In re Pilgrim Medical Center, Inc.

574 B.R. 523
CourtUnited States Bankruptcy Court, D. New Jersey
DecidedJuly 27, 2017
DocketCase No.: 16-15414 VFP (Jointly Administered)
StatusPublished
Cited by1 cases

This text of 574 B.R. 523 (In re Pilgrim Medical Center, Inc.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Pilgrim Medical Center, Inc., 574 B.R. 523 (N.J. 2017).

Opinion

MEMORANDUM OPINION

VINCENT F. PAPALIA, Bankruptcy Judge

A. Background

This matter is before the Court on the application of Cullen and Dykman (“C & D”) for the award of fees and expenses it incurred in connection with its representation of the Official Committee of Unsecured Creditors (the “Committee”) in the Chapter 11 cases of Pilgrim Medical Center, Inc. (“Pilgrim”) and Nicholas V. Campanella (“Campanella”), Pilgrim’s principal. The Pilgrim and Campanella (collectively, the “Debtors”) cases are jointly administered pursuant to an Order of this Court entered on November 7, 2016 on motion of the Committee, rather than the Debtors, as is typically the case.

The Committee in both cases consisted of Jacqueline Jalil, Tania Mena and Luisa Rojas (collectively, “Plaintiffs”). Plaintiffs are former employees of Pilgrim. On October 9, 2013, Plaintiffs obtained a judgment in the amount of $1,107,346.83 against the Debtors in an employment discrimination case filed in the Superior Court of New Jersey (the “Judgment”). The Judgment was appealed by Debtors, each of whom [526]*526then filed for the protection of this Court. The Judgment was affirmed by the Appellate Division of the Superior Court, and Debtors are now asking the New Jersey Supreme Court to consider a further appeal.

C & D was authorized to represent the Committee in the Campanella case by Order of this Court entered on October 12, 2016, nunc pro tunc to the Committee’s formation on September 28, 2016. C & D also filed an application to be retained as counsel for the Committee in the Pilgrim case, to which Pilgrim objected. As a result, a hearing on the Pilgrim retention application was scheduled to address Pilgrim’s objection. However, while that application was pending, the United States Trustee disbanded the Committee in both cases on November 16, 2016, as the result of the Debtors’ reclassification of the Committee members as secured creditors. Shortly thereafter, C & D filed an application to reinstate the Committee or, in the alternative, to appoint a Committee of Employment Discrimination Claimants (the “Reinstatement Motion”).

The Reinstatement Motion was repeatedly adjourned while the parties discussed settlement among themselves and with the assistance of a mediator. A settlement was ultimately reached and is the subject of a proposed Plan of Reorganization recently filed by the Debtors. As a result of those proceedings and discussions, the Reinstatement Motion was never heard and C & D was never officially retained as counsel for the Committee in the Pilgrim case. As will be discussed in more detail below, the lack of official retention in the Pilgrim case is a primary— though certainly not the exclusive—basis of the Debtors’ objection to C & D’s fees and expenses, which are apparently not part of the settlement.

In response, the Committee argues that the Debtors’ cases were treated as one for all practical and legal purposes and that it made substantial contributions to the Debtors’ cases in various ways, including the following:

• The Committee obtained an order directing the joint administration of these cases.
• The Committee successfully sought to reverse two prepetition alleged fraudulent conveyances of valuable real property in Montclair owned by Campanella. Those two properties have an estimated value of $2.2 million.
• The Committee was a principal cause of' the agreement of Dr. Campanella’s wife to subordinate her interest in various jointly owned real properties to unsecured creditors. Those two properties have an approximate ' value of $2.8 million, subject to mortgages of approximately $950,000.
• The Committee sought discovery from the Debtors and other involved parties, including Dr. Campanella’s family members, to address various transfers and other matters relating to these estates.
• The Committee agreed to mediate all ■ issues between and among the parties, which ultimately resulted in the proposed settlement.

The Debtors object to the majority of C & D’s fees and expenses on various grounds, including the following:

• Any fees attributable to the Pilgrim case, in which C & D was never officially retained;
• Any time spent preparing subpoenas, deemed “harassing” to family members;
• All time spent by an associate, Alissa Piccione, particularly $4,550 spent on [527]*527legal research (of which $2,626 was billed on the day that the UCC was disbanded);
• Any time which David Edelberg spent conferring with John Murano, Esq., the Judgment Creditors’ state court attorney;
• Any work done resolving C & D’s conflicts issues;
• Any time spent drafting responses to objections to retention;
• Any time spent researching fraudulent transfers (because Debtors “admitted” them);
• The Committee had no diversity, served only its own agenda and did not provide adequate representation.

In total, the objections relate to $37,029 (or 62 %) of the $53,429 in fees charged by C & D and $253.33 of the $489.53 expenses sought by C & D. For the following reasons, the Court will overrule most of the Debtors’ objections and award C & D $50,504 in fees and $253.33 in expenses, or a total of $50,757.33.

B. General Standards for Allowance of Compensation and Expenses

The standards for allowance of a retained professional’s fees and expenses are set forth in Section 330 of the Bankruptcy Code and are not in dispute. These standards are as follows:

(a)(1) After notice to the parties in interest and the United States Trustee and a hearing, ... the court may award to 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.
(3) 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 at the time at which the service was rendered toward the completion of, a case under this title;
(D) whether the services were performed within .

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Bluebook (online)
574 B.R. 523, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-pilgrim-medical-center-inc-njb-2017.