Opinion
Case No. 01-74496
April 23, 2002
OPINION
This matter is before the Court on the Motion to Pay Attorney Fee's (sic) filed by William A. Krajec, attorney for the Debtors.
On November 19, 2001, Debtors filed their voluntary petition pursuant to Chapter 7 of the Bankruptcy Code. Along with their petition, Debtors filed their schedules, including Schedule F (Creditors Holding Unsecured Nonpriority Claims). According to their Schedule F, the unsecured nonpriority claims totaled $346,784.14. None of the debts shown on Schedule F was listed as contingent, unliquidated, or disputed. Two days later, Debtors filed their Motion to Convert from Chapter 7 to Chapter 13. An Order granting the Motion was entered on November 27, 2001. On December 14, 2001, Debtors filed their Chapter 13 Plan. On February 13, 2002, John H. Germeraad, Chapter 13 Trustee, filed his Motion to Dismiss the case on the basis that the unsecured debt listed on Schedule F exceeds the jurisdictional limit of Chapter 13 as set forth in 11 U.S.C. § 109(e). A first meeting of creditors was held on February 15, 2002. On February 25, 2002, Debtors filed their Motion to Dismiss the case. The Motion was granted on February 27, 2002.
On March 1, 2002, Mr. Krajec filed his Motion to Pay Attorney Fee's (sic). Mr. Krajec acknowledges receiving attorney fees of $800 and seeks a balance of $700 from funds being held by the Chapter 13 Trustee. In support of his Motion, Mr. Krajec states that he attended the 341 hearing on February 15, 2002, and that "(h)e performed additional work due to debtors (sic) business as Foiles Customs and Amish Shoppe and debtors debts beyond the jurisdictional limit (sic)."
On April 2, 2002, the Court held a hearing on the matter, during which the Court asked Mr. Krajec to file an fee itemization. Mr. Krajec filed his Statement of Attorneys Fees on April 18, 2002. The Statement indicates that Mr. Krajec has expended 18.6 hours, that he charges $95 per hour, and that, therefore, his fees would total $1,767. His request, however, is only for an award of fees totaling $1,500.
The criteria for evaluating fee applications in bankruptcy cases is set forth in Bankruptcy Code Section 330(a)(3), which states as follows:
(3) In determining the amount of reasonable compensation to be awarded, the court shall consider the nature, the extent, and the value of such services, taking into account all relevant factors, including —
(A) the time spent on such services;
(B) the rates charged for such services;
(C) whether the services were necessary to the administration of, or beneficial at the time at which the service was rendered toward the completion of, a case under this title;
(D) whether the services were performed within a reasonable amount of time commensurate with the complexity, importance, and nature of the problem, issue, or task addressed; and
(E) whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title.
The Court has a duty to examine independently the reasonableness of fees requested. In re Price, 143 B.R. 190, 192 (Bankr. N.D. Ill. 1992) aff'd 176 B.R. 807, aff'd and remanded 42 F.3d 1068 (7th Cir. 1994); In re Wyslak, 94 B.R. 540, 541 (Bankr. N.D. Ill. 1988); In re Chicago Lutheran Hospital Association, 89 B.R. 719, 734-35 (Bankr. N.D. Ill. 1988). The burden of proof to show entitlement to the fees requested is on the applicant. See In re Kenneth Leventhal Co., 19 F.3d 1174, 1177 (7th Cir. 1994); In re Price, supra, 143 B.R. at 192; In re Stoecker, 114 B.R. 965, 969 (Bankr. N.D. Ill. 1990); In re Thorn, 192 B.R. 52, 55 (Bankr. N.D. N.Y. 1995).
In assessing the overall reasonableness of a requested fee, this Court (and the vast majority of others) continues to utilize the twelve factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), which are:
1. The time and labor required;
2. The novelty and difficulty of the question;
3. The skill necessary to perform the legal services properly;
4. The preclusion of other employment by the attorney due to acceptance of the case;
5. The customary fee for similar work in the community;
6. Whether the fee is fixed or contingent;
7. Time limitations imposed by the client or the circumstances;
8. The amounts involved and the results obtained;
9. The experience, reputation, and ability of the attorneys;
10. The "undesirability" of the case;
11. The nature and length of the professional relationship with the client; and
12. Awards in similar cases.
Id. at 717-19. See also In re East Peoria Hotel Corp., 145 B.R. 956, 962-63 (Bankr. C.D. Ill. 1991) (although the Johnson factors, the "lodestar" approach and § 330 are not identically termed, there is a sense of harmony between them and a court need not pick one over the others. The end result would be the same, whatever approach was applied.)
Services which are found to be excessive, redundant, or unnecessary are not compensable. Hensley v. Eckerhart, 461 U.S. 424, 434, 103 S.Ct. 1933, 1939-40 (1983). Reasonable time spent does not necessarily include all time actually expended. See In re Chas. A. Stevens Co., 105 B.R. 866, 870-71 (Bankr. N.D. Ill. 1989). In determining what constitutes reasonable compensation, the Seventh Circuit has stated that "there are limits — measured by standards of reasonableness — to what a professional can demand in a bankruptcy case." In re Kenneth Leventhal Co., supra, 19 F.3d at 1178. The Court may determine what is the reasonable amount of time a professional should have to spend on a given project. In re Wildman, 72 B.R. 700, 713 (Bankr. N.D. Ill. 1987) citing In re Shades of Beauty, Inc., 56 B.R. 946, 951 (Bankr. E.D. N.Y. 1986), aff'd in part, remanded in part, 95 B.R. 17 (E.D.N Y 1988).
In determining the reasonableness of the fees being sought, the Court must first separate the compensable time and charges from those which are not compensable. With respect to the individual itemized entries, a fee application must provide 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. In re East Peoria Hotel Corp., 145 B.R. 956 (Bankr. C.D. Ill. 1991); In re Wildman, 72 B.R. 700 (Bankr. N.D. Ill. 1987); In re Wiedau's, Inc., 78 B.R. 904 (Bankr. S.D. Ill. 1987). An entry of "telephone call" or even "telephone call with x" is insufficient. In re Jack-Rich, Inc., No. 94-70532, slip op. at 8 (Bankr. C.D. Ill. June 6, 1995) (Lessen, J.) citing Matter of Navis Realty, Inc., 126 B.R. 137 (Bankr. E.D.N.Y. 1991). An entry of "conference" or "meeting", "conference with x" or "conversation with x" is insufficient. Navis, supra; Jack-Rich, supra; In re Price, 143 B.R. 190 (Bankr. N.D. Ill. 1992), aff'd 176 B.R. 807 (N.D. Ill. 1993), aff'd 42 F.3d 1068 (7th Cir. 1994); In re Cascade Oil Co., Inc., 126 B.R. 99 (D. Kan. 1991). Finally, entries of "research", "legal research" or "bankruptcy research" are insufficient. Id; Navis, supra.
The itemization before the Court is replete with insufficiently specific entries. See entries dated 10/19/01 ("Faxes to me and responses"), 10/22/01 (same), 10/26/01 (same), 10/30/01 (same), 11/6/01 (same), 11/7/01 (same), 11/9/01 (same), 12/3/01 (same), 12/10/01 (same), 12/11/01 (same), 12/13/01 (same) undated entry entitled "Telephone calls to client", 2/12/02 ("Fax"), 2/13/02 (same), 2/14/02 (same), 2/22/02 ("Faxes"), 2/26/02 ("Tele conference"), 3/5/02 (Debtors faxes and responses [twelve pages]), 3/6/02 (same), 3/11/02 (same), 3/22/02 (same), and 3/24/02 (same). Each of these entries includes a description of services which is too unspecific to be compensable. Because these entries, totaling $1,121 [11.8 hours @ $95 per hour], are too unspecific to be compensable, the Court cannot award a fee for these services.
The Court further finds that, under the criteria set forth in Section 330 of the Bankruptcy Code, as well as the Johnson factors and other guiding precedent, fees of $800 are the greatest amount which could be justifiably awarded in this case. This case should never have been converted to Chapter 13 because it was obvious from Debtors' Schedule F that the Debtors were not eligible for Chapter 13 — their unsecured debts exceeded the jurisdictional limit. Mr. Krajec is an experienced bankruptcy attorney who has filed many Chapter 13 cases over the years. Accordingly, Mr. Krajec should have known that converting this case from a Chapter 7 to a Chapter 13 was an exercise in futility. It is inappropriate for him to seek, and inappropriate for the Court to award, compensation for doing so.
For the reasons set forth above, the Motion to Pay Attorney Fee's (sic) filed by William A. Krajec is denied. Mr. Krajec's fees in this case are limited to the $800 he has already received.
This Opinion is to serve as Findings of Fact and Conclusions of Law pursuant to Rule 7052 of the Rules of Bankruptcy Procedure.
See written Order.
ORDER
For the reasons set forth in an Opinion entered this day,
IT IS HEREBY ORDERED that the Motion to Pay Attorney Fee's (sic) filed by William A. Krajec be and is hereby denied.
IT IS FURTHER ORDERED that Mr. Krajec's fees in this case are limited to the $800 he has already received.