Anthony Kenneth Barbaria and Illona Drucker Barbaria

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
MEMO RE MCNUTT LAW GROUP FEE APP.
-1-
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re
ANTHONY KENNETH BARBARIA and
ILLONA DRUCKER BARBARIA, fka
ILLONA DRUCKER,
Debtors.
)
)
)
)
)
)
)
)
)
)
Case No: 05-30164 TC
Chapter 11
MEMORANDUM RE MCNUTT LAW GROUP’S FIRST INTERIM FEE APPLICATION
On October 8, 2008, counsel for the chapter 11 trustee
(Trustee) filed an application for compensation and reimbursement
of expenses (Fee Application). 	Debtors and Patco Trucking, Inc.
have each filed an objection to the Fee Application.
Upon due consideration, and for the reasons stated below, the
court overrules the objections to the Fee Application, and allows
the fees and expenses in the amounts sought, subject to the
agreement between applicant and Trustee to cap their collective
fees at $150,000. 	This memorandum constitutes the court’s findings
of fact and conclusions of law.
Signed and Filed: November 21, 2008
________________________________________
THOMAS E. CARLSON
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
November 24, 2008
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 05-30164 Doc# 497 Filed: 11/21/08 Entered: 11/24/08 09:40:53 Page 1 of
5

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
MEMO RE MCNUTT LAW GROUP FEE APP.
-2-
FACTS
On February 13, 2006, the court entered an order approving
Trustee’s application to employ McNutt Law Group (MLG) as counsel.
The Fee Application seeks final allowance of $150,419.25 in fees
and reimbursement of $9,490.56 in expenses incurred for the period
of January 10, 2006 through October 3, 2008. 	Of this amount,
$13,503.75 concerns fees for services provided regarding the
estate’s appeal of a prepetition judgment in a state-court action
by SFC Leasing against Debtors. 	Brett Pedersen was specially
employed by the estate to prosecute Debtors’ appeal of the SFC
Leasing judgment.
The estate currently holds about $250,000.
Creditor Patco Trucking, Inc. and Debtors each filed an
objection to the Fee Application. 	Patco Trucking objects, not to
the amount of fees sought, but rather to the estate’s payment of
professionals’ fees when Patco, a general unsecured creditor, may
not be paid in full. 	Debtors’ objection asserts that: (1) the
assets in the estate were liquidated rather than reorganized;
(2) that MLG made no effort to resolve creditor claims; (3) that
fees related to the SFC Leasing appeal should not be allowed
because they duplicate work performed by Brett Pedersen; and (4)
that the fees charged are excessive relative to fees generally
charged by bankruptcy counsel.
On November 6, 2008, Trustee filed a response to the
objections. 	Trustee asserts that the real properties owned by the
estate were liquidated pursuant to the confirmed plan in this case,
that this liquidation generated the bulk of funds brought into the
Case: 05-30164 Doc# 497 Filed: 11/21/08 Entered: 11/24/08 09:40:53 Page 2 of
5

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
1 Although Trustee has not yet filed his fee application, he
estimates that his fees and expenses exceed $60,000.
2 The agreement of MLG and Trustee to limit their fees to a
collective $150,000 voluntarily reduces their fee requests by
$60,000, much more than any reduction this court would make
MEMO RE MCNUTT LAW GROUP FEE APP.
-3-
estate, and that the liquidation was extremely time consuming due
to interference with the process by Debtors. 	Trustee asserts that
he has successfully objected to many claims, that he has concluded
substantially all claim objections, and that he is ready to make a
first and final distribution to creditors. 	Trustee contends that
he cannot make a distribution until he has resolved the large
priority claims of the Internal Revenue Service and Franchise Tax
Board, and that he has been unable to resolve these claims because
Debtors have failed to file their 2004 tax return needed for the
taxing authorities to determine the correct claim amounts. 	In
addition, Trustee asserts that he and MLG have agreed to cap their
collective fees at $150,000. 1
DISCUSSION
The court has reviewed the Fee Application. 	I determine that,
other than the fees re SFC Leasing (see below), the compensation
sought is reasonable and is for actual, necessary services
rendered, and expenses incurred, by MLG on behalf of Trustee. 	11
U.S.C. § 330(a). 	I determine that it was appropriate for MLG to
bill the estate for its work monitoring the SFC Leasing appeal. 	I
need not reach the issue of whether $13,503.75 is a reasonable sum
for this work, because the stipulation between MLG and the chapter
11 trustee to reduce their fees to no more than $150,000 renders
this issue moot. 2 	I determine that the hourly rates charged by MLG,
Case: 05-30164 Doc# 497 Filed: 11/21/08 Entered: 11/24/08 09:40:53 Page 3 of
5

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 regarding MLG’s work on the SFC Leasing appeal.
MEMO RE MCNUTT LAW GROUP FEE APP.
-4-
which range from $250-$475 per hour for the attorneys, and from
$100-$150 per hour for legal assistants and paralegals, are
reasonable based upon the customary compensation charged by other
experienced bankruptcy professionals in San Francisco. 	I note that
Debtors’ persistent interference with Trustee’s administration of
the estate increased the amount of time Trustee and MLG were
required to spend on services related to administration of the
estate.
The Bankruptcy Code requires payment of administrative
expenses, such as those of MLG, before payment of non-
administrative expenses, such as general unsecured claims. 	11
U.S.C. §§ 503, 507(a), 1129(b); see Order Confirming Trustee’s
Modified Plan of Reorganization (Docket No. 359). 	Accordingly,
Patco’s objection must be overruled.
The court will enter a separate order approving the fees and
expenses in the amount sought, subject to the $150,000 cap on the
combined fees of MLG and Trustee.
**END OF MEMORANDUM**
Case: 05-30164 Doc# 497 Filed: 11/21/08 Entered: 11/24/08 09:40:53 Page 4 of
5

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
MEMO RE MCNUTT LAW GROUP FEE APP.
Court Service List
Ilona & Anthony Barbaria
3131 Shelter Creek Lane
San Bruno, CA 94066
Ilona & Anthony Barbaria
1521 Freswick Drive
Folsom, CA 95630
Ilona & Anthony Barbaria
P.O. Box 969
San Bruno, CA 94066
Scott H. McNutt, Esq.
Law Offices of McNutt & Littenker
188 The Embarcadero #800
San Francisco, CA 94105
Hank M. Spacone
P.O. Box 255808
Sacramento, CA 95865
Case: 05-30164 Doc# 497 Filed: 11/21/08 Entered: 11/24/08 09:40:53 Page 5 of
5