Yvette Acevedo,

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NEW YORK
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In re: 	Case No.: 1-05-27415-dem
YVETTE ACEVEDO, 	Chapter 7
Debtor.
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DECISION AND ORDER ON APPLICATION FOR PAYMENT OF
COMPENSATION AND EXPENSES TO SPECIAL PERSONAL INJURY COUNSEL
Appearances:
Robert J. Musso, Esq.
Rosenberg, Musso & Weiner, LLP
Attorneys for Chapter 7 Trustee
26 Court Street, Suite 2211
Brooklyn, New York 11201
Eric H. Green, Esq.
Special Personal Injury Counsel
295 Madison Avenue, 19th Floor
New York, New York 10017
Diana G. Adams, Esq
United States Trustee
271 Cadman Plaza East, Suite 4529
Brooklyn, New York 11201
DENNIS E. MILTON
United States Bankruptcy Judge
INTRODUCTION
The matter is before the Court on the motion of Robert J. Musso, Esq., the
Chapter 7 Trustee (the “Trustee”) for an Order authorizing settlement of the personal injury
claim of the debtor; fixing the medical lien of Donald Milione, M.D.; and fixing the
compensation of Eric H. Green & Associates (“Special Personal Injury Counsel”). On October
6, 2009, the Court entered an Order which authorized the settlement of the personal injury action
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and fixed the medical lien of Donald Milione, M.D. After several adjournments, on October 27,
2009, the Court conducted a final hearing on the application for an Order fixing the
compensation for special personal injury counsel and took the matter under advisement.
For the reasons set forth below, the Court finds that an award of fees in the
amount sought by special personal injury counsel would be unreasonable under the
circumstances. Special Personal Injury Counsel settled the case without obtaining an order from
the bankruptcy court; failed to notify the Trustee of the medical lien, fixed at 5,082.05, when he
informed the Trustee of the settlement amounts of $22,500.00; and failed to provide the Court
with a statement regarding settlement of the case, a proposed closing invoice, or an outline of the
work done and all disbursements made. The Court finds the Special Personal Injury Counsel's
explanations and excuses for these deficiencies unacceptable, and, in some instances, incredible.
The Court reduces the amount of compensation from $7,615.05 to $2,500.00 and awards
reimbursement for documented expenses in the amount of $1,342.50.
JURISDICTION
This Court has jurisdiction over this core proceeding under 28 U.S.C. §§1334(b)
and 157(b)(2)(c) and the Eastern District of New York standing order of reference dated August
28, 1986. This Decision and Order constitutes the Court’s findings of fact and conclusions of
law to the extent required by Fed. R. Bankr. P. 7052.
FACTUAL BACKGROUND
On October 3, 2005, the debtor filed a voluntary petition for relief under Chapter
7 of the Bankruptcy Code. 	In October 2005, Robert J. Musso, Esq. was appointed the Chapter 7
case trustee. After the Trustee learned the debtor had commenced a personal injury action, he
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informed Eric H. Green, Esq. of his obligations under the Bankruptcy Code to consult with the
Trustee, file an application for retention and to seek bankruptcy court approval for any
settlement. On April 4, 2006, the Court entered an Order approving the retention of Eric H.
Green & Associates as Personal Injury Counsel to the Trustee.
On August 12, 2009, the Trustee filed an application for an Order authorizing
settlement of the personal injury claim of the debtor; fixing the medical lien of Donald Milione,
M.D.; and fixing the compensation of Special Personal Injury Counsel. On October 6, 2009, the
Court entered an Order which authorized the settlement of the personal injury action and fixed
the medical lien of Donald Milione, M.D. After several adjournments, on October 27, 2009, the
Court conducted a final hearing on the application for an Order fixing the compensation for
special personal injury counsel and took the matter under advisement.
DISCUSSION
Award of Reasonable Attorneys’ Fees and Reimbursement of Expenses
The issue before the Court is whether the request for attorneys fees and costs
which special personal injury counsel have submitted is reasonable.
A. The Standard
The Court will review the propriety of fees and expenses under the
reasonableness
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guidelines of Section 330(a) of the Bankruptcy Code.1 Section 330 (a)(3) provides:
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;
(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. Rule 2016(a) of the Federal Rules of Bankruptcy Procedure implements the
standards set forth in Section 330 of the Code and requires that the application contain “a
detailed statement of (1) the services rendered, the time expended and expenses incurred, and (2)
the amounts requested.” Fed.R.Bankr.P. 2016(a). The rule applies to professionals who are
retained pursuant to pre-approved contingency fee arrangements. In re Lenworth Westbrooks,
202 B.R. 520, 522 (Bankr. N.D.Alaska 1996). To satisfy this burden, a claimant must justify its
charges with detailed, specific, itemized documentation. In re Dimas, LLC, 357 B.R. 563, 576
1 The Court notes that even in non-bankruptcy cases, an applicant requesting an award of fees has the
burden to prove the reasonableness of such fees and that vague and otherwise insufficient descriptions of services
often result in a denial or reduction in the amount of fees sought. See Hensley v. Eckerhart, 461 U.S. 424, 433, 103
S.Ct. 1933, 1939, 76 L.Ed.2d 40 (1983); Quarantino v. Tiffany & Co., 166 F.3d 422, 425 (2d Cir.1999); LeBlanc-
Sternberg v. Fletcher, 143 F.3d 748,763-64 (2d Cir.1998); New York State Ass’n for Retarted Children v. Carey,
711 F.2d 1136, 1147 (2d Cir.1983).
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(Bankr. N.D.Cal. 2006); In re Bennett Funding Group Inc., 213 B.R. 234, 244 (Bankr. N.D.N.Y.
1997); In re Poseiden Pools of America, Inc., 180 B.R.718, 729 (Bankr. E.D.N.Y. 1995),
affirmed 216 BR. 98, 100 (E.D.N.Y. 1997). 	Billing records must clearly identify each discrete
task billed, indicate the date the task was performed, the precise amount of time spent (not to be
billed in increments greater than one-tenth of an hour), who performed the task, their level of
experience and that person’s hourly rate. In re Fibermark, Inc., 349 B.R. 385, 395 (Bankr. D.Vt.
2006). 	The records must be detailed enough to enable a Court to determine whether the
attorneys are claiming compensation for hours that are “redundant, excessive, or otherwise
unnecessary.” Hensley, 461 U.S. at 434. See also In re Recycling Industries, Inc., 243 B.R.
396, 401 (Bankr. D.Colo. 2000); In re Poseidon Pools of America, 180 BR. at 729.
It is well settled in this Circuit that an attorney may not bill for his or her full
billing rate for travel time to court. McDonald v. Pension Plan of the NYSA-ILA Pension Trust
Fund, 450 F.3d 91, 98-99 (2d Cir. 2006); Cioffi v. New York Community Bank, 465 F. Supp.2d
202, 219 (E.D.N.Y. 2006).
The Bankruptcy Court has the duty to examine the reasonableness of the fees
requested by retained professionals independently, notwithstanding the absence of objection by
the trustee, debtor or creditor. See In re Auto Parts Club, Inc., 211 B.R. 29, 33 (B.A.P. 9th Cir.
1997)(citing In re Busy Beaver Bldg. Ctr., Inc., 19 F.3d 833, 841 (3d Cir. 1994).
Special Counsel which has not been retained is not entitled to compensation for
services performed. See In re Moon, 385 B.R. 541, 549-550 (Bankr. S.D.N.Y. 2008)( “An
attorney whose retention has not been approved by the bankruptcy court prior to the time that the
attorney renders service is not within the class of persons that is eligible for compensation from
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the estate”); In re Fibermark, Inc., 349 B.R. 385, 394 n.3 (Bankr. Vt. 2006)(a professional who
renders service prior to the retention date established by the court may not be compensated from
the estate under 11 U.S.C. § 330).
The Court may also deny compensation where Special Counsel's actions violate
the Bankruptcy Code, add administrative expenses to the estate and did not provide a benefit to
the estate. A court may deny compensation for services that conferred no benefit on an estate.
In re Keene Corp., 205 B.R.,690, 696 (Bankr. S.D.N.Y. 1997). The test is an objective one, and
courts examine “what services a reasonable lawyer or legal firm would have performed in the
same circumstances.” In re Ames Dep't Stores, Inc., 76 F.3d 66, 72 (2d Cir 1996).
B. 	Application of the Standard
Special Personal Injury Counsel has not provided any billing statements, which
leaves the Court unable to state with any degree of certainty that the services rendered were
clearly identified and performed within a reasonable amount of time commensurate with the
complexity of the issues presented. Moreover, reduction of the fees requested is warranted for
services rendered which did not benefit the estate and counsel's failure to cooperate with the
Trustee.
1. 	Reduction for Services Rendered Prior to Retention
In the absence of any time billing records, the Court has no basis to find that
Special Personal Injury Counsel has rendered any services prior to retention for which he seeks
payment.
2. 	Reduction for Services Which Did Not Benefit the Estate
The Trustee objected to a full award of compensation for work performed based
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upon the claim that Special Personal Injury Counsel's failure to cooperate with the Trustee had
financially harmed the estate. The Court sustains this Objection and reduces the award of
counsel fees to $2,500.00.
The Trustee discovered the debtor's personal injury claim during the examination
at the First Meeting of Creditors. The Trustee was aware of only one proof of claim in the
amount of $229.54 having been filed in this case, and believed that the settlement which Special
Personal Injury Counsel presented for court approval of $22,500.00 would result in a 100%
distribution to creditors plus interest and a small surplus to the debtor following payment of the
debtor's exemption and Special Personal Injury Counsel's fees and expenses. However, the
Special Personal Injury Counsel had settled the case without a court order and obtained the
Trustee's consent to the settlement without informing him of the existence of an additional
medical lien of $5,085.02. Counsel acknowledged this but argued that the Trustee had not asked
him for a list of liens and expenses and that a Bill of Particulars dated June 16, 2006 informed
the Trustee of a claim for Physician's Services even though the Trustee did not ask whether any
such payment had been made.
Special Personal Injury Counsel's conduct reflects an overall lack of familiarity
with the Bankruptcy Code and general bankruptcy practice. He failed to advise the Trustee of
the medical lien at or near the same time he advised him of the settlement figure; he settled a
case without a court order; he failed to provide a statement to the Court regarding the settlement
of the case; and failed to respond to the Trustee's request to reduce his fee to make up for the
adjustment of estate property required to pay the medical lien. The documentation submitted to
the Trustee for reimbursement of expenses is not complete, and in the Court's best estimate of
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expenses incurred amounts to $1,342.50. In addition, special personal injury counsel asserts that
his claim must be paid ahead of the medical lien and debtor's exemption.
3. 	Miscellaneous Review Items – Block Billing, Amount of Travel Time
In light of th fact that Special Personal Injury Counsel has not provided any
billing statements, the Court has not reviewed the billings further for any deficiencies with
regard to items such as improper block billing and excessive fee charges for travel time.
For the reasons set forth above, the Court awards special personal injury counsel
fees in the amount of $2,500.00 expenses in the sum of $1,342.50.
CONCLUSION
The Court awards Special Personal Injury Counsel fees in the amount of
$2,500.00 and reimbursement of expenses of $1,342.50.
IT IS SO ORDERED.
Dated: Brooklyn, New York
January 26, 2010
S/ Dennis E. Milton
DENNIS E. MILTON
United States Bankruptcy Judge
To: 	Robert J. Musso, Esq.
Rosenberg, Musso & Weiner, LLP
Attorneys for Chapter 7 Trustee
26 Court Street, Suite 2211
Brooklyn, New York 11201
Eric H. Green, Esq.
Special Personal Injury Counsel
295 Madison Avenue, 19th Floor
New York, New York 10017
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Diana G. Adams, Esq
United States Trustee
271 Cadman Plaza East, Suite 4529
Brooklyn, New York 11201
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