STEPHEN RASLAVICH, Chief Judge.
Before the Court are the following: (1) Application for Compensation and Reimbursement of Expenses (the "Application"); and (ii) Supplemental Application for Compensation and Reimbursement of Expenses for Services Performed After Confirmation of Chapter 13 Plan (the "Supplemental Application"). In the Application, Debtor's counsel, Michael Bresnahan ("Counsel"), seeks an additional fee of $5,040.00 beyond the fee which he agreed to accept, with certain exceptions, for representing the Debtor in her Chapter 13 bankruptcy case. In the Application, Counsel also asks to be reimbursed for $124.95 in expenses.
In a letter to the Court, the Debtor assented to reimbursing Counsel for the expenses which he listed in his Application and Supplemental Application (she assented by specifically stating that she did not object to paying such expenses) but objected to paying any further counsel fee. At the hearing on the applications, Counsel addressed the Court but offered no evidence, documentary or testimonial, to support his applications for the aforementioned fees. At the conclusion of the hearing, the Court took the applications under advisement. Upon consideration, Counsel's applications shall be granted in part and denied in part. Counsel shall be granted total compensation in the amount of $3,000 and reimbursement of expenses in the amount of $210.50.
On October 18, 2006, Debtor commenced her Chapter 13 case by filing a Voluntary Petition for Relief. Docket Entry No. 1. On November 13, 2007, she filed the following documents: Schedules; Statement of Financial Affairs; Chapter 13 Statement of Current Monthly and Disposable Income; and her Chapter 13 plan. Docket Entry Nos. 12-24. On the same date, Counsel filed his Disclosure of Compensation of Attorney for Debtor (his "2016(b) Statement") listing the total amount owed for legal services as $3,000 with a balance due of $1,460. Docket Entry No. 25. The 2016(b) Statement, which is dated November 13, 2006, bears the electronic signature of Counsel certifying that "the foregoing is a complete statement of any agreement or arrangement for payment to me for representation of the debtor(s) in this bankruptcy proceeding." Docket Entry No. 25.
In paragraphs 6 and 7 of the 2016 Statement, Counsel stated as follows:
Docket Entry No. 25. Significantly, paragraphs 6 and 7 are inconsistent in that paragraph 6 states that the $3,000 fee charged by Counsel includes representation of the debtor in "adversary proceedings and other contested bankruptcy
On November 20, 2007, Mortgage Electronic Registration Systems, Inc. ("MERS") filed an objection to confirmation of the Debtor's Chapter 13 plan. Docket Entry No. 30. However, Debtor filed an objection to MERS' proof of claim and that objection was settled, presumably mooting the objection to confirmation. Docket Entry Nos. 51 & 64.
During the course of Debtor's bankruptcy case, the Chapter 13 Trustee filed three motions to dismiss, all of which were withdrawn at the hearing scheduled for the particular motion. Docket Entry Nos. 36 & 97 (first motion to dismiss), 115 & 131 (second motion to dismiss), 142 & 161 (third motion to dismiss). On September 20, 2007, a motion for relief from the automatic stay was filed by Cenlar, FSB ("Cenlar") but that was settled on the hearing date of October 24, 2007. Docket Entry Nos. 74 & 92. No stipulation was filed. On November 29, 2007, Cenlar filed a praecipe to have the motion re-listed and another hearing date was scheduled for the motion. Docket Entry No. 100. On the hearing date, the motion was settled again and a stipulation for the settlement was filed on March 13, 2008. Docket Entry Nos. 106 & 107. On May 21, 2008, an amended stipulation regarding the settlement was filed. Docket Entry No. 110. In the amended stipulation, the amount listed for the debtor's post-petition arrearages on her residence are listed as $13,532.87 rather than at $14,204.75 as stated in the original stipulation. See id.
During her bankruptcy case, Debtor's Summary of Schedules as well as her individual Schedules were amended and a Supplemental Matrix was filed. Docket Entry Nos. 42-46, 79-82, 84 & 86. Her Chapter 13 Statement of Current Monthly of Disposable Income was also amended. Docket Entry No. 83. In addition, her Chapter 13 plan was amended four times (meaning that after her first plan was filed, there was a second amended plan, a third amended plan, a fourth amended plan and, finally, a fifth amended plan). Docket Entry Nos. 28, 69, 77, 119 & 139. The third amended plan was confirmed on November 7, 2007, but, after confirmation, Debtor's counsel filed a motion to modify the plan. Docket Entry No. 117. He subsequently withdrew that motion but, very shortly thereafter, filed another motion to modify which resulted in the filing of Debtor's fifth amended plan. Docket Entry Nos. 123, 127, 136 & 139. Under the plan, all unsecured creditors will be paid in full.
There was only one claim objection in the case. Docket Entry No. 51. The objection was to MERS' proof of claim as mentioned above. The objection was settled. Docket Entry No. 64.
Notably, no adversary actions were filed by or against the Debtor and no evidentiary hearings were held in the case. The § 341 meeting of creditors was held but not concluded on January 18, 2007. It appears from the Docket that additional information was requested by the Chapter
Counsel filed both of his fee applications on May 3, 2010. Counsel attached a Disclosure of Compensation for Attorney for Debtor (the "Subsequent 2016(b) Statements") to both his Application and Supplemental Application. Exhibit "A" to Application, Docket No. 145 & Exhibit "A" to Supplemental Application, Docket Entry No. 150.
While both of the Subsequent 2016(b) Statements bear the same date as the original Rule 2016(b) Statement which was electronically filed on November 13, 2007 and appears on the Docket at Entry No. 25, the Subsequent 2016(b) Statements are not the same.
Significantly, the Subsequent 2016(b) Statements bear Counsel's electronic signature and certify that "the foregoing is a complete statement of any agreement or arrangement for payment to me for representation of the debtor(s) in this bankruptcy proceeding." Counsel did not identify his Subsequent 2010 Statements as being amendments to his original 2016(b) Statement nor did he advise the Court that he had attached Subsequent 2016(b) Statements to his application that were different from his original 2016(b) Statement.
On May 21, 2010, Debtor filed her letter objection to Counsel's fee applications. In the letter, she states:
Docket Entry No. 155.
On July 14, 2010, a hearing was held on Counsel's fee applications. At the hearing, the Court specifically advised Counsel that it considered the amount of fees which he was requesting to be quite out of the ordinary in a Chapter 13 case. Nevertheless, Counsel failed to introduce any evidence in support of his applications (documentary or testimonial). Consequently, while the record before the Court includes all of the documents which are on the docket in this bankruptcy case, it does not include any evidence of a fee agreement (signed or oral) between himself and the Debtor indicating that she agreed to pay any additional fee for services not noted in the 2016(b) Statement which Counsel originally filed. Moreover, there is no evidence that Debtor agreed to pay Counsel any particular hourly rate for any additional fees which he might be owed over and above the $3,000 amount.
Pursuant to 11 U.S.C. § 329 and Fed. R. Bankr.P. 2016(b), a debtor's attorney is required to file, within fifteen days of the commencement of a debtor's bankruptcy case, a disclosure of the amount of compensation that has or will be received in consideration for services rendered in connection with the bankruptcy case. See 11 U.S.C. § 329; Fed. R. Bankr.P. 2016(b). Counsel complied with that requirement by filing his 2016(b) Statement.
Counsel seeks a total of $8,040 for pre-confirmation services. He also seeks $3,660 for post-confirmation services. In this district, the Local Bankruptcy Rules permit counsel for a Chapter 13 debtor with an above-median income like the Debtor to file a short form application for counsel fees when he or she "will receive total compensation of $3,500 or less for all services rendered before confirmation." Local Bankruptcy Rule 2016-2(1)(A).
Even absent an objecting party, this Court has a duty to review fee applications to determine the propriety of compensation requested. In re Busy Beaver Building Centers, Inc., 19 F.3d 833, 841-45 (3d Cir.1994). In Busy Beaver, the Third Circuit explained:
Id. at 841 (quoting In re Evans, 153 B.R. 960, 968 (Bankr.E.D.Pa.1993)).
Pursuant to Code § 330(a)(4)(B), a court, in a Chapter 13 case in which the debtor is a individual, "may allow reasonable compensation to the 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 following other factors:
11 U.S.C. § 330(a)(3).
Counsel, as the moving party, bears the burden of proof in establishing that he is entitled to the fees which he requests. In re Murray, 2007 WL 2317523, at *2 (Bankr.E.D.Pa. August 6, 2007). Counsel has failed to establish that he is entitled to more than the $3,000 in fees in accordance with the amount set forth in his 2016(b) Statement.
Counsel failed to submit or introduce any written engagement agreement (other than the 2016(b) Statement which was filed with the Court) between himself and Debtor. As noted by the court in In re All Cases of Musher, 387 B.R. 669 (Bankr.W.D.Pa.2008):
387 B.R. at 674.
In addition, Counsel failed to introduce any other evidence (such as testimony from the Debtor) to establish that the Debtor had agreed to pay him for services not excluded in his 2016(b) Statement. Consequently, the only item in the record which discloses the fee arrangement between Counsel and the Debtor is his 2016(b) Statement. Since Counsel's duty is to candidly and fully disclose his fee arrangement with the Debtor, the Court's ruling herein shall be determined in accordance with the 2016(b) Statement which Counsel originally filed. Moreover, the language of the 2016(b) Statement shall be construed against Counsel and in favor of the Debtor since he obviously drafted it and not the Debtor.
Based on paragraph 6 of the 2016(b) Statement, Counsel agreed to represent the Debtor for the lump sum of $3,000 in all aspects of her Chapter 13 the case including representing her in adversary proceedings and contested bankruptcy matters. The additional fees, for which Counsel seeks payment in his Application above the $3,000 lump sum amount, are fees relating to the following matters:
Out of these services, the only items within the purview of the services listed in paragraph 7 of Counsels's original 2016(b) Statement are the ones relating to: (i) the Trustee's motion to dismiss; and (ii) Cenlar, FSB's motion for relief from the stay. Consequently, all of the other matters listed above were not excluded by paragraph 7 of Counsel's 2016(b) Statement. Moreover, although Counsel's defense of the Debtor in response to the Trustee's motion to dismiss and Cenlar, FSB's motion for relief from the stay were excluded services pursuant to paragraph 7 of the 2016(b) Statement, they constitute contested bankruptcy matters. As noted above, Paragraph 6(a) of the 2016(b) Statement specifically states, in conflict with Paragraph 7, that the $3,000 fee charged by Counsel includes "[r]epresentation of the debtor in adversary proceedings and other contested bankruptcy matters." Since the Court is construing the 2016(b) Statement against Counsel and in favor of the Debtor, the conflicting paragraphs shall be resolved in
The services for which Counsel is seeking payment in his Supplemental Application relate to the following matters:
See Exhibit B to Supplemental Application. As with Counsel's Application, the services listed above are within the scope of services set forth in paragraph 6 of his 2016 Statement. While Counsel specifically excluded "relief from stay actions" and "response(s) and/or defense(s) to U.S. Trustee action(s)" in paragraph 7 of the Statement, that exclusion is inconsistent with his statement in paragraph 6 that, [i]n return for the above-disclosed fee, I have agreed to render legal services for all aspects of the bankruptcy case, including. . . . [r]epresentation of the debtor in adversary proceedings and other contested bankruptcy matters[.] See 2016 Statement, Docket Entry No. 25.
Admittedly, counsel rendered services to the Debtor after her plan was confirmed to assist her when she failed to make the plan payments required thereunder; however, Counsel has not provided the Court with any evidence that there was an agreement between him and the Debtor that she would pay him any additional fee for these services. It is Counsel's burden to show the terms of his engagement agreement with the Debtor. Based on her letter to the Court, she plainly did not have any understanding that she would be expected to pay Counsel more than $3,000 for his services. Moreover, her understanding, based on the services for which Counsel is seeking additional fees, is consistent with the arrangement set forth in Counsel's 2016(b) Statement, as interpreted by this Court. Counsel has offered no evidence to show that Debtor agreed to any other fee arrangement.
Based upon Counsel's time records and the docket in this Chapter 13 case, the Court concludes that Counsel adequately
In this district, our local rule allowing attorneys to file short form applications for compensation for services rendered prior to confirmation does not specifically state what services must be provided in order for counsel to earn the no-look fee. In other jurisdictions, "courts have developed concomitant standard services that attorneys are expected to perform to earn the fee."
Id. at 630.
It is this Court's view that a Chapter 13 attorney who opts to use a flat
434 B.R. at 37. Competent attorneys who regularly represent Chapter 13 debtors should be able to evaluate each case which they accept and, if opting to utilize the flat fee approach, make an educated determination of the amount of fees that the case will require. When the case will require services beyond those needed in a typical Chapter 13 case, such as when the case will involve a dischargeability proceeding or TILA litigation, etc., it is understandable and appropriate in those circumstances for an attorney to exclude such services from his or her flat fee. Of course, the exclusion of such services should be specifically noted in the Disclosure of Compensation of Attorney for Debtor form which the attorney files. The form provides space for such exclusions for that reason.
Chapter 13 debtors file bankruptcy to get their financial affairs in order and obtain a "fresh start." Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365,
Accordingly, based on the fee agreement between Counsel and the Debtor and Counsel's time records, the Court shall approve Counsel's fee in the amount of $3,000 but shall not approve any additional fees. See In re Murray, 2007 WL 2317523, at *4 (Bankr.E.D.Pa. August 6, 2007) ("[I]f the debtor's counsel and the debtor enter into a flat fee agreement for the provisions of all of the services the debtor requires in the chapter 13 case, the bankruptcy court may award the flat fee (if it is reasonable), but may not augment the award if the representation entailed more services by counsel than anticipated."). The Court shall also allow Counsel to be reimbursed by the Debtor for expenses in the amount of $210.50 since the Debtor did not object to paying them.
Counsel's submission of different 2016(b) Statements with his Application and Supplemental Application is disturbing. As the Court observed above, Counsel submitted the Subsequent 2016(b) Statements without advising the Court that they were different in any way from his original 2016(b) Statement and with no notation on the subsequent statements that they constituted an amendment from his original 2016(b) Statement. Indeed, the Subsequent 2016(b) Statements bear the same date as his original 2016(b) Statement, thus creating the distinct mis-impression that the Subsequent 2016(b) Statements are one and the same as the original 2016(b) Statement filed on November 13, 2006. Under the Subsequent 2016(b) Statements, Counsel specifically excluded services from the $3,000 disclosed fee that he had not excluded on his original 2016(b) Statement. This conduct raises grave implications regarding Counsel's veracity. Such conduct provides additional grounds for denying Counsel fees above the $3,000 flat fee disclosed in his original 2016(b) Statement. In In re Cohagan-Deubel, 2002 WL 1046715 (Bankr.D.Colo. May 17, 2002), the court observed:
Counsel should also be aware that his submission of Subsequent 2016(b) Statements that are different from each other and from his original 2016(b) Statement without alerting the Court that such documents were being filed raises implications of whether Counsel violated Fed. R. Bankr.P. 9011. Subsection (b) of this rule provides:
Fed. R. Bankr.P. 9011. Counsel's submission of conflicting 2016(b) Statements could potentially qualify as an intentional misrepresentation to the Court for the "improper purpose" of obtaining fees to which he is not entitled. As Counsel surely knows, violations of Rule 9011(b) are sanctionable. See Fed. R. Bankr.P. 9011(c). However, because Counsel appears to have diligently represented the Debtor in this case, which bodes in his favor, and based on the assumption that Counsel will not engage in such behavior again, the Court will not proceed, in this instance, under Rule 9011. In the future, the Court will not be as lenient.
Pursuant to the original 2016(b) Statement which Counsel filed and there being no other evidence in the record before the Court of any engagement agreement between Counsel and the Debtor that entitles him to any additional fee above the $3,000 listed on his original 2016(b) Statement, Counsel shall be allowed a fee in the amount of $3,000 for his representation of the Debtor in her Chapter 13 bankruptcy case and expenses in the amount of $210.50. An order to this effect shall be issued.
Docket Entry No. 139.
Id. at 4.
Id. The bankruptcy court in Messner felt it ill-advised to "mandate a list of minimum services that must be included in any `no-look' fee without additional input from the local bar regarding market practices." Instead, the court used the approach being used in the instant case of determining whether the services listed in the fee application at issue were encompassed in the list of services described in the 2016(b) Statement which the counsel, whose application was before the court, had filed. See id.