In re Snow

• Decision Date: 09 May 2019
• Docket Number: Case No. 18-14846-JDL
• Citation: 603 B.R. 114
• Parties: IN RE: Judith Darlene SNOW, Debtor.
• Court: U.S. Bankruptcy Court — Western District of Oklahoma

603 B.R. 114

IN RE: Judith Darlene SNOW, Debtor.

Case No. 18-14846-JDL

United States Bankruptcy Court, W.D. Oklahoma.

Signed May 9, 2019

Jason A. Sansone, Sansone Howell PLLC, Del City, OK, for Debtor.

ORDER DENYING DEBTOR'S OBJECTION TO CLAIM # 1 AND DETERMINING FEES PURSUANT TO RULE 3002.1

Janice D. Loyd, U.S. Bankruptcy Judge

I. Introduction

Quicken Loans Inc. ("Quicken") is the holder of a first mortgage on the Chapter 13 Debtor's residence. Debtor challenges the reasonableness of Quicken's claim of $1,000 for pre-petition foreclosure attorney's fees and $900 for post-petition attorney's fees. Before the Court for consideration are: (1) the Debtor's Amended Motion for Determination of Fees, Expenses, or Charges Pursuant to Rule 3002.1(E) ("the Motion") [Doc. 47]; (2) Debtor's Amended Objection to Proof of Claim #1 (the "Objection") [Doc. 48]; (3) Response to Amended Objection to Claim by Debtor filed by Quicken [Doc. 52]; and (4) Response to Amended Motion for Determination of Fees, Expenses, or Charges Pursuant to Rule 3002.1(E) filed by Quicken [Doc. 53].

On April 12, 2019, the matter came on for evidentiary hearing.¹ After consideration of the arguments of counsel, the evidence submitted and the applicable law, the Court announced its decision from the bench. For the reasons stated in open court which are incorporated herein by reference, the Court makes the following Findings of Fact and Conclusions of Law pursuant to Fed.R.Civ.P. 52(a), made applicable to these bankruptcy proceedings by Fed.R.Bankr.P 7052 and 9014(c)² .

II. Jurisdiction

This Court has subject-matter jurisdiction pursuant to 28 U.S.C. § 1334(a), 28 U.S.C. § 157(a) and the Order of Reference contained in Local Rule LCvR 81.4 of the United States District Court for the Western District of Oklahoma. This is a contested matter under Rule 9014 to determine whether attorney's fees incurred pre-petition and post-petition in a Chapter 13 case by a creditor holding a claim secured by a mortgage encumbering a debtor's principal residence are allowable under Rules 3001 and 3002.1(e), respectively. Thus, this is a "core proceeding" under 28 U.S.C. § 157(b)(2)(B) - allowance or disallowance of claims against the estate - and the court may enter a final order herein. Both parties have participated fully in the litigation of this matter without challenging the jurisdiction of this Court to enter final orders and have thus consented to the same.

III. Findings of Fact

1. On November 20, 2018, Debtor filed a voluntary petition for relief pursuant to Chapter 13 of Title 11 of the United States Bankruptcy Code. [Doc.1].

2. In her Schedule D, Creditors Who Have Claims Secured by Property, the Debtor listed the claim of Quicken which

was secured by the Debtor's principal residence at $68,392 and valued the residence at $59,000. [Doc.1, pg.18].

3. On December 28, 2018, pursuant to Rule 3001, Quicken timely filed a Proof of Claim (POC) (Official Form 410) in which it listed the amounts due on the petition date under the Note and the Mortgage, including principal, interest, prepetition fees and charges, escrow deficiency, and the calculation of the prepetition arrearage. [POC 1-1]. In its POC, Quicken asserted a secured claim in the amount of $69,168.99 based on a first mortgage on the Debtor's principal residence. [POC 1-1]. The POC Part 5: "Loan Payment History from First Date of Default" itemized $1,000 in attorney's fees (in separate amounts of $600 and $400), expenses of $125 for a title report, $15 for a property inspection, $975 for title costs, $272.14 for court filing fees, $25 for notice of lis pendens and $300 for process server's fees, bringing the total to $2,778.92 in pre-petition fees and costs. Only the claim for attorney's fees in the amount of $1,000 is at issue.

4. Kim S. Jenkins, an attorney at the Baer & Timberlake law firm representing Quicken in the state foreclosure proceedings brought against the Debtor, testified, consistent with her Affidavit filed in the case and introduced as a trial exhibit, [Doc. 34-1; Quicken Ex.1], that the standard hourly fee which experienced attorneys at Baer & Timberlake charge is $350 and staff charges at $125 per hour. Jenkins testified that Quicken is normally charged at the preferential rate of $275 per hour. Jenkins testified that the time records of Baer & Timberlake indicated that the firm had expended 9.1 hours for work on the foreclosure. Jenkins' Affidavit stated that had Baer & Timberlake charged its normal preferential contractual hourly rate with Quicken of $275 per hour, the amount charged for the foreclosure up to the filing of bankruptcy would be $2,502.50. If the firm had charged its customarily hourly rate of $350 per hour and staff charges of $125 per hour, the amount charged would be $1,418.75. [Doc. 34-1; Quicken Ex.1].

5. These hourly charges, however, were never billed to Quicken, nor are they sought to be recovered as a claim in this bankruptcy. Jenkins testified that in normal foreclosure matters Baer & Timberlake had a contractual "flat fee" arrangement with Quicken of $1,000 for the filing of a foreclosure, the amount of attorney's fees also claimed in the POC. [Doc. 34-1; Quicken Ex.1].

6. After the filing of its POC, on January 11, 2019, pursuant to Rule 3002.1(c), Quicken filed Official Form 410S2 - "Notice of Postpetition Mortgage Fees, Expenses, and Charges" - claiming an additional $900, comprised of $150 attorney's fees for "Plan Review", $500 attorney's fees for "Bankruptcy/ Proof of Claim fees" and $250 for "other - 410A" fees and expenses. [POC 1-1, doc., 1/11/19]. No further detail or documentation regarding the fees was provided in the Form 410S2.

7. Matthew Hudspeth, an attorney in practice for 27 years including 16 years with Baer & Timberlake responsible for handling bankruptcy matters for Quicken, testified, consistent with his Affidavit and time records of Baer & Timberlake, as to post-petition attorney's fees expended by the firm in the Debtor's bankruptcy. As with the testimony of Jenkins, Hudspeth testified that while experienced attorneys at Baer & Timberlake customarily charged clients $350 per hour and staff at $125 per hour, the hourly fee normally charged Quicken was the preferential hourly rate of $275. The time records testified to by Hudspeth indicated the time expended for "plan review" was 1.4 hours, and 4.95 hours spent on "POC preparation and filing". [Doc. 36-1 & 2; Quicken Ex. 4 & 5]. Hudspeth testified that the time entries on the records were not made contemporaneously with the description of the work contained therein. The time was "reconstructed" by examining the firm's computer system which contained the date, nature of the service provided and the name of the person performing the same. Hudspeth concluded that based upon his experience and knowledge of the file that the time records were an accurate representation of the time and services charged by Baer & Timberlake and are fair and reasonable.

8. Michael McCormick, a senior partner in the bankruptcy department at McCalla Raymer, LLC, a national law firm with offices in 10 states, was called as an expert witness by Quicken. McCormick is licensed to practice in 11 states and the concurrent federal court districts. He has written many articles and has been an instructor in numerous continuing legal education seminars/webinars on federal regulations governing escrow accounts and the 2011 and 2016 Bankruptcy Rule amendments to Rule 3002.1. He has been active with the National Association of Chapter 13 Trustees Mortgage Committee by helping to draft "Best Practices for Trustees and Mortgage Servicers in Chapter 13".³ McCormick testified at length as to the methodology and importance of proper preparation and filing of a creditor's Proof of Claim (Official Form 410), Mortgage Proof of Claim Attachment (Official Form 410A) and Notice of Postpetition Mortgage Fees, Expenses and Charges (Official Form 410S2). McCormick testified that he reviewed Baer & Timberlake's computer records, client screens and interviewed personnel responsible for plan review and preparation of proofs of claim forms (410, 410A and 410S2) and found that they were accurate and in accordance with Baer & Timberlake's procedures. In McCormick's expert opinion the charge of $500 made by Baer Timberlake for proof of claim matters was "more than reasonable" and "on the low end of what I've seen". McCormick noted that the Federal Home Loan Mortgage Corporation (Freddie Mac) had just announced, effective April 18, a suggested $950 fee for plan review and proof of claim preparation and filing, less than the amount charged in this case by Baer & Timberlake to Quicken. The $250 for "attorney's fees" on the Official Form 410A is reasonable as "it is actually consistent with other Governmental Service Enterprises (GSE's) and Freddie Mac allows a higher fee." The Quicken Mortgage attached to the POC filed by Quicken provides in paragraph 13 regarding fees that "[l]ender may collect fees and charges authorized by the [HUD] Secretary." As to the Burk⁴ factors applicable to the present case, McCormick testified that specialized knowledge is used to prepare the proof of claim, that Baer & Timberlake has the specialized skill requisite to perform the legal services properly, that Quicken has had a relationship with Baer & Timberlake for more than 10 years and further the complexity of the work involved presents significant risks.

9. As with his testimony to the post-petition attorney's fees, charges and expenses in the total amount of $900, McCormick testified that he had reviewed time records and the Affidavit of Kim Jenkins pertaining to the pre-petition state foreclosure services rendered by Baer & Timberlake for which it charged Quicken, and was seeking here, $1000. McCormick opined that both the services rendered and the amount charged were reasonable.

10. Bret Davis testified as an expert witness for Quicken. Davis, has practiced law for 26 years...