Matter of Hunt's Health Care, Inc.

161 B.R. 971, 1993 Bankr. LEXIS 1905, 1993 WL 527357
CourtUnited States Bankruptcy Court, N.D. Indiana
DecidedSeptember 28, 1993
Docket19-10247
StatusPublished
Cited by17 cases

This text of 161 B.R. 971 (Matter of Hunt's Health Care, Inc.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Matter of Hunt's Health Care, Inc., 161 B.R. 971, 1993 Bankr. LEXIS 1905, 1993 WL 527357 (Ind. 1993).

Opinion

DECISION

ROBERT E. GRANT, Bankruptcy Judge.

This matter is before the court on the application for attorney fees filed by counsel for the trustee in this case, Beckman, Lawson, Snyder, Sandler & Federoff. M-K Management and Lincoln Bank, creditors, object to the requested amounts. They object both to specific fees charged by the trustee’s counsel and generally that the fees requested are excessive for the results obtained.

Pursuant to § 330 of the United States Bankruptcy Code, the professionals who assist in the administration of the estate are entitled to

(1) reasonable compensation for actual, necessary services rendered ... based on the nature, the extent, and the value of such services, the time spent on such services, and the cost of comparable services other than in a case under this title; and
(2) reimbursement for actual, necessary expenses. 11 U.S.C. § 330(a).

The purpose of § 330 is two-fold. First, compensation should be fair and reasonable. Second, in order not to deter competent counsel from entering the bankruptcy area, attorneys should receive in bankruptcy matters what they would receive on the open market. Matter of UNR Industries, Inc., 986 F.2d 207, 209 (7th Cir.1993). 1

*976 To determine the “reasonable compensation,” a court determines the reasonable hourly rate and the hours reasonably spent. The court then multiplies the two to determine the “lodestar”. 2 City of Burlington v. Dague, — U.S.-,-, 112 S.Ct. 2638, 2640, 120 L.Ed.2d 449 (1992); Blum v. Stenson, 465 U.S. 886, 898-900, 104 S.Ct. 1541, 1548-1550, 79 L.Ed.2d 891 (1984). See also In re Boddy, 950 F.2d 334, 337 (6th Cir.1991). The Seventh Circuit has decided that the reasonable hourly rate is presumptively the lawyer’s hourly rate on the open market. Gusman v. Unisys Corp., 986 F.2d 1146, 1150 (7th Cir.1993). The court may exclude hours that were not reasonably spent or are insufficiently documented from the application. Hensley v. Eckerhart, 461 U.S. 424, 433-34, 103 S.Ct. 1933, 1939-40, 76 L.Ed.2d 40 (1983). Once the reasonable hourly rate and the number of reasonable hours have been established and the resulting lodestar calculated, the Supreme Court has “established a ‘strong presumption’ that the lodestar represents the ‘reasonable’ fee.” City of Burlington, — U.S. at -, 112 S.Ct. at 2641. The lodestar can then be adjusted upwards or downwards upon consideration of other factors. Hensley, 461 U.S. at 434, 103 S.Ct. at 1940; Estate of Borst v. O’Brien, 979 F.2d 511, 515-16 (7th Cir.1992). Upward modifications should, however, be rare. Blum, 465 U.S. at 899-901, 104 S.Ct. at 1548-550. See also Pennsylvania v. Delaware Valley Citizens’ Council, 478 U.S. 546, 565, 106 S.Ct. 3088, 3098, 92 L.Ed.2d 439 (1986), rev’d on other grounds, 483 U.S. 711, 107 S.Ct. 3078, 97 L.Ed.2d 585 (1987).

In determining the lodestar, the fee applicant has the burden of properly documenting the hours and hourly rates involved and producing evidence of both. Hensley, 461 U.S. at 433, 103 S.Ct. at 1939. The burden of going forward then shifts to an opposing party if it wishes to dispute the lodestar. It must submit evidence challenging the accuracy or reasonableness of any item in the application. Blum, 465 U.S. at 892 n. 5,104 S.Ct. at 1545 n. 5. If the court reduces the hours spent or the lodestar figure it must articulate the reasons for these adjustments. Hensley, 461 U.S. at 437, 103 S.Ct. at 1941. See generally Estate of Borst, 979 F.2d at 515-16.

Notwithstanding the presumption which flows from the lodestar procedure outlined above, bankruptcy courts have vigorously interjected themselves into the consideration of fee applications. An explanation for this activism- lies primarily in the perceived nonin-terest of other parties in examining fee applications closely. In re Rheam of Indiana, Inc., 133 B.R. 325, 332 (D.E.D.Pa.1991). Often, it seems, it may not be cost effective for a creditor to justify attacking the fees of another party when the dividend to each individual creditor will not be appreciably effected. In order to promote “fairness” and discourage “price gouging” a court, under the guise of exercising its independent duty with regard to the application, may take it upon itself to cut, sometimes drastically, the requested fees.

In the Seventh Circuit, the bankruptcy courts have been guided in their review of fee applications by the standards enunciated by the District Court in In re Continental Illinois Securities Litigation, 572 F.Supp. 931 (N.D.I11.1983). 3 Early on in that case, *977 the District Court issued an order detailing the standards it anticipated using when reviewing the fee applications that would come before it. 4 Continental Illinois, 512 F.Supp. 931. These standards included requirements that conferral time within a firm was not to be charged; attorneys’ hourly rates would be chosen by the type of work done and the level of expertise it demanded, not by the rate of the attorney who performed the work; only a minimum of compensation for legal research would be allowed; review of other attorneys’ work was not compensable; time records would be detailed and itemized by activity; and so on. These standards were quickly adopted by bankruptcy courts which saw them as appropriate guidelines in their own review of fee applications. In re Rusty Jones, Inc., 134 B.R. 321, 333 (Bankr.N.D.Ill. 1991); In re Chicago Lutheran Hospital Ass’n., 89 B.R. 719, 725 (Bankr.N.D.Ill.1988); In re Prairie Central Railway Co., 87 B.R. 952, 956 (Bankr.N.D.Ill.1988); In re Pettibone Corp., 74 B.R. 293, 297 (Bankr.N.D.Ill. 1987); In re Wildman, 72 B.R. 700, 706 (Bankr.N.D.Ill.1987); In re Wittman Eng’g & Mfg. Co., 66 B.R. 488, 490 (Bankr.N.D.Ill.1986). This court has, in turn, followed these cases in judging fee apphcations itself.

In Matter of Continental Illinois Securities Litigation, 962 F.2d 566

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Stephanie's Too, LLC
D. New Jersey, 2021
Reid v. Wolf (In re Wolf)
595 B.R. 735 (N.D. Illinois, 2018)
Mason v. RJK Investors (In re Klarchek)
509 B.R. 175 (N.D. Illinois, 2014)
In re Quigley Co.
500 B.R. 347 (S.D. New York, 2013)
In Re Engman
389 B.R. 36 (W.D. Michigan, 2008)
Hawaii Ventures, LLC v. Otaka, Inc.
164 P.3d 696 (Hawaii Supreme Court, 2007)
Williams v. Williams (In Re Williams)
368 B.R. 744 (N.D. Indiana, 2007)
In Re Szymanski
344 B.R. 891 (N.D. Indiana, 2006)
In Re Kyle Trucking, Inc.
239 B.R. 198 (N.D. Indiana, 1999)
In Re Kusler
224 B.R. 180 (N.D. Oklahoma, 1998)
Hansen, Jones & Leta, P.C. v. Segal
220 B.R. 434 (D. Utah, 1998)
Tandy Credit Corp. v. Martinez (In Re Martinez)
179 B.R. 90 (N.D. Illinois, 1995)
In Re Val W. Poterek & Sons, Inc.
169 B.R. 896 (N.D. Illinois, 1994)
In Re Blackwood Associates, L.P.
165 B.R. 108 (E.D. New York, 1994)
Matter of Pierce
165 B.R. 252 (N.D. Indiana, 1994)

Cite This Page — Counsel Stack

Bluebook (online)
161 B.R. 971, 1993 Bankr. LEXIS 1905, 1993 WL 527357, Counsel Stack Legal Research, https://law.counselstack.com/opinion/matter-of-hunts-health-care-inc-innb-1993.