Underground Energy, Inc.

1
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
NOT FOR PUBLICATION
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
SANTA BARBARA DIVISION
In re: ) Case No. 9:13-bk-10563-PC
)
UNDERGROUND ENERGY, INC., a ) Chapter 11
Delaware corporation, )
) MEMORANDUM DECISION
)
) Date: December 10, 2014
) Time: 9:30 a.m.
) Place: United States Bankruptcy Court
) Courtroom # 201
Debtor. ) 1415 State Street
____________________________________) Santa Barbara, CA 93101
Before the court is the First and Final Application of Cooley LLP for Compensation and
Reimbursement of Expenses as Attorneys for the Official Committee of Unsecured Creditors
(“Application”). Cooley LLP (“Cooley”), former counsel to the Official Committee of
Unsecured Creditors (“Committee”), seeks final allowance of $768,771.20 in attorneys’ fees,
plus $19,301.22 in expenses, for a total of $788,072.42, for the period of April 29, 2013 through
December 10, 2014.1 Underground Energy, Inc. (“Debtor”), the Committee, and the United
1 The final compensation sought in the Application includes “$25,000, estimated to be incurred
in connection with the preparation of [the] Final Fee Application and litigation and hearing
thereon.” Application, 2:n.8. On December 24, 2014, Cooley filed a Supplemental Declaration
of Ali M.M. Mojdehi in Support of First and Final Application of Cooley LLP for Compensation
and Reimbursement of Expenses as Attorneys for the Official Committee of Unsecured Creditors
FILED & ENTERED
JAN 14 2015
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY DEPUTY CLERK	HANDY
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 1 of 19

2
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
States trustee (“UST”) object to allowance and payment of the fees and expenses sought in the
Application. Having considered the Application and objections thereto, the evidentiary record,
and arguments of counsel, the court will sustain, in part, and overrule, in part, the objections to
the Application and allow as final compensation the sum of $747,913.82 in reasonable attorneys’
fees, plus $16,272.87 in expenses, for a total of $764,186.69, based on the following findings of
fact and conclusions of law pursuant to F.R.Civ.P. 52(a),2 as incorporated into FRBP 7052 and
applied to contested matters by FRBP 9014(c).3
[Dkt. # 786] (“Supplemental Declaration”), seeking an additional award of $57,393.80 in
attorneys’ fees for 113.40 hours of legal services rendered at a blended hourly rate of $506.12
between November 4, 2014 and December 10, 2014, in connection with preparation of the
Application, responding to objections thereto, and attending the hearing thereon.
2 Unless otherwise indicated, all “Code,” “chapter” and “section” references are to the
Bankruptcy Code, 11 U.S.C. §§ 101-1330 after its amendment by the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005, Pub. L. 109-8, 119 Stat. 23 (2005). “Rule”
references are to the Federal Rules of Bankruptcy Procedure (“FRBP”), which make applicable
certain Federal Rules of Civil Procedure (“F.R.Civ.P.”). “LBR” references are to the Local
Bankruptcy Rules of the United States Bankruptcy Court for the Central District of California
(“LBR”).
3 In making its findings and conclusions, the court has considered the following documents: (1)
Application [Dkt. # 722]; (2) Declaration of Ali M.M. Mojdehi in Support of First and Final
Application of Cooley LLP for Compensation and Reimbursement of Expenses as Attorneys for
the Official Committee of Unsecured Creditors [Dkt. # 723]; (3) Joint Objection of Debtor and
Official Committee of Unsecured Creditors to the First and Final Application of Cooley LLP for
Compensation and Reimbursement of Expenses as Attorneys for the Official Committee of
Unsecured Creditors (“Joint Objection”) [Dkt. # 730]; Objection to First and Final Application of
Cooley LLP for Compensation and Reimbursement of Expenses as Attorneys for the Official
Committee of Unsecured Creditors (“UST Objection”) [Dkt. # 734]; (5) Omnibus Reply to (I)
Joint Objection of Debtor and Official Committee of Unsecured Creditors to First and Final
Application of Cooley LLP for Compensation and Reimbursement of Expenses as Attorneys for
the Official Committee of Unsecured Creditors; and (II) Objection of the United States Trustee
to First and Final Application of Cooley LLP for Compensation and Reimbursement of Expenses
as Attorneys for the Official Committee of Unsecured Creditors (“Omnibus Reply”) [Dkt. #
740]; (6) Declaration of Brian W. Byun in Support of Omnibus Reply to (I) Joint Objection of
Debtor and Official Committee of Unsecured Creditors to First and Final Application of Cooley
LLP for Compensation and Reimbursement of Expenses as Attorneys for the Official Committee
of Unsecured Creditors; and (II) Objection of the United States Trustee to First and Final
Application of Cooley LLP for Compensation and Reimbursement of Expenses as Attorneys for
the Official Committee of Unsecured Creditors [Dkt. # 741]; (7) Declaration of Allison M. Rego
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 2 of 19

3
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
A. Standard for Final Allowance of Attorneys Fees and Expenses
Section 330(a)(1) permits the court to award “reasonable compensation” for “actual,
necessary services” rendered by a trustee, examiner or properly employed professional person.
11 U.S.C. § 330(a)(1)(A). Compensation may not be awarded for: (1) unnecessary duplication
of services; or (2) services that were not: (i) reasonably likely to benefit the debtor’s estate; or
(ii) necessary to the administration of the case. 11 U.S.C. § 330(a)(4)(A)(i) & (ii).
In determining “reasonable compensation,” the court must consider the nature, extent and
value of the services, taking into account “all relevant factors,” including: (1) time spent on the
in Support of Omnibus Reply to (I) Joint Objection of Debtor and Official Committee of
Unsecured Creditors to First and Final Application of Cooley LLP for Compensation and
Reimbursement of Expenses as Attorneys for the Official Committee of Unsecured Creditors;
and (II) Objection of the United States Trustee to First and Final Application of Cooley LLP for
Compensation and Reimbursement of Expenses as Attorneys for the Official Committee of
Unsecured Creditors [Dkt. # 742]; (8) Declaration of Ali M.M. Mojdehi in Support of Omnibus
Reply to (I) Joint Objection of Debtor and Official Committee of Unsecured Creditors to First
and Final Application of Cooley LLP for Compensation and Reimbursement of Expenses as
Attorneys for the Official Committee of Unsecured Creditors; and (II) Objection of the United
States Trustee to First and Final Application of Cooley LLP for Compensation and
Reimbursement of Expenses as Attorneys for the Official Committee of Unsecured Creditors
[Dkt. # 743]; (9) Transcript of Proceedings [Dkt. # 765]; and (10) facts evident from documents
filed in the case as reflected on the court’s docket of which the court has taken judicial notice
pursuant to F.R.Evid. 201(c)(1). The court has given little weight, if any, to the following
documents in making its determination: (1) Declaration of Carl Dore, Jr. in Support of Omnibus
Reply to (I) Joint Objection of Debtor and Official Committee of Unsecured Creditors to First
and Final Application of Cooley LLP for Compensation and Reimbursement of Expenses as
Attorneys for the Official Committee of Unsecured Creditors; and (II) Objection of the United
States Trustee to First and Final Application of Cooley LLP for Compensation and
Reimbursement of Expenses as Attorneys for the Official Committee of Unsecured Creditors
[Dkt. # 744]; (2) Declaration of T. Todd Egland in Support of Omnibus Reply to (I) Joint
Objection of Debtor and Official Committee of Unsecured Creditors to First and Final
Application of Cooley LLP for Compensation and Reimbursement of Expenses as Attorneys for
the Official Committee of Unsecured Creditors; and (II) Objection of the United States Trustee
to First and Final Application of Cooley LLP for Compensation and Reimbursement of Expenses
as Attorneys for the Official Committee of Unsecured Creditors [Dkt. # 745]; and (3) Request for
Judicial Notice in Support of Omnibus Reply to (I) Joint Objection of Debtor and Official
Committee of Unsecured Creditors to First and Final Application of Cooley LLP for
Compensation and Reimbursement of Expenses as Attorneys for the Official Committee of
Unsecured Creditors; and (II) Objection of the United States Trustee to First and Final
Application of Cooley LLP for Compensation and Reimbursement of Expenses as Attorneys for
the Official Committee of Unsecured Creditors [Dkt. # 746].
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 3 of 19

4
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
services (11 U.S.C. § 330(a)(3)(A)); (2) rates charged for the services (11 U.S.C. §
330(a)(3)(B)); (3) whether the services were: (i) necessary to the administration of the
bankruptcy case; or (ii) beneficial at the time the services were rendered toward completion of
the case (11 U.S.C. § 330(a)(3)(C)); (4) 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 (11 U.S.C. § 330(a)(3)(D)); (5) with respect to a professional person, whether
the person is board certified or has otherwise demonstrated skill and experience in the
bankruptcy field (11 U.S.C. § 330(a)(3)(E)); and (6) whether the compensation is reasonable
based on the customary compensation charged by comparably skilled practitioners in
nonbankruptcy cases (11 U.S.C. § 330(a)(3)(F)).
The “lodestar” formula (under which the number of hours reasonably expended is
multiplied by a reasonable hourly rate for the person providing the services) is the traditional
standard for assessing an attorneys’ fee application in bankruptcy. See Law Offices of David A.
Boone v. Berham-Burk (In re Eliapo), 468 F.3d 592, 598–99 (9th Cir. 2006); Yermakov v.
Fitzsimmons (In re Yermakov), 718 F.2d 1465, 1471 (9th Cir. 1983). A bankruptcy
practitioner’s compensation, including the hourly rate charged, must be commensurate with the
compensation received by comparably skilled attorneys in other practice areas. 11 U.S.C. §
330(a)(3)(F); In re Fleming Cos., Inc., 304 B.R. 85, 93 (Bankr. D. Del. 2003).
B. Cooley’s Application
In the Application and Supplemental Declaration, Cooley seeks final allowance of
$768,771.20 in attorneys’ fees, plus $19,301.22 in expenses, for a total of $788,072.42, for the
period of April 29, 2013 through December 10, 2014. The court approved Cooley’s employment
on June 24, 2013, retroactive to April 29, 2013. Cooley rendered a total of 1,303 hours of
services to the estate between April 29, 2013 and August 26, 2014, according to the Application,
billed at a blended hourly rate of $556.93. The legal services rendered for which Cooley seeks
compensation in the Application are documented by invoices, copies of which are included in
Exhibit 3 to the declaration of Ali M.M. Mojdehi in support of the Application. Cooley’s
invoices reflect the services performed by Cooley on behalf of the Committee by category of
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 4 of 19

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
service. Within each category of service, the work performed is documented by (a) the date the
service was performed; (b) the attorney who performed the service; (c) a description of the task
performed; and (d) the time expended in performing the service recorded in increments of 1/10th
of an hour. Each invoice contains a summary of the work performed by each Cooley attorney or
paralegal for the Committee and their respective hourly rates, together with a list of costs
advanced during the billing period. The court takes judicial notice that the hourly rates reflected
in each of the invoices are within the range of hourly rates charged by attorneys and paralegals
for similar legal services rendered in chapter 11 cases pending in the United States Bankruptcy
Court for the Central District of California. There is no allegation nor evidence that, at any time
during its employment under § 1103, Cooley represented or held an interest adverse to the estate
with respect to the matters on which it was employed or was not disinterested. See 11 U.S.C. §
328(c).
C. The Objections to Cooley’s Application
In their Joint Objection, Debtor and the Committee first complain that “[t]he fees sought
by Cooley are completely disproportionate to the size of the estate and the results (or lack
thereof) achieved.”4 They argue that Cooley must establish, “[i]n addition to the factors outlined
in Sections 330(a)(3)(A),” that its services “made a ‘substantial contribution’ [to the] case;” and
further, that “[t]he measure of any ‘substantial contribution’ is the extent of the [actual] benefit to
the estate,” citing Cellular 101, Inc. v. Channel Commc’n, Inc (In re Cellular 101, Inc.), 377 F.3d
1092, 1096 (9th Cir. 2004).5 Given this standard, Debtor and the Committee reason that all fees
and expenses sought by Cooley with respect to (a) Cooley’s investigation and litigation of the
Mountain View/Arvin Project Area (“MVA Project”); (b) the adversary proceeding against
Bruce A Berwager (“Berwager”) and David E. Hoyt (“Hoyt”) (the “Berwager and Hoyt
Adversary”); and (c) Cooley’s work formulating a disclosure statement and proposed plan should
be disallowed entirely because the “substantial contribution” threshold has not been met.
4 Joint Objection, 1:10-11.
5 Id. at 4:17-22.
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 5 of 19

6
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
Cooley’s fees with respect to hours expended on the MVA Project and developing a disclosure
statement and plan are also attacked by the UST.
1. A Determination of Reasonable Compensation Under § 330(a)(3) Does Not Hinge on
a Finding of a Substantial Contribution to the Case or Estate
First, in seeking to bootstrap a “substantial contribution” requirement to § 330(a), Debtor
and the Committee improperly conflate § 502(b)(1) with § 502(d)(3)(D) and § 502(d)(4),
apparently hoping to incorporate the best of each section while avoiding their respective
limitations. The Committee was appointed by the United States trustee pursuant to § 1102(a)(1),
and the Committee elected to employ Cooley as its counsel pursuant to § 1103(a). Cooley is
seeking compensation as former Committee counsel pursuant to § 503(b)(2) and § 330(a), not
either § 502(d)(3)(D) or § 502(d)(4). Section 330(a) sets forth the applicable standard for
determining the allowance and payment of compensation to counsel employed under § 1103. 11
U.S.C. § 330(a)(1).
Section 330(a)(3)(C) permits compensation for services that are “necessary to the
administration of, or beneficial at the time at which the service was rendered toward completion
of, a case.” 11 U.S.C. § 330(a)(3)(C). The court may not allow compensation for unnecessary
duplication of services, or services that were neither reasonably likely to benefit the estate nor
necessary for its proper administration. 11 U.S.C. § 330(a)(4)(A). By its terms, § 502(d)(3)(D)
does not apply to an official committee of unsecured creditors appointed under § 1102.6 Nor
does § 503(d)(4) apply to an attorney employed to represent a committee appointed under §
1102.7 Whether services were necessary to the administration of the case or beneficial to the
6 Section 503(b)(3)(D) is the standard applicable to the allowance of actual, necessary expenses
incurred by “a creditor, an indenture trustee, an equity security holder, or a committee
representing creditors or equity security holders, other than a committee appointed under section
1102 of this title, in making a substantial contribution in a case under chapter 9 or 11 of this
title.” 11 U.S.C. § 502(b)(3)(D) (emphasis added).
7 Section 503(b)(4) is the standard applicable to “reasonable compensation for professional
services rendered by an attorney or an accountant of an entity whose expense is allowable under
subparagraph (A), (B), (C), (D), or (E) of paragraph (3) of this subsection, based on the time, the
nature, the extent, and the value of such services, and the cost of comparable services other than
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 6 of 19

7
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
estate is determined, not in hindsight, but objectively with reference to the time the services were
rendered. 11 U.S.C. § 330(a)(3)(A)&(C); In re Mednet, 251 B.R. 103, 108 (9th Cir. BAP 2000);
In re Circle K Corp., 294 B.R. 111, 125 (Bankr. D Ariz. 2003). Furthermore, § 330 does not
require that the services result in a material benefit to the estate. It need only be shown that the
services were reasonably likely to benefit the estate at the time the services were rendered.
Mednet, 251 B.R. at 108; Lobel & Opera v. U.S. Trustee (In re Auto Parts Club, Inc.), 211 B.R.
29, 33 (9th Cir. BAP 1997).
2. The Objections Are Not Supported By Evidence to Overcome the Presumption That
the Lodestar Represents a Reasonable Fee
While a bankruptcy court has a duty to review a fee application even in the absence of an
objection, the court should not, “not without evidence to the contrary, . . . change the facts
initially presented to it in an otherwise complete fee application . . [and] on its own, second
guess counsel in deciding whether this conference or that phone call were necessary, whose
participation was appropriate, what the market generally pays for the time and services of
counsel and its staff or how it reimburses certain expenses.” Matter of Hunt’s Health Care, Inc.,
161 B.R. 971, 981 (Bankr. N.D. Ind. 1993). As the court correctly observed in Hunt’s Health
Care:
Without being presented with facts beyond those contained in an otherwise
sufficient fee application, the court should not reduce an attorney’s hourly rate or
decide what is or is not to be characterized as overhead or how certain expenses
are properly billed. Neither should the court take the approach that, just because
it frequently reviews a multitude of fee applications, it is somehow in a better
position to determine the reasonableness of a requested fee than the market. An
attorney’s customary billing practices are presumptively correct. While they may
not be dispositive, departing from them requires a reason and information which
would warrant the conclusion that the presumption accorded to counsel’s regular
practice should not be followed. Thus, the burden is on the objector “to establish
a good reason why a lower rate is essential to access a ‘reasonable attorney’s
fee.’”
in a case under this title, and reimbursement for actual, necessary expenses incurred by such
attorney or accountant.” 11 U.S.C. § 503(b)(4).
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 7 of 19

8
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
A party objecting to a fee application may not do so based on the general
proposition that the fee sought is simply too much. It should go beyond this
assertion to articulate a reason why and, if necessary, present evidence in support
thereof. . . The objector must, at some point, identify any allegedly improper,
insufficient, or excessive entries and direct the court’s attention to them. The
objector should also be able to identify a reason why the hourly rates involved and
the time charged are not reasonable or why the market would place a lower value
on counsel’s labors and offer evidence supporting its position.
Id. at 982 (citations omitted). Attorneys’ fees should not be reduced based on “inarticulable and
unsubstantiated dissatisfaction with the lawyers’ efforts to economize on their time and
expenses.” Matter of Cont’l Ill. Sec. Litig., 962 F.2d 566, 570 (7th Cir. 1992).
In short, once an applicant has documented the hours expended and submitted evidence
in support of the hours worked, “there is a strong presumption that the lodestar represents a
reasonable fee.” Gates v. Deukmejian, 987 F.2d 1392, 1397 (9th Cir. 1993). “The party
opposing the fee application has a burden of rebuttal that requires submission of evidence
challenging the hours charged or facts asserted” in the application. Id. at 1397-98. In this case,
neither the Joint Objection nor the UST Objection is supported by a declaration or other evidence
to support disallowance of the fees or expenses sought in the Application.
3. Cooley Will Be Allowed the Final Compensation Sought for Legal Services Rendered
in Conjunction With the MVA Project, Berwager and Hoyt Adversary, and the Formulation of a
Disclosure Statement and Proposed Plan
a. MVA Project. Debtor, Committee and the UST seek disallowance of $79,641 for 143
hours of legal services rendered to the estate in conjunction with the MVA Project. Debtor and
the Committee assert that Cooley’s services in connection with the MVA Project “clearly did not
result in a substantial contribution to the estate.”8 In particular, Debtor and the Committee
charge that “[t]he time spent on the MVA Project is unreasonable, the rate charged for such
services is exorbitant in relation to the size of this case, and the services became unnecessary
after the Sale Motion was withdrawn.”9
8 Joint Objection, 7:14.
9 Id. at 7:11-13.
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 8 of 19

9
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
Cooley’s Application reveals that Cooley represented the Committee successfully in
opposing the Debtor’s motion seeking to sell the estate’s interest in the MVA Project to MK
California, LLC (“MK”); and then, after Debtor’s “withdrawal of the Sale Motion and at the
Committee’s direction,” Cooley engaged in an extensive investigation of potential claims against
MK’s principal, J. Michael Kerr (“Kerr”) and R. Terrence Budden, a principal of Compass
Global Resources, LLC. Cooley’s investigation included the discovery of documents, protracted
litigation with respect to discovery, and ultimately a Rule 2004 examination of Kerr. Once the
investigation was completed, Cooley drafted a complaint alleging claims against MK and Kerr
related to the MVA Project transaction. The complaint and supporting documents were
delivered by Cooley to successor counsel to the Committee upon Cooley’s withdrawal.10
Cooley has established that the services were authorized by the Committee and
reasonably calculated to benefit the estate at the time the services were rendered. The Debtor,
Committee, and UST have not offered evidence to the contrary. Nor is there any evidence that
“the rate charged for such services is exorbitant,” as claimed by Debtor and the Committee.11
10 Application, 8:9 – 9:14.
11 Due to objections filed by Debtor and the UST, the order authorizing Cooley’s employment by
the Committee specifically states that “[t]he rights of all parties in interest to object to Cooley’s
hourly rates are reserved and may be raised at the time of Cooley’s application for allowance of
compensation and reimbursement of expenses.” Order on Application to Authorize the
Employment of Cooley LLP as Counsel to Official Committee of Unsecured Creditors, Nunc
Pro Tunc to April 29, 2013 [Dkt. # 232], 2:4-6. However, the UST Objection does not challenge
Cooley’s hourly rates and the Joint Objection is not supported by any evidence to support a
finding that Cooley’s blended hourly rate of $556.93 is not within the range of prevailing hourly
rates charged by firms in the Central District of California for similar services by lawyers of
reasonably comparable skill, experience and reputation. Furthermore, Cooley’s “associates’
hours have been billed at a 10% discount and [Mojdehi’s] hours have been billed at a 15%
discount” in the Application. Declaration of Ali M.M. Mojdehi in Support of First and Final
Application of Cooley LLP for Compensation and Reimbursement of Expenses as Attorneys for
the Official Committee of Unsecured Creditors, [Dkt. # 723], at 3:12-13. “Cooley also has not
charged for word processing services or secretarial overtime, although the firm bills its non-
bankruptcy clients for such items.” Id. 3:13-15. Finally, Cooley’s blended hourly rate appears to
be in line with the hourly rates charged by the Committee’s current counsel, Loeb & Loeb LLP.
The court takes judicial notice of the fact that “[t]he normal billing rates of Loeb’s lawyers and
paraprofessionals at the time of [its Employment] Application range from approximately $425.00
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 9 of 19

10
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
The fact that the adversary proceeding was not filed before Cooley’s withdrawal as counsel for
the Committee does not prevent Cooley from being reasonably compensated for actual and
necessary services rendered to the Committee for investigating and pursuing the claims.
b. Berwager and Hoyt Adversary. Debtor and the Committee seek disallowance of
$13,200 for 23.7 hours of legal services rendered to the estate in conjunction with the Berwager
and Hoyt Adversary. Debtor and the Committee reason that “Cooley’s time . . . did not make a
substantial contribution to the estate because Cooley withdrew as counsel before the matters
were fully adjudicated.”12 Neither Debtor nor the Committee appear to dispute the fact that
Cooley actually rendered the legal services and advanced the costs itemized in the Application to
investigate the Committee’s potential claims against Berwager and Hoyt, made demands on
counsel for Berwager and Hoyt for documents and information, prepared and filed an adversary
proceeding against Berwager and Hoyt, and opposed their efforts to dismiss the adversary
proceeding for lack of proper service and failure to state a claim.13 Nor do Debtor or the
Committee dispute the fact that the Committee is still pursuing the adversary proceeding which
remains pending before the court.
Cooley has established that the services rendered with respect to the Berwager and Hoyt
Adversary were reasonably calculated to benefit the estate at the time the services were rendered.
to $800.00 per hour for partners, and $315 per hour for paraprofessionals” and that “Loeb has
agreed to cap its rates for partners who will work on this matter at $675.00 during the pendency
of this case.” Declaration of Bernard R. Given, II in Support of Application of Official
Committee of Creditors Holding Unsecured Claims to Retain Loeb & Loeb LLP [Dkt. # 633],
4:16-19. The court also takes judicial notice of the First Interim Fee Application of Loeb &
Loeb LLP, Counsel for the Official Committee of Creditors Holding Unsecured Claims, Seeking
Allowance and Payment of Compensation and Reimbursement of Expenses Under 11 U.S.C. §§
330 and 331 for the Period From August 13, 2014 Through October 31, 2014 [Dkt. # 752] filed
on December 8, 2014, in which Loeb seeks an interim allowance and payment of $89,601.00 in
fees, plus $810.08 in expenses, for a total of $90,411.08, for 151.8 hours of services rendered at a
blended hourly rate of approximately $596.00 during the two and one-half month period between
August 13, 2014 and October 31, 2014. No objection was filed to Loeb’s interim application,
and the fees and expenses sought were allowed at a hearing on January 7, 2015.
12 Joint Objection, 7:26-28.
13 Application, 10:20 – 11:12.
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 10 of 19

11
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
The court rejects the assertion in the Joint Objection that Cooley’s compensation should be
contingent on a successful outcome of the litigation. A final adjudication in favor of the
Committee of all claims against Berwager and Hoyt in the adversary proceeding is not a
condition to allowing Cooley reasonable compensation for actual and necessary services
rendered to the Committee in pursuing the claims prior to its withdrawal as counsel for the
Committee.
c. Plan and Disclosure Statement. Debtor, Committee and UST seek disallowance of
$191,974 for 344.7 hours of legal services rendered in conjunction with Cooley’s efforts to
formulate, draft, and file a disclosure statement and proposed plan of reorganization. In the Joint
Objection, Debtor and the Committee point out that “Loeb billed $43,656.00 to negotiate,
prepare, and file the Joint Plan and Disclosure Statement (and the attendant Disclosure Statement
Hearing),”14 and argue that “Cooley[‘s] efforts were largely duplicative of efforts of others and
thus do not constitute ‘substantial contributions.’”15 Debtor and the Committee further argue that
“[e]ven if they had been consummated, almost $200,000 to prepare, and not even confirm, a Plan
for a 4 million dollar estate exceeds all bounds of reasonableness.”16
In its reply, Cooley points out that the Application, in fact, seeks “reimbursement of
315.5 hours of work constituting fees of $137,801.40 for time relating to plan and disclosure
statement matters,” divided as follows:
$82,514.70 (approximately) was expended in negotiating, drafting and revising
the plan and disclosure statement that . . . a majority of the Committee, in number
and amount of claims held, voted to pursue but later, a majority of the Committee
in number directed not to be filed; [and]
$55,286.70 (approximately) was expended analyzing, negotiating, and objecting
to the adequacy of disclosure as to the plans and disclosure statements the Debtor
proposed after the Committee determined not to file its plan as well as analysis of
14 Joint Objection, 8:13-15.
15 Id. at 9:2-3.
16 Id. at 8:11-13.
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 11 of 19

12
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
the plan prepared by counsel for Baker Hughes/Scientific Drilling/Schlumberger
that was later proposed to be filed by the Committee . . . .17
Neither the Joint Objection nor the UST Objection identifies any specific task performed by
Cooley with respect to formulation of a disclosure statement and plan that was either not
authorized by the Committee or not calculated to lead to a benefit to the estate at the time the
work was performed.
At the hearing on December 10, 2014, Debtor’s counsel conceded that Cooley’s
contributions resulted in a disclosure statement and plan that formed the basis of the disclosure
statement ultimately approved and the consensual plan that followed, stating:
[W]hile they . . . didn’t file the disclosure statement, they provided a draft which
provided the basis for the first amended disclosure statement and first amended
disclosure statement which the Court ultimately approved. And it was the
approval of the disclosure statement that changed the playing field and ultimately
resulted in a consensual plan. That’s all true.18
It is undisputed that the case has been litigious. Debtor’s counsel was also asked whether
the Debtor was suggesting that Cooley “ran up the fees for the past year and a half and created
litigation that caused a division among members of the Committee and delayed an effective
reorganization in the case?”19 In response, Debtor’s counsel stated:
[I]t’s my belief that [Cooley] acted in good faith to help seek a resolution and a
reorganization of the case under very difficult circumstances. . . We think that the
overall fees are high in light of the size of the case, but it doesn’t have anything to
do with good faith or the fact that they weren’t trying to facilitate a
reorganization”20
In sum, the objecting parties seek to curb Cooley’s final fees and expenses because they
believe that the amount sought is simply too much. As previously stated, “[a] party objecting to
17 Omnibus Reply, 11:12-25.
18 Transcript of Hearing Re: First and Final Application of Cooley, LLP for Compensation and
Reimbursement of Expenses as Attorneys for the Official Committee of Unsecured Creditors
[Dkt. # 765] (“Transcript”), 2:9-15.
19 Id. at 14:9-13.
20 Id. at 14:14-17.
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 12 of 19

13
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
a fee application may not do so based on the general proposition that the fee sought is simply too
much.” Hunt’s Health Care, 161 B.R. at 982. The Joint Objection and UST Objection fail to
point to any specific instances of allegedly duplicative, unnecessary, or insufficient work, nor is
there evidence that Cooley’s services, at the time rendered, were not reasonably calculated to
lead to a benefit to the estate.
4. Cooley is Entitled to the Final Compensation Requested for Attending Court Hearings
and Depositions and the Travel Time Associated Therewith
Debtor and the Committee object to $53,368.20 in fees for 73.3 hours of legal services
rendered by Cooley “related to meetings and preparation for and attendance of hearings,”21 again
arguing that Cooley has not demonstrated that such work resulted in a “substantial contribution
to the estate.”22
“There is no consensus among courts about what hourly rate should be allowed for
professional’s travel time under § 330.” Thomas v. Namba (In re Thomas), 2009 WL 7751299,
*9 (9th Cir. BAP 2009), aff’d, 474 Fed.Appx. 500 (9th Cir. 2012). “[W]hether travel time is to
be compensated at a full or partial rate should be evaluated ‘not as to whether such time was
productive, but whether it was reasonable and necessary.’” Id. Four of the challenged time
entries relate to time spent by Cooley on behalf of the Committee attending depositions, and
traveling to and from the depositions. Cooley’s Omnibus Reply points out that all but one of the
remaining time entries challenged in the Joint Objection relate “to travel and attendance at
hearings before the Hon. Robin Riblet (Ret.) who did not allow for telephonic appearances.”23
The Committee knew that Cooley’s offices were in San Diego at the time it sought approval of
Cooley’s employment as counsel for the Committee. There is no evidence that Cooley was not
authorized by the Committee to either attend the depositions identified in the challenged time
entries or to travel to and from each such deposition. Given the inability to appear
21 Joint Objection, 9:13.
22 Id. at 10:9.
23 Omnibus Reply, 13:15-16.
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 13 of 19

14
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
telephonically, Cooley had no option but to travel from San Diego to Santa Barbara to properly
represent the Committee to attend hearings in the case. There is no evidence that Cooley had the
ability to bill other clients during the time Cooley was travelling to and from Santa Barbara for
hearings or elsewhere for depositions. Under the circumstances, the court concludes that
Cooley’s time attending depositions and hearings, and the travel time associated therewith, was
reasonable and necessary and compensable at its full hourly rate.
5. Cooley’s De-Lumped Time Entries are Compensable
Debtor and the Committee identify 46 instances of “lumping” in Cooley’s Application
with respect to its request for $118,806.22 in fees for 245.9 hours of legal services rendered on
various tasks for the Committee. They seek a blanket 30% reduction of the compensation sought
by Cooley for such services “due to the amount of Cooley’s request for compensation and the
size of the estate.”24
“Lumping services in a single billing entry in a fee application is ‘universally
disapproved’ by bankruptcy courts.” Thomas, 2009 WL 7751299, *5. “When services are
lumped together, the bankruptcy court is prevented from determining the necessity of each
service and ‘from fairly evaluating whether individual tasks were expeditiously performed within
a reasonable period of time.’” Id. “When fee applications are submitted with a portion or all of
the requested fees based on lumped entries, courts may reduce, rather than disallow,
compensation.” Id. at *6.
Here, Cooley in Exhibit 1 of its Omnibus Reply sought to “de-lump” each of the time
entries challenged in the Joint Objection. The time entries, as restated in Exhibit 1, de-lump the
tasks undertaken and allocate the time spent on each task in increments of 1/10 of an hour. Some
of the time entries in Exhibit 1 are not de-lumped, but are identified as a “single task” or “closely
related tasks.” The time entries, as restated in Exhibit 1, are sufficient for the court to determine
the nature of the task performed and the necessity of the work undertaken, and to evaluate
whether the task was performed within a reasonable period of time.
24 Joint Objection, 10:22-23.
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 14 of 19

15
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
6. There is No Evidence That Legal Services Performed by Cooley Were Not Authorized
by the Committee
Debtor and the Committee object to the allowance and payment of fees for legal services
rendered by Cooley to perform tasks “not required or authorized by the Committee.”25 Services
must be authorized to be compensable. See Mednet, 251 B.R. at 108. However, the Joint
Objection does not disclose the specific legal services rendered by Cooley that ostensibly were
unauthorized nor is the Joint Objection supported by evidence that any of the legal services
performed by Cooley were not, in fact, authorized by the Committee.
D. Cooley is Entitled to Reasonable Attorneys’ Fees and Costs Incurred in Defending the
Application.
In its Supplemental Declaration, Cooley seeks an additional award of $57,393.80 in
attorneys’ fees for 113.40 hours of legal services rendered at a blended hourly rate of $506.12
between November 4, 2014 and December 10, 2014, in connection with preparation of the
Application, responding to the Joint Objection and the UST Objection, and attending the hearing
on the Application and objections thereto.26 The Committee objects “to the over 50 hours spent
by several attorneys at Cooley in the preparation of the Reply and attending the hearing on the
Application.”27 The Committee further objects “to the over $3,000 in Research Database and
Document retrieval expenses.”28
In the Ninth Circuit a bankruptcy court may award compensation for time spent and
expenses incurred in successfully litigating objections to a fee application, provided the applicant
demonstrates that: (1) the services rendered satisfy the requirements of § 330(a)(4)(A); and (2)
the case exemplifies a “set of circumstances” that made the time spent and expenses incurred in
25 Id. at 13:25-26.
26 Supplemental Declaration, 3:9-14.
27 Opposition of the Official Committee of Creditors Holding Unsecured Claims to Supplemental
Fees Requested by Cooley LLP (“Supplemental Opposition”), 2:11-12.
28 Id. at 2:14-15.
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 15 of 19

16
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
the litigation “necessary” under § 330(a)(1). Smith v. Edwards & Hale, Ltd. (In re Smith), 317
F.3d 918, 928 (9th Cir. 2002) (abrogated on other grounds by Lamie v. United States Trustee,
540 U.S. 526, 531–39 (2004)).29
In the Application, Cooley included a request for an estimated $25,000 in fees and
expenses “to be incurred in connection with the preparation of [the Application] and litigation
and hearing thereon.”30 At the hearing on December 10, 2014, the court gave Cooley an
opportunity to file a supplemental declaration setting “forth an itemization of fees and expenses
incurred to support [its] claim for a $25,000 estimate of fees.”31 The amount now sought is more
than twice the estimate contained in the Application.
According to Exhibit 1 to the Supplemental Declaration, the cost of preparing, filing and
serving the Application alone exceeded $19,000 – 41.5 hours of legal services at a cost of
$19,390.90. Preparing for and attending the hearing on the Application required another 12.8
hours of legal services at a cost of $9,047.60. The remaining 59.1 hours were spent by Cooley
researching, preparing, filing and serving the Omnibus Reply at a cost of $28,955.30. Incredibly,
Cooley spent 33% more time replying to the Joint Objection and UST Objection than it did
preparing and filing its final fee application. As previously stated, the court gave little weight to
the bulk of the documentation filed in support of the Omnibus Reply.32
Three Cooley attorneys combined to spend 59.1 hours between November 30, 2014 and
December 5, 2014, analyzing the objections and drafting, filing and serving the Omnibus Reply
thereto, averaging 9.85 hours per day on the task over a six-day period. The reasonableness of
the time expended is an integral component of the lodestar analysis. In this case, the extravagant
29 The Supreme Court will soon rectify a split between the circuits on the issue of whether §
330(a) authorizes compensation for the costs professionals bear to defend their fee applications.
See ASARCO, L.L.C. v. Jordan Hyden Womble Culbreth & Holzer, P.C. (In re ASARCO,
L.L.C.), 751 F.3d 291, 299 (5th Cir. 2014), cert. granted, Baker Botts, L.L.P. v. ASARCO,
L.L.C., 135 S.Ct. 44 (2014).
30 See footnote # 1, supra.
31 Transcript, 32:18-19.
32 See footnote # 2, supra.
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 16 of 19

17
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
expenditure of time devoted to the Omnibus Reply exceeds the amount reasonably necessary
given the complexity of the issues raised in the Joint Objection and UST Objection.
Furthermore, the court declines to compensate Cooley for work performed in conjunction with
the Omnibus Reply to “de-lump” the time entries challenged in the Joint Objection. This was
work Cooley should have performed, but failed to do so, in preparation of its final fee
application. The Committee’s objection was meritorious insofar as it pointed out this deficiency.
While the court ultimately overruled the Committee’s objection and allowed the compensation
sought based on the information belatedly provided by Cooley, the court will not reward Cooley
by allowing further compensation for work performed to correct a deficiency in its original
application. Accordingly, the court reduces by 43.1 the number of hours which reasonably
should have been expended by Cooley in connection with the Omnibus Reply. Cooley will be
allowed $8,097.92 for 16.0 hours, at a blended hourly rate of $506.12, as compensation for legal
services rendered to perform this task.
With respect to Cooley’s request for reimbursement of $3,028.35 in expenses incurred for
“Research Database / Document Retrieval,” the court assumes that the expense was incurred for
computer assisted legal research but the Supplemental Declaration does not provide the court
with any explanation of the cost nor concrete documentation establishing the necessity of the
expense. Applicant has the burden to establish that an expense was actually and necessarily
incurred. In re Gillett Holdings, Inc., 137 B.R. 462, 471 (Bankr. D. Colo. 1992). A reimbursable
expense is one that is actually incurred and required to accomplish properly a task for which the
professional was employed. See In re Williams, 102 B.R. 197, 199 (Bankr. N.D. Cal. 1989)
(“[A]n expense is not ‘actual,’ and therefore not reimbursable under section 330(a)(2), to the
extent that it is based on any sort of guesswork, formula, or pro rata allocation.”); In re Convent
Guardian Corp., 103 B.R. 937, 939 (Bankr.N.D. Ill. 1989) (“An expense is necessary if it was
included because it was reasonably needed to accomplish the proper representation of the
client.”).
“Lexis and Westlaw expenses may be compensable where they are both necessary and
attributable to a particular client.” Gillett Holdings, 137 B.R. at 473. “Ideally, the billing
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 17 of 19

18
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
statements should indicate the date, the person conducting the search, the length of the search, as
well as providing evidence of the necessity for the use of the service.” Id. See In re Fibermark,
Inc., 349 B.R. 385, 400 (Bankr. D. Vt. 2006) (Computer assisted legal research (CALR) is
reimbursable, “provided the applicant: (1) demonstrates that the use charges incurred were
reasonable and necessary (which necessarily includes a description of the research topic and the
length of time spent on each topic); (2) affirms that the applicant bills its non-bankruptcy clients
for CALR use charges, including the rate at which it bills its non-bankruptcy clients; and (3)
certifies the invoiced cost from the vendor.”). In its Application, Cooley states that “computer-
aided research [is] billed at actual cost.”33 However, the Supplemental Declaration contains
little, if any, factual information that would assist the court in divining what portion, if any, of
the amount sought for “Research Database / Document Retrieval” was necessary to a proper
reply to the Joint Objection or UST Objection. Furthermore, “[t]he purpose of computer
research is to cut down the amount of time necessary to research a particular issue, not to
increase the costs.” In re Wildman, 72 B.R. 700, 732 (Bankr. N.D. Ill. 1987). This purpose does
not appear to have been served given the time spent on the Omnibus Reply and the fees sought
therefor. Accordingly, the Committee’s objection to allowance of Cooley’s request for
reimbursement of $3,028.35 in expenses incurred for “Research Database / Document Retrieval”
is sustained.
In sum, the court will allow Cooley reasonable attorneys’ fees of $36,536.42, plus
expenses of $962.13, incurred in preparing its Application and defending its Application against
the objections of the Debtor, Committee and UST finding that such services were not
unnecessarily duplicative, were reasonably likely to benefit the estate, and aided in the
administration of the case. Cooley sought to discharge its fiduciary obligations to the Committee
notwithstanding intense disagreement and increasing animosity among members of the
Committee which ultimately resulted in the resignation of all but one member of the Committee
and Cooley’s withdrawal from representation. Cooley’s services on behalf of the Committee
33 Application, 12:21.
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 18 of 19

19
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
until its withdrawal were not unnecessarily duplicative and were reasonably likely to benefit the
estate or necessary to its proper administration. Debtor’s counsel acknowledged at the hearing
that Cooley “acted in good faith to help seek a resolution and a reorganization of the case under
very difficult circumstances . . . .”34 For these reasons, Cooley’s defense of the objections to its
final compensation request exemplifies a “set of circumstances” that made the time spent and
expenses incurred in the litigation “necessary” under § 330(a)(1).
F. Conclusion.
Except as discussed above, Cooley’s Application, as supplemented, satisfies the
requirements of 11 U.S.C. § 330(a), FRBP 2016(a) and LBR 2016-1(c), and demonstrates that
(a) Cooley rendered actual services to the estate that were necessary to the administration of, or
beneficial at the time at which the services were rendered toward the completion of, the case, and
that the compensation sought for such services is reasonable; and (b) the expenses incurred on
behalf of the estate for which reimbursement is sought were actual and necessary. Based on the
foregoing, the court will allow as final fees the sum of $747,913.82 in reasonable attorneys’ fees,
plus $16,272.87 in expenses, for a total of $764,186.69.
A separate order will be entered consistent with this memorandum.
###
34 Transcript, 14:15-17.
Date: January 14, 2015
Case 9:13-bk-10563-PC Doc 811 Filed 01/14/15 Entered 01/14/15 09:41:39 Desc
Main Document Page 19 of 19