1 2 3 4 5 6 7 10 11 SECURITIES AND EXCHANGE Case No.: 3:12-cv-2164-GPC-JMA COMMISSION, 12 ORDER GRANTING: Plaintiff, 13 v. (1) RECEIVER’S TWENTY-NINTH 14 INTERIM FEE APPLICATION; AND LOUIS V. SCHOOLER and FIRST 15 FINANCIAL PLANNING [ECF No. 1750] 16 CORPORATION d/b/a WESTERN
FINANCIAL PLANNING 17 (2) ALLEN MATKINS’ TWENTY- CORPORATION, NINTH INTERIM FEE 18 Defendants. APPLICATION 19 [ECF No. 1751] 20
21 22 Before the Court are fee applications filed by the court-appointed receiver Thomas 23 C. Hebrank (the “Receiver”) and counsel to the Receiver, Allen Matkins Leck Gamble 24 Mallory & Natsis LLP. ECF Nos. 1750, 1751. The Court finds these motions suitable 25 for disposition without oral argument pursuant to Civil Local Rule 7.1(d)(1). 26 // 27 // 28 // 2 A. Receiver 3 In the Twenty-Ninth Interim Fee Application, the Receiver asserts that he incurred 4 $35,496.00 in fees and $171.36 in costs for the application period covering July 1, 2019 5 through September 30, 2019 (“Twenty-Ninth Application Period”). ECF No. 1750 at 2. 6 The breakdown of the fees amassed is as follows: 7 Category Total 8 General Receivership $ 99.00 9 Asset Investigation & Recovery $ 0.00 10 Reporting $ 1,676.25 11 Operations & Asset Sales $ 10,068.75 12 Claims & Distributions $ 23,652.00 13 Legal Matters & Pending Litigation $ 0.00 14 Total $ 15 16 Id. at 2–4. Receiver now seeks payment of 80% of fees incurred, amounting to 17 $28,396.80, and 100% of the costs, amounting to $171.36, which account for postage and 18 copies. ECF No. 1750, Ex. C. 19 B. Allen Matkins 20 In the Twenty-Ninth Interim Fee Application, Allen Matkins asserts that it incurred 21 $16,348.50 in fees and $91.10 in costs during the Twenty-Ninth Application Period. 22 ECF No. 1751 at 2. The breakdown of the fees amassed is as follows: 23 // 24 // 25 // 26 // 27 // 28 1 Category Total 2 Reporting $1,552.50 3 Operations & Asset Sales $4,695.75 4 Claims & Distributions $1,811.25 5 Third Party Recoveries $7,719.75 6 Employment/Fees $569.25 7 Total $16,348.50 8 9 Id. Allen Matkins now seeks payment of 80% of fees incurred, amounting to $13,078.80, 10 and 100% of the costs, amounting to $91.10, which were incurred for shipping, 11 messenger service fees, and document searches. ECF No. 1751, Ex. A at 3. 13 “[I]f a receiver reasonably and diligently discharges his duties, he is entitled to fair 14 compensation for his efforts.” Sec. & Exch. Comm’n v. Elliott, 953 F.2d 1560, 1577 15 (11th Cir. 1992). “The court appointing [a] receiver has full power to fix the 16 compensation of such receiver and the compensation of the receiver’s attorney or 17 attorneys.” Drilling & Exploration Corp. v. Webster, 69 F.2d 416, 418 (9th Cir. 1934). 18 A receiver’s fees must be reasonable. See In re San Vicente Med. Partners Ltd., 962 F.2d 19 1402, 1409 (9th Cir. 1992). 20 As set forth in the Court’s prior fee orders, see, e.g., ECF No. 1167, the Court will 21 assess the reasonableness of the requested fees using the factors enumerated in Sec. & 22 Exch. Comm’n v. Fifth Avenue Coach Lines, 364 F. Supp. 1220, 1222 (S.D.N.Y. 1973) 23 and In re Alpha Telcom, Inc., 2006 WL 3085616, at *2–3 (D. Or. Oct. 27, 2006). Those 24 factors include: (1) the complexity of the receiver’s tasks; (2) the fair value of the 25 receiver’s time, labor, and skill measured by conservative business standards; (3) the 26 quality of the work performed, including the results obtained and the benefit to the 27 receivership estate; (4) the burden the receivership estate may safely be able to bear; and 28 1 (5) the Commission’s opposition or acquiescence. See Fifth Avenue Coach Lines, 364 F. 2 Supp. at 1222; Alpha Telecom, 2006 WL 3085616, at *2–3. 4 A. Complexity of Tasks 5 1. Receiver 6 The Court finds that the tasks performed by the Receiver during the Twenty-Ninth 7 Application Period were moderately complex. The Receiver undertook the following 8 tasks during the relevant period: 9 - handling general administrative matters, including reviewing mail, email, and other correspondence directed to the Receivership Entities; 10 - administering the bank accounts of the Receivership Entities; 11 - reviewing and approving expenditures; - maintaining and updating the Receiver’s website with case information, 12 documents, and filing inquiries; 13 - preparing Receiver’s Twenty-Eighth interim report; - managing and overseeing the General Partnerships’ operations and real 14 properties; 15 - managing and overseeing Western’s operations; - performing accounting functions of the Receivership Entities; 16 - managing and overseeing tax reporting for Receivership Entities; 17 - managing and overseeing loan payments and overall cash management; - obtaining listing agreements and marketing properties for sale with brokers; 18 - analyzing, negotiating, and accepting purchase offers; 19 - closing property sales; - sending monthly case update reports to investors listing major legal filings, 20 property sales activity, court rulings, tax, and other information; 21 - listing and responding to sales activity on the various properties; and - filing motions to sell properties. 22
23 ECF No. 1750 at 3-5.
24 2. Allen Matkins 25 The Court finds that the tasks performed by Allen Matkins during the Twenty- 26 Ninth Application Period were similarly complex. Counsel undertook the following tasks 27 during this period: 28 1 - preparing the Receiver's Twenty-Eighth Interim Report; - assisting the Receiver by providing updates regarding enforcement of 2 judgments against the LinMar entities, closed and pending sales of properties, 3 and receipts and disbursements for the receivership estate; - preparing purchase and sale agreements, motions to approve sales (including 4 supporting declarations and proposed orders), notices concerning overbids and 5 auctions, and closing documents for Court-approved sales; - assisting in addressing issues with investor distributions; 6 - assisting in preparing monthly case updates to investors and responding to 7 direct inquiries from investors; and - communicating with the post-judgment receiver and counsel for SEC regarding 8 the disposition of remaining funds held by the post-judgment receiver. 9 ECF No. 1751 at 3–5. 10 B. Fair Value of Time, Labor, and Skill 11 The Receiver billed his time at his customary billing rate, discounted by 10 percent 12 and the blended hourly rate for all services provided by the Receiver and those working 13 for him was $192.65 per hour during the Application Period. ECF No. 1750 at 7. Allen 14 Matkins billed its time at $325.00 to $702.00 per hour, with the majority of work being 15 billed at $517.50 per hour. ECF No. 1751, Ex. A at 22. 16 The Court continues to find, as it has in previous fee orders, that the rates charged 17 by the Receiver and Allen Matkins are comparable to rates charged in this geographic 18 area and therefore represent a fair value of the time, labor, and skill provided. 19 C. Quality of Work Performed 20 The Court finds that the quality of work performed by the Receiver and Allen 21 Matkins to be above average. The Receiver has, and continues to, competently operate 22 the Receivership as evidenced by Receiver’s Twenty-Ninth Status report, ECF No. 1748, 23 while at the same time marshalling assets to support its continued financial integrity. 24 These actions benefit all investors. The Receiver and his counsel have complied with the 25 Court’s orders and have made every effort to protect investors’ interests in the GP 26 properties during the pendency of this litigation. 27 D. Receivership Estate’s Ability to Bear Burden of Fees 28 1 On August 30, 2016, the Court approved the Receiver’s Modified Orderly Sale 2 Process, ECF No.
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1 2 3 4 5 6 7 10 11 SECURITIES AND EXCHANGE Case No.: 3:12-cv-2164-GPC-JMA COMMISSION, 12 ORDER GRANTING: Plaintiff, 13 v. (1) RECEIVER’S TWENTY-NINTH 14 INTERIM FEE APPLICATION; AND LOUIS V. SCHOOLER and FIRST 15 FINANCIAL PLANNING [ECF No. 1750] 16 CORPORATION d/b/a WESTERN
FINANCIAL PLANNING 17 (2) ALLEN MATKINS’ TWENTY- CORPORATION, NINTH INTERIM FEE 18 Defendants. APPLICATION 19 [ECF No. 1751] 20
21 22 Before the Court are fee applications filed by the court-appointed receiver Thomas 23 C. Hebrank (the “Receiver”) and counsel to the Receiver, Allen Matkins Leck Gamble 24 Mallory & Natsis LLP. ECF Nos. 1750, 1751. The Court finds these motions suitable 25 for disposition without oral argument pursuant to Civil Local Rule 7.1(d)(1). 26 // 27 // 28 // 2 A. Receiver 3 In the Twenty-Ninth Interim Fee Application, the Receiver asserts that he incurred 4 $35,496.00 in fees and $171.36 in costs for the application period covering July 1, 2019 5 through September 30, 2019 (“Twenty-Ninth Application Period”). ECF No. 1750 at 2. 6 The breakdown of the fees amassed is as follows: 7 Category Total 8 General Receivership $ 99.00 9 Asset Investigation & Recovery $ 0.00 10 Reporting $ 1,676.25 11 Operations & Asset Sales $ 10,068.75 12 Claims & Distributions $ 23,652.00 13 Legal Matters & Pending Litigation $ 0.00 14 Total $ 15 16 Id. at 2–4. Receiver now seeks payment of 80% of fees incurred, amounting to 17 $28,396.80, and 100% of the costs, amounting to $171.36, which account for postage and 18 copies. ECF No. 1750, Ex. C. 19 B. Allen Matkins 20 In the Twenty-Ninth Interim Fee Application, Allen Matkins asserts that it incurred 21 $16,348.50 in fees and $91.10 in costs during the Twenty-Ninth Application Period. 22 ECF No. 1751 at 2. The breakdown of the fees amassed is as follows: 23 // 24 // 25 // 26 // 27 // 28 1 Category Total 2 Reporting $1,552.50 3 Operations & Asset Sales $4,695.75 4 Claims & Distributions $1,811.25 5 Third Party Recoveries $7,719.75 6 Employment/Fees $569.25 7 Total $16,348.50 8 9 Id. Allen Matkins now seeks payment of 80% of fees incurred, amounting to $13,078.80, 10 and 100% of the costs, amounting to $91.10, which were incurred for shipping, 11 messenger service fees, and document searches. ECF No. 1751, Ex. A at 3. 13 “[I]f a receiver reasonably and diligently discharges his duties, he is entitled to fair 14 compensation for his efforts.” Sec. & Exch. Comm’n v. Elliott, 953 F.2d 1560, 1577 15 (11th Cir. 1992). “The court appointing [a] receiver has full power to fix the 16 compensation of such receiver and the compensation of the receiver’s attorney or 17 attorneys.” Drilling & Exploration Corp. v. Webster, 69 F.2d 416, 418 (9th Cir. 1934). 18 A receiver’s fees must be reasonable. See In re San Vicente Med. Partners Ltd., 962 F.2d 19 1402, 1409 (9th Cir. 1992). 20 As set forth in the Court’s prior fee orders, see, e.g., ECF No. 1167, the Court will 21 assess the reasonableness of the requested fees using the factors enumerated in Sec. & 22 Exch. Comm’n v. Fifth Avenue Coach Lines, 364 F. Supp. 1220, 1222 (S.D.N.Y. 1973) 23 and In re Alpha Telcom, Inc., 2006 WL 3085616, at *2–3 (D. Or. Oct. 27, 2006). Those 24 factors include: (1) the complexity of the receiver’s tasks; (2) the fair value of the 25 receiver’s time, labor, and skill measured by conservative business standards; (3) the 26 quality of the work performed, including the results obtained and the benefit to the 27 receivership estate; (4) the burden the receivership estate may safely be able to bear; and 28 1 (5) the Commission’s opposition or acquiescence. See Fifth Avenue Coach Lines, 364 F. 2 Supp. at 1222; Alpha Telecom, 2006 WL 3085616, at *2–3. 4 A. Complexity of Tasks 5 1. Receiver 6 The Court finds that the tasks performed by the Receiver during the Twenty-Ninth 7 Application Period were moderately complex. The Receiver undertook the following 8 tasks during the relevant period: 9 - handling general administrative matters, including reviewing mail, email, and other correspondence directed to the Receivership Entities; 10 - administering the bank accounts of the Receivership Entities; 11 - reviewing and approving expenditures; - maintaining and updating the Receiver’s website with case information, 12 documents, and filing inquiries; 13 - preparing Receiver’s Twenty-Eighth interim report; - managing and overseeing the General Partnerships’ operations and real 14 properties; 15 - managing and overseeing Western’s operations; - performing accounting functions of the Receivership Entities; 16 - managing and overseeing tax reporting for Receivership Entities; 17 - managing and overseeing loan payments and overall cash management; - obtaining listing agreements and marketing properties for sale with brokers; 18 - analyzing, negotiating, and accepting purchase offers; 19 - closing property sales; - sending monthly case update reports to investors listing major legal filings, 20 property sales activity, court rulings, tax, and other information; 21 - listing and responding to sales activity on the various properties; and - filing motions to sell properties. 22
23 ECF No. 1750 at 3-5.
24 2. Allen Matkins 25 The Court finds that the tasks performed by Allen Matkins during the Twenty- 26 Ninth Application Period were similarly complex. Counsel undertook the following tasks 27 during this period: 28 1 - preparing the Receiver's Twenty-Eighth Interim Report; - assisting the Receiver by providing updates regarding enforcement of 2 judgments against the LinMar entities, closed and pending sales of properties, 3 and receipts and disbursements for the receivership estate; - preparing purchase and sale agreements, motions to approve sales (including 4 supporting declarations and proposed orders), notices concerning overbids and 5 auctions, and closing documents for Court-approved sales; - assisting in addressing issues with investor distributions; 6 - assisting in preparing monthly case updates to investors and responding to 7 direct inquiries from investors; and - communicating with the post-judgment receiver and counsel for SEC regarding 8 the disposition of remaining funds held by the post-judgment receiver. 9 ECF No. 1751 at 3–5. 10 B. Fair Value of Time, Labor, and Skill 11 The Receiver billed his time at his customary billing rate, discounted by 10 percent 12 and the blended hourly rate for all services provided by the Receiver and those working 13 for him was $192.65 per hour during the Application Period. ECF No. 1750 at 7. Allen 14 Matkins billed its time at $325.00 to $702.00 per hour, with the majority of work being 15 billed at $517.50 per hour. ECF No. 1751, Ex. A at 22. 16 The Court continues to find, as it has in previous fee orders, that the rates charged 17 by the Receiver and Allen Matkins are comparable to rates charged in this geographic 18 area and therefore represent a fair value of the time, labor, and skill provided. 19 C. Quality of Work Performed 20 The Court finds that the quality of work performed by the Receiver and Allen 21 Matkins to be above average. The Receiver has, and continues to, competently operate 22 the Receivership as evidenced by Receiver’s Twenty-Ninth Status report, ECF No. 1748, 23 while at the same time marshalling assets to support its continued financial integrity. 24 These actions benefit all investors. The Receiver and his counsel have complied with the 25 Court’s orders and have made every effort to protect investors’ interests in the GP 26 properties during the pendency of this litigation. 27 D. Receivership Estate’s Ability to Bear Burden of Fees 28 1 On August 30, 2016, the Court approved the Receiver’s Modified Orderly Sale 2 Process, ECF No. 1359, and the use of the One Pot approach to distribute receivership 3 assets, ECF No. 1304 at 31. These actions were taken for the dual purpose of increasing 4 the value of the receivership estate by selling GP properties and lowering administrative 5 costs. Id. at 30. 6 Allen Matkins indicates that as of June 30, 2019, the receivership estate held 7 approximately $9.15 million in cash. ECF No. 1751 at 7. On June 17, 2019, the Court 8 approved a second interim distribution to investors with allowed claims in the total 9 amount of $6 million. ECF No. 1727. Therefore, the Court finds that the Receivership 10 estate has sufficient ability to bear the instant fee requests. 11 E. Commission’s Opposition or Acquiescence 12 While the Commission does not expressly approve of the fee applications as 13 reasonable, the Receiver represents that the Commission has expressed its non-opposition 14 to the fee application. ECF No. 1751 at 8. The Court will accept this representation. 16 Considering the above five factors together, and considering that “[i]nterim fees 17 are generally allowed at less than the full amount,” Alpha Telcom, 2006 WL 3085616, at 18 *2–3, the Court awards fees and costs as set forth in the following table: 19 Applicant Fees Allowed % of Fees Costs Allowed % of Costs Incurred1 Requested 20 Receiver $28,396.80 80 $171.36 100 21 Allen Matkins $13,078.80 80 $91.10 100 22 // 23 // 24 // 25 26
27 1 The Court includes the percentage of fees incurred rather than a percentage of the fees requested, given 28 2 After a review of the parties’ submissions, the record in this matter, and the 3 || applicable law, and for the foregoing reasons, IT IS HEREBY ORDERED that: 4 1. The Receiver’s Twenty-Ninth Interim Fee Application, ECF No. 1750, is 5 GRANTED; and 6 2. Allen Matkins’ Twenty-Ninth Interim Fee Application, ECF No. 1751, is 8 3. The Receiver is directed to file a Status Report on or before April 15, 2020. 9 11 12 ||Dated: March 25, 2020 <=
14 United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28