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In re Bergmann, 15-00387-JDP. (2017)

Court: United States Bankruptcy Court, D. Idaho Number: inbco20171205616 Visitors: 16
Filed: Dec. 04, 2017
Latest Update: Dec. 04, 2017
Summary: MEMORANDUM OF DECISION JIM D. PAPPAS , Bankruptcy Judge . Introduction This decision addresses the latest skirmish in what seems to be a never-ending war between chapter 13 1 debtor Sharon Kay Bergmann ("Debtor"), and the attorney for one of her creditors, Vernon K. Smith ("Smith"). The precise matter before the Court concerns the latest fee application filed by Debtor's counsel, Randal J. French ("French"), for services rendered to Debtor in this bankruptcy case. See Fourth Applicatio
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MEMORANDUM OF DECISION

Introduction

This decision addresses the latest skirmish in what seems to be a never-ending war between chapter 131 debtor Sharon Kay Bergmann ("Debtor"), and the attorney for one of her creditors, Vernon K. Smith ("Smith"). The precise matter before the Court concerns the latest fee application filed by Debtor's counsel, Randal J. French ("French"), for services rendered to Debtor in this bankruptcy case. See Fourth Application for Approval of Compensation ("the Application"), Dkt. No. 153. The chapter 13 trustee, Kathleen A. McCallister ("Trustee"), does not oppose the Application. However, Creditor Royal Von Puckett ("Creditor"), represented by Smith,2 objected to the Application. Dkt. No. 158. The Court held a hearing on the Application on October 31, 2017, and took the issues under advisement.

Facts

Debtor filed a chapter 13 petition on March 31, 2015. Dkt. No. 1. A few months later, French filed his first application for compensation and expenses, to which Creditor objected; after a hearing, the Court overruled the objection and approved the full amount of fees and costs requested. Dkt. Nos. 71, 77, 79, 80.3

On June 23, 2016, French filed a second fee application. Dkt. No. 90. Trustee did not object to the application, see Dkt. No. 92, but Creditor, through Smith, did. Dkt. Nos. 93-94. The Court held a hearing on August 23, 2016, and on September 13, 2016, entered a decision and order finding that Creditor's objections lacked merit. The Court again approved payment by Trustee of all compensation and costs requested. Dkt. Nos. 99 and 100.4

French's third application for compensation was filed on June 17, 2017, Dkt. No. 112, but was later withdrawn. In its place, he filed a fourth application for compensation, seeking $4,815 in fees and $166.43 in costs. Dkt. No. 153. Creditor objected to the fourth application, Dkt. No. 158, and a hearing was held on October 31, 2017. At the hearing, Trustee indicated she did not object to French's latest request. Also at that hearing, the Court directed Trustee to file a status report regarding the progress of the state court proceedings concerning the Debtor's judgments against Smith. When Trustee did not timely file the status report, Debtor, through French, filed one detailing the status of the judgment appeals, and also discussing Smith's entitlement to a distribution from his mother's probate estate, and the Debtor's/Trustee's efforts to satisfy the judgments from those probate distributions. Dkt. No. 162. Creditor (i.e. Smith) filed a response to Debtor's status report. Dkt. No. 165. Trustee then filed her own tardy status report. Dkt. No. 166.

The sum and substance of these "status" submissions is that Debtor, Smith, and Trustee continue to litigate with one another in the Idaho Supreme Court, state probate court, and this bankruptcy case, like cats and dogs, with Smith insisting that Debtor's claims against him are spurious (despite the state court judgments), and Trustee and Debtor urging that they ought be allowed to collect the judgments from the probate estate and use the funds to pay off Debtor's legitimate creditors' claims (ironically, including Creditor's claim), in this bankruptcy case. Of course, in the process, all parties continue to incur attorneys fees and costs. And when French asks this Court to approve payments for his services rendered to Debtor for litigating with Smith, Creditor/Smith interpose largely irrelevant and otherwise meritless objections, which French must then defend.

Analysis and Disposition

As the Court has endeavored to explain to Creditor/Smith in the past, § 330(a)(4)(B) of the Code provides for allowance of "reasonable compensation" to a chapter 13 debtor's attorney for "representing the interests of the debtor in connection with the bankruptcy case based on a consideration of the benefit and necessity of such services to the debtor and the others factors set forth in this section." The "other factors" the Court may consider are listed in § 330(a)(3) and include the time spent by counsel rendering the services; the rate charged; whether the services were necessary to the administration of the estate; whether the services were performed within a reasonable amount of time commensurate with the complexity, importance, and nature of the problems, issues, or tasks addressed; and whether the compensation requested is reasonable compared to that charged by comparably skilled practitioners.

In this fourth application, French seeks $4,815 in attorneys fees and $166.43 in costs, for a total of $4,981.43.

The costs were incurred obtaining two deposition transcripts, as well as copy and postage costs. Dkt. No. 153. These costs appear to the Court to be actual, reasonable, and necessary, and will be approved.

The requested attorneys fees reflect 21.4 total hours spent by French on this case between August 23, 2016 and September 11, 2017, a span of over a year. Dkt. No. 153-1 at Ex. A. The Court finds that the services rendered by French all involved representing the interests of Debtor in connection with this bankruptcy case, and that the fees are reasonable in amount. Indeed, those services in part involved prosecuting French's second fee application, dealing with Debtor's desire to incur additional secured debt to purchase an automobile, an amendment to Debtor's schedule I expenses, conversations with Trustee regarding her motion to modify the chapter 13 plan, and Debtor's response to that motion. French also attended depositions, hearings, and spent time preparing the fourth fee application. All of these services are directly related to the bankruptcy case.

Creditor's objection to the fee request critically analyzes nearly all of French's individual time entries supporting his fee request, in detail, characterizing most of them as an attempt to help Debtor deceive and financially harm her creditors. The Court disagrees with such characterization. Instead, French's efforts, for the most part, represent the usual and unremarkable tasks associated with assisting a debtor to complete her chapter 13 case.

Beyond this observation, the Court declines any invitation to review French's services under a microscope as requested by Creditor. The Court considers Creditor's objections to the Application to be so lacking in merit as to justify no further comment — except one: Creditor's/Smith's most recent tirades about Debtor's motives and French's fees are "more of the same" when compared to the prior assaults. Indeed, in requiring French to (again) defend a fee application, Creditor/Smith accomplish nothing other than to require Debtor to incur more legal expenses which, in turn, must be paid by diverting payments from creditors under the plan. In approving French's second fee application, the Court warned Creditor/Smith that "further objections to Debtor's attorney's proper requests for reasonable compensation and expenses will not be tolerated as a vehicle to express apparent frustration and displeasure with issues resolved by a final order for confirmation of Debtor's plan." The Court hereby expands this admonition to Creditor/Smith that it will not allow them to litigate issues concerning Smith's liability to Debtor at the expense of the creditors in this bankruptcy case. Those battles should occur, if required, in the pending state court litigation. If Creditor/Smith persist in this tactic, they should expect to pay for the attorneys fees and costs necessarily incurred by Debtor via Court-imposed sanctions.

The objections to the Application are, again, overruled, and the amounts requested by French for compensation and expenses will be approved. French should submit a proposed order for entry by the Court; Trustee should approve the form of the order.

FootNotes


1. Unless otherwise indicated, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101 — 1532, and all rule references are to the Federal Rules of Bankruptcy Procedure, Rules 1001 — 9037.
2. While it might sound bizarre, though Debtor is indebted to Creditor, she holds two money judgments against Smith, the face amount of which, the Court understands, total in excess of $1 million. Smith's appeal from the judgments is pending before the Idaho Supreme Court. In light of this state of affairs, the Court can only presume that Smith's interests, and the motivations for his actions, strategy, and tactics in this bankruptcy case, likely extend beyond his role as an advocate for Creditor.
3. After a pitched battle with Puckett and Smith, Debtor was able to confirm a chapter 13 plan; the fees and costs awarded to French were all to be paid by Trustee from payments to be made under that plan. Dkt. No. 85 at ¶ D.
4. The Court described the fee objection by Creditor/Smith as a collateral attack on plan confirmation. Memorandum of Decision at 4, Dkt. No. 99.
Source:  Leagle

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