JAMES GRUBE, Bankruptcy Judge
The court has reviewed the fee application of the Moran Law Group filed on December 7, 2004. The application seeks attorney's fees in the amount of $5,294.50. For the reasons hereafter stated, the application will be granted in part and denied in part.
The debtor's petition was filed on August 4, 2004. The estimated fees for this case at the time of filing were $4,350. The fees were estimated pursuant to the court's fee schedule.
The San Jose Division of the Northern District has over 7,000 pending Chapter 13 cases. The majority of these cases are similar in the sense that they involve similar legal services such as filing the petition, statement of affairs and schedules and, possibly, a motion to sell or refinance a residence, a motion for relief from the automatic stay, etc. As a result, the court has established Guidelines For Payment Of Attorney's Fees In Chapter 13 Cases. The Guidelines include a fee schedule. The schedule does not limit fees but rather provides that if an attorney charges in accordance with the schedule, and no objections are raised, the scheduled fees will be approved at the time of confirmation of the plan without the filing of a fee application. Numerous courts across the country have fee schedules for Chapter 13 cases.
Periodically, the consumer bar surveys fees nationally and presents a request for a review and adjustment of the guideline fees. A copy of the court's current fee schedule is attached. It was adopted on August 1, 2003, based on a recommendation from the consumer bar. The present format contains three types of standard fees. The first involves fees for the services rendered in the basic case which can range from $1,800 to $6,350, depending on the circumstances. This type of fee should handle the vast majority of cases from start to finish unless extraordinary circumstances exist.
The National Association of Consumer Bankruptcy Attorneys periodically prepares a survey entitled Chapter 13 Attorneys Fees Function Survey. This Survey provides information about fee schedules and fee practices for approximately 100 courts across the country.
The second type of fee is a standard fee for handling the sale or refinance of real property or a motion to avoid a judicial lien. The fee is $300 if there is no court hearing required and $450 if one is needed. The bar represents that this is a reasonable fee for this service.
The final type of fee is based on the fact that in some cases circumstances change during the course of the case. Plans sometimes need to be modified and a standard fee of $200-$400 is set, provided the modification is more than one year after the filing of the petition. A fee of $200-$350 is set for new motions for relief from the automatic stay and a fee of $450 for motions to dismiss or convert. Again, these fees were proposed by the bar as representing reasonable fees for these services absent extraordinary circumstances.
The guideline fees are normally approved in the order confirming the debtor's plan. The debtor's plan was confirmed on November 5, 2004, and $4,350 was approved at that time.
The applicant always bears the burden of demonstrating the reasonableness of the request. In re Hecks' Properties, Inc., 151 B.R. 739, 745 (S.D.W. Va. 1992). The burden of demonstrating entitlement to the fees requested is on the applicant. In re Stoecker, 114 BR. 965 (Bankr. N.D. Ill. 1990).
In reviewing the application and supporting time records certain problems were evident. The request for compensation must be reasonable. In re Riverside-Linden Inv. Co., 925 F.2d 320, 322-23 (9th Cir. 1991); Unsecured Creditors' Committee v. Puget Sound Plywood, Inc., 924 F.2d 955 (9th Cir. 1991). See also In re Kitchen Factors, Inc., 143 B.R. 560, 562-63 (B.A.P. 9th Cir. 1992). The amount billed for preparing the debtor's petition and getting his plan confirmed is excessive. In submitting its proposal for guideline fees the bar suggested that $1,800 was an appropriate fee in most cases for handling the basic Chapter 13 case which include filing the petition, confirming the plan and more. In this case two attorneys and two paralegals billed $2,895.50 to get the case filed and confirmed.
There is nothing in the schedules to suggest this is a particularly difficult Chapter 13 case. The debtor owns a home with his wife valued at $700,000 with a mortgage of $314,254. They own a 2004 Nissan on which they owe $16,792 and a 2000 Nissan on which they owe $18,524. The debtor has 15 unsecured creditors. Moran states that the case was difficult because of the many communications required with the debtor. However, the $2,895.50 billed does not include any time spent communicating with the debtor.
The court notes that there were two objections to the plan by the Chapter 13 Trustee. However, these simply asked for the debtor's tax returns and requested a couple of technical corrections. A third objection was filed by the lender on one of the debtor's vehicles. The debtor's plan proposed to value the vehicle at $10,850, which was significantly below the Kelly Blue Book retail value of $17,500 and the wholesale value of $13,125 for a vehicle of like make, model, and condition. The lender indicated the value should be $15,313, which amount the debtor readily accepted. Such a low-ball valuation of the vehicle can not form a basis for additional fees. Since the Supreme Court's decision in In re Rash, 117 S.Ct. 1879 (1997), the resolution rate of automobile valuation questions by attorneys has been one hundred percent.
The time spent on getting the case filed and the plan confirmed is excessive. Rather than a competent attorney or paralegal sitting down and doing the work, two attorneys and two paralegals attacked the project in bits and pieces.
Date Description and Timekeeper Hours Amount
6/29/04 Confer with AG re: schedules and .50 $125.00 petition and budget information — RCM
Work with AG on petition — RCM 1.00 250.00
Revise petition — PRL2 2.00 180.00
6/30/04 Revise petition — PRL2 5.00 450.00
7/1/04 Proof petition; Confer with AG re: 1.25 312.50 charges — RCM
Further proofing of petition and .50 125.00 calculate life insurance loans vs cash value — RCM
Revise petition — PRL2 1.00 90.00
7/2/04 Work with AG on petition — RCM .30 75.00
Further revisions to petition — PRL2 2.00 180.00
Prepare liquidation analysis and .70 63.00 equity review; Calculate several possible plan terms and payouts — AP
7/6/04 Review schedules with RCM, analyze .25 62.50 plan options — CCM
7/18/04 Review schedules for corrections; .30 75.00 Calculate budget information — RCM
7/19/04 Confer with CCM re: plan and .20 50.00 schedules — RCM
Analyze calculate possible plan 1.00 90.00 terms; Draft plan; Draft amendment to matrix; Draft rights responsibilities — AP
Revise schedule C; Review and work .75 67.50 on budget; Analyze business income and expenses — AP
7/21/04 Proof petition; Draft 2016 .50 125.00 statement; Confer with CCM re: pot plan; Confer with AP re: revisions — RCM
8/23/04 Receive WFS objection to 1.00 250.00 confirmation, reconstruct valuation issues in plan; do new plan terms analysis to deal with greater values; address business income and expense issues raised by trustee and draft amended I and J Confer with AG re: numbers — CCM
10/12/04 Draft Third Amended Plan; review .50 125.00 file to determine if OCp and Chapter 13 plan are on file — RCM
10/28/04 Appear at prehearing (shared travel .50 125.00 to and from San Jose) — CCM
TOTALS: 19.25 $2,820.50
The court finds no support for fees in excess of the guideline amount for handling the basic case.
The court grants fees in the amount of $4,274.00. Fees in the amount of $1,020.50 are denied.
GUIDELINES FOR PAYMENT OF ATTORNEY'S FEES IN CHAPTER 13 CASES
The following are guidelines for the circumstances under which a detailed fee application need not be filed in Chapter 13 cases and the manner in which the Chapter 13 Trustee will disburse fees which are approved.
A. Fee Applications.
1. Counsel may receive an order approving fees and costs up to the amounts set forth in Paragraph 2 without filing a detailed application if:
(a) Counsel has filed and served the Chapter 13 Trustee with an executed copy of the "Rights and Responsibilities of Chapter 13 Debtors and Their Attorneys," copies of which are available on the Court's website;
(b) Counsel has accepted no more than $750 as a retainer in a consumer case or $1,500 as a retainer in a business case;
(c) No objection to the requested fees has been raised.
2. The maximum fee that can be approved through the procedure described in Paragraph 1 is:
$1800 for the basic case; and an additional
$750 if the case involves real property claims;
$500 for each additional parcel of real property with an encumbrance of at least $10,000;
$500 if the case involves state or federal tax claims
$300 if the case involves vehicle loans or leases;
$1500 if the case involves an operating business;
$400 if the case involves support arrears claims;
$300 if the case involves student loans;
$300 if the case involves more than 25 creditors, including collection agencies and attorneys.
Additional flat fees for services rendered will be automatically approved, upon application by the attorney without requiring the submission of time records, as follows:
Plan modifications filed after one year from the petition date: a. Not requiring amended Schedules I J $ 200 b. Requiring amended Schedules I J $ 400
Permission to sell, refinance, or purchase real property, or one or more motions to avoid judicial liens: a. Not requiring court hearing $ 300 b. Requiring court hearing $ 450
New motions for relief from the automatic stay, excluding unopposed motions, filed after one year from the petition date: a. Regarding personal property $ 200 b. Regarding real property $ 350
Motions to dismiss, convert, or reconvert, excluding Trustee's Notices of Default regarding plan payments: $ 450
3. If an executed copy of the "Rights and Responsibilities of Chapter 13 Debtors and Their Attorneys" is not filed, counsel has accepted more than the amount authorized in A.1.(b) without court approval, or there is an objection, an order will not be entered automatically pursuant to these Guidelines.
4. If counsel elects to be paid other than pursuant to these Guidelines, all fees including the retainer must be approved by the court whether or not the fees are payable through the Chapter 13 Trustee's Office and whether or not fees are paid for services in connection with the Chapter 13 case.
5. If counsel applies for fees, counsel must comply with Rules 2002 and 2016 of the Federal Rules of Bankruptcy Procedure, as well as the "Guidelines for Compensation and Expense Reimbursement of Professionals" adopted by the Bankruptcy Judges of the Northern District of California.
6. Counsel may request reimbursement of out-of-pocket court fees advanced, even if counsel elects to receive the automatic fees available in Paragraph 2.
7. On its own motion or the motion of any party in interest, the court may order a hearing to review any fee whether paid or unpaid.
B. DISTRIBUTION OF FUNDS IN CHAPTER 13 CASES.
Payments shall be disbursed in the following order:
1. $750 towards attorney's fees, less any amount received pre-filing as a retainer;
2. To secured creditors and the balance of attorney's fees. Those secured creditors that are specified in the plan to receive fixed monthly payments will be paid the amount specified. If fixed monthly payments are specified in the plan for all secured creditors, the balance of the plan payment will be disbursed toward attorney's fees. If fixed monthly payments are not specified in the plan for all secured creditors, secured claims without fixed monthly payments and the balance of attorneys fees will be pro-rated;
3. To priority creditors in the order prescribed by the Bankruptcy Code;
4. To unsecured creditors.