MEMORANDUM DECISION AND ORDER
DENNIS E. MILTON, Bankruptcy Judge.
Before the Court is the application of Sheldon Good & Company Auctions, NorthEast, LLC (“Sheldon Good”) for an order directing Aston Baker (the “debtor”) to reimburse Sheldon Good for legal fees and expenses incurred in connection with
the court-approved auction of debtor’s real properties (the “Application”). Sheldon Good seeks the total sum of $138,965.84 ($134,627.99 for legal fees incurred and $4,341.84 for expenses incurred). In opposition, counsel for the debtor argued that this Court lacked jurisdiction to determine the question because the Auction Agreement provided that all disputed items were to be resolved in the New York state courts. Counsel further contended that Sheldon Good was not authorized to retain counsel and could not receive any resulting fees and expenses from the debtor’s estate. In the alternative, counsel argued that even if Sheldon Good were entitled to such reimbursement, the amount of reimbursement which Sheldon Good sought exceeded the reasonableness standard set forth in Section 330(a) of the Bankruptcy Code.
As set forth in greater detail below, the Court finds that (1) this Court has jurisdiction to resolve the Application; (2) the Auction Agreement authorized Sheldon Good to retain counsel and required the debtor to indemnify Sheldon Good for legal fees and costs incurred; and (3) Sheldon Good is entitled to reimbursement in the amount of $102,589.49 for legal fees incurred but is not entitled to reimbursement of the $4,341.84 in claimed expenses because Sheldon Good provided no documentation to substantiate that these were actual out-of-pocket expenses. Upon review of the invoices for legal services which Sheldon Good produced in support of the Application, the Court has deducted $32,038.50 (approximately a 24% reduction) because Arent Fox LLP (“Arent Fox”) block billed and provided vague and inadequate billing entries which failed to provide the necessary justification for various telecommunications, meetings, correspondence and other tasks performed.
JURISDICTION
This Court has jurisdiction over this core proceeding under 28 U.S.C. §§ 1334(b) and 157(b)(2)(c) and the Eastern District of New York standing order of reference dated August 28, 1986. This Memorandum Decision and Order constitutes the Court’s findings of fact and conclusions of law to the extent required by Fed. R. Bankr.P. 7052.
PROCEDURAL HISTORY
Familiarity with the prior proceedings in this case is assumed. The facts relevant to this Application are detailed below. On November 15, 2001, the debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. On January 25, 2002, the Chapter 7 case was converted to a case under Chapter 11 of the Bankruptcy Code. On June 20, 2005, the Court issued an Order authorizing the retention of Sheldon Good as the exclusive auctioneer for the debtor’s real properties
(the “Auctioneer Order”). The Auctioneer Order approved the terms and conditions set forth in the Exclusive Real Estate Auction Agreement between Sheldon Good and the debtor (the “Auction Agreement”). Paragraph VI.6B of the Auction Agreement provided that Aston Baker would indemnify Sheldon Good from all “liabilities, losses, damages, claims, suits, causes of action third party actions ... including actual legal fees and costs.
” The Auctioneer
Order specifically reserved jurisdiction for this Court to determine any allowance of compensation or reimbursement of expenses to Sheldon Good, notwithstanding the terms of the Auction Agreement.
On September 27, 2005, Sheldon Good held a successful auction of the Properties pursuant to the Auctioneer Order. The auction resulted in the addition of approximately twelve million dollars to the debt- or’s estate. Subsequently, the debtor filed three appeals
in an effort to overturn the Auction Agreement, vacate the Court’s Order approving compensation for Sheldon-Good and dispute Sheldon Good’s application for reimbursement of legal expenses incurred in responding to these appeals. In January 2006, Sheldon Good retained Arent Fox as its counsel in at least two of the appeals filed (Appeal to District Court, Case No. 01-24227 and Appeal to Second Circuit, Case No. 05-7027). On August 8, 2007, the debtor and Sheldon Good entered into a stipulation whereby the debtor agreed to withdraw his Appeal to the District Court. On August 9, 2007, the debtor and Sheldon Good also entered into a stipulation whereby the debtor agreed to withdraw with prejudice the appeal filed in the Second Circuit (the “August 9th Stipulation”). The August 9th Stipulation included language stating that “[a]ny issues of attorneys’ fees is reserved for later determination by the Bankruptcy Court.”
On August 17, 2006, during a hearing before this Court, Arent Fox on behalf of Sheldon Good requested that the Court direct the debtor to reimburse Sheldon Good for all legal fees and expenses that it incurred in defending against the appeals. On that same date, the Court directed Arent Fox to submit to the debtor and the Court a copy of its invoice detailing the legal fees and expenses that were incurred. On August 24, 2006, Arent Fox sent a letter to debtor’s counsel and attached the relevant invoice which detailed the legal work performed on behalf of Sheldon Good between January 3, 2006 and August 17, 2006. This invoice detailed a legal charge of $134,624.00 for 376.7 hours of work and an expense charge of $4,341.84.
On September 26, 2006, debtor’s counsel filed its objections to Sheldon Good’s request. The debtor’s principal objections were that: (i) Sheldon Good was not authorized to retain counsel and charge any resulting fees and expenses to the debtor since Arent Fox was not retained pursuant to Section 327 of the Bankruptcy Code; (ii) if Sheldon Good were authorized to so act, the amount claimed ($138,965.84) exceeded the reasonableness standard set forth in 11 U.S.C. § 330(a) and (iii) this Court lacked the authority to resolve the dispute because the Auction Agreement provided that all disputes should be adjudicated in
the Courts of the State of New York. On October 9, 2006, counsel for Sheldon Good filed its response. Counsel for Sheldon Good contended that Sheldon Good was authorized to retain legal counsel and be reimbursed for their fees and expenses pursuant to the Court’s Auctioneer Order and was not required to retain Arent Fox as a professional pursuant to Section 327 of the Bankruptcy Code.
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MEMORANDUM DECISION AND ORDER
DENNIS E. MILTON, Bankruptcy Judge.
Before the Court is the application of Sheldon Good & Company Auctions, NorthEast, LLC (“Sheldon Good”) for an order directing Aston Baker (the “debtor”) to reimburse Sheldon Good for legal fees and expenses incurred in connection with
the court-approved auction of debtor’s real properties (the “Application”). Sheldon Good seeks the total sum of $138,965.84 ($134,627.99 for legal fees incurred and $4,341.84 for expenses incurred). In opposition, counsel for the debtor argued that this Court lacked jurisdiction to determine the question because the Auction Agreement provided that all disputed items were to be resolved in the New York state courts. Counsel further contended that Sheldon Good was not authorized to retain counsel and could not receive any resulting fees and expenses from the debtor’s estate. In the alternative, counsel argued that even if Sheldon Good were entitled to such reimbursement, the amount of reimbursement which Sheldon Good sought exceeded the reasonableness standard set forth in Section 330(a) of the Bankruptcy Code.
As set forth in greater detail below, the Court finds that (1) this Court has jurisdiction to resolve the Application; (2) the Auction Agreement authorized Sheldon Good to retain counsel and required the debtor to indemnify Sheldon Good for legal fees and costs incurred; and (3) Sheldon Good is entitled to reimbursement in the amount of $102,589.49 for legal fees incurred but is not entitled to reimbursement of the $4,341.84 in claimed expenses because Sheldon Good provided no documentation to substantiate that these were actual out-of-pocket expenses. Upon review of the invoices for legal services which Sheldon Good produced in support of the Application, the Court has deducted $32,038.50 (approximately a 24% reduction) because Arent Fox LLP (“Arent Fox”) block billed and provided vague and inadequate billing entries which failed to provide the necessary justification for various telecommunications, meetings, correspondence and other tasks performed.
JURISDICTION
This Court has jurisdiction over this core proceeding under 28 U.S.C. §§ 1334(b) and 157(b)(2)(c) and the Eastern District of New York standing order of reference dated August 28, 1986. This Memorandum Decision and Order constitutes the Court’s findings of fact and conclusions of law to the extent required by Fed. R. Bankr.P. 7052.
PROCEDURAL HISTORY
Familiarity with the prior proceedings in this case is assumed. The facts relevant to this Application are detailed below. On November 15, 2001, the debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. On January 25, 2002, the Chapter 7 case was converted to a case under Chapter 11 of the Bankruptcy Code. On June 20, 2005, the Court issued an Order authorizing the retention of Sheldon Good as the exclusive auctioneer for the debtor’s real properties
(the “Auctioneer Order”). The Auctioneer Order approved the terms and conditions set forth in the Exclusive Real Estate Auction Agreement between Sheldon Good and the debtor (the “Auction Agreement”). Paragraph VI.6B of the Auction Agreement provided that Aston Baker would indemnify Sheldon Good from all “liabilities, losses, damages, claims, suits, causes of action third party actions ... including actual legal fees and costs.
” The Auctioneer
Order specifically reserved jurisdiction for this Court to determine any allowance of compensation or reimbursement of expenses to Sheldon Good, notwithstanding the terms of the Auction Agreement.
On September 27, 2005, Sheldon Good held a successful auction of the Properties pursuant to the Auctioneer Order. The auction resulted in the addition of approximately twelve million dollars to the debt- or’s estate. Subsequently, the debtor filed three appeals
in an effort to overturn the Auction Agreement, vacate the Court’s Order approving compensation for Sheldon-Good and dispute Sheldon Good’s application for reimbursement of legal expenses incurred in responding to these appeals. In January 2006, Sheldon Good retained Arent Fox as its counsel in at least two of the appeals filed (Appeal to District Court, Case No. 01-24227 and Appeal to Second Circuit, Case No. 05-7027). On August 8, 2007, the debtor and Sheldon Good entered into a stipulation whereby the debtor agreed to withdraw his Appeal to the District Court. On August 9, 2007, the debtor and Sheldon Good also entered into a stipulation whereby the debtor agreed to withdraw with prejudice the appeal filed in the Second Circuit (the “August 9th Stipulation”). The August 9th Stipulation included language stating that “[a]ny issues of attorneys’ fees is reserved for later determination by the Bankruptcy Court.”
On August 17, 2006, during a hearing before this Court, Arent Fox on behalf of Sheldon Good requested that the Court direct the debtor to reimburse Sheldon Good for all legal fees and expenses that it incurred in defending against the appeals. On that same date, the Court directed Arent Fox to submit to the debtor and the Court a copy of its invoice detailing the legal fees and expenses that were incurred. On August 24, 2006, Arent Fox sent a letter to debtor’s counsel and attached the relevant invoice which detailed the legal work performed on behalf of Sheldon Good between January 3, 2006 and August 17, 2006. This invoice detailed a legal charge of $134,624.00 for 376.7 hours of work and an expense charge of $4,341.84.
On September 26, 2006, debtor’s counsel filed its objections to Sheldon Good’s request. The debtor’s principal objections were that: (i) Sheldon Good was not authorized to retain counsel and charge any resulting fees and expenses to the debtor since Arent Fox was not retained pursuant to Section 327 of the Bankruptcy Code; (ii) if Sheldon Good were authorized to so act, the amount claimed ($138,965.84) exceeded the reasonableness standard set forth in 11 U.S.C. § 330(a) and (iii) this Court lacked the authority to resolve the dispute because the Auction Agreement provided that all disputes should be adjudicated in
the Courts of the State of New York. On October 9, 2006, counsel for Sheldon Good filed its response. Counsel for Sheldon Good contended that Sheldon Good was authorized to retain legal counsel and be reimbursed for their fees and expenses pursuant to the Court’s Auctioneer Order and was not required to retain Arent Fox as a professional pursuant to Section 327 of the Bankruptcy Code. Counsel further contended that the debtor’s reliance on the provision in the Auction Agreement which provided that disputes must be adjudicated in the Courts of New York was misplaced because the Auctioneer Order specifically reserved jurisdiction for this Court to determine any allowance of compensation or reimbursement of expenses to Sheldon Good, notwithstanding the terms of the Auction Agreement, and the August 9th Stipulation specifically directed the Bankruptcy Court to resolve the issue.
DISCUSSION
A. Jurisdiction to Determine The Application
At the outset, the Court finds that it has the authority to decide this Application. The Auctioneer Order specifically reserved jurisdiction for this Court to determine any allowance of compensation or reimbursement of expenses to Sheldon Good, notwithstanding the terms of the Auction Agreement. In addition, the August 9th Stipulation designated this Court to make all findings with respect to this Application.
The Court further finds that Sheldon Good was not required to retain Arent Fox as a professional pursuant to Section 327 of the Bankruptcy Code.
Arent Fox was not a representative of the estate. Sheldon Good hired Arent Fox to defend and respond to the appeals that the debtor filed. On June 20, 2005, this Court issued the Auctioneer Order which approved Sheldon Good as the Auctioneer of the Properties and approved the terms and conditions of the Auction Agreement. As previously noted, the Auction Agreement specifically provided that the debtor would indemnify Sheldon Good for all “liabilities, losses, damages, claims, suits, causes of action third party actions ... including actual legal fees and costs.” Thus, the Court’s Order obligated the debtor to reimburse Sheldon Good for legal fees and expenses incurred in connection with the court approved auction of the Properties.
B. Award of Reasonable Attorneys’ Fees
The next issue before the Court is whether the reimbursement amount sought is reasonable. The Court will review the propriety of fees and expenses under the reasonableness guidelines of Section 330(a) of the Bankruptcy Code.
1. Assessing Reasonable Attorneys’ Fees
Sheldon Good has requested reimbursement for the $134,624.00 in legal fees and $4,351.84 in expenses it incurred for Arent Fox’s services. The debtor objected to the
amount of fees requested stating that the legal fees and expenses billed exceeded the reasonableness standard set forth in Section 330(a) of the Bankruptcy Code.
Section 330(a)(3) provides:
In determining the amount of reasonable compensation to be awarded to an examiner, trustee under chapter 11, or professional person, the court shall consider the nature, the extent, and the value of such services, taking into account all relevant factors, including:
(A) the time spent on such services;
(B) the rates charged for such services;
(C) whether the services were necessary to the administration of, or beneficial to the time at which the service was rendered toward the completion of, a case under this title;
(D) whether the services were performed 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;
(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. Rule 2016(a) of the Federal Rules of Bankruptcy Procedure implements the standards set forth in Section 330 of the Code:
Application for Compensation or Reimbursement. An entity seeking interim of final compensation for services, or reimbursement of necessary expenses, from the estate shall file with the court an application setting forth a detailed statement of (1) the services rendered, the time expended and expenses incurred and (2) the amounts requested. Fed.R.Bankr.P. 2016(a). To satisfy this burden, a claimant must justify its charges with detailed, specific, itemized documentation.
In re Dimas, LLC,
357 B.R. 563, 576 (Bankr.N.D.Cal.2006);
In re Bennett Funding Group Inc.,
213 B.R. 234, 244 (Bankr.N.D.N.Y.1997);
In re Poseidon Pools of America, Inc.,
180 B.R. 718, 729 (Bankr.E.D.N.Y.1995),
affirmed
216 B.R. 98, 100 (E.D.N.Y.1997). Billing records must clearly identify each discrete task billed, indicate the date the task was performed, the precise amount of time spent (not to be billed in increments greater than one-tenth of an hour), who performed the task, their level of experience and that person’s hourly rate.
In re Fibermark, Inc.,
349 B.R. 385, 395 (Bankr.D.Vt.2006). The records must be detailed enough to enable a Court to determine whether the attorneys are claiming compensation for hours that are “redundant, excessive, or otherwise unnecessary.”
Hensley,
461 U.S. at 434, 103 S.Ct. 1933.
See also, In re Recycling Industries, Inc.,
243 B.R. 396, 401 (Bankr.D.Colo.2000);
In re Poseidon Pools of America,
180 B.R. at 729. Also the billing practice of aggregating multiple tasks into one billing entry, typically referred to as “block billing,” is routinely disallowed. This is because the practice of block billing makes it exceedingly difficult for a Court to determine the reasonableness of the time spent on each of the individual services or tasks provided.
In re Dimas, LLC,
357 B.R. at 576;
In re Fibermark, Inc.,
349 B.R. at 395;
In re Poseidon Pools of America,
180 B.R. at 729;
Matter of Navis Realty, Inc.,
126 B.R. 137, 144 (Bankr.E.D.N.Y.1991). Consequently, courts will summarily disallow time for discrete legal services merged together in a fee application. Upon review of Arent Fox’s invoice, the Court makes the following adjustments based on the shortcomings contained in the time entries.
A. Disallowance Based Upon Improper Block Billing
As noted above, fee applications which contain block billing are difficult to review because a Court has no way to determine how much time an attorney or paralegal spent on an individual task listed in the group of tasks billed.
In re Fibermark, Inc.,
349 B.R. at 395;
In re NWFX, Inc.,
267 B.R. 118, 230 (Bankr.W.DArk.2001);
In re Poseidon Pools of America,
180 B.R. at 729;
Matter of Navis Realty, Inc.,
126 B.R. at 144. A professional is required to bill each task separately.
In re Fibermark, Inc.,
349 B.R. at 395. That way, a Court can scrutinize the reasonableness of the time expended and counsel is not tempted to inflate the actual time spent and group multiple tasks together hoping to camouflage the true length of an individual task.
See Molefi v. The Oppenheimer Trust,
2007 WL 538547, *7 (E.D.N.Y. February 15, 2007);
In re Peterson,
2004 WL 1895201,*4 (Bankr.D.Idaho 2004). Several bankruptcy courts have observed that block billing is not favored because
One, it permits an applicant to claim compensation for rather minor tasks which, if reported individually, would not be compensable. Two, it prevents the Court from determining whether individual tasks were expeditiously performed within a reasonable period of time because it is impossible to separate into components the services which have been lumped together.
In re Worldwide Direct, Inc.,
316 B.R. 637, 643 (Bankr.D.Del.2004)
quoting In re Leonard Jed Co.,
103 B.R. 706, 713 (Bankr.D.Md.1989). It is especially difficult for a Court to evaluate reasonableness when a group of attorneys block bill and work together on a task without differentiation as to how much time each attorney spent on that task. This is because it is unfeasible for a Court to tell if attorneys’ work is complimentary, and not duplicative, since block billing prevents a Court from knowing whether one attorney is primarily working on a task, and thus billing more hours, while another is simply reviewing and revising.
See Steffen v. Senterfitt,
2007 WL 1601750, *5 (M.D.Fla. June 1, 2007);
Daiwa Special Asset Corp. v. Desnick,
2002 WL 31767817, *3 (S.D.N.Y.2002);
In re Malden Mills Industries,
281 B.R. 493, 498 (Bankr.D.Mass.2002).
See also, In re Worldwide Direct,
316 B.R. at 643. The billing records here evidence a substantial amount of block billing warranting a reduction
. In fact, upon review of Arent Fox’s nineteen page invoice, it is difficult to find a time entry where different individual tasks are not grouped together under one block of time.
The Court has deducted twenty percent (20%) from Sheldon Good’s requested reimbursement for this improper block billing. Across the board percentage cuts in the fees claimed are routinely utilized so that courts do not misuse their time “set[ting] forth item-by-item findings concerning what be countless objections to individual billing items”, when the billing records are voluminous, as they are in this dispute.
McDonald v. Pension Plan of NYSA-ILA Pension Trust Fund,
450 F.3d 91, 96 (2d Cir.2006);
Williamsburg Fair Housing Committee v. The New York City Housing Authority,
2007 WL 486610,*5 (S.D.N.Y. February 14, 2007);
Daiwa Special Asset Corp.,
2002 WL 31767817,*2 (citing
Lunday v. City of Albany,
42 F.3d 131, 134 (2d Cir.1994)).
See also, In re Poseidon Pools of America,
180 B.R. at 751;
In re Navis Realty, Inc.,
126 B.R. at 144;
In re Adventist Living Ctrs., Inc.,
137 B.R. 701, 706 (Bankr.N.D.Ill.1991).
B. Disallowance Based Upon Vague and Inadequate Entries
In order to enable the Court to determine whether the time expended is reasonable, time entries such as meetings, conferences, correspondence and telephone calls must identify the participants, describe the substance of the communications, explain its outcome and justify its necessity.
In re Brous,
370 B.R. 563, 573-74 (Bankr.S.D.N.Y.2007);
In re Fibermark, Inc.,
349 B.R. at 396;
In re Southern Diesel, Inc.,
309 B.R. 810, 813 (Bankr.M.D.Ala.2004);
In re Hasset, Ltd.,
283 B.R. 376, 379 (Bankr.E.D.N.Y.2002). Likewise, with respect to research or reviewing materials, the time entries must at a minimum provide a description of the issue that is being researched or reviewed. Entries that contain such vague characterization of the services performed as “meeting with”, “conversations with”, “review materials or docket” and “draft correspondence to” fail to adequately describe the services provided and are routinely disallowed. The table below identifies time entries which contain services that are not adequately described.
Since many of these time entries were also reviewed and included in the Court’s reduction of the block billed time entries, the Court finds
that a thirty per cent (30%) reduction of the total sum of the listed vague entries is necessary. Accordingly, $5,112.90 shall be deducted from Sheldon Good’s requested reimbursement.
2. Assessing Reasonable Attorneys’ Costs
Section 330(a)(1)(B) of the Bankruptcy Code states that a professional seeking reimbursement from the estate for expenses incurred in the case must furnish the Court with records containing enough specificity to establish whether a given expense was both actual and necessary. Only fully documented expenses are reimbursable.
In re Fibermark,
349 B.R. at 398. On the last page of its invoice, Arent Fox on behalf of Sheldon Good provided a listing of its actual out-of-pocket expenses.
Phone charges $ 0.20
Telecopier $ 48.00
Overnight Delivery $ 26.52
Transcripts-Compu-Scribe, Inc. Transcript of Hearing in Aston Baker matter $547.00
Disbursements $ 12.40
Transcripts-Suzana Mustafa Aston Baker, Transcript dated September 7, 2005 $135.47
Arent Fox’s invoice stated that the total for the above listed expenses equals $4,341.84. However, the Court’s calculation of the total expenses yielded a total of $769.59. Sheldon Good has provided no evidentiary support to justify these itemized expenses. Accordingly, the Court denies the Application insofar as it seeks an award of the claimed expenses. The denial is without prejudice to renew upon presentation of supporting documentation for the claimed expenses.
CONCLUSION
The Court finds that this Court has jurisdiction to resolve the Application; that the Auction Agreement authorized Sheldon Good to retain counsel and required the debtor to indemnify Sheldon Good for legal fees and costs incurred; and that Sheldon Good is entitled to reimbursement in the amount of $102,589.49 for legal fees incurred but is not entitled to reimbursement of the $4,341.84 in claimed expenses because Sheldon Good provided no documentation to substantiate that these were actual out-of-pocket expenses. The denial of this portion of the Application is without prejudice to renew upon presentation of supporting documentation for the claimed expenses.
IT IS SO ORDERED.