No. 88-4661.United States Court of Appeals, Fifth Circuit.
December 11, 1989.
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[EDITORS’ NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]Page 1314
Hamilton J. Chauvin, Jr., Lafayette, La., for defendants-appellants, cross-appellees.
Charles N. Wooten, Lafayette, La., pro se.
Philip K. Jones, Liskow Lewis, New Orleans, La., for Continental Illinois Nat. Bank Trust Co.
Appeal from the United States District Court for the Western District of Louisiana.
Before KING, GARWOOD and DAVIS, Circuit Judges.
KING, Circuit Judge:
[1] Both sides appeal from the district court’s reduction of the bankruptcy court’s grant of fees and expenses to the Trustee and Attorney for the Trustee, raising numerous grounds. 90 B.R. 226(W.D.La.). We vacate the district court’s judgment and remand to the district court with instructions to remand to the bankruptcy court for further findings.
I.
[2] Evangeline Refining Co., Inc. (Evangeline), a refining company with retail outlets, instituted a Chapter 11 bankruptcy proceeding on January 6, 1983. Continental Illinois National Bank Trust Company of Chicago (Continental) was the principal lender to and secured creditor of Evangeline. Continental filed a motion for the appointment of a trustee. Charles N. Wooten (Wooten or Trustee) was appointed Trustee and his law firm became Attorney for the Trustee. The service stations and refinery owned by Evangeline were sold in November and December of 1983, respectively. Wooten and his firm served as Trustee and Attorney for the Trustee until
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January 8, 1987 when the matter was converted to a proceeding under Chapter 7.
[3] Over the four year period of Wooten’s administration, he filed three interim fee applications and a final application on behalf of himself as Trustee and separate interim and final applications for his firm as Attorney for the Trustee. The interim applications were initially heard by Bankruptcy Judge Rodney Bernard, Jr. (Judge Bernard). Each of the fee applications was opposed by Continental. [4] The first applications covered a period from March 14, 1983 through July 31, 1983. Wooten sought $52,575.43 as Trustee — an amount at or near the maximum allowable amount under 11 U.S.C. § 326(a)[1] for the funds disbursed over the time frame of the first application. Additionally, Wooten’s firm sought $74,706.25 as Attorney for the Trustee. Wooten also sought $14,452.71 in expenses for the Trustee. The application for Wooten as Trustee did not itemize services actually performed or the amount of time expended by Wooten and was based primarily upon the statutory maximum for funds disbursed, with a brief, general description of tasks performed. The application of Wooten’s firm listed hours worked by senior attorneys, senior staff attorneys, paralegals and secretaries over the time frame of the first application. The application also contained descriptions of tasks performed and total time devoted to each project. However, the application did not specify what employee performed which task, or what that employee’s position was. Excerpts from that application are provided below:Page 1317
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through files and looking at letters and pleadings, [Wooten] would then assess the time as to what he thought was reasonable.” Judge Boe concluded that Wooten’s applications were “essentially estimates.”
[13] During the course of Wooten’s work for Evangeline, Wooten was also trustee in 250 to 300 Chapter 7 cases, standing Chapter 13 trustee for the Lake Charles and Lafayette-Opelousas Divisions of the Western District of Louisiana and served in what Judge Boe termed “a number of fairly large Chapter 11 cases.” Judge Boe noted that these Chapter 11 cases appeared to be “far more significant” than the Evangeline case. Continental was able to locate fee applications in only nine cases. Yet on these cases alone (plus Evangeline), Wooten claimed that he worked an average of 10 to 11.25 hours a day for each calendar day from May through July of 1984. Judge Boe concluded that based upon a comparison with other cases whose hours were known, “the appearance of high mileage and high hourage days is far more than would be reasonable or could be reasonably anticipated or believed.” In addition, Wooten’s claimed hours on these ten cases resulted in six days in which he personally billed over twenty-four hours a day. Wooten claimed these impossible results were explained by secretarial errors, but Judge Boe specifically rejected Wooten’s explanation concluding that, in relation to Wooten’s other cases:[14] The three interim applications presented to Judge Boe for final approval listed time expended by attorneys and other “paralegals” on Evangeline projects. Judge Boe found that “a number of people in Wooten’s firm who had been billed as paralegals … are in fact secretaries.” Beyond the four secretaries billed as paralegals, a pilot and bookkeeper/accountant were also being billed out as “paralegals” under 11 U.S.C. § 330.[4] [15] Dan Keefe (Keefe), who formerly served as an attorney in Wooten’s firm, was called by Continental. Keefe stated that he had maintained records for the time he worked and had produced monthly summaries on his computer. These records revealed the following summary:[5]It’s not reasonable to believe that these types of hours can be put in on what is less than the full responsibilities of Mr. Wooten. I’m referring now to the fact that as mentioned earlier these cases did not exhaust the total gamut of cases for which he had responsibility. And recording the right hours on the wrong day does not explain some of these situations where I see high billing day after day after day, even if it was recorded on the wrong day. The theory that the dictation was done or the writing was done on one day and typed and recorded as being billed on some other day just doesn’t hold up under these kinds of — these types of hours.
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II.
[21] Wooten contends that the district court improperly relied on the magistrate’s report
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and recommendation and effectively allowed the magistrate to become an appellate court for a bankruptcy appeal. We disagree — finding that the district court exercised independent judgment on the appeal from Judge Boe’s ruling.
[22] After Judge Boe’s decision was appealed to the district court, District Judge Veron referred the case to Magistrate Trimble for a report and recommendation without the consent of the parties. A hearing was held and the magistrate issued a report. The parties filed written objections and Wooten moved to strike the report. The district court recalled the reference to the magistrate saying that he would “now decide this appeal as an appeal of first impression.” However, according to Wooten, the district court relied upon and parroted the magistrate’s report. Continental disagrees and maintains that the district court exercised its independent judgment. [23] In Minerex Erdoel, Inc. v. Sina, Inc., 838 F.2d 781, 786 (5th Cir.), cert. denied, ___ U.S. ___, 109 S.Ct. 57, 102 L.Ed.2d 35(1988), we examined the intricate scheme for bankruptcy appeals and determined that it did not allow bankruptcy appeals laid at the district court’s door to be referred to a magistrate. Accord Matter of Elcona Homes Corp., 810 F.2d 136 (7th Cir. 1987). Wooten contends that the district court evaded our holding i Minerex by referring to the magistrate and then recalling the reference but parroting the magistrate’s report and recommendation. Were the facts as Wooten represents them to be, we might agree. However, the district court recalled the reference to the magistrate explicitly to comply with Minerex.
The district court exercised its independent judgment and, in fact, reached a different conclusion from that of the magistrate on the amount of compensation that should be awarded to the Trustee and his counsel. Thus, we conclude that the district court corrected its improper reference to the magistrate and complied with Minerex.
III.
[24] Wooten next argues that the bankruptcy judge improperly quashed the subpoena for an attorney for Continental and then erred in failing to invoke the adverse witness rule when Continental failed to call the attorney as a witness. The district court rejected both of Wooten’s contentions.
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593 F.2d 649, 652 (5th Cir. 1979). Here the deposition sought was of limited probative value and largely cumulative. Thus, we conclude that Judge Boe did not abuse his discretion in quashing Gay’s subpoena.
[27] Next we turn to Judge Boe’s failure to invoke the adverse witness rule. Under the adverse witness rule, a party’s failure to call a witness under its control who could testify to material facts permits the court to draw an adverse inference against the party in control of the witness. II J. Chadbourn, Wigmore on Evidence § 285 (1979 Supp. 1989). The rule is discretionary and subject to an abuse of discretion standard. Wilcox v. Kerr-McGee Corp., 706 F. Supp. 1258, 1266 (E.D.La. 1989). Because Gay’s testimony was relatively unimportant and largely cumulative, we cannot say that Judge Boe abused his discretion by failing to draw an adverse inference from Gay’s failure to testify. II J. Chadbourn, Wigmore on Evidence § 287 (If a witness testimony is “comparatively unimportant, or cumulative, or inferior to what is already utilized” the adverse witness rule should not be invoked.) (emphasis in original).IV.
[28] Wooten next challenges Judge Boe’s review of Judge Bernard’s interim fee awards and raises three separate attacks. First, Wooten contends that although interim awards are interlocutory and subject to limited review, Judge Boe substituted his judgment for that of Judge Bernard and stepped beyond the review powers he possessed. Next, Wooten contends that Judge Bernard’s decision on the interim fee awards constituted the “law of the case.” Finally, Wooten maintains that Judge Boe failed to invoke a presumption of regularity as to Judge Bernard’s awards when Continental failed to supply a complete record of the earlier proceedings before Judge Bernard. The district court rejected each of Wooten’s arguments.
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binds a court.[7] As Wright, Miller and Cooper emphasize, for the law of the case doctrine to apply, “only a `final ruling’ will do. . . .” 18 C. Wright, A. Miller E. Cooper, Federal Practice and Procedure § 4478 (1981 Supp. 1989). Finality in this sense does not refer to technical concepts of finality but rather is a functional finality which “seeks to identify a determination intended to put a matter to rest.” Id. Interim fee awards are not final determinations intended to put a matter to rest. Rather, they are interlocutory and reviewable, and are intended only to provide some interim relief from the economic hardships of subsidizing litigation. Thus, we conclude that the law of the case doctrine does not apply to interim fee awards and Judge Boe was not obligated to apply the doctrine when reviewing Judge Bernard’s interim awards. Accord In re Kendavis Indus. Int’l, 91 B.R. 742, 746-47 (Bankr.N.D.Tex. 1988) (rejecting the law of the case doctrine for interim fee awards).
[32] In Wooten’s final contention with respect to Judge Boe’s review of Judge Bernard’s interim fee awards, he contends that Continental’s failure to prompt Judge Bernard to provide a record of the reasons for his interim fee awards gives rise to a presumption of correctness with respect to Judge Bernard’s awards. Where an appellant fails to provide an adequate appellate record on an issue finally decided by a prior court, that failure makes his road to victory difficult at best. See Davis v. City of Abbeville, 633 F.2d 1161, 1164 (5th Cir. 1981) (lack of recorded transcript and failure of appellant to prepare a statement of proceedings under Fed.R.App.Proc. 10(c) resulted in a decision of no remand for articulation of Johnson factors on fee application); In re Boteiho, 8 B.R. 305 (Bankr. 1st Cir. 1980) (it is sometimes incumbent upon a party planning to appeal to request the findings that provide the basis for a “bare” order on a fee application, and failure to do so may result in dismissal of an appeal). Judge Bernard’s fee awards were not “appealed” to Judge Boe. Rather, they were presented to Judge Boe for review and final approval — which included complete consideration of the propriety of the preliminary awards. While Judge Boe might have benefited from Judge Bernard’s insight through findings of fact and conclusions of law, Continental’s failure to request findings from Judge Bernard was not improper and it was certainly not an abuse of discretion for Judge Boe to refrain from drawing an adverse inference from their absence. Thus, we hold that Judge Boe committed no error in reviewing Judge Bernard’s interim fee awards.V.
[33] On cross-appeal from the award of any compensation to Wooten in his capacity as Trustee and Attorney for the Trustee, Continental contends that Wooten committed misconduct by intentionally filing false interim fee applications and, as a result, should be denied all compensation. In reviewing this contention, the bankruptcy court’s fact findings in relation to misconduct are subject to clearly erroneous review under Bankruptcy Rule 8013, while the ultimate award of compensation is governed by an abuse of discretion standard. See Matter of U.S. Golf Corp., 639 F.2d 1197, 1201 (5th Cir. 1981).
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of fee applications and that, in fact, no misconduct occurred.
[35] Bankruptcy Judge Boe, in his findings of fact and conclusions of law, found that Wooten engaged in overbilling, and characterized the overbilling as “consistent” and “systematic.” Judge Boe also found that in light of the large number of cases upon which Wooten served as trustee or counsel (including a number of Chapter 11 cases larger than the Evangeline case), Wooten’s claimed hours on Evangeline could not be “reasonably anticipated or believed.” Moreover, Judge Boe rejected any claim of negligence in data entry as to those days where Wooten personally claimed over twenty-four hours a day on Evangeline and the other cases for which Wooten’s hours were known. Finally, Judge Boe refused to discredit Keefe, although he apparently did not fully credit his testimony. Keefe testified that he worked only 41 of the 439 hours claimed by Wooten. In construing Judge Boe’s opinion, the district court stated:[36] We first examine the law in relation to the filing of fraudulent fee applications, i.e., fee applications containing misrepresentations of fact made with knowledge of their falsity and intent to deceive, and then turn to the findings of misconduct made in this case. [37] The charge of submission of fraudulent fee applications is a “wholesale objection” to a fee award which calls into question the professional integrity of the applicant. Bernstein King Collier Bankruptcy Compensation Guide ¶ 4.08 (1989). The Supreme Court has emphasized that claims for fees and costs must not be “excessive,” and must, in all respects, be “fairly and honestly made.” Hensley v. Eckerhart, 461 U.S. 424, 433-34, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40 (1982); Trustees v. Greenough, 105 U.S. 527, 537, 26 L.Ed. 1157 (1881). Moreover, we have warned counsel not to venture into “any possible abuses of compensation.” Matter of Consol. Bancshares, 785 F.2d 1249, 1255 (5th Cir. 1986) (conflict of interest). When persons perform duties in the administration of the bankruptcy estate, they act as “officers of the court” and not private persons. Callaghan v. Reconstruction Fin. Corp., 297 U.S. 464, 468, 56 S.Ct. 519, 521, 80 L.Ed. 804 (1935); York Int’l Bldg. v. Chaney, 527 F.2d 1061, 1068 (9th Cir. 1975). As such, trustees and attorneys for trustees are held to high fiduciary standards of conduct. Matter of Consol. Bancshares, 785 F.2d at 1255. [38] The filing of a fraudulent fee application by a trustee or attorney for the trustee is a flagrant violation of the obligation of candor to the court and fiduciary obligations to the estate.[8] Where a trustee or attorney for the trustee misrepresents facts to the court with knowledge of their falsity and intent to deceive,[9] courts have repeatedly denied compensation. See, e.g., Matter of Futuronics Corp., 655 F.2d 463, 470-71 (2d Cir. 1981), cert. denied, 455 U.S. 941, 102 S.Ct. 1435, 71 L.Ed.2d 653 (1982); In re Endeco Inc., 675 F.2d 166, 167 (8th Cir. 1982); Matter of Arlan’s Dept. Store, 615 F.2d 925, 943-44 (2d Cir. 1979); In re Devers, 33 B.R. 793, 799The evidence in this case overwhelmingly reflects that there are great discrepancies both in the amounts charged by Wooten for the services of his employees, and for the number of billable hours which were credited to his firm for the work that was allegedly performed…. In addition, there is overwhelming evidence that the amount of hours billed in a single day were inaccurate, as evidenced by the fact that more than 24 hours were sometimes billed for tasks performed in a single day.
(D.D.C.), aff’d without opinion, 729 F.2d 863 (D.C. Cir. 1983). Because fraud on the court and
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estate is misconduct of the highest order, courts have denied all compensation despite benefits to the estate. See, e.g., Matter of Futuronics Corp., 655 F.2d at 471; In re Endeco, 675 F.2d at 167.[10]
[39] In Matter of Futuronics, general counsel for the debtor-in-possession in a Chapter 11 proceeding had filed an application for retention of special counsel which was denied because of an apparent fee-splitting arrangement. One month later, the two firms involved “deviously deleted the unseemly portions from the application, covertly agreed to maintain the [fee-splitting] agreement in any event, and resubmitted their proposed order devoid of any reference to their prior attempt or their continued illicit contract.” Matter of Futuronics, 655 F.2d at 470. The bankruptcy judge later learned of the clandestine fee sharing arrangement, but determined that some compensation should be awarded despite the misconduct. Id. at 468. On appeal, the district court found that the bankruptcy judge had abused his discretion by awarding any fees. Id. The district court found that counsel had “intentionally kept the court in the dark” and that counsels’ actions were “totally unprofessional and in breach of their respective duties as fiduciaries and officers of the court.” Id. Under such circumstances, the district court concluded that “a Judge would indeed be remiss if he were to permit a firm guilty of such conduct to be compensated.” Id. The Second Circuit affirmed, finding that the “flagrant breach of fiduciary obligations to the bankruptcy court … warranted no less than a total denial of compensation.”[11] Id. at 470. In reaching its conclusion, the court rejected counsels’ contention that its false statements to the court should be overlooked because the efforts of counsel benefitted the estate. The court found that the “potential danger” of illicit conduct makes it “obnoxious” and refused to countenance counsels’ assertions. Id. at 471. [40] Fraudulent statements to the court regarding a fee arrangement also resulted in denial of compensation in Matter of Arlan’s Department Stores, 615 F.2d at 943. There, general counsel for the debtor-in-possession in a Chapter 11 proceeding filed false affidavits asserting that it had never represented the debtor, and intentionally failed to disclose to the court certain fee arrangements as required by the Bankruptcy Rules. Id. at 929-36. Compensation was denied by the district court, and the court of appeals affirmed. The Second Circuit characterized counsels’ actions as a “serious breach of fiduciary obligations” that demonstrated a “callous disregard of professional obligations ….” Id. at 943. In light of counsels’ fraudulent statements, the court found no abuse of discretion in the district court’s denial of all compensation and concluded that a judge “would have been remiss had he failed to find otherwise.” Id. at 944. [41] Numerous other cases have held that where a trustee or attorney for the trustee makes fraudulent statements in the course of seeking an award, all compensation should be denied. In re Devers, 33 B.R. at 799 (failure to disclose prior compensation to bankruptcy court — “breach of duty warrants the severe penalty of denial of all compensation … irrespective of whether any actual harm may have resulted”);Page 1325
In re Endeco Inc., 675 F.2d at 167 (trustee’s embezzling funds — all compensation denied despite benefits to estate); In re Pigs are Beautiful, 72 B.R. 874, 878-79 (Bankr.N.D.Ohio 1987) (trustee’s manipulation of dates on checks and making of false statements to court so that he might receive payment while concurrently obstructing disposition of creditors’ funds — forfeiture of compensation is appropriate sanction); In re Barry Yao Co., 175 F. Supp. 726, 730 (S.D.Calif. 1960), rev’d on other grounds, 286 F.2d 299, 302 (9th Cir. 1961) (misrepresentation of “value and extent of services rendered” in fee application necessitates a denial of all compensation). When a trustee or attorney for the trustee intentionally misrepresents facts to the court in a fee application or in related proceedings, a mere reduction in fees would clearly be an inadequate deterrent. At least where such misrepresentations are serious or substantial, all compensation should be denied.
[42] Judge Boe’s findings of consistent and systematic overbilling, and unrealistic hours charged by Wooten in light of his other cases, could be read to suggest that Wooten intentionally falsified fee applications. Moreover, Judge Boe’s rejection of Wooten’s claim of negligence in data entry and his refusal to discredit the testimony of Keefe, which seriously conflicted with Wooten’s time records, also imply a finding of misconduct. Finally, because Wooten originally presented the fee applications to Judge Bernard without noting that they were essentially estimates, and because the overbilling by Wooten only fully came out on cross-examination by Continental, one could infer that Wooten sought to deceive the court and the estate into accepting intentionally overbilled fee applications. However, such weighty conclusions should not be lightly implied given the inevitable repercussions to the professional reputation and integrity of those involved. Indeed, Judge Boe’s findings could be understood to mean that the overbilling that occurred spawned from innocent inaccuracies in the post hoc reconstruction of time records. Thus, we must remand to the district court with instructions to remand to the bankruptcy court for a determination of whether Wooten made misrepresentations in his fee applications or in the related proceedings with knowledge of their falsity and intent to deceive. If so, all fees should be denied.VI.
[43] Finally, we turn to Continental’s argument that Wooten failed to satisfy his burden of proof by providing sufficiently detailed and accurate fee applications for the bankruptcy court to exercise independent judgment as to what level of fees were actual, necessary and reasonable.[12] Since bankruptcy judges have discretion in determining attorney and trustee’s fees, we will reverse a determination of fees only upon abuse of discretion. Matter of U.S. Golf Corp., 639 F.2d at 1201. An abuse of discretion arises where (1) the bankruptcy judge fails to apply the proper legal standard or follows improper procedures in determining the fee award, or (2) bases an award on findings of fact that are clearly erroneous. Id. Essentially, Continental argues that Wooten’s fee applications were so wholly lacking in detail and accuracy that he failed to satisfy
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his burden of proof. Continental concludes that it was an abuse of discretion to award compensation to an applicant who failed to provide sufficiently accurate and detailed time records for meaningful independent review.
[44] The applicant bears the burden of proof in a fee application case. Matter of U.S. Gulf Corp., 639 F.2d at 1207. The reviewing court should not venture guesses nor undertake extensive investigation to justify a fee for an attorney or trustee who has not done so himself. It is not an overly burdensome task to enlighten the court as to the work undertaken. Moreover, since every dollar received by the applicant results in one dollar less for creditors, justification for compensation is a necessity. In re Hotel Assoc., 15 B.R. 487, 488(Bankr.E.D.Pa. 1981). This burden was recently reemphasized i Hensley, 461 U.S. at 433, 103 S.Ct. at 1939 (“The party seeking an award of fees should submit evidence supporting the hours worked and rates claimed.”). [45] Bankruptcy Rule 2016 requires that a trustee or attorney for the trustee who seeks interim or final compensation for services or reimbursement of expenses “shall” provide “a detailed statement of (1) the services rendered, time expended and expenses incurred, and (2) the amounts requested.”[13] Although Bankruptcy Rule 2016 requires a “detailed statement,” we have held that fee applications failing to reach an “ideal level of completeness” may suffice. See Matter of Lawler, 807 F.2d 1207, 1212 (5th Cir. 1987). However, an application must be sufficiently detailed and accurate that, in conjunction with any proceeding in connection therewith and the record in the case, a court can make an independent evaluation as to what level of fees are actual, necessary and reasonable. Id. In Matter of Lawler,
applications showed the amount of time devoted to the “case” by each individual involved and established that the charges were not duplicative. Id. While the contents of the applications were not clear, the bankruptcy judge did state that they provided sufficient detail in conjunction with the record and proceedings in the case, to inform the court “as to the extent and quality of the applicants’ services.” In re Lawler, 47 B.R. 673, 676
(Bankr.N.D.Tex. 1985). Given the bankruptcy judge’s conclusion as to the sufficiency of the application, the court held that while the time sheets did not reach the “ideal level of completeness,” they were “sufficiently detailed to allow the bankruptcy court to make an independent evaluation of whether the hours claimed are justified.” Matter of Lawler, 807 F.2d at 1212. [46] Additionally, where the trustee also serves as attorney, courts must pay special attention and time records should distinguish with reasonable specificity the legal services for which compensation is claimed as an attorney from the administrative tasks of the trustee. In re Orbit Liquor Store, 439 F.2d 1351, 1354 (5th Cir. 1971);[14] Matter of Santoro Excavating, 56 B.R. 546, 549 (Bankr.S.D.N.Y. 1986); see also H. Newberg Attorney Fee Awards 417 (1986 Supp. 1989). The problem is especially acute because the trustee’s compensation is subject to statutory maximums under 11 U.S.C. § 326, and trustees may attempt to evade the limits imposed upon their compensation by allocating trustee work to attorney work in a
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fee application. See, e.g., In re Prairie Cent. Ry., 87 B.R. 952, 959-60 (Bankr.N.D. Ill. 1988). Moreover, inherent dangers of duplicative charging by the attorney and trustee for the same work are present. See In re Hudson Shipbuilders, 794 F.2d 1051, 1058-59 (5th Cir. 1986) Matter of Bar-B-Que Management Assoc., 82 B.R. 152, 153-54
(Bankr.M.D.Fla. 1988).
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but fails to explain why compensation was awarded at the level it was given, it is difficult, if not impossible, for an appellate court to engage in meaningful review of a fee award. See generally Matter of Texas Extrusion Corp., 836 F.2d 217, 220-21 (5th Cir. 1988).
[49] Judge Boe determined that Wooten’s figures, based on reconstructed time records, were “essentially estimates” and had “less than full probative value.” Moreover, Judge Boe determined that Wooten engaged in “consistent” and “systematic” overbilling. The court was also “concerned about the lack of certain reports” and expressed serious doubt as to whether Wooten’s time records had any indicia of reliability. Judge Boe found that, in relation to some of the other cases with which Wooten’s firm was involved, Wooten’s claimed hours could not be “reasonably anticipated or believed.” [50] In the face of these findings, both Judge Boe and the district court determined that fees should be awarded. Judge Boe found that “something needs to be paid back, even though in percentage terms it is a small amount.” He then ordered Wooten as Trustee and his firm as Attorney for the Trustee to return $10,000 each to the estate. Judge Boe did not clearly explain whether he believed Wooten had met his burden of proof of submitting sufficiently detailed and accurate records for an independent assessment of actual, necessary and reasonable fees and he did not explain why compensation was justified at the level he awarded it. To a court reviewing this award, it appears that Judge Boe picked a number out of mid-air. The district court expressed concern about this aspect of Judge Boe’s reasons, but then went on to arrive at a number that, in candor, suffers from the same defect. The district court determined that Judge Boe’s $10,000 reduction in compensation was not “substantial” enough, and then reduced the awards to the Trustee and Attorney for the Trustee by 50% — failing to explain how it arrived at this figure. We are wholly unable to make an assessment of the propriety of a fee award based on a number alone, devoid of any explanation of the method for its derivation. It may well be, as Continental asserts, that the fee applications, in conjunction with the hearing and the record in this case, provide an inadequate basis upon which to make an assessment of what fees are actual, necessary and reasonable. On the other hand, it may be that such an assessment can be and was made here, but neither the bankruptcy court nor the district court has provided an explanation of how its assessment was arrived at. [51] Recognizing the harsh result that obtains when fees are denied in their entirety, and in view of the fact that a remand is necessary to resolve the misrepresentation issue discussed above, we vacate the fee award and remand the issue of the amount of the fees to be granted to the bankruptcy court for a redetermination, consistent with the standards expressed in this opinion, of whether compensation should be awarded at all, and if so, in what amount. If it is determined that fees should be awarded, the court should clearly explain how it arrived at the level of compensation awarded. [52] VACATED and REMANDED.(a) In a case under chapter 7 or 11, the court may allow reasonable compensation under section 330 of this title of the trustee for the trustee’s services, payable after the trustee renders such services, not to exceed fifteen percent on the first $1,000 or less, six percent on any amount in excess of $1,000 but not in excess of $3,000, and three percent on any amount in excess of $3,000, upon all moneys disbursed or turned over in the case by the trustee to parties in interest, excluding the debtor, but including holders of secured claims.
(b) In a case under chapter 12 or 13 of this title, the court may not allow compensation for services or reimbursement of expenses of the United States trustee or of a standing trustee appointed under section 586(b) of title 28, but may allow reasonable compensation under section 330 of this title of a trustee appointed under section 1202(a) or 1302(a) of this title for the trustee’s services, payable after the trustee renders such services, not to exceed five percent upon all payments under the plan.
(c) If more than one person serves as trustee in the case, the aggregate compensation of such persons for such service may not exceed the maximum compensation prescribed for a single trustee by subsection (a) or (b) of this section, as the case may be.
(d) The court may deny allowance of compensation for services or reimbursement of expenses of the trustee if the trustee failed to make diligent inquiry into facts that would permit denial of allowance under section 328(c) of this title or, with knowledge of such facts, employed a professional person under section 327 of this title.
11 U.S.C. § 326.
(a) After notice to any parties in interest and to the United States trustee and a hearing, and subject to sections 326, 328, and 329 of this title, the court may award to a trustee, to an examiner, to a professional person employed under section 327 or 1103 of this title, or to the debtor’s attorney —
(1) reasonable compensation for actual, necessary services rendered by such trustee,
examiner, professional person, or attorney, as the case may be, and by any paraprofessional persons employed by such trustee, professional person, or attorney, as the case may be, based on the nature, the extent, and the value of such services, the time spent on such services and the cost of comparable services other than in a case under this title; and
(2) reimbursement for actual, necessary expenses.
(b) There shall be paid from the filing fee in a case under chapter 7 of this title $45 to the trustee serving in such case, after such trustee’s services are rendered.
(c) Unless the court orders otherwise, in a case under chapter 12 or 13 of this title the compensation paid to the trustee serving in the case shall not be less than $5 per month from any distribution under the plan during the administration of the plan.
(d) In a case in which the United States trustee serves as trustee, the compensation of the trustee under this section shall be paid to the clerk of the bankruptcy court and deposited by the clerk into the United States Trustee System Fund established by section 589a of title 28.
11 U.S.C. § 330 (emphasis added).
(5th Cir. 1974). Wooten asks us to overrule Johnson. We decline Wooten’s invitation and, of course, are powerless to reverse a prior panel’s opinion absent supervening statute or Supreme Court decision. Affholder Inc. v. Southern Rock Inc., 746 F.2d 305, 311 (5th Cir. 1984). While the Supreme Court noted in Hensley
that some factors in Johnson “are subsumed within the initial calculation of hours reasonably expended at a reasonable hourly rate,” the Court in no way denied the utility of the Johnson
analysis. Hensley, 461 U.S. at 434 n. 9, 103 S.Ct. at 1940 n. 9. The Johnson analysis was applied to bankruptcy proceedings in In re First Colonial Corp. of America, 544 F.2d 1291 (5th Cir.), cert. denied, 431 U.S. 904, 97 S.Ct. 1696, 52 L.Ed.2d 388 (1977).
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