MARIA T. RICO

CourtUnited States Bankruptcy Court, D. Arizona
DecidedApril 4, 2024
Docket0:13-bk-05023
StatusUnknown

This text of MARIA T. RICO (MARIA T. RICO) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
MARIA T. RICO, (Ark. 2024).

Opinion

Dated: April 4, 2024

Bendlo Perf □□□ — 2 Brenda Moody Whinery, Bankruptcy Judge 3 ee 4 5 6 7 UNITED STATES BANKRUPTCY COURT 8 DISTRICT OF ARIZONA 9 In re: Chapter 7 10 MARIA T. RICO, Case No. 0:13-bk-05023-BMW 11 Debtor. RULING AND ORDER REGARDING FIRST AMENDED APPLICATION FOR 13 ALLOWANCE OF ADMINISTRATIVE EXPENSES —- ATTORNEY FEES AND 4 REIMBURSEMENT OF COSTS (DKT. 15 123) AND U.S. TRUSTEE’S OBJECTION THERETO (DKT. 130) 16 17 Before the Court is the First Amended Application for Allowance of Administrativ Expenses — Attorney Fees and Reimbursement of Costs (the “Amended Application”) (Ex. A) 19] filed by Jim D. Smith (“Mr. Smith’), as counsel for the bankruptcy estate (the “Estate’’), in □□□□□ Mr. Smith requests an award of attorney’s fees in the amount of $41,000.00, plus reimbursemen 21] of $221.34 in costs. Mr. Smith is also the appointed Chapter 7 Trustee in this case. 22 The United States Trustee for the District of Arizona (the “U.S. Trustee”) objects to thi 23 | Amended Application on the basis that: (1) Mr. Smith has failed to establish that all fee requested are reasonable; (2) Mr. Smith has failed to establish that all services for which he i seeking compensation were necessary; (3) Mr. Smith is improperly requesting attorne compensation for performing Chapter 7 trustee duties; and (4) Mr. Smith is impermissibl 27 ' Citations to “Ex.” refer to exhibits admitted into evidence during the March 26, 2024 evidentiar 28 hearing. All exhibits are also filings on the designated dockets.

1 seeking compensation for defending his request for attorney’s fees. (Ex. L; see also Ex. N; Ex. 2 O). 3 Mr. Smith maintains that he is seeking fees for compensable legal and paraprofessional 4 services he performed for the benefit of the Estate. (E.g., Dkt. 132;2 Dkt. 154). 5 On February 14, 2024, the Court issued a tentative ruling, which Mr. Smith declined to 6 accept.3 (Dkt. 147; Dkt. 151). Thereafter, an evidentiary hearing scheduling order was issued. 7 (Dkt. 152). 8 On March 15, 2024, the parties filed their joint pre-trial statement (Dkt. 153), and on 9 March 26, 2024, an evidentiary hearing was held (the “Evidentiary Hearing”). At the Evidentiary 10 Hearing, Mr. Smith submitted a declaration in lieu of direct testimony in support of his Amended 11 Application (the “Declaration”) (Dkt. 154), and Mr. Smith was cross-examined by counsel for 12 the U.S. Trustee. Certain documents in the Court record were admitted into evidence, and 13 thereafter the parties presented closing arguments. 14 During closing arguments, Mr. Smith reiterated his request that the Court approve his 15 Amended Application in its entirety. Counsel for the U.S. Trustee asked the Court to reduce Mr. 16 Smith’s attorney fee award to an amount that will allow for payment in full of all allowed general 17 unsecured claims. 18 At the conclusion of the Evidentiary Hearing, the Court took the matter under advisement. 19 Based upon the pleadings, testimony, evidence, and entire record before the Court, the Court now 20 issues its ruling. The following constitutes the Court’s findings of fact and conclusions of law. 21 I. Factual and Procedural Background 22 This Chapter 7 case was filed by Maria T. Rico (the “Debtor”) on April 1, 2013, and Mr. 23 Smith was appointed Chapter 7 Trustee. 24 A claims bar date was set and claims totaling $33,220.43 were filed.4 (Ex. K at 10; 25 3/26/2024 Hearing Tr. 8:25-9:11). 26 2 References to “Dkt.” are references to the administrative docket in this case unless otherwise indicated. 27 3 As part of its tentative ruling, the Court also denied Mr. Smith’s related motion for summary judgment given the outstanding genuine issues of material fact. 28 4 All claims that were filed are general unsecured claims. The holder of Claim 6, which was filed in the 1 Mr. Smith recovered approximately $3,000 for the Estate, nominal disbursements were 2 made to creditors, and Mr. Smith was awarded and paid attorney’s fees in the amount of $1,425 3 for his initial administration of the Estate. (Dkt. 42; Dkt. 54; Ex. K at 9). This case was then 4 closed. 5 Mr. Smith subsequently moved to reopen this case on two occasions for the purpose of 6 administering an undisclosed class action claim. (Dkt. 57; Dkt. 62; Dkt. 67; Dkt. 69; Dkt. 154 at 7 3-4; 3/26/2024 Hearing Tr. 10:13-12:2). 8 Mr. Smith has been reappointed Chapter 7 Trustee upon each reopening of the case, and 9 Mr. Smith has, at his request, been employed as attorney for the Estate upon each reopening. 10 (Dkt. 63; Dkt. 75). At issue in this matter is the period of time between January 22, 2019, when 11 Mr. Smith filed his most recent application to be employed as counsel for the Estate (the 12 “Employment Application”) (Dkt. 72), and February 27, 2023, on which date Mr. Smith filed the 13 Amended Application (the “Application Period”). (Ex. A). 14 After being employed to represent the Estate at the beginning of the Application Period, 15 Mr. Smith filed an application to employ three independent law firms as special counsel (“Special 16 Counsel” and the “Special Counsel Application”) to represent the Estate in a personal injury class 17 action lawsuit (the “Class Action Claim”). (Dkt. 76). 18 The Special Counsel Application was unopposed and approved by the Court on September 19 6, 2019. (Dkt. 82). 20 Thereafter, on November 4, 2019, Mr. Smith filed a motion to approve a settlement of the 21 Class Action Claim, which settlement was negotiated by Special Counsel (the “Class Action 22 Settlement”). (Dkt. 83; 3/26/2024 Hearing Tr. 13:16-21). The Class Action Settlement was 23 unopposed and approved by the Court. (Ex. C). Pursuant to the order approving the Class Action 24 Settlement, Special Counsel was to be paid its agreed-upon contingency fee and $23,544.32 in 25 net proceeds were to be paid to the Estate (the “Class Action Settlement Funds”). (Ex. C). 26 Thereafter, there were no filings on the docket for more than one year. 27 On May 13, 2021, the Debtor’s daughter, Erikka Rico (“Erikka”), filed an adversary 28 complaint against the Debtor and Mr. Smith in his capacity as Chapter 7 Trustee, seeking 1 declaratory relief or partition of certain real property (the “Undisclosed Property”), in which title 2 was held by Erikka and the Debtor (the “Rico Adversary”).5 (Dkt. 91). The Estate therefore 3 asserted a 50% interest in the subject property. (See, e.g. 0:21-ap-00133-BMW at Dkt. 22; Dkt. 4 23). Erikka took the position that the Estate had only bare legal title to the Undisclosed Property. 5 (Dkt. 91). 6 A few months after commencing the Rico Adversary, Erikka filed a motion seeking 7 approval of a sale of the Undisclosed Property for an amount sufficient to generate approximately 8 $267,800 in net proceeds (the “Sale Motion”). (Dkt. 92). Erikka took the position that the Estate 9 was not entitled to any dollar amount over the amount of the allowed claims in this case, plus 10 potential administrative expenses, and she agreed to allow the disputed 50% portion of the net 11 sale proceeds to be held pending further order of the Court. (See Dkt. 92; 9/14/2021 Hearing Tr. 12 5:1-7, 13:24-14:10; 3/26/2024 Hearing Tr. 18:3-21). 13 The Court held a hearing on the Sale Motion and the Rico Adversary on September 14, 14 2021, during which Mr. Smith agreed to allow the sale of the Undisclosed Property to proceed 15 and offered to settle the Estate’s interest in the Undisclosed Property for $33,000, the 16 approximate amount of the claims filed on the claims register, thereby resolving the Rico 17 Adversary as it pertained to the Estate (the “Undisclosed Property Settlement”). (9/14/2021 18 Hearing Tr. 14:11-17, 18:7-15, 18:21-19:1). 19 The Court gave Mr. Smith ample opportunity to reconsider his settlement offer and take 20 into account his attorney’s fees and trustee commission. (9/14/2021 Hearing Tr. 13:3-16:21). The 21 Court asked Mr.

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MARIA T. RICO, Counsel Stack Legal Research, https://law.counselstack.com/opinion/maria-t-rico-arb-2024.