Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_12-cv-03237/USCOURTS-cand-5_12-cv-03237-44/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:77 Securities Fraud

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Case No.: 5:12-cv-03237-EJD

ORDER GRANTING EIGHTH MOTIONS FOR INTERIM FEES AND COSTS

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

SECURITIES AND EXCHANGE 

COMMISSION,

Plaintiff,

v.

SMALL BUSINESS CAPITAL CORP., et 

al.,

Defendants.

Case No. 5:12-cv-03237-EJD 

ORDER GRANTING EIGHTH 

MOTIONS FOR INTERIM FEES AND 

COSTS

Re: Dkt. Nos. 1019, 1020

I. INTRODUCTION

This securities action was initiated on June 21, 2012, by Plaintiff Securities and Exchange 

Commission (the “SEC”) against defendant Mark Feathers (“Feathers”), Small Business Capital 

Corp., Investors Prime Fund, LLC, and SBC Portfolio Fund, LLC. Shortly thereafter, this court 

entered a stipulated injunction appointing Thomas A. Seaman (“Seaman”) as the permanent 

receiver to oversee the institutional defendants. See Docket Item No. 34. The court also granted, 

that same day, Seaman’s motion to engage the law firm of Allen Matkins Leck Gamble Mallory & 

Natsis, LLP (“Allen Matkins”) as his general counsel. See Docket Item No. 36. 

The injunction requires that Feathers and the institutional defendants “pay the costs, fees 

and expenses of the permanent receiver incurred in connection with the performance of his 

duties,” including the costs of his counsel. See § XII of Docket Item No. 34. Seaman and Allen 

Matkins now move pursuant to that order for approval of the fees they incurred from August 1, 

2014, through October 31, 2014. See Docket Item Nos. 1019, 1020. These motions represent the 

eighth such requests filed in this action. Feathers has filed a written opposition. See Docket Item 

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Case No.: 5:12-cv-03237-EJD

ORDER GRANTING EIGHTH MOTIONS FOR INTERIM FEES AND COSTS

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Nos. 1023, 1024. The SEC supports approval of the fees requests. See Docket Item No. 1026. 

The court has carefully reviewed all of the relevant documents submitted for these matters

and considered the arguments presented by all of the interested parties. The motions are suitable 

for decision without oral argument pursuant to Civil Local Rule 7-1(b). Accordingly, the hearing 

scheduled for June 18, 2015, will be vacated, and the eighth interim fee applications will be 

granted for the reasons explained below. 

II. LEGAL STANDARD 

As it has for each prior fee application, the court begins with a recitation of the applicable 

legal authority. A court appointing a receiver “has full power to fix the compensation of such 

receiver and the compensation of the receiver’s attorney or attorneys.” In re Alpha Telcom, Inc. 

[Alpha Telcom II], No. 03:01-CV-1283-PA, 2013 U.S. Dist. LEXIS 32391, at *51, 2013 WL 

840065 (D. Or. Mar. 6, 2013) (citing Drilling & Exploration Corp. v. Webster, 69 F.2d 416, 418 

(9th Cir. 1934)). “[C]onsiderable discretion” is afforded to the court in that regard, which may 

fashion a “fee award that is appropriate under the circumstances.” Id. at *52.

In exercising its discretion over fees, the court must be mindful that a receiver and any 

assisting professionals should be “reasonably, but not excessively” compensated for efforts to 

benefit the receivership estate. Id. “[I]n receivership situations, lawyers should be awarded 

moderate fees and not extravagant ones.” SEC v. Byers, 590 F. Supp. 2d 637, 648 (S.D.N.Y. 

2008). Thus, it is often appropriate to award a reduced rate in order to reflect the public interest 

involved in preserving funds held in the receivership estate. See id. at 646-47. Emphasis on 

sufficient, but not excessive, compensation for the receiver aids in securing confidence in the 

process because the injured investors usually recover “only a fraction of their losses.” Id. at 645.

Several additional factors should also be considered. Alpha Telcom II, 2013 U.S. Dist. 

LEXIS 32391, at *51-52. In particular, an award of interim fees may be necessary “where both 

the magnitude and the protracted nature of a case impose economic hardships on professionals 

rendering services to the estate.” In re Alpha Telcom, Inc. [Alpha Telcom I], No. 01-CV-1283-

PA, 2006 U.S. Dist. LEXIS 79997, at *7, 2006 WL 3085616 (D. Or. Oct. 27, 2006). Also relevant 

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ORDER GRANTING EIGHTH MOTIONS FOR INTERIM FEES AND COSTS

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is the “economy of administration, the burden that the estate may be able to bear, the amount of 

time required, although not necessarily expended, and the overall value of the services provided to 

the estate.” In re Imperial “400” Nat., Inc., 432 F.2d 232, 238 (3rd Cir. 1970). These factors 

along with other unique considerations may persuade the court to award the entirety of the 

requested interim fees or some amount less than requested. See Byers, 590 F. Supp. 2d at 648.

When interim fees are at issue, courts will routinely withhold a portion of the requested 

fees because “until the case is concluded the court may not be able to accurately determine the 

‘reasonable’ value of the services for which the allowance of interim compensation is sought.” 

Alpha Telcom I, 2006 U.S. Dist. LEXIS 79997, at *7-8. Lastly, “courts have recognized that it is 

unrealistic to expect a trial judge to evaluate and rule on every entry in an application” and courts 

“endorse percentage cuts as a practical means of trimming fat from a fee application.” Id. (internal 

quotations omitted).

III. DISCUSSION

A. The Fee Requests

Seaman and Allen Matkins currently request the following fees for services performed:

Applicant and 

Role

Fees Incurred Interim Payment 

Requested

Costs 

Incurred

Total Interim 

Payment 

Requested

Seaman 

(Receiver)

$220,354.00 $138,426.75 $0 $138,426.75

Allen Matkins

(Receiver’s 

General 

Counsel)

$113,498.55 $78,565.50 $1,963.18 $80,528.68

Seaman and his agents completed 1,291.9 hours of work on behalf of the estate during this 

period, which results in an average hourly rate of $170.

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 The requested interim payment of 

$138,426.75 was determined by first subtracting $66,546.50 - or the amount of loan servicing fees

already approved by the court - from the total amount of fees incurred for the period, and then 

calculating 90% of the difference, which is $138,426.75. Compensation for expenses is not 

 

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$220,354.00 of total fees for the period divided by 1,291 hours equals $170. 

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requested. 

Allen Matkins requests $78,565.50 of the $113,498.55 in total fees incurred during this 

period, which amounts to 198.9 hours of work at a blended hourly rate of $395.00. Allen Matkins

also requests compensation for all expenses, or $1,963.18. The total payment requested is

$80,528.68.

B. Analysis of Applications

i. Seaman

During the eighth interim period, Seaman and his staff continued to manage the estate 

while also undertaking tasks to finalize the receivership. Aside from loan servicing activities 

which are now addressed by the court on a monthly basis, a significant portion of the fees incurred 

are attributable to marketing the loan portfolios and preparing them for sale. These efforts were 

successful for the 504 loan portfolio and the non-SBA loans, all of which were sold during this 

period. The 7-A loans and SBLC license were also marketed according to the approved

procedures. This required Seaman to collect and review document a significant amount of 

documents as well as coordinate the marketing and sales activities with the SBA. As to estate 

management, Seaman prepared the requisite quarterly reports, maintained the receivership 

website, and responded to investor inquiries. In addition, Seaman continued to participate in the 

estate’s litigation against California Business Bank. 

Under these circumstances, the court finds that Seaman’s request for fees is reasonable in 

light of the amount of work performed on behalf of the estate. His interim request for fees in the 

amount of $153,807.50 will be approved, of which he will be authorized to pay $138,426.75, or 

90% of that amount, from the receivership estate as this time. 

ii. Allen Matkins

Allen Matkins’ has continued to assist Seaman in arranging the estate’s legal affairs. Part 

of this undertaking includes responding to Feathers’ communications, district court filings, and 

appeals, as well as preparing reports for the court. The firm also assisted Seaman in responding to 

investor inquiries and in marketing the loan portfolio for sale. In addition, Allen Matkins

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ORDER GRANTING EIGHTH MOTIONS FOR INTERIM FEES AND COSTS

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managed the estate’s legal action against California Business Bank. 

The court will grant Allen Matkins’ request for fees in the amount of $78,565.50. The 

remaining amount, $34,933.05, will be withheld until the conclusion of the receivership. The 

court will also authorize Allen Matkins’ expenses of $1,963.18. 

IV. CONCLUSION AND ORDER

The motions for fees and expenses incurred by Seaman and Allen Matkins (Docket Item 

Nos. 1019, 1020) are GRANTED. The requested amounts are disbursed as follows:

Applicant Fees & Expenses 

Authorized for 

Distribution

% of Requested Fees 

Authorized for

Distribution

% of Request

Seaman 

(Receiver)

$138,426.75 90% 100%

Allen Matkins 

(Receiver’s General 

Counsel)

$78,565.50 (fees)

$1,963.18 (expenses)

69% (fees)

100% (expenses)

100%

The hearing scheduled for June 18, 2015, is VACATED.

IT IS SO ORDERED.

Dated: June 16, 2015

______________________________________

EDWARD J. DAVILA

United States District Judge

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