In re Kline, Case No. 98-40827 (Bankr. W.D.N.C., July 22, 2003)(Hodges) - Section 330 requires the court to consider the "value," "benefit" and "necessity" of professional services. Consequently, professionals must take into consideration the economic realities of the situation when rendering services for which they expect compensation pursuant to section 330.

In re Downs & Assocs. Ltd., Case No. 02-32905 (Bankr. W.D.N.C., Dec. 11, 2002)(Hodges) - The court sustained in part the Bankruptcy Administrators Objection to the application for fees filed by the debtor's attorney, but found this to be an exceptional case, where despite "deficiencies that might be fatal to a fee application in other circumstances" awarded attorney fees for the "significant dividends" debtors counsel produced for creditors in a relatively short period of time. The court also held that counsel is entitled to compensation for defending its fee applications and such compensation is not prohibited by §330(a) of the Bankruptcy Code.

IN RE DAVID WAYNE GUYTON, Case No. 98-32966 (Bankr. W.D.N.C., February 8, 1999)(Hodges) - The court denied the debtor's attorney's Application for Approval of Security Interest. The court declined to absolutely prohibit such a practice but stated that: "Such practice may be approved in exceptional circumstances; and, at a minimum, would require a showing that the debtor would be unable to obtain any legal representation without a security interest in the debtor's property." The court stated that its ruling fell somewhere between that of the bright-line holding in the In re Escalera case and the In re Martin case which held that bankruptcy courts should make a case by case determination as to the propriety of attorneys taking a security interest in debtors' property. In re Martin, 817 F.2d 175 (1st Cir. 1987); In re Escalera, 171 B.R. 107 (Bankr. E.D. Wash. 1994).

IN RE MIDDLE PLANTATION LIMITED PARTNERSHIP, Case No. 95-31507 (Bankr. W.D.N.C. , Nov. 26, 1996)(Hodges) - The court granted a Motion for Disgorgement and found that no attorney's fees should be allowed from the retainer held by debtor's counsel, a NationsBank account, or any other funds presently in the debtor's possession. The court cited 11 U.S.C. § 330 which allows a debtor's attorney to apply for reasonable compensation for services and expenses. In its holding, however, the court relied on the general rule that administrative expenses occurring post-petition are not permitted to be charged against secured collateral where the creditor is neither oversecured nor adequately protected. In re Visual Industries, Inc., 57 F.3d 321, 324 (3d Cir. 1995).

SIMPSON V. RAYBURN, MOON & SMITH, P.A. (IN RE KOLORTEX CORPORATION), Case No. 95-30796 (Bankr. W.D.N.C., May 22, 1996)(J. Wooten) - Rayburn represented the debtor in a Chapter 11 case that was subsequently converted to a Chapter 7 proceeding. Rayburn filed an application for attorneys' fees and expenses in the amount of $4,273, and the bankruptcy administrator and the trustee objected to these fees. This time, the bankruptcy administrator argued that 11 U.S.C. 330 precluded Rayburn from receiving any compensation for services rendered after the case was converted to a Chapter 7 proceeding and the Bankruptcy Court appointed a Chapter 7 trustee. The Bankruptcy Court noted that there is no legislative history concerning the recent deletion of the phrase "or to the debtor's attorney" from 11 U.S.C. 330(a), so the Court relied on the plain meaning of the language of the statute and held that it precludes a Chapter 11 debtor's attorney from receiving compensation from the estate for services rendered after the case is converted to a Chapter 7 proceeding and a trustee is appointed. The Court held that to the extent a trustee requires the services of the debtor's attorney, the trustee can file an application to hire the debtor's attorney as special counsel under 11 U.S.C. 327(e). The Court further held that to allow compensation to debtor's counsel from the estate under these circumstances, to some extent, undermines the trustee's ability to control the estate and act in the best interests of the estate. Furthermore, since the trustee does not control the debtor's attorney under this scenario, it leaves the door wide open for a significant occurrence of duplicative services.

SIMPSON V. RAYBURN, MOON & SMITH, P.A. (IN RE KOLORTEX CORPORATION), Case No. 3:96CV22-MU (W.D.N.C., April 26, 1996)(J. Mullen) - Rayburn represented the debtor in a Chapter 11 case that was subsequently converted to a Chapter 7 proceeding. Rayburn filed an application for attorneys' fees and expenses in the amount of $44,018, and the bankruptcy administrator and the debtor objected to these fees. The Bankruptcy Court allowed the fees as Chapter 11 expenses of administration, and the bankruptcy administrator appealed to the District Court. The Court noted that "unfortunately" the bankruptcy administrator raised for the first time on appeal her argument that 11 U.S.C. 330 precluded Rayburn from receiving any compensation for services rendered after the case was converted to a Chapter 7 proceeding and the Bankruptcy Court appointed a Chapter 7 trustee. Because the bankruptcy administrator could not demonstrate that exceptional circumstances existed, the Court refused to consider this issue raised for the first time on appeal. The Court also rejected the bankruptcy administrator's argument that the Bankruptcy Court erred in admitting evidence of fee applications unrelated to Rayburn's application. The Court held that other fee awards in the Western District of North Carolina were relevant to evaluating the fee application at issue, and the Bankruptcy Court did not err in permitting another attorney to testify concerning other fee applications. Finally, the Court held that the fee application alone was insufficient to support the Bankruptcy Court's award of attorneys' fees and expenses because it was vague and contained a number of services and tasks which were "lumped" together into one time entry. However, the Court held that the Bankruptcy Court properly exercised its discretion to use Rayburn's testimony to supplement the application, and its determination was not clearly erroneous. The Court concluded by stating that "[c]ounsel in the Western District of North Carolina are hereby placed on notice that a petition for attorneys' fees and expenses pursuant to 11 U.S.C. Section 330(a) should contain sufficient detail to permit a meaningful evaluation by the court."

IN RE BSC, INC., Case No. 93-30450 (Bankr. W.D.N.C., Feb. 10, 1995) - The Court sanctioned counsel for the debtor for having a conflict and therefore, not being disinterested. The Court awarded counsel only half of the fees for which it sought authorization to receive.

IN RE WENAR CORPORATION, Case No. 89-31001 (Bankr. W.D.N.C. 1992) - Court approved nunc pro tunc payment of approximately $802,000 to debtor's consultant who performed valuable services on behalf of the debtor at the rate of $200 per hour for more than two years, during which time the objecting creditors repeatedly dealt with the consultant, were fully informed of his hourly rate, were pleased with his work, and admitted that the net effect of his efforts benefitted the estate.

IN RE ACKER, Case No. 89-31304 (Bankr. W.D.N.C., June 20, 1991)(J. Hodges) - Compensation for preparing fee applications will be limited to actual time spent, or in the absence of such showing, one-tenth of one hour.

IN RE THE LAKE NORMAN COMPANY, INC., Case No. 90-30188 (Bankr. W.D.N.C., April 9, 1991)(J. Wooten) - The Court allowed billings in .25 hour increments and found that while daily grouping of time is objectionable and should be discouraged, the fee application at issue gave sufficient explanation to permit the Court's understanding and consideration of the application. The Court found that the hourly rate of $195.00 was a high hourly rate and "exceeds to the outer bounds of reasonableness." However, the Court found that it was within the range of fees allowed within the community and should be given favorable consideration in the case which the Court found to be a complex and large case.

IN RE HALL, Case No. C-B-89-30220 (Bankr. W.D.N.C., Dec. 14, 1989)(J. Hodges) - The debtors in this proceeding were originally represented by James C. Hord. Attorney Hord executed a consent order on behalf of the debtors. The debtors felt that this order treated them unfairly, and they sought other representation. The debtors' new counsel moved to set aside this prior order and object to the fees awarded Hord for entry of the order. Upon discovering this motion, Hord moved for sanctions against the debtors' new counsel under Federal Rule of Bankruptcy Procedure 9011. The debtors' new counsel then moved for sanctions against Hord under the same provision. At the trial, the court determined that Hord's testimony was not credible, that he had failed to sufficiently document his work, and that his representation of the debtors had been less than competent. The court denied Hord's motion for sanctions, forced Hord to return all fees paid to him in connection with the prior order, and granted sanctions against Hord. The court also forced Hord to pay for the debtors' costs and fees as a part of the sanctions award.

IN RE MAXWAY CORPORATION, Case No. C-B-88-01027, and IN RE DANNERS, INC., Case No. C-B-88-01026 (Bankr. W.D.N.C., Aug. 4, 1989)(J. Hodges) - The court was faced with the issue of whether to approve an award of interim attorneys' fees to the debtors' attorneys. The court had before it two separate fee applications, the first of which contained general statements about the work performed which no explanation or justification of the charges. It was determined that this information was insufficient for a proper formulation of a fee award, and the attorneys were required to submit a detailed schedule of the time entries and other supporting data. The court examined this evidence utilizing the standards applicable to attorneys' fee awards as established by the Supreme Court and the Fourth Circuit Court of Appeals, and it concluded that the appropriate standard was "reasonable hours multiplied by a reasonable hourly rate." Only in "exceptional circumstances" is this lodestar fee to be upwardly adjusted. The market rate utilized to determine the fee should be that of the market in the relevant community. It was the court's view that New York should be the relevant community in this case because it would have been unfair to penalize the debtor's attorneys just because the debtor's bankruptcy had been filed in an area with a lower fee rate. In addition, the court observed that most of the work had been done in New York. The court then approved the fees on a topic-by-topic basis using the determined New York rate.

IN RE HENSLEY, Case No. A-B-85-00082 (Bankr. W.D.N.C., April 28, 1989)(J. Hodges)- Creditors objected to an application for interim fees by the debtor's attorney. The court concluded that the number of hours billed by the attorney were reasonable, and it multiplied those hours by a reasonable hourly rate (determined by the local market). The fact that the case was a Chapter 11 bankruptcy in which there had been delay due to various fruitless, but legitimate, attempts to reorganize, did not, in the court's view, provide for an enhancement of the fee requested.

IN RE H & H TRUCKING, INC. OF GASTONIA, Case No. C-B-84-00749 (Bankr. W.D.N.C., March 9, 1989)(J. Hodges) - The court computed a "lodestar" fee by multiplying reasonable hours by a reasonable hourly rate. The lodestar fee could be adjusted in "exceptional circumstances" to account for results obtained and the quality of representation. However, these "exceptional circumstances" occur only in rare and exceptional cases, and it would be unusual for the lodestar fee to be adjusted upward or downward. The court sustained a creditor's objections to some hours spent by the trustee's attorney on matters which were more properly functions of the trustee. These matters included letters and telephone calls concerning review and settlement of claims, preparation of collection letters, and preparation of motions and notices closing the Chapter 7 estate. The court rejected the creditor's argument that the trustee is entitled to a commission under 11 U.S.C. 326 on disbursement of assets that only the trustee brought into the estate, and not on disbursement of assets brought into the estate by creditors.

IN RE INTERCONTINENTAL METALS TRADING CORPORATION, Case Nos. C-C-84-635-P and C-C-84-636-P (W.D.N.C., Sept. 18, 1985)(J. Potter) - The Chapter 11 debtors made application to the bankruptcy court for authorization to pay a law firm $45,000 in fees incurred by the debtors or their principals during the pendency of a Grand Jury investigation of the debtors' business practices. The bankruptcy court denied the application in the absence of a showing that the services of the attorneys benefitted the estate. The District Court held that the bankruptcy judge's findings were not "clearly erroneous", but it remanded the case because of a lack of specific findings of fact on the issue of whether the services were in the best interest of the estate.