In Re Patronek

121 B.R. 728, 1990 Bankr. LEXIS 2558, 1990 WL 199118
CourtUnited States Bankruptcy Court, E.D. Pennsylvania
DecidedDecember 10, 1990
Docket19-10503
StatusPublished
Cited by31 cases

This text of 121 B.R. 728 (In Re Patronek) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Patronek, 121 B.R. 728, 1990 Bankr. LEXIS 2558, 1990 WL 199118 (Pa. 1990).

Opinion

*729 OPINION

DAVID A. SCHOLL, Bankruptcy Judge.

The law firm of MILLER and MILLER, counsel for the Debtor in this Chapter 13 bankruptcy case (“Counsel”), asks that we reconsider our Order of October 9, 1990, allowing it $1,200 of $2,000 sought as counsel fees for representation of the Debtor. Because we find that our award was already at the high end of the market rate for representation of a debtor in a Chapter 13 case and that the instant case presented no unusual or time-consuming issues, the motion for reconsideration will be denied.

The instant bankruptcy case was filed on September 14, 1989. After one continuance, the Debtor’s Plan of Reorganization was confirmed on August 28, 1990. The only aspect of the case worthy of note was the Debtor’s listing of a relatively large complement of unsecured debts, totalling $84,189. Of these debts, over $59,000 involved student loans amassed by the Debt- or in preparing for a career as a veterinarian. 1 Consequently, one of the student-loan creditors, the University of Pennsylvania (“Penn”), filed an Objection to confirmation and another such lender, the Pennsylvania Higher Education Assistant Agency (“PHEAA”), proceeded to take an examination of the Debtor pursuant to Bankruptcy Rule 2004 (a “R2004 Exam”). However, after the R2004 Exam, both Penn and PHEAA were apparently satisfied with the Debtor’s Plan, which contemplated remittance of $600 monthly to the Trustee for 60 months, because neither appeared to oppose its confirmation. An order was therefore entered confirming the Plan without a hearing.

On September 6, 1990, counsel filed an Application requesting compensation of $2,000, $600 of which had already been paid and $1,400 of which was to be paid through the plan. On October 8, 1990, Counsel certified that no objections had been filed thereto, and requested that we award it the entire fee requested.

The “Itemized Statement” accompanying the Application was in fact a recitation of tasks in the process of representing a typical debtor in a Chapter 13 case, which is identical with that filed by Counsel with nearly every one of its fee Applications. No dates or times spent on any of the “services” performed were recited. Therefore, although a lower fee might have been justified on the basis of the Application, we respected the assessment of the case by Counsel as one in which the upper range of the market rate for handling Chapter 13 cases was warranted, and we awarded Counsel $1,200.

On October 19, 1990, Counsel filed and served the instant motion upon only the Chapter 13 Trustee and the United States Trustee. 2

*730 The instant motion is based upon two grounds: (1) The Debtor is paying $36,000 into the plan, entitling the Chapter 13 Trustee to a commission of $3,600. Counsel therefore reasons that “[i]t would be anomalous if the Chapter 13 trustee were to receive three times the amount paid to counsel for the debtor when counsel for the debtor formulated the plan;” and (2) Counsel has now submitted a “real” “Itemization of Services,” documenting 14.9 hours expended on this case and 5.1 hours more which are anticipated to be expended. Given the time recited, our Order of October 9, 1990, would allegedly result in compensation of Counsel at a rate of $60 per hour, rather than the $100 per hour Counsel apparently deems minimally acceptable.

A bearing was scheduled on the motion on November 21, 1990, and postponed at Counsel’s request until November 22, 1990. On the latter date, Counsel appeared, by its senior member, and advised that it had no testimony or argument to present and would abide by the court’s ruling on the motion. We have no reason to doubt Counsel’s representation that he would not pursue this matter with an appeal beyond this court. However, once bitten, twice shy. See In re Paster, 119 B.R. 468 (E.D.Pa.1990) (reduction of Counsel’s fee from $1,700 to $1,300 reversed). We believe that it has consequently become necessary to make our position on the issue of appropriate awards of counsel fees in consumer bankruptcy cases clearer.

Prior to the promulgation of the Local Bankruptcy Rules (“L.B.Rules”) 2002.2 and 2002.3, effective July 1, 1988, this court had no mechanism in place to effect the mandate of B.Rule 2002(a)(7) that, only “after a notice and hearing,” as defined in 11 U.S.C. § 102(1), are applications for compensation and reimbursement of expenses in excess of $500 in any cases, including consumer cases, to be allowed. 3 Since promulgation of those L.B.Rules, we have required and reviewed fee applications in all cases in which counsel seeks compensation in excess of $500. This included most of the consumer bankruptcy cases in this district, a species which will be represented by about 7,500 filings in this court in 1990.

This outpouring of fee applications in consumer cases has made us quite aware of the market rates generally charged for representation of debtors in such cases. In most cases, probably in excess of ninety-five (95%) percent, we have allowed exactly what counsel has requested. We believe that Paster has constituted the only appeal from the reductions we have made in all of the other consumer cases.

However, we cannot help but note that this appeal, although seemingly involving small difference of opinion between counsel and the court, was successful. This phenomenon might be explained by the fact that, since the dispute was small, the appellate court respected the strength of Counsel’s convictions and felt that a relatively slight accommodation to it was warranted. However, a track record of success is sure to breed more appeals, which will ultimately tax the scarce resources of both the district court and this court. 4

*731 Moreover, we note that, in Paster, our reduction of a $1,700 request to $1,300 was not remanded, but was set aside as an “abuse of discretion” because our banter with Counsel in a colloquy (never expecting an appeal) was believed to establish that our Order reducing the requested fee was based upon an impermissible “visceral reaction,” which failed to explain the basis for our actions. We would hope, after reviewing several thousand such applications annually, our experience would be considered as somewhat more informed than an unreasoned reaction, be it ever so “visceral.”

Experience also teaches us that it is totally unrealistic to think that creditors in a Chapter 13 case will spend the time to object and appear in court to argue against a fee requested by the debtor’s counsel. Although, in a general sense, that portion of an excessive fee paid through a Chapter 13 plan comes directly out of creditors’ pockets, the amount lost by any one creditor is simply too small to merit the expense and attention of a court filing. We believe that small creditors have the right to assume that a judge will make some effort to preserve the integrity of the Chapter 13 process by not merely signing off on fee applications by rote.

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Bluebook (online)
121 B.R. 728, 1990 Bankr. LEXIS 2558, 1990 WL 199118, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-patronek-paeb-1990.