Arthur Winer, Inc. v. Aimen

166 B.R. 881, 1994 U.S. Dist. LEXIS 5922, 1994 WL 174282
CourtDistrict Court, N.D. Illinois
DecidedMay 5, 1994
DocketNo. 92 C 2668; Bankruptcy No. 81 B 2112
StatusPublished

This text of 166 B.R. 881 (Arthur Winer, Inc. v. Aimen) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Arthur Winer, Inc. v. Aimen, 166 B.R. 881, 1994 U.S. Dist. LEXIS 5922, 1994 WL 174282 (N.D. Ill. 1994).

Opinion

MEMORANDUM OPINION AND ORDER

ALESIA, District Judge.

This case comes to the court under its appellate jurisdiction over the United States Bankruptcy Courts. 28 U.S.C. § 158(a). The bankruptcy court below upheld interim fees and costs in the amount of $84,873.50 awarded to Philip S. Aimen as compensation for his representation of Eugene Crane (“Trustee”), the Chapter 11 Trustee for Taxman Clothing Co. (“Taxman”), in several preference actions against some of Taxman’s creditors (“appellants”). Appellants claim that the bankruptcy court abused its discretion in granting these fees and in refusing to direct Aimen to disgorge any portion of them. The court affirms.

[882]*882I. FACTS AND PROCEDURAL HISTORY

The facts of this case stretch back thirteen years and merit a brief summary.

In 1981, Taxman went bankrupt, and its Trustee in bankruptcy filed preference actions against the appellants, seeking the return of money that he claimed was paid to them when Taxman was already insolvent. In 1988, the Trustee retained Aimen to try these actions. The cases were consolidated and eventually went to trial in the beginning of 1985. In 1986, the bankruptcy court ruled that Taxman was insolvent during the relevant time period, and in 1987, it ordered the appellants to repay $44,468.33 to the estate.

Spaced throughout the pretrial and trial phases of these actions, Aimen filed four applications for interim fee awards, pursuant to 11 U.S.C. §§ 327, 328, and the bankruptcy court partially granted each of them for a total of $49,049.

Appellants appealed the bankruptcy court’s judgment in the preference actions to a court of this district, and in 1988 that court affirmed the decision. Aimen received a fifth interim award for services rendered in defending this appeal.

Appellants then appealed that district court’s decision to the United States Court of Appeals for the Seventh Circuit. In 1990, the Seventh Circuit reversed the District Court, holding that Aimen had failed to prove insolvency during the relevant period. In re Taxman Clothing Co., 905 F.2d 166 (7th Cir.1990). Aimen received a sixth interim award for defending the appeal to the Seventh Circuit.

The total amount of the interim fee awards to Aimen was $84,873.50, including costs. At a post-trial hearing in the bankruptcy court to determine Aimen’s final fees, Aimen filed an application for additional compensation in the amount of $23,599.50, and appellants requested that the court order Aimen to disgorge at least some portion of his interim fees already received. The appellants argued that it was inappropriate for Aimen to receive $84,873.50 in an attempt to recover $32,884.69, the amount originally sought in the preference actions. The bankruptcy court denied both requests and entered an order allowing final compensation in the amount of $84,873.50.

Both parties appealed to another court of this district, which affirmed the denial of additional compensation and reversed and remanded the final compensation award. In re Taxman Clothing Co., 134 B.R. 286 (N.D.Ill.1991). The court noted that a district court must review the fee determinations of a bankruptcy court under an abuse-of-discretion standard. Id. at 287. Applying that standard, the court held that the bankruptcy court did not err in denying Aimen’s request for additional compensation, but that it did not properly address the question of whether Aimen must return any of the interim fees he received. More specifically, the district court held that the bankruptcy court should have addressed the propriety of the interim awards by applying the “lodestar” analysis (actual, necessary and reasonable hours spent times a reasonable hourly rate equals compensation). The court further held that the resulting lodestar amount must be adjusted according to the results obtained.1

Finally, on remand, the bankruptcy court re-entered its original award of fees and costs in the amount of $87,873.50.

This ease now comes to the district court for the third time since it began thirteen years ago. The appellants argue that the [883]*883bankruptcy court abused its discretion in granting fees and costs to Aimen in the amount of $87,873.50 and in refusing to order Aimen to disgorge any of them. They argue that the bankruptcy court improperly applied the lodestar analysis and that it underempha-sized Aimen’s lack of benefit to the estate.2

Aimen responds by asserting that the bankruptcy court properly applied the lodestar analysis by finding that Aimen actually performed the hours claimed, that they were reasonable and necessary, and that they were billed at a reasonable hourly rate. He further contends that the “benefit of the estate analysis” is not appropriate in the setting of attorney’s fees.

II. DISCUSSION

On appeal from the bankruptcy court, the district court reviews a fee award under an abuse-of-discretion standard. In re Wildman, 72 B.R. 700, 705 (Bankr.N.D.Ill.1987). The court finds no grounds on which to hold that the bankruptcy court abused its discretion or that it failed to follow the directions of the district court’s remand, and accordingly affirms the final fee award.

The parties have clearly identified the two central issues in determining Aimen’s fee award: the lodestar analysis and the benefit to the estate. The Bankruptcy Code, as amended in 1978, encompasses these two factors in § 330, which states that the proper award is “reasonable compensation for actual, necessary services rendered ... based on the nature, the extent, and the value of such services, the time spent on such services, and the costs of comparable services other than in a case under this title.” 11 U.S.C. § 330(a)(1).

On remand, the bankruptcy court began its analysis by applying the lodestar approach, which it stated “requires the court to multiply the actual and necessary hours reasonably expended by a reasonable hourly rate to find the appropriate compensation.” In re Taxman Clothing Co., No. 81 B 2112, at 5, 1992 WL 55687 (Bankr.N.D.Ill. Mar. 11, 1992). The court reviewed the hours Aimen spent at each phase of the litigation, and applied the lodestar analysis to determine whether or not Aimen deserves compensation for those hours. The court found that the time Aimen spent on the pretrial order, the trial of the insolvency issue, the trial of the preference issue, the appeal .to the district court, and the appeal to the appellate court was reasonable and necessary for the adequate representation of the estate in bankruptcy. See id. at 7-9. Therefore, the court concluded that “under the lodestar approach ... the total hours spent of 856.5 were both reasonable and necessary in this matter.” Id. at 9. Multiplying 856.5 hours by a reasonable hourly rate,3 the total amount of Aimen’s fee request was $108,546.50. Id. at 6.

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Related

In Re Continental Illinois Securities Litigation
750 F. Supp. 868 (N.D. Illinois, 1990)
In Re Wildman
72 B.R. 700 (N.D. Illinois, 1987)
In Re Grabill Corp.
110 B.R. 356 (N.D. Illinois, 1990)
In Re Drexel Burnham Lambert Group, Inc.
133 B.R. 13 (S.D. New York, 1991)

Cite This Page — Counsel Stack

Bluebook (online)
166 B.R. 881, 1994 U.S. Dist. LEXIS 5922, 1994 WL 174282, Counsel Stack Legal Research, https://law.counselstack.com/opinion/arthur-winer-inc-v-aimen-ilnd-1994.