In Re Szymczak

246 B.R. 774, 2000 WL 351407
CourtUnited States Bankruptcy Court, D. New Jersey
DecidedMarch 3, 2000
Docket19-11831
StatusPublished
Cited by18 cases

This text of 246 B.R. 774 (In Re Szymczak) 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 Szymczak, 246 B.R. 774, 2000 WL 351407 (N.J. 2000).

Opinion

OPINION

RAYMOND T. LYONS, Bankruptcy Judge.

Malsbury & Almenante, P.A. (the “Applicant”), counsel to the chapter 13 debtors, Henry A. and Betsy Szymczak (the “Debtors”), filed a fee application seeking an allowance of fees in the amount of $9,691.25 and reimbursement of expenses in the amount of $266.62. The court issued an order awarding Applicant a total allowance of $2,250.00 for fees and full reimbursement of expenses. Thereafter, Applicant filed a motion for reconsideration and a hearing was held on November 9, 1999. The court granted Applicant’s motion for reconsideration and took the issue of fees under advisement.

For the reasons set forth below, this court revises the allowance of fees to $3,350.00 and full reimbursement of expenses for Applicant’s representation of the Debtors. The balance of Applicant’s fee request is denied.

This court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(a), 28 Ú.S.C. §§ 157(a) and (b)(1) and the Standing Order of Reference from the United *777 States District Court for the District of New Jersey dated July 23, 1984 referring all cases under Title 11 of the United States Code to the bankruptcy court. This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(A) and (0).

FACTS

On April 28, 1998, Debtors filed a voluntary chapter 13 bankruptcy petition to prevent the threatened foreclosure of their condominium. Approximately fifteen months later, on July 20, 1999 the court confirmed the Debtors’ chapter 13 plan. At the time of confirmation, Applicant estimated its attorneys’ fees at $7,000.00 which would be paid through the Debtors’ plan. Because Applicant’s fee request exceeded $1,500.00, the local bankruptcy rules required Applicant to file a detailed fee application for review and approval by the court. 1

On June 29, 1999, Applicant submitted the instant fee request to the court. The fee application covered the time period from Debtors’ initial meeting with Applicant to discuss filing bankruptcy until July 6,1999, shortly before the originally scheduled confirmation hearing. 2 Applicant was initially paid a $1,200.00 retainer by the Debtors and sought court approval of a total fee allowance of $9,691.25 for services rendered and reimbursement of $266.62 for out-of-pocket costs. Applicant’s fee request included approximately fifty four hours of attorney time at an average rate of $180.00 per hour, and one hour of paralegal time at $65.00 per hour.

After reviewing the instant fee application, the court entered an order awarding Applicant $1,050.00 ($2,250.00 less the $1,200.00 retainer previously paid by Debtors) for attorney fees and $266.62 for reimbursement of out-of-pocket costs. Upon learning of the bankruptcy court’s significant reduction to its fees, Applicant filed a motion for reconsideration of its fee application. Applicant’s brief in support provided a background on the Applicant and its over twenty years of experience with chapter 13 cases. Applicant’s letter brief further stated that “[b]ecause the Szymc-zak case involved a number of additional tasks which are not part of the typical chapter 13 case but were necessary in this case, we feel the number of hours billed was reasonable.”

The bankruptcy court conducted a hearing on Applicant’s motion for reconsideration. At the hearing, Applicant reiterated its position that the Debtors’ case was not the typical chapter 13 case and that the court’s reduction in fees was too severe and unwarranted. Applicant argued that the Debtors’ case involved an installment loan contract for Debtors’ residence, rather than a typical mortgage, requiring Applicant to perform additional research and to conduct extensive negotiations with the vendors. Applicant also informed the court that Mrs. Szymczak suffered a se *778 vere mental illness which made this case particularly difficult and necessitated further work by Applicant to save the Debtors’ home.

At the hearing the court asked Applicant if it was appropriate for a bankruptcy court to consider how much a debtor would have to pay another lawyer who took their bankruptcy case on a fixed fee basis, instead of on an hourly fee basis. In response, Applicant agreed that it would be appropriate for the court to consider such information, but under the circumstances of this particular case, it is doubtful that another attorney would have taken the Debtors’ case on a fixed fee basis because it required so much work above and beyond the typical chapter 13 case. Applicant believed many attorneys would have allowed this case to fall through the cracks; whereas Applicant saved the Debtors’ residence and achieved confirmation of a plan of reorganization.

DISCUSSION

The court has to determine the amount of a reasonable fee for an attorney representing a debtor in a chapter 13 bankruptcy case. 11 U.S.C. § 330(a)(4)(B) 3 specifically authorizes bankruptcy courts to allow reasonable compensation to the debtor’s attorney in a chapter 13 case. 4 “[T]he bankruptcy court has a duty to review fee applications, notwithstanding the absence of objections by the United States trustee, creditors, or any other interested party....” In re Busy Beaver Bldg. Ctrs., Inc., 19 F.3d 833, 841 (3d Cir.1994). This overriding obligation to examine fee applications derives from the court’s commitment to “protect the estate, lest overreaching attorneys or other professionals drain it of wealth which by right should inure to the benefit of unsecured creditors.” Id. at 844. “Although the Court has a duty to fairly compensate counsel it also has a responsibility not to overly compensate attorneys to the detriment of the debtor and the creditors.” In re Taylor, 100 B.R. 42, 45 (Bankr.D.Colo.1989).

The court’s responsibility to protect the estate is especially important in chapter 13 cases where there is little motivation for a debtor, or creditors, to object to a particular fee allowance. 5 “From the point of view of the debtor, the amount to be paid under the plan is fixed at confirmation, and it is of no real consequence to the debtor whether the money is paid to the attorney or the creditors. In addition, there is little or no economic incentive for most creditors in Chapter 13 cases to object to fees; the cost of the objection will likely exceed any additional distribution they may receive.” In re Yates, 217 B.R. 296, 300 (Bankr.N.D.Okla.1998) (citing In re Copeland, 154 B.R. 693, 697-98 (Bankr.W.D.Mich.1993)). See also In re Stromberg, 161 B.R.

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Cite This Page — Counsel Stack

Bluebook (online)
246 B.R. 774, 2000 WL 351407, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-szymczak-njb-2000.