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Weyerhaeuser Co. v. Yellow Poplar Lumber Co., Inc.

United States District Court, W.D. Virginia, Abingdon Division

June 28, 2017



          James P. Jones United States District Judge.

         The court has before it for decision the Application for Fees by Guardian ad Litem and Attorney for the Trustee, filed by attorney John M. Lamie. While there are no objections to the Application, it raises issues that require extended discussion.

         I. Factual Summary and Procedural History.

         On July 17, 1928, White Oak Lumber Company filed a petition in the United States District Court for the Western District of South Carolina[1] to have Yellow Poplar Lumber Company, Inc. (“Yellow Poplar) adjudged a bankrupt. Yellow Poplar was adjudged a bankrupt and the bankruptcy case was closed in 1931. Eighty-two years later, on April 3, 2013, suit was filed in the Circuit Court of Buchanan County, Virginia, seeking a determination of the ownership of the gas estates of certain parcels of land located in Virginia, based upon a 1929 deed from Yellow Poplar's bankruptcy trustee.[2] The defendants in that action removed the case to the United States Bankruptcy Court for the Western District of Virginia. Later, at the request of the plaintiff, this court withdrew reference of the case from the bankruptcy court. On December 10, 2013, the court appointed Mr. Lamie to serve as Guardian ad Litem (“GAL”) for the unknown successors in interest to Yellow Poplar. Order, ECF No. 101.[3] Other parties were added to the case, asserting claims to the disputed property.

         Thereafter, with the agreement of the parties, the United States District Court for the District of South Carolina reopened Yellow Poplar's bankruptcy case and transferred it in its entirety to this court. Order, In re Yellow Poplar Lumber Co., Case No. 8:28-cv-01101-BHH (Closed Case No. B-1101) (D.S.C. July 20, 2015); Case No. 1:15CV00037, ECF No. 4. On August 24, 2015, this court appointed Mr. Lamie to serve as the replacement Trustee for Yellow Poplar.[4] The court later authorized the employment of Mr. Lamie in his capacity as an attorney as counsel for the Trustee, along with his law firm, Browning, Lamie & Gifford, P.C.

         Certain of the ownership claims were resolved, but the remaining major claims involving the Trustee, Weyerhaeuser, and defendants Range Resources-Pine Mountain, Inc. (“RR-PM”), Range Resources-Appalachia, LLC, EQT Production Company, and EQT Production Nora, LLC, were set for jury trial, but on January 25, 2017, a few days before that trial, the Trustee notified this court that the parties had reached a settlement of the ownership claims. On February 8, 2017, Mr. Lamie filed a Settlement Agreement and accompanying Motion for Approval of Settlement. All parties to the Settlement Agreement subsequently filed supporting briefs. After public notice of the proposed settlement, the court held a hearing on the settlement on May 12, 2017. No objections to the settlement were submitted. An Order approving the settlement and quieting title to the subject property was entered on June 7, 2017.

         On April 11, 2017, Mr. Lamie applied for payment of his fees and expenses as GAL, Trustee, and counsel to the Trustee. ECF No. 536. He filed a supplement to his application on June 9, 2017. ECF No. 551. As GAL, Mr. Lamie provided 137 hours of legal services at an hourly rate of $210 per hour, resulting in fees amounting to $28, 770. ECF No. 551. He also incurred costs of $315.48. ECF No. 536-2. As counsel to the Trustee, he provided 206.10 hours of legal services at an hourly rate of $250 per hour, resulting in fees amounting to $51, 525. ECF No. 551. He also incurred costs of $5, 965. ECF No. 536-2. Mr. Lamie has requested a fee enhancement that would bring his total requested fee award to $325, 000. ECF No. 551. For the reasons stated below, I will grant his application.

         II. Fees and Costs for GAL.

         Because the unknown successors in interest to Yellow Poplar were named as defendants, Mr. Lamie was appointed to serve as GAL for those unknown parties. See Fed. R. Civ. P. 17 (c)(2). Mr. Lamie is entitled to seek payment of fees for, as well as reimbursement of costs incurred in the course of, his service as GAL. See Doe v. Kidd, 656 F. App'x 643, 658 (4th Cir. 2016) (unpublished). Since Yellow Poplar's possible creditors and owners were the substantial beneficiary of Lamie's services as GAL, it is appropriate that the fees and costs be paid from Yellow Poplar's estate as taxed costs. Fed.R.Civ.P. 54(d)(1).

         As I have previously found in this case, $210 per hour is a reasonable rate for a GAL in this case. Order, June 7, 2017, ECF No. 549 (granting petition of another GAL for certain other unknown parties at $210 per hour); see Doe v. Kidd, 656 F. App'x at 659-60 (noting that GAL hourly rates between $150-$250 have been found to be reasonable). In addition, the total fees and costs requested here are reasonable under the circumstances. I will therefore grant Mr. Lamie's application for fees in his capacity as GAL in the amount of $28, 770 and his costs in the amount of $315.48.

         Pursuant to the Settlement Agreement, costs attributable to guardians appointed by the court are to be shared in proportion to the ownership division for Tract 11 of the disputed property. Settlement Agreement ¶ 9, ECF No. 520-1.

         III. Fees and Costs for Trustee and Counsel to the Trustee.

         A. Applicable Law.

         1. Availability of Fee Award.

         This matter is governed by the Bankruptcy Act of 1898 (“1898 Bankruptcy Act”) and the 1973 Rules of Bankruptcy Procedure (“Former Bankruptcy Rules”). See Op & Order 3-4, ECF No. 397. I thus consider the appropriateness of Mr. Lamie's requested fees and costs under these statutes and rules.

         With regard to a Trustee's compensation, the 1898 Bankruptcy Act states:

Trustees shall receive, as full compensation for their services, payable after they are rendered . . . from estates which they have administered, such commissions on sums to be paid as dividends and commissions as may be allowed by the courts, not to exceed . . . one per centum on such sums in excess of ten thousand dollars.

         Bankruptcy Act § 48(a) (1898) (repealed). In addition, where a Trustee performs any court-authorized “legal or other service” that are not required as part of his bankruptcy Trustee duties, he is entitled to “[a]dditional compensation” beyond the statutory cap. Fed.R.Bankr.P. 219(c)(2) (1973).

         An attorney who performs “professional services” in connection with a case, including serving as counsel to the Trustee, is also entitled to compensation. Fed.R.Bankr.P. 219(c)(3) (1973) (“Compensation may be allowed an attorney . . . for professional services.”). Such professional services must “requir[e] and utiliz[e] legal skill, ” In re Emergency Beacon Corp., 43 B.R. 672, 674-75 (Bankr. S.D.N.Y. 1984), and be previously authorized by the court. In re Kornstein's, Inc., 56 B.R. 481, 482 (Bankr. D.R.I. 1985). The compensation of such attorney is not subject to the one percent statutory cap; instead, it must simply be “reasonable.” Fed.R.Bankr.P. 219(c)(1) (1973) (“The compensation allowable by the court to a trustee . . . [or] attorney . . . shall be reasonable.”). See also Fed.R.Bankr.P. 219 (1973) advisory committee's note (“[A]llowances to attorneys . . . are not subject to the limitations imposed by § 48 of the Act on the compensation of . . . trustees.”).

         2. Amount of Fee Award.

         Any compensation given to a Trustee performing legal services or an attorney serving as counsel to a Trustee must be “reasonable.” Fed.R.Bankr.P. 219(c). The factors courts must consider in determining whether compensation is “reasonable” have evolved over time. Former Bankruptcy Rule 219(c)(1) enumerates specific factors that courts should consider in awarding a Trustee's or attorney's compensation: “the nature, extent, and value of the services rendered as well as . . . the conservation of the estate and the interests of creditors.” Fed.R.Bankr.P. 219(c)(1) (1973). The Advisory Committee further stated that the “principal factors which enter into a determination of what is reasonable are the time spent, the intricacy of the questions involved, the size of the estate . . ., the results obtained and the ‘economic spirit' of the Bankruptcy Act to curtail unnecessary expenses.” Fed.R.Bankr.P. 219 (1973) advisory committee's note (quoting In re Paramount Merrick, Inc., 252 F.2d 482, 485 (2d Cir. 1958)).

         The Fourth Circuit has expanded on these factors. In 1976, echoing the Advisory Committee, it held in a bankruptcy case that courts must consider (1) “the time spent, ” (2) “the character of the services rendered, ” (3) “the results achieved, ” (4) “the size of the estate, ” (5) “the evidence relating to the services rendered, ” and (6) “‘the economic spirit' of the [Bankruptcy] Act.” New England Merchs. Nat'l Bank v. O'Donnell (In re Farrington Mfg. Co.), 540 F.2d 653, 657 (4th Cir. 1976). A court's ultimate goal, it explained, is to balance the “public interest in attracting competent counsel in bankruptcy proceedings” with “doing equity to the estate and its creditors.” Id. (citing Jacobowitz v. Double Seven Corp., 378 F.2d 405, 408 (9th Cir. 1967)).

         Two years later, the Fourth Circuit further expanded this analysis by adopting the twelve factors enumerated by the Fifth Circuit in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), holding that “these factors must be considered by district courts . . . in arriving at a determination of reasonable attorneys' fees” and that “any award must be accompanied by detailed findings of fact with regard to the factors considered.” Barber v. Kimbrell's, Inc., 577 F.2d 216, 226 (4th Cir. 1978).

         The twelve Johnson factors are:

(1) [T]he time and labor expended; (2) the novelty and difficulty of the questions raised; (3) the skill required to properly perform the legal services rendered; (4) the attorney's opportunity costs in pressing the instant litigation; (5) the customary fee for like work; (6) the attorney's expectations at the outset of the litigation; (7) the time limitations imposed by the client or circumstances; (8) the amount in controversy and the results obtained; (9) the experience, reputation and ability of the attorney; (10) the undesirability of the case within the legal community in which the suit arose; (11) the nature and length of the professional relationship between attorney and client; and (12) attorneys' fees awards in similar cases.

Id. at 226 n.28. Barber was not a bankruptcy case, but the Fourth Circuit has applied its holding to attorney's fee awards in the bankruptcy context. Harman v. Levin, 772 F.2d 1150, 1152 (4th Cir. 1985).[5] The court has also provided additional guidance for district courts applying the Johnson factors:

[D]istrict courts [should] . . . first ascertain the nature and extent of the services supplied by the attorney from a statement showing the number of hours worked and an explanation of how these hours were spent. The court should next determine the customary hourly rate of compensation. These are essentially Johnson factors 1 and 5. The court should then multiply the number of hours reasonably expended by the customary hourly rate to determine an initial amount for the fee award. Finally, the court should adjust the fee on the basis of the other factors, briefly explaining how they affected the award.

Anderson v. Morris, 658 F.2d 246, 249 (4th Cir. 1981), disavowed on other grounds by Bernstein v. Menard, 728 F.2d 252 (4th Cir. 1984). This guidance essentially requires courts to start by calculating the so-called “lodestar” and then adjust that ...

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