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UNITED
STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF
CALIFORNIA

In re Porter Ltd. of London, dba

David Porter Jewelry,

Case No. 95-43022 NS

Debtor.

This Chapter 7 case is before the Court pursuant to the United States trustee's objection to
applications for compensation submitted by the Chapter 7 trustee and professionals in his
employ. The
United States trustee ("UST") raises two objections: (1) the compensation requested is
unreasonable
in light of the outcome of the case; and (2) the applicants have failed to justify this result in their
applications. The gist of the objections is that many of the services sought to be compensated
ought to
have been performed by the Chapter 7 trustee rather than by other professionals.

The facts are not disputed. The debtor, a retail jewelry store, filed a petition for relief under
Chapter 11, a plan of reorganization was confirmed, and the case closed. Upon failure to meet
the
requirements of the plan, the case was reopened and converted to Chapter 7. Richard J. Spear
was
appointed as the Chapter 7 trustee. With the Court's approval, Mr. Spear retained counsel and an
appraiser. Sometime later, the Court authorized the sale of substantially all of the debtor's
personal
property, subject to any and all claims of consignment and accounts receivable. The Court then
approved Mr. Spear's retention of an accounting firm. Seven months later, Mr. Spear and the
appointed
professionals filed the fee applications in question.

The UST urges that the fees should be reduced 50% across the board. This Court set the
matter
for hearing on June 17, 1998, took the matter under submission, and now approves fees and costs
in the
amounts set forth below. Discussion

The UST posits that Unsecured Creditors' Committee v. Puget Sound P1ywood,
924 F.2d 955
(9th Cir. 1991), imposes a special burden on all of the professionals to show that their fee
requests are
reasonable in light of the overall outcome of this case. The UST advocates this
position on the grounds
that "a bad result was obtained" in this case.

Section 330(a)(3) as amended in 1994 requires the Court to consider whether the services
provided by the professionals were necessary to the administration of the case or were beneficial
at the
time the services were rendered. Section 330(a)(4), also added in 1994, prohibits compensation
for
services that are unlikely to benefit the debtor's estate or unnecessary to its administration.
Although
cost-benefit is an important factor to consider under both § 330 and Puget Sound Plywood
, actual
benefit to the estate is not (and never was) an absolute prerequisite to compensability. In re
Ames Dept.
Stores, Inc., 76 F.3d 66 (2nd Cir 1996). All of the factors spelled out in § 330 must be
considered in
order to arrive at a reasonable fee.

A. Compensation of Chapter 7 Trustee Spear under §§ 326 and
330

While § 330 provides for the compensation of trustees, § 326(a) limits the compensation that
a
trustee may receive to a percentage of the money disbursed to creditors. Mr. Spear has requested
the
maximum compensation allowable under § 326(a). The relevant question is whether the
requested fees
reflect reasonable, actual, and necessary services. Under § 704, a Chapter 7 trustee is required to
collect
and reduce to money the property of the estate and to close the estate as expeditiously as is
compatible
with the best interests of all parties. According to his fee request, the trustee's services resulted
in a
distributable sum of $25,432.27. His fee application shows that he fulfilled his obligations to
reduce
the debtor's assets to cash, organize the receipts and disbursements of the debtor, and provide
notice of
the bar date for the filing of claims against the debtor's estate. Nonetheless, this Court agrees that
some
reduction is reasonable because it finds that the professionals hired by the trustee performed
someservices that should have been performed by the trustee, as explained below. Mr. Spear
therefore will
be awarded fees in the amount of $2,800.00.

B. Compensation of Chapter 7 Trustee's Professionals under §§ 328 and
330

Although § 327 allows the trustee to employ professionals "to represent or assist the trustee
in
carrying out the trustee's duties under the title..," it is equally clear that "[professionals] may not
be
employed and will not be compensated for services that the Code identifies as administrative
duties of
a trustee." 3 Mary Davies Scott et al., Collier on Bankruptcy § 327.02[2] (Lawrence P.
King ed., 15th
ed. 1998). See also In re Jenkins, 130 F.3d 1335, 1341 (9th Cir. 1997) (citing
In re Prairie Central
Railway Co., 87 B.R. 952, 959 (Bankr. N.D. Ill. 1988), for the proposition that "[t]he
Trustee cannot
effectively expand the maximum limits of § 326(a) by hiring other people to perform his duties
for him,
whether they are paralegals, attorneys, accountants or other professional persons, and utilize the
potentially unlimited scope of § 330 as a basis for award of reasonable compensation.").

1. Chapter 7 Trustee's Attorneys' §§ 327 and 330 Fee
Applications

The UST contends that many of the services performed by the Chapter 7 trustee's attorneys
were
administrative in nature. The UST particularly objects to time spent by the attorneys talking to
creditors
regarding consignments in bankruptcy cases. A fine line often separates tasks requiring the
services of
a lawyer from tasks which could be performed by a trustee. Although it is debatable whether
discussing
consignment issues requires a lawyer's services, there is little question that other tasks performed
by the
lawyers in this case, such as responding to numerous inquiries from creditors regarding Chapter 7
and
acting as an intermediary between the trustee and potential purchasers of assets, did not require
the
services of a lawyer. To suggest that responding to such inquiries consumes no more time than
referring
the calls to the trustee begs the question, particularly since with little effort any creditor calls
could be
channeled to the appropriate party. The Court also agrees that time spent coordinating with the
trustee's
appraiser to determine the value of personal property is not legal work. The same reasoning
applies to
time spent reviewing accounts receivable for their collectibility; providing inventory lists and
explaining
auction procedures to creditors; and providing accountants with the debtor's books and records.
All of
these are administrative duties.

Because these services are not legal in nature, they are not properly compensable under §
330.
All that remains is to calculate the compensation to be awarded according to applicable Ninth
Circuit
law. As was noted in In re Yermakov, 718 F.2d 1465 (9th Cir. 1983), "The primary
method used to
determine a reasonable attorney fee in a bankruptcy case is to multiply the number of hours
expended
by an hourly rate." Id. at 1471. This is referred to as the 'lodestar' approach. The
hourly rate must be
based on the rate that would be charged for comparable services in a non-bankruptcy case.
§330(a)(3)(E). But Puget Sound Plywood clarified that '[a]lthough ... calculating the
'lodestar' is the
'primary' method for calculating fees, 'primary' is not a synonym for 'exclusive.'" 924 F.2d 955,
960
(9th Cir. 1991). The Ninth Circuit concluded that where the fee application submitted by counsel
is such
that a court cannot "quantify to numerical precision ... the lodestar calculation," the court does
not abuse
its discretion in applying a different formula. Id. at 960 - 61.

Because it is difficult in this case "to quantify to numerical precision" a reasonable number
of
hours, the Court will impose a 25% reduction as to the attorneys' fees. The UST does not object
with
particularity to the attorneys' request for compensation of expenses, and it is hereby
approved.

2. Appraiser's §§ 327 and 330 Fee Applications

Here, too, the UST argues that many of the services provided by the appraiser ought to have
been
performed by the trustee. The UST objects specifically to requests for compensation for time
spent
obtaining keys; opening the debtor's premises and supervising the removal of assets, personal
items, and
consigned goods; and securing the debtor's premises. Some of the tasks performed, such as
removal of
assets, might be compensable if it could be shown that the trustee would have been required to
obtain
these services elsewhere at greater expense in the ordinary course of preserving the assets of the
estate.
No such showing was made here. Moreover, the appraiser's application states that his date of
appointment was August 22, 1997, but he applies for fees starting from July 21, 1997, without
explaining the justification for retroactive payment. Because the amount of the appraiser's fee
request
is not justified under the standards of § 330, and because it is impossible to "quantify to
numerical
precision" the lodestar calculation, the Court will impose a 25% reduction in fees. The request
for
expenses will be granted in its entirety.

3. Accountants' §§ 327 and 330 Fee
Applications

The UST raises no factual objections related specifically to the fee application of the Chapter
7
trustee's accountants. The objection merely asserts that the fees requested are too high in light of
the
results of the case and are unjustified by the accountants' fee application. The Court finds neither
the
approximately eighteen hours billed by the accountants on this case nor the rates charged
unreasonable.
Neither is the request for $214.56 in expenses. The services provided involved computing
payroll
withholding taxes and preparing income tax returns. These are precisely the types of services
that fall
within the expertise of an accountant. For these reasons, the accountant's fee and cost requests
will be
granted.

Conclusion

Accordingly, trustee's fees are hereby awarded to Richard Spear in the amount of $2,800.
Carr,
McClellan, Ingersoll, Thompson & Horn, the attorneys for the trustee, are awarded
$9,429.73 in fees and
$548.47 in expenses. Phillip L. Canville, the trustee's appraiser, is hereby awarded $1,254 in fees
and
$144 in expenses. Bachecki, Crom & Co., the trustee's accountants, are hereby awarded
$2,329.50 in
fees and $214.56 in expenses.

IT IS SO ORDERED.

________________________________

Randall J. Newsome,

United States Bankruptcy Judge