Opinion
Case No. 09 B 44943
12-16-2014
In re: CANOPY FINANCIAL, INC. Debtor.
Chapter 7
FINDINGS OF FACT AND CONCLUSIONS OF LAW IN SUPPORT OF ORDER GRANTING APPLICATION OF SEYFARTH SHAW, LLP, ATTORNEYS FOR TRUSTEE, FOR ALLOWANCE OF INTERIM COMPENSATION AND REIMBURSEMENT OF EXPENSES
TOTAL FEES REQUESTED: $568,006.00
TOTAL FEES REDUCED: $26,967.15
TOTAL FEES ALLOWED: $541,038.85
TOTAL COSTS REQUESTED: $6,499.56
TOTAL COSTS REDUCED: $0.00
TOTAL COSTS ALLOWED: $6,499.56
TOTAL FEES AND COSTS ALLOWED: $547,538.41
The attached time and expense entries have been underlined to reflect disallowance in whole or in part. The basis for each disallowance is reflected by numerical notations that appear on the left of each underlined entry. The numerical notations correspond to the enumerated paragraphs below.
(1) Improper Allocation of Professional Resources
The Court denies the allowance in part of compensation for the following task since a professional with a lower level of skill and experience or a paraprofessional could have performed the task. In re Pettibone, 74 B.R. 293, 303 (Bankr. RD. 111. 1987) ("Senior partner rates wilt be paid only for work that warrants the attention of a senior partner. A senior partner who spends time reviewing documents or doing research a beginning associate could do will be paid at a rate of a beginning associate. [Citation omitted]. Similarly, non-legal work performed by a lawyer which could have been performed by less costly non-legal employees should command a lesser rate."); In re Wildman, 72 B.R. 700, 710 (Bankr. N.D. Ill. 1987) (same); In re Alberto, 121 B.R. 531, 535 (Bankr. N.D. Ill. 1990) (determining use of partner appropriate where attendant complex legal issues warrant highly experienced practitioner).
(2) Unreasonable Time
The Court denies the allowance in part of compensation for the following task since the professional or paraprofessional expended an unreasonable amount of time on this task in light of the nature of the task, the experience and knowledge of the professional performing the task, and the amount of time previously expended by the professional or another on the task. In re Pettibone, 74 B.R. 293, 306 (Bankr. N.D. Ill. 1987) ("The Court will determine what is the reasonable amount of time an attorney should have to spend on a given project... An attorney should not be rewarded for inefficiency. Similarly, attorneys will not be fully compensated for spending an unreasonable number of hours on activities of little benefit to the estate."); In re Wildman, 72 B.R. 700, 713 (Bankr. N.D. Ill. 1987) (same).
As to the time devoted to the preparation of the fee application itself, the Court denies the allowance of compensation that is disproportionate to the total hours in the main case. In re Wildman, 72 B.R. 700, 711 (Bankr. N.D. Ill. 1987) ("In the absence of unusual circumstances, the hours allowed by this Court for preparing and litigating the attorney fee application should not exceed three percent of the total hours in the main case."); In re Spanjer Bros., Inc., 203 B.R. 85, 93 (Bankr. N.D. Ill. 1996) (compensation limited to 5%). See also In re Pettibone Corp., 74 B.R. 293, 304 (Bankr, N.D. Ill. 1987) (citing Coulter v. State of Tennessee, 805 F.2d 146, 151 (6th Cir. 1986)(in non-bankruptcy cases, compensation for preparation and litigation of fee petions limited to 3-5% of the nours of the main case)).
(4) Insufficient Description
The Court denies the allowance of compensation for the following task since teh descripation of teh time entry fails to identify in a reasonable manner the service rendered. In re Pettibone, 74 B R 293 301 (Bankr. N.D. Ill. 1987)("A proper fee application must list each activity, its date, th attorney who performed the work, a Receods which give no explanation of the activities performed are not compensable."); In re Wildman, 72 B.R. 70, 708-9 (Bankr, N.D. Ill. 1987) (same).
(5) Duplication of Services
The Court denies the allowance of compensation for services that duplicate these of another professional or paraprofessional. See 11 U.S.C. § 330(a)(4)(A)(i). Reduction in fees is warranted if multiple attorneys from the each firm appear in court on a motion or argument or for a conference, unless counsel adequately demonstrates that 1987) ("A debtor's estate should not bear the burden of duplication of services. If found in the record, such duplication shall be disallowed by the court as unnecessary."). It is also an accepted principle that generally no more than one attorney may bill for time spent in an intra-office conference or meeting absent an adequate xeplanation. See In re Adventist Living Ctrs., Inc., 137 B.R., 701, 716 (Bankr, N.D. Ill. 1991); In re Pettibone, 74 B.R., at 303.
(7) Lumping
The Court may impose a ten percent penalty for "lumping." In re Wildman, 72 B.R., 700, 709 (Bankr, N.D. Ill. 1987) ("Applicants may not circumvent time requirement or any of the requirements of detail by "lumping" a bunch of activities into a single entry. [citation omitted]. Each type of service should be listed with the corresponding specific time allotment.").
(11) Overhead Costs are Non-Compensable
The Court denies the reimbursement for fees or expenses that are overhead that are overhead costs. Expenses which are overhead are not compensable because they are built into the hourly rate. See In re Wildman, 72 B.R., 700, 731 or expenses incident to the operation of the film which cannot be attributed to a particular client or cost." In re Convent Guardian Corp., 103 B. R., 937, 939-40 (Bankr. N.D. Ill 1989) ( quoting In re Thacker, 48 B.R. 161, 164 (Bankr. N.D. Ill. 1985)).
(12) Clerical Work Not Compensable
The Court disallows the compensation of elerical or stenographic employees of the professional for the performance of routine clerical or administeative activities in the normal course of the professional's business, such as photocopying, secretarial work, or routine filing. Such activities are not in the nature of professional services and must be absorbed by teh applicant's firm as an overhead expense. In re Dimas, LLC, 357 B.R. 563, 577 (Bankr. N.D. Cal. 2006)(citing Missouri v. Jenkins, 491 U.S. 274, 288 n. 10 (1989)). See also In re Chellino, 209 B.R. 106, 114 (Bankr. C.D. Ill 1996) (Paralegal, but not "clerk" services entitlled to compensation at an hourly rate; clerk activities are overhead of the professional); Souza v. Miguel, 32 F.3d 1370, 1375 (9th Cir. 1994)(Trustee not entitled to reimbursement of the overhead expenses such as secretarial, stenegomphic, clerical, and routine messenger services). Date: December 16, 2014
/s/_________
Janet S. Baer
United States Bankruptcy Judge
EXHIBIT 2
Part 1
SALE OF ASSETS
| Date | Description | Timekeeper | Hours | Value |
| 07/01/14 | Confer with G. Paloian regarding inventory of artwork retrieved from San Francisco Canopy office (.20); retrieve/review inventory regarding same (.20); retrieve/review photos of artwork to determine sale value (.40). | J. McManus | 0.80 | 228.00 |
| 07/02/14 | Review artwork received from San Francisco Canopy-office with J. Ziegler (.40); arrange for photographing and cataloguing artwork (.20); review/download photos of same (.10); email to G. Paloian regarding potential liquidation of artwork (.10). | J. McManus | 0.80 | 228.00 |
| 07/02/14 | Review, photograph, and catalog artwork for potential sale. | J. Ziegler | 1.80 | 180.00 |
| 07/03/14 | Review additional artwork photos (.20); confer with A. Connor regarding value and liquidation of same (.10). | J. McManus | 0.30 | 85.50 |
| 07/07/14 | Confer with G. Paloian regarding strategy for determining value of artwork retrieved from Canopy San Francisco office (.20); confer with J. Ziegler regarding same (.10); edit email to Brussels gallery (.10); retrieve specific pieces of artwork for G, Paloian's review (.20). | J. McManus | 0.60 | 171.00 |
| 07/07/14 | Consult with J. McManus regarding valuation of artwork for sale (.20); retrieve artwork for gallery information (.40); conduct google search for contact information for gallery where artwork was purchased (.40); draft email to gallery where artwork was purchased in order to determine value thereof (.20). | J. Ziegler | 1.20 | 120.00 |
| 07/08/14 | Retrieve photos of paintings to be emailed to gallery for valuation (.20); edit and send email to gallery (.10). | J. Ziegler | 0.30 | 30.00 |
| 07/09/14 | Attend to liquidation of artwork (.20); confer with J. Ziegler regarding same (.10). | J. McManus | 0.30 | 85.50 |
| 07/11/14 | View rugs received from Canopy's San Francisco office regarding potential liquidation or abandonment. | J. McManus | 0.20 | 57.00 |
| 07/18/14 | View oriental rugs received former SF Canopy office (.20); confer with G. Paloian regarding same (.20); discuss potential art sales with A. Connor (.20); confer with G. Paloian regarding suggested art purchasers (.10). | J. McManus | 0.70 | 3 99.50 |
| 07/18/14 | Review and photograph rugs for liquidation. | J. Ziegler | 0.50 | 50.00 |
| 07/21/14 | Communicate with Art reagrding valuation of rugs and artwork. | J. Ziegler | 0,20 | 20.00 |
| 07/22/14 | Confer with J. Ziegler and G. Paloian regarding inspection of Persian/Indian/Turkish rugs (.20); assemble photos of artwork for viewing by (.20) | J. McManus | 0.40 | 114.00 |
| Date | Description | Timekeeper | Honrs | Value |
| 07/22/14 | Communication with regarding: appraisal of artwork (.20); communication with regarding appraisal of rugs (.10); consult with J. McManus regarding same (.10). | J. Ziegler | 0.40 | 40.00 |
| 07/23/14 | View Persian and Indian rugs with J. Ziegler prior to appraiser viewing (.20); confer with G. Paloian regarding same (.10); review email communications from art appraiser regarding initial determination of value of artwork (.20). | J. McManus | 0.50 | 142.50 |
| 07/23/14 | Prepare Persian rugs for appraisal (.50); communicate with fine arts appraiser (.10); meet with rug appraiser (.40). | J. Ziegler | 1.00 | 100.00 |
| 07/25/14 | Telephone call with rug appraiser regarding rug value (.20); communicate with G. Paloian regarding same (.10). | J. Ziegler | 0.30 | 30.00 |
| 07/28/14 | Discuss rag appraisal with G. Paloian (.10); photograph Persian and Indian rugs for submission to Chicago Liquidators (.30); confer with J. Ziegler regarding same (.10). | J. McManus | 0.50 | 142.50 |
| 07/30/14 | Photograph Persian rugs to send to sale. | J. Ziegler | 0.50 | 50.00 |
| 08/06/14 | Emails communications with regarding sale of estate property. | J. McManus | 0.40 | 114.00 |
| 08/07/14 | Prepare memo to regarding sale of Estate rugs form former Canopy office. | J. McManus | 0.40 | 114.00 |
| 08/18/14 | Compose email to regarding liquidation of Persian rugs. | J. McManus | 0.30 | 85.50 |
| TOTAL | 12.40 | $2,387.00 |
FEE APPLICATIONS
| Date | Description | Timekeeper | Hours | Value |
| 06/02/14 | Prepare Seyfarth Thirteenth Fee Application to exclude Trustence fees. | J. McManus | 0.90 | 256.50 |
| 06/05/14 | Prepare Seyfarth Fee Application. | J. McManus | 1.40 | 399.00 |
| 06/11/14 | Edit time detail in preparation of Exhibit 2 to Thirteenth Seyfarth Fee Application. | J. McManus | 2.10 | 598.50 |
| 06/12/14 | Review/edit time detail regarding Seyfarth's Thirteenth Fee Application. | J. McManus | 1.00 | 285.00 |
| 06/18/14 | Prepare Thirteenth Fee Application. | J. McManus | 1.40 | 399.00 |
| 06/19/14 | Prepare Seyfarth's Thirteenth Fee Application. | J. McManus | 2.10 | 598.50 |
| 06/20/14 | Review/edit April detail (1.10); confer with J. Ziegler regarding same (.10). | J. McManus | 1.20 | 342.00 |
| 06/23/14 | Prepare Seyfarth Fee Application. | J. McManus | 1.20 | 342.00 |
| 06/25/14 | Revise Seyfarth Fee Application, Exhibit 2. | J. McManus | 1.20 | 342.00 |
| 06/26/14 | Review/edit April fee detail for Exhibit 2 to Seyfarth Fee Application. | J. McManus | 3.20 | 912.00 |
| 06/26/14 | Review fee application time detail for accuracy, de-lumping (3.90); consult with J. McManus regarding same (.10). | J. McManus | 4.00 | 400.00 |
| 06/27/14 | Revise Exhibit 2 to Seyfarth's Thirteenth Fee Application. | J. McManus | 2.10 | 598.50 |
| 06/30/14 | Assemble/review vendor invoices to be included in Seyfarth Fee Application. | J. McManus | 0.40 | 114.00 |
| 07/02/14 | Prepare Exhibit 3 to Seyfarth's Thirteenth Fee Application. | J. McManus | 0.80 | 228.00 |
| 07/08/14 | Revise Exhibit 3 to Fee Application (.70); revise pleading portion of Fee Application (.50). | J. McManus | 1.20 | 342.00 |
| 07/16/14 | Review/edit Exhibit 2 to Seyfarth Application (.90); review/edit Exhibit 3 to Seyfarth Application (.90).' | J. McManus | 1.80 | 513.00 |
| 07/16/14 | Assist J, McManus with preparation of fee application. | J. Ziegler | 2.50 | 250.00 |
| 07/17/14 | Revise Fee Application. | J. McManus | 1.10 | 313.50 |
| 07/18/14 | Review/edit Exhibit 2 to Seyfarth's Thirteenth Fee Application (1.50): review/edit Exhibit 3 to same (1.10). | J. McManus | 2.70 | 769.50 |
| 07/18/14 | Assist J. McManus with preparation of fee application. | J. Ziegler | 1.20 | 120.00 |
| 07/21/14 | Edit Exhibit 2 to Seyfarth Fee Application (1.20); revise pleading (.80); revise Exhibit 3 (.40). | J. McManus | 2.40 | 684.00 |
| 07/22/14 | Review/revise fee application (.50); review bankruptcy and district court dockets in order to prepare same (.30). | M. Pinksion | 0.80 | 332.00 |
| Date | Description | Timekeeper | Hours | Value |
| 07/22/14 | Revise Seyfarth pleading portion of Thirteenth Fee Application (3.20); confer with R. Pinkston regarding same (.10); revise Exhibit 3 (.40). | J. McManus | 1.70 | 484.50 |
| 07/23/14 | Revise pleading portion of Seyfarth Fee Application (.60); prepare/incorporate charts into same (1.40); revise/finalize Exhibit 2 (1.30); revise/finalize Exhibit 3 (1.10). | J. McManus | 4,40 | 1,254.00 |
| 07/23/14 | Assist J. McManus with preparation of fee application (13th). | J. Ziegler | 0.50 | 50.00 |
| 07/24/14 | Prepare fee application. | G. Paloian | 1.20 | 780.00 |
| 07/24/14 | Redact time entries for Canopy Application (7.50); review and continue redaction (.90); review application (.40). | C. Harney | 8.80 | 3,300.00 |
| 07/24/14 | Revise/finalize Seyfarth Fee Application in preparation for filing (1.60); revise/format/finalize Exhibit 2 to Seyfarth Fee Application (1.10); revise/format finalize Exhibit 3 (.90); revise Service List (.20); prepare proposed Order (.20) cause Seyfarth's Thirteenth Fee Application to be filed with the Court (.20). prepare cover letter to Judge Wedoff enclosing filed fee application and redacted copy of fee application (.20). | J. McManus | 4.40 | 1,254.00 |
| 07/29/14 | Assist J. McManus with preparation of fee application. | J. Ziegler | 0.90 | 90,00 |
| 07/30/14 | Prepare and revise Exhibit 2.1 to Seyfarth fee application (1.50); consult with J. McManus regarding same (.20). | J. Ziegler | 1.70 | 170.00 |
| 08/13/14 | Review/edit June detail. | J. McManus | 0.60 | 171.00 |
| 08/18/14 | Review/edit June detail. | J. McManus | 0.80 | 228.00 |
| 08/19/14 | Prepare for fee application hearing (.10); confer with J. Sowka regarding same (.10). | J. McManus | 0.20 | 57.00 |
| 08/20/14 | Prepare for hearing on Seyfarth fee application (.20); appear in court for hearing on same (.50); confer with J. McManus regarding reductions to same by the court (.10); various conferences with G. Paloian regarding same (.10). | J. Sowka | 0.90 | 387.00 |
| 08/20/14 | Review Findings of Fact regarding Seyfarth Fee Application and discuss same with G. Paloian (.10); draft Supplement to Seyfarth's Thirteenth Fee Application (2.10). | J. McManus | 2.20 | 627.00 |
| 08/21/14 | Review Findings of Fact related to Fee application | C. Harney | 0.20 | 75.00 |
| 08/21/14 | Revise Supplement to Seyfarth's Thirteenth Fee Application (.50); review/edit July detail (.70). | J. McManus | 1.20 | 342.00 |
| 09/05/14 | Revise Supplement to Seyfarth Fee Application. | J. McManus | 0.80 | 228.00 |
| 09/11/14 | Confer with G. Paloian regarding submission of fee application supplement (.10); draft Seyfarth's Fourteenth Fee Application (.90). | J. McManus | 1.00 | 285.00 |
| Date | Description | Timekeeper | Hours | Value |
| 09/15/14 | Review/edit July detail, | J. McManus | 0.70 | 199.50 |
| 09/16/14 | Review/edir July time detail. | J. McManus | 0.80 | 228,00 |
| 09/22/14 | Prepare Fourteenth Seyfarth Fee Application. | J. McManus | 1.20 | 342.00 |
| 09/25/34 | Review findings of fact and conclusions of law, as well as time entries, regarding reduction in allowed compensation. | M. Pinkston | 0.40 | 166.00 |
| 09/25/14 | Revise Fee Application Supplement (.80); confer with G. Paloian regarding same (.20); prepare Fourteenth Fee Application (.70). | J. McManus | 1.70 | 484,50 |
| 09/25/34 | Prepare Fourteenth Fee Application. | J. McManus | 0.80 | 228.00 |
| 09/26/14 | Revise Fee Application Supplement. | J. McManus | 0.80 | 228.00 |
| 09/29/14 | Review/edit August detail. | J. McManus | 1.00 | 285.00 |
| 09/30/14 | Prepare Seyfarth's Fourteenth Fee Application. | J. McManus | 1.10 | 313.50 |
| 10/02/14 | Prepare Seyfarth Fee Application, Exhibit 2. | J. McManus | 1.80 | 513.00 |
| 10/03/14 | Prepare Seyfarth Fourteenth Fee Application (1.70); draft Supplement to Thirteenth Fee Application (.40). | J. McManus | 2.10 | 598.50 |
| 10/06/14 | Review/edit time detail in preparation of Seyfarth's Fourteenth Fee Application. | J. McManus | 1.70 | 484.50 |
| 10/07/14 | Review/edit August/September time detail (1.90); confer with G. Paloian and R. Pinkston regarding same and regarding supplement (.20); prepare Supplement to Seyfarth's Thirteenth Fee Application (.60). | J. McManus | 2.70 | 769.50 |
| 10/09/14 | Review/edit Exhibit 3 to Seyfarth Fee Application (.50); draft pleading portion of fourteenth fee application (1.40); draft pleading portion of fee application supplement regarding Seyfarth's' thirteenth fee application (.70). | J. McManus | 2.60 | 741.00 |
| 10/10/14 | Revise Seyfarth Fee Application. | J. McManus | 1.10 | 313.50 |
| 10/15/14 | Prepare fee application. | G. Paloian | 0.90 | 585.00 |
| 10/15/14 | Review/edit all detail in preparation of Exhibit 2 to Seyfarth Fee Application (1.40); revise Supplement (.70). | J. McManus | 2.10 | 598.50 |
| 30/16/14 | Prepare Fourteenth Fee Application. | J. McManus | 0.80 | 228.00 |
| 10/23/14 | Prepare fee application. | G. Paloian | 0.60 | 390.00 |
| 10/27/14 | Prepare fee application. | G. Paloian | 0.40 | 260.00 |
| 10/27/14 | Revise October detail for Fourteenth Fee Application (.90); revise Exhibit 2 to same (.70). | J. McManus | 1.60 | 456.00 |
| 10/28/14 | Prepare fee application. | G. Paloian | 0.40 | 260,00 |
| Date | Description | Timekeeuer | Hours | Value |
| 10/28/14 | Revise Exhibit 2 to Seyfarth's Fourteenth Fee Application (.90); confer with G. Paloian and N. Nevils regarding edits to same (.10); prepare pleading portion of fee Application (.80). | J. McManus | 1.80 | 513.00 |
| 10/30/14 | Review/edit Exhibit 2 to Seyfarth Fee Application. | J. McManus | 0.90 | 256.50 |
| 10/31/14 | Conference with J. McManus regarding preparation of fee application. | M. Pinkston | 0.20 | 83.00 |
| 10/31/14 | Extensive review of 100 pages of Exhibit 2 to Seyfarth Fee Application. | J. McManus | 0.90 | 256.50 |
| TOTAL | 99.30 | $28,702.50 | ||
| Total Fees | $568,163.50 |
| Description | Hours | Value |
| Paloian v. Fifth Third | 523.00 | $233,490.50 |
| Paloian v. Ridgestone | 595.60 | $268.140.00 |
| Paloian v. Solomon | 5.10 | $2,416.50 |
| Case Administration | 8.30 | $3,059.50 |
| Claims Administration | 36.80 | $16,073.00 |
| Investigation of Estate Claims/Litigation | 26.30 | $13,737.00 |
| Sale of Assets | 12.40 | $2,387.00 |
| Fee Applications | 99.30 | $28,702.50 |
| 1,306.80 | $568,006.00 |