Securities and Exchange Commission v. Schooler et al

Filing 1756

ORDER Granting Receiver's Twenty-Ninth Inter ( #1750 , #1751 ) im Fee Application; and Allent Matkins Twenty-Ninth Interim Fee Application. The Receiver is directed to file a Status Report on or before April 15, 2020. Signed by Judge Gonzalo P. Curiel on 3/25/20. (dlg)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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SECURITIES AND EXCHANGE
COMMISSION,

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ORDER GRANTING:

Plaintiff,

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Case No.: 3:12-cv-2164-GPC-JMA

(1) RECEIVER’S TWENTY-NINTH
INTERIM FEE APPLICATION; AND

v.
LOUIS V. SCHOOLER and FIRST
FINANCIAL PLANNING
CORPORATION d/b/a WESTERN
FINANCIAL PLANNING
CORPORATION,

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[ECF No. 1750]
(2) ALLEN MATKINS’ TWENTYNINTH INTERIM FEE
APPLICATION

Defendants.

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[ECF No. 1751]

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Before the Court are fee applications filed by the court-appointed receiver Thomas

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C. Hebrank (the “Receiver”) and counsel to the Receiver, Allen Matkins Leck Gamble

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Mallory & Natsis LLP. ECF Nos. 1750, 1751. The Court finds these motions suitable

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for disposition without oral argument pursuant to Civil Local Rule 7.1(d)(1).

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3:12-cv-2164-GPC-JMA

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I.

BACKGROUND

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A.

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In the Twenty-Ninth Interim Fee Application, the Receiver asserts that he incurred

Receiver

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$35,496.00 in fees and $171.36 in costs for the application period covering July 1, 2019

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through September 30, 2019 (“Twenty-Ninth Application Period”). ECF No. 1750 at 2.

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The breakdown of the fees amassed is as follows:

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Category

Total

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General Receivership

$ 99.00

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Asset Investigation & Recovery

$ 0.00

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Reporting

$ 1,676.25

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Operations & Asset Sales

$ 10,068.75

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Claims & Distributions

$ 23,652.00

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Legal Matters & Pending Litigation

$ 0.00

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Total

$

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Id. at 2–4. Receiver now seeks payment of 80% of fees incurred, amounting to

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$28,396.80, and 100% of the costs, amounting to $171.36, which account for postage and

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copies. ECF No. 1750, Ex. C.

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B.

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In the Twenty-Ninth Interim Fee Application, Allen Matkins asserts that it incurred

Allen Matkins

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$16,348.50 in fees and $91.10 in costs during the Twenty-Ninth Application Period.

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ECF No. 1751 at 2. The breakdown of the fees amassed is as follows:

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3:12-cv-2164-GPC-JMA

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Category

Total

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Reporting

$1,552.50

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Operations & Asset Sales

$4,695.75

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Claims & Distributions

$1,811.25

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Third Party Recoveries

$7,719.75

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Employment/Fees

$569.25

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Total

$16,348.50

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Id. Allen Matkins now seeks payment of 80% of fees incurred, amounting to $13,078.80,

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and 100% of the costs, amounting to $91.10, which were incurred for shipping,

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messenger service fees, and document searches. ECF No. 1751, Ex. A at 3.

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II.

LEGAL STANDARD
“[I]f a receiver reasonably and diligently discharges his duties, he is entitled to fair

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compensation for his efforts.” Sec. & Exch. Comm’n v. Elliott, 953 F.2d 1560, 1577

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(11th Cir. 1992). “The court appointing [a] receiver has full power to fix the

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compensation of such receiver and the compensation of the receiver’s attorney or

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attorneys.” Drilling & Exploration Corp. v. Webster, 69 F.2d 416, 418 (9th Cir. 1934).

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A receiver’s fees must be reasonable. See In re San Vicente Med. Partners Ltd., 962 F.2d

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1402, 1409 (9th Cir. 1992).

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As set forth in the Court’s prior fee orders, see, e.g., ECF No. 1167, the Court will

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assess the reasonableness of the requested fees using the factors enumerated in Sec. &

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Exch. Comm’n v. Fifth Avenue Coach Lines, 364 F. Supp. 1220, 1222 (S.D.N.Y. 1973)

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and In re Alpha Telcom, Inc., 2006 WL 3085616, at *2–3 (D. Or. Oct. 27, 2006). Those

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factors include: (1) the complexity of the receiver’s tasks; (2) the fair value of the

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receiver’s time, labor, and skill measured by conservative business standards; (3) the

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quality of the work performed, including the results obtained and the benefit to the

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receivership estate; (4) the burden the receivership estate may safely be able to bear; and

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3:12-cv-2164-GPC-JMA

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(5) the Commission’s opposition or acquiescence. See Fifth Avenue Coach Lines, 364 F.

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Supp. at 1222; Alpha Telecom, 2006 WL 3085616, at *2–3.

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III.

DISCUSSION

A.

Complexity of Tasks
1.

Receiver

The Court finds that the tasks performed by the Receiver during the Twenty-Ninth

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Application Period were moderately complex. The Receiver undertook the following

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tasks during the relevant period:

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- handling general administrative matters, including reviewing mail, email, and
other correspondence directed to the Receivership Entities;
- administering the bank accounts of the Receivership Entities;
- reviewing and approving expenditures;
- maintaining and updating the Receiver’s website with case information,
documents, and filing inquiries;
- preparing Receiver’s Twenty-Eighth interim report;
- managing and overseeing the General Partnerships’ operations and real
properties;
- managing and overseeing Western’s operations;
- performing accounting functions of the Receivership Entities;
- managing and overseeing tax reporting for Receivership Entities;
- managing and overseeing loan payments and overall cash management;
- obtaining listing agreements and marketing properties for sale with brokers;
- analyzing, negotiating, and accepting purchase offers;
- closing property sales;
- sending monthly case update reports to investors listing major legal filings,
property sales activity, court rulings, tax, and other information;
- listing and responding to sales activity on the various properties; and
- filing motions to sell properties.
ECF No. 1750 at 3-5.
2.

Allen Matkins

The Court finds that the tasks performed by Allen Matkins during the TwentyNinth Application Period were similarly complex. Counsel undertook the following tasks
during this period:

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3:12-cv-2164-GPC-JMA

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- preparing the Receiver's Twenty-Eighth Interim Report;
- assisting the Receiver by providing updates regarding enforcement of
judgments against the LinMar entities, closed and pending sales of properties,
and receipts and disbursements for the receivership estate;
- preparing purchase and sale agreements, motions to approve sales (including
supporting declarations and proposed orders), notices concerning overbids and
auctions, and closing documents for Court-approved sales;
- assisting in addressing issues with investor distributions;
- assisting in preparing monthly case updates to investors and responding to
direct inquiries from investors; and
- communicating with the post-judgment receiver and counsel for SEC regarding
the disposition of remaining funds held by the post-judgment receiver.

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ECF No. 1751 at 3–5.
B.

Fair Value of Time, Labor, and Skill

The Receiver billed his time at his customary billing rate, discounted by 10 percent
and the blended hourly rate for all services provided by the Receiver and those working
for him was $192.65 per hour during the Application Period. ECF No. 1750 at 7. Allen
Matkins billed its time at $325.00 to $702.00 per hour, with the majority of work being
billed at $517.50 per hour. ECF No. 1751, Ex. A at 22.
The Court continues to find, as it has in previous fee orders, that the rates charged
by the Receiver and Allen Matkins are comparable to rates charged in this geographic
area and therefore represent a fair value of the time, labor, and skill provided.
C.

Quality of Work Performed

The Court finds that the quality of work performed by the Receiver and Allen
Matkins to be above average. The Receiver has, and continues to, competently operate
the Receivership as evidenced by Receiver’s Twenty-Ninth Status report, ECF No. 1748,
while at the same time marshalling assets to support its continued financial integrity.
These actions benefit all investors. The Receiver and his counsel have complied with the
Court’s orders and have made every effort to protect investors’ interests in the GP
properties during the pendency of this litigation.
D.

Receivership Estate’s Ability to Bear Burden of Fees
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3:12-cv-2164-GPC-JMA

On August 30, 2016, the Court approved the Receiver’s Modified Orderly Sale

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Process, ECF No. 1359, and the use of the One Pot approach to distribute receivership

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assets, ECF No. 1304 at 31. These actions were taken for the dual purpose of increasing

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the value of the receivership estate by selling GP properties and lowering administrative

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costs. Id. at 30.

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Allen Matkins indicates that as of June 30, 2019, the receivership estate held

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approximately $9.15 million in cash. ECF No. 1751 at 7. On June 17, 2019, the Court

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approved a second interim distribution to investors with allowed claims in the total

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amount of $6 million. ECF No. 1727. Therefore, the Court finds that the Receivership

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estate has sufficient ability to bear the instant fee requests.
Commission’s Opposition or Acquiescence

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E.

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While the Commission does not expressly approve of the fee applications as

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reasonable, the Receiver represents that the Commission has expressed its non-opposition

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to the fee application. ECF No. 1751 at 8. The Court will accept this representation.

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IV.

CONCLUSION

Considering the above five factors together, and considering that “[i]nterim fees

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are generally allowed at less than the full amount,” Alpha Telcom, 2006 WL 3085616, at

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*2–3, the Court awards fees and costs as set forth in the following table:

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Applicant
Receiver
Allen Matkins

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Fees Allowed
$28,396.80

% of Fees Costs Allowed
Incurred1
80
$171.36

% of Costs
Requested
100

$13,078.80

80

100

$91.10

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The Court includes the percentage of fees incurred rather than a percentage of the fees requested, given
that the Receiver and Allen Matkins request only a percentage of their actual fees.
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3:12-cv-2164-GPC-JMA

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ORDER

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After a review of the parties’ submissions, the record in this matter, and the

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applicable law, and for the foregoing reasons, IT IS HEREBY ORDERED that:

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1. The Receiver’s Twenty-Ninth Interim Fee Application, ECF No. 1750, is
GRANTED; and
2. Allen Matkins’ Twenty-Ninth Interim Fee Application, ECF No. 1751, is
GRANTED.
3. The Receiver is directed to file a Status Report on or before April 15, 2020.

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IT IS SO ORDERED.

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Dated: March 25, 2020

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3:12-cv-2164-GPC-JMA