In re Sanders

521 B.R. 389

In re: Anna Marie Sanders, Debtor.

Case No. 13–11065–JKO

United States Bankruptcy Court, S.D. Florida, Fort Lauderdale Division .

Signed December 8, 2014

Zana Michelle Scarlett, Office of the US Trustee, Miami, FL, for U.S. Trustee.

Tina M. Talarchyk, Esq., The Talarchyk Firm, Palm Beach, FL, for Debtor.

ORDER ON FEE APPLICATIONS OF TALARCHYK MERRILL, LLC [ECF 245], AND TALARCHYK NEWBURGH, LLC [ECF 265]; DIRECTING ACCOUNTING; AND SETTING EVIDENTIARY HEARING FOR JANUARY 30, 2015

John K. Olson, Judge United States Bankruptcy Court

This dismissed chapter 11 case came before the Court on June 5, 2014, on the “First” [sic] and Final Fee Application (the “Second Talarchyk Merrill Fee Application”) [ECF 245] of Talarchyk Merrill, LLC (“Talarchyk Merrill”), and on October 30, 2014, on the First and Final Fee Application (the “Talarchyk Newburgh Fee Application”) [ECF 265] of Talarchyk Newburgh, LLC (“Talarchyk Newburgh”) as Attorneys for the Debtor and Debtor–in–Possession. The Court deferred ruling on the Second Talarchyk Merrill Fee Application until the Talarchyk Newburgh Fee Application was ripe for review.

The history of the Debtor's legal representation in this case is curious.

Employment of Talarchyk Merrill

The Debtor filed an Application (the “Retention Application”) [ECF 17] to employ Attorney Tina M. Talarchyk (“Talarchyk”) and Talarchyk Merrill on January 31, 2013. The Retention Application disclosed that on or about January 14, 2013, Talarchyk Merrill had received from the Debtor a fee retainer of $23,787 together with the filing fee of $1,213, aggregating $25,000. The Retention Application represented that Talarchyk Merrill “will retain [the entire amount] of the Retainer in trust during the pendency of this case to be applied to any professional fees, charges and disbursements that remain unpaid at the end of the Chapter 11 Case.” [ECF 17, ¶¶ 22–23]. On April 1, 2013, the Court entered an Order [ECF 75] granting the Retention Application, thereby authorizing Talarchyk and Talarchyk Merrill to act as Debtor's counsel.

Purported Substitution of Talarchyk Newburgh for Ozment Merrill

On April 7, 2013, Talarchyk filed a Stipulated Motion [ECF 80] for Substitution of Counsel (the “First Substitution Motion”) pursuant to which Talarchyk Newburgh was to be substituted for Ozment Merrill, PLLC (“Ozment Merrill”) as counsel for the Debtor. This is curious in itself, since Ozment Merrill never appeared as counsel for the Debtor; the Debtor's Petition [ECF 1], filed January 17, 2013, was signed by Talarchyk, for the firm Talarchyk Merrill.

Not a single pleading in the case was filed by Ozment Merrill, PLLC. Nonetheless, the First Substitution Motion contained the electronic signatures of Talarchyk for Talarchyk Newburgh and of David L. Merrill (“Merrill”) for Ozment Merrill.¹ The Court granted the First Substitution Motion by Order [ECF 88] entered April 10, 2013.

Fee Applications of Talarchyk Merrill

An application (the “First Talarchyk Merrill Fee Application”) [ECF 234] was filed by Talarchyk Merrill on March 31, 2014, seeking compensation for Talarchyk Merrill as Debtor's counsel in the amount of $20,430, together with cost reimbursements in the amount of $440. The United States Trustee objected [ECF 244] to the First Talarchyk Merrill Fee Application, on the basis that it did not comply with the applicable requirements of controlling Eleventh Circuit law. The Court sustained the United States Trustee's Objection and disallowed the First Talarchyk Merrill Fee Application in its entirety, without prejudice, by Order [ECF 250] entered May 2, 2014, following a hearing held April 29, 2014.

On May 1, 2014, Talarchyk Merrill filed its “First” [sic] and Final Fee Application [ECF 245] (the “Second Talarchyk Merrill Fee Application”). The Second Talarchyk Merrill Fee Application was signed by Talarchyk and was heard on June 5, 2014, along with the fee application of The Talarchyk Firm [ECF 246]. On June 13, 2014, Talarchyk Newburgh, through Steven S. Newburgh, objected [ECF 258] to The Talarchyk Firm's Fee Application. The Talarchyk Newburgh Objection was sustained by Order [ECF 261] entered September 8, 2014. That Order also authorized Talarchyk Newburgh and The Talarchyk Firm to file such fee application(s) as they deemed appropriate within 21 days of that order, or by September 29, 2014. The Talarchyk Firm has not filed any further fee application, the time for doing so has now expired, and no fees will be awarded to The Talarchyk Firm in this case. Talarchyk Newburgh's fee application [ECF 265] (the “Talarchyk Newburgh Fee Application”) is ruled upon below.

The Second Talarchyk Merrill Application is replete with incomprehensible numbers:

• In Exhibit 1–A, the Application states that Talarchyk spent a total of 21.0 hours on the engagement and Merrill spent a total of 38.21² hours, for a Talarchyk Merrill grand total of 59.21 hours.

• In Exhibit 1–B, which purports to break down the lawyers' time by category, the Application states that neither Talarchyk nor Merrill spent any time on the category of activity “Case Administration,” but that together,they spent 27.7 hours in “Case Administration.”

• Again in Exhibit 1–B, neither Talarchyk nor Merrill spent any time on the category “Meetings and Communications with Creditors” (Talarchyk specifically recording 0.0 hours), but that together they spent 4.2 hours.

• In its totals, Exhibit 1–B states that Talarchyk and Merrill together spent 51.41 hours (versus 59.21 alleged on Exhibit 1–A).

• But on a lawyer-by-lawyer, category-by-category basis, Exhibit 1–B says that Merrill's total time in the case was 5.01 hours in the category “Plan and Disclosure Statement.” Talarchyk's only time recorded by category was 12.6 hours in the category “Fee Employment Applications,” 0.9 hours recorded in the category “Relief from Stay,” and 1.0 hours recorded in the category “Plan and Disclosure Statement.”

• Thus, according to the detailed lawyer-by-lawyer, category-by-category time recording in Exhibit 1–B, Merrill recorded a total of 5.01 hours and Talarchyk recorded a total of 14.5 hours, for a Talarchyk Merrill grand total of 19.51 hours.

• But according to Exhibit 3 to the Second Talarchyk Merrill Fee Application, Talarchyk had a total of 33.4 hours and Merrill had a total of 12.0 hours, for a Talarchyk Merrill grand total of 45.4 hours.

• But if one adds up the individual time entries contained in Exhibit 3, one reaches a total of 60.7 hours.

The Second Talarchyk Merrill Application thus goes beyond mere professional sloppiness into arithmetic gibberish.³

To summarize: the Second Talarchyk Merrill Application variously represents, in accordance with the requirements of Rule 9011, that Talarchyk Merrill spent (a) 59.01 hours, (b) 51.41 hours, (c) 19.51 hours, (d) 45.4 hours, or (e) 60.7 hours representing the Debtor. And it asks that each of Talarchyk and Merrill be paid at a rate of $450/hour.

Applicable Legal Standards for Review

In evaluating professional fee applications, the Court looks to the factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974), made applicable to bankruptcy cases by In re First Colonial Corp. of America, 544 F.2d 1291 (5th Cir.1977) ; see also Loranger v. Stierheim, 10 F.3d 776 (11th Cir.1994). The Bar is thoroughly familiar with these factors, and the Court will discuss only those three which are particularly relevant here.

1. Time and labor required. Talarchyk Merrill claims to have spent somewhere between 19.51 and 60.7 hours in this representation. As the Court's late mentor Judge Thomas E. Baynes, Jr., regularly expressed, a lawyer's fee application should be his or her finest piece of work. Since Talarchyk Merrill has given the Court so many choices, the Court chooses 19.51 hours.

2. The skill required to perform the legal services properly. This is a Chapter 11 case filed with $4.5 million in debt and $1.5 million in assets, according to the Debtor's Chapter 11 Case Management Summary [ECF 19] filed by Talarchyk. The Debtor (through Talarchyk) filed a Plan [ECF 207] and a Disclosure Statement [ECF 208], dealing with two secured claims, $8,645 in IRS liability, and $7,700 in general unsecured claims. This was a simple case which the Court would have expected any of the competent and efficient lawyers in this District who specialize in individual Chapter 11 debtor representation to handle completely for fees in the $25,000 to $30,000 range. Instead, the Plan went nowhere, the assets were sold, and the case dismissed.

However, Talarchyk claimed to rack up fees in three different firms as follows: Talarchyk Merrill: $20,430 [ECF 245]; Talarchyk Newburgh: $12,600 [ECF 265]; The Talarchyk Firm⁴ : $172,350 [ECF 235], for a grand total of $205,380, or something like 6 or 7 times the maximum amount a case like this should have cost.

9. The experience, reputation and ability of the attorneys. Each of the three lawyers who represented the Debtor in this case seeks compensation at the rate of $450/hour. In considering their reputations and abilities, the Court finds that Newburgh's fairly compensable hourly rate is $450/hour as sought, and that Merrill's is $250/hour. Although Talarchyk served some years ago as President of the Bankruptcy Bar Association of the Southern District of Florida and has served in some other Bar-related activities, her peripatetic practice⁵ seems stuck in an awkward and distant past. Her performance in this case was shockingly sloppy. Based upon her reputation and ability, and for the specific reasons set forth in this Order, the Court finds that Talarchyk's fairly compensable hourly rate is, like Merrill's, $250/hour.

Piccadilly Circus

A singular example of Talarchyk's incompetence will suffice to demonstrate her remarkable performance in this case.

As part of the Debtor's Motion [ECF 166] seeking authority to sell her properties under 11 U.S.C. § 363(f), Talarchyk included the following paragraph:

Exemption from...