Crestview Funeral Home, Inc.

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
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06/10/06
Crestview Funeral Home, Inc.
95-11923
Order Granting in Part, Denying in Part [1084-1] Application For Compensation (
Fees: $ 9,104.32, Expenses: $ 832.27) by P Diane Webb, attorney for trustee;
payment to P D. Webb of $8238.78 in fees and $629.67 in expenses .
Received on: 2006-02-10 13:35:20.000
2006-02-10 00:00:00.000
2006-02-10 00:00:00.000
Patti Hennessy
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1The objection filed by Lester Salazar is identical to the objection filed by John Salazar. (See
Docket # 1094 and Docke # 1095). At the final hearing on the Sixth Interim Fee Application, counsel
for the Trustee raised the issue of whether Lester E. Salazar had standing to object. In light of the fact
that the objection of Lester Salazar is identical to the objection filed by John Salazar and in light of the
Court’s ruling on the Sixth Interim Fee Application, the Court will not address this argument.
1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: CRESTVIEW FUNERAL HOME, INC. No. 7-95-11923 MA
ORDER ON SIXTH INTERIM FEE APPLICATION FOR
COMPENSATION BY DIANE WEBB AS COUNSEL FOR THE TRUSTEE
THIS MATTER is before the Court on the Fifth Interim Fee Application for Compensation by
Diane Webb (Webb) as Counsel for the Trustee (“Fifth Interim Fee Application”). John L. Salazar
(Salazar), pro se, former president of Crestview Funeral Home, Inc. (“Crestview”), and Lester Salzar,
pro se, filed objections.1 Daniel J. Behles filed a limited objection to the Application, asserting that
because he holds an allowed administrative expense claim which has not yet been paid, the accountant
should not be paid unless his claim is paid contemporaneously. (See Docket # 1091). The Court held a
final hearing on the Sixth Interim Fee Application on January 31, 2006, and the Court took the matter
under advisement. After considering the Sixth Interim Fee Application and the evidence presented at
the final hearing, and being otherwise sufficiently informed, the Court finds:
The Sixth Interim Fee Application covers the period from August 15, 2003 through April 22,
2005. Webb seeks Court approval of compensation requested in the Sixth Interim Fee Application in
the total amount of $9,936.59, broken down as follows: 1) attorneys’ fees in the amount of $8,497.50;
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2Of this amount, Debtor reports that $492.40 is taxable.
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2) expenses and costs in the amount of $832.272; 3) New Mexico gross receipts taxes in the amount of
$606.82.
John Salzar and Lester Salazar filed identical objections to the Sixth Interim Application,
asserting generally that the attorney for the trustee should not be compensated from the estate because
the Chapter 7 trustee and his attorney failed to properly investigate whether certain pre-needs claimants
were covered by insurance, such that less money has been realized from the estate. Consequently, John
Salazar and Lester Salazar allege that the attorney has failed to preserve the estate, and request that the
Sixth Interim Application be denied. At the final hearing, the Trustee testified that he had reviewed the
insurance policies for the Debtor and determined that the policies in effect did not cover the losses
relating to pre-needs accounts. Counsel for the Trustee also testified that she reviewed the insurance
policies in connection with her defense of the adversary proceedings filed by John Salazar against the
Trustee. No evidence of an insurance policy that would have covered the losses from pre-needs
accounts was introduced into evidence at the final hearing on the Sixth Interim Application. The
objection to the Sixth Interim Application based on allegations that the Trustee and counsel for the
Trustee failed to properly investigate possible insurance coverage is overruled.
The Sixth Interim Fee Application summarizes the fees requested by category, as follows:
1. Case Administration:
$405.00 2.7 hours attorney time
2. Tax Issues:
$240.00 1.6 hours attorney time
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3. Adversary Proceeding 00-1091:
$30.00 .3 hour attorney time
4. Discovery Issues:
$855.00 5.7 hours attorney time
5. Fifth Fee Application:
$810.00 5.4 hours attorney time
6. Disgorgement Issue Against Auctioneer:
$570.00 3.8 hours attorney time
$68.94 service fee for service of subpoena and exemption forms
7. Adversary No. 01-1248 time from 3rd and 4th Fee Application:
$2,062.50 13.75 hours attorney time
$ 62.05 copies - 414 copies at .15/copy
$ 5.90 postage
$ 35.00 research Lexis/Nexis
8. Adversary No. 01-1248 time from 5th Fee Application:
$1,890.00 12.60 hours attorney time
$ 75.25 copies
$ 12.21 postage
9. Adversary No. 01-1248 MA from 6th Fee Application:
$1,200.00 8.0 hours attorney time
10. Preparation of fee application for estate accountant:
$195.00 1.3 hours attorney time
$106.95 copies - 713 copies at .15/copy
11. Preparation of Sixth Interim Fee Application:
$240.00 1.6 hours attorney time
$115.35 copies - 769 copies at .15/copy
$ 97.80 copies - 652 copies at .15/copy
$252.82 postage
Whether an objection to compensation as been filed, “the court has an independent duty to
review fee applications. . . ” In re Kusler, 224 B.R. 180, 184 (Bankr.N.D.Okla. 1998). Section 330
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governs compensation of attorneys employed by the trustee, and provides in relevant part as follows:
(a)(1) After notice to the parties in interest and the United States Trustee and a
hearing and subject to sections 326, 328, and 329, the court may award to a trustee,
an examiner, a professional person employed under section 327 or 1103 –
(A) reasonable compensation for actual necessary services rendered by the
trustee, examiner, professional person, or attorney and by any
paraprofessional person employed by any such person; and
(B) reimbursement for actual, necessary expenses.
. . .
(3) In determining the amount of reasonable compensation to be awarded the
court shall consider the nature, the extent, and the value of such services, taking into
account all relevant factors, including –
(A) the time spent on such services;
(B) the rates charged for such services;
(C) whether the services were necessary to the administration of, or
beneficial at the time at which the service was rendered toward
the completion of, a case under this title;
(D) 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; and
(E) whether the compensation is reasonable, based on the
customary compensation charged by comparably skilled
practitioners in cases other than cases under this title.
(4)(A) Except as provided in subparagraph (B), the court shall not allow
compensation for –
(i) unnecessary duplication of services; or
(ii) 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)
In determining whether the requested fees are necessary, the Court will consider whether the
services benefitted the estate, keeping in mind that requested fees need not automatically be denied as
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unnecessary where they do not provide a tangible benefit to the estate. In re Lederman Enterprises,
Inc., 997 F.2d 1321, 1323 (10th Cir. 1993) (determining that necessary fees are those fees that benefit
the estate); Van Cott, Bagley, Cornwall & McCarthy v. B.R. & F., L.C. (In re Ricci Investment
Co., Inc.), 217 B.R. 901, 906 (D. Utah 1998) (noting that “necessary fees include, but are not limited
to those that benefit the estate.”) (citation omitted). When determining whether services benefitted the
estate, “Courts should also consider ‘whether the services rendered promoted the bankruptcy process
in accordance with the practices and procedures provided under the Bankruptcy Code.’” Kusler, 224
B.R. at 184 (quoting In re Spanjer Bros., Inc., 203 B.R. 85, 90 (Bankr. N.D.Ill. 1996)). Work in
defense of an adversary proceeding filed against the Trustee is compensable from the estate, provided
the amount of the fee is otherwise reasonable. See In re Ricci, 217 B.R. at 907 (noting that
“[n]ecessary and actual fees are allowable in situations where the fees are unavoidably incurred . . .
even if they are not of a benefit to the estate.”). In addition, attorneys’ fees incurred in preparation of a
fee application are compensable from the bankruptcy estate. See In re CF & I Fabricators, 131 B.R.
474, 483 (Bankr. D.Utah 1991) (“Because the fee application is required by the bankruptcy court, the
professional is entitled to the reasonable market rate for time in fulfilling that requirement.”) (citation
omitted).
In view of these standards, the Court finds that the following requested amounts must be
disallowed:
a. $30.00 for teleconferences with court reporter regarding transcripts in
connection with Adversary Proceeding No. 00-1091. This amount is trustee work and is not
appropriately compensable as attorneys’ fees incurred by counsel for the Chapter 7 Trustee. See 11
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3The Order on the Fifth Interim Fee Application specifically excluded fees and costs relating to
Adversary No. 00-1248 M. (See Docket # 1074)
6
U.S.C. § 328(b); Kusler, 224 B.R. at 186 (noting that 11 U.S.C. § 328(b) “has been interpreted as
requiring the denial of compensation to an attorney appointed to represent the trustee for performing the
trustee's statutory duties.”) (citations omitted).
b. $168.00 (1.4 hours of the 5.4 hours of attorney time requested) in defending the
Fifth Interim Fee Application. The amount requested is excessive. See In re Vista Foods, USA, Inc.,
234 B.R. 121, 130 (Bankr.W.D.Okla. 1999) (“[Services found to be excessive, redundant, or
unnecessary are not compensable.”) (citations omitted).
c. $127.40 for photocopies charged at .15 per page. The charge for photocopies
compensable by the estate is limited to the actual cost. See CF & I Fabricators, 131 B.R. at 494
(discussing telecopier charges, and noting that in accordance with § 330(a)(2) only “actual, necessary
expenses” may be reimbursed so that only the actual, out of pocket expenses are compensable.
“Professionals cannot make a profit by billing in excess of actual charges for expenses to the estate.”)
(citation omitted). The Court will allow photocopies at the rate of 10¢ per page, for a total allowed
amount of $254.80. (.10 X 2548 copies).
d. $75.25 for photocopies charged in connection with Adversary Proceeding No. 00-
1248 M requested in connection with the Fifth Interim Fee Application.3 This charge for photocopying
does not specify the cost per page and the Court, therefore, cannot determine whether the copy charge
bears a relation to the actual cost incurred. It is not the Court’s job to decipher and interpret entries in
support of a request for compensation. See Kusler, 224 B.R. at 184 (“The burden is on the
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4Of this amount, $289.80 is taxable.
5($7,699.50 in attorneys’ fees + $289.80 in taxable costs) X .0675 = $539.28
6Daniel J. Behles holds an allowed Chapter 11 administrative expense for his services as an
expert witness on behalf of the Debtor. (See Order Granting Application for Compensation - Docket #
307). The Sixth Interim Application is a request for allowance of a Chapter 7 administrative expense,
which has priority over allowed Chapter 11 administrative expenses. See 11 U.S.C. § 726(b) (“ . . . a
claim allowed under section 503(b) of this title incurred under this chapter [7] after such conversion has
priority over a claim allowed under section 503(b) of this title incurred under any other chapter of this
title . . . before such conversion”).
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professional seeking payment from the estate to provide sufficient information regarding the services
rendered and the expenses incurred . . .”).
e. $600.00 (4 hours of the 8 hours of attorney time requested) for work performed in
connection with Adversary No. 00-1248 M included as part of the Sixth Interim Application. Eight
hours of attorney time for the work described in the Sixth Interim Application relating to Adversary No.
00-1248 is excessive.
WHEREFORE, IT IS HEREBY ORDERED that Sixth Interim Fee Application is
GRANTED, in part. Attorneys’ fees in the amount of $7,699.50, costs and expenses in the amount of
$629.674, plus applicable New Mexico gross receipts taxes at the rate of 6.75% in the amount of
$539.285, are hereby APPROVED, for a total allowed amount of $8,868.45. Fees in the amount of
$798.00 and costs in the amount of $202.65 are hereby DISALLOWED.
ORDERED FURTHER, that the limited objection of Daniel J. Behles is overruled.6
____________________________________
MARK B. McFEELEY
United States Bankruptcy Judge
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I hereby certify that a true and correct copy of the foregoing was either electronically
transmitted, faxed, delivered, or mailed to the listed counsel and parties, on the date file-stamped
above.
P. Diane Webb
Attorney for Trustee
PO Box 1156
Albuquerque, NM 87103
Office of the United States Trustee
PO Box 608
Albuquerque, NM 87103
John L. Salazar
1600 Escalante SW
Albuquerque, NM 87104
Lester Salazar
1600 Escalante SW
Albuquerque, NM 87104
Daniel J. Behles
226-A Cynthia Loop NW
Albuquerque, NM 87114
________________________________
Patti G. Hennessy
Law Clerk
(505) 348-2545
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