Opinion ID: 419205
Heading Depth: 2
Heading Rank: 3

Heading: Reasonableness of Fees Awarded to Rau

Text: 19 Even though we have determined that Rau did not act improperly, and even though his fee was within the maximum allowed by statute, we must still examine the fee awarded to make certain that it is reasonable. The appellants contend that the $15,000 Rau obtained as receiver and the $66,020 he was awarded as trustee were unreasonable and excessive based on the number of hours he worked. The appellants further argue that Rau's failure to keep time records should reduce the number of hours for which he may receive compensation. 20 The bankruptcy court found that the fees were reasonable and proper, partly because of the favorable results of the bankruptcy administration, and also because the receiver's fee was substantially below the authorized maximum. The district court upheld this determination as a proper exercise of discretion. We affirm. 21 For purposes of calculating fees in bankruptcy, the time spent on behalf of the estate is very important in determining what is reasonable and fair compensation. In re Beverly Crest Convalescent Hospital, Inc., 548 F.2d 817, 820 (9th Cir.1976). In order for the debtor, the creditor, and the court to analyze the fee requests, the receiver-trustee and his attorney should keep accurate records of the time spent on behalf of the estate. Id. 22 Rau, however, kept no time records. Instead, he estimated that he spent four hours a day, working on the matter, including weekends, during the time he was receiver, a post he held from June 26, 1978 until August 2, 1978, a total of 38 days. This estimate yields a figure of 152 hours worked by Rau as receiver. Rau also estimated that as trustee he spent 1500 to 2000 hours until February 15, 1980, and then between ten and fifteen hours a week for the next eight or nine months. We derive 1850 hours (using his lower estimate) or 2600 hours (using his higher figure). 23 The bankruptcy court did not make a specific finding as to how many hours Rau worked, although it implicitly accepted his estimates. For purposes of reviewing the reasonableness of his fee, we assume in light of Rau's failure to keep proper time records that he actually worked the lowest number of hours consistent with his estimates. See Beverly Crest, 548 F.2d at 820-21; York, 527 F.2d at 1073. 24 In the situation where the same individual serves as both receiver and trustee, we have found it proper to aggregate both the hours worked and the fee received in each capacity when assessing the reasonableness of his fee. E.g., Beverly Crest, 548 F.2d at 82. The reason for this is that the statutory limit on a trustee's fee imposed by 11 U.S.C. Sec. 76(c) (1976) is independent of the limit on a receiver's fee imposed by 11 U.S.C. Sec. 76(a) (1976). In some cases, one or the other of these fee limitations may yield the receiver-trustee an unduly low maximum, so that it is proper to compensate the receiver-trustee by raising the fee he receives in his other capacity above the fee that is otherwise reasonable for his services in that capacity, measured on an hourly basis. As long as the aggregate fee received as receiver and trustee is reasonable, it can be sustained under the rule of Beverly Crest. 25 Rau's $66,020 award, which was the maximum he was allowed as trustee, averages approximately $35 per hour over 1850 hours of work. This rate is less than the $50 per hour we held to be a proper fee in Beverly Crest, 548 F.2d at 821. As receiver, Rau was compensated less than the maximum authorized by statute, but at a rate of approximately $98 per hour, which is higher than the $85 per hour rate that we found clearly excessive in Beverly Crest. However, when we average Rau's receiver and trustee fees, see id., the total award for 2002 hours averages approximately $40 per hour. We do not find this rate unreasonable or excessive. 26 We reach this conclusion even though, as the SWM Group contends, Rau had assistance in running the stations, see Rose Pass Mines, Inc. v. Howard, 615 F.2d 1088, 1091 (5th Cir.1980) (per curiam), received other income during this time period, and was reimbursed for his expenses. 10 The factors to be assessed in calculating a reasonable fee include the nature, extent, and value of the services rendered as well as ... the conservation of the estate and the interests of creditors. Bankr.R. 219(c)(1). Considering the success of the bankruptcy, which paid all creditors in full and returned a large sum of money to the shareholders partly as a result of Rau's diligent efforts, the fee award of $40 per hour was well within the bounds of reasonableness. 11 Cf. Beverly Crest, 548 F.2d at 821 ($50/hour called a reasonable fee); In re U.S.A. Motel Corp., 521 F.2d 117, 119 (9th Cir.1975) (per curiam) (excessive fee reduced to $35/hour).