In re: Morry Waksberg M.D., Inc. ( 2015 )


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  •                                                           FILED
                                                               DEC 22 2015
     1
                              NOT FOR PUBLICATION
     2                                                     SUSAN M. SPRAUL, CLERK
                                                             U.S. BKCY. APP. PANEL
                                                             OF THE NINTH CIRCUIT
     3                UNITED STATES BANKRUPTCY APPELLATE PANEL
     4                          OF THE NINTH CIRCUIT
     5   In re:                        )     BAP No.     CC-15-1109-TaKuKi
                                       )
     6   MORRY WAKSBERG M.D., INC.,    )     Bk. No.     2:06-bk-16101-BB
                                       )
     7                  Debtor.        )
         ______________________________)
     8                                 )
         THE BANKRUPTCY LAW FIRM, PC, )
     9                                 )
                        Appellant,     )
    10                                 )
         v.                            )     MEMORANDUM*
    11                                 )
         ALFRED SIEGEL, CHAPTER 7      )
    12   TRUSTEE,                      )
                                       )
    13                  Appellee.      )
         ______________________________)
    14
                     Argued and Submitted on November 19, 2015
    15                        at Pasadena, California
    16                       Filed – December 22, 2015
    17             Appeal from the United States Bankruptcy Court
                       for the Central District of California
    18
           Honorable Sheri Bluebond, Chief Bankruptcy Judge, Presiding
    19
    20   Appearances:    Kathleen P. March of The Bankruptcy Law Firm,
                         P.C. argued for appellant; Byron Moldo of Ervin,
    21                   Cohen & Jessup LLP argued for appellee.
    22
         Before:    TAYLOR, KURTZ, and KIRSCHER, Bankruptcy Judges.
    23
    24
    25
    26       *
                This disposition is not appropriate for publication.
    27   Although it may be cited for whatever persuasive value it may
         have (see Fed. R. App. P. 32.1), it has no precedential value.
    28   See 9th Cir. BAP Rule 8024-1(c)(2).
     1                               INTRODUCTION
     2           The Bankruptcy Law Firm, P.C. (“Law Firm”), through its
     3   principal attorney, Kathleen P. March, appeals from an order
     4   partially granting its request for an allowance of fees and
     5   costs as an administrative expense under § 503(b)(1)(A).1      The
     6   Law Firm focuses its appeal solely on the bankruptcy court’s
     7   sharply reduced fee award.     We AFFIRM.
     8                                   FACTS
     9           This is the second appeal to the Panel in this case.   See
    10   The Bankruptcy Law Firm, PC v. Siegel (In re Waksberg), 
    2014 WL 11
       5285648 (9th Cir. BAP Oct. 15, 2014) (“Waksberg I”).
    12   Previously, the Law Firm appealed from orders entered in the
    13   bankruptcy cases of Morry Waksberg, M.D. and his corporation,
    14   Morry Waksberg, M.D., Inc.: the first order approved a
    15   compromise between Dr. Waksberg, M.D., his mother, Ida
    16   Waksberg, and the chapter 7 trustee; the second order
    17   substantively consolidated the bankruptcy estates of
    18   Dr. Waksberg and the corporation.       On appeal, the Panel
    19   affirmed the bankruptcy court’s approval of the compromise but
    20   vacated the substantive consolidation order and remanded the
    21   matter back to the bankruptcy court for further proceedings.
    22   The memorandum decision in Waksberg I sets forth the factual
    23   background of the case; as a result, we recount here only those
    24   facts most relevant to the present appeal.
    25           In 2006, Dr. Waksberg and his corporation each filed
    26
    27       1
                Unless otherwise indicated, all chapter and section
    28   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
    
                                           2
     1   chapter 11 bankruptcy petitions.     An official committee of
     2   unsecured creditors was appointed in the corporate case, and
     3   the Law Firm was employed as the committee’s counsel.     The
     4   bankruptcy court later entered an order approving a final
     5   compensation award to the Law Firm, half of which it collected
     6   immediately.    Eventually, both bankruptcy cases were converted
     7   to chapter 7.   The Law Firm’s uncollected fees, thus, remained
     8   pending as an unpaid chapter 11 administrative expense in the
     9   corporate case.
    10        Contentious disputes ensued with respect to Dr. Waksberg’s
    11   exemption claims and Mrs. Waksberg’s claims against the
    12   estates.   The parties later came to a compromise, and the
    13   Trustee moved for approval of the settlement agreement.
    14        Concurrently, the Trustee moved to substantively
    15   consolidate the two bankruptcy estates.     Seeking to protect its
    16   claim to payment in the corporate case, the Law Firm filed a
    17   single opposition to both of the motions; its focus, however,
    18   was against substantive consolidation.     The bankruptcy court
    19   granted both motions, and the Law Firm appealed.     On appeal,
    20   the Panel concluded that the circumstances did not meet the
    21   Ninth Circuit’s standard for substantive consolidation, as it
    22   resulted in inequity to the Law Firm.
    23        Back before the bankruptcy court, the Law Firm filed a
    24   motion seeking to allow its fees and costs incurred in opposing
    25   the consolidation and appealing the consolidation order as a
    26   chapter 7 administrative expense under § 503(b)(1)(A) (the
    27   “§ 503(b) Motion”).   It attached Ms. March’s declaration and a
    28   billing record of the Law Firm’s services rendered in
    
                                          3
     1   connection with the consolidation dispute.      Eventually, the Law
     2   Firm’s post-conversion administrative expense request increased
     3   to $202,580.2
     4           The Law Firm asserted that it successfully blocked the
     5   Trustee’s “illegal attempt” to use $2.6 million dollars
     6   belonging to the corporate estate to pay claims of the
     7   individual estate.     As its efforts necessarily preserved the
     8   corporate estate, the Law Firm asserted that it was entitled to
     9   administrative payment of its fees and costs, based on two
    10   theories of recovery: first, the plain language of § 503(b);
    11   and second, the “fundamental fairness” doctrine announced in
    12   Reading Co. v. Brown, 
    391 U.S. 471
     (1968).      Reading provides
    13   for the allowance of damages resulting from a postpetition tort
    14   claim as an administrative expense, even in the absence of a
    15   benefit conferred to the bankruptcy estate.      According to the
    16   Law Firm, the Trustee breached his fiduciary duty to the
    17   corporate estate and its claimants (including the Law Firm)
    18   when he successfully petitioned for substantive consolidation.
    19           The Trustee opposed.   He argued that § 503(b)(1)(A) did
    20   not support the Law Firm’s request, as the nature of the fees
    21   requested did not fall within that particular Code provision.
    22   And he contested that the Reading exception applied.
    23
    24       2
                This amount is not in the record, but taken from the Law
    25   Firm’s briefs on appeal. At the hearing on the § 503(b)
         Motion, the Law Firm clarified that it sought an additional
    26   $30,000 in fees and $77 in costs in connection with its reply
    27   to the Trustee’s opposition. It does not appear, however, that
         the Law Firm filed a supplemental billing record with respect
    28   to the additional work performed.
    
                                            4
     1        But to the extent the bankruptcy court was inclined to
     2   grant the request, the Trustee argued that the Law Firm’s
     3   requested fees and costs were grossly inflated.    He challenged
     4   the nature and quantity of the time entries and provided
     5   approximately 60 examples of tasks administrative in nature
     6   billed at either $800 an hour, for Ms. March, or $400 an hour
     7   for the Law Firm’s single associate (“Associate”).    The Trustee
     8   also challenged Ms. March’s $800 billing rate, asserting that
     9   the rate was higher than other esteemed bankruptcy
    10   practitioners within the judicial district.
    11        Pursuant to a bankruptcy court order, the Law Firm filed a
    12   revised billing record (the “Billing Record”).    As Ms. March
    13   stated in an accompanying declaration, the revised document
    14   responded to the bankruptcy court’s instruction for a “more
    15   detailed itemization” of the fees incurred and billing in one-
    16   tenths of an hour.
    17        At the hearing, the bankruptcy court rejected a number of
    18   the Law Firm’s theories for allowance of administrative expense
    19   treatment, including application of the Reading exception and
    20   protection of the integrity of the bankruptcy system.    Turning
    21   to § 503(b), it read portions of its tentative ruling into the
    22   record and determined that, as a result of the Law Firm’s
    23   efforts, a substantial benefit to the corporate estate inured.
    24   It noted, however, that it was still required to find that the
    25   requested fees and costs were an actual and necessary cost.
    26        The bankruptcy court found that the Billing Record
    27   reflected several issues, including numerous entries for
    28   associate attorney, paralegal, or administrative-level work
    
                                        5
     1   billed by Ms. March at $800 an hour.   It also found that $800
     2   was not a reasonable hourly fee for Ms. March for the services
     3   rendered in connection with the consolidation dispute.     Stating
     4   that it was required to determine how much it would have cost
     5   to obtain the substantive consolidation reversal, the
     6   bankruptcy court estimated the number of hours it believed that
     7   an experienced practitioner would have reasonably expended in
     8   opposing consolidation, prosecuting the appeal, and filing the
     9   motions for stay pending an appeal before the bankruptcy court
    10   and the BAP.
    11        The Law Firm disagreed with the bankruptcy court’s
    12   analysis.   Ms. March argued that nothing in the Billing Record
    13   was unnecessary to obtaining vacatur of the consolidation
    14   order.   She also argued that her $800 hourly rate was justified
    15   based on her qualifications and experience including her tenure
    16   as a former bankruptcy judge and her triple certification as a
    17   bankruptcy specialist.   The rhetoric apparently escalated, as
    18   the bankruptcy court stopped Ms. March and instructed her to
    19   change the tone of her voice.   Ms. March apologized but
    20   continued to assert that the result obtained by the Law Firm
    21   “was stupendous.”   Ms. March did not mince words in her belief
    22   that the bankruptcy court was wrong:
    23        So frankly, Your Honor, it is reversible error if you
              go there. And my firm will appeal again if
    24        necessary. . . . So not only is this error of law
              and you have no facts to support where Your Honor is
    25        going, but it’s extremely dysfunctional because until
              my firm is paid and out of the case there’s not going
    26        to be the substantive consolidation that –
    27   Hr’g Tr. (Apr. 1, 2015) at 34:10-11, 15-19.
    28        The bankruptcy court determined that it would grant in
    
                                         6
     1   part the § 503(b) Motion and allow $26,000 in fees and $3,237
     2   in costs.   Immediately following the hearing, the Law Firm
     3   filed a timely notice of appeal.
     4        The Law Firm also opposed the proposed order lodged by the
     5   Trustee.    It asserted that the lodged order did not comport
     6   with the bankruptcy court’s ruling at the hearing and requested
     7   that the bankruptcy court enter its tentative ruling into the
     8   record.
     9        The bankruptcy court disagreed and entered the order
    10   granting in part the § 503(b) Motion.     It also issued a
    11   memorandum decision.
    12                              JURISDICTION
    13        The bankruptcy court had jurisdiction pursuant to 28
    14   U.S.C. §§ 1334 and 157(b)(2)(B).     We have jurisdiction under 28
    15   U.S.C. § 158.
    16                                  ISSUE
    17        Whether the bankruptcy court abused its discretion in
    18   reducing the amount of the Law Firm’s requested fees and costs.
    19                           STANDARDS OF REVIEW
    20        We review the bankruptcy court’s decision to reduce fees
    21   pursuant to an administrative expense allowance for an abuse of
    22   discretion.   See Burlington N.R.R. Co. v. Dant & Russell, Inc.
    23   (In re Dant & Russell, Inc.), 
    853 F.2d 700
    , 707 (9th Cir.
    24   1988); Gonzalez v. Gottlieb (In re Metro Fulfillment, Inc.),
    25   
    294 B.R. 306
    , 309 (9th Cir. BAP 2003).     A bankruptcy court
    26   abuses its discretion if it applies the wrong legal standard,
    27   misapplies the correct legal standard, or if its factual
    28   findings are illogical, implausible, or without support in
    
                                          7
     1   inferences that may be drawn from the facts in the record.        See
     2   TrafficSchool.com, Inc. v. Edriver Inc., 
    653 F.3d 820
    , 832 (9th
     3   Cir. 2011).      And, if the bankruptcy court’s “findings are
     4   plausible in light of the record viewed in its entirety, the
     5   [Panel] cannot reverse even if it is convinced it would have
     6   found differently.”        Husain v. Olympic Airways, 
    316 F.3d 829
    ,
     7   835 (9th Cir. 2002), aff’d, 
    540 U.S. 644
     (2004).
     8                                   DISCUSSION
     9   A.       Scope of appeal
    10            This case presents an anomalous situation, for the reason
    11   that it does not involve a traditional fee application or legal
    12   fees incurred by a law firm retained by the estate.       This case,
    13   instead, involves the unusual allowance of a creditor’s legal
    14   fees and costs as an administrative expense under
    15   § 503(b)(1)(A).3     Unusual, because a creditor’s legal fees are
    16   typically allowed as an administrative expense under
    17   § 503(b)(4), to the extent the creditor’s expense is allowable
    18   under § 503(b)(3).      But see The Law Offices of Neil Vincent
    19   Wake v. Sedona Inst. (In re Sedona Inst.), 
    220 B.R. 74
    , 81 (9th
    20   Cir. BAP 1998) (“[W]here a creditor makes a substantial
    21   contribution in a case, reasonable professional fees and costs
    22   may be awarded under § 503(b)(4) regardless of whether the
    23   creditor has an independent allowable expense under
    24
              3
    25          No cross-appeal was taken from the allowance of the
         administrative expense and that determination is now final.
    26   The Trustee argues in his brief that § 503(b) did not support
    27   any award of fees to the Law Firm. This does not, however,
         qualify as a notice of cross-appeal. See generally Fed. R.
    28   Bankr. P. 8002, 8003.
    
                                              8
     1   § 503(b)(3).”).
     2         Notwithstanding the peculiarities here, there is no
     3   question that the bankruptcy court was required to consider the
     4   reasonableness of the Law Firm’s requested fees and costs,
     5   given the effect of administrative expense treatment.     See
     6   generally In re Dant & Russell, Inc., 853 F.2d at 706
     7   (“‘[A]ctual’ and ‘necessary’ are construed narrowly so as ‘to
     8   keep fees and administrative costs at a minimum.’”) (citation
     9   omitted).   In doing so, the bankruptcy court had “wide
    10   discretion in determining the reasonableness of fees . . . .”
    11   The Margulies Law Firm v. Placide (In re Placide), 
    459 B.R. 64
    ,
    12   73 (9th Cir. BAP 2011).
    13         Here, after finding that the Law Firm conferred a
    14   substantial benefit to the corporate estate, the bankruptcy
    15   court proceeded to examine the requested fees and costs for
    16   reasonableness.   In doing so, it found that some of the fees
    17   were unreasonable and, thus, it reduced the amount of fees it
    18   deemed allowed as an administrative expense.
    19         In this respect, the Law Firm’s arguments as to the
    20   Reading exception are irrelevant.   Whether the Law Firm’s fees
    21   were allowed under § 503(b)(1)(A) or under the Reading
    22   exception, the fees were always subject to a reasonableness
    23   analysis.   Contrary to the Law Firm’s belief, neither scenario
    24   presented it with carte blanche to obtain payment of fees and
    25   costs in whatever amount it deemed appropriate.
    26   ///
    27   ///
    28   ///
    
                                         9
     1   B.    The bankruptcy court did not abuse its discretion in
     2         reducing the amount of fees and costs allowed as an
     3         administrative expense.
     4         The Law Firm argues that the bankruptcy court ignored the
     5   three possible methods for calculating reasonable fees and
     6   erred by arbitrarily cutting fees.    According to the Law Firm,
     7   these three methods are: (1) the plain language of
     8   § 503(b)(1)(A), which allows fees that are “actual” and
     9   “necessary” to preserving the estate; (2) the 12 “lodestar”
    10   factors set forth in Kerr v. Screen Extras Guild, Inc., 526
    
    11 F.2d 67
     (9th Cir. 1975); and (3) the “common fund” doctrine.
    12   This last argument, regarding the common fund doctrine, is
    13   raised for the first time on appeal; thus, we do not address
    14   it.   See Samson v. W. Capital Partners, LLC (In re Blixseth),
    15   
    684 F.3d 865
    , 872 n.12 (9th Cir. 2012) (appellate court may
    16   decline to address argument not raised before bankruptcy
    17   court).
    18         The overlap between the Law Firm’s other arguments is
    19   significant and much of it is based on the “uncontroverted”
    20   evidence presented to the bankruptcy court, e.g., the Billing
    21   Record and Ms. March’s declaration.   According to the Law Firm,
    22   the uncontroverted evidence showed that it actually incurred
    23   the fees and that these fees were necessary to recover the
    24   2.6 million dollars for the corporate estate.
    25         Under either “method,” we conclude that the bankruptcy
    26   court did not abuse its discretion in assessing reasonableness
    27   and in concluding that a reduction in the amount of the allowed
    28   administrative expense was warranted.
    
                                         10
     1        1.    Reasonableness of fees requested
     2        The lodestar method is the customary method for assessing
     3   fees in bankruptcy, “under which ‘the number of hours
     4   reasonably expended’ is multiplied by ‘a reasonable hourly
     5   rate’ for the person providing the services.”    Law Offices of
     6   David A. Boone v. Derham–Burk (In re Eliapo), 
    468 F.3d 592
    , 598
     7   (9th Cir. 2006).   The lodestar method, however, is not
     8   mandatory in all bankruptcy cases.   Id.
     9        In applying the lodestar, the court must consider “some or
    10   all of twelve relevant criteria” set forth in Kerr.    Carter v.
    11   Caleb Brett LLC, 
    757 F.3d 866
    , 868-69 (9th Cir. 2014).     But see
    12   Brown v. Baden (In re Yagman), 
    796 F.2d 1165
    , 1184 (9th Cir.
    13   1986) (“There is no need to rigidly apply the factors set forth
    14   in Kerr . . . but the court must make some evaluation of the
    15   fee breakdown submitted by counsel.”), opinion amended on
    16   denial of reh’g sub nom., In re Yagman, 
    803 F.2d 1085
     (9th Cir.
    17   1986)).   In any event, the loadstar method subsumes many of the
    18   Kerr factors.   See Gonzalez v. City of Maywood, 
    729 F.3d 1196
    ,
    19   1204 n.3 & 1209 n.11 (9th Cir. 2013).
    20        Contrary to the Law Firm’s arguments, to the extent the
    21   bankruptcy court was required to apply the lodestar method, the
    22   record here reflects that it did so.    As discussed further
    23   below, it determined a reasonable hourly rate for Ms. March and
    24   the Associate in rendering these particular services.     It next
    25   determined the number of hours reasonably necessary to complete
    26   the services.   And, finally, it calculated the lodestar
    27   recovery by multiplying these figures, without further
    28   adjustment.   Under these circumstances, that the bankruptcy
    
                                        11
     1   court did not identify the Kerr factors by name is of no
     2   moment.   See Gonzalez, 729 F.3d at 1204 n.3 & 1209 n.11.
     3        The bankruptcy court’s determination of unreasonableness
     4   was based on the following findings: (1) the hourly rates for
     5   Ms. March and the Associate were excessively high; (2) some of
     6   the services rendered by Ms. March and the Associate were
     7   administrative in nature or otherwise noncompensable; and
     8   (3) some of the fees were redundant or otherwise unnecessary.
     9   After eliminating fees it considered “excessive, redundant,
    10   unnecessary, or otherwise not compensable,” the bankruptcy
    11   court adjusted the hourly rates and number of hours expended to
    12   that it deemed reasonable.    In doing so, it utilized a single,
    13   hourly rate of $400 and approved only the following services
    14   and time:
    15   •    Preparing and arguing the objection to the substantive
    16        consolidation portions of the Trustee’s motions: 15 hours;
    17   •    Preparing and arguing the Waksberg I appeal: 30 hours; and
    18   •    Preparing and arguing the motions for stay pending appeal:
    19        20 hours.
    20        On this record, the bankruptcy court’s determinations were
    21   not erroneous.
    22        2.     Reasonable hourly rates
    23        A reasonable hourly rate for the purposes of computing the
    24   lodestar amount is the “prevailing market rates in the relevant
    25   community.”   Gonzalez, 729 F.3d at 1205-06 (citation omitted).
    26   “[T]he relevant community is the forum in which the [] court
    27   sits.”    Id. (citation omitted).    Then, “[w]ithin this
    28   geographic community,” the court considers “the experience,
    
                                         12
     1   skill, and reputation of the attorney.”     Id. (citation
     2   omitted).   And, “the fee applicant has the burden of producing
     3   ‘satisfactory evidence’ that the rates he [or she] requests
     4   meet these standards.”    Id. (citation omitted).
     5        The Billing Record reflects billing only by Ms. March and
     6   the Associate.    We address them in the inverse.
     7               a.    The Associate’s hourly rate
     8        The bankruptcy court expressed doubt as to whether the
     9   Associate’s $400 hourly rate was warranted; it noted that the
    10   attorney was only four years out of law school and a graduate
    11   of an unaccredited law school.    The record shows, however, that
    12   it did not reduce the Associate’s hourly rate; instead, it
    13   utilized a blended hourly rate for both the Associate and Ms.
    14   March.   On this record, this was not inappropriate or
    15   disfavorable to the Law Firm.
    16        Save for a few entries generically identified as “Westlaw
    17   research” in connection with the appeal, it does not appear
    18   that the Associate performed any services requiring her skills
    19   as an attorney.    Other than preparing several proofs of service
    20   and the bill of costs, the Associate did not draft any of the
    21   Law Firm’s papers.    Instead, she spent her time assembling
    22   documents, tables and appendices, preparing forms,
    23   electronically filing and downloading documents, and cite
    24   checking.   Although these tasks were undoubtedly required from
    25   a practical standpoint, they were not compensable at $400 an
    26   hour.
    27               b.    Ms. March’s hourly rate
    28        The bankruptcy court next found that although she was well
    
                                          13
     1   educated, Ms. March’s $800 hourly rate for the services
     2   rendered in connection with the consolidation litigation was
     3   excessively high.     In doing so, it made several findings4 as to
     4   Ms. March’s experience, skill, and reputation as a bankruptcy
     5   attorney.
     6           The bankruptcy court was entitled to consider these
     7   factors.     With 14 years of judicial experience in the Central
     8   District of California, the bankruptcy judge has extensive,
     9   particularized knowledge of the local bankruptcy bar.     And, the
    10   bankruptcy judge was entitled to rely on personal knowledge of
    11   the prevailing market rates for bankruptcy practitioners in the
    12   Central District of California in determining a reasonable
    13   hourly rate for the services provided in opposing
    14   consolidation.     As bankruptcy courts frequently adjudicate fee
    15   applications, there is no doubt that the bankruptcy judge’s
    16   knowledge extended to local billing rates for attorneys across
    17   the spectrum.     At the hearing, the bankruptcy court, in fact,
    18   referred to other attorneys by name who billed at $800 an hour
    19   and higher and concluded that Ms. March was not of their
    20   caliber.     On this record, its findings were not clearly
    21   erroneous.
    22           The Law Firm contends that the bankruptcy court abused its
    23   discretion in reducing Ms. March’s hourly rate to her billing
    24   rate in 2006, and that the antiquated hourly rate was not
    25   commensurate with Ms. March’s experience and qualifications
    26   eight years later.
    27
    28       4
                  See Appendix A.
    
                                          14
     1        The record shows, however, that the bankruptcy court did
     2   not reduce Ms. March’s hourly rate to her 2006 billing rate.
     3   It merely observed that, in its opinion, Ms. March’s hourly
     4   rate significantly increased between 2006 and 2014, and that
     5   the $800 hourly rate was not a rate approved by any client or
     6   court.   The bankruptcy court did not use Ms. March’s 2006
     7   hourly rate as a benchmark in setting a reasonable hourly rate.
     8   Rather, as stated, the reduction was based on its judgment of
     9   the market value of Ms. March’s services in opposing and
    10   appealing the consolidation, including the complexity of legal
    11   work involved.
    12        The Law Firm also argues that its uncontroverted evidence
    13   - Ms. March’s declaration and the Billing Record - established
    14   that Ms. March billed at $800 an hour.    That may be so, but the
    15   declaration was not dispositive on the question of whether the
    16   rate was reasonable.   That was a question committed solely to
    17   the discretion of the bankruptcy court.
    18        And, the movant, the Law Firm - not the Trustee and
    19   certainly not the bankruptcy court - bore the burden of
    20   producing satisfactory evidence that Ms. March’s $800 hourly
    21   rate was the prevailing market rate in the Central District of
    22   California, based on her experience, skill, and reputation in
    23   the community.   The Law Firm did not submit evidence showing,
    24   for example, that in 2014, Ms. March billed at $800 an hour in
    25   a bankruptcy case in the Central District of California and
    26   that the hourly rate was approved by a client or the bankruptcy
    27   court in any other case.    Nor did the Law Firm produce expert
    28   testimony or market data.   Other evidence beyond the Law Firm’s
    
                                         15
     1   self-selected evidence may have existed; but the Law Firm did
     2   not present it to the bankruptcy court.
     3           3.   Nature of services rendered
     4           The bankruptcy court found that a number of entries in the
     5   Billing Record related to services that were noncompensable,
     6   either because they were administrative in nature or part of an
     7   attorney’s overhead.       In support of this finding, it identified
     8   a partial list of 33 time entries containing such services.       It
     9   highlighted such tasks that Ms. March billed at $800 an hour5
    10   and tasks that the Associate billed at $400 an hour.6
    11           The record supports the bankruptcy court’s findings.     The
    12   Billing Record is replete with entries involving tasks that
    13   were administrative or paraprofessional in nature.      Billing
    14   these services at $800 or $400 an hour was not appropriate.
    15           Perhaps the Law Firm does not have adequate secretarial or
    16   paraprofessional support, leaving these types of tasks to
    17   Ms. March and the Associate.      Even if that were the case, the
    18   Law Firm is expected to discount the rates or forgo collection,
    19   commensurate with the level of skill required for the task at
    20   hand.
    21           The Law Firm contends that of the foregoing, only $896 was
    22   clerical in nature; the remaining tasks, totaling $17,316, were
    23   tasks that required an attorney’s knowledge and skill.      We
    24   disagree that only an attorney may prepare a form notice of
    25   appeal or a proof of service, assemble the body of an appellate
    26
             5
    27            See Appendix B.
    
    28       6
                  See Appendix C.
    
                                            16
     1   brief, or attach exhibits.      Many paraprofessionals do so, under
     2   the supervision of an attorney; none of these activities
     3   require a law degree or bar membership.         The attorney, in any
     4   event, cannot expect compensation for these types of tasks at
     5   her typical hourly rate.7
     6            4.   Reasonable number of hours
     7            In computing the lodestar amount, the court “must [also]
     8   determine a reasonable number of hours for which the prevailing
     9   party should be compensated.”         Gonzalez, 729 F.3d at 1202.   In
    10   this context, “reasonable” means “[t]he number of hours . . .
    11   [which] could reasonably have been billed to a private client.”
    12   Id. (citation omitted).      Billing records, of course, may
    13   include hours that could not reasonably be billed to a private
    14   client, e.g., entries for hours that are “excessive, redundant,
    15   or otherwise unnecessary.”      Id.     In such instances, the court
    16   may exclude these hours under one of two methods: (1)
    17   conducting an “hour-by-hour analysis of the fee request”; or
    18   (2) making an across-the-board percentage cut[] either in the
    19   number of hours claimed or in the final lodestar figure . . .
    20   .”   Id. (citation omitted).     If the latter and the reduction is
    21   greater than ten percent, the court must “set forth a concise
    22
    23        7
                And, that fees are not compensable for services clerical
    24   in nature should be of no surprise to Ms. March or the Law
         Firm. In In re Stewart, 
    2008 WL 8462960
    , at *3 (9th Cir. BAP
    
    25 A.K. Marsh. 14
    , 2008), aff’d, 334 F. App’x 854 (9th Cir. 2009), the
         Law Firm appealed from the bankruptcy court’s reduction of fees
    26   that the Law Firm incurred as chapter 13 counsel. Among other
    27   things, the bankruptcy court’s reduction included fees incurred
         for clerical/secretarial tasks. This Panel affirmed the
    28   bankruptcy court; and the Ninth Circuit affirmed the Panel.
    
                                           17
     1   but clear explanation of its reasons for choosing a given
     2   percentage reduction.”    Id. at 1203.
     3        Here, the bankruptcy court found that the Billing Record
     4   contained entries that were “excessive, redundant, or otherwise
     5   unnecessary.”   It then stated that it calculated the reasonable
     6   number of hours “[a]fter reviewing the charges reflected on
     7   [the Billing Record], and assessing the tasks that were
     8   actually necessarily performed for the benefit of creditors,
     9   and eliminating any charges that the Court considered
    10   excessive, redundant, unnecessary or otherwise not compensable
    11   . . . .”   Thus, it appears that the bankruptcy court engaged in
    12   an hour-by-hour analysis of the requested fees.    This was
    13   within the bankruptcy court’s discretion.    See Gonzalez,
    14   729 F.3d at 1203.
    15        The Law Firm argues that the bankruptcy court “fail[ed] to
    16   identify any task done by [it] which was unnecessary to
    17   preserve the estate.”    It asserts “everything that [it] did
    18   opposing the [consolidation] was necessary to obtain the result
    19   of preserving that $2.6 million of corporation estate money.”
    20   Id. at 14.
    21        Noting that it had “extensive knowledge of the issues in
    22   dispute in this case and [was] in an excellent position to
    23   evaluate how long it should have taken [the Law Firm] to
    24   perform the services,” the bankruptcy court found that the
    25   Billing Record contained “entries for services rendered that
    26   were not necessary to the benefit conferred and entries for
    27   excessive amounts of time spent on services that would
    28   otherwise be compensable.”    In doing so, it pointed out the
    
                                         18
     1   specific examples of extraneous and excessive time entries.8
     2           The Billing Record confirms the bankruptcy court’s
     3   findings.     There are entries in which both Ms. March and the
     4   Associate conducted legal research on the same date; the nature
     5   of that research, however, is not detailed in relation to the
     6   Associate.     We also note other questionable entries, “lumped”
     7   together with legitimate tasks, such as Ms. March: reviewing
     8   the final fee order in the chapter 11 case; searching the
     9   Waksberg individual bankruptcy case for the compromise motion;
    10   and calendering deadlines.     And, each time that a motion,
    11   opposition, brief, order, and even the memorandum decision in
    12   Waksberg I was filed or entered on the docket, Ms. March - at
    13   $800 an hour - downloaded the document.      We do not doubt that
    14   the Law Firm actually spent the amount of time reflected in the
    15   Billing Record.     But, that there was a tangential connection to
    16   the consolidation dispute did not render each and every time
    17   entry “necessary” within the meaning of § 503(b)(1)(A).
    18           What becomes apparent is the Law Firm’s all or nothing
    19   approach to the fees requested.       As plainly stated in its brief
    20   and reiterated at oral argument, it seems to believe that once
    21   the bankruptcy court determined that its efforts conferred a
    22   benefit to the corporate estate and it filed an adequate
    23   billing record, the bankruptcy court’s scrutiny should end.
    24   This line of thinking, however, ignores the additional
    25   considerations that the bankruptcy court was required to
    26   undertake, including an evaluation of reasonableness and the
    27
    28       8
                  See Appendix D.
    
                                          19
     1   necessity of fees incurred.
     2        Based on the foregoing, the bankruptcy court did not abuse
     3   its discretion in the method undertaken to consider
     4   reasonableness of the fees requested by the Law Firm.   Nor, on
     5   this record, can we find any basis for determining that it
     6   abused its discretion in reducing those fees.   We remain
     7   mindful of the fact that this was not a typical fee application
     8   for attorneys’ fees or even a prevailing party fee award; there
     9   was the overlay of § 503(b), which dictated restraint in the
    10   amount of fees allowed.   See Nat’l Labor Relations Bd. v. Walsh
    11   (In re Palau Corp.), 
    139 B.R. 942
    , 944 (9th Cir. BAP 1992)
    12   (Section 503(b) is construed narrowly to keep fees and costs to
    13   a minimum and to preserve limited estate assets for the benefit
    14   of creditors).   And, here, bankruptcy court oversight was
    15   particularly important where no external client was reviewing
    16   the fees and where the Law Firm’s efforts were on account of
    17   its own administrative expense claim.
    18        Given the clear inappropriateness of the Law Firm’s
    19   billings in some areas, such as the attempt to exact premium
    20   payment for clerical or paralegal work, and given the Law
    21   Firm's failure to support its fee request with evidence of
    22   reasonableness beyond the bare facts of self-determined rate
    23   and self-directed hours on task, the record provides no basis
    24   for a conclusion that the bankruptcy court abused its
    25   discretion.
    26   C.   Whether the bankruptcy court harbored a “personal negative
    27        opinion” of Ms. March such that it influenced the ruling.
    28        The Law Firm contends that the bankruptcy court improperly
    
                                        20
     1   injected its “personal negative opinion of Ms. March into its
     2   decision.”   The bankruptcy court’s statements at the hearing
     3   and in its memorandum decision, while at times pointed, were
     4   neither derisive nor personally hostile to Ms. March.
     5        The Law Firm further asserts that the bankruptcy court’s
     6   statements were unsupported based on the uncontroverted
     7   evidence before it; namely, Ms. March’s declaration that, in
     8   her opinion, she was “extremely highly qualified” as a Yale Law
     9   School graduate, triple certified bankruptcy specialist, Rutter
    10   author on California bankruptcy law, and a former bankruptcy
    11   judge.   It contends that the bankruptcy court’s statements,
    12   thus, constituted a “judge acting as a witness,” in violation
    13   of Federal Rule of Evidence 605.
    14        The Law Firm is incorrect.     Again, that Ms. March’s
    15   declaration - based on her subjective belief of the value of
    16   her services in this case – was uncontroverted did not make its
    17   contents established fact.   The bankruptcy court was not
    18   required to accept this assertion without question.     A judge’s
    19   role fundamentally involves forming judgments and opinions;
    20   that the bankruptcy court valued Ms. March’s services in this
    21   case lower than did Ms. March did not violate Federal Rule of
    22   Evidence 605.
    23        Moreover, as stated, the bankruptcy court’s determination
    24   here necessarily required an evaluation of Ms. March’s
    25   experience, skill, and reputation as an attorney.     This was not
    26   a situation involving a pure question of law where the
    27   bankruptcy court’s opinion on the value of Ms. March’s services
    28   in the case would be out of place or inappropriate.     At the
    
                                        21
     1   time that the § 503(b) Motion was filed, the bankruptcy court
     2   had presided over these bankruptcy cases for approximately
     3   eight years.   It possessed institutional knowledge of the cases
     4   and of counsel; the basis for its opinion of the value of the
     5   services rendered was not unfounded.
     6   D.   Fees incurred in preparing and litigating the § 503(b)
     7        Motion.
     8        Finally, the Law Firm argues that the bankruptcy court
     9   abused its discretion in disregarding fees incurred in
    10   preparing and litigating the § 503(b) Motion.    It reiterates
    11   that § 503(b) is a fee provision statute and, thus, it is
    12   entitled to its fees in pursuing and defending the fee request.
    13
    14        The bankruptcy court denied the Law Firm’s request for
    15   fees incurred in preparing and litigating the § 503(b) Motion.
    16   In doing so, it asked the Law Firm whether it had case
    17   authority to support the additional $47,543.67 requested for
    18   preparing the motion when it was a professional not employed by
    19   the estate.    After the Law Firm responded in the negative, the
    20   bankruptcy court denied allowance of those fees.
    21        The bankruptcy court did not abuse its discretion in
    22   denying an allowance of these fees.    No authority exists for
    23   allowing as an administrative expense a creditor law firm’s
    24   fees in preparing a § 503(b)(1)(A) request.    To the extent the
    25   Law Firm relies on N. Sports, Inc. v. Knupfer (In re Wind N’
    26   Wave), 
    509 F.3d 938
     (9th Cir. 2007), that case involved a
    27   request under § 503(b)(4) and, thus, it is distinguishable in
    28   that regard.   In any event, it appears that the holding in
    
                                         22
     1   In re Wind N’ Wave is subject to question following the United
     2   States Supreme Court’s decision in Baker Botts L.L.P. v. ASARCO
     3   LLC, 
    135 S. Ct. 2158
     (2015) (holding that, in the absence of an
     4   express statutory provision, an attorney is not entitled to
     5   compensation for litigating a fee request).   But, as it is not
     6   necessary to our decision, we make no determination as to the
     7   continuing validity of In re Wind N’ Wave in the wake of Baker
     8   Botts.
     9        What the Law Firm essentially seeks is an award based on
    10   fee-shifting; that this is contrary to the American Rule in
    11   litigation and impermissible under § 503(b)(1)(A) is clear.
    12   The bankruptcy court’s decision not to allow these particular
    13   fees is consistent with both the American Rule and Baker Botts,
    14   which precludes fee-shifting in the absence of an express
    15   statute so providing.
    16                             CONCLUSION
    17        We AFFIRM the bankruptcy court.
    18
    19
    20
    21
    22
    23
    24
    25
    26
    27
    28
    
                                       23
     1                             Appendix A
     2   The bankruptcy court found that Ms. March:
     3   •    “[L]acked the judgment and advocacy skills” of an attorney
     4        who billed at $800 an hour;
     5   •    Only began practicing bankruptcy law in 2002, after her
     6        request for reappointment to the bankruptcy bench was
     7        denied;
     8   •    Lacked the benefit of a mentor in bankruptcy law prior to
     9        taking the bench;
    10   •    Submitted papers that were long, argumentative, and
    11        difficult to read;
    12   •    During hearings in the case, “insult[ed]” and
    13        “threaten[ed] the trier of fact” at the podium during oral
    14        argument;
    15   •    “[L]ack[ed] the judgment to know when it would be in her
    16        client’s best interest not to advance a particular
    17        argument, objection or position”; and
    18   •    Was neither a nationally recognized bankruptcy expert nor
    19        highly regarded by her peers or “the bankruptcy community
    20        at large.”
    21
    22
    23
    24
    25
    26
    27
    28
    
                                       24
     1                             Appendix B
     2   The bankruptcy court identified the following tasks, which
     3   Ms. March billed at $800 an hour:
     4   •    Preparing a notice of appeal;
     5   •    Preparing the designation of record on appeal;
     6   •    Reviewing the table of contents, excerpts of record, and
     7        the Law Firm’s opening brief;
     8   •    Preparing cover pages to the excepts of record;
     9   •    Preparing instructions for Federal Express retrieval and a
    10        copy of the excerpts of record;
    11   •    Picking up documents and instructing the Associate on how
    12        to file documents in the appeal; and
    13   •    Checking the excerpts of record cites in the Law Firm’s
    14        reply brief.
    15
    16
    17
    18
    19
    20
    21
    22
    23
    24
    25
    26
    27
    28
    
                                       25
     1                               Appendix C
     2   The bankruptcy court highlighted that the Associate billed $400
     3   an hour for the following tasks:
     4   •    Preparing tables of contents and authorities to the Law
     5        Firm’s opposition to consolidation;
     6   •    Efiling and serving the Law Firm’s opposition;
     7   •    Efiling the notice of appeal;
     8   •    Preparing a transcript order form;
     9   •    Preparing the notice of transcript and proof of service,
    10        and efiling those documents;
    11   •    Preparing tables of contents and authorities to the motion
    12        for stay pending appeal;
    13   •    Preparing a proof of service and efiling the motion for
    14        stay pending appeal;
    15   •    Assembling an appendix to the motion for stay pending
    16        appeal;
    17   •    Preparing a proof of service and efiling the motion for
    18        stay pending appeal to the BAP;
    19   •    Preparing a proof of service and efiling supplement to
    20        motion for stay pending appeal with the BAP;
    21   •    Preparing a proof of service and efiling the statement of
    22        issues on appeal;
    23   •    Preparing a proof of service and efiling the designation
    24        of record on appeal;
    25   •    Preparing a proof of service and efiling the Law Firm’s
    26        reply to the motion for stay pending appeal;
    27   •    Assembling documents for the excerpts of record;
    28   •    Adding excerpt of record cites to the Law Firm’s opening
    
                                         26
     1       brief;
     2   •   Cite checking the Law Firm’s opening brief;
     3   •   Preparing tables of contents and authorities to the Law
     4       Firm’s opening brief;
     5   •   Preparing a proof of service and efiling the Law Firm’s
     6       opening brief;
     7   •   Adding excerpts of record cites to the Law Firm’s reply
     8       brief;
     9   •   Preparing a proof of service and efiling the Law Firm’s
    10       reply brief;
    11   •   Finalizing the Law Firm’s bill of costs, and preparing a
    12       proof of service and efiling the bill of costs; and
    13   •   Preparing a proof of service and efiling the Law Firm’s
    14       reply to the Trustee’s opposition to the bill of costs.
    15
    16
    17
    18
    19
    20
    21
    22
    23
    24
    25
    26
    27
    28
    
                                      27
     1                             Appendix D
     2   The bankruptcy court found that the following was extraneous or
     3   excessive:
     4   •    7 hours to prepare the motion for stay pending appeal to
     5        the bankruptcy court, then an additional 5 hours to
     6        prepare a substantively identical motion with the BAP;
     7   •    34 hours to prepare the opening brief on appeal, which
     8        advanced identical arguments as its opposition, in a
     9        somewhat modified fashion;
    10   •    22.5 hours to prepare the reply brief, which contained the
    11        same arguments as the stay motion and opening brief;
    12   •    Significant charges for researching issues such as the
    13        procedures in the Central District of California for
    14        filing emergency motions, when such procedures were
    15        clearly spelled out in the bankruptcy court’s local rules
    16        and manual;
    17   •    “Multiple charges for preparing for oral arguments, which
    18        it argued the same issues repeatedly”;
    19   •    Charges for “advancing the argument that the [T]rustee’s
    20        conduct [could] be tortious, entitling it to compensation
    21        under Reading v. Brown,” which “border[ed] on the
    22        frivolous and should never have been included”; and
    23   •    Charges for preparation of a settlement offer to the
    24        Trustee.
    25
    26
    27
    28
    
                                       28