ORDER REGARDING OBJECTION TO NATIONSTAR MORTGAGE LLC D/B/A MR. COOPER'S POST PETITION MORTGAGE FEES SUPPLEMENTING PROOF OF CLAIM NO. 6-11

MIKE K. NAKAGAWA, Bankruptcy Judge.

On November 14, 2018, the court heard the Objection to Nationstar Mortgage LLC D/B/A Mr. Cooper's Post Petition Mortgage Fees Supplementing Proof of Claim No. 6-1. ("Objection"). The appearances of counsel were noted on the record. After arguments were presented, the matter was taken under submission.

On April 9, 2018, Dan William Hill and Virginia Ellen Hill ("Debtors") filed a joint Chapter 13 petition, accompanied by their schedules of assets and liabilities ("Schedules") and Statement of Financial Affairs ("SOFA"). According to their Schedule A/B and Schedule D, the Debtors have a fee simple interest in their primary residence located at 4589 Cedar Island Court, Las Vegas, Nevada ("Residence"). They attest that the Residence has a current value of $347,000, and that it secures a claim in the amount of $304,244 in favor of Nationstar/Mr. Cooper ("Nationstar"). According to their SOFA, the Debtors filed their Chapter 13 petition four days prior to a scheduled foreclosure sale of the Residence by Nationstar. Along with their Schedules and SOFA, Debtors filed a proposed Chapter 13 plan ("Plan") that provides for them to make their regular monthly loan payments to Nationstar, and to cure any prepetition arrearages over the life of the Plan.

On May 15, 2018, Nationstar filed a proof of claim ("POC") in the amount of $322,454.58, that was signed under penalty of perjury on May 14, 2018, by Bryan S, Fairman, of the San Diego law firm of Aldridge Pite, LLP ("Aldridge Pite"), as agent for Nationstar.2 Affixed to the POC is a 43-page attachment ("Attachment") consisting of a computer generated loan payment history, a "standing notice" used by Nationstar, a proof of claim disclosure form used by the law firm, a copy of an annual escrow account disclosure statement generated by Nationstar, a copy of the underlying promissory note, and a copy of the assignment of the underlying deed of trust.3

On June 29, 2018, Nationstar filed a Notice of Postpetition Mortgage Fees, Expenses, and Charges ("Mortgage Fee Notice") by which it seeks to supplement its POC by the total amount of $950.00. That figure consists of attorney's fees of $300 incurred on April 20, 2018, to review the proposed Plan, plus another $400 incurred on May 15, 2018, to prepare the POC, and another $250 to prepare the Attachment. The Mortgage Fee Notice, like the POC, is signed under penalty of perjury by Nationstar's local counsel.

On September 24, 2018, Debtors filed a 3-page Objection to the Mortgage Fee Notice ("Objection"). Debtors argue that only $50 in attorney's fees, rather than $300, should be allowed for review of the Plan. They also argue that only $100, rather than $400, should be allowed to prepare the POC, and only $50, rather than $250, should be allowed to prepare the Attachment. Debtors therefore argue that instead of $950, Nationstar should be allowed only $200. The Objection is not accompanied by an affidavit, declaration, or other admissible evidence establishing the appropriate amount of attorney's fees for the services rendered.

On October 18, 2018, Nationstar, through its local Nevada counsel, filed a 62-page response to the Objection, most of which consists of a copy of its POC as well as a copy of the Mortgage Fee Notice. The response is accompanied by a 6-page Declaration of Nichole Glowin ("Glowin Declaration") in support of the response. That declaration attests that local Nevada counsel prepared the Mortgage Fee Notice, see Glowin Declaration at ¶ 5, but that the Aldridge Pite firm performed the services set forth in the document. Although there is no evidence of the actual amount of time spent by the Aldridge Pite firm, nor the hourly rate charged by the professional that performed the services, Nationstar maintains that charges reflect services on a "flat fee" basis according to "industry-recognized Fannie Mae guidelines." Response at 5:23. Nationstar suggests that the purported flat fees "appear to be highly reasonable as they are at most equivalent to about 1-2 hours of billing at most firms at rate of $295.00 per, including the firm at issue herein. . ." Id. at 5:25-27.

On November 14, 2018, a hearing was held on the Objection, attended by counsel for both the Debtor and Nationstar. After arguments were presented, the matter was taken under submission.

There is no dispute in this proceeding that Nationstar is an oversecured creditor that may be allowed reasonable attorney's fees under its contract pursuant to Section 506(b). By their Objection to the Mortgage Fee Notice, Debtors seek a $750 reduction in the attorney's fees sought by Nationstar. Debtors do not suggest that the Aldridge Pite firm charged an excessive hourly rate, or that too much time was spent, because there is no information in the Mortgage Fee Notice how the fees were determined. In response, Nationstar also provides no evidence of the hourly rates charged or the time spent by the Aldridge Pite firm, but simply argues that the flat fees charged are reasonable.

The court does not recall having to resolve an objection to a flat fee requested under Section 506(b) by an oversecured creditor.4 Attorneys whose creditor clients require services to be provided on a flat fee basis may be spared the tedium of maintaining contemporaneous time records in exchange for handling a greater volume of matters for the client. There is no direct analogue in bankruptcy practice, however, because the court, not the client, determines the reasonableness of the requested fee. As Nationstar acknowledges in the current proceeding, a "lodestar" method typically is applied in bankruptcy that looks to a reasonable amount of time to perform a service at a reasonable hourly rate. See Response at 4:28 to 5:8. Thus, reference to purported flat fees under "industry-recognized Fannie Mae guidelines" may support some argument somewhere, but not here.5

In this case, the Mortgage Fee Notice was signed under penalty of perjury as a supplement to the POC under FRBP 3002.1. Under Section 502(a), a claim set forth in a proof of claim is deemed allowed unless a party in interest objects. Under FRBP 3002(f), a properly filed and executed proof of claim constitutes prima facie evidence of the validity and amount of the claim because it is supported by evidence, i.e., a party attesting to its accuracy under penalty of perjury. Compare Garner v. Shier (In re Garner), 246 B.R. 617, 622 (B.A.P. 9th Cir. 2000) ("In short, a proof of claim that is executed by an attorney has an evidentiary effect similar to that of a verified complaint."). To overcome the prima facie validity of a proof of claim, an objecting party therefore is required to raise a legal or factual basis to challenge the claim. See Campbell v. Verizon Wireless (In re Campbell), 336 B.R. 430, 434-35 (B.A.P. 9th Cir. 2005). See also Davis v. CSMC Mortgage-Backed Pass-Through Certificates (In re Davis), 2017 WL 3014349, at *5 (B.A.P. 9th Cir. July 14, 2017) ("`The proof of claim . . . is, unless rebutted, `prima facie' evidence. One rebuts evidence with counter-evidence.' . . . The debtor's decision not to offer evidence `narrow[ed] the issue to whether the proof of claim is executed and filed in accordance with the rules.' . . . Accordingly, the objection `was not adequate to rebut the Rule 3001(f) evidentiary presumption' and the bankruptcy court `was not required to consider the controversy on its full-blown merits . . .'"). Often the evidence may consist of an admission in the proof of claim itself, such as the date the statute of limitations commenced, sufficient to conclude that the claim cannot be enforced under non-bankruptcy law. Even more often, the creditor that filed the proof of claim does not respond to an unsupported objection and the claim is disallowed on a default basis.

In this unusual case, Debtors filed their Objection, but it was not accompanied by any evidence to overcome the prima facie validity of the Mortgage Fee Notice. Nationstar responded, however, by submitting the Glowin Declaration attesting to services that allegedly were performed by the Aldridge Pite firm. Additionally, Nationstar admits in its written response that the attorney's fees included in the Mortgage Fee Notice were not charged on a lodestar basis and were included as a purported "flat fee" modeled after the Fannie Mae guidelines. As a result, the court concludes that the Mortgage Fee Notice is entitled to no presumption as to validity or amount.

As previously mentioned, the Debtors suggest that the allowance of $200 is appropriate while Nationstar believes that $950 is warranted. Unfortunately, there is no evidence in the record nor suggestion at the hearing, however, that counsel for either party ever attempted to resolve this $750 dispute without necessity of incurring additional attorney's fees or requiring judicial intervention. Neither party to this Objection has been practical nor reasonable in this matter.

Under these circumstances, rather than simply wishing a pox on both parties' houses, the court will sustain the Objection in part. The total amount set forth in the Mortgage Fee Notice will be reduced to $500 allowed and the remaining $450 will be disallowed. In the event similar matters are presented to this court in the future, the court will consider whether sanctions should be imposed under 28 U.S.C. § 1927.

IT IS THEREFORE ORDERED that the Objection to Nationstar Mortgage LLC D/B/A Mr. Cooper's Notice of Postpetition Mortgage Fees Supplementing Proof of Claim No. 6-1, Docket No. 41, brought by the above-captioned Chapter 13 debtors, be, and the same hereby is, SUSTAINED in part and OVERRULED in part.

IT IS FURTHER ORDERED that the Notice of Postpetition Mortgage Fees, Expenses, and Charges filed by Nationstar Mortgage LLC is allowed in the amount of $500.00 and disallowed in the remaining amount of $450.00.