Beverly Byrd and Ralph T. Byrd

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at GREENBELT
In re: 	*
*
Ralph T. Byrd 	*
Beverly Byrd 	* 	Case No. 	04-35620-TJC
* 	(Substantively consolidated with
* 	01-25006-TJC)
*
Debtors 	* 	(Chapter 7)
*
*
*
* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	*
MEMORANDUM OF DECISION GRANTING IN PART AND DEFERRING IN
PART SECOND APPLICATION OF SHULMAN, ROGERS, GANDAL, PORDY
& ECKER, P.A., FOR ALLOWANCE OF ADMINISTRATIVE CLAIM FOR
PROFESSIONAL SERVICES RENDERED AND FOR REIMBURSEMENT OF
EXPENSES
Before the Court is the Second Application of Shulman, Rogers, Gandal, Pordy &
Ecker, P.A., for Allowance of Administrative Claim for Professional Services Rendered
and for Reimbursement of Expenses (the “Application”) (Docket No. 460), filed by
James Hoffman (the “Applicant”) on November 15, 2006. The Debtors filed an
Opposition to Administrative Claims (the “Opposition”) on December 8, 2006. Docket
No. 479. 	Oral argument is deemed unnecessary because the facts and legal arguments
Signed: December 12, 2006
SO ORDERED
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are adequately presented in the parties’ briefs and the exhibits submitted in support. See
Local Rule 9013-1(b)(4). 1
In the Application, the Applicant seeks fees and expenses in the amount of (1)
$39,943.00 for fees incurred and $2,875.74 for expenses rendered in connection with
services provided while the case was in Chapter 13 (the “Chapter 13 Request”); and (2)
$39,543.00 for fees incurred and $2,469.93 for expenses rendered in connection with
services provided after the case was converted to Chapter 7 on March 20, 2006 (the
“Conversion Date”) through September 30, 2006 (the “Chapter 7 Request”). The Court
will bifurcate its ruling on the Application. 	For the reasons stated herein, the Court will
grant the Chapter 7 Request. The Court will defer to a later date the resolution of the
Chapter 13 Request, without prejudice to Applicant’s claim for approval of the Chapter
13 Request. Accordingly, the remainder of this memorandum addresses only the Chapter
7 Request except as may be specifically noted herein.
The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334, 157(a),
and Local Rule 402 of the United States District Court for the District of Maryland. This
is a core proceeding pursuant to 28 U.S.C. § 157(b)(2).
1. 	The Chapter 7 Request constitutes reasonable compensation for
actual and necessary services performed by the Applicant.
The Applicant was approved as special counsel for Gregory Johnson, the Chapter
7 Trustee (the “Trustee”) by order dated August 29, 2006. Docket No. 393. The
approval order followed a lengthy hearing in which the Debtors contended that the
Applicant should not be retained as special counsel because of an alleged conflict of
interest. According to the Debtors, the conflict arose because the Applicant represented
1 The notice of application, which was served on the Debtors on November 15, 2006, specifically provided
that the Court could enter an order approving the application without a hearing
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Platinum Financial Services, Inc., the creditor that filed the involuntary petition against
Ralph T. Byrd. Because the Debtors had previously asserted on a number of occasions
that the Applicant was the subject of a debilitating conflict of interest, and
notwithstanding the fact that the two prior judges that had presided over this case had
approved Applicant’s retention in the earlier chapters of this case (Docket Nos. 103 and
296 in Case No. 01-25006), 2 the Court gave the Debtors every opportunity to establish
the basis for their claim of conflict. The Court issued an extensive bench ruling in which
it addressed all of the Debtors’ allegations of alleged conflict. Subsequently, on August
29, 2006, the Court entered an order providing in part as follows:
the Court finding and concluding that Shulman Rogers
represents no interest materially adverse to said Trustee or
the Estate in the matters upon which it is to be engaged,
and that the employment of Shulman Rogers is necessary
and would be in the interests of the Estate, and that the case
is one justifying a general retainer, and in addition the
Court finding and concluding that Shulman Rogers also
would qualify for employment under 11 U.S.C. §327(a)
because, pursuant to 11 U.S.C. §327(c), no actual conflict
exists as a result of Shulman Rogers’ prior representation
of Platinum Financial Services Corporation and no creditor
or the United States Trustee has objected to Shulman
Rogers’ retention, and for the reasons stated in the bench
ruling on the record at the conclusion of the hearing on
August 21, 2006 . . . .
2 Specifically, on August 26, 2002, Roger Schlossberg, the then chapter 7 Trustee, filed an application to
employ the Applicant as special counsel to the estate. Docket No 77 entered in Case No. 01-25006. On
December 6, 2002, the Court authorized the Chapter 7 Trustee to employ the Applicant as special counsel
to the estate. Docket No. 103 in Case No 01-25006. The Applicant served as special counsel to the
Chapter 7 Trustee from December 6, 2002 through June 25, 2004. On June 25, 2004, this Court granted an
order to convert the case from Chapter 7 to Chapter 11 at the Debtor’s request. On July 23, 2004, Greg
Johnson was appointed the Chapter 11 Trustee. On August 30, 2006, Mr. Johnson filed an application to
employ the Applicant as special counsel to the estate. Docket No. 260 in Case No. 01-25006. On October
5, 2004, this Court entered an Order Authorizing the Employment of the Applicant as special counsel to the
Chapter 11 Trustee to be nunc pro tunc to July 23, 2004. Docket No 296 in Case No. 01-25006.
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Docket No 393. The order approving the Applicant as special counsel for the Trustee in
this Chapter 7 case was not appealed by the Debtors. Accordingly, the Applicant has
served as special counsel to the Trustee from the Conversion Date through the present,
although in the Chapter 7 Request, the Applicant seeks only fees and expenses from the
Conversion Date through September 30, 2006 at this time, subject to making further
applications as applicable.
The Court has reviewed the Application thoroughly. The Court finds and
concludes that the fees incurred by the Applicant from the Conversion Date through
September 30, 2006, are reasonable compensation for the actual and necessary services
rendered by the Applicant in this case pursuant to 11 U.S.C. § 330(a)(1). The Court
further finds and concludes that the expenses sought during that period constitute
reimbursement for actual, necessary expenses also pursuant to 11 U.S.C. § 330(a)(1). In
making these determinations, the Court has considered the nature, extent and value of
such services, taking into account the factors enumerated under 11 U.S.C. §330(a)(3).
In particular, the Court finds that the Application contains a thorough and detailed
description of the services provided by the Applicant, the need for the services and the
results of those services. The Application properly groups the various services performed
by the Applicant into categories, and describes the work done in each category and
amount of time devoted to each category. The Court has reviewed these categories and
the work done within each category and has determined that the services performed were
actual and necessary, and were appropriate services to be performed by counsel. 	The
Court also finds that the Application properly analyzes the fee request under the well-
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established twelve-factor analysis enumerated in Johnson v. Georgia Highway Express,
Inc., 488 F.2d 714 (5th Cir. 1974).
In particular, during the period covered by the Chapter 7 Request, the Debtors
fought the recent conversion of the case to Chapter 7, sought reconsideration of the
conversion order and prosecuted an appeal of the conversion order. Also during the
period, the Debtors filed a motion to strike the appointment of the Trustee, and objected
to the Trustee’s application to employ the Applicant. The Debtors objected to the
Trustee’s motion to compel payment of the funds held by the Chapter 13 trustee pursuant
to 11 U.S.C. §§ 1326(a)(1) and (2). The Debtors filed a motion to prevent the Trustee
from holding the statutorily required meeting of creditors under Section 341 of the
Bankruptcy Code. The Debtors objected to the Trustee’s motion to employ a real estate
agent, and to the Trustee’s motion to employ a company to assist the Trustee in removing
the Debtors' personal property from their residence. The Court held at least four lengthy
hearings during the period covering many of the motions and matters described above, as
well as matters that were filed before the application period. As a result of the
Applicant’s services, the Trustee prevailed in all of these matters. The Debtors filed
motions to reconsider, motions to stay and notices of appeals of many of these matters.
The Applicant has prevailed in virtually all of those as well,3 at least those that have been
ruled on to date.
3 The Court granted the Debtors’ motion for reconsideration of its initial ruling on the motion to compel the
turnover of the Chapter 13 fees. The Court had initially granted the motion to compel because the Debtors’
failed to object to it and granted the motion for reconsideration to relieve the Debtors of the effect of their
default in responding. After the Court granted the Debtors’ reconsideration motion and set the motion to
compel in for hearing, the Trustee prevailed on the merits of the motion to compel. See Docket Nos. 327,
346, 401.
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During the application period, in addition to responding to the actions of the
Debtors, the Applicant also assisted the Trustee in his efforts to administer the case and
estate. As examples, the Applicant sought to have the Debtors leave their residence so
that the Trustee could market and sell it, conducted the lengthy Section 341 meeting of
creditors, assisted the Trustee in seeking information and documents from the Debtors
over their objection, and assisted the Trustee in obtaining court approval of the retention
of a real estate agent and moving company. These activities were appropriate services to
be performed by counsel, especially in this case where the Debtors tend to object to or
challenge virtually every action taken by the Trustee. See infra.
The Court further finds and concludes that the time spent and the hourly rates
charged in connection with the above matters and the other matters described in the
Application are reasonable and appropriate. The Applicant, as an officer of the Court,
represents that significant attorney time was incurred in this representation which the
Applicant did not record and for which the Applicant does not seek to be compensated.
The Applicant states that it does not bill all time incurred in this case because of the
collectibility concerns arising from the four year delay in receiving any payment in this
case and the potential that the estate is administratively insolvent – and hence it is
hesitant to create unnecessarily large uncollectible receivables. The Court’s review of the
actual time spent by the Applicant doing the various tasks set forth in the Application
bears this out, as the time spent appears to be very reasonable, in some cases minimal, in
light of the services performed and the results achieved.
This judge has presided over this case since shortly after the Conversion Date and
has witnessed the efforts of the Applicant. Although this case has not presented any
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particularly unique, novel or complicated issues of law or fact while this judge has
presided over it, the Debtors have made it an excessively costly case. In the six month
period between the Conversion Date and September 30, 2006, the docket reflects 164
docket entries. It is safe to say that the Debtors have attempted to employ virtually any
procedural avenue they have available to them to stop the efforts of the Trustee to
administer this case. This is not necessarily to conclude that the Debtors have acted
improperly – to the extent such a finding or conclusion is necessary in this case it will be
addressed on another day. The Court does conclude, however, that the Debtors’ efforts
have resulted in the administration of this case costing far more than this case would
otherwise warrant.
2. 	The objections raised by the Debtors are without merit to the Chapter
7 Request.
In the Opposition, the Debtors raise four objections to the Application. Each will
be addressed in turn.
a. 	Trustee administrative duties.
In the Opposition, the Debtors summarily contend that the Application should be
denied in its entirety because it does not show the need for counsel services separate from
the Trustee’s duties. The Debtors rely on In re Computer Learning Centers, Inc., 272
B.R. 897, 903 (E.D. Va. 2001) for the proposition that counsel may not be retained at the
expense of the estate to perform trustee’s duties. However, although the Debtors cite the
foregoing proposition from the Computer Learning Centers case – i.e., that bankruptcy
counsel may not be retained to perform duties of the trustee – they simply state in
conclusory terms that the principle has been violated. No facts or support for that
violation is given.
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In this instance, the Applicant submitted Exhibit B to the Application, which
contained detailed time records for the services for which the Applicant seeks
compensation. Each individual time entry describes with particularity the work for which
compensation is sought. Further, as stated above, the Application itself contains a
thorough and detailed description of the services performed, including grouping the
services into categories of work performed. The Court has reviewed the time entries and
the Application and finds and concludes that none of the entries are ministerial or
administrative duties of the Trustee. Also, as stated above, the Court finds and concludes
that the services performed by the Application were actual and necessary, the
compensation sought is reasonable, and the services were appropriate
Despite the fact that the Debtors were served with the Application and Exhibit B
twenty-three days before they filed their Opposition, the Debtors fail to cite to a single
time entry as an example of the Applicant performing “trustee’s duties.” The Debtors fail
even to describe generally any services the Applicant performed that could fall into the
category of “trustee’s duties.” The Debtors do not dispute that they have been actively
involved in extensive litigation with the Applicant representing the Trustee throughout
the application period. Yet the Debtors contend that the Application should be denied “in
its entirety” because the Application does not show that the services were not merely
administrative duties of the Trustee.4 Debtors’ conclusory, unsupported objection is
insufficient to raise a bona-fide objection against the thorough, well-supported, complete
Application.
4 The Debtors’ appear to contend that the Application fails because the Trustee himself did not file any
statement in connection therewith. But Sections 330 and 331 of the Bankruptcy Code expressly
contemplate that the professional person, not the Trustee, will file the application for allowance of claim.
11 U.S.C. §§330, 331. The Trustee, of course, was served with the Application (Application at p. 29) and
has not filed an objection to it.
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b. 	Applicant’s alleged conflict.
The Debtors contend that the Applicant is the subject of a conflict of interest
which prevents the Applicant from serving as special counsel to the Trustee or receiving
compensation from the estate. As stated above, this Court previously rejected the
Debtors’ claim that the Applicant was the subject of a debilitating conflict of interest. See
supra at p. 2-3. The Debtors did not appeal that ruling, and the findings and conclusion
of the Court stand as unchallenged. Considering the extent to which the Court addressed
the Debtors' claim of conflict, and that the order was entered a little more than three
months ago, the Court sees no reason to take a “second look” at this issue as requested by
the Debtor, Opposition at p. 1, (which would be the fourth look when taking into account
the prior judges’ determinations on the Applicant’s retention in the previous chapters.)
See also supra at p. 2-3 and n.2. Accordingly, the Court rejects the Debtors’ claim that
the Application should be denied in its entirety because of the Applicant’s alleged
conflict of interest.
c. 	The Chapter 13 Request.
In their third and fourth arguments, the Debtors address whether Applicant’s fees
and expenses should be awarded during the period that the case was in Chapter 13.
Opposition at p. 3-4. As stated above, supra at p. 2, the Chapter 13 Request of the
Application shall be deferred to a later date.
Accordingly, the Court will enter an order granting the Application to the extent
of the Chapter 7 Request and deferring the resolution of the Application to the extent of
the Chapter 13 Request, without prejudice to Applicant’s claim for approval of the
Chapter 13 Request at a later date.
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Copies to:
Debtors
Trustee
Office of the U.S. Trustee
James Hoffman, Special Counsel
All Parties on the Mailing Matrix
END OF ORDER
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