Michael H. Clement Corporation

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	No. 09-43502 T
Chapter 11
MICHAEL H. CLEMENT CORPORATION,
Debtor-in-Possession.
_______________________________/
MEMORANDUM OF DECISION RE FEE APPLICATION
On 	December 	16, 	2009, 	Samuel 	E. 	Goldstein 	& 	Associates
(“Goldstein”), 	special 	counsel 	for 	the 	above-captioned 	debtor 	(the
“Debtor”), 	filed 	an 	application 	requesting 	interim 	allowance 	and
payment 	of 	fees 	and 	costs 	incurred 	post-petition. 	An 	amended
application 	(the 	“Amended 	Application”) 	was 	filed 	on 	February 	11,
2010. 	Both the original application and the Amended Application were
opposed 	by 	Frank 	C. 	Alegre, 	Sr. 	and 	Helen 	C. 	Alegre 	as 	Trustees 	of
the Frank C. Alegre and Helen C. Alegre Revocable Trust (hereinafter
“Alegre”). 	The Amended Application came on for hearing on March 15,
2010. 	At 	the 	Court’s 	directions, 	the 	parties 	filed 	post-hearing
briefs. 	The Court’s findings and conclusions are set forth below.
Signed: May 03, 2010
________________________________________
LESLIE TCHAIKOVSKY
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
May 03, 2010
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
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BACKGROUND
The above-captioned chapter 11 case was filed on April 28, 2009,
shortly 	before 	a 	scheduled 	trial 	in 	a 	state 	court 	action 	involving
the 	Debtor 	and 	Alegre. 	The 	state 	court 	action 	had 	been 	initiated
jointly by the Debtor and its principal, Michael Clement (“Clement”).
Upon filing for bankruptcy, the Debtor removed the state court action
to the bankruptcy court. 	Because the Debtor was the plaintiff, its
prosecution was not subject to the automatic stay.
The 	Court 	approved 	Goldstein’s 	employment 	by 	the 	Debtor 	as
special counsel in the state court action on May 19, 2009. 	Prior to
that date, on May 7, 2009, Alegre moved for remand of the state court
action. 	The 	Court 	granted 	the 	motion, 	and 	the 	action 	was 	tried 	in
state 	court. 	Judgment 	was 	entered 	against 	the 	Debtor 	on 	or 	about
July 	10, 	2009. 	The 	judgment 	gave 	Alegre 	the 	right 	to 	recover 	his
reasonable attorneys’ fees and costs from the Debtor and Clement, the
amounts of the fees and costs to be determined at a later date. 	The
judgment 	is 	currently 	on 	appeal. 	Goldstein 	does 	not 	represent 	the
Debtor in the appeal.
Goldstein 	filed 	his 	original 	fee 	application 	on 	December 	16,
2009 and scheduled it for hearing on January 19, 2010. 	Alegre filed
an 	opposition 	to 	the 	application 	on 	January 	12, 	2010. 	Goldstein
filed a reply on January 18, 2010. 	At the hearing, the Court denied
the 	application 	without 	prejudice 	due 	to 	improper 	service 	and
formatting problems without addressing Alegre’s objections.
The Amended Application was filed on February 11, 2010. 	Alegre
filed 	a 	renewed 	opposition 	to 	the 	Amended 	Application 	on 	March 	8,
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2010. 	Goldstein filed a renewed reply. 	A hearing was conducted on
the Amended Application on March 15, 2010. 	At the hearing, counsel
for Alegre asserted objections with a specificity not included in its
opposition. 	The 	Court 	directed 	Alegre 	to 	put 	these 	objections 	in
writing. 	It set a briefing schedule so that the Debtor would have an
opportunity to respond and Alegre would have an opportunity to reply.
The parties complied with the briefing schedule.
DISCUSSION
1. 	Original 	and 	Amended 	Applications, 	Objections, 	and 	March 	15,
2010 Hearing
In 	the 	original 	application, 	Goldstein 	sought 	allowance 	and
payment of fees totaling $103,187.50 and costs totaling $6,998.10 for
services 	provided 	and 	costs 	incurred 	between 	April 	28, 	2009 	and
October 	27, 	2009. 	In 	the 	Amended 	Application, 	Goldstein 	sought
allowance 	and 	payment 	of 	fees 	totaling 	$124,248 	and 	costs 	totaling
$3,056.14 for services provided and costs incurred between April 28,
2009 	and 	January 	26, 	2010. 	The 	fees 	requested 	in 	the 	Amended
Application 	reflected 	517 	hours 	of 	services. 	The 	Application
disclosed that Goldstein had received $235,000 from the Debtor pre-
petition 	for 	services 	provided 	and 	costs 	incurred 	pre-petition 	and
that 	he 	had 	an 	unpaid 	claim 	for 	pre-petition 	services 	and 	costs
totaling $168,908.12.
The 	Amended 	Application 	contained 	a 	narrative 	summary 	of 	the
work performed post-petition, broken into projects as required by the
Court’s 	guidelines. 	The 	Amended 	Application 	was 	supported 	by 	a
declaration 	to 	which 	was 	attached 	a 	line-by-line 	breakdown 	of 	the
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services 	performed 	and 	costs 	incurred. 	The 	description 	of 	the
services 	performed 	was 	broken 	into 	the 	projects 	described 	in 	the
narrative summary.
On 	January 	12, 	2010, 	Alegre 	filed 	a 	detailed 	objection 	to 	the
original application. 	First, he contended that the application was
premature. 	Alegre reminded the Court that the state court action had
resulted in a judgment adverse to the Debtor. 	Although that judgment
was 	on 	appeal, 	Alegre 	contended 	that, 	until 	the 	appeal 	had 	been
decided, it was premature to determine whether Goldstein’s services
were reasonably likely to benefit the bankruptcy estate as required
by 11 U.S.C. § 330.
More 	specifically, 	Alegre 	objected 	to 	the 	$28,2795.50 	in 	fees
and 	costs 	requested 	by 	Goldstein 	for 	services 	in 	connection 	with
Alegre’s post-judgment motion for fees and costs. 	Alegre contended
that this motion had only been asserted against Clement and that the
automatic 	stay 	prevented 	him 	from 	asserting 	it 	against 	the 	Debtor.
Thus, 	the 	services 	provided 	by 	Goldstein 	in 	this 	category 	were 	for
the benefit of Clement only. 	In particular, Alegre objected to the
fees requested by Goldstein for attempting to obtain a statement of
decision 	with 	regard 	to 	the 	fee 	motion 	from 	the 	state 	court 	judge.
Alegre noted that the state court judge had characterized the request
as “borderline frivolous.”
Alegre 	also 	objected 	to: 	(1) 	$7,677.50 	in 	fees 	requested 	for
services 	for 	which 	the 	time 	allocations 	were 	“clumped”: 	i.e., 	more
than 	one 	task 	was 	described 	with 	no 	breakdown 	of 	the 	time 	spent 	on
each 	task, 	(2) 	$3,687.50 	in 	fees 	requested 	for 	services 	that 	were
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inadequately described, and (3) $5,943 in fees requested for services
for which the descriptions contained redactions. 	The line items in
question 	were 	identified 	in 	the 	objection. 	In 	sum, 	the 	specific
objections related to fees totaling $45,586.50.
In 	his 	reply 	to 	the 	original 	application, 	Goldstein 	contended
that none of the services he provided were solely for the benefit of
Clement personally. 	He noted that Alegre was seeking $1,000,000 in
attorneys’ fees and $50,000 in costs. 	The judgment stated that the
Debtor and Clement were jointly and severally liable for these fees
and 	costs. 	Moreover, 	Clement’s 	liability 	for 	these 	fees 	and 	costs
would have a substantial effect on Clement’s ability to contribute to
the Debtor’s reorganization effort. 	In addition, Goldstein contended
he 	had 	requested 	a 	statement 	of 	decision 	on 	the 	advice 	of 	the
Debtor’s appellate counsel because at least one published appellate
decision had based its adverse ruling on the absence of a statement
of decision.
Goldstein 	also 	disputed 	Alegre’s 	contention 	that 	he 	was 	only
entitled 	to 	fees 	and 	costs 	if 	his 	services 	actually 	conferred 	a
benefit 	on 	the 	estate: 	i.e., 	if 	the 	appeal 	from 	the 	adverse 	state
court 	judgment 	was 	successful. 	He 	noted 	that 	the 	law 	is 	clear 	that
reasonableness is determined at the time the services are performed
and 	costs 	incurred, 	not 	in 	hindsight 	at 	the 	end 	of 	the 	litigation.
See 	11 	U.S.C. 	§ 	330(a)(3)(A)&(C); 	In 	re 	Mednet, 	251 	B.R. 	103, 	108
(Bankr. 	9th 	Cir. 	2000); 	In 	re 	Circle 	K 	Corp., 	294 	B.R. 	111, 	125
(Bankr. D. Ariz. 2003). 	Thus, his fee application was not premature.
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1The only additional objection raised by the objection filed
on March 8, 2010 was to a January 19, 2010 time entry representing
$72 in fees. 	Goldstein has conceded that this fee should be
disallowed.
6
Finally, 	Goldstein 	characterized 	as 	nit-picking 	Alegre’s
objections 	to 	certain 	time 	entries 	on 	the 	ground 	that 	the
descriptions 	of 	services 	were 	“clumped,” 	the 	services 	were
inadequately described, or the descriptions contained redactions. 	He
contended that any “clumped” items set forth work on a single topic,
the 	descriptions 	were 	adequate 	if 	viewed 	in 	context, 	and 	the
redactions were necessary to protect privileged content.
After the Application was filed, on March 8, 2010, Alegre filed
a 	supplemental 	opposition. 	The 	supplemental 	opposition 	reiterated
briefly 	Alegre’s 	contentions 	in 	the 	original 	opposition. 1 	On 	March
12, 2010, Goldstein filed a supplemental reply. 	Goldstein asserted
that, 	by 	reiterating 	his 	previous 	objections, 	Alegre 	revealed 	that
he 	had 	not 	really 	reviewed 	the 	Application. 	Goldstein 	contended
that, 	in 	the 	Application, 	he 	had 	taken 	extreme 	care 	to 	comply 	with
the Court’s guidelines as to the description of services and separate
listing of discrete tasks. 	In addition, he had eliminated virtually
all of the redactions.
At the March 15, 2010 hearing, Alegre asserted that none of the
costs incurred after July 10, 2009, the date of the adverse judgment,
were incurred for the benefit of the bankruptcy estate and should be
disallowed. 	He 	also 	made 	a 	series 	of 	objections 	to 	different
categories 	of 	services, 	citing 	to 	the 	page 	numbers 	of 	the 	time
entries. 	Given the number and specificity of these objections, the
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Court ordered Alegre to put them in writing. 	A briefing schedule was
established for him to do so, and deadlines were set for the filing
of Goldstein’s response and Alegre’s reply.
2. 	Post-Hearing Briefs
A. 	Alegre’s Post Hearing Opposition
In 	his 	opening 	post-hearing 	brief, 	Alegre 	asserted 	that 	his
objections to Goldstein’s fee application fell into three categories:
(1) fees for services that were not reasonably incurred, (2) fees for
services performed for Clement personally as opposed to the Debtor,
and 	(3) 	costs 	for 	services 	rendered 	after 	the 	judgment 	was 	entered
and 	thus 	incurred 	for 	Clement’s 	benefit 	rather 	than 	the 	Debtor’s.
These are discussed in more detail below.
(1) Fees for Services Not Reasonably Incurred
The fees for services that Alegre contended were not reasonably
incurred by Goldstein totaled $5,992.50. 	Of this amount, $4,768.50
represented work done on the appeal from an order imposing sanctions
against 	the 	Debtor 	and 	Clement 	due 	to 	discovery 	abuses, 	and 	$1,224
represented 	work 	done 	correcting 	the 	deficiencies 	in 	Goldstein’s
original fee application.
Alegre made several points with regard to his objection to the
fees requested for work done on the appeal from the sanction order.
First, 	he 	noted 	that 	the 	appeal 	was 	brought 	by 	both 	the 	Debtor 	and
Clement. 	Thus, at a minimum, the fees should be apportioned between
the 	two. 	Second, 	the 	work 	was 	not 	performed 	for 	the 	Debtor’s
benefit, because the sanction award could not be enforced against the
Debtor 	due 	to 	the 	automatic 	stay. 	Third, 	one 	of 	the 	judges 	on 	the
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appellate 	panel 	essentially 	characterized 	the 	appeal 	as 	frivolous.
Finally, 	all 	but 	$1,192 	was 	incurred 	after 	the 	appeal 	was 	decided,
in 	an 	attempt 	to 	have 	the 	appellate 	decision 	de-published. 	Alegre
contended that this work was not done for the benefit of the Debtor.
With 	respect 	to 	the 	work 	done 	correcting 	the 	deficiencies 	in
Goldstein’s original fee application, Alegre’s primary objection was
that 	Goldstein 	should 	not 	be 	compensated 	for 	correcting 	his 	own
mistakes. 	Moreover, 	he 	contended 	that 	the 	fees 	requested 	in 	this
category should be reduced due to Goldstein’s “overreaching”: 	i.e.,.
his 	attempt 	to 	hold 	the 	estate 	liable 	for 	fees 	not 	incurred 	on 	the
Debtor’s behalf, or at least not reasonably so.
(2) Fees for Services Performed Only for Clement
Alegre contended that $30,584 of the fees were for services that
were performed only for Clement’s benefit. 	These services included
work done in connection with discovery issues, two motions for fees
filed 	by 	Alegre, 	Alegre’s 	motion 	to 	require 	Clement 	to 	file 	an
undertaking to stay execution of the judgment, and Clement’s motion
to strike Alegre’s motion to tax costs.
Alegre noted that $4,184 of the fees were described as having
been 	incurred 	for 	discovery 	matters. 	Alegre 	contended 	that 	$2,222
of these fees were incurred taking the deposition of Alegre’s trial
counsel, 	Steven 	Piser 	(“Piser”). 	He 	contended 	further 	that 	the
deposition was conducted in connection with Clement’s opposition to
Alegre’s motion for attorneys’ fees and thus only benefitted Clement.
Alegre did not explain why the balance of the fees requested in this
category should be disallowed.
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For the same reason, Alegre objected to the fees requested for
work done in connection with the two fee motions: i.e., $8,461.50 and
$6,019, 	respectively. 	These 	motions 	were 	asserted 	only 	against
Clement, not the Debtor, and only Clement, not the Debtor, objected
to the motions.
For the same reason, Alegre objected to the $11,312.50 in fees
requested for opposing Alegre’s motion to require an undertaking as
a 	condition 	of 	staying 	enforcement 	of 	the 	judgment 	pending 	appeal.
Due to the automatic stay, the judgment could not have been enforced
against 	the 	Debtor. 	Thus, 	the 	motion 	only 	affected 	Clement, 	and
Goldstein’s services were only for Clement.
Again 	for 	the 	same 	reason, 	Alegre 	objected 	to 	$6,626 	in 	fees
requested 	for 	filing 	an 	opposition 	to 	Alegre’s 	bill 	of 	costs 	after
trial. 	Because of the automatic stay, according to Alegre, the cost
bill could not be “assessed” against the Debtor. 	He contended that,
on 	August 	31, 	2009, 	he 	filed 	a 	document 	with 	the 	state 	court,
clarifying that the bill of costs was only directed against Clement.
(3) Costs Incurred Only for Clement’s Benefit
Finally, 	Alegre 	contended 	that 	Goldstein 	was 	requesting
reimbursement 	of 	$2,187.50 	in 	costs 	incurred 	after 	entry 	of 	the
judgment on July 10, 2009. 	After that date, he contended, there were
no 	proceedings 	pending 	against 	the 	Debtor. 	Thus, 	the 	costs 	could
only have been incurred for Clement’s benefit. 	For example, some of
the costs were presumably incurred in connection with Alegre’s post-
judgment motion to tax costs. 	Due to the automatic stay, this motion
was only asserted against Clement.
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B. 	Goldstein’s Post-Hearing Brief
In 	his 	response 	to 	Alegre’s 	post-hearing 	opening 	brief,
Goldstein 	noted 	that, 	at 	the 	March 	15, 	2010 	hearing, 	Alegre 	had
contended 	that 	approximately 	80 	percent 	of 	his 	requested 	fees 	and
costs 	should 	be 	disallowed. 	He 	noted 	that, 	in 	his 	post-hearing
brief, Alegre has stated grounds for disallowing only approximately
$38,000 of Goldstein’s fees and costs.
Goldstein 	noted 	that 	Alegre’s 	primary 	objection 	was 	that 	the
services 	giving 	rise 	to 	the 	fees 	were 	performed 	only 	for 	Clement’s
benefit, 	not 	for 	the 	Debtor’s. 	However, 	Goldstein 	noted, 	prior 	to
the trial, Clement had assigned his interest in the litigation to the
Debtor. 	Thus, all of the services he performed were for the Debtor’s
benefit. 	Goldstein 	contended 	that 	the 	state 	court 	judge 	had 	been
advised 	of 	the 	assignment 	and 	should 	not 	have 	permitted 	Clement 	to
be named in the judgment. 	Moreover, even if the judgment cannot be
enforced 	against 	the 	Debtor 	at 	present, 	the 	Debtor 	will 	ultimately
be liable for those fees and costs since the judgment held the Debtor
and Clement jointly and severally liable.
Goldstein 	asserted 	that 	the 	$5,992.50 	in 	fees 	incurred 	in
connection with the appeal from the sanction award and to amend the
original fee application were reasonably incurred. 	He conceded that
one 	of 	the 	appellate 	judges 	on 	the 	sanction 	appeal 	expressed 	the
opinion 	that 	the 	appeal 	was 	unreasonable. 	However, 	Goldstein
respectfully disagreed with that statement. 	Goldstein also asserted
that it was reasonable to attempt to have the appellate decision de-
published 	and 	that 	these 	services 	were 	performed 	for 	the 	Debtor’s
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benefit. 	Finally, the $1,244 in fees incurred to prepare the Amended
Application 	were 	not 	just 	incurred 	to 	correct 	deficiencies 	in 	the
original 	application. 	Additional 	work 	was 	required 	because 	the
Amended 	Application 	covered 	an 	additional 	time 	period. 	Goldstein
noted 	that 	the 	amount 	he 	was 	requesting 	was 	within 	the 	Court’s
guideline limit of five percent of the total application amount.
Goldstein 	also 	disagreed 	with 	Alegre’s 	contention 	that
$32,771.50 of the fees and costs requested were incurred solely for
Clement’s benefit. 	He conceded that the services performed that gave
rise 	to 	these 	fees 	were 	performed 	in 	connection 	with 	matters 	that,
on 	their 	faces, 	were 	only 	directed 	against 	Clement. 	However, 	he
contended that the services were nevertheless necessary for several
reasons.
First, 	based 	on 	the 	language 	of 	the 	judgment, 	the 	Debtor 	was
jointly 	and 	severally 	liable 	for 	any 	fees 	and 	costs 	assessed.
Second, 	Alegre’s 	motion 	for 	fees 	and 	costs 	was 	originally 	asserted
against 	both 	Clement 	and 	the 	Debtor. 	Third, 	since 	Clement 	had
assigned 	his 	interest 	in 	the 	action 	to 	the 	Debtor, 	Clement 	was 	no
longer 	really 	a 	party 	to 	the 	state 	court 	action. 	As 	a 	result, 	the
services 	were 	performed 	only 	for 	the 	Debtor’s 	benefit. 	Third,
Clement 	was 	the 	Debtor’s 	principal 	whom 	the 	Debtor 	is 	bound 	to
indemnify.
C. 	Alegre’s Post-Hearing Reply
In reply, Alegre took issue with Goldstein’s assertion that the
judgment held the Debtor and Clement jointly and severally liable for
Alegre’s fees and costs. 	He quoted the language of the judgment and
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evidence to the Court in his reply, characterizing it as
“sandbagging.”
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attached 	a 	copy 	of 	it 	to 	the 	declaration 	executed 	by 	Piser.
Similarly, he quoted from the language of the fee order, noting that
it 	named 	only 	Clement, not the Debtor. 	A copy of the fee order is
also attached to Piser’s declaration. 	Alegre also asserted that the
cost bill was not directed against the Debtor. 	However, no copy of
the cost bill was attached to Piser’s declaration.
Alegre noted that Goldstein did not dispute that the motion to
require 	an 	undertaking 	only 	pertained 	to 	Clement. 	He 	disparaged
Goldstein’s argument that enforcement of the judgment against Clement
would have interfered with the bankruptcy case. 	Moreover, he argued
that, 	if 	this 	were 	so, 	relief 	should 	have 	been 	sought 	from 	the
bankruptcy court.
Alegre 	characterized 	as 	frivolous 	Goldstein’s 	contention 	that
Clement’s assignment to the Debtor of his interest in the litigation
rendered 	the 	Debtor 	the 	only 	remaining 	target 	of 	the 	post-trial
motions. 	First, he noted that Goldstein attached only a portion of
the 	transcript 	of 	the 	state 	court 	hearing 	in 	support 	of 	this
argument. 	He 	provided 	an 	additional 	portion 	of 	the 	transcript,
evidencing 	Goldstein’s 	insistence 	that 	Clement 	be 	retained 	as 	a
“nominal” party in the case. 2 	Moreover, he noted that state law did
not 	permit 	an 	obligee 	to 	eliminate 	his 	liability 	to 	an 	obligor 	by
assigning 	it 	to 	a 	third 	party 	without 	the 	obligor’s 	consent. 	In
support 	of 	this 	contention, 	Alegre 	cited 	Cal. 	Civ. 	Code 	§ 	1457,
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Britschgi 	v. 	McCall, 	41 	Cal. 	2d 	138, 	144 	(1953) 	and 	Baer 	v.
Associated Life Ins. Co., 202 Cal. App. 3d 117, 124 (1988).
Finally, 	Alegre 	contended 	that 	the 	fees 	requested 	for 	work 	in
connection 	with 	the 	appeal 	of 	the 	sanction 	order 	was 	unreasonable.
First, 	approximately 	$5,000 	of 	the 	fees 	requested 	was 	for 	work
performed 	long 	after 	the 	briefing 	process 	was 	complete. 	Second, 	a
substantial portion of the fees requested related to the attempt to
have the appellate decision de-published.
3. 	Decision
A. 	Was Application Premature?
As noted above, in his objection to the original application and
the Amended Application, Alegre raised a blanket objection to the fee
application 	on 	the 	ground 	that 	it 	was 	premature: 	i.e., 	that 	the
reasonableness of the fees and costs could only be determined after
the 	appeal 	had 	been 	decided. 	This 	objection 	was 	not 	reiterated 	in
the 	post-hearing 	briefs 	and 	may 	have 	been 	abandoned. 	If 	not,
however, the Court overrules it. 	Such a position would require any
debtor wishing to appeal an adverse judgment to obtain counsel on a
contingency fee basis. 	This might not always be possible. 	When an
appeal was nevertheless meritorious, the debtor’s inability to obtain
counsel 	would 	result 	in 	a 	windfall 	to 	the 	appellee. 	Moreover, 	the
services provided here were not really in connection with the appeal.
Rather, 	they 	were 	post-trial 	matters 	directly 	connected 	to 	the
judgment.
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B. 	Were Fees Reasonably Incurred?
In 	the 	post-hearing 	brief, 	as 	noted 	above, 	Alegre 	objected 	to
$5,992.50 	of 	the 	fees 	as 	not 	reasonably 	incurred: 	(1) 	$4,768.50
incurred in connection with the appeal from the sanction order, all
but $1,192 of which was incurred in an effort to prevent publication
of the appellate opinion, and (2) $1,224 to correct deficiencies in
the original fee application. 	The Court has considered the arguments
of 	the 	parties 	with 	respect 	to 	these 	fees. 	It 	concludes 	that 	the
attempt 	to 	prevent 	publication 	of 	the 	appellate 	opinion 	was 	not
reasonably for the benefit of the estate. 	In the Court’s view, these
services were primarily incurred for Goldstein’s benefit. 	Thus, the
$4,768.50 in fees requested for this effort will be disallowed.
The 	Court 	finds 	that 	the 	additional 	$1,192 	in 	fees 	for 	the
appeal of the sanction order were reasonably incurred for the benefit
of 	the 	estate. 	The 	comment 	by 	one 	of 	the 	appellate 	judges 	at 	the
hearing 	on 	the 	appeal 	is 	insufficient 	to 	persuade 	the 	Court
otherwise. 	However, 	these 	services 	were 	also 	incurred 	for 	the
Clement’s 	benefit, 	and 	the 	estate 	should 	only 	be 	charged 	with 	half
of 	the 	fees 	or 	$596. 	Thus, 	the 	fees 	sought 	by 	Goldstein 	in 	this
category will be reduced by $5,396.50 ($5,992.50 less $596).
The Court will also allow only half of the remaining $1,192 in
fees 	incurred 	correcting 	the 	deficiencies 	in 	the 	original 	fee
application. 	Alegre is correct that the estate should not be charged
for the correction of errors. 	However, Goldstein is correct that the
Amended 	Application 	required 	additional 	work 	since 	it 	covered 	an
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3Goldstein objected to Alegre attaching evidence in support of
his reply brief, characterizing it as “sandbagging.” 	This
objection is overruled. 	The evidence was provided to refute
inaccurate contentions made by Goldstein in his response to
Alegre’s post-hearing brief. 	Goldstein does not challenge the
authenticity of the evidence provided–-i.e., a portion of a
transcript from a state court hearing and a copy of the judgment.
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extended time frame. 	As a result, $546 of this portion of the fees
requested will be allowed, and an equal amount will be disallowed.
C. 	Were Fees Incurred Solely for the Benefit of Clement?
In 	the 	post-hearing 	brief, 	Alegre 	also 	objected 	to 	various
categories of services provided by Goldstein as having been incurred
only 	for 	the 	benefit 	of 	Clement: 	(1) 	post-judgment 	discovery, 	(2)
oppositions 	to 	two 	motions 	for 	fees, 	(3) 	opposition 	to 	Alegre’s
motion 	to 	require 	an 	undertaking 	as 	a 	condition 	of 	a 	stay 	of
execution, and (4) opposition to motion to tax costs. 	Alegre noted
that all of this post-judgment activity was directed solely against
Clement 	as 	he 	believed 	that 	the 	automatic 	stay 	prevented 	him 	from
proceeding any further against the Debtor.
Goldstein made a series of arguments as to why these activities
implicated the Debtor as well as Clement, and in some respects only
the Debtor. 	The Court found none of his arguments persuasive. 3 	As
a 	result, 	all 	of 	the 	fees 	incurred 	in 	these 	categories 	will 	be
disallowed as a claim against the estate. 	The fees in this category
totaled $30,584.
D. 	Formatting Issues
Alegre’s 	objections 	to 	the 	original 	and 	Amended 	Applications
also raised issues concerning the format of the applications. 	Alegre
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contended that, with respect to the original application, $7,677.50
in 	fees 	were 	requested 	for 	services 	for 	which 	the 	time 	allocations
were “clumped,” $3,687.50 in fees were requested for services which
were 	inadequately 	described, 	and 	$5,943 	in 	fees 	were 	requested 	for
services 	the 	descriptions 	of 	which 	contained 	redactions. 	In 	his
subsequent objection, Alegre contended that the Amended Application
contained the same problems as the original application. 	Goldstein
responded 	that 	Alegre 	had 	obviously 	not 	reviewed 	the 	Amended
Application 	carefully 	because 	he 	had 	removed 	the 	redactions.
Goldstein 	contended 	that 	the 	other 	descriptions 	objected 	to 	had
either been revised or were adequate.
The 	Court 	has 	reviewed 	the 	time 	entries 	attached 	to 	both 	the
original application and the Amended Application. 	The Court agrees
with 	Goldstein 	that 	the 	redactions 	have 	been 	eliminated. 	As 	a
result, 	this 	objection 	is 	overruled. 	The 	other 	two 	objections 	are
also 	overruled. 	The 	Court 	finds 	the 	descriptions 	of 	the 	services
provided 	to 	be 	sufficient 	and 	any 	clumping 	to 	be 	negligible.
Therefore, 	no 	further 	reduction 	in 	the 	fees 	requested 	will 	be
required.
E. 	Cost Request
Finally, 	Alegre 	objected 	to 	the 	$2,187.50 	in 	costs 	incurred
after the judgment was entered. 	Goldstein made no coherent response
to this objection. 	Thus, the costs requested will be reduced by this
amount.
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CONCLUSION
As 	noted 	above, 	in 	the 	Amended 	Application, 	Goldstein 	sought
allowance 	and 	payment 	of 	fees 	totaling 	$124,248 	and 	costs 	totaling
$3,056.14 for services provided and costs incurred between April 28,
2009 	and 	January 	26, 	2010. 	The 	Court 	concludes 	that 	of 	these
amounts, 	the 	following 	reductions 	should 	be 	applied: 	$5,396.50 	for
work 	done 	on 	the 	appeal 	of 	the 	sanctions 	order, 	$546 	for 	work 	done
correcting 	the 	original 	fee 	application, 	and 	$30,584 	for 	services
incurred only for Clement’s benefit. 	Thus, a total of $36,526.50 of
the 	fees 	requested 	will 	be 	disallowed, 	and 	$87,721.50 	in 	fees 	will
be 	allowed 	on 	an 	interim 	basis. 	The 	cost 	reimbursement 	request 	of
$3,056.14 should be reduced by $2,187.50, resulting in allowance of
costs 	on 	an 	interim 	basis 	in 	the 	amount 	of 	$868.64. 	Goldstein 	is
directed to submit a proposed form of order in accordance with this
decision.
END OF DOCUMENT
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COURT SERVICE LIST
James A. Tiemstra
Law Offices of James A. Tiemstra
Tribune Tower
409 13th St. 15th Fl
Oakland, CA 94612
Jermeny W. Katz
Pinnacle Law Group
425 California St., Ste. 1800
San Francisco, CA 94104
Steven B. Piser
Law Offices of Steven B. Piser
499 Fourteenth St., Ste. 210
Oakland, CA 94612
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