McClintock Family Partnership

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Greenbelt
IN RE: 	:
:
McCLINTOCK DAIRY LLC 	: 	Case No. 07-10077PM
: 	Chapter 11
Debtor 	:
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IN RE: 	:
:
McCLINTOCK FAMILY PARTNERSHIP : 	Case No. 07-10079PM
: 	Chapter 11
Debtor 	:
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MEMORANDUM OF DECISION
Before the court are Amended Applications filed November 5, 2007, and November 24,
2007, on behalf of William L. Needler and Associates (“Applicant”), counsel for the Debtors,
McClintock Dairy LLC (“Dairy”) and McClintock Family Partnership (“Partnership”), for
compensation for the period November 9, 2006, through October 10, 2007 (“Applications”).
The Applications seek compensation of $29,338.75 for services rendered to Partnership and
$43,401.75 for services rendered to Dairy together with reimbursement of out-of-pocket
expenses of $2,741.20 and $3,111.84, respectively.
No opposition was filed to the Applications. While the Office of the United States
Trustee appointed an Official Unsecured Creditors Committee (“Committee”) consisting of
Graham Dairy Supply, Inc. (Dairy Claim No. 2; $64,153.34), together with Grantsville Truck &
Trailer and Yachere Feed, Inc., scheduled as holders of claims in the sums of $2,699.01 and
Signed: January 09, 2008
SO ORDERED
Entered: January 10, 2008 Case 07-10079 Doc 106 Filed 01/10/08 Page 1 of 7

1 Were the Committee to retain counsel, the expense of counsel would be an
administrative expense payable by the bankruptcy estate. 11 U.S.C. § 330(a)(1).
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$5,573.54, respectively, the Committee is totally uninvolved in the administration of these cases.
The Office of the United States Trustee has been similarly inactive other than suggesting in a
pleading, later withdrawn, that an “appropriate holdback” be made on the Applications.1 On the
other hand, the First United Bank & Trust, (“First United”), a secured creditor, secured by the
sole lien on the real estate owned by Partnership and by receivables, equipment, livestock, and
harvested crops and dairy production, has been diligently protecting its rights and is responsible
for such progress as has been made in the case. A schedule attached to Dairy’s Schedule D
purports to show also that First United is secured by a leasehold interest, presumably the lease
from Partnership to Dairy that the Debtors valued at $1,900,000.00. However, Dairy’s Schedule
G, “Executory Contracts and Unexpired Leases,” states under oath that Dairy has no executory
contracts or unexpired leases. Dairy schedules two other holders of secured claims: the first,
Farm Service Agency, said to hold a second lien on Dairy’s equipment, and the second, First
National Equipment Financing, said to hold a lien on a Claas Harvester. The Debtors’ three
principals, Gary McClintock, Jeffery McClintock, and Steve McClintock, all have personally
guaranteed the obligations to First United and First National Equipment Financing.
Originally, the Applicant filed Applications for compensation for the period through May
12, 2007. Because of the fact that the Applications were not prepared according to the
Compensation Guidelines for Professionals in this court found in Appendix D to the Local
Bankruptcy Rules, the court did not rule on them. Now before the court are these Amended
Applications. There are increased costs to the estates caused by the Applicant’s unfamiliarity
with local practice such as its lack of attention to the Compensation Guidelines.
In the absence of objection, the court will accede to the Applicant’s allocation of a
substantial segment of the fees, one-half to Dairy and one-half to Partnership. In so doing, the
court notes that the only claims filed in the Partnership case were those of First United,
aggregating $1,815,211.62. First United filed identical claims in Dairy.
While neither the dormant Committee nor the Office of the United States Trustee took
any position on the Applications, this court has the duty and the power to review the
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2 Apparently the Applicant is not familiar with this proposition as shortly after the 20 day
notice period for objections ran, a representative of the firm called chambers to inquire why the
an order approving the fee application had not been signed.
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Applications in the absence of objection. In re Busy Beaver Bldg. Centers, Inc., 19 F.3d 833,
840-41 (CA3 1994); In re Garrison Liquors, Inc., 108 B.R. 561, 565 (BC MD 1989). 2
Judge Schneider’s decisions in the case of In re Leonard Jed Co., 103 B.R. 706 (BC MD
1989), and 118 B.R. 339 (BC MD 1990), are excellent sources for an understanding of the
jurisprudence for allowance of attorney’s fees in the bankruptcy court. The court begins with the
“lodestar” principles that the Fourth Circuit promulgated as criteria in reviewing applications for
compensation by attorneys in bankruptcy cases. Harman v. Levin, 772 F.2d 1150 (CA4 1985).
Harman adopts the criteria originally set forth in the case of Johnson v. Georgia Highway
Express, Inc., 488 F.2d 714 (CA5 1974).
Some general observations about the handling of this case are appropriate before dealing
with the Johnson factors. This is a relatively simple case involving farm property in Western
Maryland. The principal work of counsel that the court observed consisted of working out the
issue of cash collateral pursuant to 11 U.S.C. § 363(c)(2) with First United and selling a parcel of
real property, the proceeds of which were used to reduce the amount due to First United.
Inasmuch as this is the Applicant’s first case in Maryland, there are numerous examples of time
spent for educating the firm as to this court’s practices as well as the requirements of the Office
of the United States Trustee, and the Local Bankruptcy Rules. There is no benefit to the estates
from the expenses incurred in the time spent in obtaining resident counsel. Next, while the
Applicant ostensibly complies with the requirement of paragraph B of the Compensation
Guidelines by recording time spent in tenths of an hour, because of the even allocation of time
spent between the two entities as to several entries, this amounts to recording entries in two
tenths of an hour. The court finds that adjustments must be made by it as to both of these
factors. The Debtors’ Plans are in limbo, as the Disclosure Statements were withdrawn on May
11, 2007 (Dairy, Dkt. # 98; Partnership, Dkt. #56). Finally, there is overlapping among the
categories in the Applications.
The court will now review the Applications under the criteria set out in Johnson v.
Georgia Highway Express, Inc.:
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3 M & M Weaver & Sons, Inc. filed two claims, one of which was a secured claim in the
sum of $28,294.57. 	Dairy scheduled this creditor as holding an unsecured claim.
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1. 	The time and labor expended. The court has no basis to dispute the time spent on this
case as stated by the Applicant. While the Disclosure Statements were withdrawn, the court
assumes that much of the time spent in its creation will be recycled when amended Plans and
Disclosure Statements are filed. However, the court finds it extraordinary that over 85 hours
were devoted to the negotiation and preparation of a cash collateral agreement, as shown in
Section 7 of the Applications. More time relating to cash collateral matters appears at various
places in the Applications, a problem made difficult by the overlapping described above. An
investment of this amount of time in cash collateral matters in a case of this size is rare.
Furthermore, the court is puzzled on account of its considerable experience with First United’s
counsel, Roger Schlossberg, an active bankruptcy practitioner whom the court observes is not a
person to waste time or needlessly prolong litigation. Inasmuch as the Debtors have selected
out-of-town counsel, the court does not propose to penalize counsel for the time devoted to travel
between this court and other jurisdictions where he is said to have pending matters. The court
assumes that there has not been double billing of travel time with cases pending in other
jurisdictions and this case.
2. 	The novelty and difficulty of the questions raised. This is a relatively simple case
under Chapter 11 involving one active secured creditor and two or three relatively inactive
secured creditors.3 The unsecured creditors have been silent and, as stated before, the
Committee dormant.
3. 	The skill required to properly perform the professional services rendered. This is as
close to a garden variety case under Chapter 11 as one could imagine. One needs experience in
cases under Chapter 11 combined with an understanding of problems peculiar to farmers. The
Applicant’s work has been aided by the absence of attention to the case by the Committee.
4. 	The preclusion of other employment by the attorney to the acceptance of the case.
Aside from the fact that the time spent on this case could not have been spent on another case,
this case does not present any possibility of conflicts of interest that preclude other employment.
5. 	The fee charged is in line with compensation awarded in this District for cases of this
size. The fee charged is commensurate with charges customarily made in this District.
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6. 	Whether the fee is fixed or contingent. As all attorney’s fees in cases under Chapter
11 are contingent in that they require court approval, this is not a factor.
7. 	The time limitations imposed by the client or the circumstances. Because of the cash
drain on the Debtors, there was some urgency in completing arrangements for the use of cash
collateral. This took up a large amount of the time spent on this case. This is also unusual in
that such matters are usually worked out either before the filing of a case or early in its
administration.
8. 	The amount involved and the results obtained. At this stage of the case, it is difficult
to predict whether the Debtors will emerge successfully from Chapter 11. After the filing of this
Application, the Applicant worked out an agreement with the Farm Security Administration.
Similarly, the Applicant consummated an agreement with First National Equipment Financing
relating to a forage harvester as well as to agreements as to modification of the automatic stay
with First United.
9. 	The undesirability of the case. This is not a factor.
10. The experience, reputation and ability of counsel. A WestLaw search pulled up
approximately 90 cases involving the Applicant. While a large number of these cases were
unsuccessful, there is no dispute that the Needler firm has handled a large number of agricultural
cases in the bankruptcy court.
11. The nature and length of the professional relationship with the clients. This is the
Applicant’s first experience with the McClintock group.
In ruling on these Applications, the most important factor for the court to consider is that
of the results obtained. In re International Coins & Currency, Inc., 26 B. R. 256, 261 (BC VT
1982). One cannot make this important finding with any certainty until after the hearing on
confirmation of the Debtors’ Plans. With agreements in place as to the secured creditors, the
outcome of this case will depend upon Debtors’ performance of their obligations under the
agreements and the ballots filed by the unsecured creditors without priority. For the reasons
stated above, there will be some diminution of the amounts sought.
An appropriate order will be entered.
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cc: 	McClintock Dairy LLC
1300 Pigs Ear Road
Grantsville, MD 21536
McClintock Family Partnership
1300 Pigs Ear Road
Grantsville, MD 21536
William L. Needler
555 Skokie Blvd
Suite 500
Northbrook, IL 60062
Donald Scott Goldbloom
12590 National Pike
Grantsville, MD 21536
Jayci Shaw Duncan
100 S. Liberty Street
P.O. Box 360
Cumberland, MD 21501-0360
Office of the United States Trustee
W. Clarkson McDow, Jr.
6305 Ivy Lane, Suite 600
Greenbelt, MD 20770
Graham Diary Supply Inc.
1581 Business Route 66
Greensburg, PA 15601
Grantsville Truck & Trailer
776 Springs Road
Grantsville, MD 21536
Yachere Mobile Feed Service
415 Somerset Ave
Rockwood, PA 15657
Larry D. Adams
Assistant U. S. Attorney
United States Attorneys Office
36 South Charles Street, 4th Floor
Baltimore, MD 21201
Case 07-10079 Doc 106 Filed 01/10/08 Page 6 of 7

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Roger Schlossberg
134 West Washington Street
P.O. Box 4227
Hagerstown, MD 21741-4227
Sheryl L. Lohaus
Gross & Welch, P.C., L.L.O.
2120 S. 72nd Street, Ste. 1500
Omaha, NE 68124
All interested parties requesting notice
End of Memorandum of Decision
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