Patrick Dewire Hottinger

No. 2:21-bk-O00669 Doc62 Filed 07/20/23 Entered 07/20/23 16:55:32 Page1of6

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IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF WEST VIRGINIA

IN RE: )

PATRICK DEWIRE HOTTINGER, Case No.: 2:21-bk-00669

Debtor. Chapter 7

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MEMORANDUM OPINION

On May 16, 2023, Martin P. Sheehan submitted a Motion for Reconsideration of the court’s

May 3, 2023, Memorandum Opinion and corresponding Order as it pertains to his application for

compensation and expenses for Sheehan & Associates, PLLC. Mr. Sheehan seeks reconsideration

contending he was authorized to be retained at a particular hourly rate and not otherwise subject

to a reduction in this court’s discretion.

For the reasons stated herein, the court will deny the relief sought.

I. BACKGROUND

On March 3, 2022, the court approved employment of Mr. Sheehan and his law firm

Sheehan & Associates, PLLC, as counsel for the Chapter 7 Trustee at the hourly rate of $425.00

for attorney services. On March 17, 2023, Mr. Sheehan submitted his application for compensation

and expenses for Sheehan & Associates, PLLC, seeking approval of fees totaling $7,055.00 based

upon 16.60 hours of services performed and expenses of $1,249.84. Included in the time sheets

exhibiting the fees and expenses was an assertion of 5.50 hours of travel on April 4, 2022, from

Wheeling, West Virginia, to Elkins, West Virginia, to attend a deposition. Despite the amount of

fees accrued by Mr. Sheehan, he voluntarily reduced the amount of his application based upon

funds available in the bankruptcy estate. However, he requested approval and reserved the right to

collect remaining fees from any future assets discovered and liquidated in the estate. During the

telephonic hearing held on May 2, 2023, to consider the fee application, Mr. Sheehan confirmed

the nature of the travel was only driving his vehicle and did not include simultaneous legal services

(i.e., a telephone call regarding the matter via a hands-free device). On May 3, 2023, the court

entered its Memorandum Opinion and Order consistent with its ruling granting the Application for

Compensation with a reduction of compensation for submitted travel time to one half the billable

hourly rate. On May 16, 2023, Mr. Sheehan filed the subject Motion for Reconsideration.

II. ANALYSIS

Mr. Sheehan asks for reconsideration based upon his notion that the court’s authorization

of employment of Mr. Sheehan and his law firm at the hourly rate of $425.00 was not subject to

reduction at the court’s discretion. Mr. Sheehan argues that his hourly rate set forth in the

Application to Employ is equivalent to the fee arrangement contemplated in § 328 of the

Bankruptcy Code and analyzed by the court in In re Merry-Go-Round Enterprises, Inc., 244 B.R.

327 (Bankr. D. Md. 2000). Mr. Sheehan contends his travel time in dispute was necessary and

proper for the purpose of taking depositions in the matter. However, he suggests the issue should

not be considered at this time given his voluntary reduction in fees in this particular matter and

given the fact that the debtor nor the trustee, which in this instance is also Mr. Sheehan, has

objected to his rate of compensation for travel time. Nonetheless, should the court decline to hold

this matter in abeyance, Mr. Sheehan seeks reconsideration of the court’s reduction of

compensation for submitted travel time or a hearing on the issue to provide evidence on the issue

of customary travel rates charged by contemporaries.

Having considered Mr. Sheehan’s argument, the court finds it appropriate to rule on the

matter to resolve the issue and deny the Motion to Reconsider.

A. The Motion to Reconsider lacks grounds for reconsideration.

Mr. Sheehan’s Motion to Reconsider is considered under Rule 9023 of the Federal Rules

of Bankruptcy Procedure, which incorporates Rule 59 of the Federal Rules of Civil Procedure.

Generally speaking, courts do not grant motions to reconsider unless “the moving party can point

to controlling decisions or data that the court overlooked.” Rafter v. Liddle, 288 Fed. Appx. 768,

769 (2d Cir. 2008) (citing Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir.1995)). Motions

to reconsider under Bankruptcy Rule 9023, as motions to reconsider under FRCP 59, should not

be used as “vehicles for ‘taking a second bite at the apple[.]’” Rafter, 288 Fed. Appx. at 769 (citing

Sequa Corp. v. GBJ Corp., 156 F.3d 136, 144 (2d Cir.1998)).

Here, Mr. Sheehan failed to articulate a basis for reconsideration. Specifically, he directs

the court to no facts or case law that the court may have overlooked in rendering its decision.

Rather, Mr. Sheehan seemingly requests a “do-over” on the issue or asks the court to hold the issue

in abeyance until monies may become available upon which to collect his fee award – neither of

which are grounds for the court to reconsider its position in its Memorandum Opinion and

corresponding Order on the application for compensation and expenses for Sheehan & Associates,

PLLC. Furthermore, despite Mr. Sheehan’s request, the court finds that a hearing to allow for the

presentation of evidence and testimony on travel rates charged by lawyers is unnecessary and

unwarranted. Mr. Sheehan made clear in the hearing on his application for compensation that his

travel time was simply driving. No further evidence is necessary. The court will thus deny the

Motion to Reconsider. Nonetheless, the court finds it prudent to take this opportunity to make

clear its position on the hourly rate for travel time as this issue will likely repeat itself.

B. The Court has discretion to modify legal fees.

Mr. Sheehan seeks his hourly rate of $425 for travel time. He believes the court should

permit this because, among other things, time spent traveling is necessary and has an associated

opportunity cost because he is out of the office. Although the court generally finds Mr. Sheehan’s

travel time to be compensable pursuant to the relevant factors, including those in § 330(a)(3) of

the Bankruptcy Code and the “Johnson factors,” as instructed by the Fourth Circuit in Harman v.

Levin, 772 F.2d 1150, 1151 n.1 (4th Cir. 1985) (citation omitted), it finds it to be compensable at

a reduced hourly rate.

Although bankruptcy courts across all districts are split in various ways as to how travel

time should be compensated, the overarching principle that is eminently clear is that the court has

broad discretion in determining reasonableness of fees. In re Temple Ret. Cmty., Inc., 97 B.R. 333,

336 (Bankr. W.D. Tex. 1989). The very language of § 330(a)(2) provides the court with discretion

to “award compensation that is less than the amount of compensation that is requested.” With this

notion, the court used its discretion to determine travel time here was compensable at a reduced

rate.

Put simply, travel time is typically unproductive and not compensable at the attorneys’

regular hourly rate. In re Pothoven, 84 B.R. 579 (Bankr. S.D. Iowa 1988); see e.g., In re Taylor,

66 B.R. 390 (Bankr. W.D. Pa. 1986) (determining that “payment of fifty percent (50%) rate for

travel time is more than charitable.”); In re Robertson Companies, Inc., 123 B.R. 616, 621 (Bankr.

D.N.D. 1990) (holding that “[i]t is inappropriate to bill unproductive time at a full hourly rate. As

a matter of general principle . . . travel time [is] . . . billed at one-half the normal hourly rate.”).

This court concurs that

[a] lawyer’s travel time might be compensated at his or her full hourly rate in

general civil litigation, on an opportunity-cost theory, but in bankruptcy, where

costs paid to the debtor’s counsel reduce the estate assets ultimately available to

creditors, the better approach is to allow travel costs at half the hourly rate, unless

the lawyer is able to perform client work during the travel time.

In re C2R Glob. Mfg., Inc., 611 B.R. 313, 317-18 (Bankr. E.D. Wis. 2019).

A professional’s asserted travel time, however, may qualify as productive. If, for example,

“the professional establishes that he or she utilized that time productively by preparing for a

meeting or court proceeding in the case, [then] compensation may be awarded at a higher

percentage.” In re Caribbean Const. Servs., Inc., 283 B.R. 388, 395 (Bankr. D.V.I. 2002); In re

Pothoven, 84 B.R. at 585 (asserting that “[t]ravel to and from a location typically shall be

compensated at one-half of the attorneys’ or other professionals’ hourly rate unless it can be shown

that the time was utilized more productively by preparing for meetings, court appearances, et

cetera.”). Although “time spent in transit may be necessary. . . [it] is clearly not as productive as

time spent in court or in the office.” Id. To clarify, “the professional can be reimbursed fully for

expenses related to travel, but not for the actual travel time.” In re Auto. Warranty Corp., 138 B.R.

72, 78 (Bankr. D. Colo. 1991) (citing In re Microwave Products of America, Inc., 104 B.R. 900,

908 (Bankr. W.D.Tenn. 1989)).

Customarily, “[a]bsent a compelling reason justifying normal hourly rate for travel, [this]

court permits . . . counsel to bill at one-half of their normal hourly rate . . . unless they assert that

they are entitled to their full hourly rate because they spend their travel time providing services to

the bankruptcy estate.” In re Shafer Bros. Constr. Inc., 525 B.R. 607, 616 n.4 (Bankr. N.D.W. Va.

2015) (emphasis added); In re Watson Seafood & Poultry Company, Inc., 40 B.R. 436, 443 (Bankr.

E.D.N.C. 1984) (concluding travel time compensation at one-half the hourly rate because “[i]t is

the practice in [that] district.”). This court concludes that reasonable travel is necessary but rarely

qualitatively similar to time in court or in the office. It is therefore unreasonable in most instances

to tax the bankruptcy estate a professional’s full hourly rate for travel time. To be clear, however,

the court considers all requests on a case-by-case basis.

Here, the court finds that the 5.50 hours of travel was not qualitatively similar to time

utilized in the office or in court. Accordingly, the court reduced Mr. Sheehan’s hourly rate for

travel by one-half, or $212.50. As such, the amount to be received by Mr. Sheehan, without

considering his voluntary reduction in fees, totals $5,886.25, including $4,717.50 in attorneys’

fees and $1,168.75 in travel fees. The court’s determination does not affect the amount in expenses

approved by the court, totaling $1,249.84.

C. 11 U.S.C. § 328(a) is not applicable.

To the extent Mr. Sheehan relies on the court’s analysis in In re Merry-Go-Round

Enterprises, Inc., 244 B.R. 327 (Bankr. D. Md. 2000), he misses the mark. Specifically, Mr.

Sheehan asserts that he “was authorized to be retained, at a particular hourly rate, and not otherwise

subject to any condition,” and that Merry-Go-Round puts his compensation beyond the court’s

discretion. However, the analysis in Merry-Go-Round – examining § 328 of the Bankruptcy Code

– is materially different than the instant circumstances. In Merry-Go-Round, the arms-length

contingency fee arrangement was authorized in advance by the court under 11 U.S.C. § 328(a) as

constituting reasonable terms and conditions. Merry-Go-Round, 244 B.R. at 335. The court in

Merry-Go-Round held that the fee agreement was expressly approved at the outset under § 328(a)

as reasonable, leaving only the issue set forth in § 328(a) of whether the terms of the agreement

were improvident considering developments not capable of being anticipated at approval by the

court. Id. at 337.

The authority established in Merry-Go-Round does not compel the court to reconsider its

reduction under § 330 in compensation for travel. Section 328 is inapplicable here because this

matter does not involve the recharacterizing of an arms-length, contingency fee arrangement.

Rather, Mr. Sheehan entered into an agreement with himself to employ himself as counsel at the

hourly rate of $425.00, which is subject to review under § 330. Even so, if § 328 did apply in this

instance, the court is still provided with latitude to alter compensation when appropriate. Section

328(a) provides:

“[n]otwithstanding such terms and conditions, the court may allow compensation

different from the compensation provided under such terms and conditions after the

conclusion of such employment, if such terms and conditions prove to have been

improvident in light of developments not capable of being anticipated at the time

of the fixing of such terms and conditions.”

As such, in accordance with § 328(a), the court is given an opportunity to use its discretion to

adjust compensation.

Furthermore, the arrangement at issue in Merry-Go-Round was that of a contingency fee

agreement preapproved by the court as reasonable and not a privately negotiated agreement leaving

the court to review its effect after the recoveries had been identified. Typically, in contingency fee

cases, the attorney is assuming some risk by fronting the cost of litigation and time in betting that

the percentage return will pay all in the end, leaving less room for the court to analyze the outcome

of the fee.1 Here, the court approved Mr. Sheehan’s Application to Employ Martin P. Sheehan

and Sheehan & Associates, PLLC as Counsel on an hourly basis not subject to the analysis of §

328(a). The court did not find the hourly rate listed within the application to constitute a fee

agreement in its March 3, 2022, Order Granting Application to Employ Sheehan & Associates,

PLLC as Attorney for the Trustee, nor did it make an express finding of reasonableness of any

such fee agreement.2 With those material differences, this court finds Merry-Go-Round inapposite.

III. CONCLUSION

For the foregoing reasons, the court denies the Motion for Reconsideration and upholds its

Memorandum Opinion and corresponding Order granting the application for compensation but

reducing Mr. Sheehan’s hourly rate for travel by one-half. An order consistent with this opinion

shall be separately entered contemporaneously herewith.

1 In fact, the court in Merry-Go-Round held that once a contingency fee agreement has been preapproved by a

bankruptcy court under the Bankruptcy Code, the fee produced thereby is not subject to a lodestar analysis or a de

novo review for the determination of reasonableness. 244 B.R. at 344. The court went on to explain that the

preapproval procedure is provided by the Code for protection of the “creditors and potential class beneficiaries of the

bankruptcy estate and an inducement for qualified professionals to represent the bankruptcy estate by protecting the

benefits of their fee agreements.” Id. Hourly rate fee agreements are significantly less risky for the attorney, confident

in the details of the arrangement that their efforts will be compensated for based upon hours worked and not the

outcome of the case, leaving courts with more reason to use discretion in their review.

2 In any event, this court has discretion to adjust the terms of compensation under § 328 and § 330, regardless of the

approval of the employment application. In short, counsel cannot propose an employment agreement that prevents

review and adjustment by the court.