Robert L. Henley and Julie A. Henley

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UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO

PACER Cover Sheet
for Electronically Filed Documents

Any data shown here are current as of 06/10/06 . Any element of information on this form,
except the received date, is subject to change as changes may be made to the Court's official docket.

Case Title. Robert L. Henley and Julie A. Henley

Case Number: 04-10155

Description: Order Granting in Part, Denying in Part [57-1] Application For Compensation (
Fees: $24781.33, Expenses: $ 178.23) by Richard J Parmley Jr. NOTE: See
Order for details

Received on: 2005-08-23 09:20:28.000

Date Filed: 2005-08-23 00:00:00.000

Date Entered On 2005-08-23 00:00:00.000
Docket:

| Filer Information

Submitted By: Mary Anderson

If this form is attached to the document identified above, it serves as an endorsed copy of the
document as it exc existed on the above date. ‘To confirm that nothing has changed since then,
review

AUTHENT, TED.

SIDE Pt totss-<13 Doc 76 Filed 08/23/05 Entered 08/23/05 14:06:00 Page 1 of 10

Page 1 of 5
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
Robert L. Henley and
Julie A. Henley,
Debtors. No. 13 - 04-10155 - SF
ORDER ON FEE APPLICATION
FILED BY DEBTOR’S COUNSEL
On July 28, 2005, the Court conducted an evidentiary
hearing on the Application for Allowance and Payment of
Compensation and Reimbursement of Expenses and Costs and for
Shortened Objection Deadline (“Application”) (doc 57) filed by
Debtors’ counsel (“Counsel”) and the objections thereto filed
by the Chapter 13 Trustee (docs 62 and 69). On August 9,
2005, the Court entered an interim stipulated order granting
in part the Application and permitting Counsel to begin
receiving payments (doc 73).
The issue at the evidentiary hearing, which was not
resolved by the interim stipulated order, was what portions of
the prepetition services rendered to the Debtors were “for
representing the interests of the debtor in connection with
the bankruptcy case”. See 11 U.S.C. § 330(a)(4)(B),
incorporated into 11 U.S.C. § 503(b)(2). (The parties
stipulated that all the post petition services were
Case 04-10155-s13 Doc 76 Filed 08/23/05 Entered 08/23/05 14:06:00 Page 2 of 10

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compensable.) Such prepetition services are to be treated as
administrative claims of the estate. In re Busetta-Silvia,
314 B.R. 218 (10th Cir. B.A.P. 2004). Counsel’s time sheets,
attached to the Application and admitted into evidence as
Exhibit 1, together with the testimony of Counsel, constituted
the evidence.
Having reviewed the evidence and arguments of counsel,
the Court finds that a substantial portion of the prepetition
fees were incurred for work that was undoubtedly helpful to
the Debtors and, to put it mildly, very well done, but
nevertheless not done “in connection with the bankruptcy case”
as such. Those portions of the prepetition fees are therefore
not allowable as administrative claims against the estate.
There is no bright line between “in connection with” the
bankruptcy case and not in connection with the case. Busetta-
Silvia cites the standard used in an unpublished case, In re
Scribner, No. 401-44799 (Bankr.N.D.Tex. Aug. 7, 2002). In re
Busetta-Silvia, 314 B.R. at 265: “[T]he [Scribner] Court
concludes that fees are incurred 'in connection with' a
bankruptcy case when the client has chosen bankruptcy as the
means through which to resolve his financial difficulties and
counsel thus begins to prepare for an actual filing under
Chapter 13." (Internal quotation marks and citations
Case 04-10155-s13 Doc 76 Filed 08/23/05 Entered 08/23/05 14:06:00 Page 3 of 10

Page 3 of 5
omitted.) Using this standard is only partially helpful in
this case, because the Debtors and Counsel clearly anticipated
the filing of a bankruptcy petition from the outset of the
representation yet much of the work was much more directly
related to resolving the problems in a state-court context;
e.g., filing answers and appearing in the state court actions.
The work in Scribner was pretty much “before and after”; there
was a pretty clear dividing line in that case between when the
debtor was seeking other ways to solve the problem and when
the debtor turned to bankruptcy as the solution. In this
case, the Henleys and Counsel from the outset determined that
bankruptcy was at least a solution, if not the solution, and
therefore entries for work in other courts is intermingled
with entries for clearly bankruptcy related work. The mere
fact that the beginning of the time entries start with a
bankruptcy related entry cannot serve to make all subsequent
entries related enough to the bankruptcy case to qualify fora
administrative payment. Undoubtedly these other actions can
be construed to have been in some vague way done “in
connection with” the bankruptcy case, but the connection is
too tenuous to justify treatment of the fees as administrative
claims against the estate.
Which portions are allowable and which not are set out on
Case 04-10155-s13 Doc 76 Filed 08/23/05 Entered 08/23/05 14:06:00 Page 4 of 10

Page 4 of 5
the attached four pages from the Application, covering the
period from August 2, 2002, through January 9, 2004. The
entries starting on page 5 of the Application, including the
first entry for January 12, 2004 (the petition date), through
to the end, are allowed in their entirety. The Court makes no
ruling on the issue of how the disallowed portion of the fees
are to be treated. See In re Busetta-Silvia, 314 B.R. at 227,
n. 44 (“If the attorney for the debtor is required to delegate
some of his or her fee to the status of an unsecured creditor,
he or she has a vested interest in seeing the debtor pay as
high a percentage of the unsecured debt as possible. The
debtor, on the other hand, is best served by proposing a plan
that calls for the minimum amount necessary to meet
confirmation standards. These two interests are at unescapable
odds.”).
IT IS THEREFORE ORDERED that the Application is granted
in full as to all entries from January 12, 2004 forward, and
the Application for the period from August 2, 2002, through
January 9, 2004 is granted and denied as set out in the
attached four pages; and
IT IS FURTHER ORDERED that Counsel shall prepare a form
of order consistent with this ruling and taking into account
the interim stipulated order (doc 73), which form of order
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Page 5 of 5
shall calculate the exact amount of compensation and
reimbursement to which Counsel is entitled and for treatment
as an administrative claim and shall disallow for
administrative claim treatment the remainder.
James S. Starzynski
United States Bankruptcy Judge
COPY TO:
Richard J Parmley, Jr
232 N Schwartz Ave
Farmington, NM 87401 -5547
Kelley L. Skehen
625 Silver Avenue SW
Suite 350
Albuquerque, NM 87102 -3111
United States Trustee
P.O. Box 608
Albuquerque, NM 87103
I hereby certify that on August 23, 2005, a true and correct
copy of the foregoing was electronically transmitted, faxed,
delivered, or mailed to the listed counsel and/or parties.
Mary B. Anderson
Case 04-10155-s13 Doc 76 Filed 08/23/05 Entered 08/23/05 14:06:00 Page 6 of 10

Richard J. Parmley, Jr., P.C.
232 N. Schwartz
Farmington, NM 87401

Ph: 505-327-0496

Fax: 505-326-2624

Robert Henley Jun 15/05
6205 Ensenada Way ,
Farmington, NM 87401
File #: 020109BR13

Attention: Inv #: Sample
RE: HENLRO.020109BR Chapter 13
DATE DESCRIPTION HOURS AMOUNT
Aug-02-02 Initial interview regarding Internal Revenue problems 1.50 262.50

and possible Bankruptcy, phone conference with

Citizens Bank, phone conference with Dave Rehbein at
So _IRS. _ -
Aug-07-0 aft answer to Bank of America 0.50 70.00

; Ttgage's complat losure and file.

Aug-22-02- > Con: i rt and Ernie Sells from IRS. 1.00 175.00
Sep-18-02 ~ _Reviow lex fon TRS and Motion for Default, phone 0.80 140.00
A ee ongfence with client. _——
Sep-24-02 STAFF TIME: Begin work on Chapter T3 Bankruptcy. 4.00 160.00
Sep-25-02 STAFF TIME: Review and revise Schedules and 0.50 20.00

Statement of Financial Affairs, go through and highlight
ae information still required from clients. -
f Oct-08-02 Onrerence with Ginny at Citizens regarding 0.80 140.00
; work out, instru i
Caomplai . =. -
Oct-30-02 Phone conference with Robert, conference with Julie to 0.80 140.00
review and revise Schedules, instruction to staff, note to
file,
Oct-31-02 STAFF TIME: Review and revise Bankruptcy 3,00 120.00
documents.
Nov-03-02 Review and revise Schedules and Statement of Financial 0.50 87.50
— Affairs, instruction to staff.
| Nov-04-02 Phone conference with Dave Rehbein at IRS. 0.30 52.50
— —
L STAFF TIMB-fetter to Julie, letter to Ginny Smalley at 0.20 8.00 J
Nov-14-02 Review and revise Schedules aiid Statement of Financial 0.50 87.50

Affairs, instructions to staff.

EXHIBIT A

Case 04-10155-s13 Doc 76 Filed 08/23/05 Entered 08/23/05 14:06:00 Page 7 of 10

wa

June 15,2005

Nov-18-02
Nov-19-02

Nov-21-02

Nov-22-02

Nov-25-02

Nov-26-02
Jan-07-03
Jan-G&-03

Jan-09-03
Jan-10-03
Jan-13-03

Jan-22-03

Feb-10-03

Feb-11-03

Mar-10-63

Mar-11-03

Mar-12-03

STAFF TIME: Review and revise bankruptcy 1.00
documents, letters to Rehbein and Bloomfield.

Review file, instructions to staff, note to file, call client 0.50
(left message), letter to clients,

Review and revise Petition, Schedules, and Statement of 3.80

Financial Affairs, phone conference
conference with Julie,|Angwer At Paint Comp
Review financial and payment history on secured IGans 1.60
to calculate arrearages, draft plan analysis, instructions to

staff, review and revise Schedules and Statement of

Financial Affairs.

Review and revise Chapter 13 plan and plan analysis, 0.80
instructions to staff regarding payoff vs. arrearage on

Citizens loans.

STAFF TIME: Work on Bankruptcy. 1.00
STAFF TIME: Work on IRS forms, tax amounts. 0.40
Review file, call to client, instructions to staff. 0.20
Review Petition and Schedules, review and revise plan 1.00
and plan analysis, instructions to staff, note to file.

Phone conference with Ginny at Citizens Bank regarding 1.50

arrearages, note to file, instruction to staff, review loan
status re: calculate arrearages, phone conference with
client regarding upcoming hearing.

STAFF TIME: Work on Petition and Schedules, Chapter 2.00
13 plan, and plan analysis.
STAFF TIME: Review and revise Petition, Schedules, 2.00

and Statement of Financial Affairs, Chapter 13 plan, and
plan analysis.

Review and revise Plan and Schedules. 1.00
Review file, phone conference with Shapiro & 1.00
Meinhold, fax to Attorney Hankla, instructions to staff, —52
letter to cli Ee,

Complaint
STAFF TIME: Answer American Furniture's compiai

ce, fax to Hankla, file by fax the
t, letter to clients, answe

1.50

to request for production.
STAFF TIME: Work on resp:
for production.
Phone conference
call to Sharon :
Palmer, letter to Sharon Hankla.
IME: Letter to Joe Palmer, letter to Sharon
Hénkla, motion and order for conti

40.00
87.50

665.00

280.00

140.00

. 40.00

16.00
35.00
175.00

262.50

80.00

80.00

175.00

175.00

Case 04-10155-s13 Doc 76 Filed 08/23/05 Entered 08/23/05 14:06:00 Page 8 of 10

June 15, 2005

Mar-25-03

Mar-26-03

Mar-27-03

Apr-08-03
Apr-09-03

Apr-10-03

Apr-17-03
Apr 18-03

Apr-21-03

Apr-23-03

Apr-24-63
Apr-29-03

Apr-30-03

May-02-03

May-07-03
May-08-03
May-09-03

May-12-03

:
|
|
\

Phone conference with Attorney Sharon Hankla
regarding status of Citizens assignment, phone
conference with Attorney Joe Palmer, review Ha

letter to\Palmer.

Confererice with client regarding Citizens Bank w¢rkout,
phone conference with Attorney Joe Palmer. Answer
discovery in\All Paint vs. Henley case, instructions to
staff, phone conference with NMPRC re: Corpoyation
status, note to file. ;

Review corporatédocuments and staff memorgndum,
instruction to staff.

STAFF TIME: Work.on responses to All Paint’s request
for production.

Phone conference with glient, phone conference with
Carl Garling at Citizens Rank, note to file

Conference with client an¥ bank represepitatives Carl
Garling, Joe Palmer, and Ginney Small¢y.

Phone conference with Attomney Hankja regarding BA
ys. Henley, phone conferencd with Jo¢ Palmer regarding
new request for payoff numbets, not¢ to file, instruction
to staff. ‘
Phone conference with Attorne
status of assignment.

Phone conference with Carl Garlfig at Citizens.

oe Palmer regarding

Phone conference (3) with Gingy at Citizens, two phone
calls to Sharon Hankla regardifg payff amount, three
phone conferences with Attofney Joe Palmer regarding
status of wire transfer and wrk on chakge in terms of
agreement, conference call With Court.

Phone conference with Rofert regarding\status of
mortgage at Citizens.

Phone conference with Robert, phone conference with
Ginny at Citizens regarding terms of loans, \nstructions

to staff.
Conference with Rob¢rt, phone conference with

Attorney Palmer's office, phone conference with Karl
Garling. .
Review documents/ phone call to Karl Garling.

Prepare for trial, Appear with client at Magistrate Vourt
on Watson vs. Henley, phone conference with Att@#mey

Sharon Hankla/ conference with with Carl Garling.

Draft Stipulatéd Motion and Order Setting Aside Default

Judgment, phone call to Attorney Sharon Hankla.
Phone conference with Cheryl at Citizens, phone
conferenge with client.

Phone cdnference with Robert, review Order Setting
Aside Judgment.

Phoné conference with Bil! Bloomfield at NM Taxation
& Revenue, call to client, letter to Sharon Hankla, note
to’ file.

ee

1.50

0.30
1.00
0.25
2.00

0.80

0.20
0.50

1.50

0.50

0.50
1.30

0.50

2,00

1.00
0.25
0.30

0.80

262.50

52.50
40.00
43.75
350.00

140.00

35.00
87.50

262.50

87.50

87.50
227.50

87.50

350.00

175,00
43.75

$2.50

140.00

Case 04-10155-s13_ Doc 76 Filed 08/23/05 Entered 08/23/05 14:06:00 Page 9 of 10

June 15,'2005
May-14-03

May-15-03

May-29-03
Jun-19-03
Jun-30-03
Aug-05-03
Aug-08-03
Aug-11-03

Aug-12-03

owt

Phorig conference to Sharon Hankla, two phone cafis to
client, left message.

Phone coxference with Robert, two phone cofiferences
with Citizens, phone call to Sharon Hankl# regarding
endorsement ef note.

Phone conferen¢e (2) with Helen at Magistrate Court,
phone conferencdwith Gene Watsgh, note to file.
Phone conference With Bill Blopfnfield at NM Taxation
& Revenue regarding\paymen? agreement.

Phone conference with Atigfney Joe Palmer's office
regarding dismissal of fors¢losure action.

ints American

: ph ence with
at Citizens, pick up printouts of Citizens* tistes,

pbér ne conference with Attomcy Mike Danoff's offids,

On

Aug-13-03

Aug-26-03
Oct-22-03
Oct-23-03

Nov-03-03

Dec-18-03

Jan-06-04

Jan-09-04

| review and revise Schedules and Statement of Financial

Affairs, instructions fo staff, call to client regarding
additional information,

Fumiture

0.50 87.50
0.50 87.50
0.50 87.50
0.25 43.75
0.20 35.00
0.50 20.00
0.50 87.50
0.30 52.50
2.00 350,00
Ee
CO LOD OK

175.00

1.00
0.20 35.00
1.30 227.50
t ; 2.20 385.00
Review Schedules and Statement of Financial Affairs, 1.50 262.50
conference with clients to review budget and Citizens
Bank default.
unt = —500-00— AM AP
Review Schedules, instruction to staff regarding copy 1.00 175.00
and answers to all discovery in All Paint, review
discovery.
Phone conference with Attorney Joe Palmer. 0.20 40.00
Review and revise Schedules and Statement of Financial 3.50 700.00

Affairs, phone conference with Robert, phone conference
with Julie, phone conference with Ginney at Citizens
Bank regarding copies of notes, phone conference with
Dave Rehbein at IRS.

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