition, schedules, statement of affairs and plan which may be required.
Disclosure of Compensation of Attorney for the Debtor(s), ¶ 6(a) and (b) (emphasis added). This straight-forward text was then qualified and expanded upon by ten additional paragraphs that contained, among others, the following statements buried within them:
• "The above disclosed fee for legal services is the minimum amount for the client to pay."
• "Except as noted above, the fee and original retainer is an estimate and is in no way considered a flat fee."
Lengthy paragraphs separately addressed cases filed in the U.S. Bankruptcy Courts in Virginia, the District of Columbia, and Maryland. Relevant to cases filed in Virginia, the disclosure stated that representation did not extend to a large number of matters that most consumers would consider a routine and necessary part of a chapter 13 case, including "representation of the Debtor(s) at the confirmation hearings," "[n]egotiations with parties concerning confirmation," and "negotiations with secured creditors to reduce to market value." The disclosure further asserted that any such excluded matters "will require a separate retainer" — notwithstanding that the local rules of this court require the attorney for the debtor to appear at every hearing in the case unless granted leave to withdraw and do not permit the attorney to condition such appearance on payment of an additional "retainer." Local Bankr. R.2090-1(G, H).
Following the meeting of creditors on July 18, 2006, the trustee and the debtor's former husband, Ross R. Robinson, filed objections to confirmation. The debtor then filed a modified plan on August 5, 2006. The plan required the debtor to pay the trustee $900 per month for one month, followed by $1,335 for 59 months, plus a $9,770 lump sum payment in the third month. From the payments received, the trustee would be paid his statutory commission. Debtor's counsel would be paid "$2,400.00 balance due of the total fee of $3,000.00." A $9,770 domestic support obligation owed to Mr. Robinson would be paid over two months. The remaining funds would be paid pro rata to creditors holding allowed unsecured claims, with the estimated distribution being 51 cents on the dollar. The trustee and Mr. Robinson objected to confirmation, and the trustee also filed a motion to dismiss. The issues were whether the $9,770 liability owed to Mr. Robinson for back child support "first became due" before or after the filing of the petition and whether an $80,601 liability owed to Mr. Robinson for his half-share of the equity in the former marital residence was a "domestic support obligation" that would have to be paid in full in the plan. The attorney for the debtor filed a 19-page memorandum in support of his client's position and ably represented Ms. Robinson at an evidentiary hearing that was held on September 19, 2006, and continued to September 27, 2006, for a ruling. The court determined that the child support obligation "first became due" before the chapter 13 petition was filed (with the result that it could properly be treated in the plan) and that the $80,601 obligation to pay Mr. Robinson half of the equity in the former marital residence was not a domestic support obligation (and was therefore a general unsecured claim that could be compromised by the plan). The court accordingly overruled the objections to confirmation, denied the motion to dismiss, and confirmed the modified plan on September 28, 2006.
The application before the court was filed by the debtor's attorney on April 9, 2007, and covers the period through February 28, 2007.1 It seeks approval of $16,351.20 in compensation and reimbursement of expenses, less the $600.00 paid by the debtor as a retainer and the $2,400.00 paid by the trustee under the plan, for a net of $13,351.20 to be paid by the trustee as supplemental compensation. The application states, "Debtor's Plan contains sufficient provisions to pay these fees without prejudice to creditors, and has been modified to include room for administrative expenses to be paid through the Chapter 13 plan." Attached to the application are time records from the beginning of the case reflecting 103.89 hours of attorney and paralegal time billed at hourly rates ranging from $85.00 per hour to $225.00 per hour, for a "blended" rate of $156.85 per hour. The application additionally requests reimbursement for postage and copying costs in the amount of $55.72. A breakdown of the fees relative to the significant events in the case is as follows:
Through the meeting of creditors $ 2,365.06
From meeting of creditors through filing of
amended plan. $ 3,023.75
From filing of amended plan through conclusion
of confirmation hearing. $10,653.17
Miscellaneous post-confirmation matters
including claim review. $ 253.50
Total $16,295.48
The trustee, as noted, has filed an objection stating that there are insufficient funds in the plan to pay the requested fees. The debtor, for her part, filed an objection stating that it was her understanding that the case would cost $3,000.00; that neither the attorney nor any member of his office had ever notified her, either in writing or orally, that additional fees were being incurred or would be billed; and that the law firm had not responded to her numerous requests for a copy of the fee agreement. She additionally complained that the copy of the fee application that had been mailed to her was missing several pages and that there were several issues in the case that the law firm had not attended to despite her requests.
The evening prior to the hearing, the law firm provided Ms. Robinson with a copy of the contract for legal services (captioned "Virginia Retainer Agreement") signed by her on June 8, 2006.2 The original of the contract was offered in evidence at the hearing. It is a single-page, visually dense, non-paragraphed document printed in what appears to be 9-point type. It begins by stating, "For and in consideration of the professional and legal advice to be rendered to me/us: I /We agree to pay the [law firm] the sum of $600 up front and $2,400 in plan." (bold face in original). Nine sentences further along into the contract is a bold-faced statement:
I/We acknowledge that the above fee is for debt relief services, to include analysis of [the] client's financial situation, rendering advice to the client in determining whether to file a petition in bankruptcy;, preparation and filing of any petition, schedules, statement of financial affairs[,] and plan; providing Trustee with verification of income and other relevant information prior to the 341 Meeting of Creditors; representation of client at the first scheduled 341 Meeting of Creditors.
This is immediately followed by the statement (in regular rather than bold-face type):
The above stated fee is an estimate and in no way may be considered a flat fee. The hourly rate of $225/hr for each attorney and $110/hr for each paralegal is the rate schedule....
Some five sentences later (approximately half-way through the document), the following text occurs, again in regular rather than bold-face type:
The above fee and this retainer do not include Amending Schedules, Exemption Planning, Preparation and Attendance of [sic] Confirmation Hearings, Adversary Proceedings, Motions for Relief from Automatic Stay, Conversions, Contested Matters or Appeals, Matters unlike the Regular Practice of Bankruptcy, or other Motions. All such matters and unstated matters, in order for this law office to represent me/us, requires a separate retainer and shall be billed at an hourly rate of $225/hr for each attorney and $110/hr for each paralegal in accordance to [sic] Local Bankruptcy Rules.
At the hearing, the debtor reiterated that she had not been aware that additional fees would be charged for the work the law firm was doing and that she was never invoiced for those fees as they were incurred. She also stated that her budget was already very tight and would not permit an increase in plan payments sufficient to cover the requested fees, although she suggested that based on a recent pay increase she might be able to pay an additional $100 a month into the plan.
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Connecticut Bar Ass'n v. U.S.
...certain course of action. Accordingly, the Court finds that sections 528(a)(1) and (a)(2) are constitutional. See In re Robinson, 368 B.R. 492, 500 n. 7 (Bkrtcy.E.D.Va.2007) ("[T]here can be little doubt that the requirement for a written contract applies to attorneys representing consumer ......
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Milavetz, Gallop & Milavetz, P.A. v. U.S.
...the Code. Id. (finding debtor's counsel was a debt relief agency); Olsen v. Gonzales, 350 B.R. 906 (D.Or.2006) (same); In re Robinson, 368 B.R. 492 (Bankr. E.D.Va.2007) (finding debtor's counsel was debt relief agency); Hersh v. United States, 347 B.R. 19 (N.D.Tex.2006) (finding that bankru......
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In re Perez
...representing consumer debtors in bankruptcy to provide as much clarity as possible. §528 (a)(1), Bankruptcy Code." In re Robinson, 368 B.R. 492, 501-02, (Bankr. E.D. Va. 2007)." 12. On February 2, 2016, one (1) day before the contested hearing on confirmation of the chapter 13 plan was held......
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Dignity Health v. Seare (In re Seare)
...way of knowing which exclusions were likely to apply and what the chances were of facing increased legal fees. See In re Robinson, 368 B.R. 492, 500–01 (Bankr.E.D.Va.2007). Where adversary litigation arises, those additional fees could greatly exceed the $2,000 flat fee. See id. at 501.Robi......
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...& Milavetz, P.A. v. United States, 541 F.3d 785, 790 (8th Cir. 2008). 51. 379 B.R. 680 (Bankr. S.D. Tex. 2007). 52. Id. at 685-86. 53. 368 B.R. 492 (Bankr. E.D. Va. 2007). 54. Id. at 500 n.7. 55. See, e.g, Olsen v. Gonzales, 350 B.R. 906, 912 (D. Or. 2006); Conn. Bar Ass'n v. United States,......