In re Spurlock
| Decision Date | 01 August 2022 |
| Docket Number | Case No. 21-31957 |
| Citation | 642 B.R. 269 |
| Parties | IN RE: Sarah B. SPURLOCK, Debtor. |
| Court | U.S. Bankruptcy Court — Southern District of Ohio |
Courtney A. Cousino, Fesenmyer Law Offices, LLC, Columbus, OH, Thomas M. Fesenmyer, Fesenmyer Law Offices, LLC, Dayton, OH, for Debtor.
MEMORANDUM ORDER CONCERNING DEBTOR COUNSEL'S APPLICATION FOR COMPENSATION (DOC. 1)
This matter is before the court on the Application for Allowance of Fees in Chapter 13 Case (doc. 1 at 52) (the "Application") filed by Thomas Fesenmyer ("Fesenmyer"), counsel for the debtor, Sarah B. Spurlock ("Debtor"). Fesenmyer seeks a flat fee award of $4,350 in attorney fees, the maximum no-look fee in this district, for representing the Debtor throughout this Chapter 13 case. See LBR 2016-1(b)(2)(A), as amended by General Order 50-1. The Debtor in this case seeks only to address a secured debt on a motor vehicle through her Chapter 13 Plan; she owns no other significant assets and owes no other secured or priority debts. If not for her desire to preserve the equity in her motor vehicle, this case may have been filed under Chapter 7. Nevertheless, Fesenmyer argues that he is entitled to receive the maximum allowable flat fee for his work in this case. The question presented by these circumstances is whether Local Bankruptcy Rule 2016-1(b)(2)(A) (the "No-Look Fee Rule") entitles attorneys to receive the highest allowable flat fee, currently $4,350, for every Chapter 13 case filed by an attorney, without regard to the facts or circumstances of the case. Interpreting the No-Look Fee Rule in accordance with § 330, the Sixth Circuit's In re Boddy decision,1 and the Ohio Rules of Professional Conduct, the court determines that the No-Look Fee Rule adopted by the Southern District of Ohio requires attorneys who opt-in to the flat fee structure to assess the facts and issues presented by each individual case to determine a reasonable flat fee, which may be equal to or lower than the maximum allowable flat fee. In the alternative, counsel may itemize their fees pursuant to Local Bankruptcy Rule 2016-1(b)(2)(C). The court determines that the No-Look Fee Rule does not entitle attorneys to receive an identical fee in every case or eliminate the requirement that a fee be reasonable and tied to actual and necessary work for the benefit of the estate or the debtor.2
Here, the court does not find that the actual and necessary work required to effectively represent the Debtor in this case supports an award of the maximum allowable flat fee as reasonable compensation. Therefore, for the reasons that follow, the court approves attorney fees for this case in the total amount of $4,320. This sum represents an adjusted $3,660 flat fee for representing the Debtor during this Chapter 13 case and an additional $660 for time spent preparing a confirmation statement.
The Debtor filed her Chapter 13 petition on November 18, 2021. Doc. 1. She is a below median income debtor.3 On her schedules, she indicated ownership of one automobile, a 2015 Honda Civic, with a value of $10,400 (the "motor vehicle"). Doc. 1 at 15-16. She filed a Chapter 13 Plan on December 1, 2021 (doc. 13) (the "Plan"). The Plan pays the fully secured claim on the motor vehicle. The Plan does not provide for any of the other types of relief – for example, lien avoidance or curing arrearages on secured debt – that are commonplace in many Chapter 13 cases. The Debtor will pay approximately $15,000 ($250 x 60) over the life of the Plan, assuming that the Plan period extends to 60 months.4 To address the motor vehicle claim, the Plan provides for an estimated secured claim of $1,958.00 to be paid at the Till interest rate of 5.5% with minimum monthly payments of $100.00.5 The Plan accounts for the attorney fee of $4,350 and shows that the Debtor paid $625 up front. The remaining $3,725.00 is to be paid through the Plan in monthly payments of at least $125.00. At the rate of $125 per month, the $3,725 balance would be paid in 30 months. The Plan provides a 3% dividend to non-priority unsecured creditors.
The court entered an Order on February 23, 2022 which summarized the Plan and raised issues about whether the Plan was confirmable and whether the $4,350 fee was reasonable and necessary. Doc. 20. Fesenmyer filed a Debtor's Statement in Support of Confirmation and No-Look Fee (doc. 23) (the "Statement in Support") and the Trustee's counsel filed the Chapter 13 Trustee's Memorandum Concerning Court's Order (doc. 24) (the "Trustee's Memorandum").
The Statement in Support advised the court that "[t]he Debtor's motivation in filing this case is to protect equity in her 2015 Honda Civic,6 repay as much debt as feasible, and reorganize her financial situation on a good faith basis[.]" Statement in Support at 5. Upon review of the Statement in Support, the court determined that confirmation of the Debtor's Chapter 13 Plan was appropriate, and the Plan was confirmed (docs. 25, 26). However, the court proceeded with a hearing on whether the maximum no-look fee of $4,350 was a reasonable attorney fee for this Chapter 13 case.7
The court conducted a hearing on April 7, 2022 on the Application (the "Hearing"), participated in by Fesenmyer; his co-counsel, Courtney A. Cousino; Scott G. Stout, counsel for the Chapter 13 Trustee; and John G. Jansing, the Chapter 13 Trustee. Fesenmyer, and an expert witness, Nannette Dean, testified.
In response to the court's concerns, Fesenmyer asserted in the Statement in Support that the maximum allowable flat fee of $4,350 was justified in this case. After noting the benefits of a court's use of a no-look structure for Chapter 13 cases, Fesenmyer described the services which he has performed and those that he anticipates performing for the Debtor as the case progresses. He attached an itemization of his fees for the case and walked the court through it.
The Trustee's Memorandum also noted the benefits of a no-look fee structure in Chapter 13 cases and provided:
Fesenmyer testified and introduced two exhibits into evidence – the Statement in Support and counsel's itemization of fees for the case (the "Fee Itemization") (doc. 31). The Fee Itemization was the same one that was attached to the Statement in Support.
Fesenmyer testified in support of the fees requested in the Application and Fee Itemization. He stated that he was admitted to practice in the State of Ohio in 2001 after attending Capital University Law School. Doc. 36, Transcript of the Hearing (Tr.) at 11. Fesenmyer currently bills $250 an hour, has represented debtors in Chapter 13 cases for over 20 years, and has filed over 4,000 bankruptcy cases. Tr. 12, 13, 52, 54.
Fesenmyer performed all the legal work for the Debtor in this case. Tr. 14. He does not employ paralegals because he cannot afford to do so. Tr. 13. He charges between $500 and $625 for Chapter 7 bankruptcy cases and charges the same amount up front for Chapter 13 cases, with the balance of the no-look fee being paid from Chapter 13 plan payments. Tr. 15. He has used itemized billing in two business cases and prior to the Hearing had never used itemized billing for any non-business Chapter 13 cases. Tr. 33, 34.
He charges a flat fee in all his consumer Chapter 13 cases because he believes it helps all constituents involved, including the court and the Chapter 13 Trustee, and because it gives debtors certainty as to what their attorney fees will be for the case. Tr. 15, 33. He also believes that he could not help as many clients as he does if he billed hourly, as they almost all would pay higher fees and that he earns the no-look fee in a typical Chapter 13 case. Tr. 15, 16. While he provides debtors with the option to pay an hourly fee, they, like this Debtor, usually opt to pay a flat fee. Tr. 15. All of his clients sign a contract which sets forth the flat fee. Id . However, no such fee agreement was introduced in evidence in this case, and the Debtor did not appear or testify at the Hearing.
Fesenmyer testified as to the normal amount of time he spends on a Chapter 13 case and the tasks he performs in representing a Chapter 13 debtor. Tr. 16-20. He believes that he is entitled to the maximum allowable flat fee in every case based on the time that he spends on a typical Chapter 13 case. Tr. 33.
The itemization of fees in this case for pre-petition and preconfirmation services was based on contemporaneous time entries, which he testified he keeps in every case. Exhibit B; Tr. 35-36. Fesenmyer estimated his time for anticipated future services based on his experience. Exhibit B at 3; Tr. 44. Fesenmyer billed five hours for researching and preparing the Statement in Support, with two hours spent on the confirmation issues and three hours spent on the no-look fee issues. Exhibit B at 3, Tr. 42-43.
The Debtor also called Nannette Dean ("Dean"), a Columbus, Ohio bankruptcy attorney, to testify as an expert witness in support of the fees. Dean testified she attended Capital University Law School and was admitted to the practice of law in Ohio in 1995. Tr. 47. She has been practicing in bankruptcy court since 1996 and has experience in both medium and small law firms. Id . Dean...
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...on their claims, since any amount paid as attorney's fees usually reduces the amount to unsecured creditors. In re Spurlock , 642 B.R. 269, 287 (Bankr. S.D. Ohio 2022). Just as attorneys are not restricted to the expedited fee process and can seek additional fees if warranted, the expedited......
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