Professional Documents
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In re:
CURTIS JAMES JACKSON, III
Debtor
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Chapter 11
Case No. 15-21233 (AMN)
through her undersigned attorneys, Pullman & Comley, LLC, hereby files this Objection to the
Application of Brewer, Attorneys & Counselors (the Brewer Firm), As Special Counsel For
the Debtor, For The Reimbursement of Expenses For The Time Period From July 15, 2015
Through October 15, 2015 [Docket No. 215] (the Expense Application). In support of this
Objection, Ms. Leviston respectfully represents:
PRELIMINARY STATEMENT
1.
A significant portion of the expenses sought by the Brewer Firm in the Expense
Application for hotel stays, court reporter fees, travel and legal research are extravagant,
excessive and unreasonable.
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back-up documentation attached to the Expense Application. The lack of detailed and itemized
back up information warrants disallowance of these expenses, or alternatively, a significant
reduction in these expenses.
RELEVANT BACKGROUND
2.
On July 13, 2015 (the Petition Date), the debtor, Curtis James Jackson (the
Debtor), filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. No
official committee of unsecured creditors has yet been appointed in the Chapter 11 case.
3.
On August 11, 2015, the Debtor filed an Application to Employ the Brewer Firm
as Special Counsel to the Debtor (the Retention Application). The Retention Application was
approved by order dated September 18, 2015.
4.
On October 30, 2015, the Brewer Firm filed the Expense Application which seeks
reimbursement of expenses incurred by the Brewer Firm for the time period from July 13, 2015
through October 15, 2015 (the Application Time Period). Although the Brewer Firm is not
seeking any payment of fees by the Expense Application, it seeks reimbursement of $123,455.92
in expenses incurred in the Application Time Period (the Total Expenses). See ECF Doc. I.D.
No. 215, at p.1. The Total Expenses are summarized in the Expense Application as follows:
Category
Delivery
Court Reporter
Equipment
Filing Fee
Hotel
Index & Abstracting Services
Legal Research
Parking
Service Fee
Transportation
Travel Expenses
Laundry
Airfare
Total
$ 2,087.64
$ 26,890.90
$ 2,947.31
$ 130.00
$57,241.76
$ 613.97
$14,800.66
$450.00
$2,197.50
$7,572.24
$4,186.94
$132.50
$4,204.50
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$123,455.921
Total:
Hotel Expenses
5.
expenses (the Hotel Expenses). As reflected in the Exhibit 2 annexed to the Expense
Application, (see ECF Doc. I.D. No. 215-3), the Hotel Expenses are related to four (4) separate
hotels including: The Benjamin, The Loews Regency, The Hilton and the Lombardy
(collectively referred to as the Hotels).
6.
at the Exhibit 3 annexed to the Expense Application (see ECF Doc. I.D. No. 215-3) covers
time the Brewer Firm attorneys spent there between May 17, 2015 through July 14, 2015 for
Stephanie Gase and May 25, 2015 through July 27, 2015 for Todd Stepanek. As reflected on the
Benjamin Statements, the following charges (the Gase and Stepanek Charges) were incurred
on the following dates:
Stephanie Gase Statements
June 10th - $13,317.11
July 3rd - $11,015.16
July 13th - $5,000*2
July 14th - $661.40*
Todd Stepanek Statements
June 10th - $8,521.01
1 Ms. Leviston objects to the all of the reimbursement requests to the extent that the Brewer Firm does not provide
adequate documentation to support its requests. However, for sake of brevity, this Objection will only address
the most egregious reimbursement requests.
2 An asterisk denotes a charge which appears to have been incurred in the Application Time Period.
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Expense Application (see ECF Doc. I.D. No. 215-3) also shows that James Renard stayed at the
Loews Regency from May 27, 2015 through July 26, 2015. As reflected on the Expense
Applications Exhibit 2 (see ECF Doc. I.D. No. 215-2), the Loews Regency charges for which
the Brewer firm seeks reimbursement totals $30,347.32 (the Renard Statements). As reflected
on the Renard Statements, the following charges (the Renard Charges) were incurred on the
following dates:
Renard Statements
June 10th - $6,914.93
June 19th - $7,700.86
June 21st - $2,144.88
July 2nd - $10,669.30
July 8th - $3,834.60
July 14th - $4,169.72*
July 26th - $1,397.21*
August 3rd - $5,897.02*
August 3rd - $2,952.26*
Court Reporter Expenses
8.
The court reporter expenses in the amount of $26,890.90 (the Court Reporter
Expenses) include the cost of Real Time reporters and reporting, which is a highly expensive
and extravagant litigation tool. Real Time reporters utilize technologies to deliver computer text
screens within a few seconds of the words being spoken. Specialist software that the Real Time
reporters use allows participants in court hearings to make notes in the text and highlight
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portions for future reference. These enhanced features come with a cost significantly over and
above what a typical court reporter charges.
charges (the Legal Research Expenses), yet there is absolutely no back-up documentation
attached to the Expense Application regarding these charges to demonstrate what research was
done, by whom, to what extent and for what purpose.
Travel Expenses
10.
The Brewer Firm is seeking reimbursement of $4,186.94 for travel expenses (the
Travel Expenses), yet there is also no back-up documentation attached to the Expense
Application showing who traveled where, the type and nature of the travel incurred and for what
purpose.
OBJECTIONS
11.
Ms. Leviston contends that the Brewer Firm has not justified reimbursement for
the Hotel Expenses, the Court Reporter Expenses, the Legal Research Expenses or the Travel
Expenses with detailed, specific, itemized documentation, and as such, has failed to satisfy its
burden that these charges are reasonable. As an alternative to being disallowed for failing to
provide detailed documentation, the Hotel Expenses, the Court Reporter Expenses and Legal
Expenses should be disallowed, or at a minimum, significantly reduced as excessive and
luxurious, and thus, unreasonable.
BASIS FOR THE OBJECTIONS
12.
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13.
The Brewer Firms documentation in support of the Hotel Expenses, the Court
Reporter Expenses, the Legal Research and the Travel Expenses is either severely deficient or
totally omitted, and therefore, these expenses cannot be determined to be reasonable and should
be disallowed. To satisfy its burden of reasonableness, an applicant must justify its charges with
detailed, specific, itemized documentation. In re Baker, 374 B.R. 489, 494 (Bankr. E.D.N.Y.
2007); In re Bennett Funding Group, 213 B.R. 234, 244 (Bankr. N.D.N.Y. 1997).
14.
which of the Hotel Expenses referenced in the attachments to the Application are actually
included in the expenses sought for reimbursement.
Stepanek Charges noted above with an asterisk next to them in paragraph 63 totaling $18,429.51
3 These charges total $18,429.51 as follows: $5,000 on July 13th, $661.40 on July 14th, $5,000 on July 13th, $5,000
on July 20th, $2,658.61 on July 25th and $109.50 on July 27th (collectively referred to as the Application Time
Period Benjamin Hotel Expenses).
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are the only charges on the Benjamin Statements that were actually incurred by the Brewer Firm
in the Application Time Period which is defined as July 13th through October 15.th Further,
the Loews Regency charges set forth in paragraph 7 totaling $14,416.21 are the only charges in
the Renard Statements that were actually incurred in the Application Time Period. Therefore,
the hotel charges in the amounts of $18,429.51 and $14,416.21 are the only hotel charges that the
Brewer Firm should be seeking reimbursement for by the Application. Any charges outside the
Application Time Period, which the Brewer Firm included in its attachments, appear to be prepetition charges (dates ranging from May 17, 2015 through July 12, 2015) and are not properly
included for reimbursement. Even at these lower amounts, the Hotel Expenses are nevertheless
unreasonable for the following reasons.
15.
The dates the Brewer Firm refers to in the Exhibit 2 to the Expense Application
for the Benjamin Hotel charges fail to correlate to the Benjamin Statements. For example, the
Brewer Firm refers to charges at the Benjamin Hotel on July 22nd in the Exhibit 2, but in the
Benjamin Statements, there are no such charges (as reflected by credit card charges) incurred by
the Brewer Firm on that date. See ECF Doc. I.D. No. 215-2. Also, as reflected in the Exhibit 2
annexed to the Expense Application (id.), which is a summary of all expenses, the Hotel
Expenses are related to four (4) separate hotels including: The Benjamin, The Loews Regency,
The Hilton and the Lombardy (collectively referred to as the Hotels). The attachments located
at Exhibit 3 annexed to the Application only contain statements from two of the four Hotels;
namely, The Benjamin and Loews Regency. See ECF Doc. I.D. No. 215-3. Accordingly, the
back-up documentation is incomplete.
16.
The foregoing discrepancies and omissions, and the sheer confusion resulting
from the amounts requested compared to the back-up documentation, demonstrate that the
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Brewer Firm has not adequately justified the Hotel Expenses. As such, the Brewer Firm has not
met its burden of demonstrating that these expenses are reasonable. For this reason, the Hotel
Expenses should be disallowed.
17.
With regard to the Legal Research Expenses, aside from listing sub-totals in the
Exhibit 2 to the Application, the Brewer Firm provides no back-up documentation in support
of the amounts requested. In the absence of detailed, specific, and itemized documentation, the
Brewer Firm has not satisfied its burden to prove the expenses are reasonable. In re Pettibone
Corp., 74 B.R. 293, 302 (Bankr. N.D. Ill. 1987) (stating that to justify reimbursement of
expenses, the nature and purpose of the legal research should be noted and the entry should
indicate what matter the material sought will be used in) (citing In re Four Star Terminals, Inc.,
42 B.R. 419, 435 (Bankr. D. Alaska 1984) (holding that entries of research, legal research or
bankruptcy research are insufficient to justify an award of expenses)). In the total absence of
back-up documentation, the Legal Research Expenses cannot be found to be reasonable and
should be disallowed.
18.
Expenses or the Court Reporter Expenses. Without detailed, itemized back-up documentation to
support the $4,186.94 in Travel Expenses, there is no way for parties-in-interest to determine
which professionals traveled where, whether the professionals traveled first-class or coach, and
thus, there is no way to gauge their reasonableness. For this reason, the Travel Expenses should
also be disallowed. Additionally, the requested Court Reporter Expenses in the amount of
$26,890.90 are not substantiated with any documentary support, and for this reason, they should
be disallowed as well.
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B.
The Hotel Expenses and the Court Reporter Expenses Are Luxurious,
Excessive, and Therefore, Not Reasonable
19.
Hotel Expenses and the Court Reporter Expenses, the excessive and luxurious nature of these
expenses justifies disallowance of them. Excessive and extravagant expenses are routinely
disallowed, or reduced, when more economic alternatives are available. See e.g. In re West End
Financial Advisors, LLC, 2012 WL 2590613, at *15 (Bankr. S.D.N.Y. 2012) (reducing allowable
expenses incurred by attorneys staying in expensive hotels and traveling first class between New
York and Washington); In re EWI, Inc., 208 B.R. 885, 897 (Bankr. N.D. Ohio 1997) (agreeing
with the United States Trustee that luxury dining or accommodations are not reimbursable and
disallowing such expenses); In re N.S. Garrott & Sons and In re Eastern Arkansas Planting
Company, 54 B.R. 221, 225 (Bankr. E.D. Ark. 1985) (disallowing lodging expenses that were
excessive compared to typical lodging costs for the applicable area of the country). See also
United States Trustee Fee Guidelines For Reviewing Applications For Compensation and
Reimbursement of Expenses Filed Under 11 U.S.C. 330, at (b)(5)(i).
20.
The Hotel Expenses and Court Reporter Expenses are outrageous, excessive and
unnecessary. The Brewer Firm attorneys stayed at hotels in New York City that charged
anywhere from $450.00 to $1,000.00 per night per room when accommodations were available
in New York City at the same time for $300 to $400 per night per room. Ms. Levistons
attorneys stayed in a New York City hotel for the same trial as the Brewer Firms attorneys and
expended $249.00 to $450.00 per night per room.
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21.
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Similarly excessive are the Brewer Firms Legal Research Expenses. The Brewer
Firm contends that it incurred $14,800.66 in the Application Time Period on legal research.
However, in that same time period, Ms. Levistons counsel incurred less than $3,000 in legal
research costs when they prepared for and engaged in the same trial as the Brewer Firm. As such,
the Legal Research Expenses are excessive and should be disallowed, or significantly reduced.
22.
The Court Reporter Expenses in the amount of $26,890.90 include the cost of
Real Time reporters and reporting, which is a highly expensive and extravagant litigation tool.
Real Time reporters utilize technologies to deliver computer text screens within a few seconds of
the words being spoken. Specialist software that the Real Time reporters use allows participants
in court hearings to make notes in the text and highlight portions for future reference. These
enhanced features come with a cost significantly over and above what a typical court reporter
charges. Given the excessive and luxurious nature of the Court Reporter Expenses, they should
be disallowed.
C.
23.
Before granting a law firm's request for reimbursement, the court has the duty to
scrutinize the expenditures to assure that they are properly chargeable to the debtor's estate. In re
Island Helicopter Corp., 53 B.R. 71, 72 (Bankr. E.D.N.Y. 1985) (citing In re Boston & Maine
Corp., 46 B.R. 990, 992 (D. Mass. 1985); In re Garnas, 40 B.R. 140, 141 (Bankr. D.N.D.
1984)). In determining whether a particular expense is chargeable to the debtor's estate, the court
must distinguish between overhead expenses, which are not reimbursable, and out-of-pocket
expenses, which are. In re Thacker, 48 B.R. 161, 164 (Bankr. N.D. Ill. 1985).
Overhead
expenses are those day-to-day operating costs which are incurred regardless of whom the law
firm represents. Id. Common examples of these costs include library expenses, id. at *73, rent
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and utility expenses and secretarial expenses. Id; In re Global International Airways Corp., 38
B.R. 440, 444 (Bankr. W.D. Mo. 1984). Out of pocket expenses are those expenses which can
clearly be traced and allocated to a particular client. Thacker, 48 B.R. at 164. Examples include
court fees, transcription fees, out of town travel expenses, delivery service, long distance
telephone calls and postage expenses. Id. Generally, once a determination has been made that a
particular outlay is an out-of-pocket expense, the court must then evaluate whether the outlay
was reasonable and necessary. Id. The applicant has the responsibility to provide the court with
sufficient information to make this evaluation. Island Helicopter Corp., 53 B.R. at 72 (citing In
re American International Airways, Inc., 47 B.R. 716, 724 (Bankr. E.D. Pa. 1985)).
24.
The Brewer Firm may have a flat fee arrangement with either Westlaw or
LexisNexis for the firms research expenses, which would mean these expenses constitute firm
overhead and are not properly chargeable to the Debtors estate. Here, there is no information
concerning the Legal Research Expenses from which Ms. Leviston may determine whether the
research expenses are firm overhead or whether they are truly out of pocket expenses, and
even if they are, whether they are reasonable. For this reason, the Legal Research Expenses
should also be disallowed.
25.
In conclusion, Ms. Leviston submits that the Brewer Firm has not justified
reimbursement for the Hotel Expenses, the Court Reporter Expenses, the Legal Research
Expenses or the Travel Expenses with detailed, specific, itemized documentation, and as such,
has failed to satisfy its burden that these charges are reasonable, and should be allowed.
Alternatively, the Hotel Expenses, the Court Reporter Expenses and the Legal Research
Expenses should be disallowed, or at a minimum, significantly reduced as excessive, luxurious,
and unreasonable.
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WHEREFORE, Lastonia Leviston respectfully requests that the Court enter an order
sustaining this objection and granting such other relief as is appropriate.
Dated at Bridgeport, Connecticut this 18th day of November, 2015.
Respectfully submitted,
By:__/s/Jessica Grossarth ___
Elizabeth J. Austin (ct04384)
Jessica Grossarth (ct23975)
Pullman & Comley, LLC
850 Main Street, P.O. Box 7006
Bridgeport, CT 06601-7006
(203) 330-2000 Fax: (203) 576-8888
eaustin@pullcom.com
jgrossarth@pullcom.com
Attorneys to Lastonia Leviston
ACTIVE/77397.1/JXG/5428397v1
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