In re Wildman

• Decision Date: 03 April 1987
• Docket Number: Bankruptcy No. 81 B 05869,81 B 07254,82 B 10068.,81 B 05870,81 B 08649-81 B 08654,81 B 07255,81 B 15981,81 B 08275
• Parties: In re Paul C. WILDMAN, et al., 5300 North Sheridan Road Partnership, a/k/a 5300 North Sheridan Road, a limited partnership, 6320 North Kenmore Partnership, a/k/a 6320 North Kenmore, Glencoe-Sheridan Partnership, a/k/a 5400 North Sheridan a limited partnership, Pratt Avenue Apartment Associates, a/k/a 1673 West Pratt Boulevard Partnership, 5420 North Sheridan Apartment Associates, a/k/a 5420 North Sheridan Road, the Devon Partnership, a general partnership, 5200 North Sheridan Road Apartment Associates, a limited partnership, Hogan & Farwell/Marken Realty Group, Ltd. Debtors.
• Court: United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois

72 B.R. 700 (1987)

In re Paul C. WILDMAN, et al., 5300 North Sheridan Road Partnership, a/k/a 5300 North Sheridan Road, a limited partnership, 6320 North Kenmore Partnership, a/k/a 6320 North Kenmore, Glencoe-Sheridan Partnership, a/k/a 5400 North Sheridan a limited partnership, Pratt Avenue Apartment Associates, a/k/a 1673 West Pratt Boulevard Partnership, 5420 North Sheridan Apartment Associates, a/k/a 5420 North Sheridan Road, the Devon Partnership, a general partnership, 5200 North Sheridan Road Apartment Associates, a limited partnership, Hogan & Farwell/Marken Realty Group, Ltd. Debtors.

Bankruptcy Nos. 81 B 05869, 81 B 05870, 81 B 07254, 81 B 07255, 81 B 08275, 81 B 08649-81 B 08654, 81 B 15981, 82 B 10068.

United States Bankruptcy Court, N.D. Illinois, E.D.

April 3, 1987.

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John H. Ward, Antonow & Fink, Chicago, Ill., for movant Trustee.

MEMORANDUM OPINION AND ORDER ON ANTONOW & FINK'S (1) MOTION FOR RECONSIDERATION OF ORDER DISALLOWING CERTAIN ATTORNEY'S FEES AND (2) PETITION FOR SUPPLEMENTARY FEES FOR THE PERIOD APRIL 22, 1986 TO JANUARY 11, 1987

JACK B. SCHMETTERER, Bankruptcy Judge.

Antonow & Fink ("A & F") as attorney for Trustee has moved for reconsideration of this Court's November 25, 1986 Order. That Order allowed in part and disallowed in part A & F's petition for additional fees for services rendered as counsel for Trustee between July 1, 1985 and April 21, 1986. Also before the Court is A & F's petition for supplementary fees for the period between April 22, 1986 and January 11, 1987. For the reasons set forth below, A & F's motion for reconsideration is denied. Further, A & F's petition for fees and expenses filed on March 5, 1986 is allowed in part and disallowed in part. Because of the status of this case, the Court intends this Order to be final and appealable. An Order carrying out the decisions herein is separately entered this date.

A & F'S MOTION FOR RECONSIDERATION

I. BACKGROUND

There are thirteen related bankruptcy estates involved here which are being jointly administered for various purposes under Chapter 11 of the Bankruptcy Code. Twelve of the thirteen debtors filed for protection in 1981 while the thirteenth filed in early 1982. A plan of reorganization was confirmed in eleven of the thirteen bankruptcies on June 27, 1984. The Pratt Avenue Plan was confirmed on September 5, 1985. The thirteenth case was later dismissed.

On June 17, 1981 A & F was granted leave to appear and represent the Trustee in these bankruptcy proceedings. Melanie Rovner Cohen, a partner at A & F, was appointed Successor Trustee for the estates on June 6, 1985.

On August 28, 1984, A & F was granted a "final" award of attorney's fees for services rendered as counsel for Trustee through June 30, 1984. By Order entered October 29, 1985, A & F was awarded supplementary fees and reimbursement for expenses for the period between July 1, 1984 and June 30, 1985. Total fees and disbursements awarded to A & F through June 30, 1985 amounted to $778,080.

The petition presently being reconsidered is A & F's third petition for fees. A hearing was held thereon on June 10, 1986, following notice to all Debtors, creditors and parties in interest. A & F prayed that it be granted supplemental fees in the amount of $130,700 and disbursements of $3,979.86.

Objections to A & F's third petition were filed on behalf of Debtors Kaiserman and Fogelberg. The objections generally questioned the pace, staffing, extent and value of work performed and the amount of fees still being applied for long after confirmation of most of the plans.

II. THE NOVEMBER 25, 1986 ORDER

In the November 25, 1986 Order on A & F's third fee petition, this Court allowed and awarded $3,979.86 for reimbursement of disbursements and $96,950 in supplementary fees. The balance and remainder of fees applied for, $33,750, were disallowed.

This Court took issue with the amount of staffing still involved in the case even though it is at a post confirmation stage when a relatively small group of associate level lawyers and paralegals should be able to clean up remaining problems under direction of one senior attorney. Instead, A & F's application showed heavy senior legal direction by two senior attorneys, over thirteen middle and lower level attorneys, four paralegals, and other unspecified workers doing minor jobs. In all, twenty-eight people worked on the case during the period in question. The Court concluded that with that much staffing, some duplication of work, otherwise unnecessary conference time, and work inefficiency was inevitable.

The Court then went on to discuss specific objections to eight of the fifteen categories of work. Each of these eight categories were reduced by amounts ranging from $750 to $9,000. More specific details of the Court's objections will be given below when each category is discussed in turn. The remaining seven categories were not discussed and were awarded fees in full.

III. STANDARDS OF RECONSIDERATION

A & F now asks that this Court reconsider the November 25, 1986 Order disallowing $33,750 in attorney's fees. In support, A & F submits an affidavit by one of its senior attorneys, John H. Ward. The Ward Affidavit, along with the motion, presents general observations concerning staffing at A & F as well as the asserted factual bases that allegedly require the Court to reconsider its ruling.

Motions for reconsideration serve a limited function: to correct manifest errors of law or fact or to present newly discovered evidence. Keene Corp. v. International Fidelity Insurance Co., 561 F.Supp. 656, 665 (N.D. Ill. 1983). A motion for reconsideration cannot be used to raise arguments that could and should have been made before the judgment issued. Id. In this case, A & F argues only that the Court has made errors of fact and does not dispute the common standards applied to fee petitions. A & F's motion and the Ward affidavit raise several issues which were not brought to light in either the application itself or the hearing on the fee petition. Such affidavits and showings should ordinarily be made before the hearings on fees rather than afterwards. Nevertheless, because movant has strongly criticized the Court¹ and also because disputes over fees arise frequently and are among the most important and time-consuming duties of this Court, the Court has considered the Ward affidavit and has fully reconsidered all issues posed by the A & F petition and will present a full discussion of all issues involved here.

The 300 Chapter 11 cases before this Court generate hundreds of fee petitions a year, the Chapter 7 cases produce a like number, and the Chapter 13 cases present even more (albeit far less complex). This is indeed an important subject in bankruptcy.

IV. STANDARD FOR REVIEW OF ATTORNEY FEE PETITIONS AND DUTY OF THE COURT

In passing upon attorneys' applications for allowances, the Bankruptcy Court must deal with several broad considerations:

(1) Are the services which are the subject of the application properly compensable as legal services?

(2) If so, were they necessary and is the performance of necessary tasks adequately documented?

(3) If so, how will they be valued? Were the necessary tasks performed within a reasonable amount of time and what is the reasonable value of that time?

In making fee determinations, the bankruptcy court has wide discretion. The standard of review on appeal of a fee award by a bankruptcy court is whether the bankruptcy judge has abused discretion. Matter of U.S. Golf Corp., 639 F.2d 1197 (5th Cir.1981); Cohen & Thiros v. Keen Enterprises, 44 B.R. 570 (N.D.Ind.1984); In re AOV Industries, Inc., 43 B.R. 468 (D.D.C.1984), vacated and remanded, in part, on other grounds, 798 F.2d 491 (D.C. Cir.1986). Therefore the Judge's authority should be exercised with great care and fairness.

The bankruptcy judge has a duty to challenge requested fees sua sponte. As stated in Cohen & Thiros, supra,

". . . the bankruptcy court sits as a guardian of the funds available to creditors. It is not an abuse of discretion for the court to thoroughly examine fee petitions. Indeed, it could be an abuse of discretion to fail to challenge an insufficient petition: `It is the bankruptcy court\'s independent obligation to give credit only where there are . . . supporting documents, even in cases where no interested parties raise objections to the claim.\'"

44 B.R. at 574 (quoting In re Meade Land Development Co., 527 F.2d 280, 284 (3d Cir.1975).

If no objections are raised to a fee request, the Bankruptcy Court is still not bound to award the fee as prayed. It has the independent authority and responsibility to determine the reasonableness of all fee requests, regardless of whether objections are filed. In re NRG Resources, Inc., 64 B.R. 643, 650 (W.D.La.1986); In re Affinito & Son, Inc., 63 B.R. 495, 497 (Bankr.W.D.Pa.1986); In re Esar Ventures, 62 B.R. 204, 205 (Bankr.D. Hawaii 1986); In re Jensen-Farley Pictures, Inc., 47 B.R. 557, 585 (Bankr.D. Utah 1985); In re Wilson Foods Corp., 36 B.R. 317, 320 (Bankr.W.D.Okl.1984).

The commentators agree. As one states, ". . . the court continues to retain the ultimate responsibility for ensuring that the compensation awarded to professional persons falls within the parameters prescribed by section 330." 2 Collier on Bankruptcy, Paragraph 328.02 at 328-8 (15th Ed. 1986). Others are more specific: "Even if no party in interest objects . . . the court should review the application to make sure the compensation sought has been earned and is reasonable." R.E. Ginsberg, Bankruptcy, Paragraph 4501 (1985). "The bankruptcy judge can and must apply his own expertise sua sponte, if necessary, in order to be fair to both counsel and creditors because, in the final analysis, either excess generosity or extreme miserliness in allowing fees will reflect in the public perception of the system." Lavien, Fees as Seen from...