Judith E Haney

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

In Re: )

)

JUDITH E. HANEY ) Case No. 21-02007-TOM-13

)

Debtor. )

______________________________________________________________________________

MEMORANDUM OPINION AND ORDER

ON FINAL APPLICATION FOR COMPENSATION AND EXPENSES

This case came before the Court for hearing on April 28, 2022, on the “Final Application

for Compensation and Expenses” (Doc. 81, the “Fee Application”) filed by William Dennis

Schilling; “Debtor’s Objection to Trustee’s Fees Filed by Dennis Schilling (Document 81)” (Doc.

104, the “Original Objection”) filed by Judith E. Haney; “Response to Debtor’s Objection to

Trustee Counsel’s Fees” (Doc. 108, the “Response”) filed by William Dennis Schilling; “Debtor’s

Renewed Objection to Payment of William Dennis Schilling’s Attorney’s Fees” (Doc. 248, the

“Renewed Objection”) filed by Judith E. Haney; and “Debtor’s Supplement to Objection to

Payment of Invoice (Document 81)” (Doc. 492, the “Supplement to Objection”) filed by Judith E.

Haney (the Original Objection, the Renewed Objection, and the Supplement to Objection,

collectively, the “Fee Objections”). In addition, the “Debtor’s Summary of Objections to Payment

of William Dennis Schilling’s Professional Fees (Doc. 81)” (Doc. 548) was filed by Judith E.

Haney on the morning of the hearing.

Appearing before the Court were Judith E. Haney, the Debtor;1 William Dennis Schilling

(“Schilling”) for himself;2 Richard M. Blythe as attorney for J. Thomas Corbett, Bankruptcy

1 The Debtor is appearing pro se.

2 This case was originally filed as a Chapter 7 case. The Chapter 7 Trustee’s application seeking to employ Schilling

as his counsel (Doc. 20) was approved by this Court’s Order (Doc. 47) shortly after the case was filed

Administrator; Rachel L. Webber, attorney for J. Thomas Corbett in his individual capacity;

Joseph E. Stott, attorney for Andre M. Toffel, former Chapter 7 Trustee,

in his individual capacity; and Mary Frances Fallow, attorney for the Chapter 13 Trustee. This

Court has jurisdiction pursuant to 28 U.S.C. §§ 1334(b), 151, and 157(a) and the District Court’s

General Order of Reference Dated July 16, 1984, as Amended July 17, 1984.3 This is a core

proceeding arising under Title 11 of the United States Code as defined in 28 U.S.C. § 157(b)(2)(A)

and (O).4 The Court has considered all of the pleadings, the testimony, the exhibits, the arguments,

and the law, and finds and concludes as follows.5 The Court adopts all of the findings and

conclusions from all of its prior orders entered thus far in the bankruptcy case and in the adversary

proceeding.

FINDINGS OF FACT6

The Debtor filed her bankruptcy case, originally under Chapter 7, on August 26, 2021.7

Andre Toffel was added to the Debtor’s case as Chapter 7 Trustee on September 7, 2021, and his

Application for Approval of Employment of Professional Person (the “Employment Application”)

3 The General Order of Reference Dated July 16, 1984, As Amended July 17, 1984 issued by the United States

District Court for the Northern District of Alabama provides:

The general order of reference entered July 16, 1984 is hereby amended to add that there be hereby referred

to the Bankruptcy Judges for this district all cases, and matters and proceedings in cases, under the

Bankruptcy Act.

4 28 U.S.C. §157(b)(2)(G) provides as follows:

(b)(2) Core proceedings include, but are not limited to–

(A) matters concerning the administration of the estate;

. . . .

(O) other proceedings affecting the liquidation of the assets of the estate or the debtor-creditor or the equity

security holder relationship . . . [.]

5 This Memorandum Opinion and Order constitutes findings of facts and conclusions of law pursuant to Federal

Rule of Civil Procedure 52, applicable to contested matters in bankruptcy pursuant to Federal Rule of Bankruptcy

Procedure 7052 and Federal Rule of Bankruptcy Procedure 9014.

6 Pursuant to Rule 201 of the Federal Rules of Evidence, the Court may take judicial notice of the contents of its

own files. See ITT Rayonier, Inc. v. U.S., 651 F.2d 343 (5th Cir. 1981); Florida v. Charley Toppino & Sons, Inc.,

514 F.2d 700, 704 (5th Cir. 1975).

7 The bankruptcy case was first assigned to Bankruptcy Judge D. Sims Crawford and Chapter 7 Trustee James G.

Henderson. On September 7, 2021, James G. Henderson rejected his appointment as Chapter 7 Trustee and Andre

M. Toffel was appointed as the new Chapter 7 Trustee. On September 8, 2021, the Debtor’s bankruptcy case was

reassigned for cause from Judge Crawford to this Court.

seeking to employ Schilling as “attorney for Trustee” was filed on September 8, 2021. Doc. 20.

On the same day Schilling filed a Notice of Appearance and Request for Service. Doc. 21. Of

particular importance to the Fee Application and Fee Objections, the Employment Application

contains the following language:

3. The specific facts showing the necessity for the employment here requested

are as follows:

Complicated case involving analysis of potential causes of action,

decision as to whether to file adversary proceeding and if so to

prosecute same as well as various other analysis and assistance for

which legal assistance is required.

. . . .

8. . . . .

Allowance for expenses (if any):

To be reimbursed after court approval

Hourly basis for said person and for each other person expected to perform

work and to be included in any application for compensation:

$400.00 per hour for attorney time

$ 90.00 per hour for paralegal time

Doc. 20, at 2.8 On September 14, 2021, an Amended Notice and Order Approving Employment of

Attorney (Doc. 37, the “Employment Notice and Order”) was entered, providing that the

Employment Application would be deemed approved unless a written objection was filed within

21 days after entry of the Amended Notice and Order. No objections to the Employment Notice

and Order were filed.9

8 The Employment Application and Notice of Appearance and Request for Service were sent to directly to the

Debtor’s attorney of record at the time. The Debtor’s now-former counsel filed a motion seeking to withdraw from

his representation of the Debtor (Doc. 14); while that motion was not served directly on the Debtor by the Clerk’s

Office or the Bankruptcy Noticing Center since she was represented by counsel, attached to the motion is an email

from the Debtor to counsel letting him know in no uncertain terms that his services were “hereby terminated

effective immediately.” Consequently, the Debtor knew or should have known that the attorney was withdrawing

from the case. The order granting the motion to withdraw (Doc. 23) was sent directly to the Debtor. See Docs. 23,

29.

9 The Employment Application was sent to Debtor’s then-attorney. Attorneys are charged with sending copies of

motions and other documents to their clients. However, the Employment Notice and Order was sent directly to the

On September 13, 2021, the Chapter 7 Trustee filed a document entitled Case Status

Change (Doc. 30) explaining that the original notice of the meeting of creditors indicated that no

assets would be available to pay unsecured creditors; however, since that time, he had “discovered

property of the estate which [he] would reduce to cash. After payment of administrative expenses,

it appears there will be a distribution to unsecured creditors.” Doc. 30, at 1.

Also on September 13, 2021, the Debtor filed a document entitled Withdrawal of Chapter

7 Petition Case No. 21-02007-DSC7 (Doc. 32, the “Withdrawal of Petition”) stating she wanted

to “withdraw” her bankruptcy petition because she could pay her creditors and wanted to avoid

“further harm to her creditors and to herself.” Doc. 32, at 1. The Withdrawal of Petition was

followed by an Amended Motion to Voluntarily Dismiss Chapter 7 Petition Case No. 21-02007-

DSC7 (Doc. 40, the “Amended Motion to Dismiss”) on September 14, 2021.

This Court scheduled a telephonic hearing10 for October 18, 2021 on the Debtor’s

Withdrawal of Petition and Amended Motion to Dismiss. On September 20, 2021, less than one

week after the Amended Motion to Dismiss was filed, the Debtor filed a Withdrawal of Motion to

Dismiss Chapter 7 Petition Case No. 21-02007-DSC7 (Doc. 49) and a Motion to Convert Case to

Chapter 13 (Doc. 51, the “Motion to Convert”). After a hearing on October 21, 2021, this Court’s

Order granting the Motion to Convert was entered the same day. Doc. 78.

Also on the same day as the hearing, and after the Order converting the case was entered,

Schilling filed his Fee Application requesting $4,000 in compensation and $51.53 in expenses for

a total of $4,051.53. Doc. 81. Attached to the Fee Application is a copy of his “pre-bill worksheet”

Debtor at her address of record. See Doc. 37-1 attached to Doc. 37. Thus, the Debtor would have known about the

Employment Application even if the attorney never sent it to her. The Debtor has demonstrated she has access to the

Court’s PACER system apparently with her own account (she has requested permission more than once to file

documents electronically), and it has been this Court’s experience that the Debtor has actively monitored this case.

The bottom line is that the Debtor had the opportunity to object to the Employment Application but did not do so.

10 At that time all hearings were being held telephonically due to the pandemic.

detailing his work, time spent, and expenses incurred as counsel for the Chapter 7 Trustee.11 Per

the Fee Application, Schilling first performed work for the Chapter 7 Trustee on September 7,

2021, the day the Chapter 7 Trustee was appointed; the Employment Application was filed one

day later. This Court’s Amended Notice and Order was entered on September 17, 2021, and on

October 25, 2021, the Debtor filed her Original Objection. It is at this point that the bankruptcy

case in general took a highly contentious turn.

Obviously, the Debtor’s Fee Objections reflect that the Debtor takes issue with Schilling’s

charges relating to his work for the Chapter 7 Trustee; however, the Fee Objections tell only part

of the story. The Debtor filed a considerable number of documents, including motions and

objections, and renewed and supplemental versions of motions and objections, when this Court

did not rule as quickly as the Debtor wanted or when she was unhappy with the outcome. In just

about every document that the Debtor filed, she made hateful and malicious allegations and

remarks that called out virtually every person involved in any way in her bankruptcy case.12 On

October 29, 2021, the Debtor filed a state court action against Schilling, the former Chapter 7

Trustee, and a law firm involved in separate state court action brought by the Debtor. The state

court case was removed to this Court on November 2, 2021 and designated as Adversary

Proceeding No. 21-00045-TOM.13

11 Schilling’s pre-bill worksheet indicates that he incurred fees and expenses in the total amount of $5,728.53. In his

Application for Compensation Schilling requested reduced fees of $4,000, for a total requested fees and expenses in

the amount of $4,051.53.

12 The Debtor has sought numerous times in several ways to remove this Court from her bankruptcy case, alleging

bias and lack of impartiality, among other things. This Court has declined to recuse from this case and the Debtor’s

appeals of those orders have been unsuccessful. On August 11, 2022, the Debtor filed another Motion to Disqualify

Judge Tamara O. Mitchell (BK Doc. 571, AP Doc. 45). This Court’s Notice and Order on Motion to Disqualify

Judge Tamara O. Mitchell was entered on August 12, 2022 (BK Doc. 573, AP Doc. 159).

13 Schilling soon filed a counterclaim against the Debtor. The adversary proceeding is still pending between the

Debtor and Schilling; however, the Chapter 7 Trustee and the law firm were dismissed as defendants on February

10, 2022.

Due to the Debtor’s continued repetitive, combative pleadings, this Court issued on

December 8, 2021 an Order Directing the Debtor and All Parties to Cease Repetitive Filings and

Authorizing Enforcement of This Order. (Doc. 306, the “Order to Cease”). In addition to ordering

the parties to stop filing repetitive documents the Court cautioned the parties that it could strike or

deny relief as to any document violating the Order to Cease. Although the Debtor did abide by the

Order to Cease briefly, she eventually resumed filings as before, prompting this Court to issue an

Order for a Hearing to Be Scheduled and Noticed for Debtor and Any Party to Show Cause Why

the Bankruptcy Case and the Adversary Proceeding Should Not Be Dismissed Immediately. Doc.

307. On February 10, 2022, this Court’s lengthy Memorandum Opinion and Order on Notice to

Show Cause Why the Bankruptcy Case and the Adversary Proceeding Should Not Be Dismissed

(Doc. 423, the “Show Cause Opinion”) was entered, revealing the Court’s conclusion that

sanctions under both Bankruptcy Rule 9011 and the Court’s inherent powers were appropriate;

however, because the Debtor owed a significant sum to unsecured creditors and needed bankruptcy

relief, this Court declined to dismiss the case at that time but cautioned the parties that “the case

shall proceed in a civilized, respectful, courteous, and business-like manner,” warned against

repetitive filings, and directed that filings were “not [to] be vicious, malicious, vexatious or mean-

spirited as those terms are viewed and perceived by a reasonable person.”14 Doc. 423, at 43.

This very brief history of the events in this bankruptcy case provides the background

helpful for understanding the issues involved in the Fee Application and the Fee Objections

14 Despite this Court’s directive in the Show Cause Opinion, the Debtor once again started peppering her filings with

unnecessarily hostile accusations of Schilling’s “disturbing, bizarre, behavior,” “threatening conduct,” “childlike

rebellion,” abuse, and lying, and this Court’s “allow[ing] him to continue amidst the shock, disdain, and distraction

that his offensive behavior induced.” Doc. 553, at 1-2, Motion to Disqualify William Dennis Schilling Pursuant to

Canon Nine, ABA Model Rules of Professional Conduct. Some of the Debtor’s later filings have been anything but

civilized, respectful, courteous, and business-like. However, within the last couple of months or so, the Debtor has

refrained from filing the volume of documents that she has in the past. The Court can only speculate that the Debtor

may have perhaps slowed her pace because these matters were under submission.

currently before this Court. The Debtor has consistently fought to block any participation by

Schilling in her case, especially since the time of conversion, arguing strenuously that Schilling is

not an “interested party.”15 As noted, the Debtor has taken aim against almost everyone involved

in this case, but her vitriol has been especially concentrated first against Schilling and then against

this Court for not prohibiting Schilling from participating in this case. It is not surprising that the

Debtor has objected to the entirety of Schilling’s requested fee, as is her right to do.16

Schilling’s Fee Application with the attached pre-bill worksheet reflects that he seeks

compensation of $4,000 and expenses of $51.53 as an administrative expense for his work

performed for the Chapter 7 Trustee from September 7, 2021 “to conclusion of case.” Doc. 81, at

1. The Debtor has particularly expressed opposition to Schilling’s charges billed in the days prior

to entry of the Court’s Employment Notice and Order on September 14, 2021; she asserts those

charges are in violation of the Handbook for Chapter 7 Trustees (the “Handbook”) published by

the U.S. Department of Justice17 in support of her argument. According to the Debtor, the

Handbook forbids work on a Chapter 7 case by a professional until an order approving an

application for employment has been entered. To this Court’s knowledge, the Debtor never

attached copies of the relevant pages of the Handbook to any of her filings, and never offered

copies into evidence at any hearing. Other objections the Debtor raises pertain to the way Schilling

researched state court cases in person as opposed to online, charges for work performed after she

indicated her intent to convert her case to Chapter 13, the amount of time Schilling spent on the

15 In its Order Denying Multiple Motions Filed by Debtor Regarding William Dennis Schilling and Related Motions,

this Court determined Schilling to be an interested party. See Doc. 357, at 4

16 The hearing on confirmation of the Debtor’s proposed Chapter 13 plan (the “Plan”) was held on June 30, 2022.

After reminding the parties that the Fee Application and Fee Objections were still under submission and, after

confirming with the Chapter 13 Trustee that the Debtor’s proposed Plan would work regardless of whether this

Court allowed all, some, or none of Schilling’s fees, the Court confirmed the Plan. See Doc. 569, Confirmation

Order.

17 U.S. Dept. of Justice, Handbook for Chapter 7 Trustees (Oct. 1, 2012),

https://www.justice.gov/ust/page/file/762521/download).

case, the Court’s failure to order a forensic accounting of Schilling’s charges, and the Bankruptcy

Administrator’s failure to respond to her concerns.

Schilling’s Fee Application was prepared using the standard format in this Court. In the

Fee Application Schilling reveals that he had neither sought nor received fees and expenses

previously in the case, and that no further applications for fees would be sought. He asserts “[t]he

attorney’s fees requested herein were actual, necessary and reasonable in order to preserve and

create the Debtor’s estate and for the benefit of the creditors of the above estate” then summarizes

the work he performed:

a. Reviewed the petition of the debtor.

b. Various discussions with the debtor’s attorney.

c. Investigate facts surrounding potential assets of the estate and the workings

of the debtor.

d. Prepare application for compensation in this matter.

Doc. 81, at 3.

The Fee Application and the pre-bill order reflect that Schilling spent time researching

potential assets of the estate, especially lawsuits pending in the state court. The Debtor’s Schedule

A/B reflects that she has three pending lawsuits in which she is the plaintiff (Doc. 1, at 14) while

her Statement of Financial Affairs lists four pending lawsuits (Doc. 1, at 45).18 According to the

Debtor the values of the lawsuits are “unknown.” Schilling’s Fee Application and his testimony

reflect he researched pending state court lawsuits in which the Debtor was a party and actually

found six in which the Debtor was the plaintiff. Schilling’s Fee Application and his testimony also

reflect that his research was performed in person in the Jefferson County Courthouse because he

does not have an account to perform the research online, and that his expenses included obtaining

copies of relevant records.

18 Also listed in the Statement of Financial Affairs is a state court lawsuit in which the Debtor is a defendant. Doc. 1,

at 45.

Additionally, the Fee Application indicates that he communicated with the Chapter 7

Trustee, corresponded with the Debtor’s former counsel, corresponded with attorneys for

defendants in the state court actions, drafted documents and discovery, reviewed the Debtor’s

filings, corresponded multiple times with the Debtor, and prepared his Fee Application, among

other things. Schilling also makes clear in the bill that his long-time paralegal also performed work

in the Debtor’s case that was included in the bill.19

As is required in this Court,20 Schilling analyzes his services under the factors set forth in

Johnson v. Georgia Highway Express, 488 F. 2d 714 (5th Cir. 1974) and in Norman v. Housing

Authority of the City of Montgomery, 836 F. 2d 1292 (11th Cir. 1988). Schilling discloses that he

charged his established hourly rate of $400 per hour and explains that although his actual work on

the case totaled $5,677 he voluntarily reduced the amount requested in his Fee Application to

$4,000 in fees; together with expenses of $51.53, Schilling has requested a total of $4,051.53. The

Bankruptcy Administrator is required to review fee applications and he did so in this case. The

Bankruptcy Administrator’s Statement of Review Regarding the Application for Final

Compensation and Reimbursement of Expenses Filed by William Dennis Schilling, Attorney for

the Trustee (Doc. 245), filed November 22, 2021, sets forth the criteria in which the Bankruptcy

Administrator reviewed the Fee Application and states that he has no objection to the Fee

Application.

At the hearing on the Fee Application and the Fee Objections, Schilling introduced into

evidence several exhibits as well as his testimony in support of his Fee Application. The Debtor

19 The pre-bill worksheet reflects that Schilling’s paralegal’s billing rate is $90 per hour. According to this Court’s

tabulation of the time spent and amount charged as reflected in the pre-bill worksheet, Schilling’s paralegal spent 1.3

hours on this case for a total of $117 billed.

20 Compensation for Professionals is addressed in Local Rule 2016-1, found at

https://www.alnb.uscourts.gov/content/rule-2016-1-compensation-professionals.

did not present any witnesses, exhibits, or other evidence at the hearing to support her Fee

Objections other than her own testimony.

CONCLUSIONS OF LAW

A. The Debtor’s Fee Objections

In her Fee Objections and in open Court the Debtor particularly expressed opposition to

Schilling’s charges billed in the few days prior to the Employment Notice and Order being entered,

citing to the Handbook21 in support of her argument. The Debtor did not put the Handbook or any

portion thereof into evidence, but the Court may take judicial notice of the same. The Handbook

provides in relevant part:

4. DUTIES OF A TRUSTEE IN THE ADMINISTRATION OF A CASE

. . . .

C. COLLECTION AND LIQUIDATION OF ASSETS, 11 U.S.C. § 704(a)(1),

AND ACCOUNTABILITY OF THE TRUSTEE FOR ALL PROPERTY

RECEIVED, 11 U.S.C. § 704(a)(2)

. . . .

10) EMPLOYMENT OF PROFESSIONALS

a. GENERAL STANDARDS

Under section 327, a chapter 7 trustee may employ professionals,

including attorneys, accountants, appraisers or auctioneers to

“represent or assist the trustee” in performing trustee duties under

title 11. Those professionals may be awarded compensation for

actual and necessary expenses, pursuant to section 330.

The employment of professionals must be approved by the Court.

Court approval must be sought prior to the rendering of any services.

11 U.S.C. 327(a). . . . Generally, courts do not authorize

compensation for services rendered prior to court-ordered

employment. However, some courts permit retroactive or nunc pro

tunc orders of employment in special circumstances, but even where

permitted, such orders should be rarely sought.

21 U.S. Dept. of Justice, supra note 17.

Handbook, § (4)(C)(10)(a). At the very beginning of the Handbook is an applicable portion that

the Debtor has overlooked:

1. INTRODUCTION

A. PURPOSE

. . . .

This Handbook is intended to establish or clarify the views of the United States

Trustee Program (Program) on the duties owed by a chapter 7 trustee to the

debtors, creditors, other parties in interest, and the United States Trustee.22 The

Handbook does not present a full and complete statement of the law; it should

not be used as a substitute for legal research and analysis. . . .

. . . .

Nothing in this Handbook should be construed to excuse the trustee from

complying with all duties imposed by the Bankruptcy Code and Federal Rules

of Bankruptcy Procedure (Rules), local rules, and orders of the court.

Handbook, § 1(A) (footnote added). While the Handbook does provide that generally work should

not be performed before employment is sought, “the Handbook does not present a full and

complete statement of the law; it should not be used as a substitute for legal research and analysis.”

Id. The Handbook makes clear that a Chapter 7 trustee must comply with local rules and orders in

addition to the Bankruptcy Code and Bankruptcy Rules. Id. Thus, the Handbook does not prevent

a Chapter 7 trustee from complying with local practices.

In In re Hunanyan, the Chapter 7 trustee filed an application to employ accountants

effective roughly two weeks before the application was filed, which was also the date work was

commenced. In re Hunanyan, 631 B.R. 904, 906, 913 (Bankr. C.D. Cal. 2021). The United States

Trustee23 objected, stating that “the effective date of the employment should be the hearing date

or the date the Court signs the order, if there is no hearing.” Id. at 907. The court noted that

“[u]nlike many sections of the Bankruptcy Code, neither section [Bankruptcy Code § 327

regarding employment of professionals or Bankruptcy Code § 330 regarding compensation of

22 The Bankruptcy Administrator in Alabama and North Carolina.

23 Supra note 22.

professionals] has a temporal requirement for when the application should be filed,” nor does Rule

2014(a) of the Federal Rules of Bankruptcy Procedure which provides further guidance on

employment of professionals.24 Hunanyan, 631 B.R. at 908-09. The court further explains:

Although there is no stated time limit in § 327, the implication is that the

employment application should occur quickly. Logically, if Congress has required

approval of employment to ensure that estate resources are not wasted and that

professionals are qualified and not conflicted, this should generally occur before

the administration of the estate proceeds very far. Accord, In re Jarvis, 53 F.3d 416,

419 (1995) (§ 327(a) neither expressly sanctions nor expressly forbids the post facto

authorization of outside professional services.) Courts have repeatedly remarked on

this ambiguity. See, e.g., In re Singson, 41 F.3d 316, 319 (7th Cir. 1994); In re

Triangle Chems., Inc., 697 F.2d 1280, 1289 (5th Cir. 1983) (The most that can be

fairly said is that the language of both statute and rule contemplates prior

authorization).

Adding to this situation, every employment application where work must

start immediately seeks a form of retroactive approval because an employment

application cannot get approved until it is noticed pursuant to Fed. R. Bankr. P.

9013, requiring a written motion done within the time requirements of Fed. R.

Bankr. P. 9006(d) which requires at least 7 days-notice.

Where professional assistance is needed before the noticed hearing can be

held, the trustees must determine if action is needed quickly to properly carry out

required duties under 11 U.S.C. § 704(a), and a court review is necessarily done

later of both the employment criteria and the fees incurred.

Hunanyan, 631 B.R. at 909-10 (footnote omitted).

Hunanyan addresses the practical reasons why work may begin before an employment

order has been entered. In this Court the same holds true. The Court has previously explained to

the Debtor that it is neither practical, nor possible, nor wise for the Court to rule on many motions

24 The Hynanyan court’s comments are in line with a bankruptcy treatise that is well respected and often cited by

courts around the country. According to Collier on Bankruptcy:

Section 327(a) provides that an attorney, accountant or other professional person providing services

in connection with the bankruptcy proceedings may not be employed by the trustee except with the

court’s approval. . . . Although the statute does not require the approval to precede the retention,

some courts have read this requirement into the statute. . . . A professional who acts for a trustee or

on behalf of a trustee without obtaining court approval in accordance with any applicable local rules

may be denied any compensation for such services. Accordingly, professionals should comply

with all local rules and established practices and procedures in the filing jurisdiction.

3 Collier on Bankruptcy ⁋ 327.03 (16th ed. 2022) (emphasis added).

or applications immediately after they are filed.25 Sometimes a decision hinges on the disposition

of other motions or filings. Sometimes it is helpful to see how a situation plays out since matters

often take care of themselves. On a more basic level, given the sheer volume of filings that come

before this Court,26 some matters must take priority over others.

This Court, as well as some other courts in this District, has a routine process for ruling on

applications to employ professionals and other routine matters that are rarely subject to objection.

In such cases, the Court issues a “negative notice and order.” Since those outside of the court

system may not be familiar with the terminology, an explanation could be helpful.27 In general, a

negative notice and order provides notice that a motion or application has been filed and that,

absent objection within a certain time frame, the requested relief is granted pursuant to the terms

of the notice and order. Many motions and applications may be disposed of using this process; a

negative notice and order may save time and expense on a routine issue that is likely to be granted

or approved with no hearing unless someone objects. A negative notice and order preserves the

rights of the movant or applicant and other interested parties since, if the debtor or some other

party objects, the Court will then hold a hearing to consider the relief requested and the objection.

This Court’s Employment Notice and Order regarding the Employment Application was

prepared according to the Court’s usual procedure, and like other similar orders, this one provided

that absent objection during the objection period, the applicant “shall be and hereby is

APPROVED” as counsel. Doc. 37. In this case, the Chapter 7 Trustee was appointed on

September 7, 2021, the Employment Application was filed the next day on September 8, 2021,

25 Despite the Debtor’s belief, what she considers to be a delay in ruling on one of her motions or objections does

not signal a conspiracy engaged in by this Court for “revenge-taking” against her.

26 In addition to the examples given, other factors may stand in the way of immediate rulings such as weekends,

federal holidays, leave taken by chambers and clerk’s office staff who process this Court’s orders, and emergencies

in other cases, among other things.

27 The practical effect of notice and orders is that the Court’s ruling may become effective more quickly than

noticing a motion for hearing, waiting through the notice time, holding the hearing, then issuing an order.

and this Court’s Employment Notice and Order was entered September 14, 2021. There was no

delay between the Chapter 7 Trustee’s appointment and the filing of the Employment Application.

A discussion of the Chapter 7 Trustee’s duties is necessary to address the Debtor’s Fee

Objections. It is the duty of a Chapter 7 trustee to review a debtor’s schedules for potential assets

that could be used to pay unsecured creditors and, if assets are found, to liquidate the assets and

distribute the proceeds. Generally the investigation should be started quickly to prevent the risk of

assets being lost or declining in value.28 The timely filing of an application to employ then the

entry of a negative notice and order may allow a trustee or his professional to begin preserving

assets immediately. In this case, the Debtor listed three lawsuits on her initial Schedule A/B.

Because the Debtor had filed a Chapter 7 the Chapter 7 Trustee “stepped into the shoes of the

Debtor” and became the plaintiff in those lawsuits. The Trustee had no way of knowing whether

the Debtor would attempt to settle or otherwise dispose of the lawsuits (or any other assets) and

no way of knowing the potential value of those suits without further investigation since the Debtor

valued them in her schedules as “unknown.” As it turns out, Schilling’s investigation revealed that

the Debtor had six lawsuits pending in the state court, more than originally scheduled. Schilling’s

timely investigation perhaps preserved the value of estate assets.

As demonstrated, when it appears there could be assets to pay creditors, it is not practical

for trustee’s counsel to put off investigation for weeks before an order approving employment

could be entered. Safeguards are still in place to make sure that counsel does not act

inappropriately. 3 Collier on Bankruptcy ⁋ 327.03 (16th ed. 2022) (“A professional who acts for a

trustee or on behalf of a trustee without obtaining court approval in accordance with any applicable

28 A debtor should not be offended by a quick start to an investigation. Someone who takes an appointment to serve

as a trustee should not otherwise have a connection to the case; thus, the trustee will not know the debtor and has no

idea how the debtor will act regarding asset preservation. A trustee should act quickly if he or she has identified

assets that should be preserved.

local rules may be denied any compensation for such services.”). If someone had objected to

Schilling’s employment during the period for objections, then this Court would have held a hearing

on the Employment Application and the objections before entering an order. If the Court denied

the Employment Application, Schilling would not receive any compensation for whatever work

he had done.

Besides arguing that Schilling had no authority to work on this case prior to the

Employment Notice and Order, the Debtor further argues that Schilling’s work should have

stopped once she decided to convert her case to Chapter 13. The Debtor filed her Motion to Convert

From Chapter 7 to Chapter 13 by a Debtor (Doc. 51) on September 20, 2021, and this Court’s

Order (Doc. 78) converting the case was entered October 21, 2021; thus the Debtor’s case was

pending as a Chapter 7 case until the conversion on October 21, 2021. The pre-bill worksheet

evidences that Schilling’s last work, namely emailing the Chapter 7 Trustee and preparing the Fee

Application, was performed on October 21, 2021. Schilling billed only for time while the case was

pending as a Chapter 7.29

In addition, the debtor has complained about both the work performed by Schilling and the

amount of time that he spent. As mentioned, on Schedule A/B the Debtor listed three pending state

court cases in which she was the plaintiff, and on the Statement of Financial Affairs she listed four;

when Schilling investigated, he found six. That the Debtor omitted information about her state

court suits could have raised a red flag regarding other potentially omitted or misrepresented assets.

According to Schilling, he performed in-person research of various records, particularly probate

records. The Debtor has argued that Schilling should have saved time by doing all of his research

online, and Schilling responded that he does not have the capability to do so. The Debtor had an

29 Bankruptcy Code § 330(a)(6) codified existing case law providing that a professional may be compensated for his

or her time preparing a fee application. 3 Collier on Bankruptcy ⁋ 330.03[16][a][i] (16th ed. 2022).

issue with Schilling’s bill and she took the appropriate step of objecting, but she did not provide

any support for her arguments that the amount of the bill is inappropriate. This Court will not

second guess the method counsel for the Trustee used to perform his job so long as the time and

rate satisfy the criteria used to consider the appropriateness of his fee application. It is the

responsibility of this Court to determine whether or not the tasks undertaken and the time spent by

Schilling were appropriate, and not to tell him how he should have gone about it.

The Debtor has made other objections to Schilling’s Fee Application that the Court can

dispose of quickly. The Debtor argues that she “has repeatedly provided to this court ample

evidence of the necessary [sic] to conduct a forensic audit of Schilling’s invoice.” Doc. 548, at 3.

It is true that the Debtor has repeatedly requested a “forensic audit” of Schillings fees. This Court

has explained to the Debtor that the court system does not pay for forensic audits. The Court is not

sure why the Debtor persists in believing the court system would do so. The Debtor also complains

that J. Thomas Corbett, the Bankruptcy Administrator, and Jon Dudeck, attorney with the

Bankruptcy Administrator’s Office, “have each failed to be responsive to [Debtor’s] concerns

about Schilling’s invoice.” Doc. 548, at 3. The Bankruptcy Administrator’s Statement of Review

explains why the Bankruptcy Administrator did not object to Shilling’s Fee Application. As

evidenced by the record, the Debtor filed a subpoena30 to Mr. Corbett, the Bankruptcy

Administrator. Mr. Corbett moved to quash the Debtor’s subpoena and filed a response.31 The

Bankruptcy Administrator’s office properly responded to the Debtor’s requests for information by

30 A Subpoena to Appear and Testify at a Hearing or Trial in a Bankruptcy Case (or Adversary Proceeding ) to J.

Thomas Corbett was filed by the Debtor on April 19, 2022. Doc. 530. It is not clear why the subpoena was served on

Mr. Corbett in his individual capacity instead of in his capacity as Bankruptcy Administrator.

31 The Non-Party J. Thomas Corbett’s Motion to Quash (Doc. 541) was filed on April 25, 2022, the same day as his

Non-Party J. Thomas Corbett’s Response to Subpoena (Doc. 542) was filed.

responding on the record. Perhaps the Bankruptcy Administrator’s Office did not respond in the

way the Debtor would have liked, but the Office responded appropriately.

The Debtor has made many arguments throughout this case for which she has not provided

evidentiary support and, while clearly the Debtor or someone assisting her has done a great deal

of research, the Debtor has not presented any facts, testimony, evidence, or law that backs up her

arguments. Further, at the hearing on the Fee Application and the Fee Objections, the Debtor

presented no witnesses, no exhibits, and no other evidence supporting her position other than her

own testimony. However, Schilling presented exhibits as well as his testimony supporting the work

he performed on behalf of the Chapter 7 Trustee. The Fee Application has been reviewed by the

Bankruptcy Administrator who has no objection. The Chapter 13 Trustee likewise did not raise an

objection. However, the ultimate determination of the fees and expenses to be awarded is the

responsibility of this Court, and in doing so, the Court will consider the law, the testimony and

evidence of Schilling, the testimony of the Debtor, the recommendation of the Bankruptcy

Administrator, and other filings within this case. Upon conducting its review, if the Court

determines that a portion, or all, of the fees or of the expenses requested are not appropriate, those

portions will not be approved for payment.

B. Evaluation of the Fee Application under Norman and Johnson

The Bankruptcy Code provides that a professional person employed to represent a trustee

in bankruptcy may be awarded “reasonable compensation for actual, necessary services rendered”

and “reimbursement for actual, necessary expenses.” 11 U.S.C. § 330(a)(1)(A)-(B). A professional

person seeking fees and expenses must file a detailed application which includes descriptions of

the services rendered, the amount of the hourly rate requested and the total number of hours the

applicant alleges were expended. Fed. R. Bankr. P. 2016; Loranger v. Stierheim, 10 F.3d 776 (11th

Cir. 1994), Brake v. Tavormina (In re Beverly Mfg.), 841 F.2d 365 (11th Cir. 1988), Am. Benefit

Life Ins. Co. v. Baddock (In re First Colonial Corp. of America), 544 F.2d 1291 (5th Cir. 1977),

In re Gold Seal Prods. Co., Inc., 128 B.R. 822 (Bankr. N.D. Ala. 1991). After such application is

filed, the burden remains on the applicant to establish that the fees and expenses requested,

including the hourly rate, the hours expended, and the costs, are reasonable and necessary. The

Court must then review the application, challenge any fees or charges that may be inappropriate,

even in the absence of an objection, and determine the reasonableness of the fees and expenses

requested. Gold Seal, 128 B.R. at 827. If the Court determines that the amounts requested are either

unreasonable or unnecessary, then the Court "itself an expert on the question and may consider its

own knowledge and experience concerning reasonable and proper fees" must determine, set, and

award an appropriate amount. Norman, 836 F.2d at 1303.

In examining professional fees the Court must go through several steps:

1. Determine if the fee application is sufficient

2. Independently review the application as to the reasonableness and necessity

of the amounts requested

3. Make an initial determination as to an appropriate fee award by:

a) determining the nature and extent of the services

b) determining the value of the services

c) considering the factors in Johnson v. Georgia Highway Express,

Inc., 488 F.2d 714 (5th Cir. 1974)

4. Determine the Lodestar

a) Reasonable hourly rate considering some or all of the Johnson

factors

b) Reasonable number of compensable hours

c) Adjustment to the Lodestar

5. Conclusion as to amount of fees due

6. Review of expenses and conclusion as to amount due

A bankruptcy judge has broad discretion in determining reasonable fees for professionals

in bankruptcy matters. First Colonial, 544 F.2d at 1298. However, the approach in reviewing

professional fees as adopted by the United States Supreme Court and the Eleventh Circuit Court

of Appeals is designed to be objective. See Norman, 836 F.2d at 1299. This approach also provides

a standardized review that professionals can rely upon when requesting approval of their fees and

helps ensure that professionals in bankruptcy cases are paid no less and no more than outside the

bankruptcy arena.

1. Sufficiency of the Fee Application

Schilling has provided a cover sheet summarizing his employment, the period for which

he seeks compensation, the fees and expenses he seeks, and notes that he has not previously filed

an application or previously received fees and expenses. In addition, Schilling provided a more

detailed explanation of his services, attaching his bill itemizing the work performed, fees charged,

and the amount of time spent.

2. Independent Review of the Application

The Court independently reviewed the Fee Application and heard the testimony at the

hearing of this matter. This Court has also considered the Fee Objections filed by the Debtor.

3. Initial Determination as to an Appropriate Fee Award

a) Nature and Extent of the Services

Schilling was hired to assist the Chapter 7 Trustee in his investigation of the Debtor’s

assets, including state court lawsuits, that could potentially be liquidated for the benefit of

unsecured creditors and to otherwise assist the Trustee in legal matters. The Fee Application and

attached pre-bill worksheet indicate Schilling reviewed the Debtor’s bankruptcy filings and

various state court records, communicated with the Debtor, the Debtor’s former counsel, and with

state court defendants’ counsel, and prepared filings in the Debtor’s case, among other things.

Schilling’s work fell within the scope of the Employment Application.

b) Value of the Services

The work performed by Schilling primarily revolved around investigating and attempting

to collect assets of the estate, particularly in regard to numerous lawsuits the Debtor had filed in

state court. The Debtor converted the case to Chapter 13 prior to any asset collection. Nonetheless,

the work performed by Schilling was necessary and helpful.32

c) The Johnson Factors

1. Time and labor required. Schilling’s time and labor, as set out in the

Application, were reasonable considering his duties. The Debtor provided

incomplete information on her schedules about the number of lawsuits she had

pending against others in state court. Schilling was required to investigate these as

well as other potential assets of the Debtor.

2. Novelty and difficulty of the questions. The issues in this case were

not novel.

3. Skill requisite to perform the services properly. Schilling has the

skills that were necessary to perform the services requested and in fact has served

in this capacity for several decades.

4. Preclusion of other employment by the attorney due to acceptance

of the case. Schilling states in his Fee Application that he was not precluded from

taking other employment due to this case.

5. Customary fee. Schilling’s requested fee in this case is in line with

the prevailing market rate and consistent with his charges to other clients.

6. Whether the fee is fixed or contingent. All fees in this case, as in any

bankruptcy case, are subject to the contingency of approval by this Court. Further,

32 Schilling’s investigation may have been a factor that prompted the Debtor to convert her case to Chapter 13. The

Debtor’s confirmed Plan provides that creditors will be paid 100% of the amount of their claims.

Schilling’s fee is contingent in another respect – he will get paid only if the Debtor

continues to make her Chapter 13 payments.

7. Time limitations imposed by the Court or other circumstances. This

was not an applicable factor.

8. Amount involved and results obtained. The Debtor converted her

case to Chapter 13 prior to the collection of any assets for the benefit of unsecured

creditors. However, since the Debtor converted her case and now has a confirmed

Plan, her unsecured creditors will now be paid in full.

9. Experience, reputation and ability of attorneys. Schilling has

practiced before this Court for a number of years and has been frequently hired by

all of the Chapter 7 trustees in this division. He is held in high regard by other

members of the local bar.

10. Undesirability of the case. The Court is unaware of any reason

undertaking this matter would have been undesirable.33

11. Nature and length of the professional relationship with the client.

Schilling has for several years frequently represented the Chapter 7 Trustee

regarding various matters.

12. Awards in similar cases. The requested fee is in line with fees

approved in similar cases.

4. Determination of the Lodestar

a) Reasonable Hourly Rate

33 At the time Schilling was employed there was no obvious reason why taking the case would be undesirable. If the

Court considered everything that has transpired since that time then the Court may have reached a different

conclusion.

Schilling has requested his typical fee of $400 per hour; the prevailing rate for bankruptcy

attorneys in this area ranges from $195 to $450 per hour in consumer cases.34 Schilling’s hourly

rate has been approved in numerous similar cases. Schilling’s experienced, long-time paralegal

has a fee of $90 per hour.

b) Reasonable Number of Compensable Hours

The Court has reviewed this in light of all of the Johnson factors and finds that the number

of hours Schilling spent on this case and for which he has requested compensation is reasonable.

According to the Fee Application, Schilling and his paralegal actually spent 15.20 hours working

on this case for a total of $5,677; however, Schilling voluntarily reduced his requested fees to

$4,000. The Court finds that the reasonable number of hours for Schilling and his paralegal is

15.20.

c) Adjustments to the Lodestar

After determination of the reasonable hourly rate and the reasonable number of hours

expended, the Court can further adjust the lodestar based on the services performed or for the

results obtained so that the end result is not excessive. This may be done by identifying the number

of hours related to specific unsuccessful matters or by merely reducing the entire application by

some proportionate amount. Norman, 836 F.2d at 1302. Schilling has voluntarily reduced his

requested fee to $4,000, approximately 70% of his hourly rate times the number of hours he

worked. No further adjustment is warranted.

5. Conclusion as to the Amount of Fees Due

34 In large Chapter 11 commercial cases hourly rates in the community tend to be higher.

Based on the conclusions in this Memorandum Opinion, the Court finds that Schilling is

due fees in the amount of $4,000, having been already reduced per his request. The requested

amount is lower than the lodestar calculation.

6. Expenses

Schilling’s pre-bill worksheet attached to his fee application itemizes the expenses

requested; the Bankruptcy Administrator has no objection to the expenses. The Court has reviewed

the requested expenses and concludes that expenses in the amount of $51.53 are approved.

CONCLUSION

Schilling is due reasonable fees of $4,000 and expenses of $51.53. Accordingly, it is hereby

ORDERED, ADJUDGED AND DECREED that the Fee Application is approved in the

amount of $4,000 in fees and $51.53 in expenses. It is

FURTHER ORDERED that the Chapter 13 Trustee is hereby authorized and directed to

pay the fees and expenses approved herein as an administrative expense claim with pro rata

distributions on said claim consistent with other claims allowed and paid pursuant to 11 USC §

503(b).

Dated: August 12, 2022 /s/ Tamara O. Mitchell

TAMARA O. MITCHELL

United States Bankruptcy Judge

TOM/dgm