In re Taylor
| Decision Date | 06 October 1986 |
| Docket Number | Bankruptcy No. 82-2961,Motion No. 86-2627. |
| Citation | 66 BR 390 |
| Parties | In re Ronald C. TAYLOR and Jayme Taylor, t/a Sir Ronald's Restaurant and Lounge, and J.J. Personnel, Debtors. |
| Court | U.S. Bankruptcy Court — Western District of Pennsylvania |
Mary Anne McKeen, Lampl, Sable, Makoroff & Libenson, Pittsburgh, Pa., for debtors.
Robert J. Taylor, Ambridge, Pa., Trustee.
Before the Court is an Objection to the Trustee's Proposed Order of Distribution in this case, the fee applications of the attorney for the Trustee and the attorney for the Debtors, as well as the Motion To Approve Employment of Counsel Nunc Pro Tunc submitted by the attorney for the Debtors (Motion No. 86-2627).
Because this Court is ordering significant adjustments in the fees requested, the Trustee's Proposed Order of Distribution cannot be confirmed, and will require revision pursuant to the changes which will follow.
This case was originally filed under Chapter 11 of the Bankruptcy Code on September 9, 1982. The case was subsequently converted to a case under Chapter 7 of the Code on March 17, 1983, at which time the Trustee was appointed. The Debtors received their discharge on July 25, 1984.
The Trustee filed several proposed distributions culminating in a Third Revised Proposed Order of Distribution, filed on January 9, 1986, now presently before this Court. The Trustee's Report indicates that the total amount received in the case was $8,562.92. After disbursements of $1,437.24, there remains $7,125.68. The Trustee's fee in this case is $390.00. Counsel for the Debtors requested $5,557.50 in fees and $108.05 in expenses in the Chapter 7 case; their application in the preconversion Chapter 11 case lists fees of $4,177.50 (not including an original retainer of $1,000.00) and $46.49 in expenses. The Trustee, acting as his own attorney, lists fees of $2,185.00. Clearly, the Chapter 7 administrative claims are greater than the total amount available for distribution. There would be no monies available for any Chapter 11 administrative expenses, nor would any of the creditors receive any of the amounts owed to them.
The Trustee and Debtors' counsel have determined that their fees would necessarily be paid on a pro rata basis, with the Trustee receiving $326.82, the attorney for the Trustee receiving $1,831.70, and the Debtors' attorney receiving $4,804.46.
The Court is seriously troubled by this outcome as this scenario appears to be the rule as opposed to the exception. It cannot be a policy of this Court to allow the legal fees in a bankruptcy case to completely swallow all of the assets. The Court is cognizant of the fact that the estate assets and the actual amounts claimed are not substantial. However, the Court is also cognizant of the fact that the issue contained herein and the procedures utilized are all too familiar. On too many occasions the professional fees exhaust all available assets, leaving nothing to any other creditor. Clearly Congress did not intend this result, and equally clearly, this Court will not condone this continuing result. In this case, serious difficulties appear in both of the fee petitions presented. Therefore, these fee petitions will be adjusted to correspond with the compensable hours expended.
Compensation given to the Trustee for his services is determined by a percentage of the total monies received through the Trustee's services. 11 U.S.C. § 326. The services to be performed by the Trustee are enumerated at 11 U.S.C. § 794. This section gives expansive administrative responsibility to the Trustee.
Pursuant to 11 U.S.C. § 327(a), the Trustee is given the authority to employ professional persons if the Trustee determines such services are necessary. The Trustee may receive Court authorization to serve as his own attorney if such a dual role is in the best interest of the estate. 11 U.S.C. § 327(d). The attorney is only permitted to be compensated for such if his services are required in a legal capacity. 11 U.S.C. § 328(b). It is clear, however, that the attorney cannot be compensated for performing the duties of the Trustee. Matter of Wilmon, Inc. 61 B.R. 989 (Bktcy. W.D.Pa.1986); In re Meade Land and Development Company, Inc., 527 F.2d 280 (3rd Cir.1975); In re Whitney, 27 B.R. 352 (Bktcy.D.Me.1983).
The attorney is to assist the Trustee in the performance of services for the estate, which cannot be performed by one not licensed to practice law. Matter of Wilmon, Inc., supra; In re Shades of Beauty, Inc., 56 B.R. 946 (Bktcy.E.D.N.Y.1986); In re McAuley Textile Corporation, 11 B.R. 646 (Bktcy.D.Me.1981).
Before an attorney for the Trustee can be compensated by this Court, we must determine which services performed were truly legal in nature, and which were actually the ministerial duties of the Trustee. Matter of Wilmon, Inc., supra; In re Red Cross Hospital Association, Inc., 18 B.R. 593 (Bktcy.W.D.Ky.1982); In re McAuley Textile Corporation, supra.
This is at best a difficult task, especially when the Trustee acts as his own attorney; however, it is this very difficulty which gives credence to the absolute need for detailed explanations of the legal nature of the services performed. Matter of Wilmon, Inc., supra; Matter of Santoro Excavating, Inc., 56 B.R. 546 (Bktcy.S.D.N.Y. 1986); Matter of Minton, 33 B.R. 38 (Bktcy.S.D.N.Y.1983); In re Whitney, supra.
This attorney has submitted a detailed itemization of services rendered. However, the entries appear in absolutely no logical order and have no corresponding time allocations. Said summary provides no assistance to this Court. We will not indulge in extensive labor and guesswork to justify a fee for an attorney who has not done so himself. Matter of Wilmon, supra; In re Nashville Union Stockyard Restaurant Company, Inc., 54 B.R. 391 (Bktcy.M.D.Tenn.1985); In re Anderson, 49 B.R. 725 (Bktcy.D.Haw.1985); In re Horn & Hardart Baking Company, 30 B.R. 938 (Bktcy.E.D.Pa.1983).
The attorney for the Trustee does list the following general areas of services rendered:
1) Complaint To Sell Liquor
License and review of Answer
by the United States 2.50 Hours
2) Notice to 18 secured creditors
of sale of the liquor license 4.00 Hours
3) Legal advertising of sale of
liquor license 1.50 Hours
4) Telephone calls and
correspondence with the
Pennsylvania Liquor Control
Board 1.00 Hours
5) Calls and meeting with the
Debtors re: liquor license 1.25 Hours
6) Correspondence and telephone
calls with the Debtors'
attorney 2.00 Hours
7) Prepared Renewal
Application, Stipulation and
Affidavit for transfer of
liquor license 1.00 Hours
8) Rescheduling of sale of liquor
license and preparation of
documents necessary to
reschedule 1.75 Hours
9) Sale of liquor license 3.00 Hours
10) Meeting with the successful
bidder on the liquor license 1.50 Hours
11) Prepared Schedule of
Distribution (includes future
time for causing distribution
to be achieved) 3.50 Hours
Initially, the Court acknowledges that the filing of the Complaint To Sell the Liquor License and the review of the Response thereto does constitute legal work necessitating the services of the attorney.
The preparation of the notices for the sale is a ministerial function to be performed by the Trustee. Said notice can easily be prepared by reference to a "form book", to which a Trustee should have ready access. In fact, the form notice contained in Collier on Bankruptcy, Vol. 6 (15th ed.) expressly calls for the signature of the Trustee. Additionally, the Court is unable to determine why the noticing of eighteen (18) creditors would consume four (4) hours. The attorney cannot be compensated for this activity.
The preparation of advertising for the sale of the liquor license is clearly the duty of the Trustee. Classification of the advertising as "legal" because the advertising occurred in legal journals, does not make the work "legal".
Telephone calls and correspondence with the Liquor Control Board might possibly qualify as legal time. However, the attorney has offered no explanation, in either the original application or the supplemental itemization, to show why these services were beyond the scope of the Trustee's duties. We assume that these contacts were necessary to determine the procedures required for reinstating an expired liquor license. This is clearly the administrative duty of the Trustee, not his attorney.
Telephone calls and meetings with the Debtors, in reference to the liquor license, appear to be duties appropriately assigned to the Trustee. Since no explanation was offered as to the legal nature of these calls, or the conferences, no legal compensation can be awarded. Similarly, telephone calls and correspondence with the Debtors' counsel may very well have involved legal issues. However, without any supporting narrative, the Court cannot grant any attorney fees.
Counsel also requests compensation for the preparation of the liquor license Renewal Application, Stipulations, and an Affidavit for the transfer of the liquor license. None of these activities requires an attorney's services, as the Trustee would be required to prepare these documents whether or not an attorney had been appointed. We will not award fees to an attorney for the performance of the Trustee's duties.
The original date for the sale of this liquor license was postponed; however, it is unclear to the Court why this delay occurred....
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In re Lilliston, Bankruptcy No. 88-5-2189-SD.
...the estate for other services unless he establishes that his services benefited the estate. Id. at 109. See also In re Taylor, 66 B.R. 390, 394-397 (Bankr.W.D. Pa.1986). Where professional services are performed which benefit only the debtor personally, the debtor, not the estate, is liable......