Opinion
Case No. 99-73137, Adversary No. 99-7196.
February 6, 2001
O P I N I O N
This matter is before the Court on the Petition for Fees and Costs filed by UnionBank/West ("the Bank" or "Plaintiff") and the Debtors' Objection thereto.
On September 27, 1999, Debtors filed their voluntary petition pursuant to Chapter 7 of the Bankruptcy Code. On December 3, 1999, the Bank filed this adversary proceeding. A trial was held on October 10, 2000, and, on October 30, 2000, a Judgment Order was entered by this Court finding debts totaling $831,021.81 to be nondischargeable as to Debtor Brent Likes, "together with interest after October 10, 2000, court costs and reasonable attorneys' fees to be determined by this court." Order at p. 2. On December 4, 2000, counsel for the Bank filed a Petition for Fees and Costs, and a hearing was held on the same date for the purpose of determining the amount of attorneys' fees and costs to be included in the judgment.
The Bank seeks fees of $53,120.50 and reimbursement of costs of $5,887.99. Attorneys' fees were billed at a rate of $125 per hour; paralegal time was billed at $65.00 and $75.00 per hour. Debtors raise a number of objections, most of which relate to specific time and expense entries. Debtors also object generally to the reasonableness of the fees being sought.
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. 989). 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. This task is rendered somewhat more difficult by the fact that the itemization before the Court does not identify who performed each of the tasks set forth on the itemization, nor does it identify whether each specific task was performed by an attorney or a paralegal. However, the Court believes that all of the entries of attorney time relate to services provided by attorney Richard J. Berry. The Court can distinguish Mr. Berry's entries from those relating to services provided by his paralegal(s) by dividing the amount of each individual entry by the hours relating to that entry.
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 9/27/99, 9/30/99, 10/4/99 (#1), 10/5/99 (#1 #2), 10/6/99 (#1, #2, #3 #4) 10/8/99, 10/12/99 (#1 #2), 10/18/99, 10/20/99, 10/22/99, 10/24/99, 10/27/99, 11/2/99 (#2 #3), 11/9/99, 11/15/99, 11/16/99, 11/22/99, 11/30/99, 12/1/99 (#2), 12/6/99 (#1 #2), 12/7/99 (#2 #3), 12/8/99, 12/9/99, 12/10/99 (#1 #2), 12/21/99, 12/22/99 (#1, #2 #3), 12/28/99, 1/4/00 (#1 #3), 1/7/00, 1/13/00, 1/14/00, 1/18/00, 1/21/00, 1/24/00, 1/25/00, 1/27/00 (#1 #2), 1/31/00, 2/7/00, 2/8/00 (#1 #2), 2/9/00, 2/10/00, 2/15/00 (#1 #2), 2/16/00, 2/22/00, 2/25/00 (#2), 2/28/00, 2/29/00, 3/2/00, 3/7/00, 3/30/00, 3/31/00, 4/6/00 (#1), 4/7/00 (#2), 4/13/00, 4/14/00, 4/19/00 (#1, #2 #3), 5/3/00 (#2 #3), 5/4/00, 5/5/00, 5/8/00 (#1 2), 5/9/00 (#1 #2), 5/10/00, 5/11/00, 5/12/00, 5/22/00, 5/23/00, 5/23/00, 5/30/00 (#2), 6/1/00 (#2), 6/7/00, 6/8/00, 6/14/00, 6/20/00, 7/6/00, 7/7/00 (#1 #2), 7/10/00 (#1 #2), 7/1//00, 7/17/00, 7/21/00, 8/2/00, 8/9/00, 8/14/00, 8/18/00, 8/23/00, 8/30/00, 9/1/00, 9/5/00 (#1 #2), 9/6/00 (#2), 9/7/00 (#2), 9/12/00 (#1), 9/14/00 (#2), 9/15/00, 9/16/00 (#2), 9/20/00 (#1), 9/25/00 (#3), 9/26/00, 9/27/00 (#1, #3 #5, 9/29/00 (#1 #3), 10/2/00 (#1 #2) and 10/4/00. Each of these entries includes a description of services which is too unspecific to be compensable. In some cases, these entries are "lumped" with other services, making evaluation of the necessity, reasonableness, and amount of non-compensable time expended impossible. Because these entries, totaling $19,903.50, are too unspecific to be compensable, the Court cannot award a fee for these services.
Of the remaining entries, fees totaling $11,734.50 are attributed, in whole or in part, to working on the pre-trial order between September 6, 2000 and September 25, 2000. This is a patently unreasonable amount of time to expend and fees to charge for the task. In fact, the Court can find no reasonable basis for awarding more than $2,500 for services relating to the preparation of the pre-trial order. Unfortunately, a number of these entries include other services; however, as indicated above, this "lumping" of services on the itemization makes evaluation of the reasonableness of individual entries impossible and necessitates the disallowance of the entire entry.
For the five days extending from September 25, 2000 to September 29, 2000, there are entries totaling $4,200 which are attributed in whole or in part to working on the trial brief. This, too, is an unreasonable amount of time to expend and fees to charge for this task. To allow fees greater than $1,800 for these services would be unreasonable. The same problem with respect to "lumping" exists with many of these entries.
Based upon a thorough review of the itemizations attached to the Fee Application, and for the reasons set forth above, the Court finds that fees should be awarded in the amount of $21,582.50. The remaining $31,538 in fees requested are denied.
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 $21,582.50 are the greatest amount which could be justifiably awarded in this case. The Court would generally expect to see fees in a range of $10,000 to $15,000 in similar cases. However, this case was made more difficult by the Debtors' tactical decision to "play hardball", which resulted in much more time being spent on the case than would have otherwise been necessary and which justifies the higher fee in this case.
The Bank's counsel also requests reimbursement for expenses in the amount of $5,887.99. This includes 4,390 photocopies at a rate of $.25 per copy. Many courts do not permit reimbursement for in — house photocopying or postage as these expenses are considered overhead. See In re Miami Optical Export, Inc., 101 B.R. 383, 385 (Bankr. S.D. Fla. 1989). In this circuit, however, most courts do allow reimbursement for reasonable in-house photocopying charges. The maximum rate allowed by most courts in this circuit for in — house copying charges does not exceed $.20. See In re Caribou Partnership III, 152 B.R. 733, 740 (Bankr. N.D. Ind. 1993)($.20 per page); In re Churchfield Management Investment Corp., 98 B.R. 838, 860 (Bankr. N.D. Ill. 1989)($.15 per page or less); In re Trak Microcomputer Corp., 58 B.R. 708, 713-14 (Bankr. N.D. Ill. 1986)($.15 per page). The Court will allow the request for reimbursement for in-house photocopying at the rate of $.20 per page. This adjustment will reduce the allowed expenses by $219.50. The remainder of the request for reimbursement will be allowed.
To summarize, fees were requested in the amount of $53,120.50. The Court is disallowing (i) $19,903 for insufficiently specific entries, plus (ii) $9,234.50 for unreasonable time expended and fees charged for preparing the pre-trial order, plus (iii) $2,400 for unreasonable time expended and fees charged for preparing the trial brief. Accordingly, professional fees are allowed in the amount of $21,582.50 and denied as to the remaining $31,538. In addition, the reimbursement of costs is requested in the amount of $5,887.99. The Court will reduce this amount by $219.50 to adjust for copying charges. Accordingly, costs are allowed in the amount of $5,668.49.
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.
O R D E R
For the reasons set forth in an Opinion entered this day,
IT IS HEREBY ORDERED that Plaintiff UnionBank/West's Petition for Fees and Costs is allowed in part and denied in part.
IT IS FURTHER ORDERED that professional fees be and are hereby awarded to Plaintiff in the amount of $21,582.50 and denied as to the remaining $31,538 requested.
IT IS FURTHER ORDERED that expenses be and are hereby awarded to Plaintiff in the amount of $5,668.49 and denied as to $219.50.