This case was heard by the court on March 20, 1998 on the objection of the debtor, Richard J. Getty, by counsel, to the final fee application of the law firm of Lewis, D’Amato, Brisbois & Bisgaard (hereinafter "The Firm") for compensation and expenses. The final fee application, which was filed with the court on October 17, 1997, is for services rendered and expenses incurred during the period November 1, 1994 through the date of the hearing on the fee application.

Also involved is the debtor’s continuing objection to The Firm’s First Interim Fee Application filed with the court on January 6, 1995 seeking compensation in the amount of $25,118.00 for services rendered during the period May 1, 1993 through October 31, 1994 and for reimbursement for expenses in connection therewith in the amount of $6,564.61. The First Interim Fee Application, and the debtor’s objection filed on January 25, 1995 thereto, was heard by the court on January 27, 1995, and was approved by the court by order entered on February 15, 1995. The debtor’s appeal from the order of February 15, 1995 approving the First Interim Fee Application was dismissed by the district court because the order approving the interim fee application was not a final, appealable order.

The final fee application for compensation in the total amount of $39,690.50 for services rendered and reimbursement of expenses in the total amount of $9,997.12 includes the amounts applied for in the First Interim Fee application as previously approved by the court by the order of February 15, 1995.

The final fee application seeks compensation in the amount of $14,572.50 for services rendered from November 1, 1994 through March 20, 1998, the date of the hearing on the final fee application, and reimbursement for expenses in the amount of $3,432.51 incurred during the latter period.

The debtor, Richard J. Getty, an attorney, filed a pro se petition for relief under chapter 11 of the Bankruptcy Code in this court on November 13, 1992.

A principal asset of the debtor was Regency Shopping Center, 1600-1675 Los Angeles Avenue, Simi Valley, California, valued by the debtor in the schedules to the petition at $2,700,000. The property was subject to a first mortgage in the approximate amount of $722,148.07 in favor of Golden State Life Insurance Company, a second mortgage in the approximate amount of $602,286.22 in favor of Imperial Creditcorp, and a third mortgage in the approximate amount of $56,603.00 in favor of John Safi. The property was also subject to a lien in the approximate amount of $20,000 for back taxes.

The chapter 11 filing was precipitated in part by the fact Imperial Creditcorp had commenced an action in the Superior Court of the State of California, Simi Valley Branch, to foreclose its second mortgage on the shopping center property.

Shortly after the debtor filed for relief under chapter 11, Imperial Creditcorp moved for an order sequestering the rental income from the shopping center and prohibiting the debtor from using cash collateral. The motion was based on a deed of trust and an assignment of rents executed by the debtor to secure the second mortgage indebtedness to Citicorp.

Following a hearing held on January 7, 1993, the court on January 25, 1993 entered an order restricting the use of cash collateral and, at the request of Citicorp, appointing the George Elkins Company as property manager, to take possession of, receive the rents and profits, and to operate, lease, and manage the Regency Shopping Center. In effect George Elkins Company functioned as a special receiver of only the shopping center property and not as a receiver of the debtor’s property in general, located primarily in Kentucky.

The order of appointment authorized the George Elkins Company to employ counsel to prosecute actions to evict tenants or to collect rents and to otherwise assist the property manager with legal problems involved in managing the property.

On May 19, 1993 the George Elkins Company made application to employ Lewis, D’Amato, Brisbois & Bisgaard (the "Firm") as counsel, and on June 8, 1993 an order was entered approving the application.

The report of the property manager for June 1993, filed with the court on July 9, 1993, indicates that during the month of June The Firm prepared unlawful detainer complaints against three shopping center tenants who were delinquent in their rent. The tenants were Michael S. Lohman, d/b/a Specialty Awards, Arturo Ruiz, d/b/a Mexican Bakery, and Sina Ashtorzod, d/b/a Future Way.

From the outset Mr. Getty interfered with the management of the shopping center by the George Elkins Company and with the legal prerogatives of The Firm in its representation of the property manager.

On February 4, 1993 the debtor moved to set aside the order of January 25, 1993 restricting the use of cash collateral and appointing a property manager. Ultimately, this motion was overruled.

On February 16, 1993 Imperial Creditcorp filed a complaint in this court seeking to hold the debtor in contempt for his refusal to abide by the order of January 25, 1993 restricting the use of cash collateral and appointing the property manager. The complaint alleged the debtor had continued to collect and retain rents and had refused to turn over books and records of account relating to the shopping center.

In the interim between the filing of the debtor’s motion to set aside the order of January 25, 1993, the initiation of contempt proceedings by Imperial Creditcorp, and the joint hearing on these matters held March 4, 1993, Mr. Getty had on February 17, 1993 obtained appointment of John O. Morgan to represent the debtor in possession. By agreement of the parties the hearing was continued to permit the parties to resolve their differences.

However, on October 28, 1993, the property manager, George Elkins Company, by and through The Firm, initiated new contempt proceedings against the debtor requesting that the debtor be punished for his continued refusal to abide by the order of January 25, 1993.

Both of these contempt complaints contain affidavits detailing Mr. Getty’s interference with the operation of the shopping center, supported by letters of Mr. Getty to the George Elkins Company which demonstrate rather clearly that Mr. Getty was continuing to contact tenants and was interfering with negotiations between The Firm and tenants who were delinquent in their rent. Mr. Getty was telling tenants not to settle delinquent rent claims with The Firm but rather simply pay current rent and he would settle the delinquent rent claims with them when he reassumed control of the shopping center.

The record indicates that some of the charges of The Firm of which Mr. Getty complains resulted from Mr. Getty’s obstreperous and uncooperative conduct and interference with the management of the shopping center by the George Elkins Company.

While it is true The Firm was not particularly successful in collecting delinquent rent from some of these tenants, it was successful in evicting nonpaying tenants in order that space could be relet by the George Elkins Company. Also, it appears that the failure of The Firm to collect a greater amount on delinquent rent claims was due in part to Mr. Getty undercutting The Firm’s collection efforts.

The debtor asserts The Firm performed no services that benefited the bankruptcy estate. Perhaps a few pertinent examples of services that benefited the estate will suffice to demonstrate otherwise.

A portion of the parking space utilized in the operation of Regency Center, at the rear of the shopping center, was leased from the Southern Pacific Transportation Company under a lease agreement dating back to 1964. When bankruptcy intervened the debtor was more than six months in arrears on the $250 per month rental payments on the lease. Under title 11 U.S.C. § 365(d)(4) the debtor in possession (trustee) had only 60 days from the date of commencement of the chapter 11 case to cure the default in back rent and to assume this lease of nonresidential real property, otherwise the lease was deemed rejected. During this 60-day period, while he was representing himself, Mr. Getty took no action to assume the lease and made no request for an extension of time within which to assume or reject the lease. On January 25, 1993 Southern Pacific Transportation Company filed with the court a motion for an order deeming the lease rejected.

Ultimately The Firm, in its representation of the George Elkins Company, negotiated a letter agreement with Southern Pacific Transportation Company to keep the lease in effect. Otherwise, according to the testimony of Annie Verdries, a partner in The Firm, the shopping center would not have had the number of parking spaces required by local law and could not have continued to operate.

When the George Elkins Company took over operation of the shopping center the center was in a state of disrepair. Tenants were complaining about leaks in the roof, speed bumps were needed, interlopers had trailers parked in back of the shopping center and bums were sleeping there. The Firm in its representation of the George Elkins Company persuaded Imperial Creditcorp, the foreclosing creditor, to allow the property manager to withhold payments on the second mortgage indebtedness in order that the property manager might accumulate funds needed to replace the roof on the shopping center and perform other necessary maintenance on the upkeep of the shopping center, and to employ a security firm to patrol the premises. This arrangement permitted the property manager to upgrade the shopping center property, attract new tenants, and thereby increase the value of the property. On page 10 of his objection to the final fee application of The Firm, the debtor questions the benefit to the estate of contacts between The Firm and the attorney for Imperial Creditcorp. Obviously, the cooperation of Imperial Creditcorp was necessary to the resuscitation of the debtor’s shopping center.

On August 11, 1993 Imperial Creditcorp moved for relief from stay and noticed the motion for hearing on September 28, 1993. On that date the parties entered into an agreement which was dictated into the record by counsel for Citicorp and was incorporated in an order entered by the court on November 17, 1993 resolving the relief from stay issue. It should be noted, however, that between the September 28, 1993 and November 17, 1993 dates Citicorp filed its complaint to hold the debtor in contempt for noncompliance with the agreement the parties had dictated on the record.

A year later, on August 18, 1994, Imperial Creditcorp moved to dismiss the debtor’s chapter 11 case or to convert the case to a case under chapter 7, citing many reasons why the debtor had little prospect of developing a feasible and acceptable plan of reorganization. This motion was ultimately withdrawn on March 15, 1995, and an agreed order confirming the debtor’s Fourth Amended Plan of Reorganization was entered on April 26, 1995. Significantly, this order provided that "[t]he George Elkins Company shall remain in control of the Regency Center as property manager under this Court’s order of January 25, 1993, Order Restricting Use of Cash Collateral and appointing Property Manager until such time as Imperial is paid in full for all principal, interest, and other appropriate charges on it (sic) mortgage loan with the Debtor."

Obviously, it was largely the intervention of the George Elkins Company and The Firm that persuaded Imperial Creditcorp to permit use of cash collateral (rental income) for necessary repairs to the shopping center in lieu of making monthly mortgage payments to Imperial Creditcorp. The argument that there was no reason for counsel for the George Elkins Company to be involved in negotiations with counsel for Imperial Creditcorp is untenable.

These negotiations resulted in freeing up rental income for improvements to the shopping center costing between $35,000 and $40,000, including a new roof which cost $34,000.

The court is not particularly impressed by the letters of Mr. Getty to George Elkins Company complaining about management inaction and expenditures in view of the deterioration of the shopping center and the failure to make payments on the second mortgage that occurred under Mr. Getty’s management.

In October of 1995, approximately six months after confirmation of the plan, the debtor was able to obtain a new second mortgage loan in an amount sufficient to pay delinquent taxes and to pay off the second mortgage indebtedness to Imperial Creditcorp.

This has apparently terminated the services of the George Elkins Company, which filed its final report on October 11, 1995 for the month of September 1995. On January 31, 1996, The Firm, with the agreement of George Elkins Company, withdrew as counsel for the management company.

At the hearing on the final fee application of The Firm it appeared from the testimony of Annie Verdries, a partner in The Firm, that The Firm had performed services for the George Elkins Company for a period of four years for which it has received no compensation. The Firm is not seeking interest for this delay in payment.

In a letter dated July 28, 1993 to the George Elkins Company Mr. Getty indicated that a tenant, Dr. Sina Akhtaryad, d/b/a Future Way, owed him $90,505.49 and urged that a suit be immediately instituted against Dr. Akhtaryad in the Superior Court for Ventura County for collection of this amount. In addition to the unlawful detainer action which The Firm had already commenced against Dr. Akhtaryad, The Firm commenced a collection action as requested by Mr. Getty and performed services and incurred expenses in the amount of $11,147.90 through June of 1994. At that time The Firm, on the instructions of the George Elkins Company, agreed to dismiss the collection action at the request of and on the representations of Mr. Getty that he would pursue collection from Dr. Akhtaryad when he (Getty) regained control of the shopping center.

A somewhat similar outcome occurred in The Firm’s unlawful detainer action and attempt to collect delinquent rent from Michael S. Lohman, et al., d/b/a Specialty Awards. The Firm entered into settlement negotiations with counsel for the Lohmans, but the settlement fell through because the Lohmans were offered a better deal in direct negotiations with Mr. Getty. The Firm performed legal services and incurred expenses in the amount of $13,330.05 in pursuing the rent claim against the Lohmans. The claim was settled for only $15,000, largely due to Mr. Getty’s interference in the negotiations.

Other substantial legal services were performed by The Firm in institution of contempt proceedings against Mr. Getty at the request of the George Elkins Company. These proceedings were unnecessarily complicated by Mr. Getty’s counterclaim against the George Elkins Company and Third Party Complaint against Imperial Creditcorp. The contempt action was commenced on October 28, 1993 and was dismissed by agreement of the parties on March 16, 1994, but not before The Firm had performed substantial legal services and incurred expenses in connection with the action.

Similarly, Mr. Getty’s appeal from the order of February 15, 1995 awarding The Firm interim compensation for the foregoing services required The Firm to perform additional services and incur additional expenses, which are included in the final fee request.

As amply demonstrated by the facts of this case, the debtor’s uncooperative behavior toward a professional entity appointed by the court in his chapter 11 case substantially increased the fees of the counsel appointed to represent the professional entity. In such circumstances the debtor’s objection to such fees rings hollow. Nevertheless, the court has carefully examined The Firm’s final fee application and has re-examined The Firm’s first interim fee application and finds the applications to be reasonable under the facts of this case. The court is satisfied that the legal services performed by The Firm, and the management of the shopping center by the George Elkins Company, abated the insistence of Imperial Creditcorp on foreclosure, saved the shopping center as an asset of the debtor’s estate, and resulted in the acceptance by Imperial Creditcorp and other creditors of the debtor’s plan of reorganization. The likelihood of reorganization of the debtor was nil without the services of these entities and the cooperation of Imperial Creditcorp.

Accordingly, the debtor’s objections to the fee applications are overruled and the applications shall be approved by a final and appealable order entered in accordance with the opinion of the court.

Dated:

By the court –

________________________________
JOE LEE, U.S. BANKRUPTCY JUDGE

Copies to:

John O. Morgan, Esq.

Annie Verdries, Esq.

U.S. Trustee

In conformity with the memorandum opinion of the court this day entered, IT IS ORDERED that the objections of the debtor to the fee applications of the law firm of Lewis, D’Amato, Brisbois & Bisgaard, counsel for the George Elkins Co., be and the same are hereby overruled, and the applications in the amount of $39,690.50 for compensation and $9,997.12 for reimbursement for expenses are approved. There being no just reason for delay, this is a final and appealable order.

Dated:

By the court –

_______________________________
JOE LEE, U.S. BANKRUPTCY JUDGE

Copies to:

John O. Morgan, Esq.

Annie Verdries, Esq.

U.S. Trustee