Jeffrey Alan Smith and Sharon Ruth Smith

The court incorporates by reference in this paragraph and adopts as the findings and orders
of this court the document set forth below.
INRE:
IS/ RUSS KENDiG
Russ Kendig
United States Bankruptcy Judge
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
CHAPTER 13
JEFFREY ALAN SMITH AND
SHARON RUTH SMITH,
l CASE NO. 09-64409
JUDGE RUSS KENDIG
Debtors.
~)
)
MEMORANDUM OF OPINION
(NOT INTENDED FOR
PUBLICATION)
Donald M. Miller, counsel for debtors ("Counsel"), submitted a fee application on
April 8, 2011 requesting approval of $4,760.00 in fees and $838.75 in expenses, for
compensation totaling $5,422.75. 	The chapter 13 trustee, Toby L. Rosen ("Trustee"),
objected. The court held a hearing on May 25,2011, attended by Robert H. Harbert, counsel
for Trustee, and Counsel.
The court has jurisdiction of this matter pursuant to 28 U.S.C. §§ 1334 and the
general order of reference entered in this district on July 16, 1984. Venue in this district and
division is proper pursuant to 28 U.S.C. § 1409.
This opinion is not intended for publication or citation. 	The availability of this
opinion, in electronic or printed form, is not the result of a direct submission by the Court.
FACTS
The parties do not dispute the operative facts. Under the court's Administrative
Order 08-05, entered on May 6, 2008, Counsel is entitled to a no-look fee of $3,000.00.
The increased fees sought in the application are due, in part, to the additional time spent
researching and preparmg two briefs regarding Debtors' sizeable increase in 401(k)
contributions immediately before filing the case. Before filing, Debtor Jeffrey Smith
increased his 401(k) contribution from three percent (3%) ofhis biweekly gross pay to
09-64409-rk Doc 74 FILED 06/09/11 ENTERED 06/09/11 09:32:29 Page 1 of 3

fifteen percent (15%). The court found the increase was evidence of bad faith and denied
confirmation of Debtors' plan.
Debtors reduced the 401(k) contribution to eleven percent (11 %) and filed an
amended plan. 	Confirmation was again denied, finding that the new authority cited by
Debtors was inapposite and Debtors failed to demonstrate the case was filed in good
faith.
Approximately 7.9 hours were dedicated to the 401(k) issue, including research,
preparation of the memoranda filed with the court, participation in hearings on the
objections to confirmation, conferences and discussions with Debtors, and filing the
amended plans. This represents approximately $1,580.00 of the fees requested.
LAW AND ANALYSIS
Trustee argues that Counsel should not be rewarded, through approval of fees, for
advancing bad faith arguments. As Counsel identifies, Trustee's position is similar to
arguing that Counsel's fees should be disallowed as a sanction under Federal Rule of
Bankruptcy Procedure 9011(b)(2).
Whether the court reviews under Rule 9011 (b) standards or the compensation
standards under 11 U.S.C. § 330, the driving force is the same: reasonableness. As the
Sixth Circuit recently enunciated on the Rule 9011 (b) standard:
'The test for imposing sanctions [under Rule 9011(b)]
is whether the individual's conduct was reasonable
under the circumstances.' Corzin v. Fordu (In re Fordu),
201 F.3d 693, 711 (6th Cir. 1999). 'In applying this test,
the bankruptcy court is not to use the benefit of hindsight
but should test the signer's conduct by inquiring what was
reasonable to believe at the time the [filing] was submitted.'
Mapother & Mapother, P.S.C. v. Cooper (In re Downs),
103 F .3d 4 72, 481 ( 6tfi Cir. 1996) (alterations, citation, and
internal quotation marks omitted).
B-Line, LLC v. Wingerter (In re Wingerter), 594 F.3d 931, 939 (6th Cir. 201 0).
Similarly, reasonableness drives compensation awards under 11 U.S.C. §
330(a)(4)(B):
In a chapter 12 or chapter 13 case in which the debtor
is an individual, the court may allow reasonable compen-
sation 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.
The lodestar calculation, the product of an "attorney's reasonable hourly rate by the
number of hours reasonably expended," In re Boddy, 950 F.2d 334, 337 (6th Cir.. 1991),
creates a presumption of reasonable compensation, subject to adjustment by twelve
factors. See Geier v. Sundquist, 372 F.3d 784, 793 (6t Cir. 2004) (citing Johnson v.
Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974)).
To start, the court will consider whether Debtors' position with regard to the
401(k) contributions was justified. In its June 15,2010 opinion, the court outlines the
state of the law before passage of BAPCPA. As stated, before BAPCPA, courts looked
unfavorably on a debtor's 401(k) contributions because the benefit inured to debtors at
09-64409-rk Doc 74 FILED 06/09/11 ENTERED 06/09/11 09:32:29 Page 2 of 3

the expense of their creditors. In re Smith, Case. No. 09-64409 (Bankr. N.D. Ohio June
15, 2010) (unreported). BAPCPA changed the landscape by excluding 401(k)
contributions from property of the estate, and disposable income, with the addition of 11
U.S.C. § 541(b)(7). As the Bankruptcy Appellate Panel commented on the shift,
"Congress clearly intended to strike a balance between protecting debtors' ability to save
for their retirement and requiring that debtors pay their creditors the maximum amount
they can afford to pay." Burden v. Seafort (In re Seafort), 437 B.R. 204, 210 (B.A.P .. 6th
Cir. 2010). The change in law left a door open for debtors to test the allowable limits of
the new provision. Although Debtors' first attempt went too far, resulting in the court's
conclusion that they lacked good faith, the issue they presented was primed for review.
Consequently, the court finds that the actual work was reasonable.
After the court issued its first opinion, Debtors forged a second attempt to define
the parameters of 401 (k) contributions and filed an amended plan doubling their plan
payments. The court looks less favorably on the second attempt. In the first opinion, the
court noted "[w]hile each case must stand on its own facts, relevant factors may include
whether the debtor increased his contribution on the eve of bankruptcy, the amount of any
such increase, the financial planning justification for any such increase, and the amount of
debtor's 401(k) contributions relative to the distribution to unsecured creditors." Id. at 4.
Debtors' brief on the objection to confirmation of the amended plan addressed none of
the factors the court identified as relevant. Debtors completely ignored the pink elephant,
the sizeable increase in 401(k) contributions, from the three percent (3%) prepetition
deduction to the eleven percent (11%) deduction in the amended plan. Consequently, the
benefit and necessity of the second amended plan and related services, including
preparation of the second brief, were not reasonable. This represents approximately 4.1
hours of service, or $820.00.
Upon determining the reasonableness of the services, the court must now address
whether the compensation is reasonable. This was not addressed by Trustee. She does
not challenge the amount of compensation or the hours expended by Counsel. In the
absence of objection by Trustee, the court will not take issue with the amount of
compensation requested.
However, the court does raise one item sua sponte. Counsel seeks reimbursement
of $838.75 in expenses, which is atypically high. No itemization is provided. 	Without
an itemization, the court cannot assess the reasonableness of the expenses and will not
approve reimbursement.
Consequently, Counsel's fees are reduced by $820.00, for total compensation of
$3,940.00. The court declines to approve the reimbursement of$838.75 in expenses.
Counsel is granted fourteen (14) days to supplement the application to detail the expense
request, if desired.
The court will issue an order contemporaneously with this opinion.
#
Service List:
Toby L. Rosen
Charter One Bank Building, 4th Floor
400 W. Tuscarawas St.
Canton, OH 44702
Donald M Miller
1400 Market Ave N
Canton, OH 44714-2608
# 	#
09-64409-rk Doc 74 FILED 06/09/11 ENTERED 06/09/11 09:32:29 Page 3 of 3