This case is before the court on application of debtors' counsel, Richard Clay ("Clay"), for compensation and expenses and on application of the U. S. Trustee for compensation.

FINDINGS OF FACT:

The debtors, Kenneth Terry Snyder and his wife, Patricia Ann Snyder, ("the Snyders"), filed for relief under chapter 7 of the Bankruptcy Code March 9, 1984. In their Statement of Financial Affairs filed March 19, 1984 the Snyders state that their consultations with and payments to attorneys include payments to Clay of $500 "for financial planning" and $500 "against an hourly charge of $65.00, for representation in bankruptcy." Clay's Disclosure of Fees, also filed March 19, 1984, reflects that the Snyders paid him a retainer of $500 for representing them in their bankruptcy case and that the remainder of the fee is "contingent," based on a hourly rate of $65.

On January 30, 1986 Clay filed an application for compensation in the amount of $1,803.75, 27.75 hours at an hourly rate of $65, for the period of March 5, 1984 through December 23, 1985. Reimbursement for expenses in the amount of $52.50 claimed for that period were for sums advanced for mileage at $.25 per mile for three trips of 70 miles each, a total of 210 miles. These trips, from counsel's office in Danville, Kentucky to Lexington, Kentucky, were for court hearings and a Rule 2004 examination of the debtors by the chapter 7 trustee. Of the 27.75 hours listed, Clay includes 5.50 hours of services rendered for the period of July 10, 1984 through November 20, 1984 under the heading "National Bank of Lancaster Adversary Complaint." With credit given for the $500 retainer paid, the amount requested for compensation and expenses is $1,356.25. No objection to the application has been filed.

On June 27, 1984 an adversary proceeding was filed by National Bank of Lancaster against Kenneth Terry Snyder. The complaint sought to have the indebtedness owed to the bank by Kenneth Snyder excepted from discharge under 11 U.S.C. § 523(a)(2)(B), the false financial statement provision. Those issues as well as issues raised by objections of the bank to exemptions claimed by the Snyders were tried concurrently. On March 14, 1990 the court entered a memorandum opinion and judgment dismissing the bank's complaint and sustaining its objections to exemptions. The court found that immediately prior to bankruptcy the Snyders had engaged in a fraudulent course of conduct to avoid payment of the bank, their only unsecured creditor, by converting nonexempt assets (cash in the approximate amount of $37,000) into exempt assets. The Snyders were ordered to account to the trustee for a $14,000 premium for the purchase of an annuity policy and for all monies in their IRA accounts.

On April 13, 1990 debtors' counsel filed a motion to tax as costs against the plaintiff bank his attorney fees and expenses totalling $5,385 for services to the debtors in contesting the complaint of the bank. Clay requested compensation in the amount of $5,312.50, 42.50 hours at $125.00 per hour, plus expenses in the amount of $72.50 for the period from June 6, 1984 through April 25, 1990. Expenses were for travel from counsel's office in Danville, Kentucky to court hearings in Lexington, Kentucky at $.25 per mile for 4 trips plus parking costs. The itemization of services rendered began with an entry on June 1, 1984, that is, prior to the filing of the bank's complaint, with preparation for a 2004 examination of Kenneth Snyder and concluded with preparation of counsel's motion for attorney fees and estimated charges for attendance at a April 25, 1990 hearing on that motion.

The motion was denied, the ruling appealed, and the case remanded by the district court to the bankruptcy court for application to the facts of the language of 11 U.S.C. § 523(d) prior to amendment thereof in 1984. On September 4, 1991 the court entered an order denying counsel's request that the National Bank of Lancaster be required to pay his fee for defending the debtor in the adversary proceeding. The court stated, "On these facts, to require the bank to reimburse the debtors for the costs and expenses of defending against their fraudulent course of conduct would be to 'rub the bank's nose in it' so to speak." The order of September 4, 1991 was affirmed by the district court on January 10, 1992.

In the meantime, on February 13, 1991 Clay filed in the main case a motion for allowance of interim attorney fees through December 31, 1985, in other words, duplicating his application filed January 30, 1986. At a hearing on that motion the court directed the U. S. Trustee to file a preliminary report as to assets in the main case before the court ruled on the motion for attorney fees.

On June 29, 1994 the U. S. Trustee filed his report and application for compensation. The Trustee reports a balance of $9,966.13-- receipts totalling $11,026.13, including receipt of a settlement agreement of $7,500 for the annuity and IRA, and disbursements of $1,060 for compensation and expenses of counsel to the chapter 7 trustee. The U. S. Trustee requests a commission of $510.78 pursuant to calculations authorized under 11 U.S.C. § 326(a). No expenses are requested. The Trustee reports that "this estate ready to be closed." No objection to the report and application has been filed.

CONCLUSIONS OF LAW:

Regardless of whether an objection is filed, the court has a duty to determine whether requests for compensation and reimbursement are reasonable. In re Jensen-Farley Pictures, Inc., 47 B.R. 557 (Bankr. Utah 1985). An examination of the request which is presently before the court reveals that of the 27.75 hours of services rendered and $52.50 in reimbursement in expenses sought, counsel has included 16.50 hours and $35 in expenses which were sought previously to be taxed as costs against National Bank of Lancaster in the adversary proceeding and which were denied. Clearly 5.50 hours of services which are itemized under the heading "National Bank of Lancaster Adversary Claim" and which demonstrate the services were directly related to the adversary proceeding are not allowable. Of the 11 hours remaining, 7.50 hours were in fact for services rendered in the main case and thus are allowable, i.e., discharge hearing, reaffirmation. However, the balance of 3.50 hours is not sufficiently documented to enable the court to determine whether these services were reasonable, actual, and necessary, 11 U.S.C. § 330(a)(1). (10/14/85 Letter from, letter to Jerry Truitt; phone conference, conference with client 1.0). Furthermore, since these same 3.50 hours of services were included in counsel's application in the adversary proceeding, the matter is resolved against the applicant. In re Jensen-Farley Pictures, Inc., 47 B.R. 557, 582 (Bankr. Utah 1985). To summarize, 9 hours are not allowable either because they represent services obviously rendered in the adversary proceeding (5.50) or because the entries are not sufficiently documented and therefore the matter is construed against the applicant (3.50). On the other hand, 18.75 hours of services are allowable as services clearly documented as having been rendered in the debtors' bankruptcy case from March 5, 1984 through March 8, 1985 and are allowable at a rate of $65 per hour. Counsel for the debtor is entitled to compensation in the amount of $1,218.75 for these hours. Since a retainer of $500 was paid, counsel is entitled to an interim fee award of $718.75.

Counsel also requests reimbursement in the amount of $52.50 for mileage at 25 cents per mile for traveling from his office to court and to the trustee's office. It appears the attorney charged his regular hourly rate of $65 per hour for nonproductive travel time driving from his office at Danville to Lexington for court hearings and back to Danville. Nonproductive travel time is compensable at a reduced rate. In re Jenson-Farley Pictures, Inc., 47 B.R. 557, 583 (Bankr. Utah 1985); In re Microwave Products of America, Inc., 104 B.R. 900, 907-08 (Bankr. W.D. Tenn 1989). When the regular fee is not reduced for travel time, mileage should be considered as subsumed by the fee as a cost of doing business. Accordingly, the request for mileage reimbursement is disallowed. These travel costs are not "necessary expenses" within the meaning of 11 U.S.C. § 330(a)(2) but rather are overhead, costs of doing business, and are not allowable.

Pursuant to 11 U.S.C. § 326(a), the U. S. Trustee's application for compensation in the amount of $510.78 is granted.

Dated:

By the court --

_______________________________

JOE LEE

CHIEF JUDGE

Copies to:

Richard Clay

Joseph J. Golden