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In re Spear

United States Bankruptcy Court, Southern District of Ohio
Jan 10, 2022
636 B.R. 765 (Bankr. S.D. Ohio 2022)

Summary

discussing additional factors

Summary of this case from In re Nihart

Opinion

Case No. 21-30649

2022-01-10

IN RE: Sheila R. SPEAR, Debtor.

G. Timothy Dearfield, Dearfield Law Firm, LLC, Kettering, OH, Matthew Dearfield, Dearfield Law Firm LLC, Mason, OH, for Debtor.


G. Timothy Dearfield, Dearfield Law Firm, LLC, Kettering, OH, Matthew Dearfield, Dearfield Law Firm LLC, Mason, OH, for Debtor.

MEMORANDUM ORDER GRANTING IN PART AND DENYING IN PART APPLICATION FOR ATTORNEY FEES PRE-CONFIRMATION (DOC. 41)

Guy R. Humphrey, United States Bankruptcy Judge

I. Introduction

This matter is before the court on the Application for Attorney Fees Pre-Confirmation filed by G. Timothy Dearfield on August 24, 2021 (doc. 41) (the "Application"). The Application seeks attorney fees in the amount of $19,046.50 for legal work performed by Mr. Dearfield and his law firm through confirmation of the debtor's Chapter 13 plan.

II. Facts and Procedural Background

The debtor filed her Chapter 13 case on April 19, 2021. She is a registered nurse and employed by a local hospital. She also owns a sole proprietorship which is engaged in the business of making and selling greeting cards that operates under the name "Crafty Cards by Sheila." The debtor scheduled no income or expenses associated with the sole proprietorship and no evidence was introduced as to this sole proprietorship having an impact on the complexity or administration of this Chapter 13 case.

The debtor's petition and schedules reflect that she has primarily consumer debts, with approximately $218,000 in secured debt and $410,000 in unsecured debt. Doc. 13 at 1. She owns her residence valued at $213,000, which accounts for most of her secured debt, and $294,000 in personal property, including an $8,000 car, a $62,000 IRA, and an inherited certificate of deposit in the amount of $215,700, in addition to other miscellaneous personal property. Id. at 3, 4, 8, 12-13. Her unsecured debt consists primarily of credit card debt and $75,000 owed to her father. Id. at 15-23.

On its Disclosure of Compensation of Attorney For Debtor and Application For Allowance Of Fees In Chapter 13 Case, Local Bankruptcy Form 2016-1(b), Dearfield stated that it agreed to be paid $10,000 for its services, with $3,687.00 having been received prior to the filing of the Disclosure, and a balance due of $6,313.00. Doc. 13. Unless otherwise noted, the court will refer to the law firm and its professionals collectively as "Dearfield."

The debtor's amended chapter 13 plan provides for a 50% dividend to unsecured creditors and payments to the debtor's residential lender and a pawn shop as secured creditors. The plan is to be funded through monthly payments of $2,100, which are to be stepped up to $2,700 in May of 2022; and the debtor's turnover of the funds held in the certificate of deposit, minus $29,000 which she was entitled to retain in the event that she lost her job, in which case she was to fund the monthly plan payments through that $29,000. Doc. 24. If she does not lose her job, she is to pay the $29,000 to the Chapter 13 Trustee by May 1, 2022. The plan provides for attorney fees to Dearfield in the amount of $12,500.00, with $8,813.00 to be paid through the plan payments. The plan was confirmed on September 11, 2021. Doc. 44.

The Application includes a total of 84.7 hours expended, for total fees of $19,046.50 broken down as follows:

Timothy Dearfield

@ $275/hour

45.1 hours

$12,402.50

Matthew Dearfield

@ $175/hour

35.2 hours

$ 6,160.00

Julie Terry

@ $110/hour

4.4 hours

$ 484,00

84.7

$19,046.50

The Application does not seek the reimbursement of expenses.

Pursuant to a prior order (doc. 50), the court held a hearing on the Application on November 4, 2021, attended by the John G. Jansing, the Chapter 13 Trustee, Scott G. Stout, staff attorney to the Chapter 13 Trustee, and Timothy Dearfield. In its review of the Application prior to the hearing, the court grouped the services provided by Dearfield as described in the Application into the following categories, with the following sums of time and fees for each category.

Services Performed

Hours Spent

Fees Billed

General pre-petition and pre-confirmation legal services

44.6

$9,491.50

Preparation for and attendance at the Creditors Meeting

6.9

$1,797.50

Research and corresp regarding "Catfisher" scam

19.7

$4,925.00

Research, corresp, communications, and filing of Proof of Claim on a pawn shop claim

10.25

$1,891.25

Research and work relating to the debtor's inheritance

3.55

$ 941.25

Totals

85

$19,046.50

See Order Setting Hearing On Application For Compensation (doc. 46). These categories and summaries were provided to Dearfield in advance of the hearing and Dearfield did not take issue with the categories and summaries at the hearing.

One exhibit was introduced and admitted at the hearing – the Affidavit of Sheila R. Spear (doc. 48) – the debtor. The Affidavit consists of one page and states that the debtor supports the Application. No party presented sworn testimony in support of the Application, but Mr. Dearfield did provide his statements as counsel in support of and explaining the representation which he and his firm provided to the debtor and for which the fees are sought. As he is an officer of the court, the court accepted Dearfield's statements in support of the Application in lieu of sworn testimony. Timothy Dearfield stated that the extraordinarily high number of hours spent on this Chapter 13 case was largely attributable to his need to consult with the debtor concerning her proclivity to engage with individuals online who had fleeced her out of substantial sums of money and who Dearfield feared would continue to do so without his vigilant counseling of her. Dearfield's time concerning this activity is reflected in the time labeled "Catfisher scam," which is the term which Dearfield used in the Application for this scheme to which the debtor fell prey. Thus, in addition to the normal bankruptcy legal tasks, such as completing the petition, schedules, and statement of financial affairs, counseling the debtor concerning her financial circumstances, and attending the creditors meeting, Dearfield provided counseling and advice to the debtor in an attempt to prevent the debtor from re-engaging with these individuals who were siphoning off her funds. Beyond that aspect of the case, Dearfield did not illuminate any other work performed that was out-of-the-ordinary for a Chapter 13 bankruptcy case. The only other items of note the court discerned in reviewing the Application related to counseling the debtor and providing in the plan for her inheritance and filing a secured proof of claim for the pawn shop which loaned the debtor money and took jewelry as collateral for the loan. The Chapter 13 Trustee filed no response to the Application and stated during the hearing that the Trustee supports the Application.

III. Legal Analysis

A. The Duty of Bankruptcy Courts to Independently Review Fee Applications

Bankruptcy courts have an independent duty to monitor and determine the reasonableness of attorney fees related to bankruptcy cases regardless of whether any party objects to the fee application. Cupps & Garrison, LLC v. Rhiel (In re Two Gales, Inc. ), 454 B.R. 427, 432-33 (B.A.P. 6th Cir. 2011) ; In re Busy Beaver Bldg. Ctrs. , 19 F.3d 833, 841 (3d Cir. 1994) ("[T]he bankruptcy court has a duty to review fee applications ... which the Code does not expressly lay out but which we believe derives from the court's inherent obligation to monitor the debtor's estate and to serve the public interest.") (emphasis in original). The debtor's apparent support of the fees does not eliminate the court's obligation. In Dery , the Sixth Circuit explained, "In a bankruptcy case fees are not a matter for private agreement. There is an inherent public interest that must be considered in awarding fees." Dery v. Cumberland Cas. & Sur. Co. (In re 5900 Assocs. ), 468 F.3d 326, 329-30 (6th Cir. 2006) (quoting In re Inslaw, Inc. , 106 B.R. 331, 333 (Bankr. D.D.C. 1989) ); see also Cupps & Garrison , 454 B.R. at 433 ("Even if no objection has been raised by creditors or parties in interest, the bankruptcy court has both the power and the obligation to review fee applications."). This responsibility serves to guard the integrity of and public trust in the federal bankruptcy courts. As one bankruptcy court stated:

[T]he integrity of the bankruptcy system ... is at stake in the issue of a bankruptcy judge's performance of the duty to review fee applications sua sponte. The public expects, and has a right to expect, that an order of a court is a judge's certification that the result is proper and justified under the law.... Nothing better serves to allay [public perceptions that high professional fees unduly drive up bankruptcy costs] than the recognition that a bankruptcy judge, before a fee application is approved, is obliged to [review it carefully] ... and find it personally acceptable,

irrespective of the (always welcomed) observation of the UST or other interested parties.

In re Evans , 153 B.R. 960, 968 (Bankr. E.D. Pa. 1993) (quoting In re Del. River Stevedores , 147 B.R. 864, 869-70 (Bankr. E.D. Pa. 1992) ). See also In re Walters , 868 F.2d 665, 668 (4th Cir. 1989) (citation omitted) ("We are of opinion that any payment made to an attorney for representing a debtor in connection with a bankruptcy proceeding is reviewable by the bankruptcy court notwithstanding the source of payment.").

B. Legal Overview of Attorney Fee Applications in Chapter 13 Cases

In addressing the compensation of the officers of a bankruptcy estate, including attorneys, Bankruptcy Code § 330 states in pertinent part:

(a)(1) After notice to the parties in interest and the United States Trustee and a hearing, and subject to sections 326, 328, and 329, the court may award to a trustee, a consumer privacy ombudsman appointed under section 332, an examiner, an ombudsman appointed under section 333, or a professional person employed under section 327 or 1103 —

(A) reasonable compensation for actual, necessary services rendered by the trustee, examiner, ombudsman, professional person, or attorney and by any paraprofessional person employed by any such person; and

(B) reimbursement for actual, necessary expenses.

(2) The court may, on its own motion or on the motion of the United States Trustee, the United States Trustee for the District or Region, the trustee for the estate, or any other party in interest, award compensation that is less than the amount of compensation that is requested.

11 U.S.C. § 330(a).

In Chapter 13 cases, courts determine the reasonableness of attorney fees under § 330 using the lodestar method. In re Boddy , 950 F.2d 334, 337 (6th Cir. 1991) ("The Supreme Court has made it clear that the lodestar method of fee calculation is the method by which federal courts should determine reasonable attorney's fees under federal statutes which provide for such fees."). When employing the lodestar method, courts generally start with the number of hours reasonably expended on the matter multiplied by a reasonable hourly rate. Hensley v. Eckerhart , 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983) ; Blanchard v. Bergeron , 489 U.S. 87, 94, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989) ; Boddy , 950 F.2d at 337. "This calculation provides an objective basis on which to make an initial estimate of the value of a lawyer's services." Hensley , 461 U.S. at 433, 103 S.Ct. 1933. The focus of this calculation is on determining what is a reasonable number of hours for the work performed and a reasonable billing rate for the attorneys who performed the work. City of Riverside v. Rivera , 477 U.S. 561, 567-68, 106 S.Ct. 2686, 91 L.Ed.2d 466 (1986).

The lodestar calculation (hourly rate multiplied by the number of hours incurred) does not necessarily end the determination of what is a reasonable attorney fee. Other factors may and should also be considered and may warrant an increase or a decrease in the fees awarded. Hensley , 461 U.S. at 434, 103 S.Ct. 1933. These factors, originating with Johnson v. Ga. Highway Express, Inc. , 488 F.2d 714 (5th Cir. 1974) are commonly referred to as the Johnson factors. These factors include: 1) the novelty and difficulty of the issues; 2) the skill required to perform the services properly; 3) the preclusion of other employment resulting from counsel's acceptance of the matter; 4) the customary fee for such matters; 5) whether the fee is fixed or contingent; 6) time limitations imposed by the client or otherwise dictated by the circumstances; 7) the amount at issue and the results obtained; 8) the experience, reputation, and ability of the attorneys; 9) the undesirability of the case; 10) the nature and length of the professional relationship between counsel and the client; and 11) awards in similar cases or under similar circumstances. Boddy , 950 F.2d at 338 (citing Harman v. Robertson , 772 F.2d 1150, 1152 n.1 (4th Cir. 1985) ); Schumacher v. AK Steel Corp. Ret. Accumulation Pension Plan , 995 F. Supp. 2d 835, 848 (S.D. Ohio 2014). See also Blanchard , 489 U.S. at 91 n.5, 109 S.Ct. 939 (discussing the Johnson factors). The 1994 amendments generally incorporated the Johnson factors into § 330(a)(3), which governs fee awards to professionals in bankruptcy cases. See 11 U.S.C. § 330(a)(3) ; In re Phillips , 291 B.R. 72, 84 (Bankr. S.D. Tex. 2003) (noting the mention of the Johnson factors in congressional documents). In addition, except as otherwise allowed, "the court shall not allow compensation for—(i) unnecessary duplication of services; or (ii) services that were not—(I) reasonably likely to benefit the debtor's estate; or (II) necessary to the administration of the case." 11 U.S.C. § 330(a)(4)(A).

For many years, the Bankruptcy Court for the Southern District of Ohio has approved a fee amount which is presumed to be reasonable for most services provided to a debtor in a Chapter 13 case, known as the "no-look fee." Local Bankruptcy Rule 2016-1(b)(2)(A) describes the following as the services which debtor's counsel is generally to provide in exchange for the "no-look fee":

(A) No-Look Fee. Upon confirmation of the plan, fees may be allowed up to $3,700 ("no-look fee") without further application or specific itemization for services rendered. The no-look fee includes the general legal services performed in a chapter 13 case listed below, whether performed pre-confirmation or postconfirmation:

(i) initial client interview, preparation and signing of any retainer or representation agreement, analysis of the debtor's financial situation, and rendering advice to the debtor in determining whether, and under what chapter, to file a petition in bankruptcy;

(ii) advising the debtor concerning his or her obligations and duties pursuant to the Code, the Rules, these Local Rules, applicable court orders, and provisions of his or her chapter 13 plan;

(iii) preparation and filing of any document required by § 521 of the Code, including Official Form 122C-1 and Official Form 122C-2 (if applicable), the petition, schedules, statement of financial affairs and any amendments thereto that may be required;

(iv) preparation and filing of the chapter 13 plan, and any pre-confirmation amendments thereto that may be required; provided, legal services performed relative to avoidance of wholly unsecured mortgages / liens, avoidance of judicial liens impairing an exemption in real property, or avoidance of nonpossessory, nonpurchase-money security interests in exempt property within a chapter 13 plan are not covered by the no-look fee and may be compensated through a separate application for fees; however, in such event, no additional compensation will be allowed for the preparation and

filing of a motion pursuant to Rule 5009(d).

(v) preparation and filing of payroll orders and amended payroll orders, except amended payroll orders prepared in connection with the modification of a plan or the temporary suspension of payments;

(vi) representation of the debtor at the § 341 meeting of creditors and confirmation hearing, and at any adjournments thereof;

(vii) filing of address changes for the debtor;

(viii) review of claims;

(ix) review of notice of intention to pay claims;

(x) preparation and filing of objections to non-real estate and nontax claims, exclusive of any hearings;

(xi) preparation and filing of first motion to suspend or temporarily reduce plan payments;

(xii) representation of the debtor in addressing any routine tax return or tax refund inquiries by the trustee, exclusive of any motion, objection, or hearing;

(xiii) filing of a notice of final cure payment, when filed by the debtor, exclusive of any hearings;

(xiv) preparation and filing of debtor's certification regarding issuance of discharge order;

(xv) routine phone calls and questions;

(xvi) file maintenance and routine case management; and

(xvii) any other duty as required by local decision or policy.

The amount of the no-look fee may be changed from time to time by general order.

LBR 2016-1(b)(2)(A). The no-look fee has been increased a number of times over the years. Effective February 24, 2021, and after recommendation by the Attorney Advisory Committee for the United States Bankruptcy Court for the Southern District of Ohio, the no-look fee was increased by the court to $4,350. Bankr. S.D. Ohio General Order 50-1.

Attorneys in the Southern District of Ohio may, however, opt out of the no-look fee and instead itemize their time. In that circumstance, counsel is to file an itemized fee application within 60 days after the confirmation order is entered, as Dearfield did in this case. See LBR 2016-1(b)(2)(C).

C. Analysis of the Application Under the Law

As an initial matter, based upon the court's experience with and knowledge of attorney rates in Dayton and the Southern District of Ohio, the court finds that the rates charged by Dearfield for Timothy Dearfield's, Matthew Dearfield's, and Julie Terry's services are reasonable and within the market rate for attorneys and paralegals of comparable experience and skills for Dayton and the Southern District of Ohio. Timothy Dearfield is an experienced bankruptcy practitioner, having practiced for 33 years, including many cases and proceedings before this court. Matthew Dearfield also provided services to the debtor and has been practicing with the Dearfield firm since he graduated from law school in 2018. Julie Terry, the paralegal who provided services to the debtor, is very experienced, having 19 years of experience as a paralegal. See Application at 8.

Timothy Dearfield's hourly rate is $275 per hour. Matt Dearfield's hourly rate is $175 per hour. Julie Terry's hourly rate is $110 per hour. In calculating the reductions for certain portions of the fee application, the court used the average or blended hourly attorney rate of $225, disregarding Ms. Terry's hourly rate.

Since the court has determined that the hourly rates charged by Dearfield are reasonable for the Dayton and Southern District of Ohio market, the court's focus turns to the other component of the lodestar method – that being the total number of hours expended for the services provided – and, particularly, whether the total number of hours expended is reasonable under the circumstances. Dearfield expended a total of approximately 85 hours in representing the debtor through confirmation of the plan.

The court first notes that Dearfield did not provide an independent expert on the reasonableness of the fees. Accordingly, the court must determine the reasonableness of the fees based upon the Application, Timothy Dearfield's statements at the hearing, the debtor's and Chapter 13 Trustee's support of the Application, and the court's own review of the Application and experience with billings for Chapter 13 cases within the Southern District of Ohio and Dayton.

"[W]e observe that certainly a bankruptcy judge's experience with fee petitions and his or her expert judgment pertaining to appropriate billing practices, founded on an understanding of the legal profession, will be the starting point for any analysis." In re Busy Beaver Bldg. Ctrs. , 19 F.3d 833, 854 (3d Cir. 1994) (emphasis in original).

In order to determine whether the total number of hours expended is reasonable, the court will analyze the fees sought based upon the different categories of services which Dearfield provided to the debtor.

1. General pre-petition and pre-confirmation legal services: $9,491.50

The first and largest group of services, in terms of the fees sought, is for general prepetition and pre-confirmation legal services in the total amount of $9,491.50. These services include a total of 44.6 hours incurred by Dearfield, with 1.5 hours spent by paralegal Julie Terry and the remainder spent by Timothy and Matthew Dearfield.

Excluding the separate services which the court discusses below, the court was not able to discern from the Application, and Timothy Dearfield did not identify at the hearing, any additional prepetition or pre-confirmation general bankruptcy services which the firm provided to the debtor beyond the general services expected of Chapter 13 counsel described by Local Bankruptcy Rule 2016-1(b)(2)(A) for purposes of the no-look fee. As noted, the court recently approved an increase to the no-look fee for such services, increasing that number to $4,350. That amount would equate to 21.75 hours at $200 per hour, 17.4 hours at a rate of $250 per hour, or 14.5 hours at $300 per hour. While attorney supervision is necessary for performance of all bankruptcy-related services, much of the general prepetition and pre-confirmation services can be performed by paralegals or legal assistants at appropriate rates for those paraprofessionals. In this case Ms. Terry's services were billed out at the rate of $110 per hour, but she only spent 1.5 hours on the general pre-confirmation services, while Timothy and Matthew Dearfield spent the vast majority of that time (almost 45 hours). In reviewing a fee application under these circumstances, another bankruptcy court stated:

The Court should be mindful that not all services should carry the same compensation .... The fact that an experienced attorney elects to perform routine ministerial services which could be performed by others far less experienced does not increase the value and should not increase

the cost to the estate for these services.

In re Union Cartage Co. , 56 B.R. 174, 178 (Bankr. N.D. Ohio 1986). See also In the Matter of Ferkauf, Inc. , 42 B.R. 852, 858 (Bankr. S.D.N.Y. 1984) ("[T]he hourly fee awarded should be adjusted when a significant percentage of the total work completed is of such a routine nature. Compensation for routine work should be discounted."); Busy Beaver , 19 F.3d at 852 ("[T]he appropriate rate the attorney will command for paralegal services will ordinarily parallel the paralegal's credentials and the degree of experience, knowledge, and skill the task at hand calls for.") (citation omitted); In re Vogue , 92 B.R. 717, 718 (Bankr. E.D. Mich. 1988) ("[W]hen an experienced attorney does clerk's work, he or she should be paid clerk's wages."). Thus, counsel need to push work down to the lowest available rate for which such work can be competently performed or otherwise adjust the billing accordingly so that clients are not excessively billed for the level of the work performed.

Judge Kendig has identified the routine legal matters to which Chapter 7 trustees attend in In re Kieffer , 306 B.R. 197, 207 (Bankr. N.D. Ohio 2004). Routine matters in a Chapter 13 case are illustrated by the tasks provided for by the no-look fee in Local Bankruptcy Rule 2016-1(b)(2)(A).

Based upon the court's review of the Application and the statements of Timothy Dearfield, the court is unable to identify how the general prepetition services which Dearfield provided were greater in quantity or quality than the services to be provided under the no-look fee at an amount of $4,350. Those services appear from the Application to have been in the nature of routine services described by Local Bankruptcy Rule 2016-1(b)(2)(A). In general, the number of hours that Dearfield's attorneys incurred for the general pre-confirmation services is excessive. As noted, the $4,350 no-look fee would equate to 21.75 hours at $200 per hour, 17.4 hours at a rate of $250 per hour, and 14.5 hours at $300 per hour for those services. The combination of the number of hours the attorneys spent (43.1) on these routine matters, in combination with their rates, resulted in an excessive bill for those services. As noted, the court does not have any concern over the rates charged by the professionals, but the court does take issue with the number of hours spent and what appears to the court as hours spent by attorneys which could have been more efficiently and economically spent by a paralegal or billed at a paralegal rate. However, the court is willing to allow Dearfield's fees totaling $5,400 for those general prepetition services, which would equate to 24 hours at the blended attorney rate of $225 per hour, and which is $1,650 in excess of the no-look fee. This will result in a reduction of the Application in the amount of $3,491.50 with respect to those services.

In referring to the $4,350 no-look fee approved by the Bankruptcy Judges for Chapter 13 bankruptcy cases in the Southern District of Ohio, the court is not opining as to any legal implications relating to the "no-look fee" or as to the appropriateness of that amount for fees in any particular Chapter 13 case before the court. Fees in each case are governed by 11 U.S.C. § 330 and Boddy , regardless of the presumed reasonableness of fees charged under the no-look fee or otherwise. The no-look fee does provide the court with a presumptively reasonable fee sought in any Chapter 13 case. However, the court does not view the District's no-look fee as either a floor or a ceiling for attorney fees in a Chapter 13 case, but rather, a framework with which to analyze the reasonableness of fees sought in each particular case.

2. Preparation for and attendance at the Creditors Meeting: $1,797.50

While the court broke out the time and services incurred by Dearfield relating to preparation for and attendance at the creditors meeting held pursuant to § 341, those services would normally be included as part of the services included in the no-look fee. See LBR 2016-1(b)(2)(A)(vi). However, given Timothy Dearfield's explanation during the hearing that additional services were required to counsel the debtor regarding her "catfishing" proclivities and the fact that the debtor did have the inheritance and pawn shop issues to address, the court will approve an additional $900 for the creditors meeting preparation, which equates to an additional $225 per hour for four hours. The court will deduct the additional $897.50 billed for those services.

3. Research and correspondence regarding the "Catfisher" scam: $4,925.00

The second largest group of services, in terms of the fees sought, is for services provided to the debtor relating to the "catfisher" scam. Dearfield spent 19.7 hours for a total of $4,925 in fees related to these services.

The results obtained are an important consideration in determining the reasonableness of attorney fees sought. Boddy , 950 F.2d at 338 ; In re Addleman , Case No. 17-16032, 2018 WL 5797709, at *9, 2018 Bankr. LEXIS 3370, at *27 (Bankr. N.D. Ohio Nov. 2, 2018). This factor requires the court to consider if the party seeking the fees failed to prevail on a claim or claims that were not related to the claim upon which the party succeeded. If the party failed to succeed on all claims, the court considers whether that party nevertheless "achieve[d] a level of success that makes the hours reasonably expended a satisfactory basis for making a fee award[.]" Hensley , 461 U.S. at 434, 103 S.Ct. 1933. When a party moving for attorney fees is partially successful, the court may take such partial success into consideration in making its award of attorney fees. Id. at 430, 103 S.Ct. 1933 ("[T]he level of a plaintiff's success is relevant to the amount of fees to be awarded."); Blum v. Stenson , 465 U.S. 886, 900, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984) (similar).

The court is concerned about the amount of time spent with respect to the catfishing services because it has been unable to discern any legal remedy sought that relates to this matter. The court does not disagree with the need for limited time spent in educating the debtor to avoid such schemes. And the court might be willing to approve increased fees if those fees detailed efforts to recover the funds lost to the schemers. However, the Chapter 13 plan confirmed for the debtor's case and the time records and statements of Timothy Dearfield at the hearing do not evince any efforts or steps taken to recover those funds for the bankruptcy estate, with the exception of an email prepared and sent to the "catfishers." The court understands that a justifiable decision may have been made that recovery of those funds would be extremely difficult and unlikely and that the cost of pursuing such a recovery would be prohibitive. However, the court cannot justify almost $5,000 in fees for the services related to the catfishing scheme when those services did not include a plan and steps to recover such funds. In other words, there was no benefit to the debtor and the estate for such services and no "success" in that endeavor, beyond any successful persuasion to convince the debtor not to engage with the schemers. For these reasons, in addition to the court's allowing $5,400 for the general prepetition and pre-confirmation services, the court will award $1,800 for those services, equating to eight (8) hours at a blended attorney rate of $225 per hour. 4. Research, correspondence, communications, and filing of the Proof of Claim for the Pawn Shop Claim: $1,891.25

Timothy Dearfield's statements during the hearing revealed that the debtor asked the firm to file a proof of claim on behalf of a pawn shop evidencing a loan made by the pawn shop secured by jewelry which the debtor pawned to the creditor. The purpose of such work was to ensure that the creditor would be paid through the plan, allowing the debtor to recover the pawned jewelry upon completion of the payments to the creditor. This is confirmed by the Application and the proof of claim and amended proof of claim prepared by Dearfield and filed on behalf of the creditor. Timothy Dearfield stated at the hearing that the jewelry had great sentimental value to the debtor.

Dearfield spent a total of 10.25 hours related to the pawn shop matter, for a total of $1,891.25 in fees: 8.45 hours for Matthew Dearfield, 1.3 hours for Timothy Dearfield, and .5 hours for Julie Terry. The time spent on this matter involved the preparation of the proof of claim and the amended proof of claim and "research regarding treatment of pawn claims in Chapter 13." The jewelry is represented as having a total value of $2,533.12 on the proof of claim and pawn shop documents attached to the amended proof of claim. The proof of claim simply states that $2,533.12 is owed to the creditor. The Chapter 13 Trustee objected to the original proof of claim because documentation concerning the security agreement, collateral, and perfection of the lien was not attached to the proof of claim. An amended proof of claim was filed in response to the Trustee's objection, the only purpose of which appears to have been to attach the pawn shop documents which were omitted from the original proof of claim. The court will allow 5 hours of time at the blended attorney rate of $225 per hour, for a total of $1,125, for this work, reducing the amount charged for those services by $766.25. The court believes that three hours for research and two hours for preparation and filing of the proof of claim should have been sufficient for these tasks to have been accomplished and more accurately reflects the value and benefit of these services for jewelry valued at approximately $2,500.

5. Research and work relating to the debtor's inheritance: $ 941.25

The last category of work was for research and work related to addressing the debtor's inheritance. The court finds this work to be appropriate in amount, time, and value and benefit to the bankruptcy estate, and therefore approves all of the time and fees associated with that work.

6. Summary and General Assessment of the Work Performed and Results Obtained

Based upon the foregoing, the court approves fees for the prepetition and pre-confirmation services provided to the debtor as follow: 1) $5,400 for general pre-petition and pre-confirmation legal services (24 hours @ $225); 2) $900 for additional work related to the creditors meeting (4 hours @ $225); 3) $1,800 for research and counseling concerning the catfishing scheme (8 hours @ $225); 4) $1,125 for research and the drafting of the pawn shop claim (5 hours @ $225); and 5) $941.25 for work related to the debtor's inheritance, for a total of $10,166.25.

The court appreciates that the debtor and the Chapter 13 Trustee support the Application. And the court appreciates the time and services provided by Dearfield to the debtor, including the counseling efforts with the debtor to educate her as to the motives, methods, and operations of those individuals who were successful in getting her to part with funds for their benefit. Those services were appropriate and beneficial to the debtor and the bankruptcy estate. In addition, Dearfield performed the general bankruptcy services and services related to obtaining the return of the pawned jewelry and accounting for the debtor's inheritance. However, while those services may have exceeded the typical services performed for a debtor in a Chapter 13 case to some degree, the court finds that the services were not more than four times the services in value or benefit than the services provided by counsel under the no-look fee. Thus, the reasonable amount of time required to provide those services should not have been more than four times the amount of time that counsel typically provide in a no-look fee case.

This court must assess the fees requested by Dearfield in the larger framework of all the Chapter 13 cases which come before the court. Succinctly, while this debtor may be more solvent than the typical debtor due to her inheritance of the certificate of deposit and may have consented to the use of some of her inherited funds to compensate Dearfield to the extent of $19,046.50 for pre-confirmation services, these are not acceptable reasons for the excessive fees requested here. When this court compares the services provided in this case by Dearfield with the services provided by other counsel in other Chapter 13 cases, the court finds that the total fees requested in this case are not in line with the other cases and with Chapter 13 services provided by counsel in Dayton and the Southern District of Ohio. For the reasons stated in this decision, the court finds that some fees in excess of the no-look fee are justified, but not almost $15,000 over the recently increased $4,350 no-look fee. While the case may have involved some additional complexity beyond the typical Chapter 13 case due to the debtor's circumstances, the amount of time and fees billed were excessive for the services provided.

IV. Conclusion

Based upon the Application, the November 4, 2021 hearing, the evidence introduced at the hearing, and the statements of Timothy Dearfield, and for the reasons set forth above, the court allows fees in favor of Dearfield in the total amount of $10,166.25.

Accordingly, the Application for Compensation is granted in part and denied in part. Dearfield is awarded the amount of $10,166.25 in fees for its prepetition and pre-confirmation legal services.

IT IS SO ORDERED.


Summaries of

In re Spear

United States Bankruptcy Court, Southern District of Ohio
Jan 10, 2022
636 B.R. 765 (Bankr. S.D. Ohio 2022)

discussing additional factors

Summary of this case from In re Nihart
Case details for

In re Spear

Case Details

Full title:In re: SHEILA R. SPEAR, Debtor.

Court:United States Bankruptcy Court, Southern District of Ohio

Date published: Jan 10, 2022

Citations

636 B.R. 765 (Bankr. S.D. Ohio 2022)

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