In Re Kevin Walker

Filing 15

ORDER AFFIRMING AWARD OF BANKRUPTCY COURTS AWARD OF ATTORNEY FEES by Judge Dean D. Pregerson. (Made JS-6. Case Terminated.) (lc)

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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BAYER WISHMAN & LEOTTA,

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Appellant,
v.
ROD DANIELSON, Chapter 13
Trustee and KEVIN WALKER,

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Appellees.
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___________________________

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Case No. EDCV 13-01430 DDP
[US Bankruptcy Court Riverside,
6:09-28706 WJ]
ORDER AFFIRMING AWARD OF
BANKRUPTCY COURT

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Presently before the Court is an appeal filed by Appellant

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Bayer Wishman & Leotta (“Appellant”) of an award of attorney’s fees

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by the Bankruptcy Court (Riverside Division). Having considered the

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submissions of the parties, the Court affirms the Bankruptcy

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Court’s award.1

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cc: US Bankruptcy Court & US Trustee's Office

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Note that this order mirrors an order issued
contemporaneously in In re Macey, EDCV-13-01431-DDP, which involves
a parallel appeal on the same issue.

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I.

Background
Appellant, who is counsel for debtor Kevin Walker in a Chapter

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13 bankruptcy case, appeals the Bankruptcy Court’s partial denial

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of an application for attorney’s fees and costs for services

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performed on behalf his client. In particular, Appellant sought

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fees and costs incurred in the preparation of a Status Report

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required by an order of the Court issued on March 18, 2013. (See

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Opening Brief, Excerpt of the Record (“E.R.”) Tab 6 at 45-48.) The

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required Status Report presented information and documentation

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concerning payments of claims which the debtor’s chapter 13 plan

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provided would be paid by the debtor. (Id.)

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Appellant’s Application for Supplemental Fees, filed with the

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Bankruptcy Court on July 2, 2013, sought $1,622.34, including

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$1,575 in fees and $47.34 in costs, in connection with its

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preparation of the Status Report. (E.R. Tabs 9 and 10 at 160-169.)

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The Application and supporting memorandum justified the fees sought

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solely on the basis of the attorney’s hourly rate of $350 and the

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number of hours of work performed carrying out various tasks in

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preparing the Status Report; no other information was presented to

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demonstrate the reasonableness of the fees sought for the task at

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issue. (Id.)

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On June 25, 2013, the Trustee filed an objection to the

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application. (See E.R. Tab 12 at 197.) The Trustee argued that

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“[t]he fees requested for these tasks exceed the usual and

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customary standard for fees for similar tasks in this district and

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the division” and that “counsel has submitted no evidence that the

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fees are reasonable, and no evidence that these tasks were ‘out-of-

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the-ordinary’ warranting the higher fees requested.” (Id.) The

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Trustee recommended the approval of $600 in fees and costs. (Id.)

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The Bankruptcy Court held a hearing on the fee application on

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July 29, 2013. During the hearing, the Court heard arguments

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regarding the fee request in the instant case as well as an

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application by the same attorney for supplemental fees for the same

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task in In re Macey, EDCV13-01431-DDP. As further described below,

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during the hearing, the Court presented the results of its own

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independent investigation to assess the reasonableness of

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Appellant’s supplemental fee request, which involved analysis of

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125 cases in which bankruptcy counsel sought supplemental fees

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before the Riverside Division for the same task. (See E.R. Tab

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13(a) at 203-207.) The Court found, on the basis of this analysis,

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that, despite the high quality of Appellant’s Status Report, the

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fees sought by Appellant were excessive. (Id.) The Court approved

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fees and costs in the amount of $600. (Id. at 203.)

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Appellant appealed the Bankruptcy Court’s award and Appellee
moved to transfer the appeal to this Court on August 8, 2013.

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II.

Standard of Review

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This Court will not disturb a bankruptcy court’s award of

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attorneys’ fees “absent an abuse of discretion or an erroneous

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application of the law.” In re Eliapo, 468 F.3d 592, 596 (9th Cir.

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2006) (citing In re Nucorp Energy, Inc., 764 F.2d 655, 657 (9th

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Cir. 1985)). The Court “will not reverse an award of fees unless it

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has a definite and firm conviction that the bankruptcy court

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committed clear error in the conclusion it reached after weighing

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all of the relevant factors.” Id.
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III. Discussion

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The gravamen of Appellant’s appeal is that the Bankruptcy

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Court erred in not approving the full amount of fees sought by

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Appellant by declining to use the “loadstar” method, which was the

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basis for the Appellant’s requested fees. This Court disagrees.

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The Bankruptcy Court for the Central District of California

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provides for use of a court-approved Rights and Responsibilities

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Agreement Between Chapter 13 Debtors and Their Attorneys (“RARA”)

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(form F. 3015-1.7.RARA). Use of a RARA is optional. If a RARA is

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used, and the attorney seeks fees for certain tasks set forth in

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bold font in the RARA in an amount that does not exceed specified

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maximums ($5,000 in a case in which the debtor is engaged in a

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business; $4,000 in all other cases), such fees may be approved by

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the court without the need for the attorney to file any further fee

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application or to hold any hearing. Local Bankruptcy Rules (“LBR”)

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3015-1(v)(1)-(2) and Appendix IV. These are customarily referred to

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as “no look” or “presumptive” fees.

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If the attorney performs tasks on behalf of the debtor not set

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forth in bold type in the RARA, the attorney may apply to the court

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for supplemental fees and costs. LBR 3015-1(v)(1). However, such

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applications are reviewed by both the chapter 13 trustee and the

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court. Id. The application must be filed in accordance with 11

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U.S.C. §§ 330 and 331, Rules 2016 and 2002 of the Federal Rules of

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Bankruptcy Procedure, and LBR 2016-1 and 3015-1, as well as the

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“Guide to Applications For Professional Compensation” issued by the

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United States Trustee for the Central District of California. LBR

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3015-1(5).

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In the present case, Appellant filed an application for

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supplemental fees for preparation of the Status Report, which it

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contends was not encompassed within the tasks listed in bold type

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in the RARA. Appellant contends that the Court should have used the

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loadstar method, whereby the number of hours reasonably expended is

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multiplied by a reasonable hourly rate for the person performing

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the services, to determine its fees. (Opening Brief at 11.)

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11 U.S.C. §330(a) provides that courts may determine
“reasonable compensation” considering “the nature, the extent, and

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the value of such services, taking into account all relevant

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factors, including--

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(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.”

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11 U.S.C. §330(a). “The court may . . . award compensation that is

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less than the amount of compensation that is requested.” §330(b).

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As both parties recognize, “the customary method for assessing

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an attorney's fee application in bankruptcy is the ‘lodestar.’”

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In re Eliapo, 468 F.3d 592, 598 (9th Cir. 2006). “However, the

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lodestar method is not mandatory.” Id. (citing Unsecured Creditors'

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Comm. v. Puget Sound Plywood, Inc., 924 F.2d 955, 960 (9th Cir.

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1991) (“Although [In re Manoa Finance Co., 853 F.2d 687 (9th Cir.
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1988),] suggests that starting with the ‘lodestar’ is customary, it

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does not mandate such an approach in all cases.”); In re Busy

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Beaver Bldg. Ctrs., Inc., 19 F.3d 833, 856 (3d Cir. 1994) (“While

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bankruptcy fees are commonly calculated using the lodestar method,

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... § 330 by no means ossifies the lodestar approach as the point

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of departure in fee determinations.”).)

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“It is well settled that the burden is on the attorney

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claiming a fee in a bankruptcy proceeding to establish the value of

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his services.” In re Gianulias, 111 B.R. 867, 869 (E.D. Cal. 1989).

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As the Supreme Court has stated, a party seeking fees must provide

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“satisfactory evidence” that its fees “are in line with those

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prevailing in the community for similar services by lawyers of

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reasonably comparable skill, experience and reputation.” Blum v.

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Stenson, 465 U.S. 886, 896 (1984). See also LBR 3015-1(v)(2)

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(stating that an application for supplemental attorney’s fees “must

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be supported with evidence of the nature, necessity, and

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reasonableness of the additional services rendered and expenses

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incurred.”)

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Where a party seeking fees has not provided sufficient

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evidence of the reasonableness of its fees, a trial court is

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entitled substantial discretion in determining appropriate fees and

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costs. See In re Gianulias, 111 B.R. 867, 869 (E.D. Cal. 1989)

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(noting that it is “reasonable to allow trial court judges

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substantial flexibility” in calculating fees and noting that

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bankruptcy judges may devise various ways to determine fees where

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applications are deficient); In re Lock Shoppe, Inc., 67 B.R. 74

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(E.D. Pa. 1986) (disregarding itemized entries in a fee application

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that did not justify the hourly rate and was otherwise deficient
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and awarding fees based on the court’s own assessment of the value

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on the services); Matter of U.S. Golf Corp., 639 F.2d 1197, 1207-08

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(5th Cir. 1981) (“We have long recognized the importance of the

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bankruptcy judge's closeness to issues raised in an application for

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attorneys fees . . . . Consequently, a bankruptcy judge has wide

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discretion in the awarding of attorneys fees.”)

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In the present case, Appellant’s supplemental fee application

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did not contain any information to demonstrate the reasonableness

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of the fees for the particular task at issue. (See E.R. Tabs 9 and

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10.) In the absence of such evidence, the Court conducted its own

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independent study to determine a reasonable fee in which it

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compiled information concerning 125 cases where fee applications

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were filed in the Riverside Division seeking compensation for the

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same task (preparing a Status Report). (E.R. Tab 13(a) at 203-07.)

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It concluded that the fees requested by Appellant of $1,622.34 were

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substantially higher than was typical for the same task.

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Specifically, the Court found that Appellant’s request was nearly

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triple the average fee requested of all 125 cases ($565) and the

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average allowed ($551). (Id. at 205.) It further noted that in 89

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of the 125 cases, fees requested were $600 and were approved at

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that amount; that fee applications in only 11 of the cases exceeded

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$600 and in only 3 cases exceeded $800; and that there were no

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other applications besides Appellant’s where the fee sought

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exceeded $1000. (Id.) The Court additionally noted that it was not

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convinced that all of the services for which Appellant sought fees

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fell outside of the basic (non-bold face) responsibilities listed

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in the RARA and were thus separately compensable. (Id. at 207.) On

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the basis of these observations, the Court concluded that, despite
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the high quality of Appellant’s work, Appellant’s requested fees

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were unreasonable for the task at issue and determined that an

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appropriate fee, as recommended by the Trustee, was $600. (Id. at

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203.)

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This Court finds that the Bankruptcy Court did not err or

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abuse its discretion, but instead followed a reasonable approach

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and reached a reasonable conclusion as to the value of the services

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at issue based on the information available.

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IV.

Conclusion
For the reasons stated herein, the Bankruptcy Court’s award of

attorney’s fees in the instant matter is hereby affirmed.

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IT IS SO ORDERED.

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Dated: August 22, 2014
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DEAN D. PREGERSON
United States District Judge

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