STEPHAN M. VIDMAR United States Magistrate Judge Presiding by Consent
MEMORANDUM OPINION AND ORDER
THIS MATTER is before the Court on Plaintiff's Motion for Order Authorizing Attorney Fees Pursuant to 42 U.S.C. § 406(b) and Supporting Memorandum [Doc. 27], filed on January 21, 2020. The motion seeks $15,001 in attorney fees for legal services rendered before the Court. Id. at 1. The Commissioner filed his response on February 3, 2020. [Doc. 30]. He takes no position on the request for fees. Id. at 1. The parties have consented to the undersigned's entering final judgment in this case. [Doc. 7]. Having reviewed the briefs, the record, and the applicable case law and being otherwise fully advised in the premises, I find that the Motion is well taken and should be granted. Plaintiff will be awarded $15,001 in attorney fees.
Procedural History
The Commissioner denied Plaintiff's applicato keep, or in any event make available to the Trustee, adequate books and records. According to credible testimony, Debtor has held numerous parcels of real property, single family, multifamily, and large development projects, in his own and other names, often as d/b/a's or limited partnerships, and has given more than one first lien on many parcels.
Trustee has sought to enjoin all 11 U.S.C. § 362 motions for 180 days.
While the Court is aware of the difficulties the Trustee must necessarily encounter, the Court must be guided by the standards for issuance of a preliminary injunction. Taking those enumerated in Commonwealth Life Insurance Co. v. Neal, 669 F.2d 300 (5th Cir.1982), the Court finds an insufficient showing for the granting of an injunction. There has been no probability of success on the merits shown as to the named defendants. The Trustee has testified that, due to the chaos in which the Trustee has found the Debtor's books and records, he is often unable to determine probability of success on the merits as to various defendants herein within the 30 days provided by the statute for preliminary hearings on 11 U.S.C. § 362 matters. Similarly, as of the time of the hearing on the preliminary injunction which he has sought herein, he has been unable to determine probability of success as to the named defendants.
Additionally, it is clear that harm to at least one defendant, Dee Kinser on behalf of her elderly mother, outweighs harm to the estate. If Mrs. Kinser, whose mother's support comes from her monthly income from a note on the house she sold to Debtor, is enjoined from pursuing the relief from stay which she seeks, she will be prohibited from foreclosing on the house and thus from realizing income from it.
As to harm to other defendants, it is acknowledged that there may be lienholders not yet known or named as defendants who may pursue claims on real property as to which named defendants herein would be enjoined from seeking relief.
There is an inadequate showing as to public interest; no unsecured creditors came forward to support the Trustee. Secured creditors, presumably including those who may hold competing first liens on a single parcel of real property, oppose the enjoining of relief from stay motions.
It is possible that the estate will suffer irreparable harm absent the requested injunction. However, this alone will not support issuance of an injunction.
Accordingly, this Court denies the Trustee's requested preliminary injunction
It is so ORDERED.
ivors-and-disability-insurance-benefits/section-406-representation-of-claimants-before-commissioner" class="raw-ref">42 U.S.C. § 406(b)(1) (2018). "The tenor of 406(b) is permissive rather than mandatory. It says that the court
may make such an award, not that such an award
shall be made."
Whitehead v.
Richardson, 446 F.2d 126, 128 (6th Cir. 1971). The
Whitehead court reasoned that "Congress recognized the difference between the mandatory term 'shall' and the permissive term 'may.'"
Id. Congress used "shall" in 406(a) and "may" in 406(b) where the statute specifically provides that the court is expected to determine whether to allow attorney's fees.
Id. Traditionally, an award of attorney's fees is a matter within sound discretion of the court.
Id.
In Gisbrecht v. Barnhart, the Supreme Court concluded that § 406(b) was designed by Congress to "control, not displace, fee agreements between Social Security benefit claimants and their counsel." 535 U.S. 789, 792 (2002). Courts should review fee arrangements "as an independent check, to assure that they yield reasonable results in particular cases." Id. at 807. The statute imposes the 25%-of-past-due-benefits limitation on fees as a ceiling, not as a standard to be used to substantiate reasonableness. Id. at 808-09.
Courts have reduced attorney fee "recovery based on the character of the representation and the results the representation achieved." Id. at 808. In cases where plaintiffs' attorneys have caused delays or provided substandard representation, or if the benefits are large in comparison to the amount of time counsel spent on the case, courts have authorized reduced fees. Id.; see also McGuire v. Sullivan, 873 F.2d 974, 981 (7th Cir. 1989) (explaining that "the court should consider the reasonableness of the contingency percentage to make sure the attorney does not receive fees which are out of proportion to the services performed, the risk of loss[,] and the other relevant considerations"). Ultimately, plaintiffs' attorneys have the burden of showing that the fee sought is reasonable. Gisbrecht, 535 U.S. at 808. "Within the 25 percent boundary, . . . the attorney for the successful claimant must show that the fee sought is reasonable for the services rendered." Id. at 807.
Analysis
First, the Court must determine if the Fee Agreement meets § 406(b)(1) guidelines. In relevant part, the Fee Agreement reads:
FEE AGREEMENT—FEDERAL COURT
. . .
. . . . If I am awarded benefits in federal court or if I am awarded benefits by the Social Security Administration following a remand ordered by [the] federal court in my case in which my attorney represented me, I agree to pay my attorney twenty-five percent (25%) of my and my family's past-due benefits. . . .
. . . .
This agreement is in addition to any previous fee agreement I have signed with my attorney for representation before the Social Security Administration. . . .
[Doc. 27-1] at 19.
Thus, the Fee Agreement meets § 406(b)(1)'s guideline of not exceeding 25% of the past-due benefits.
The Fee Agreement was entered into by Plaintiff and attorney Michael D. Armstrong, individually on October 3, 2016. Id. The attorney requesting fees at this time, however, is Laura J. Johnson on behalf of "Michael Armstrong Law Office, LLC" ("the firm"). [Doc. 27]. Because the Fee Agreement mentioned neither Ms. Johnson nor the firm, nor any other business entity, the Court ordered supplemental briefing from Ms. Johnson to establish her entitlement to attorney fees under the Fee Agreement. [Doc. 31]. Ms. Johnson timely supplemented the Motion. [Doc. 32]. She provided an affidavit from Mr. Armstrong, averring that he remains an employee of the firm and that "[a]ll proceeds from my representation of claimants inures to the benefit of the firm." [Doc. 32-1] at 2. This suffices to show that Ms. Johnson as "current owner" of the firm, [Doc. 32] at 1, may collect on the Fee Agreement.
Second, the Court must review contingent-fee agreements such as these "to assure that they yield reasonable results in particular cases." Gisbrecht, 535 U.S. at 807. Plaintiff's counsel has the burden of demonstrating that his request for fees is reasonable under the circumstances. Id. The reasonableness determination is "based on the character of the representation and the results the representation achieved." Id. at 808. Factors relevant to the reasonableness of the fee request include: (1) whether the attorney's representation was substandard; (2) whether the attorney was responsible for any delay in resolution of the case; and (3) whether the contingency fee is disproportionately large in comparison to the amount of time spent on the case. Id.
Having reviewed the particular facts of this case in light of the Gisbrecht factors, I find that Plaintiff's counsel has shown that $15,001 is reasonable for representation of Plaintiff before this Court. Counsel have ably represented Plaintiff before this Court, totaling 35.26 hours of attorney time. [Doc. 27-1] at 16-17. Counsel's representation was more than adequate; the results achieved were excellent. See [Doc. 27-1] at 1-3. Next, the Court finds that Plaintiff's counsel were not responsible for any appreciable delay in resolution of the case.
Finally, the Court finds that the award would not be disproportionately large in comparison to the amount of time spent on the case (35.26 hours). See Affidavit of Michael Armstrong [Doc. 31-1] at 16-19. It would equate to an effective hourly rate of $425.44. Considering counsel's experience and performance in this case, the Court finds the rate to be reasonable.
See generally Grunseich v. Barnhart, 439 F. Supp. 2d 1032, 1035 (C.D. Cal. 2006) (approving attorney fees of $600 per hour); Yarnevic v. Apfel, 359 F. Supp. 2d 1363, 1365-66 (N.D. Ga. 2005) (approving attorney fees at an effective rate of $643 per hour); Montes v. Barnhart, No. 01-cv-0578 BB/KBM (D.N.M. Dec. 3, 2004) (approving attorney fees at an effective rate of $701.75 per hour).
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that Plaintiff's Motion for Order Authorizing Attorney Fees Pursuant to 42 U.S.C. § 406(b) [Doc. 27] is GRANTED. Counsel is awarded $15,001 in attorney fees pursuant to 42 U.S.C. § 406(b)(1) for representing Plaintiff before this Court.
This Court previously awarded $6,809.96 in attorney fees under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412. [Doc. 30] at 1. As counsel acknowledges, he is required to refund the smaller of the EAJA award (or, if applicable, whatever portion of the EAJA award not subject to offset under the Treasury Offset Program) or this § 406(b) award to Plaintiff in accordance with Gisbrecht, 535 U.S. at 796. [Doc. 31] at 2. --------
IT IS SO ORDERED.
/s/ _________
STEPHAN M. VIDMAR
United States Magistrate Judge
Presiding by Consent