In re Nicole Gas Prod., Ltd.

542 B.R. 204

In re: Nicole Gas Production, Ltd., Debtor.

Case No. 09–52887

United States Bankruptcy Court, S.D. Ohio, Eastern Division, at Columbus .

Signed December 10, 2015

Nicole Gas Production Ltd., Westerville, Oh, pro se.

MEMORANDUM OPINION AND ORDER AWARDING FREDERICK RANSIER ATTORNEYS' FEES AND EXPENSES INCURRED AS A RESULT OF CIVIL CONTEMPT

John E. Hoffman Jr., Unites States Bankruptcy Judge

I. Introduction

The Court previously held three individuals in civil contempt for commencing and continuing a state court action asserting claims belonging to the bankruptcy estate of Nicole Gas Production, Ltd. ("NGP"). Frederick L. Ransier, III ("Ransier"), the Chapter 7 trustee of NGP's estate, requests an award of the reasonable attorneys' fees and expenses he has incurred to date as a result of the contemptuous conduct. For the reasons explained below, the Court awards Ransier fees and expenses in the amount of $91,068.

II. Jurisdiction and Constitutional Authority

The Court has jurisdiction to hear and determine this contested matter under 28 U.S.C. §§ 157 and 1334 and the general order of reference entered in this district. This is a core proceeding. See 28 U.S.C. § 157(b)(2)(A) and (O).

The Court also has the constitutional authority to enter a final order awarding professional fees and costs incurred as a result of contemptuous conduct. See In re Brown, 511 B.R. 843, 848 (Bankr.S.D.Tex.2014) (holding that bankruptcy courts have the constitutional authority to impose sanctions for contempt after Stern v. Marshall, ––– U.S. ––––, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011) ); In re Green, No. 12–13410, 2014 WL 1089843, at *1 (Bankr.N.D.Ohio Mar. 19, 2014) (same); Schermerhorn v. Centurytel, Inc. (In re Skyport Global Commc'ns), No. 08–36737–H4–11, 2013 WL 4046397, at *41 (Bankr.S.D.Tex. Aug. 7, 2013) (same).

III. Procedural Background

Earlier in this case, Ransier filed a motion requesting that the Court enter an order directing Freddie Fulson ("Fulson") and the attorneys who represented him in the state court action—Robert Sanders ("Sanders") and James Lowe ("Lowe" and, together with Sanders and Fulson, the "Fulson Parties")—to appear and show cause why they should not be held in civil contempt (the "Contempt Motion") (Doc. 119). The Court held an evidentiary hearing on the issue of whether the Fulson Parties should be held in civil contempt (the "Contempt Hearing"). Following the Contempt Hearing, Fulson passed away, and his probate estate was substituted as the plaintiff in the state court case, effectively substituting his estate (the "Fulson Estate") as a party in interest in this contested matter. See Docs. 188 & 190. The co-administrators of the Fulson Estate are Curtland H. Caffey and S. Brewster Randall, II, Esq. (the "Co-administrators").

Based on the evidence presented at the Contempt Hearing, the Court entered an opinion and order (the " Contempt Opinion ") holding that the Fulson Parties "violated the automatic stay and were in contempt of Court when they commenced and continued the state court action." In re Nicole Gas Prod., Ltd., 519 B.R. 723, 725 (Bankr.S.D.Ohio 2014). The Contempt Opinion also established a procedure for the Court to determine the amount of damages the NGP estate sustained as a result of the Fulson Parties' contemptuous conduct. In accordance with this procedure, Ransier filed a statement of the time and expenses incurred by professionals from his law firm, Vorys, Sater, Seymour and Pease LLP ("Vorys"), as of the date the statement was filed (the "First Fee Statement"), together with a supporting affidavit (the "Ransier Affidavit") (Doc. 200).¹ Lowe filed an objection to the First Fee Statement (the "Lowe Objection") (Doc. 201), and Sanders filed an objection as well (the "Sanders Objection") (Doc. 202). Ransier then filed a combined reply to the Lowe Objection and the Sanders Objection (the "Ransier Reply") (Doc. 206).

Although the Court provided Sanders, Lowe and the Co-administrators with notice of the entry of the Contempt Opinion, Docs. 196 & 199, Ransier gave notice of the filing of the First Fee Statement to Sanders and Lowe, but not to the Co-administrators. After the Court made Ransier aware of the need to provide the Co-administrators with notice of the First Fee Statement, he served it on them under the terms of an agreed order among the Co-administrators, Sanders and Lowe (the "Agreed Order") (Doc. 246). The Agreed Order established a schedule under which the Co-administrators filed an objection to the First Fee Statement (the "Co-administrators Objection") (Doc. 248) and Ransier filed a reply to their objection (Doc. 250). The Court will refer to Lowe, Sanders and the Co-administrators collectively as the "Objectors."

The Court held a hearing to consider the amount of fees and expenses that should be awarded to Ransier (the "Fee Hearing"). At the Fee Hearing, Ransier testified in support of the fees and expenses charged by the Vorys professionals who rendered the legal services he asserted were necessary to respond to the Fulson Parties' contemptuous conduct. During the Fee Hearing, the Court admitted the following documents into evidence without objection: (1) Ransier's Exhibit 1 (the First Fee Statement), Exhibit 1A (the Ransier Affidavit) and Exhibit 2 (a document setting forth Ransier's expenses); and (2) Lowe's Exhibit A (a version of the First Fee Statement annotated with paragraph numbers 1 through 303).

At the conclusion of the Fee Hearing, the Court asked Ransier to file (1) an affidavit explaining Vorys's billing policy with respect to computerized legal research and (2) a supplemental statement of the fees and expenses incurred since the First Fee Statement was filed. On October 6, 2015, Vorys attorney Brenda Bowers filed an affidavit (the "Bowers Affidavit") in support of a statement of the time and expenses incurred since the filing of the First Fee Statement (the "Second Fee Statement") (Doc. 252). On November 6, 2015, at the Court's request, the parties filed a Notice of Submission of Reviewed and Numbered Supplemental Fee Statement Pursuant to Contempt Order (Doc. 253), attaching a copy of the Second Fee Statement annotated with paragraph numbers 304 through 444).²

The Court will assume that the Objectors oppose Ransier's recovery of the fees and expenses set forth in the Second Fee Statement on the same grounds that they objected to the First Fee Statement. Accordingly, the Court will deem the Sanders, Lowe and Co-administrators' Objections to be objections to both the First and Second Fee Statements.

IV. Findings of Fact

In this opinion, the Court uses defined terms contained in the Contempt Opinion and incorporates by reference the findings of fact set forth in the Contempt Opinion. Based on the evidence introduced during the Contempt Hearing and the Fee Hearing, including the documentary evidence and the testimony presented, and having found Ransier to be a highly credible witness, the Court makes the following additional findings of fact.

A. The Total Amount of Fees and Expenses Requested

In the First Fee Statement, Ransier attributed a total of $68,476.50 of fees and $3,788.48 of expenses to the Fulson Parties' contempt. According to the Bowers Affidavit and the Second Fee Statement, after Ransier filed the First Fee Statement, he incurred additional fees of $22,972 and additional expenses of $149.27. Thus, the amount of fees Ransier seeks to recover is $91,448.50, and the amount of expenses is $3,937.75, for a total award of fees and expenses in the amount of $95,386.25. Bowers Aff. ¶ 8.

B. Fees

Because Ransier is the Chapter 7 trustee of NGP's bankruptcy estate as well as an attorney for the estate, the Court "may allow compensation for [his] services as such attorney ... only to the extent that [he] performed services as attorney ... for the estate and not for performance of any of [his] duties that are generally performed by a trustee without the assistance of an attorney ... for the estate."

11 U.S.C. § 328(b). Litigating a contested matter such as this contempt proceeding certainly requires an attorney's professional skills. See, e.g., Gordon v. Walton (In re Hambrick), No. 08–66265, 2012 WL 10739279, at *5 (Bankr.N.D.Ga. Apr. 10, 2012). Ransier testified that he was careful to separate the work that he performed as Chapter 7 trustee of the NGP estate—and work that other professionals at his firm performed on his behalf in his capacity as Chapter 7 trustee—from the services that he and others provided as counsel in this contested matter. The Court finds that Ransier and the other Vorys attorneys billed only for time spent representing the estate as counsel, not as the Chapter 7 trustee. That said, Ransier may recover the fees set forth in the First and Second Fee Statements (collectively, the "Fee Statements") only to the extent that (1) the hourly rates of the professionals who represented NGP's estate in this matter were reasonable and (2) the time spent was both reasonable and expended as a result of the Fulson Parties' contempt.

1. Hourly Rates

The Fee Statements identify the professionals who represented NGP's estate in this contempt matter together with their hourly rates. Ransier testified that the rates charged by the Vorys professionals in this matter reflect the firm's rates in 2009 (the year the NGP case was commenced) rather than the rates in place at the time the services were performed from 2013 through 2015. The parties stipulated in the Agreed Order that the "hourly rates of the attorneys and paralegals within the [First Fee Statement] are reasonable, standard and customary for similarly situated attorneys and paralegals in bankruptcy litigation throughout Ohio and the Midwest for similar bankruptcy litigation matters" and that "[t]here shall be no expert witnesses required as to the reasonableness of the hourly rates." Agreed Order ¶ B.

Ransier has been licensed to practice law since 1974 and has been a panel Chapter 7 trustee in the ...