In re Schumann Tire & Battery Co., Inc.
| Decision Date | 25 July 1988 |
| Docket Number | Bankruptcy No. 83-0202-BK-J-GP. |
| Citation | 89 BR 223 |
| Parties | In re SCHUMANN TIRE & BATTERY CO., INC., Debtor. |
| Court | U.S. Bankruptcy Court — Middle District of Florida |
Ronald Bergwerk, Jacksonville, Fla., for Trustee.
Albert H. Mickler, Jacksonville, Fla., for H. Harold Hart.
Charles W. Grant, Jacksonville, Fla., Trustee.
ORDER PURSUANT TO REMAND IN RE FEE APPLICATION OF RONALD BERGWERK
THIS IS a Chapter 7 liquidation case originally commenced by an involuntary petition filed on April 5, 1983, by Mr. Ronald L. Bergwerk on behalf of certain creditors of Schumann Tire & Battery Co., Inc. (Debtor). The matter under consideration is the appropriate fee to be awarded to Mr. Bergwerk for his services, rendered to the Trustee in connection with the administration of the estate of the Debtor. The record of this case reveals the following facts relevant and germane to the resolution of Mr. Bergwerk's Applications for Allowance.
On May 2, 1983, an order for relief was entered without contest and on May 3, 1983, Mr. Charles W. Grant (Trustee) was appointed as interim trustee who later succeeded himself and now acting as the permanent trustee for the estate. On May 6, 1983, Mr. Grant applied for authorization to employ himself as attorney for the estate and his application was granted ex parte on the same day. On May 18, 1983, the Trustee filed an application to employ Mr. Bergwerk to act as special attorney for the estate and the application was approved on May 18, 1983.
On August 5, 1985, Mr. Bergwerk filed an Application for allowance for fees, and on December 27, 1985 filed an amendment to the application. In his original application Mr. Bergwerk sought an allowance in the amount of $103,200.00 plus reimbursement of expenses in the amount of $1,134.39. The Application was not supported by any documentation whatsoever as to the time spent on any particular service by Mr. Bergwerk. The amended fee application was filed on December 27, 1985. In the amended Application Mr. Bergwerk sought an allowance in the amount of $138,400.00, together with reimbursement of $1,134.73 for expenses.
On February 18, 1986, the Debtor challenged the fee application of Mr. Bergwerk. On July 31, 1986, after a duly noticed hearing the Hon. George L. Proctor, after having considered the matter, entered an order, and allowed the fee to Mr. Bergwerk for the professional services rendered by him in the amount of $35,725.88, together with the cost allowance of $1,165.64. On August 4, 1986, the Honorable George L. Proctor entered an order and directed the Trustee to pay dividends on the only claims allowed to three creditors, and also entered an order on the same date directing the Trustee to refund to the Debtor $275,088.96. This order was based on the finding by the court that after all allowed claims were paid in full, there remained in the estate $275,088.96. It is without dispute that this sum is yet to be paid to the Debtor even though the order was never appealed, and Mr. Grant did pay Mr. Bergwerk the sum of $35,725.88, who accepted the payment, notwithstanding that he challenged the award by his cross-appeal discussed below.
On August 11, 1986, the Debtor filed a notice of appeal challenging the order of the fee allowance. As first noted, Mr. Bergwerk in turn also filed a cross-appeal challenging the order of allowance.
On December 7, 1987, the District Court, having considered the appeal, entered an order which, inter alia, found that because the bankruptcy court failed to make specific findings of fact concerning the factors established by the Fifth Circuit Court of Appeals in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974), the order of allowance was improper. The Order further vacated the order of allowance entered on July 31, 1986, and remanded the matter to the bankruptcy court for a new determination of Mr. Bergwerk's fee application with directions to consider the guidelines set forth in Johnson v. Georgia Highway Express, Inc., supra, and factors discussed in the case of In the Matter of First Colonial Corporation of America, 544 F.2d 1291 (5th Cir.), cert. den. 431 U.S. 904, 97 S.Ct. 1696, 52 L.Ed.2d 388 (1977).
On December 14, 1987, after entry of the order of remand, the Debtor filed a motion and requested an order directing the Trustee to refund the monies due to the Debtor. In due course the Honorable George L. Proctor scheduled a hearing pursuant to the order of remand. However, prior to the hearing the Debtor filed a Motion to Recuse the Honorable George L. Proctor, who after having heard argument of counsel and having considered the Motion, entered an order on March 8, 1988, and recused him and transferred the case to the undersigned.
On May 2, 1988, subsequent to the entry of the order of recusal, Mr. Bergwerk filed his Second Amended Fee Application seeking compensation in the amount of $171,000.00 plus a reimbursement of expenses in the amount of $1,134.73 for his services rendered to the Trustee and costs expended in connection with this case. This last fee application which is accompanied by a memorandum is also supplemented now for the first time by a summary of the number of hours claimed to have been spent by Mr. Bergwerk on four specified matters, and a description of the services rendered by him in chronological sequence with specific amounts of time allocated to each of the services rendered. It is without dispute that the time schedule submitted by Mr. Bergwerk does not represent a contemporaneous recordation of the events as they occurred, but represents only an attempt by Mr. Bergwerk to reconstruct from memory and from some records the type of services rendered, the date on which they were rendered, and the amount of time allegedly spent on that particular service.
The record reveals that the case appeared to be a no-asset case initially according to the schedules filed by the Debtor after the entry of the Order of Relief. The primary activity of Mr. Bergwerk according to the schedules submitted with the Second Amended Fee Application centered around three adversary proceedings. The first adversary proceeding, # 83-221, which was the only adversary actually tried, was filed by Mr. Bergwerk on behalf of the Trustee on May 12, 1983, and named as defendants, H. Harold Hart and Hart Enterprises, and sought recovery on five different claims set forth in the complaint. In Count I the Trustee sought to set aside certain transfers as a voidable preference by an insider and sought an invalidation of the transfer. The claim in Count II was based on Section 548 of the Bankruptcy Code and alleged that the same transfer was fraudulent and thus voidable by a trustee. The claim in Count III was an action to void the same transfer and sought a judgment against Hart Enterprises, Inc., the other defendant named in the adversary proceeding. This claim was also based on Section 548 of the Bankruptcy Code and alleged the transfer to be fraudulent. The claim in Count IV was an action where the Trustee sought a turnover of certain properties, ostensibly, although it was not stated, pursuant to Section 542 of the Bankruptcy Code. These properties were the very same properties which were subject to the transfers attacked by the Trustee in the earlier counts. The claim in Count V sought an accounting from both the defendants and a money judgment for all the profits which the defendants allegedly realized from utilizing the assets which were transferred.
In due course the adversary proceeding was set for trial, the claims set forth in the pleadings were tried and on January 13, 1984, the bankruptcy court entered its Findings of Fact and Conclusions of Law and dismissed all claims set forth in the complaint with the exception of the claim set forth in Count V which, as noted, sought an accounting and damages. The Court concluded that the transfers of assets of the Debtor to the entities named in the complaint never in fact occurred as alleged, but were transferred to Bostwick Oil & Tire Distributors Company, Inc. (Bostwick Oil), who was a bona fide purchaser for value of the assets who should be held liable for the unpaid portion of the purchase price. Notwithstanding, the Court entered a money judgment against H. Harold Hart and Hart Enterprises in a total amount of $271,189.60, jointly and severally, and against H. Harold Hart individually, in the amount of $75,000.00. The Court also granted leave to the defendants to file a proof of claim against the estate if they so deemed to be advised. Inasmuch as Bostwick Oil was not a named defendant in this adversary proceeding, no judgment was entered against Bostwick, but only against H. Harold Hart and Hart Enterprises. The Court noted, however, that Bostwick Oil itself already filed an interpleader and sought a determination by the bankruptcy court as to whom the money should be paid on the remaining obligation for the purchase of the properties involved. Bostwick stated that it was willing to make all payments on the contract of purchase and place the payment in the registry of the court.
On July 8, 1983, the next adversary proceeding, # 83-319, was filed by Mr. Bergwerk on behalf of the estate against Hart Enterprises, Inc., and Bostwick Oil. This complaint, which consisted of two counts, sought a turnover of certain vehicles described in the complaint, or in the alternative, a money judgment for the value of the vehicles. In Count II the Trustee sought a turnover of some other vehicles which according to the complaint were titled in the name of the Debtor. The Trustee sought in the alternative a money judgment for the value of the vehicles described in the complaint.
On August 5, 1983, Mr. Bergwerk filed a Motion for Summary Judgment, accompanied by an affidavit and a copy of the title certificates to some vehicles which clearly indicated that those vehicles are, and in fact have been, the...
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