DANIEL S. OPPERMAN, Bankruptcy Judge.
The remaining issue in this adversary proceeding is the amount of fees and costs that should be assessed against Plaintiff's counsel under 28 U.S.C. § 1927. The Defendant requests up to $31,905.00 in fees and $73.52 in costs; the Plaintiff believes the amount should be $1,296.00. For the reasons detailed in this Opinion, the Court awards $8,152.00 in fees and $73.52 in costs.
This Court issued an Opinion Regarding Defendant's Motion for Sanctions Pursuant to 28 U.S.C. § 1927 on April 2, 2018 and directed the Defendant "to submit a statement of fees and costs incurred after August 1, 2017 that are believed linked to Plaintiff's counsel's actions." The Defendant timely filed this statement, but Plaintiff's counsel filed an appeal of the April 2, 2018 Opinion and subsequent Order. On January 14, 2019, the United States District Court for the Eastern District of Michigan ("District Court") affirmed the April 2, 2018 Opinion and subsequent Order. This Court then set deadlines for additional pleadings addressing the remaining issues. In the interim, the District Court issued an Order Denying Motion for Sanctions. Pertinent portions of this Order state:
For sake of brevity, this Court incorporates the Findings of Fact previously made by this Court and the District Court.
Additional pleadings filed with the Court caused this Court to hold a telephonic status conference to determine if an evidentiary hearing was necessary to address additional issues not raised earlier. On July 9, 2019, the Defendant filed a pleading indicating that no further hearings were necessary, and that the Court could decide the matter after reviewing the pleadings. Accordingly, the Court will not address the subsequent issues raised in the later pleadings.
Defendant's counsel submitted a statement of services that reports 60.3 hours of attorney time and 6.5 hours of law clerk time. The Plaintiff has objected, in one form or the other, to all of these entries.
This Court has subject matter jurisdiction over this proceeding under 28 U.S.C. §§ 1334(b), 157(a), and 157(b)(1) and E. D. Mich. LR 83.50(a). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A) (matters concerning the administration of the estate).
Section 1927 states:
Again, for the sake of brevity, the Court incorporates the previous Opinions and Orders of this Court and the District Court which analyzed these issues. There remains two issues: the appropriate hourly rate and the time spent by Defendant's counsel. The Court addresses each as follows:
When this proceeding started, Defendant's counsel had approximately seven years of commercial and bankruptcy litigation experience and was recognized as a Michigan Super Lawyers Rising Star. His current standard hourly rate ranges from $195.00 to $225.00, but he agreed to discount his hourly rate to $175.00 and then two months later, to $160.00, for the Defendant.
In contrast, the Economics of Law Practice Survey published by the State Bar of Michigan reports a range of $200.00 to $317.00 per hour for attorneys in Livingston County, where Defendant's counsel is based, with a greater range of $200.00 to $510.00 for Michigan bankruptcy practioners. In comparison, Plaintiff's counsel charges $300.00 per hour.
The Court starts with the language of Section 1927, which states that the excess costs, expenses, and attorneys' fees must be "reasonably incurred". Here, while Defendant's counsel could have charged up to $225.00 per hour, he agreed to accept $160.00 per hour and charged the Defendant accordingly. The Defendant therefore incurred attorney fees at the rate of $160.00 per hour, so Section 1927 directs this Court to use that rate.
The Defendant makes excellent arguments that Plaintiff's counsel should not benefit from any discounted rate and that utilization of a higher rate enforces the deterrence and punishment element of Section 1927. While true, the statute simply awards fees, costs and expenses "reasonably incurred", not potentially incurred or possibly charged. Absent clear statutory language, this Court declines to expand the actual words used by Congress.
Defendant's counsel detailed his services with 74 entries and Plaintiff's counsel has filed 25 objections to these entries. Plaintiff's counsel has two overriding objections: 1) many entries are services with lumped items and 2) there are numerous "emails to client" which are unnecessary. Plaintiff's counsel is correct that some entries contain numerous services, but most entries are separated such that the Court can evaluate the nature of the services and the time expended on each service. Where the Court cannot make this determination, the Court notes that failure and disallows the requested fees. As to the emails to client entries, the Court encourages communications between an attorney and client and will not penalize Defendant's counsel for these communications. If the communications are unwarranted, however, the Court will note that fact and disallow the requested fees.
After stating these general guidelines, the Court addresses the entries of Defendant's counsel and the objections of Plaintiff's counsel in chronological order. To do so, the Court reproduces Defendant's counsel's entries, the objections of Plaintiff's counsel, and the Court's analysis and ruling:
8/1/2017, 8/2/2017 — .40 hours billed for emails to his Client and for "reviewing procedure for appearing by telephone". This should be reduced to not more than .20 hours as excessive and unnecessary.
The entries are sufficiently separated to allow the Court to conclude that .40 hours were devoted by counsel spending .20 hours on email correspondence and .20 hours reviewing a notice and the procedure to appear by telephone. The Court overrules the objection and allows the fees.
8/4/2017 — .5 hours billed for re-review of Trustee's response when same had been billed on 8/1/2017. Same was unnecessary and excessive. This should be reduced to not more than .2 hours for the email to his Client and was not necessitated by Mr. Nathanson.
The Court notes the August 1 entry included a response to review of a motion to dismiss and the August 4 entry refers to a response to a motion for summary judgment which totaled 60 pages with exhibits. This amount is not excessive. The Court overrules the objection and allows the fees.
8/11/2017 & 8/14/2017 — 4.9 hours billed for "research" of one issue raised by Plaintiff and preparation of a 7 page response in which most of the argument was repetition from Defendant's original motion. Defendant's Counsel spent less than one page discussing the "title" issue referenced, and a "form" certificate of service. At least 3.4 hours of these billing is excessive and should be reduced to not more than 1.0 hours.
These services include analyzing and responding to the motion described in section (b). The issues raised in the motion were sufficiently complex to warrant this amount of time. The Court overrules the objection and allows the fees.
8/15/2017 — .4 billed for a telephone conference for permission to appear telephonically and a "stipulation and order". This Court traditionally has allowed Counsel to appear telephonically by merely requesting same via a phone call and as such, same was not necessary. This should be reduced to not more than .2 hours.
Plaintiff's counsel is correct that this Court routinely allows telephonic appearances if arranged by contacting the courtroom deputy. The Court partially sustains the objection, disallows .30 hours but allows .20 hours.
8/16/2017, 8/17/2017, 8/18/2017, 8/21/2017, 8/28/2017 — 9.7 hours billed for research regarding Mr. Nathanson's so-called "self-serving affidavit" and motion to amend and preparing a 3 ½ page response (inclusive of captions and signature) and arguing the motion for summary judgment before the Court (the entire argument was approximately 40 minutes. These billings are excessive including 4.2 hours to prepare for and argue a motion with arguments lasting 40 minutes (for both sides). This should be reduced to not more than 1 hours.
The numerous and interconnected issues raised by the parties required thoughtful preparation and oral argument. Oral argument was excellent and helpful to the Court. The time spent does not appear excessive under these circumstances. The Court overrules the objection and allows the fees.
10/31/2017, 11/28/2017, 12/08/2017, 12/11/2017, 12/12/2017, 12/15/2017 — 6.8 hours billed for `research', review of opinions, and drafting a motion for sanctions, "revising exhibits", and repeated emails to the Client regarding same. Curiously, Defendant's Counsel performed research on the sanctions motion almost a month before this Court entered its opinion on summary judgment on November 27, 2017. Review of this Court's `recent decisions' was also superfluous. The motion itself contained 8 pages of a "statement of facts" and 4 pages of legal argument. Counsel also billed an additional .2 hours for revising the same order on 11/30/2017 that he `reviewed' two days earlier, and .3 hours to "finalize exhibits" which were exhibits from the instant action and emails. Further, Mr. Marvin also bills for emails to the Client each and every time he revises the motion. Counsel claims to have spent 2.1 hours emailing his Client, revising a motion he previously wrote, "finalizing exhibits"; more superfluous excessive billing. This billing is excessive and should be reduced to not more than 1.0 hours;
These series of entries detail the efforts of Defendant's counsel anticipating and reacting to this Court's granting Defendant's Motion for Summary Judgment. While the observation that Defendant's counsel began working on a motion for sanctions before this Court's opinion is correct, such an action was not unexpected given the development of this case, especially after August 1. The Court agrees that excessive time was devoted to attention to exhibits, so the Court partially sustains Plaintiff's counsel's objection and will disallow .30 hours and allow the remainder.
12/19/2017; .10 hours — another email with his Client about the "next Course of action" — should be disallowed.
The Court encourages attorney-client communications and .10 hours is not excessive. The Court overrules the objection and allows the fees.
12/28/2017 — .80 hours — Part of this time was to review a safe harbor notice sent to Mr. Marvin. This was caused by Mr. Marvin filing the motion for sanctions, not by Mr. Nathanson. This should be reduced to .1 for `review' of the order to extend time, reviewing a safe harbor notice and the motion to extend time is excessive at .3 hours;
These entries are appropriate and the time is not excessive. The Court overrules the objection and allows the fees.
1/3/2018; .70 hours to "confirm" a legal position, and for "research" on a motion an yet more email with his client, this should be reduced to not more than .20 hours
The Court generally allows .20 hours for communication with a client, which leaves .50 hours for the confirmation and legal research entries, which is not excessive. The Court overrules the objection and allows the fees.
1/19/2018, 1/22/2018, 1/26/2018, 1/29/2018, 1/30/2018, 1/31/2018 — 5.8 hours claimed for more "research" and "emails", including what Mr. Marvin claims 5.4 hours in drafting a short reply brief. This should be reduced to not more than 1 hour;
The Court reviewed the docket of this proceeding to place these entries in context. Plaintiff's counsel filed a 16-page answer, brief and attached affidavit and Defendant's counsel prepared and filed a 7-page response, addressing numerous issues and cases raised by Plaintiff's counsel. Along with the communication with Defendant, these entries are appropriate and not excessive. The Court overrules the objection and allows the fees.
2/6/2018, 2/8/2018 — 3.0 hours — Claimed for "preparation" for the motion hearing, and a phone call. The Court will note the hearing lasted approximately 20 minutes, yet Counsel claims to spent almost half a day preparing for it and advanced no new arguments at the hearing — this should be reduced to not more than 1.5 hours;
The Court agrees the time spent to prepare for the telephonic hearing is excessive but notes the Court's docket indicates the hearing was almost .50 hours. The Court reduces the time allowed by 1.0 hour but allows 2.0 hours.
4/2/2018, 4/3/2018, 4/9/2018 — 3.8 hours — Counsel again has to review his own billing ledger and claims 1.1 hours to read the Court' short opinion and repeatedly email his Client, further research (again) into an appropriate billing "rate" which is irrelevant in a §1927 motion — these entries should be reduced to not more than an .5 hour;
Again, the entries to review the Court's Opinion and communication with Defendant are not excessive. While the Court did not agree with Defendant's counsel's arguments about reliance on the State Bar of Michigan Survey, these services were appropriate. The Court overrules the objection and allows the fees.
4/12/2018 & 4/30/2018 — 2.2 hours to draft the "Statement of Fees and Costs". The Court did not require a brief and a brief was not necessary. Further, the §1927 award for not for a "reasonable attorney fee", and all the preparation of this was unnecessary, as was the accompanying brief and `supporting documents'. Additionally, review of Mr. Nathanson's rates and his fee application have no bearing upon this matter, as Mr. Nathanson was appointed as Counsel for Trustee with an hourly rate previously approved by this Court. All that was necessary was for Mr. Marvin to comply with this Court's order was to print his invoices or client ledger to his Client and attach same and file same with the Court. This should be reduced to not more than .3 hours, based upon the unnecessary work;
The Court disagrees that services were not required to determine the amount of a "reasonable" fee. Likewise, the Court disagrees that all Defendant's counsel had to do was print his invoices or client ledger and file those papers with the Court. The Court overrules the objection and allows the fees.
4/13/2018 — .2 hours to review objections to proposed order. The objections were filed as the order submitted by Mr. Marvin was not in compliance with the Court's Opinion and Ruling, ergo, not caused by Mr. Nathanson. This should be disallowed. The following time entries are for periods not compensable per this Court's orders, but the following specific objections are also included:
The review of the objection to the proposed order was necessary and as a result an agreed order was entered. The Court overrules the objection and allows the fees.
5/10/2018-5/17/2018 — 2.1 hours — Unnecessary time spent "reviewing his time with his Client" (Presumably, Fife would have been billed and fully aware what was billed to him on those dates, and further, Fife is not the arbiter of what fees and costs the Court will grant); time spent reviewing unrelated issues with an attorney who is not part of this matter; and more emails with his Client. Totally unrelated, unreasonable, unnecessary and excessive.
The Court agrees that services related to communication with another attorney who represented another Defendant in another adversary proceeding was not necessary to this proceeding. The Court reduces the time allowed by .20 hours for each of the May 10, May 11, May 15, May 16, and May 17 entries to reduce the allowed hours by 1.0 hour but will allow the remainder.
5/24/2018 — 3.5 hours — Research frivolous claims and attorney fees and review the 2004 exam. Unreasonable, excessive, and totally unrelated to this Court's order to submit a fee statement.
The Court notes that the fees for these services were billed at the law clerk's hourly rate. The 2.0 hours is appropriate as it relates to claims in this action, but the second entry of 1.50 hours is not, so the Court allows 2.0 hours or $200.00, and disallows 1.5 hours or $150.00.
5/25/2018 — 5/29/2018 — 6.00 hours to read Nathanson's response draft yet another brief on costs. Unnecessary and excessive, as the Court ordered Mr. Marvin to submit a fee statement, not an 89-page brief.
These services are related to the review and response by Defendant's counsel to Plaintiff's counsel's pleadings and total 6.0 hours, which Plaintiff's counsel finds excessive. The Court does not agree, given the volume of issues and cases raised by Plaintiff's counsel, as well as the Court's own time spent analyzing Plaintiff's counsel's response. The Court overrules the objection and allows the fees.
5/30/2018 — .70 hours — research of ethics rules. Completely unrelated to the matter at bar, and no relation to a statement of fees and costs.
The Court agrees with Plaintiff's counsel's objection and disallows these fees.
5/30/2018 — 8/20/2018 — 5.5 hours — of time for Mr. Marvin leaving the file in Mr. Nathanson's office for nearly a year. Unreasonable, the allegation that Mr. Nathanson read the file is untrue, and not caused by Mr. Nathanson.
The Court partially sustains Plaintiff's counsel's objection but excepts entries where Defendant's counsel communicated with Defendant. The Court allows time entries for July 11 and July 27 totaling .20 hours but disallows the remainder.
1/21/19-2/20/2019 4.5 hours total to re-open the case. Mr. Nathanson did not cause the case to be closed. Mr. Marvin could have requested a determination of the fees/costs as there was no stay on appeal. Furthermore, Mr. Marvin should have emailed the clerk to correct the error of the case being closed with a motion pending. If not resolved then, a follow up phone call should have sufficed. The undersigned, if a motion is even necessary, bills no more than .5 for a motion to reopen the case.
While Plaintiff's counsel is correct that he did not close this proceeding, it was closed while the appeal was pending. The proceeding needed to be reopened and could have been reopened earlier, but it took longer than expected. The Court allows 2.5 hours but disallows 2.0 hours.
3/1/2019 & 3/11/2019 — .50 hours to review the order and talk to his client. This, along with the other entries clearly show Mr. Marvin is simply billing the file for absolutely unnecessary work to artificially inflate his fees.
The Court encourages attorney client communications, so this objection is overruled and the fees are allowed.
3/20/2019 — another 1.3 hours billed to "update" his bill of costs that should come right off Mr., Marvin's billing records system (totals 2.8 hours or almost half a day including 3/25 entry). This should have been as simple as printing out billing records.
The Court sustains the objection in part and allows .50 hours and disallows the remainder.
3/25/2019 — 1.5 to draft his bill of costs, duplicate of unnecessary and unreasonable time entry (totals 2.8 hours or almost half a day including 3/20 entry) for what should have been a computer printout or copies of the invoices sent to his Client.
The Court allows .20 hours for communication with Defendant but disallows the remainder as duplicative.
3/28-3/29 .80 hours to further "revise" the fees and to have his Fife direct Mr. Marvin on how to revise his billings.
The Court allows .20 hours for communication with Defendant but disallows the remainder as duplicative.
4/1/2019 — .50 to "finalize and email his client" — unreasonable and not necessary. There is no need to "finalize" when Mr. Marvin was ordered merely to submit a statement of fees and costs, not an 86-page brief.
The Court allows .20 hours for communication with Defendant but disallows the remainder as duplicative.
Additionally, Defendant's counsel has requested costs of $73.52 consisting of postage of $17.17, $52.00 PACER charges and $4.35 for transcripts. These costs are reasonable and incurred by Defendant, so the Court awards $73.52 in costs as well.
Defendant reasonably incurred $7,952.00 in attorney fees consisting of 49.7 hours x $160.00 per hour and an additional $200.00 consisting of 2.0 hours x $100.00 per hour, as well as costs of $73.52. Defendant is entitled to an order assessing these amounts against Plaintiff's counsel as required by 28 U.S.C. § 1927. Counsel for the Defendant is directed to prepare an order consistent with this Opinion and the entry of order procedures of this Court.
