Opinion
CASE NO.: 02-16172, (Jointly Administered)
May 13, 2003
ORDER
The matter before the Court is the Second Interim Application for Fees and Reimbursement (hereinafter "Application") filed by the law firm of Benesch, Friedlander, Copland, and Aronoff ("BFCA"), counsel for Debtors, Debtors-in-Possession for compensation for services rendered in the amount of $1,330,362.84 and reimbursement of expenses in the amount of $98,681.09 for the application period of October 1, 2002 through January 31, 2003 (the "Second Application Period"). BFCA also seeks additional compensation for services rendered in the amount of $261,535.25 for the period of January 1, 2003 to January 31, 2003. Objections were filed by the Office of the United States Trustee ("U.S. Trustee"), the Official Committee of Equipment Lessors ("Equipment Lessors"), and William H. Maloof ("Maloof'). The Court acquires core matter jurisdiction over the instant matter pursuant to 28 U.S.C. § 157 (a) and (b), 28 U.S.C. § 1334, and General Order Number 84 of this District.
See Errata Filing to Second Application filed March 28, 2003 (Doc #1219).
The U.S. Trustee objects to the application on the grounds that it has moved to have an examiner appointed under § 1104(c) of the Bankruptcy Code and that "no additional funds should be paid to BFCA until resolution of the concerns raised in the examiner motion." Additional objections lodged by the U.S. Trustee are as follows:
1. Two hundred seventy eight hours (278.00) of time were billed by a paralegal in the amount of $40,426.00 for tasks described as docket management, updating internal case files, organizing pleadings, and maintaining service lists.
2. Fees for compensation of services rendered in September 2002 were billed during this application period in the amount $18,048.00, without any explanation as to why these fees were not included in the first interim application or how the services benefitted the estate.
3. Travel time in the amount of $346.00 was billed for two professionals for 2.30 and 1.00 hours, respectively, for travel to and from the Debtor's business office.
4. Local meal expenses for one professional totaling $1,607.24 were billed.
The Equipment Lessors object to the application on the basis that the U.S. Trustee filed a Motion for the Appointment of an Examiner to Investigate Allegations of Dishonesty, Mismanagement and Misconduct (Docket No. 1107). The Equipment Lessors contend that as a result of the filing of the aforesaid motion and to protect the Equipment Lessors and other creditors having priority claims, including similarly situated equipment lessors, no further allowance and payment of fees and expenses should be approved. They suggest that an allowance and payment of fees and disbursements should be harmonized with the results of an examiner's findings. (See Equipment Lessors Motion at 3). Maloof's objection requests that the fees should be withheld until the examiner issues his or her findings.
The Court has reviewed the subject application in light of the standards of §§ 330 and 331 of the Bankruptcy Code, Bankruptcy Rule 2016, and the Guidelines for Compensation and Expense Reimbursement of Professionals for this District and the objections thereto, and makes the following findings:
The services rendered and charged against the Debtor's estate were, for the most part, actual, necessary, and beneficial to the Debtor's estate. The Application provides sufficient detail for an appropriate examination of the application. The appointment of an examiner, alone, is an insufficient basis upon which to defer consideration of a fee application. Specifically, compensation for services rendered and expense reimbursement should not be precluded or deferred where an applicant's services withstand scrutiny under the applicable provisions of the Bankruptcy Code, Bankruptcy Rules and any applicable guidelines. To do otherwise would improperly prejudge the outcome of an examiner's pending investigation. Fee awards are always subject to adjustment where just cause is shown.
COMPENSATION FOR OFFICE TASKS PERFORMED BY PARALEGALS.
Paragraphs 13 and 15 of the Guidelines require that time spent performing routine office tasks is generally non-compensable. However, some fees billed to a Debtors' estate are necessary and beneficial to a Debtors' estate and should, therefore, be reasonably compensable. Compensation for paralegal services depends upon the type of work actually performed, as well as the skill and experience of the paralegal involved in the geographic area, not unlike the formula applied to attorneys. In this instance, paralegals performed docket management, updating internal case files, organizing pleadings, and maintaining service lists in the Debtors' consolidated bankruptcy cases. These services were generally necessary to the prosecution of the Debtors' cases. As such, reasonable fees shall be awarded for these tasks. Herein, compensation for said tasks will be reduced by one-half of the requested amount. Therefore, the amount requested is allowed in the amount of $20,213.00.
COMPENSATION FOR SERVICES PERFORMED OUTSIDE OF THE APPLICATION PERIOD.
Counsel for the Applicant sufficiently justified the amount of $18,048.00 billed within the second application period for services rendered prior to the application period. Debtors explained that Ms. Mehalko was out of the office at the end of September 2002 which did not allow her to finalize her time entries before the firm closed its billings for that month. The time entries provide sufficient detail for review. In light of the explanation offered by the Applicant, the fees are compensable in the amount requested.
REIMBURSEMENT FOR TRAVEL.
Applicant charged the estate for travel time at one half the hourly rate as required by the Guidelines. The U.S. Trustee's objection to the time spent for travel between offices is without merit, as the UST does not challenge whether such travel was necessary for the prosecution of the Debtors' consolidated bankruptcy cases.
REIMBURSEMENT FOR MEALS.
Applicant charged the estate $1,607.24 for meals related to negotiations, meetings, etc. Such expenses are generally non-compensable under this Court's Guidelines. At the hearing, counsel for the Debtors did not sufficiently justify this charge to the Debtors' estate. Therefore, such expenses are not compensable.
Conclusion
The United States Trustee's objection is sustained, in part, and is overruled, in part. The objections lodged by the Equipment Lessors and William Maloof are overruled for the reasons stated above. Compensation is hereby awarded in the amount of $1,310,149.84 for the subject application periods. Expenses are hereby approved for reimbursement in the amount of $77,073.85, for a total award of $1,387,223.69.