Securities and Exchange Commission v. Schooler et al, No. 3:2012cv02164 - Document 1804 (S.D. Cal. 2021)
Court Description: ORDER Granting 1792 Receiver's Thirty-Third Interim Fee Application; and 1793 Allen Matkins' Third-Third Fee Application. The Court further Vacates the hearing on this matter. Signed by Judge Gonzalo P. Curiel on 3/10/21. (dlg)
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 SECURITIES AND EXCHANGE COMMISSION, 15 16 17 ORDER GRANTING (1) RECEIVER’S THIRTY-THIRD INTERIM FEE APPLICATION; AND [ECF No. 1792] Plaintiff, 13 14 Case No.: 3:12-cv-2164-GPC-JMA v. LOUIS V. SCHOOLER and FIRST FINANCIAL PLANNING CORPORATION dba Western Financial Planning Corporation, (2) ALLEN MATKINS’ THIRTYTHIRD INTERIM FEE APPLICATION [ECF No. 1793] Defendant. 18 19 20 21 22 23 24 25 26 27 28 Before the Court are fee applications filed by the court-appointed receiver Thomas C. Hebrank (the “Receiver”) and counsel to the Receiver, Allen Matkins Leck Gamble Mallory & Natsis LLP (“Allen Matkins”). ECF Nos. 1792, 1793. No oppositions have been filed. The Court finds these motions suitable for disposition without oral argument pursuant to Civil Local Rule 7.1 (d)(1) and VACATES the hearing on this matter. I. BACKGROUND A. Receiver In the Thirty-Third Fee Application, the Receiver asserts that he incurred $17,068.50 in fees and $121.96 in costs for the application period covering July 1, 2020 1 3:12-cv-2164-GPC-JMA 1 through September 30, 2020 (“Application Period”). ECF No. 1782 at 2. The 2 breakdown of the fees amassed is as follows: 3 Category Total 4 General Receivership $767.25 5 Asset Investigation & Recovery $0.00 6 Reporting $1,307.25 7 Operations & Asset Sales $14,994.00 8 Claims & Distributions $0.00 9 Legal Matters & Pending Litigation $0.00 Total $17,068.50 10 11 12 13 Id. at 3–4. Receiver now seeks payment of 80% of fees incurred, amounting to $13,654.80, and 100% of the costs, which account for postage and copies. ECF No. 14 1782-3, Ex. C. 15 B. 16 In the Thirty-Second Interim Fee Application, Allen Matkins asserts that it 17 18 19 20 21 22 23 24 25 26 Allen Matkins incurred $20,864.65 in fees during the Application Period. ECF No. 1793 at 2. The breakdown of the fees amassed is as follows: Category Total General Receivership $0.00 Reporting $1,449.00 Operations & Asset Sales $18,487.65 Claims & Distributions $465.75 Employment/Fees $462.25 Total $20,864.65 27 28 Id. Allen Matkins now seeks payment of 80% of the fees incurred, amounting to 2 3:12-cv-2164-GPC-JMA 1 $16,691.72. ECF No. 1793-1, Ex. A. 2 C. 3 “[I]f a receiver reasonably and diligently discharges his duties, he is entitled to LEGAL STANDARD 4 compensation.” Sec. & Exch. Comm’n v. Elliott, 953 F.2d 1560, 1577 (11th Cir. 1992). 5 “The court appointing [a] receiver has full power to fix the compensation of such 6 receiver and the compensation of the receiver’s attorney or attorneys.” Drilling & 7 Exploration Corp. v. Webster, 69 F.2d 416, 418 (9th Cir. 1934). A receiver’s fees must 8 be reasonable. See In re San Vicente Med. Partners Ltd., 962 F.2d 1402, 1409 (9th Cir. 9 1992). As set forth in the Court’s prior fee orders, see, e.g., ECF No. 1782, the Court will 10 11 assess the reasonableness of the requested fees using the factors enumerated in Sec. & 12 Exch. Comm’n v. Fifth Avenue Coach Lines, 364 F. Supp. 1220, 1222 (S.D.N.Y. 1973) 13 and In re Alpha Telcom, Inc., 2006 WL 3085616, at *2–3 (D. Or. Oct. 27, 2006). Those 14 factors include: (1) the complexity of the receiver’s tasks; (2) the fair value of the 15 receiver’s time, labor, and skill measured by conservative business standards; (3) the 16 quality of the work performed, including the results obtained and the benefit to the 17 receivership estate; (4) the burden the receivership estate may safely be able to bear; and 18 (5) the Commission’s opposition or acquiescence. See Fifth Avenue Coach Lines, 364 F. 19 Supp. at 1222; Alpha Telecom, 2006 WL 3085616, at *2–3. 20 II. 21 A. Complexity of Tasks 22 1. Receiver DISCUSSION 23 The Court finds that the tasks performed by the Receiver during the Application 24 Period were moderately complex. The Receiver undertook the following tasks during 25 the relevant period: 26 27 28 - handling general administrative issues, including reviewing mail, email, and other correspondence directed at the Receivership Entities; - administering the bank accounts of the Receivership Entities; 3 3:12-cv-2164-GPC-JMA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 - reviewing and approving expenditures; - maintaining and updating the Receiver’s website with case information, documents, and filing inquiries; - preparing Receiver’s Thirty-Second Interim Report (ECF No. 1785); - managing and overseeing the GPs’ operations and real properties; - managing and overseeing Western’s operations; - performing the accounting functions of the Receivership Entities; - managing and overseeing tax reporting for Receivership Entities; - managing and overseeing GP operational bills, loan payments, and cash management; - obtaining listing agreements and marketing properties for sale with brokers; - analyzing, negotiating, and accepting purchase offers; - conducting investor votes; - 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 - producing pending sales and finalizing the closing of various properties. ECF No. 1792 at 3–4. 2. Allen Matkins 16 17 The Court finds that the tasks performed by Allen Matkins during the Application 18 Period were somewhat complex. Counsel undertook the following tasks during this 19 period: 20 21 22 23 24 25 26 27 - preparing the Receiver’s Thirty-Second Interim Report (ECF No. 1785); - sales of receivership properties including the Santa Fe, Dayton III, Washoe III, and Silver Springs South properties, as well as the two-acre portion of the Minden property, via the Modified Orderly Sale Process; - addressing unique issues with investor distributions, preparing monthly case updates to investors, and responding to several direct inquiries from investors or their counsel regarding distributions; - assisting the Receiver in preparing his Thirty-First Interim Fee Application (ECF No. 1772). ECF No. 1793 at 3. 28 4 3:12-cv-2164-GPC-JMA 1 2 B. Fair Value of Time, Labor, and Skill The Receiver billed his time at $247.50 per hour and the time of those working for 3 him at $180.00 per hour, resulting in a blended rate of $194.62 per hour during the 4 Application Period. ECF No. 1792 at 3–4, 6. Allen Matkins billed its time at $409.50 – 5 $517.50 per hour. ECF No. 1773-1, Ex. A. 6 The Court continues to find, as it has in previous fee orders, that the rates charged 7 by the Receiver and Allen Matkins are comparable to rates charged in this geographic 8 area and therefore represent a fair value of the time, labor, and skill provided. 9 10 C. Quality of Work Performed The Court finds that the quality of work performed by the Receiver and Allen 11 Matkins to be above average. The Receiver has, and continues to, competently operate 12 the Receivership as evidenced by Receiver’s Thirty-Fourth Interim Report, ECF No. 13 1799, while at the same time marshalling assets to support its continued financial 14 integrity. These actions benefit all investors. The Receiver and his counsel have 15 complied with the Court’s orders and have made every effort to protect investors’ 16 interests in the GP properties during the pendency of this litigation. 17 18 D. Receivership Estate’s Ability to Bear Burden of Fees On August 30, 2016, the Court approved the Receiver’s Modified Orderly Sale 19 Process, ECF No. 1359, and the use of the One Pot approach to distribute receivership 20 assets, ECF No. 1304 at 31. These actions were taken for the dual purpose of increasing 21 the value of the receivership estate by selling GP properties and lowering administrative 22 costs. Id. at 30. 23 The Receiver indicates that the receivership, as of the third quarter, held 24 approximately $4.1 million in cash. ECF No. 1792 at 6. The Court finds that the 25 Receivership estate has sufficient ability to bear the instant fee requests. 26 27 28 E. Commission’s Opposition or Acquiescence While the Commission does not expressly approve of the fee applications as reasonable, the Receiver represents that the Commission has expressed its non5 3:12-cv-2164-GPC-JMA 1 opposition to the fee applications. ECF No. 1792 at 6. The Court will accept this 2 representation. 3 III. CONCLUSION Considering the above five factors taken together, and considering that “[i]nterim 4 5 fees are generally allowed at less than the full amount,” Alpha Telcom, 2006 WL 6 3085616, at *2–3, the Court awards fees and costs as set forth in the following table: 7 8 Applicant Fees Allowed Receiver $13,654.80 % of Fees Costs Allowed % of Costs Incurred1 Requested 80% $194.62 100% Allen Matkins $16,691.72 80% 9 10 $0.00 100% 11 IV. 12 After a review of the parties’ submissions, the record in this matter, and the 13 14 applicable law, and for the foregoing reasons, IT IS HEREBY ORDERED that: 1. The Receiver’s Thirty-Third Interim Fee Application, ECF No. 1792, is 15 GRANTED; 16 2. Allen Matkins’ Thirty-Third Interim Fee Application, ECF No. 1793, is 17 GRANTED. 18 3. The Court further VACATES the hearing on this matter. 19 IT IS SO ORDERED. 20 21 ORDER Dated: March 10, 2021 22 23 24 25 26 27 1 28 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. 6 3:12-cv-2164-GPC-JMA
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