Chung & Press, LLC et al v. Branigan, No. 8:2017cv00484 - Document 13 (D. Md. 2017)

Court Description: MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 10/16/2017. (tds, Deputy Clerk)
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Chung & Press, LLC et al v. Branigan Doc. 13 FILED u.s. DISTRICT IN THE UNITEJ) STATES J)(STRICT crmnRfCT FOR THE J)(STRICT OF MAI{YLANJ) Southern CCURT OF Mt,RYLMH' ZOIl OCT 1 bPI: J);on 31 * CHUNG & I'RESS, LLC, * }(. -.- Appellant, ~i' Case No.: G,IH-I7-00.t8.t * v. * THIMOTHY P. BRANIGAN, CHAI'TER 13 TRUSTEE * Appellee. * * * * * * * * * MEMORANJ)UM Bankruptcy debtor's Interim Application The Bankruptcy * * Court for the District of Maryland for Compensation Court reduced Appellant's * * OPINION counsel Chung & Press. LLC ("Appellant'.) 2017 order by the U.S. Bankruptcy Counsel's * and Reimbursement request for attorney's appeals a January II. granting. in parL Dcbtor of Expenses. ECF No. 1-2. tees $14.602.50 to $9.300.00. United States Trustee liled an Amicus brief pursuant to 11 U.S.c. ~ 307 defending the Bankruptcy argumcnts Court" s Order. Oral argument are adcquately not be significantly presented because the facts and legal in the briefs and record. and the dccisional aided by oral argument. follow. the Court will aflirm the Bankruptcy I. is deemed unnecessary .'Icc Fed. R. Bankr. 1'. 8019. For the reasons that Court's Order. BACKGROUNJ) Debtor William T. Starner tiled for Chapter 13 bankruptcy rclief under the provisions 11 U.S.c. ~~ 1301 c{ sClf. on July 10.2014. ECF No. 1-2 at 1.1 Appellant I proccss would tiled a Disclosure of of Pin cites to documents tiI~d on the Court's electronic liIing system (eM/EeF) refer to the page Ilumbers generated by that system lor this appeal. Compensation pursuant to Bankruptcy Rule 2016(b) stating that it had acccptcd a $3.645 rctainer and would charge Debtor at a rate of$495 per hour for legal representation. III. at I. The Bankruptcy Court entered an order confirming Debtor's Chapter J 3 plan on September 2. 20 J 5. whieh pays creditors $9.760.00 over a period of 36 months. III. at 3. According to the Bankruptcy Court. Debtor's Chapter 13 case was relatively routine. "with the only wrinkle being the Debtor's dispute with his ex-spouse," It!. at 2. On February 23. 2016. Appellant filed a Fee Application requesting $14.602.50 in fees and $211.50 in expenses for work performed between May 5. 2014 and January 12.2016 retlecting its disclosed rate of$495 per hour. !d at 3: ECI' NO.2-50. The Bankruptcy Court held a hearing on the Fee Application on August 16.2016. ECF NO.5. and reduced Appellant's fee award to $9.300.00. ECF No. 1-2 at 13. The Bankruptcy Court denied Appellant's Motion to Alter or Amend the reduced fce award on February 10.20 J 7. ECF No. 1-3. and this appeal Ii.lllowed. ECF NO.1. 11. STANDARD OF REVIEW The Court has jurisdiction over the appeal pursuant to 28 U.S.c. ~ J 58(a). See also ,I/o'" Ral7lo \'. Gorman. 721 F.3d 241. 246 (4th Cir.2(13) (parties of bankruptcy cases can appeal orders that dispose of discrete disputes within the larger case). The Court reviews the Bankruptcy Court's findings of clear error and conclusions of law de novo. See In re ,l/en:I'-GoRound El7lerprises. Il1c 400 F.3d 219. 224 (4th Cir. 2(05): In re Kielisch. 258 F.3d 315. 319 .. (4th Cir. 2(01). The amount of an attornev's fce award is len to the discretion of the trial court. which has close and intimate knowledge of the efforts expended and the value oCthe services rendered. Arnold v. Burger King Corp. 719 F.2d 63. 67 (4th Cir. 1983). III, I)JSCUSSION Appellant alleges that the Bankruptcy Court erred in rcducing its fec award because the Bankruptcy Court I) failcd to consider the customary compensation charged by similar practitioners in non-bankruptcy actions. 2) incorrectly concluded that a paralegal could have performed 4.2 hours of work billed by Appellant. and 3) improperly considered the presumptively reasonable standard nat fee set forth in Appendix r of the Local Bankruptcy Rules for the District of Maryland (the Oono look" lee). ECF NO.8. In a Chapter 13 proceeding ... the court may allow reasonable compensation to the debtor's allorney ... based on a consideration of the benefit and necessity of such services to the debtor and the other I~lctorsset forth in this section."' II U.S.c. ~ 330(a)(4)(b). The Local Bankruptcy Rules allow bankruptcy counsel to charge a flat lee in representing Chapter 13 debtors. The fee is presumptively reasonable but not mandatory. See Loc. Bankr. R. App'x F: see a/so /n re Kestner. No. 12-32831-RAC. 20 IS WL 1855357. at * II (Bankr. D. Md. Apr. 20. 2015). However. if debtor's counsel choses an alternate arrangement. SUdl as an hourly rate. counsel must lile an application in accordance with the Bankruptcy Code. /n re Kestner. No. 1232831-RAC. at * I I. The bankruptcy court has both the power and duty to review the lee application. See II U.S.C. ~ 329(b): /n re Courtois. 222 B.R. 491. 494 (Bankr. D. Md. (998). Section 330(a)(3) of the Bankruptcy Code sets I{mh the f~lctorsthe bankruptcy court must apply to determine the reasonable fee as 1{)lIows: In determining the amount of reasonable compensation to be awarded to an examiner. trustee under chapter I I. or prolessional person. the court shall consider the nature. the extent. and the value of such services. taking into account all relevant factors. induding(A) the time spent on such services: (B) the rates charged I{)rsuch services: (C) whether the services were necessary to the administration oC or beneficial at the time at which the service was rendered toward the completion oC a case under this title: (0) whether the services were perl{JrIned 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). In determining the reasonableness of the fee sought here. the Bankruptcy Court applied a hybrid of the lodestar analysis and twelve-factor test set forth in.Johl1Sol1\". Georgia Hig/nray Express. IlIc .. 488 F.2d 714 (5th Cir. 1(74) as adopted by the Fourth Circuit in Barher Kimbrell's I'. IlIc .. 577 F.2d 216 (4th Cir. 1(78). Sec ECI' No. 1-2 at 6-7. Under the lodestar analysis. a reviewing court multiplies the number of hours reasonably expended by a reasonable hourly rate. Sec Daly \'. lIill. 790 F.2d 1071. 1084 (4th Cir. 1(86). The court may then assess the overall reasonableness of the lodestar by considering the twelve .Johllsoll factors. speci Iically: (I) the time and labor required: (2) the novelty and difliculty of the questions raised: (3) the skill requisite to perform the legal services properly: (4) the preclusion of employment by thc attorney due to acceptance of the case: (5) the customary fee: (6) whcthcr the fee is fixed or contingent: (7) time limitations imposcd by thc 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: (I I) the nature and length of the professional relationship between the attornev and the client: and (12) attorney's fee awards in similar cases. Sec .Johl1.\()lI.488 F.2d at . . 717-720. The eourt is to consider all twelve factors. but "need not robotically list each factor or comment on those lactors that do not apply," Do(/eka, L.L. C. I'. AIII/'{}/f)a\"i.\. NO.7: IO-CV-17.D. 20 I0 WL 3239117. at *2 (E.D. N.C. Aug. 16.2010). In applying the .Johllsoll factors. the Bankruptcy Court first evaluated the five categories of fees included in Appellant's Fee Application: I) Initial Services: 2) Ex-Spouse Motions: 3) Plans and Conlirmation: 4) General Representation/Advisement: 4 and 5) Preparation of the Fee Application. ECF No. 1.2 at 7. After deducting 1.2 hours that Appellant voluntarily agreed to waive for preparation orthe Fcc Application. the Bankruptcy Court round that Appcllant spent 28.3 hours on the matter. ECF No. 1.2 at 10. llowever. the Bankruptcy Court noted several time entries from categories I and 3 that. in the Bankruptcy Court'sjudgment. could have been performed by a paralegal. associate. or at a reduced administrative rate and IllUnd that billing 4.2 of the 28.3 hours at an attorney's rate was not reasonable. fd. at II. The Bankruptcy Court determined that a reduced fee award of $9.300.00 sufficiently compensated Appellant tllr expeditiously resolving the Chapter 13 matter that. with the additional complication or a domestic dispute. made the case less desirable. ECF No. 1.2 at 13. A. Appellant's Hourly Rate Appellant argues that the Bankruptcy Court erred in its application of the Johnson litctors because the Bankruptcy Court. when considering a reasonable hourly rate. only compared Appellant"s rate to other Chapter 13 practitioners rather than .'comparably skilled practitioners in cases other than cases under this title" as required by II U.S.c. * 330(a)(3)(F). ECF No.8 at 16. As a preliminary matter. the Bankruptcy Court's hybrid lodestarl./ohnsol1 tactor approach is a permissible methodology Il)r determining the reasonableness or attorney' s Ices in Chapter 13 proceedings. See In re Il)rth in II USc. VII. 366 R.R. 511.520-21 (D. Md. 20(7). Compared to the live litctors set * 330(a)(3). the twelve Johnsol1 filctors .'are a parallel but more detailed approach to addressing the important considerations involved in setting attorney's fces". See Harman v. Levin. 772 F.2d 1150. 1152 (4th Cir. 1985). The five lactors set Illrth in II u.s.c. * 330(a)(3) are not exelusive or rigid: rather. they arc a subset or factors relevant to the determination ora reasonable Icc. See II U.S.c. * 330(a)(3) (..the court shall consider ... all relevant lactors. including .. "') (emphasis added). 5 Contrary to Appellant's position. ~ 330(a)(3)(F) does not go so far as to mandate that debtor's counscl be compensated at the exact rate counsel would have been paid for a non-bankruptcy matter or imply that counsel's non-bankruptcy rate is presumptively reasonable for Chapter 13 matters. Nonetheless. Congress enacted this provision to ensure ..that high-quality attorneys and other professionals would be available to assist trustees in representing and administering bankruptcy estates" and recognized that "eomparable compcnsation" was necessary so that these professionals would remain in the bankruptcy licld. See Baker Bolls L.L./'. \".ASARCO Ll.C 135 S. Ct. 2158. 2170 (2015) (Breyer. .I. disscnting) (citing II.R. Rep. No. 95-595. p. 330 (1977)): see also III re Apex Oil Co. 960 F.2d 728. 732-733 (8th Cir. 1992) (when the court is determining a rcasonable hourly rate lil[ purposes of the lodestar calculation •.. the cost of comparable. nonbankruptcy services is a factor relevant to delining the parameters of reasonable compensation"). The Bankruptcy Court's initial Memorandum Opinion did not address ~ 330(a)(3)(F). In that opinion. the Bankruptcy Court. alier reviewing the number of hours reasonably expended. stated that "it must review the customary rate li)r a consumer Chapter 13 case." ECF No. 1-2 at 9. The Bankruptcy Court went on to compare Appellant's proposed hourly rate of$495 to reported rates of other Chapter 13 counsel. concluding that the average rate charged was $336.25 and Appellant's rate "is substantially higher than that of most Chapter 13 attorneys." Ill. The Bankruptcy Court did the same for rates charged by paralegals in Chapter 13 cases. noting that the average was $134.25 per hour. Ill. at 10. It appears Irom the record. that Appellant did not present the Bankruptcy Court with any argument or evidence regarding the rates of non-bankruptcy attorneys until its Motion to Alter or Amend. See ECF No. II-I at 10-11 (Appellee noting that Appellant "did not include aflidavits Irom other attorneys attesting to the customary rate charged for similar services in non- 6 bankruptcy contexts. tee matrixes. or other evidence in support of his fee application."): ECF No. 12 at 9 (Appellant noting that it provided non-bankruptcy comparisons in its Motion lor Reconsideration). Addressing that argument in the Motion. the Bankruptcy Court stated: Counsel maintains that this Court incorrectly compared his hourly rate to other bankruptcy practitioners in the area rather than to the hourly rate charged by comparably skilled practitioncrs in non bankruptcy cases. Counsel then cites to the Ice ranges contained in the Attorney Fee Matrix used by the U.S. Attorney's Oftice for the District of Columbia and the Maryland District Court Local Rules. and concludes that an attorney with his experience would be at the high end of both scales. Thus. Counsel argucs his hourly rate of $495.00 is reasonable. The Court does not lind this argument suflicient to warrant an adjustment of the compensation awarded. Preliminarily. although the Court agrees that section 330 of the Bankruptcy Code instructs Courts to examine reasonableness by comparison to non bankruptcy practitioners. the Court disagrees that the reasonableness of Counsel's hourly rate should be determined by comparison to the rates charged by attorneys practicing in the District of Columbia and with Counsel's assertion that Baltimore rates arc lower than those typically charged in the Grecnbelt area. Nevertheless. the Court's discussion of Counsel's hourly rate was only one part of its analysis and the Court did not arrive at a linal compensation award by applying a reduced hourly rate. Rather. the Court considered the reasonableness of the application as a whole. Moreover. although the Memorandum in support of the Fee Order recognizes that Counsel's hourly rate is substantially higher than that of most Chapter 13 attorneys in this area. the analysis of Counsel's hourly rate was also in the context of comparing it to the rates charged by paralegals in light of this Court's conclusion that some of the services billed by Counsel could have been performed by a paralegal. Thus. comparing Counsel's Ices to nonbankruptcy practitioners docs not change the Court's conclusion that his compensation should be reduced after considering all of the lodestar and Johllsoll factors. ECF No. 1-3 at 2. Thus. while the Bankruptcy Court did appear to rely solely on Chapter 13 compensation awards in its initial opinion and in comments made during the hearing.2 the Bankruptcy Court. once provided with inlt)fJnation regarding non-bankruptcy practitioners in the Motion to Alter or Amend. considered the evidence and did not lind that itjustilied Appellant's request. Therelt)re. , See ECF NO.5 at 14: 17-19 (001 mean you're asking for IS114.600 in a Chapler 13 case which is a lot of money. I Illean for a Chapter 13"): id. at 19:21-20:6 (""nd when I was practicing I didn"t do 135 unless it was. because I couldn"t charge m)' normal rate and I knew I was going to get stung if I did the 13. And I did them. in rare cases I did them when I committed to a client that I was going to file a 7 and then all ofa sudden it became a 13. because it was appropriate"). 7 the "customary compensation charged by comparably skilled practitioners in cascs other than cases under this title" was ..tak[cnJ into account". as * 330(a)(3) instructs. B. Excluded Hours Next. Appellant argues that the Bankruptcy Court impermissibly determined that 4.2 hours of purportedly administrativc or clerical tasks should have bccn perfi.JrI11ed a paralegal by or associate instead of Appellant. ECF NO.8 at 19, The number of hours reasonably expended is a question of fact reserved for the Bankruptcy Court. and the Court only reviews this determination for an abuse of discretion. See Bro< iz;ak \'. Runyon. 145 F.3d 194. 196 (4th Cir. 1998): see a/so Hens/ey 1', Ecker/wrf.461 U.S. 424. 437 (1983) (the trial court has discretion in determining the amount of hours reasonably billed because of its superior understanding of the litigation and desirability of avoiding appellate review of such faetualmalters). The Bankruptcy Court identified the time entries that. in its estimation. did not warrant Appellant's rate. speeitieally noting entries for dratiing 1i.1rI11 letters and a "bare bones" petition. ECF No. 1-2 at 10-11. The Bankruptcy Court was in f~lctthe recipient of some of these documents and had first-hand knowledge of which aspects of the case could have been handled by an experienced attorney as compared to an associate or paralegal. Appcllant notes that work pcrformcd by its clerical stafTwas not included in the fee application, ECF No 12 at 10, However. the Bankruptcy Court is not charged with contirming that Appellant itself actually performed the tasks charged in its Fee Application: rather. the Bankruptcy Court must confinll that those charges were reasonable and an exercise of "billing judgment:' See IIY([1/ 1'. Bamharf. 315 F.3d 239. 253 (4th Cir. 2002). Here. the record reflects that the Bankruptcy Court carefully reviewed specific charges in the fce application and applicd the .Iohnso17 factors in making its determination, The Court cannot find that it abused its discretion in excluding specific hours. 8 Finally. Appellant suggests that the Bankruptcy Court improperly reduced Appellant"s Ice award based on the nat Icc provided in Appendix I' of the Local Bankruptcy Rules. ECF No. 8 at 22. However. the Bankruptcy Court's opinion makes elear that it merely referenced the nat Icc as the presumptively reasonable starting point for a fee award. ECF No. 1-2 at 5 ("when Chapter 13 counsel opts out of the Appendix F nat fee. the compensation sought is no longer presumptively reasonable. and the Court has the power to review the fees sough!""). A party seeking attorney's fees maintains the burden of establishing entitlement to a reasonable award. Hensley. 461 U.S. at 438. and Appellant"s decision to lorgo the nat fcc appropriately initiated the Bankruptcy Court's inquiry into whether Appellant"s request was reasonable. As already indicated. the Bankruptcy Court appropriately applied the Johnson factors in making that inquiry. Therefore. the Court has no basis to find that the Bankruptcy Court's reference to the Appendix F nat fee was an abuse of discretion. IV. CONCLUSION For the foregoing reasons. the Order of the Bankruptcy Court is affirmed. A separate Order follows. Dated: October ;'.2017 GEORGE J. HAZEL United States District Judge 9