Lynn Marie Buck

UNITED STATES BANKRUPTCY COURT
DISTRICT OF MASSACHUSETTS
CENTRAL DIVISION
_____________________________________
)
In re: 	)
) 	Chapter 7
LYNN MARIE BUCK, 	) 	Case No. 08-43918-HJB
)
Debtor 	)
_____________________________________ )
)
)
In re: 	)
) 	Chapter 7
JANICE MAUREEN GROCCIA, 	) 	Case No. 08-43919-HJB
)
Debtor 	)
)
_____________________________________ )
MEMORANDUM OF DECISION
Before this Court are Applications for Approval of Debtor’s Counsel’s Fees and
Expenses (together, the “Fee Applications”) filed by Attorney L. Jed Berliner (“Attorney
Berliner”) in these separate, but interrelated, Chapter 7 cases. 	While orders of
disallowance and disgorgement are the inevitable outcomes here, the Court takes the
opportunity by this Memorandum to express its particular dismay with respect to the type
of conduct by debtors’ counsel here described.
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I. 	FACTS AND TRAVEL OF THE CASES
On November 28, 2008 (the “Petition Date”), Attorney Berliner filed bankruptcy
petitions on behalf of Janice Maureen Groccia (“Groccia”) and Lynn Marie Buck (“Buck”)
(together, the “Debtors”) under Chapter 13 of the Bankruptcy Code. 	The Debtors are
mother and daughter, respectively. As of the Petition Date, they lived together and owned
their home in Sterling, Massachusetts as joint tenants.1
In their bankruptcy Schedules, the Debtors estimated the value of their residence
at $220,000 and reported that it was encumbered by a first mortgage of approximately
$186,000, leaving equity of about $34,000. The mortgage obligation was current as of the
Petition Date. 2 They also owned together a 2004 Hyundai Santa Fe automobile with a total
reported value of $6,870; a 2002 Nissan Altima with a reported value of $7,360; and a joint
checking account in the amount of $2,085.07. Otherwise, the assets of Buck were
negligible and fully exempt under § 522(d) of the Bankruptcy Code; and, while Groccia
appeared to have relatively more valuable assets by dint of certain retirement accounts and
pensions, her assets were represented to be similarly exempt or excluded from the
bankruptcy estate. 	All in all, the picture presented by the Debtors’ Schedules was of
debtors whose assets would realize no dividend for unsecured creditors in a Chapter 7
liquidation case.
1 The Debtors moved from Massachusetts to Florida shortly after their cases converted to
Chapter 7.
2 The Chapter 13 Plans further discussed below set forth no payments to be made on
account of mortgage arrearages.
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As is true with most consumer debtors, the Debtors’ financial difficulties likely arose
from many places, but notable is that Groccia was a seventy-two year old widow whose
sole source of income was Social Security payments, supplemented by the aforesaid
retirement funds; and that her daughter, Buck, suffered from debilitating head injuries. Nor
was there a hopeful picture presented by the Debtors’ Schedules I and J. 	Groccia’s
Schedule I reflected gross monthly income totaling $2,342.29; while Buck’s Schedule I
reflected gross monthly income totaling $802.96, not including contributions made by her
mother. 	Each Schedule J reflected monthly “net income” of $130.00; however, those
calculations arose from highly unusual entries in their respective Schedules J: the Debtors
estimated the following monthly costs of their combined existence: $100 for food, $0 for
clothing, $3 for laundry and dry cleaning, $5 for medical and dental expenses, $13 for
transportation expenses, and $0 for recreation.
Those Schedule J numbers were not all that were objectively odd. Perusal of the
proposed Chapter 13 plan filed by Groccia revealed that over 36 months, she would pay
the monthly amount of $130.00 to the Chapter 13 trustee to be distributed as follows over
the life of the plan: 1) a 0.5217% dividend on the claims of her unsecured creditors – a
grand total of $252.98 over the 36 months of the plan; 2) the sum of $3,959.00 to Attorney
Berliner; and 3) the sum of $468.00 to the Chapter 13 trustee (of which this Court
calculates the sum of $439.88 was attributable to commissions on account of payments
made to her attorney). Accordingly, of the total sum of $4,680.00 to be paid under her plan,
Groccia would pay as attorney’s fees or on account of attorney’s fees the sum of $4,398.88
or almost 94% of all distributions.
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The Chapter 13 plan filed by Buck presented a similar picture. Over the 36 months
of Buck’s proposed plan, she would also pay the monthly amount of $130.00 to the Chapter
13 trustee to be distributed over the life of the plan as follows: 1) a 1.2493% dividend on
the claims of her unsecured creditors – a grand total of $253.01 over the 36 months of the
plan; 2) the sum of $3,959.00 to Attorney Berliner; and 3) the sum of $468.00 to the
Chapter 13 trustee (of which this Court calculates the sum of $439.88 is attributable to her
attorney’s request for compensation). Accordingly, of the total sum of $4,680.00 paid under
her plan, Buck would also pay as attorney’s fees or on account of attorney’s fees the sum
of $4,398.88 or almost 94% of all distributions.
The Chapter 13 trustee objected to confirmation of each of the foregoing plans,
contending that from “an economic and legal standpoint, it does not appear to be in the
Debtors’ best interest to be in Chapter 13;” that “based on the Chapter 13 Agreement filed
in both of these cases, [Attorney Berliner] concluded ‘Chapter 7 is appropriate’ and that
fees and costs would be $2,554.00;” and “[i]t appears the only benefit for the Debtors to be
in Chapter 13 is that legal fees could be spread over 36 months, however, the fees are
increased to $4,000 per case.” 	(Tr. Obj. Plan ¶ 6). 	Indeed, each of the Chapter 13
Retainer Agreements prepared by Attorney Berliner and attached to each of the Chapter
13 Agreements required to be filed by Massachusetts Local Bankruptcy Rule 13-
2(a)(1)(A)(ii) provided in relevant part:
A Chapter 7 filing, to discharge unsecured debt only, is appropriate in your
situation but it would cost $2484, including $2000 attorney fees and costs.
A Chapter 13 filing allows for immediate suspension of unsecured debt, and
gives you 36 months to pay fees and costs remaining after the first payment.
[...]
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Fees for Chapter 13 services are the greater of $4,000.00 or hourly in
accordance with our usual and customary rates, currently set at $265.00 for
myself and lesser for staff, plus costs. 	Fees also include the additional
services required to obtain court approval of hourly fees when they exceed
$4,000.00, and also for collection against you if necessary. I also will be paid
reasonable costs plus the greater of hourly fees or 45% of (1) any asset
taken from you before the bankruptcy filing which I recover for you, and (2)
any recovery for a creditor’s violations of bankruptcy or other consumer
protection laws. 	You authorize me to associate with other counsel for
prosecuting consumer protection laws if I believe you are best served this
way. You will reimburse me for all reasonable expenses and disbursements.
This Court conducted a hearing on the Chapter 13 trustee’s objections in both the
Buck and Groccia cases and took the matters relating to the objections under advisement.
Also on that date, the Court ordered Attorney Berliner, inter alia, to file the Fee
Applications. As the Chapter 13 trustee indicated was her intention, she subsequently filed
motions seeking that the cases be dismissed or converted to Chapter 7. Those motions
were mooted, however, as was the Chapter 13 trustee’s objections to the Chapter 13 plans,
when the Debtors each responded by requesting conversion of their cases to Chapter 7. 3
The cases were accordingly converted, and each of the Debtors subsequently received her
Chapter 7 discharge.
Notwithstanding the resolution of the objections to confirmation of the plans and the
requests for dismissal or conversion, the issue of Attorney Berliner’s Fee Applications
3 Both Buck and Groccia noted in their affidavits filed with the Court that the Chapter 13
trustee’s objection to their plans caused so much “stress” and “anxiety” that Groccia then made a
decision to access her IRA to pay Attorney Berliner to convert both cases. This Court notes all of
this stress and anxiety could have been avoided if the Debtors had been properly counseled to file
their cases under Chapter 7 from the outset; by the time that the Debtors converted to Chapter 7,
they would have already likely received their Chapter 7 discharges.
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remained outstanding. The Fee Applications were subsequently filed 4 and are now the only
remaining issues under advisement in the Debtors’ cases.
II. 	POSITIONS OF THE PARTIES5
A. 	Attorney Berliner
Attorney Berliner contends that amendments to the Bankruptcy Code made by the
Bankruptcy Abuse Prevention and Consumer Protection Act of 20056 (“BAPCPA”) have
created a situation by which Attorney Fee-Only Chapter 13 Plans 7 are the only means by
which many prospective debtors can get prompt bankruptcy protection. He argues that,
4 Attorney Berliner missed the original deadline for filing the Fee Applications, and on
January 21, 2010, was ordered to disgorge his fees. However, Attorney Berliner subsequently
sought reconsideration of the January 21, 2010 orders, and they were vacated. 	The Fee
Applications were then filed timely in accordance with the extended deadline.
5 At or about the same time as the issues before the Court arose in these cases, they also
arose in a slightly different context in the cases of two other debtors, Wendy Sicard (case number
07-42111-HJB) and Wayne Eric Puffer (case number 08-30290-HJB). 	These debtors are also
represented by Attorney Berliner. Those cases remain in Chapter 13, and the issues taken under
advisement were whether the cases and plans - also providing Attorney Berliner with all or virtually
all of the distributions - had been filed in good faith. Briefs were filed by Attorney Berliner and the
Chapter 13 trustee in the Sicard and Puffer cases. While Attorney Berliner appended only part of
his brief in those cases to the Fee Applications before the Court here, this Court has considered
all the briefs filed in all four matters when summarizing the positions of the parties and drafting this
Memorandum.
6 Bankruptcy Abuse Prevention & Consumer Protection Act of 2005, Pub. L. No. 109-8, §
256, 119 Stat. 23 (2005).
7 Throughout this opinion, the Court uses the term “Attorney Fee-Only Chapter 13 Plan,”
as this is the terminology used by the parties. In fact, the plans filed by these Debtors provided a
de minimis dividend to unsecured creditors. However, this Court adopts the terminology of the
parties for simplicity. There is no dispute in the record that attorney payment is the main purpose
of each of these plans. See Sicard/Puffer Br. Supp. Confirmation, 3 (attached to the Buck/Groccia
Fee Applications) (“The debtors in these two cases seek approval for their Chapter 13 debt
adjustment plans, which pay their counsel fees and the trustee commission but no meaningful
dividend to the general unsecured creditors.”) (emphasis added).
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though many debtors qualify for relief under Chapter 7, they are unable to afford Chapter
7 attorneys’ fees, which most attorneys require be paid before filing a Chapter 7 case.
These potential debtors, which Attorney Berliner argues are often the poorest and most in
need of immediate bankruptcy relief, experience continuous harassment from creditors, the
threat of imminent foreclosure and repossession, and constant financial hardship.
However, they do not have the assets or income to hire an attorney to file and prosecute
a Chapter 7 case. 	By filing Attorney Fee-Only Chapter 13 Plans, Attorney Berliner
contends, these debtors have been best able to gain the immediate benefits of the
automatic stay and afford the bankruptcy counsel of their choice by paying debtors’ counsel
through a Chapter 13 plan. Indeed, in the Sicard and Puffer cases, Attorney Berliner has
provided affidavits from 14 individuals (all of whom are or were his former clients) who state
that they are satisfied with their decisions to pay their attorneys’ fees through a Chapter 13
plan even though the fees are higher – because that route afforded them immediate relief
that they could not have attained under Chapter 7. 8 Also attached to a later brief filed by
Attorney Berliner in the Sicard and Puffer cases was an affidavit by another attorney, Paul
A. LaRoche (“LaRoche”). The LaRoche affidavit sought to lend support to the argument
that many potential Chapter 7 debtors are unable to seek protection in Chapter 7, despite
great financial distress, because they are unable to afford Chapter 7 attorneys’ fees.9
8 As no facts are in dispute and no evidence was taken or requested to be taken by any
party, the role and necessity of the affidavits is not clear. Further, their credibility is questionable
at best, given that each is submitted by a person counseled by Attorney Berliner and each contains
virtually identical language and structure. The Court is comfortable inferring that they were not
drafted by the debtors.
9 In response to this affidavit, the Chapter 13 trustee filed a Motion to Strike Affidavit. In
that motion, she argued that Attorney LaRoche does not have any personal knowledge of the facts
in any of the cases under advisement and that the LaRoche Affidavit “convolute[s] the issues.” This
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B. 	Chapter 13 trustee
The Chapter 13 trustee presents three major arguments as to why Attorney Fee-
Only Chapter 13 Plans are impermissible. First, she argues that such plans are merely
thinly veiled Chapter 7 cases, thereby contravening the fundamental purpose of Chapter
13 – to permit a debtor to repay his or her debts over an extended period of time through
future income. 	Second, the Chapter 13 trustee highlights the retainer agreements
docketed in these cases. 	She argues that these agreements placed debtors into
involuntary servitude – forced to pay off their attorneys’ fees and denied a discharge in the
meantime. Finally, the Chapter 13 trustee argues that Attorney Fee-Only Chapter 13 Plans
fail to meet the good faith requirements of § 1325(a).
The Chapter 13 trustee also seeks to debunk the myth that Chapter 13 was the only
manner in which these debtors could have obtained immediate bankruptcy relief. 	She
maintains that, in addition to opportunities available from other attorneys and legal
organizations whose regular fees are less expensive or provide reduced-fee or pro bono
services, these cases represent the types of no-asset cases in which debtors frequently
proceed pro se in Chapter 7. The Chapter 13 trustee also notes what she claims to be an
exaggeration of the exigent circumstances surrounding many debtors’ filings. She notes
that most of the cases Attorney Berliner highlighted in his papers were not filed for several
Court took the Chapter 13 trustee’s Motion to Strike under advisement and agrees that the
LaRoche Affidavit is inappropriate. As no evidence was taken and no facts are in dispute, the
LaRoche Affidavit’s proper form, if any, would have been as an amicus brief. In light of the fact that
the Chapter 13 trustee had no opportunity to examine LaRoche and that the affidavit may not have
been admissible on relevance and personal knowledge grounds, even in an evidentiary context,
this Court will grant the Chapter 13 trustee’s Motion to Strike Affidavit in the Sicard and Puffer
cases.
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months after his initial consultation with the debtors – precisely the amount of time most
debtors claimed it would have taken them to save the funds necessary to retain an attorney
to file a Chapter 7 case.
III. 	DISCUSSION
A. 	Attorney Fee-Only Chapter 13 Plans
1. 	The Good Faith Requirement
Section 1325(a)(3) 10 provides that “the court shall confirm a plan if– . . . the plan has
been proposed in good faith and not by any means forbidden by law.” 	11 U.S.C. §
1325(a)(3). And under § 1325(a)(7), introduced in the BAPCPA amendments, the Court
must also find that “the action of the debtor in filing the petition was in good faith.” 	The
burden to demonstrate good faith is placed on the debtor. 	Sullivan v. Solimini (In re
Sullivan), 326 B.R. 204, 211 (B.A.P. 1st Cir. 2005). See also In re Virden, 279 B.R. 401,
407 (Bankr. D. Mass. 2002).
Left undefined by Congress, “Congress presumably used the phrase ‘good faith’ in
its ordinary sense.” Keach v. Boyajian (In re Keach), 243 B.R. 851, 856 (B.A.P. 1st Cir.
2000). However, “[c]ourts differ in their approach to determining a debtor’s good faith.”
Sullivan, 326 B.R. at 211. In Keach, a panel of the Bankruptcy Appellate Panel for the First
Circuit (the “First Circuit BAP”) concluded that a court’s examination of a debtor’s good faith
should be limited to the question of the debtor’s honesty of purpose, “judged only by
examining surrounding circumstances such as the debtor’s candor with creditors and the
10 Unless otherwise noted, all statutory references will be to Title 11 of the United States
Code. 11 U.S.C. §§ 101, et seq.
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court.” 	Keach, 243 B.R. at 868, 871. 	However, several courts, including those in this
District, have criticized the Keach approach as too restrictive.11
In Sullivan, another panel of the First Circuit BAP explicitly returned to a totality of
the circumstances test when assessing the good faith of Chapter 13 plans. 12 That panel
opined that, in assessing a debtor’s good faith, bankruptcy courts should generally
consider:
(1) debtor’s accuracy in stating her debts and expenses, (2) debtor’s honesty
in the bankruptcy process, including whether she has attempted to mislead
the court and whether she has made any misrepresentations, (3) whether the
Bankruptcy Code is being unfairly manipulated, (4) the type of debt sought to
be discharged, (5) whether the debt would be dischargeable in a Chapter 7,
and (6) debtor’s motivation and sincerity in seeking Chapter 13 relief.
Sullivan, 326 B.R. at 212. See also Marrama v. Citizens Bank of Mass. (In re Marrama),
430 F.3d 474, 482 (1st Cir. 2005) (applying the totality of the circumstances test used in
11 See Virden, 279 B.R. at 409; In re Scotten, 281 B.R. 147, 149 (Bankr. D. Mass. 2002);
In re Fleury, 294 B.R. 1, 6 (Bankr. D. Mass. 2003). But with respect for the many courts that apply
the totality of the circumstances test, this Court still finds the Keach approach most persuasive and
the one intended by Congress. Regarding Keach, this Court has written:
The Keach decision has been criticized by some courts and commentators who have
suggested that its holding limits a court’s consideration of a debtor’s postpetition
good faith only to the debtor’s postpetition behavior. That criticism is misplaced and
the Keach holding apparently misunderstood. A court’s consideration of postpetition
honesty of purpose is frequently informed by a debtor’s prepetition conduct. . . .
Keach stands for a more subtle proposition: that a court may not alter rights that a
debtor has been granted by Congress (e.g., the right to make a new non-serial
Chapter 13 filing; the right to pay a dividend unaffected by the nature of a debt which
Congress has expressly declared dischargeable; and the right to then discharge that
debt) by determining that those rights are unfair or inequitable based on the court’s
distaste for Congress’ choices.
In re Hadsell, 327 B.R. 520, 525 n.8 (Bankr. D. Mass. 2005).
12 In an earlier case, another panel of the First Circuit BAP implicitly adopted the totality of
circumstances test for its analysis as to whether a Chapter 13 plan had been filed in good faith.
Cabral v. Shamban (In re Cabral), 285 B.R. 563, 573 (B.A.P. 1st Cir. 2002). However, Sullivan did
so expressly. Sullivan, 326 B.R. at 211.
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Sullivan to assess good faith in a Debtor’s request to convert from Chapter 7 to Chapter
13), aff’d, 549 U.S. 365 (2007) (on other grounds)).
However, this Court need not today parse between Keach and Sullivan. The issues
before the Court do not implicate the nature of the claims discharged or a debtor’s
prepetition conduct; rather, they are centered on professional fees for services rendered
by an attorney in a bankruptcy case and whether an attorney may direct or influence a
debtor’s choice of the chapter in which the debtor should file solely in order to assure
payment of those professional fees. 	Those good faith issues fit squarely within each
of the Keach and Sullivan paradigms.
2. 	Attorney-Fee Only Chapter 13 Plans and Good Faith
In these cases, there is no question as to the Debtors’ purposes in choosing Chapter
13; they did so solely in order to pay their attorneys’ fees. The purpose of Chapter 13 is
to enable “individual debtors to reorganize their financial affairs . . . by extending due dates
and servicing their debts out of future income pursuant to a payment plan crafted under the
supervision of the bankruptcy court.” 	Young v. Key Bank of Me. (In re Young), 66 F.3d
376, 377 (1st Cir. 1995).13
13 “Although BAPCPA implemented numerous changes to the Bankruptcy Code, the
fundamental purposes of a Chapter 13 bankruptcy remained intact. 	As explained in the
Congressional Committee Notes,
The purpose of chapter 13 is to enable an individual, under court supervision and
protection, to develop and perform under a plan for the repayment of his debts over
an extended period. In some cases, the plan will call for full repayment. In others,
it may offer creditors a percentage of their claims in full settlement. . . . The benefit
to the debtor of developing a plan of repayment under chapter 13, rather than opting
for liquidation under chapter 7, is that it permits the debtor to protect his assets. In
a liquidation case, the debtor must surrender his nonexempt assets for liquidation
and sale by the trustee. Under chapter 13, the debtor may retain his property by
agreeing to repay his creditors. H.R. Rep. No. 95-595, at 1 (1977), U.S. Code Cong.
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The plans in the cases before the Court serve a singular purpose – to pay the
professional fees of Attorney Berliner. Each of these debtors was qualified to file a Chapter
7 case. Based on the Schedules filed by each debtor, it is overwhelmingly likely that each
debtor would have retained all of her prepetition assets and received a prompt Chapter 7
discharge. Instead, however, the Debtors were counseled to file Chapter 13 cases – which,
but for the intervention of the Chapter 13 trustee, would have delayed their discharges for
three years and conditioned those discharges on 36 plan payments which their schedules
indicated that they were poorly positioned to afford. 	In addition, they were to pay
substantially higher attorneys’ fees and trustee commissions. The risks to the debtors of
proceeding in this manner were substantial, especially here, where plan payments were
based on arguably unfeasible budgets. Such plans also create unjustifiable burdens on the
trustee. 	To require her to administer cases simply to make monthly payments to the
Debtors’ attorney and no other creditor defies both logic and the intent of Congress. “Such
filings have the inherent effect of placing the interests of the attorney above those of his
client, the Court and the bankruptcy system as a whole. . . . Allowing attorneys to utilize
Chapter 13 for the sole purpose of ensuring payment of fees runs afoul of these manifest
purposes [of Chapter 13].” In re Diano, No. 01-85932-CRM, slip op., at 3-4 (Bankr. N.D.
& Admin. News 1978, p. 5863. A Chapter 13 petition has always been completely
voluntary. Id. These concepts were affirmed when Congress debated the changes
proposed under BAPCPA. H.R. Rep. No. 109-31 (2005), U.S. Code Cong. & Admin.
News 2005, p. 88. . . . In order to keep certain property, a Chapter 13 debtor agrees
to pay creditors according to a repayment plan.”
In re Marchionna, 393 B.R. 512, 521 (Bankr. N.D. Ohio 2008).
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Ga. Dec. 17, 2001) (attach’d as Ex. A to Sicard/Puffer Am. Reply Br. of Ch. 13 Tr.).14 “A
plan whose duration is tied only to payment of attorney’s fees simply is an abuse of the
provisions, purpose, and spirit of the Bankruptcy Code.” 	In re Paley, 390 B.R. 53, 59
(Bankr. N.D.N.Y. 2008).15 Chapter 13 plans in which all or virtually all of the funds to be
14 The overwhelming majority of courts that have addressed this question agree that
Attorney Fee-Only Chapter 13 Plans fail to meet the good faith requirement of § 1325(a)(3).
However, the plans in some of those cases also failed to meet good faith requirements on
additional grounds. See In re Sanchez, No. 13-09-10955 MA, 2009 WL 2913224, at *1, *3 (Bankr.
D.N.M. May 19, 2009) (finding a lack of good faith with a plan that pays only attorneys’ fees in a
case where debtors have a history of incurring “debts they are unable to repay and then seek[ing]
bankruptcy protection every few years in order to alleviate their debt burden”); In re Lehnert, No.
07-55988, 2009 WL 1163401, at *4 (Bankr. E.D. Mich. Jan. 14, 2009) (sustaining an objection to
an Attorney Fee-Only Plan as not filed in good faith because the debtors were able to afford some
dividend to creditors); In re Montry, 393 B.R. 695, 696-97 (Bankr. W.D. Mo. 2008) (stating
“[c]onfirming a Chapter 13 plan in a case where the only benefit to a debtor – beyond the relief
available in Chapter 7 – is the ability to pay the bankruptcy attorney’s fees over time would . . .
unnecessarily raise the cost of filing a bankruptcy petition for debtors who do not need or are ill
suited for Chapter 13; and subvert the Supreme Court’s holding in Lamie v. U.S. Trustee prohibiting
the payment of post-petition attorney’s fees from a debtor’s Chapter 7 bankruptcy estate.”)
(footnotes omitted); In re Paley, 390 B.R. 53, 59-60 (Bankr. N.D.N.Y. 2008) (stating “[t]he Debtors
are not adjusting anything, much less debt; they are canceling and eliminating the claims of
creditors while simply paying their attorneys. Under the theories advanced by the Debtors, carried
to an absurd extreme, if they had paid their respective attorneys in full up front, they would have
proposed a plan of $0 for zero months and demanded a Chapter 13 discharge. . . . These cases,
basically Chapter 7 cases hidden within Chapter 13 petitions, blur the distinction between the
chapters into a meaningless haze.”); In re Dicey, 312 B.R. 456, 459-60 (Bankr. D.N.H. 2004)
(stating “[n]ot only is the Plan a thinly disguised liquidation, but it is in essence only a payment plan
for the Debtors’ bankruptcy attorney’s fees. Congress did not create Chapter 13 as a vehicle solely
for the payment of attorney’s fees.”). But see In re Molina, 420 B.R. 825, 830-33 (Bankr. D.N.M.
2009) (holding that a debtor who is in “economic straits;” “literally doing all that the statute requires
of her;” ineligible to file for Chapter 7; and compliant with “the letter, and the spirit, of the chapter
13 law as Congress has written it” may file an Attorney Fee-Only Chapter 13 Plan).
15 In so holding, this Court does not make light of the concern voiced by Attorney Berliner–
despite his motives in so arguing – that some debtors are simply not able to afford the attorneys
fees associated with filing a Chapter 7 case, and that the holding of the United States Supreme
Court in Lamie v. U.S. Tr., 540 U.S. 526 (2004), without a Congressional “fix,” has exacerbated the
problem. But while this Court does not minimize the struggle of many Chapter 7 debtors to retain
counsel, the Attorney Fee-Only Chapter 13 Plan here doubled the Debtors’ attorneys’ fees while
increasing the risk they would fail to receive a discharge at all. In this way, Attorney Berliner has
not used Chapter 13 as a payment device; rather, he has used Chapter 13 as a payment collection
and enhancement device. 	At some point, one has to wonder whether the line between client
assistance and client exploitation has been blurred and whether Attorney Berliner’s form Retainer
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distributed are paid only to Debtors’ counsel unquestionably fail to meet any fair
interpretation of the term “good faith” in §§ 1325(a)(3) and (7), respectively.
B. 	The Fee Applications in the Converted Cases
The standards for allowance of compensation of professionals are generally set forth
in § 330 of the Bankruptcy Code. 11 U.S.C. § 330 (2005). The standards for Chapter 13
professionals are governed by § 330(a)(4)(B):
In a chapter 12 or chapter 13 case in which the debtor is an individual, the
court 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 other factors set forth in this section.
11 U.S.C. § 330(a)(4)(B) (2005). Section 330 further instructs the court:
In determining the amount of reasonable compensation to be awarded to an
examiner, trustee under chapter 11, or professional person, the court shall
consider the nature, the extent, and the value of such services, taking into
account all relevant factors, including--
(A) the time spent on such services;
(B) the rates charged for such services;
(C) whether the services were necessary to the administration of, or
beneficial at the time at which the service was rendered toward the
completion of, a case under this title;
(D) whether the services were performed within a reasonable amount of time
commensurate with the complexity, importance, and nature of the problem,
issue, or task addressed;
Agreement in these and other respects could be more properly characterized as adhesion
contracts.
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(E) with respect to a professional person, whether the person is board
certified 	or 	otherwise 	has 	demonstrated 	skill 	and 	experience 	in 	the
bankruptcy field; and
(F) whether the compensation is reasonable based on the customary
compensation charged by comparably skilled practitioners in cases other
than cases under this title.
11 U.S.C. § 330(a)(3) (2005).
In 	this 	Circuit, 	the 	“lodestar” 	approach 	is 	commonly 	used 	to 	analyze 	the
reasonableness of compensation. Boston & Me. Corp. v. Moore, 776 F.2d 2, 6-7 (1st Cir.
1985); Furtado v. Bishop, 635 F.2d 915, 920 (1st Cir. 1980). “Courts first develop a point
of reference by determining a reasonable billing rate and then multiplying it by the number
of hours which appropriate tasks should have consumed.” In re LaFrance, 311 B.R. 1, 20
(Bankr. D. Mass. 2004) (citing Garb v. Marshall (In re Narragansett Clothing Co.), 210 B.R.
493, 497 (B.A.P. 1st Cir. 1997)).
The lodestar rate ought to take into account “the type of work performed, who
performed it, the expertise that it required, and when it was undertaken.” 	Grendel’s Den,
Inc. v. Larkin, 749 F.2d 945, 950-51 (1st Cir. 1984). The court must “consider prevailing
market rates in determining the lodestar, based on usual and customary rates in the
jurisdiction. . . . No presumption exists that a professional is entitled to the amount he or
she requests.” 	Garb, 210 B.R. at 498-99. 	Once determined, the applicable rate is
multiplied by the hours reported, after those which are “duplicative, unproductive,
excessive, or otherwise unnecessary” are subtracted. 	Grendel’s Den, Inc., 749 F.2d at
950.
Finally, the lodestar is adjusted by various factors, including:
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(1) the time and labor required; (2) the novelty and difficulty of the questions
presented by the case; (3) the skill requisite to perform the legal service
properly; (4) the preclusion of other employment by the attorney due to
acceptance of the case; (5) the customary fee for similar work in the
community; (6) whether the fee is fixed or contingent; (7) time pressures
imposed by the client or the circumstances; (8) the amount involved and
results obtained as a result of the attorneys’ services; (9) the experience,
reputation and ability of the attorneys; (10) the “undesirability” of the case;
(11) the nature and length of the professional relationship with the client; [and]
(12) awards in similar cases.
In re Smuggler’s Beach Props., Inc., 149 B.R. 740, 743 (Bankr. D. Mass. 1993).
“[N]otwithstanding the standards set forth above, judges should exercise special
care in characterizing the services of an attorney as excessive or unnecessary.” 	In re
Laberge, 380 B.R. 277, 282 (Bankr. D. Mass. 2008). “Judges are often poorly positioned
and insufficiently informed to permit a conclusion that what was done for a client was not
required in order to protect the client’s interests.” Id.
However, no such deference on the part of the Court is appropriate here. Neither
of the Debtors’ plans could have passed muster under §§ 1325(a)(3) or (7), nor on a close
inspection should they have been found to satisfy § 1325(a)(6). 	Even Attorney Berliner
concedes in the Retainer Agreement which he drafted that, but for the payment of the
Debtors’ attorneys’ fees, the Chapter 13 filings were unwarranted. Each of the Debtors’
Retainer Agreements with Berliner provided, “A Chapter 7 filing . . . is appropriate in your
situation but it would cost $2484, including $2000 attorney fees and costs.” Both of the
Debtors were ideal Chapter 7 candidates, having no previous filings, no valuable assets
that could be property of the estate, and incomes well-below the state median. Indeed,
within a short time after conversion of these cases to Chapter 7, the Chapter 7 trustee
reported no assets available for distribution to unsecured creditors, and each Debtor
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eventually received her Chapter 7 discharge. But these debtors could have received their
Chapter 7 discharges by early 2009. Instead, they did not receive their discharges until
October 29, 2009 (Buck) and November 3, 2009 (Groccia). 	Each of these debtors, if
properly counseled, could have filed Chapter 7 bankruptcy cases in November of 2008,
either by Attorney Berliner employing a reduced rate, by another attorney with a lesser
charge, by a legal services organization, or pro se. 16 Attorney Berliner chose not to adopt
any of those routes, instead filing petitions in a chapter totally inappropriate to the Debtors’
needs and best interests so that he could maximize his compensation. Indeed, the Court
refuses to believe that Attorney Berliner, having practiced under the Bankruptcy Code for
decades, did not understand that these Chapter 13 cases would inevitably fail by virtue of
the unrealistic calculations in Schedules J. 17 But he also knew that, when they failed, the
cases could be converted to Chapter 7 and he would get the benefit of payments made by
the Debtors to the Chapter 13 trustee in the interim. Under these circumstances, payment
of compensation in any amount would be an inappropriate reward.
16 The Court does not by any means suggest that it recommends that any debtor file a
Chapter 7 case pro se. Nevertheless, some do and manage to obtain bankruptcy discharges in
Chapter 7 - without paying the sum of $4,000 for that privilege.
17 This Court chooses in this case not to sua sponte pursue whether the preparation of each
of the Debtor’s Schedules J – whose numbers were not reasonable but whose effect was to create
the appearance of a surplus sufficient to support a Chapter 13 dividend – should be pursued as a
violation of § 707(b)(4)(D) and/or Fed. R. Bankr. P. 9011(b). See In re Withrow, 391 B.R. 217
(Bankr. D. Mass. 2008).
17
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IV. 	CONCLUSION
In each of the above-captioned cases, the Court will allow each of Attorney Berliner’s
Fee Applications in the amount of $299.00 (the amount of the Chapter 7 filing fee in
November of 2008) and order Attorney Berliner to disgorge the balances to the respective
Debtors.
Orders consistent with this Memorandum will issue accordingly.
DATED: 	July 9, 2010
By the Court,
________________________________
Henry J. Boroff
United States Bankruptcy Judge
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