Opinion
21-50709
03-10-2022
In re: FORNEY E. HARPER, Debtor.
Chapter 13
ORDER GRANTING IN PART AND DENYING IN PART APPLICATION FOR ATTORNEY FEES PRE-CONFIRMATION (DOC. #70)
Nami Khorrami, Judge
Relevant Factual and Procedural Background
Before the Court is the Application for Attorney Fees Pre-Confirmation (Doc. #70) ("the Application") filed by G. Timothy Dearfield ("Applicant"), attorney for Forney Harper ("Debtor"). Applicant seeks fees in the amount of $8,475.50 for services performed pre-confirmation in this Chapter 13 case ("Case"). Debtor filed this Case on March 5, 2021, and his plan was confirmed on December 13, 2021. At the time of filing of the Case, Debtor owned two pieces of real property: (1) his residence located at 62545 Dogwood Lane, Hamden, Vinton County, Ohio ("Debtor's Home"), and (2) Ten John Street, Hamden, Ohio 45634, also located in Vinton County, which had a partially burnt home on it with nominal value. Schedule A/B 3-4, ECF No. 15. Debtor also owned several vehicles and mobile homes with nominal values. Id. 4-5. Debtor, unemployed at the time of filing, received unemployment compensation, social security, a small pension, VA benefits, and contributions from children and grandchildren. Schedule I 26-27, ECF No. 15. Based on Schedule D filed by Debtor, Debtor's Home was encumbered by seven liens in favor of the State of Ohio Department of Job and Family Services ("ODJFS"). Schedule D. 14-17, ECF No. 15. Other than those liens, this Case appears to be simple.
Applicant, in his Disclosure of Compensation of Attorney for Debtor and Application for Allowance of Fees in Chapter 13 Case (Doc. #16), indicates a fee of $4,350, consistent with the current no-look fee authorized under Local Bankruptcy Rule 2016-1(b)(2)(A) and General Order 50-1. However, Applicant opted out of the no-look fee and timely filed an itemized fee application. After reviewing the Application, Debtor's Schedules, Statements and relevant pleadings, the Court, sua sponte, set this matter for a hearing on February 9, 2022 ("Hearing"). At the Hearing, Applicant was present, and the Chapter 13 Trustee, Edward Bailey, appeared through his counsel, Andrew Stimmel, for observation only. Debtor did not appear and there were no objections filed to the Application by any party.
The Application was filed on December 23, 2021, within 60 days of the date of the confirmation order and in compliance with Local Bankruptcy Rule 2016-1(b)(2)(C).
Legal Analysis
"Bankruptcy courts have an independent duty to monitor and determine the reasonableness of attorney fees related to bankruptcy cases regardless of whether any party objects to the fee In re Spear, No. 21-30649, 2022 Bankr. LEXIS 65, at *6 (Bankr. S.D. Ohio Jan. 10, 2022) (citations omitted). The policy behind the court's independent duty to review attorney fees was articulated in In re Hotel Associates, Inc:
The Court does not require a fee application the size of a boring victorian novel. However, in light of the fact that every dollar expended on legal fees results in a dollar less that is available for distribution to the creditors, the Court believes that a justification of such fees in the application for compensation is not an overly burdensome task.15 B.R. 487, 488 (Bankr. E.D. Pa. 1981).
In fact, bankruptcy courts have routinely reduced excessive and duplicative charges. In re Hayes & Son Body Shop, Inc., No. 91-5634, 1992 U.S. App. LEXIS 5496, at *6 (6th Cir. Mar. 23, 1992) (citation omitted). Specifically, "[t]he court may, on its own motion . . . award compensation that is less than the amount of compensation that is requested." 11 U.S.C. § 330(a)(2) (emphasis added). The applicant has the burden to prove that the requested fees are proper and reasonable. In re New Bos. Coke Corp., 299 B.R. 432, 438 (Bankr. E.D. Mich. 2003) (citations omitted). "The requirement that attorneys and other professionals adequately explain time entries for which compensation is sought is not an overly burdensome task, especially in light of the fact that every dollar expended on legal fees results in a dollar less that is available for distribution to the creditors or return to debtor." In re Pettibone Corp., 74 B.R. 293, 302 (Bankr. N.D.Ill. 1987) (citing In re Hotel Assocs., Inc., 15 B.R. 487, 488 (Bankr. E.D. Pa. 1981)).
11 U.S.C. § 330 governs compensation and reimbursement of expenses for professionals who perform services for the bankruptcy estate. Specifically, § 330(a)(1) authorizes a bankruptcy court to award reasonable compensation to a professional person employed under § 327 or § 1103 for actual, necessary services and reimbursement for actual, necessary expenses. Certain factors are considered by courts in reviewing and determining reasonableness of attorney compensation under § 330(a)(3):
(3) In determining the amount of reasonable compensation to be awarded to . . . [an attorney or other] professional person, 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;
(E) with respect to a professional person, whether the person is board certified or otherwise has demonstrated skill and experience in the bankruptcy field; and
(F) whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title.11 U.S.C. § 330(a)(3) (emphasis added).
The factors enumerated in § 330(a)(3) were added in 1994 when the statute was amended to include § 330(a)(3) and (a)(4). See Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, title I, §117, title II, §224(b), Oct. 22, 1994, 108 Stat. 4119, 4130 (codified as amended at 11 U.S.C. § 330(a)(3) (2021)). In the Sixth Circuit, the seminal case regarding attorney fees is In re Boddy, 950 F.2d 334 (6th Cir. 1991), which was decided before the 1994 amendments to the Bankruptcy Code. In re Ulrich, 517 B.R. 77, 80 (Bankr. E.D. Mich. 2014). Boddy adopted the lodestar method of calculating fees in bankruptcy cases. Boddy, 950 F.2d at 337. The lodestar amount is obtained by "multiplying the attorney's reasonable hourly rate by the number of hours reasonably expended." Id. (quoting Grant v. George Schumann Tire & Battery Co., 908 F.2d 874, 879 (11th Cir. 1990)). "The Supreme Court has made it clear that the lodestar method of fee calculation is the method by which federal courts should determine reasonable attorney fees under federal statutes which provide for such fees." Boddy, 950 F.2d at 337 (citations omitted).
Boddy recognized that the bankruptcy court has discretion to consider other factors in reviewing the reasonableness of attorney compensation. Boddy, 950 F.2d at 338 (citing Harman v. Levin, 772 F.2d 1150, 1152 n.1 (4th Cir. 1985) noting twelve factors bankruptcy courts may consider (see Barber v. Kimbrell's, Inc., 577 F.2d 216, 226 n.28 (4th Cir. 1978) that relied on the factors articulated in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974), commonly referred to as the Johnson factors)). However, the Sixth Circuit held that often "factors will be duplicative if the court first determines the lodestar amount because the lodestar [method] presumably subsumes all of these factors in its analysis of the reasonable hourly rate and the reasonable hours worked." Boddy, 950 F.2d at 338 (citations omitted). Regardless, "[t]he factors now expressly listed in the statute are substantially similar to the potentially relevant factors identified in Boddy, although they are now more specifically described." Ulrich, 517 B.R. at 81.
The Johnson factors consist of the following: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount 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. Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974).
Legal Analysis of the Application
This Court applied the lodestar method to evaluate the Application and found that the rates charged by Applicant and his paralegal, Elizabeth Thompson ("Paralegal"), are reasonable and not a matter in dispute. Instead, the Court questioned the reasonableness of time expended on certain services itemized in the Application. Specifically, the Court inquired about the amount of time billed for services rendered by Applicant and Paralegal as outlined in the Application as entry numbers 27 through 40 with a date of service of May 25, 2021 ("Entries 27-40"); entry numbers 43 through 49 with a date of service of June 15, 2021 ("Entries 43-49"); and entry numbers 59 through 60 with a date of service of July 29, 2021 ("Entries 59-60"). Appl. 7-9, ECF No. 70.
According to the Application, "G. Timothy Dearfield (TD) has been an attorney for 33 years, and the vast majority of cases have been bankruptcy and debt resolution." Appl. 11, ECF No. 70. His hourly rate is $275/hr. "Elizabeth Thompson (ET) has an Associate's Degree from Shawnee State University in Applied Science-Paralegal Program (1995) and a Bachelor's Degree from Shawnee State University in Social Sciences (1998). She has been employed for 23 years as a paralegal in a bankruptcy law practice, devoting 100% to bankruptcy involving thousands of cases." Id. Her hourly rate is $110/hr.
Entries 27-40
Entries 27-40 refer to the preparation and execution of seven motions to avoid liens (individually "Motion" and collectively "Motions") of ODJFS by both Applicant and Paralegal. Mot. to Avoid Lien, ECF Nos. 26-32. As delineated below, Paralegal spent 1.2 hours @ $110.00 ($132.00) "to prepare" each Motion. Applicant spent 0.7 hours @ $275.00 ($192.50) to review, edit and execute each Motion. In total, Applicant and Paralegal jointly spent 1.9 hours on each Motion for a total of 13.3 hours and charged Debtor $324.50 per Motion for a total of $2,271.50 in fees. Entries 27-40 from the Application are listed below:
27.5/25/21 Prepared motion to avoid lien with State of Ohio Dept. of Job/Family Services.
1.2 hrs @ $110.00 (ET) $132.00
28.5/25/21 Review/edit/execute motion to avoid lien with Ohio Dept. of Job/Family Services (Dc #26).
0.7 hrs @ $275.00 (TD) $192.50
29.5/25/21 Prepared motion to avoid lien with State of Ohio Dept. of Job/Family Services.
1.2 hrs @ $110.00 (ET) $132.00
30.5/25/21 Review/edit/execute motion to avoid lien with Ohio Dept. of Job/Family Services (Dc #27).
0.7 hrs @ $275.00 (TD) $192.50
31.5/25/21 Prepared motion to avoid lien with State of Ohio Dept. of Job/Family Services.
1.2 hrs @ $110.00 (ET) $132.00
32.5/25/21 Review/edit/execute motion to avoid lien with Ohio Dept. of Job/Family Services (Dc #28).
0.7 hrs @ $275.00 (TD) $192.50
33.5/25/21 Prepared motion to avoid lien with State of Ohio Dept. of Job/Family Services.
1.2 hrs @ $110.00 (ET) $132.00
34.5/25/21 Review/edit/execute motion to avoid lien with Ohio Dept. of Job/Family Services (Dc #29).
0.7 hrs @ $275.00 (TD) $192.50
35.5/25/21 Prepared motion to avoid lien with State of Ohio Dept. of Job/Family Services.
1.2 hrs @ $110.00 (ET) $132.00
36.5/25/21 Review/edit/execute motion to avoid lien with Ohio Dept. of Job/Family Services (Dc #30).
0.7 hrs @ $275.00 (TD) $192.50
37.5/25/21 Prepared motion to avoid lien with State of Ohio Dept. of Job/Family Services.
1.2 hrs @ $110.00 (ET) $132.00
38.5/25/21 Review/edit/execute motion to avoid lien with Ohio Dept. of Job/Family Services (Dc #31).
0.7 hrs @ $275.00 (TD) $192.50
39.5/25/21 Prepared motion to avoid lien with State of Ohio Dept. of Job/Family Services.
1.2 hrs @ $110.00 (ET) $132.00
40.5/25/21 Review/edit/execute motion to avoid lien with Ohio Dept. of Job/Family Services (Dc #32).
0.7 hrs @ $275.00 (TD) $192.50
After reviewing each Motion, the Court notes that all the Motions involve the same creditor (ODJFS), the same property (Debtor's Home), and nearly the same recycled information, with some minor differences noted. In fact, these Motions are fairly-routine, fill-in form Motions. Absent additional explanation, the Court finds that 1.9 total hours spent by Applicant and Paralegal on each Motion to be unreasonable.
In response to the Court's concerns, Applicant explained that the additional number of hours spent on each Motion were attributable to the fact that the Vinton County Recorder did not have the best records, which made it difficult to ascertain if the liens encumbered Debtor's Home. In support of his Application, Applicant asserted that he had to prove to ODJFS' counsel that the liens encumbered Debtor's Home. In proving this, Applicant and Paralegal spent time researching whether these liens attached to Debtor's Home prior to Debtor's ownership of the property or whether the liens attached after Debtor acquired the property. Based on this research, Applicant determined that the liens did not attach to after acquired property, which was the ultimate resolution of the matter. Applicant conceded that the Application did not outline his services in sufficient detail and offered to reduce his fees by approximately two hours or $550.
As stated above, Applicant bears the burden of justifying his requested fees. In re New Bos. Coke Corp., 299 B.R. 432, 438 (Bankr. E.D. Mich. 2003) (citations omitted). "When a professional seeks to have fees paid from the debtor's estate, the request for compensation should be based upon detailed, contemporaneous time records that reveal enough information to enable the court to make an informed judgment about specific tasks and the time allotted thereto." 3 Collier on Bankruptcy P 330.03 (16th 2021) (footnote omitted). An application "should clearly identify, describe and explain the services and expenses charged to the estate clearly, so that the court is able to evaluate the reasonableness of the compensation requested." Id. (footnote omitted).
While this Court is cognizant that Applicant and Paralegal spent additional time researching the status of the seven liens and communicating with the representatives of the Vinton County
Recorder, Applicant did not properly itemize these services on the Application. Instead, Applicant included the above-mentioned research and communication services under Entries 27-40, which are denoted as services for the preparation, review, and execution of the Motions. The burden is on Applicant to reveal enough information in the Application to enable the Court to make an informed decision about specific services and the time expended. Had Applicant provided detailed entries for the time spent on researching the liens and communicating with the Vinton County Recorder, the Court would have been better able to evaluate the Application for the reasonableness of these services and the fees requested. Absent adequate detailed description of billing, the Court cannot make these determinations or assess the reasonableness of these charges.
Therefore, the Court believes that it could have taken Applicant and Paralegal approximately 1.9 hours to prepare, review, edit and execute the first Motion; however, the subsequent six Motions (with the recycled information), most likely did not. Given these circumstances, the Court finds that 1.9 total hours spent on each Motion and the total of 13.3 hours collectively spent on the seven Motions to be unreasonable. Accordingly, for Entries 27-40, the Court will reduce Applicant's time by 2 hours (2 x $275= $550) and reduce Paralegal's time by 3 hours (3 x 110= $330), for a total reduction of $880.00. Entries 43-49
The Court also expressed concern with the time expended on services outlined in the Application as Entries 43-49. These entries refer to Applicant's services for the receipt and review of the seven responses filed by ODJFS (individually "Response" and collectively "Responses") to the Motion. Resp., ECF Nos. 35-41.
43. 6/15/21 Received/reviewed response to motion to avoid lien with State of Ohio Dept. of Job/Family Services (#26) by Brian Gianangeli, Esq.
0.6 hrs @ $275.00 (TD) $165.00
44. 6/15/21 Received/reviewed response to motion to avoid lien with State of Ohio Dept. of Job/Family Services (#27) by Brian Gianangeli, Esq..
0.6 hrs @ $275.00 (TD) $165.00
45. 6/15/21 Received/reviewed response to motion to avoid lien with State of Ohio Dept. of Job/Family Services (#28) by Brian Gianangeli, Esq..
0.6 hrs @ $275.00 (TD) $165.00
46. 6/15/21 Received/reviewed response to motion to avoid lien with State of Ohio Dept. of Job/Family Services (#29) by Brian Gianangeli, Esq..
0.6 hrs @ $275.00 (TD) $165.00
47. 6/15/21 Received/reviewed response to motion to avoid lien with State of Ohio Dept. of Job/Family Services (#30) by Brian Gianangeli, Esq..
0.6 hrs @ $275.00 (TD) $165.00
48. 6/15/21 Received/reviewed response to motion to avoid lien with State of Ohio Dept. of Job/Family Services (#31) by Brian Gianangeli, Esq..
0.6 hrs @ $275.00 (TD) $165.00
49. 6/15/21 Received/reviewed response to motion to avoid lien with State of Ohio Dept. of Job/Family Services (#32) by Brian Gianangeli, Esq..
0.6 hrs @ $275.00 (TD) $165.00
Here, Applicant charged $165 to receive and review each Response (0.6 hrs @ $275.00 =$165.00). In total, he spent 4.2 hours (0.6 hrs x 7) on Responses and charged $1,155 ($165 x 7) for receiving and reviewing these documents. Importantly, the Court notes that each Response is less than a page in length. Further, when the Court evaluated the content of each Response, there were generally two types of boilerplate bases in support of the Responses: (1) three of the seven Responses stated that Applicant did not properly identify the lien and subsequently, ODJFS did not have enough information to clarify the lien (Resp., ECF Nos. 39-41); and (2) the other four Responses stated that Applicant did not provide the case, volume, or page number for the lien, however, a valid lien existed. Resp., ECF Nos. 35-38. When the Court articulated its concern, Applicant responded that he had done the work, but conceded, again, that the Application did not reflect all the work performed in sufficient detail.
The Court finds Applicant's response to be insufficient to satisfy the Court's concerns. Applicant recorded that he received and reviewed each Response; however, again, he did not list his services related to contacting the Vinton County Recorder or researching the liens. Thus, the Court believes .6 hours could have been reasonably expended on two of the Responses; however, the remaining five Responses were nearly identical. At most, each Response required .3 hours of attorney time. Therefore, Applicant's total time for these entries will be reduced by 1.5 hours (1.5 hrs. x $275= $412.50) or $412.50.
Entries 59-60
The Court's final concern involved the time expended on services outlined in the Application as Entries 59-60:
59.7/29/21 Preparation of motion to continue hearing on motions to avoid liens/responses thereto and agreed order on same.
1.5 hrs @ $110.00 (ET) $165.00
60.7/29/21 Review/edit and circulate motion to continue hearing on motions to avoid liens/responses thereto and agreed order on same to all parties.
1.0 hrs @ $275.00 (TD) $275.00
These entries relate to the preparation and review of a Motion for Continuance on Motion to Avoid Liens (Doc. #45) ("Motion to Continue"). Again, the Court notes that this is a one-page motion. Absent further explanation, the Court finds 2.5 hours (1.5 hours for Paralegal and 1 hour for Applicant) or $440 of billed time for the preparation and review of a simple Motion to Continue to be unreasonable. When questioned, Applicant responded that he spent a lot of time on this Case, but he did not sufficiently prepare the Application.
The Court finds Applicant's explanation to be skeletal and unconvincing. The production and review of a one-page Motion to Continue does not require 2.5 hours. Normally, the Court would reduce Paralegal's time by half (.75 x $110= $82.50) and Applicant's time by half (.5 x $275= $137.50) for a total reduction of $220. However, when evaluating the Application in its entirety, the Court is compelled by three additional factors: (1) Applicant did not charge for the preparation of the Application; (2) he had several "no charge" items denoted on the Application; and (3) he did not charge his client for any expenses. Therefore, the Court will offset the reduction for this set of entries against these considerations. As a result, the Court will not reduce the Application any further.
Conclusion
Based on the foregoing, it is hereby ORDERED that the Court will reduce the fees requested by Applicant by a total of $1,292.50. Accordingly, the Application for Compensation is granted in part and denied in part. Applicant is awarded the amount of $7,183.00 for preconfirmation legal services to be paid by the Chapter 13 Trustee.
IT IS SO ORDERED.