Matter of Navis Realty, Inc.

Decision Date09 April 1991
Docket NumberBankruptcy No. 186-61974-352.
Citation126 BR 137
PartiesIn the Matter of NAVIS REALTY, INC., Debtor.
CourtU.S. Bankruptcy Court — Eastern District of New York

COPYRIGHT MATERIAL OMITTED

Sherman, Citron & Karasik, P.C. by Howard Karasik, Sp. Counsel, New York City, for debtor.

Office of U.S. Trustee by Alfred Dimino, Garden City, N.Y.

DECISION ON FEE APPLICATION

MARVIN A. HOLLAND, Bankruptcy Judge:

Special Counsel for the Debtor submits an application for an interim fee allowance pursuant to § 330 of the Bankruptcy Code, 11 U.S.C. § 101 et seq., a) for an allowance of compensation for services rendered as Special Counsel to the Creditors' Committee and b) for reimbursement of actual and necessary disbursements incurred.

A Bankruptcy Court fee application is no different than any other Bankruptcy Court proceeding whose outcome seeks a binding judgment or order. The judgment or order sought must be supportable by conclusions of law which in turn must be logically sustainable by adequate findings of fact each of which in turn is predicated upon evidence sufficient to establish it. In a Bankruptcy Court fee application we start with the application itself as the record, and supplement that record with such testimony or documentary evidence as the applicant may wish to submit. Where, as here, the record contains insufficient factual information to justify or support the necessary findings, and where, as here, the applicant has declined the Court's offer of an opportunity to modify or supplement the application, the application must be denied.

11 U.S.C. § 330 entitled "Compensation of officers" states in subparagraph (a) thereof

(a) After notice to any parties in interest and to the United States trustee and a hearing, and subject to sections 326, 328 and 329 of this title, the court may award to a trustee, to an examiner, to a professional person employed under section 327 or 1103 of this title, or to the debtor\'s attorney —
(1) reasonable compensation for actual, necessary services rendered by such trustee, examiner, professional person, or attorney, as the case may be, and by any paraprofessional persons employed by such trustee, professional person, or attorney, as the case may be, based on the nature, the extent, and the value of such services, the time spent on such services, and the cost of comparable services other than in a case under this title; and
(2) reimbursement for actual, necessary expenses.

In reviewing applications for attorney's fees, the Court must consider three broad areas:

1. Are the services that 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 re Wildman, 72 B.R. 700, 704-05 (Bankr.N.D.Ill.1987); In re Shades of Beauty, Inc., 56 B.R. 946 (Bankr.E.D.N.Y. 1986), aff'd, 95 B.R. 17 (E.D.N.Y.1988).

In order to enable the court to make the findings prerequisite to a proper fee award, a proper professional fee application for compensation pursuant to 11 U.S.C. § 330 should therefore contain, at minimum, the following:

a. A copy of the order authorizing retention of the professional to show compliance with 11 U.S.C. § 327.
b. A statement of all compensation previously received in the case together with a copy of all orders awarding or denying same.
c. A statement of whether or not previous applications for fees have been made in the case, and if made, their history, in order to avoid duplication of compensation for the same services.
d. A statement of the amount presently sought.
e. A schedule of the claimed appropriate billing rate for each individual whose services are the subject of the application, as a starting point for the court to address the "cost of comparable services" under 11 U.S.C. § 330(a)(1).
f. Sufficient information to enable the court to conclude its determination of the appropriate billing rate for each of the persons whose services are the subject of the application. This may include:
i. Biographical data concerning the applicant and its members.
ii. A disclosure of the items which the applicant includes in the calculation of its overhead and operating expenses.
iii. A discussion of the "cost of comparable non-bankruptcy services" 11 U.S.C. § 330, which is "that fee which is customarily charged in the local community by someone who possesses similar skill, experience, expertise, stature and reputation who is faced with similarly novel and complex issues and who procures comparable results." In re Shades of Beauty, 56 B.R. at 951.
g. A summary background narrative describing generally those of the debtor\'s problems addressed by the applicant, and the manner in which they were approached, in order to enable the court to know whether to invoke the provisions of 11 U.S.C. § 328(a).
h. A computation of the compensation sought, derived by totalling the time appropriately spent by each individual involved and then multiplying that amount by the appropriate billing rate for each such individual.
i. If a "lodestar" adjustment is sought, the applicant shall provide the court with a separate analysis of the facts upon which such adjustment is claimed together with the amount of the proposed adjustment.
j. A detailed schedule of disbursements claimed. If not apparent from the context of the application, sufficient information should be provided to enable the court to pass separately upon the necessity and appropriateness of each item for which reimbursement is sought, in accordance with 11 U.S.C. § 330(a)(2).
k. A copy of the applicant\'s original time sheets. If kept by hand, they should be accompanied by a typed chronological translation. These time sheets include, at a minimum:
i. Date the service was performed.
ii. Identity of the person performing the service.
iii. A detailed explanation and justification of any items which appear to be unusual.
iv. Description of the services performed. The description should include the subject matter of all conferences and telephone calls, the parties involved and the identity of documents drafted, proofed, filed or served.

The following should be observed with regard to enumerated requirements:

Itemized Daily Entries. A proper fee application must list each activity, its date, the attorney who performed the work, a description of the nature and substance of the work performed, and the time spent on the work. Records which give no explanation of the activities performed are not compensable.
Particular Entries.
Negotiations. Time for negotiations should identify each specific issue.
Telephone Calls. An entry of "telephone call" or even "telephone call with Mrs. X" is insufficient. The purpose of the conversation and the person called or calling, must be clearly set out.
Conferences. Similarly, an entry of "conference" or "meeting", "conference with X" or "conversation with X" is insufficient. The entry should at the very least note the nature and purpose of the various meetings and conferences as well as the parties involved.
Drafting Letters or Documents. Time entries for drafting documents should specify the document involved and the matter to which it pertains. Time entries for drafting letters should briefly set forth the nature of each letter and to whom it is addressed.
Legal Research. Entries of "research", "legal research" or "bankruptcy research" are insufficient. The nature and purpose of the legal research should be noted. In addition, the entry should indicate what matter or proceeding for which the research was utilized and why this issue needed to be researched and what use was made of the research in the bankruptcy case.
Other Entries. Time entries for other activities, such as court appearances, preparation for court appearances, and depositions should also briefly state the nature and purpose of the activity.
Lumping. Applicants may not circumvent the minimum time requirement or any of the requirements of detail by "lumping" a number of activities into a single entry. Each type of service should be listed with the corresponding specific time allotment. Otherwise, the Court is unable to determine whether or not the time spent on a specific task was reasonable. Therefore, services which have been lumped together are not compensable.
Abbreviations. If abbreviations are used in the itemized daily entries, they must be explained somewhere in the application. Unexplained abbreviations will render the time entry not compensable.
Prior Fee Applications. In addition to the above requirements, the application should state those fees, if any, that were previously approved or denied by the court. Such entry shall include the date of the approval or denial of the prior application or applications and the amount of fees and expenses approved.

While the above requirements help to establish that services performed were "actual," the court must also determine that the services were reasonable and necessary. This determination will be made in accordance with the following guidelines:

The application should contain sufficient detail to enable the court to apply the following generally accepted guidelines:

Individual Responsibility. Generally, attorneys should work independently, without the incessant "conferring" that so often forms a major part of many fee petitions. Examples of the kind of work for which only one attorney will be compensable are:
Conferences. While some intraoffice conferences may be necessary, no more than one attorney may charge for it unless an explanation of each attorney\'s participation is given.
Court Appearances. When more than one attorney appears in court on a motion or argument for a conference, no fee should be sought for nonparticipating counsel. Attorneys should not circumvent this requirement by merely rotating or taking turns
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