shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 1 of 19

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1 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 1 of 19 D. Brent Wells James E. Cuellar WELLS & CUELLAR, P.C. 440 Louisiana, Suite 718 Houston, Texas Telephone: (713) Facsimile: (713) UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK IN RE: Chapter 11 AMERICAN EAGLE AIRLINES, INC., Debtor. HTL OPERATING, LLC d/b/a MCM ELEGANTE HOTEL, Plaintiff, v. (Jointly Administered) Case No (SHL) Adv. Pro. No shl AMERICAN EAGLE AIRLINES, INC, Defendant. PLAINTIFF S RESPONSE IN OPPOSITION TO DEFENDANT S MOTION FOR ATTORNEYS FEES AND COSTS TO THE HONORABLE JUDGE OF SAID COURT: COMES NOW, HTL OPERATING, LLC d/b/a MCM ELEGANTE HOTEL ( MCM ), Plaintiff in the above-styled Adversary Proceeding, and files this its Response in Opposition to the Motion of American Eagle Airlines, Inc. Pursuant to Fed. R. Bankr. P. 7008(b) and 7054(b) for Attorneys Fees and Costs [Dkt. 19], and in support thereof would show the Court the following:

2 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 2 of 19 I. BACKGROUND This closed Adversary Proceeding, disposed by a final Order Dismissing Amended Complaint [Dkt. #17] more than four months ago, was originally brought by MCM to have a judicial determination of the status of a certain long-term, fixed-price Services Agreement for Hotel Accommodations ( Agreement ) between MCM and American Eagle Airlines, Inc. ( American Eagle ). MCM believed and urged this Court to rule that such Agreement was a forward contract subject to post-petition termination pursuant to the safe harbor of 556. As an indication of the earnestness of MCM s intentions, MCM never was so bold as to act upon its theory of forward contract termination and consistently performed the Agreement for the continuing benefit of American Eagle. Thus, there was no harm whatsoever to American Eagle as a consequence of the short-lived nine-month forward contract debate. Although the Court ruled against MCM s contentions at an ultimate hearing on January 9, 2013, this does not detract from MCM s colorable and good faith basis in fact and law for having invoked and advocated application of Bankruptcy Code 101(25), 101(26), and 556. See Plaintiff s Response in Opposition to Defendant s Rule 12(b)(6) Motion [Dkt. #12], which is incorporated herein by this reference. Although the Agreement under scrutiny, shown by Exhibit A hereto, was central to the legal analysis on both sides, neither party was seeking to enforce the Agreement: MCM was hoping to justify its post-petition termination of the Agreement, while American Eagle was seeking to preserve the option to either assume or reject same under 365 (indeed, American Eagle still has not assumed such Agreement as of the date of this Response). In a Reply pleading [Dkt. #14] filed in advance of the ultimate hearing, American Eagle purported to invoke a contractual attorneys fees 2

3 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 3 of 19 provision at 11.8 of the Agreement, requesting a recovery of its attorneys fees; but with every opportunity to urge same on January 9 th, American Eagle chose instead to forego presentation of any evidence or argument whatsoever addressing this compulsory substantive counterclaim. Indeed, upon submission of the proposed Order which the Court signed on January 16, 2013, American Eagle specifically itemized the pendency, consideration, and resolution of its Reply pleading, while encouraging the ensuing full and final disposition of the case, again without any mention of its claim for attorneys fees. The generic retention of jurisdiction clause, which these debtors include as a routine matter of form in most orders submitted on their behalf, did not preclude the substantive finality of the Order as of January 30, 2013 (in which timeframe both parties elected to forego an appeal: MCM did not appeal the explicit denial of its forward contract position, and American Eagle did not appeal the implicit adverse adjudication of its attorneys fees request). American Eagle s present Motion for its defensive attorneys fees and costs is a second bite at the apple and insupportable either legally or equitably. The Rules which American Eagle cites do not provide a basis for awarding such fees, the present Motion is fatally late, and American Eagle has waived any right it might have had to try to enforce a contractual provision in a contract it has not even bothered to assume (American Eagle s reasonable, businesslike assumption or rejection of the Agreement at an early date could have avoided this entire litigation). Finally, even if any attorneys fees were hypothetically awardable, those requested by American Eagle are not in the realm of reasonable. 3

4 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 4 of 19 II. RULE 7008(b) DOES NOT PROVIDE A SUBSTANTIVE BASIS FOR AWARDING ATTORNEYS FEES TO AMERICAN EAGLE. Contrary to the title of American Eagle s Motion, Rule 7008(b) does not provide a substantive basis for awarding attorneys fees. Instead, Rule 7008(b) merely states the general rule that a request for an award of attorneys fees must be pleaded as a claim. Although Rule 7008(b) imposes a pleading requirement on parties seeking attorneys fees, it has never been understood to provide a substantive basis for recovery of attorneys fees. III. RULE 7054(b) DOES NOT PROVIDE A SUBSTANTIVE BASIS FOR AWARDING ATTORNEYS FEES TO AMERICAN EAGLE. Contrary to the title of American Eagle s Motion, Rule 7054(b) does not provide a substantive basis for awarding attorneys fees. Instead, Rule 7054(b) only authorizes the recovery of costs. In this context, the term costs does not include attorneys fees. Hopkins v. Marble (In re Kempkers), 2013 WL *2 (Bankr. D. Idaho, February 4, 2013)( Civil Rule 54(d), dealing with attorneys fees, is not incorporated in Rule 7054 ); In re Jose Antonio Santiago Vazquez, 2011 WL *1 (Bankr. D. Puerto Rico, August 3, 2011)( attorney s fees are generally not taxable as costs ). 4

5 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 5 of 19 IV. THE TRAVELERS CASE DOES NOT PROVIDE AN INDEPENDENT BASIS FOR AWARDING ATTORNEYS FEES TO AMERICAN EAGLE. According to American Eagle, the Supreme Court in Travelers 1 held that a party s entitlement to attorneys fees under state law is enforceable in a bankruptcy adversary proceeding. However, that is a gross mischaracterization of the Supreme Court s holding. Travelers was not decided in the context of an adversary proceeding. Instead, Travelers arose from a claim objection. In a bankruptcy case filed by Pacific Gas & Electric ( PGE ), Travelers filed an amended proof of claim which was based on attorney s fees and expenses incurred by Travelers in defending against PGE s objection to Travelers original proof of claim. PGE filed an objection to the amended claim, which objection was sustained by the bankruptcy court and thereafter affirmed by the District Court and Court of Appeals. On appeal, the Supreme Court analyzed Travelers claim for attorney s fees under 11 U.S.C The Court held that, under 502, a creditor s claim must be allowed unless the claim implicates any of the nine exceptions enumerated in 502(b). 549 U.S. at 449. Ultimately, the Court found that the limiting principle relied upon by PGE, the so-called Fobian rule, 2 did not have any support in the Bankruptcy Code, either in 502(b) or elsewhere. Id. at 452. In responding to PGE s other arguments, the Court left open the possibility that Travelers claim might be objectionable on some other basis, stating the following: We conclude only that the Court 1 Travelers Casualty & Surety Co. of America v. Pacific Gas & Electric Co., 549 U.S. 443, 127 S.Ct. 1199, 167 L.Ed.2d 178 (2007). 2 In re Fobian, 951 F.2d 1149 (9th Cir. 1991), cert. denied, 505 U.S. 1220, 1221 (1992). There, the Ninth Circuit refused to award attorneys fees to a creditor who successfully objected to a debtor s plan because the litigated issues were peculiar to federal bankruptcy law and did not involve basic contract enforcement questions. Id. at

6 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 6 of 19 of Appeals erred in disallowing [Travelers ] claim based on the fact that the fees at issue were incurred litigating issues of bankruptcy law. Id. at 456. According to American Eagle, the Supreme Court in Travelers held that, absent a provision to the contrary, claims for attorneys fees (if allowable under state law) would be allowable in bankruptcy proceedings. Motion, at 8. However, the Supreme Court did not make such a broad and sweeping statement. 3 Instead, the Court merely stated that it generally presume[s] that claims enforceable under applicable state law will be allowed in bankruptcy unless they are expressly disallowed, citing 502(b). By citing to 502(b), the Court was concerned only with a creditor s claim for attorneys fees as opposed to a claim asserted by some other party. Even in the limited context of creditor claims under 502, the Court did not suggest that any claim which is not subject to any of the nine exceptions listed in 502(b) should be allowed without further inquiry. In sidestepping PGE s alternative argument that an unsecured creditor is not entitled to recover its post-petition attorneys fees, the Court said it express[es] no opinion with regard to whether... other principles of bankruptcy law might provide an independent basis for disallowing Travelers claim for attorneys fees. Travelers, supra, 549 U.S. at 456. Therefore, American Eagle s broad statement simplistically mis-quotes and mis-applies the Travelers opinion. The foregoing discussion about Travelers reveals two verities. First, the Supreme Court did not decide that attorneys fees were recoverable in an adversary proceeding. Procedurally, the dispute was a simple claim objection that was decided in the main case and not in a separate 3 American Eagle cites to pages 451 and 453 of the Travelers opinion. However, an examination of those two pages reveals that the Supreme Court did not make the pronouncement described by American Eagle. 6

7 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 7 of 19 adversary proceeding. 4 Second, the Supreme Court did not issue a broad pronouncement that any party was entitled to attorneys fees. On the contrary, the Court was only concerned with whether a creditor was entitled to attorneys fees under 502. In the instant case, American Eagle s claim for attorneys fees cannot possibly find support under 502 for the obvious reason that American Eagle is not a creditor. Therefore, American Eagle s overbroad statement that a party s entitlement to attorneys fees under state law is enforceable in a bankruptcy adversary proceeding has no support whatsoever in Travelers. Although American Eagle claims that Travelers was extended by Ogle v. Fidelity Deposit Co. of Md., 586 F.3d 143 (2d Cir. 2009), this is not the case. 5 More importantly, Ogle does not lend any support for American Eagle s claim for attorneys fees. In Ogle, another claim objection case, 6 the Second Circuit held that an unsecured claim for post-petition fees, authorized by a valid pre-petition contract, is allowable under section 502(b). Id. at 147. However, this holding does not support American Eagle s claim because (1) as discussed above, American Eagle s claim does not arise under 502, and (2) American Eagle s claim is subject to other defensive issues that were not raised in Ogle (e.g., MCM s arguments that American Eagle s Motion is untimely and that American Eagle waived its right to recover attorneys fees). 4 In fact, the term adversary proceeding is not found anywhere in the Opinion. 5 In Ogle, the Second Circuit held that a prior Second Circuit decision, United Merchants & Manufacturers, Inc. v. Equitable Life Assurance Society of the United States, 674 F.2d 134 (2d Cir. 1982), controlled the outcome of the case, and the Court determined that United Merchants was not impaired by the Travelers decision. Ogle, 586 F.3d at Therefore, it does not follow that Ogle extended Travelers as argued by American Eagle. 6 As in Travelers, the claim objection was handled in the main case and not in a separate adversary proceeding. As in Travelers, the term adversary proceeding does not appear anywhere in the Ogle opinion. 7

8 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 8 of 19 In sum, neither Travelers nor Ogle supports American Eagle s claim for attorneys fees. V. AMERICAN EAGLE S MOTION WAS NOT TIMELY FILED. As discussed above, this Court signed its Order Dismissing Amended Complaint [Dkt. 17] on January 16, 2013, and American Eagle waited until May 16, 2013 to file the instant Motion. This begs the question: was American Eagle s Motion timely filed? The answer is no. Although the Bankruptcy Rules are silent on the precise question before this Court, MCM would point to Rule 54 of the Federal Rules of Civil Procedure for guidance on the timeliness issue. Specifically, Rule 54(d)(2)(B) requires fee motions to be filed no later than 14 days after entry of judgment. Federal district court judges routinely deny fee motions if they are not filed within the 14-day deadline mandated by Rule 54(d)(2)(B). See, e.g., FirstBank Puerto Rico v. Jaymo Properties, LLC, et al., 2013 WL (D. Virgin Islands 2013); Marchisotto v. City of New York, 2009 WL (S.D.N.Y. 2009). Although Rule 54(d) is not expressly applicable to adversary proceedings, 7 the reasons behind the 14-day rule 8 suggest there is no logical reason to distinguish between fee motions filed under Rule 54(d)(2) and fee motions filed in adversary proceedings. If this Court adopts the view, as it should, that fee motions filed in adversary proceeds should be filed within 14 days after judgment for the same reasons that govern fee motions filed under 7 Bankruptcy Rule 7054(a) only incorporates Rules 54(a)-(c). 8 According to the Advisory Committee Notes for the 1993 amendments to Rule 54, the purposes of the 14-day deadline are (1) to assure that the opposing party is informed of the fee claim before the time for appeal has elapsed; (2) to enable the court to resolve fee disputes shortly after trial, while the services performed are freshly in mind; and (3) to enable appellate review of a fee dispute to proceed at the same time as review on the merits of the case. 8

9 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 9 of 19 Rule 54(d)(2)(B), MCM would show that, since American Eagle did not file the instant Motion within 14 days after the January 16, 2013 Order, the instant Motion should be denied. VI. AMERICAN EAGLE WAIVED ITS RIGHT TO RECOVER ATTORNEYS FEES AND COSTS. In its Reply pleading [Dkt. 14] which was filed with the Court on January 4, 2013, American Eagle asserted its claim for attorneys fees ( 18, p. 15). However, at the ultimate hearing on January 9, 2013, American Eagle (1) did not submit any evidence of its attorneys fees; (2) made no mention of its attorneys fees; and (3) sought no relief from Judge Lane on the subject of its attorneys fees. 9 Such silence was classic courtroom waiver. Furthermore, American Eagle voluntarily submitted a proposed form of final Order for the Adversary Proceeding which referenced the fact that its Reply was considered, but the proposed Order did not explicitly award any attorneys fees or reserve the issue, thereby implicitly denying any attorneys fee recovery to American Eagle. American Eagle s voluntary submission of the Order without exception or objection was again waiver. The Order was signed on January 16, 2013, and became final for appeal purposes after January 30, American Eagle s failure to object to, appeal, or challenge the Order was again waiver. In Hartford Police F.C.U. v. DeMaio (In re DeMaio), 158 B.R. 890 (D. Conn. 1993), the court denied attorneys fees to the prevailing party in a nondischargeability proceeding, inter alia, because the party failed to produce evidence of its attorneys fees prior to judgment. See also In re Access Cardiosystems, Inc., 460 B.R. 67, 84 n.26 (Bankr. D. Mass. 2011)( Although the Complaint 9 For example, American Eagle could have requested an extension of time within which to file its fee motion. However, American Eagle did not made any such request. 9

10 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 10 of 19 also included a request for attorneys' fees, no evidence relative to attorneys' fees was presented. Accordingly, to the extent recoverable, the request for attorneys fees has been waived ). In the instant case, American Eagle did not offer any evidence of its attorneys fees at the January 9 th hearing or at any time prior to the Court s January 16, 2013 Order. According to American Eagle, its claim for attorneys fees is contractual in nature since it purports to be based on the express terms of the Agreement. 10 As such, its attorneys fees are considered an element of damages and should have been proven up before final judgment was entered on January 16, See., e.g., Lifeline Pharmaceuticals, LLC v. Hemophilia Infusion Managers, LLC, 2012 WL *3 n.5 (S.D. Ala. March 22, 2012)( Because costs and fees are part of the plaintiff s substantive recovery, they must be proved up before entry of judgment ). By failing to prove up its claim for attorneys fees before Judge Lane signed the January 16, 2013 Order, American Eagle waived its claim for attorneys fees. The Order, which became final for appeal purposes after January 30, 2013, was an adverse adjudication of any relief sought but not granted, including American Eagle s request for attorneys fees. VII. THE ATTORNEYS FEES REQUESTED BY AMERICAN EAGLE ARE NOT REASONABLE. In calculating an attorneys fees award, district courts use the lodestar method: hours reasonably expended multiplied by a reasonable hourly rate. McDonald v. Pension Plan of the NYSA-ILA Pension Trust Fund, 450 F.3d 91, 96 (2d Cir. 2006). With respect to both lodestar 10 Under Bankruptcy Rule 7013, incorporating Rule 13, Fed. R. Civ. P., American Eagle s counterclaim for recovery of attorneys fees under the Agreement was compulsory in the Adversary Proceeding. Under Texas law, a defendant s failure to assert a compulsory counterclaim precludes its assertion in later actions. Wyatt v. Shaw Plumbing Co., 760 S.W.2d 245, 247 (Tex. 1988). 10

11 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 11 of 19 factors, American Eagle s evidence falls far short of proving its entitlement to the requested amount ($139,430.50). These deficiencies will be discussed in turn below. A. American Eagle did not submit the required evidence. The Supreme Court has held that a reasonable hourly rate is a rate in line with... prevailing [rates] in the community for similar services by lawyers of reasonably comparable skill, expertise and reputation. Blum v. Stenson, 465 U.S. 886, 895 n.11, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984). American Eagle s evidence consists of attorney timesheets and the Declaration of Alfredo R. Pérez. Although the timesheets identify each attorney who performed work on the case and the attorney s hourly rate, the timesheets do not provide any biographical information to determine each attorney s skill level, expertise, and reputation for purposes of comparing the attorney (and his hourly rate) to the rates charged by other lawyers in the community with similar skills, expertise, and reputation. Likewise, the Pérez Declaration suffers from the same deficiency, and it even fails to give biographical information about the declarant, Mr. Pérez. In similar situations, courts have refused to award fees relating to an attorney for whom no biographical information was submitted as part of the fee motion. See, e.g., Caraballo v. Homecomings Financial, 2013 WL (S.D.N.Y. 2013)(citing Adorno v. Port. Auth. of New York & New Jersey, 685 F.Supp.2d 507, 514 (S.D.N.Y. 2010)). American Eagle makes two arguments in support of its hourly rates. First, American Eagle argues that its rates are commensurate with the rates charged by comparable law firms. There is no evidence whatsoever to support this conclusory allegation, and American Eagle has the burden of proof. See Farbotko v. Clinton County of New York, 433 F.3d 204, 209 (2d Cir. 2005)(citing Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984)); Stewart Title Guaranty Co. v. 11

12 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 12 of 19 Sterling, 822 S.W.2d 1, 10 (Tex. 1991); accord, Vincent v. Bank of America, 109 S.W.3d 856, 868 (Tex. App. Dallas 2003, pet. denied). Although American Eagle points to the Pérez Declaration, Mr. Perez does not offer any evidence on two important points: (1) the rates charged by comparable law firms, and (2) the degree to which his firm compares to these other law firms. Accordingly, Pérez s allegation that his firm s rates are commensurate with the rates charged by comparable law firms is a hollow, meaningless statement with no probative value. American Eagle s other tack is for Mr. Pérez to argue in his Declaration that he has previously submitted declarations in the main AMR case on five previous occasions, 11 and he incorporates these previous declarations by reference. However, these other declarations do not lend support for American Eagle. 12 Like the Pérez Declaration attached to the instant Motion, these other declarations do not show how Weil s rates compare to the rates of its peers. In the September 17, 2012 declaration, 13 Mr. Pérez contends that Weil s fees are reasonable based on the customary compensation charged by comparably skilled practitioners in comparable bankruptcy and nonbankruptcy cases in a competitive national legal market. 14 No proof was offered in support of 11 January 10, 2012 (Dkt. 591), February 27, 2012 (Dkt. 1411), June 19, 2012 (Dkt. 3271), September 17, 2012 (Dkt. 4520), and January 18, 2013 (Dkt.6272). 12 At least two of the prior declarations (February 27, 2012, and June 19, 2012) do not concern themselves with the reasonableness of Weil s fees. 13 Docket No in the bankruptcy main case ( ). 14 In the Declaration attached to the instant Motion, Mr. Pérez contends ( 3) that [t]he hourly rates as which Weil charged American Eagle for its services are consistent with those charged to other Weil clients both in and out of bankruptcy proceedings. This statement is not supported with any evidence. Moreover, Mr. Pérez s contention misses the point: instead of looking at what Weil is charging its other clients, Weil needs to show what other law firms (lawyers of reasonably comparable skill, expertise and reputation ) are charging. Here again, American Eagle did not offer any evidence on this important point. 12

13 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 13 of 19 this naked and conclusory assertion. Without proof of what Weil s peers are charging, it is impossible for this Court to assess whether Weil s rates are reasonable. B. American Eagle s hourly rates are not reasonable. Even judged by Wall Street standards, Weil s rates are not reasonable. For example, the rates charged by Haynes and Boone, an international law firm who is also representing American Airlines in the bankruptcy main case, are considerably lower than Weil s rates. In the firm s Third Interim Fee Application (Dkt in the bankruptcy main case), Haynes and Boone is charging $775 per hour for a partner whose experience level is similar to Mr. Pérez, whose hourly rate is $300 (38.7%) more. See Affidavit of D. Brent Wells attached hereto as Exhibit B and incorporated herein by this reference ( 11, discussing Haynes and Boone s hourly rates in the bankruptcy main case). See Affirmation of Wanda Borges attached hereto as Exhibit C and incorporated herein by this reference. It is noteworthy that, in the Application to Employ Weil filed in the bankruptcy main case (Dkt. 591), Mr. Pérez filed a Declaration in which he represented to the Court that Weil would cap its hourly rate at $1,000 ( 28). In spite of this promise, the timesheets attached to the instant Motion show that Weil violated its promise by charging more than $1000 per hour for Mr. Pérez on multiple occasions Although the timesheets do not disclose an hourly rate for any of the timekeepers, the rate can be derived by dividing the amount charged by the hours worked. In most instances, the rate attributable to Mr. Pérez is $1,075 per hour. However, the entry for January 9, 2013 (the day of the hearing) reveals an implied rate of $1,136 per hour. 13

14 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 14 of 19 Finally, Mr. Pérez s rate is not the only rate that is questionable in this case. The hourly rate implicitly charged by Ms. Gilbane 16 is questionable when compared to the rates charged by more senior attorneys within her own firm. See Affirmation of Wanda Borges attached hereto as Exhibit C. 17 C. American Eagle failed to prove the hours were reasonably expended. As discussed in McDonald, supra, only those hours that are reasonably expended qualify for inclusion in the lodestar calculation. In the instant case, many of the hours billed by Weil were not reasonably expended because (1) there was a duplication of effort; and (2) the efforts expended were disproportionate to the task at hand. American Eagle utilized the services of seven different timekeepers during the course of the short-lived adversary proceeding: three partners and counsel, three associates, and one paralegal. 18 By using so many different professionals on one project, Weil cannot argue with a straight face that there was no duplication of effort. For example, just to react to the original 362 motion in July, 2012, American Eagle s attorneys took 36.0 hours of professional time expended by three attorney timekeepers at a fee of $24, and a firmwide average rate of $692 per hour. In contrast, MCM s fees for the 16 Here again, the hourly rates are not disclosed in the timesheets attached to the Motion. However, the rate can be easily derived by dividing the amount charged by the number of hours worked. 17 In her Affirmation (Exh. C, para. 17 and 18), Ms. Borges explains that, in reviewing Weil s fee applications in the main AMR case, there were several attorneys more senior to Ms. Gilbane who were billing at rates equal to or less than the rate implicitly charged by Ms. Gilbane in this Adversary Proceeding. Ms. Borges conclusion is that Ms. Gilbane s hourly rate is not usual and customary for any firm other than the Weil firm. 18 In its Motion, American Eagle did not disclose the status of the various timekeepers. Instead, this information was gleaned from Weil s website. 14

15 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 15 of 19 motion were $8, based on an hourly rate of $225 per hour. See Affidavit of D. Brent Wells attached hereto ( 9). With respect to American Eagle s Motion to Dismiss, four different Weil timekeepers spent over 35 hours on this project. In contrast, in responding to that motion, MCM principally utilized one attorney who spent less than 25 hours on MCM s Response. See Affidavit of D. Brent Wells attached hereto ( 9). With respect to the deposition of MCM s president, Ed Lasater, MCM s attorney billed 25 hours for tasks associated with the deposition. In contrast, two Weil timekeepers accumulated over 40 hours of time associated with the very same deposition. In addition, three Weil timekeepers billed almost 20 hours associated with the Motion to Strike, a Motion which was coincidentally not granted and determined to be moot by the Court. American Eagle s Reply [Dkt. 14] to MCM s Response [Dkt. 12] to American Eagle s Motion to Dismiss provides the most striking example of the extent to which Weil overstaffed this case. American Eagle utilized the services of five different timekeepers who billed over 55 hours to prepare a 16-page Reply. At the outset, three different attorneys billed time to review MCM s Response. 19 On December 28, 2012, Mr. Pérez started drafting American Eagle s Reply. The same day, Ms. Gilbane also joined him in drafting the Reply. The following week, Mr. Schwarzbach joined the fray, billing 7.6 hours to revise the Reply. During that same timeframe, Ms. Meises, the fifth timekeeper on the project, billed time to revise the Reply. Given the lofty tones 19 Mr. Pérez billed 0.7 hours on December 27, 2012; Ms. Gilbane billed 0.6 hours on the same day; and Ms. Napoli billed 0.4 hours on December 31, Oddly, although Ms. Napoli reviewed MCM s Response, she did not participate in drafting American Eagle s Reply. That being so, it is unclear why she reviewed MCM s Response in the first place, and it is even more difficult to understand why she billed American Eagle for her services. Surely, the hours she billed to review MCM s Response were not reasonably expended. 15

16 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 16 of 19 the firm uses to describe its lawyers, 20 it is difficult to describe as reasonable the firm s use of four different lawyers to draft a 16-page Reply, and it is equally difficult to describe as reasonable the fact that these four lawyers spent over 55 hours to draft the Reply. This level of overstaffing is well outside the zone of reasonable. 21 In addition to the foregoing, the timesheets attached to the Motion also reveal an overbilling/miscalculation issue 22 and an instance where Mr. Pérez billed $1, for attending a hearing which had previously been adjourned. 23 MCM s criticism of the reasonableness of Weil s fees is supported by the findings of the Fee Examiner (Robert Keach) who was appointed by this Court. In his Examiner s Report dated April 16, 2013 (Dkt. 7649), Mr. Keach found 18 separate billing issues 24 which caused him to recommend a $403,000 reduction in fees payable to Weil. 20 In its Second Fee Application [Dkt. 4520] filed in the bankruptcy main case, the firm writes that Weil has a preeminent Business Finance & Restructuring practice with over 100 attorneys specializing in this area of the law and enjoys a national reputation for its expertise in financial reorganizations and restructurings of troubled entities (p. 20, 41). 21 In her Affirmation attached hereto as Exhibit C, Ms. Borges discusses other instances of overstaffing relating to the Motion to Allow. See Affirmation, para See Affirmation of Wanda Borges (Exh. C ), para. 9e. 23 See Affirmation of Wanda Borges (Exh. C ), para 9f. 24 Among the billing issues identified by Mr. Keach: (a) billing at rates in excess of $1,000 per hour in contravention of the $1,000 per hour cap; (d) transitory timekeepers; (e) vague time entries; (f) repetitive time entries; (h) multiple attendees; and (i) excessive intra-office conferences. 16

17 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 17 of 19 In sum, if this Court sees fit to award some measure of attorneys fees to American Eagle, 25 MCM urges this Court to recognize that the hours reasonably expended are far less than the hours reported by Weil. VIII. CONCLUSION AND PRAYER With no legal basis for pursuing the waived attorneys fee claim, American Eagle unfortunately seems dubiously motivated at this point by some punitive urge to send a message to a smaller business that dared to try to invoke perceived rights under the Bankruptcy Code: you had better not mess with this monolithic Chapter 11 Goliath and its unusually expensive counsel. As evidenced by 101(25), 101(26), and 556, the Bankruptcy Code is not so jaded in its treatment of non-debtor parties striving to preserve their legal rights in a Chapter 11 environment such as this, nor should this Court have any reason to subscribe to such a message. Accordingly, HTL OPERATING, LLC d/b/a MCM ELEGANTE HOTEL prays that the Motion of American Eagle Airlines, Inc. Pursuant to Fed. R. Bankr. P. 7008(b) and 7054(b) for Attorneys Fees and Costs be DENIED in its entirety; and that MCM Elegante have such other and further relief, general and special, at law or in equity, to which it may be justly entitled. 25 MCM does not waive, and continues to urge, its various arguments that American Eagle is not entitled to recover any attorneys fees. 17

18 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 18 of 19 Dated: June 5, 2013 Respectfully Submitted, Attorneys for HTL Operating, LLC d/b/a MCM Elegante Hotel By: /s/ Wanda Borges Wanda Borges, Esq. (wb4904) Cristina M. Lipan, Esq. BORGES & ASSOCIATES, LLC 575 Underhill Blvd., Suite 118 Syosset, NY Telephone: (516) x225 Facsimile: (516) By: /s/ D. Brent Wells D. Brent Wells, Esq. State Bar No Federal I.D. No WELLS & CUELLAR, P.C. 440 Louisiana, Suite 718 Houston, Texas Telephone: (713) Facsimile: (713)

19 shl Doc 23 Filed 06/05/13 Entered 06/05/13 14:19:28 Main Document Pg 19 of 19 CERTIFICATE OF SERVICE I hereby certify that, on June 5, 2013, true and correct copies of the above and foregoing Plaintiff s Response in Opposition to Defendant s Motion for Attorneys Fees and Costs were sent via the Court s CM/ECF system to: and by UPS overnight mail to: Alfredo R. Pérez Eleanor Gilbane Weil, Gotshal & Manges, L.L.P. 767 Fifth Avenue New York, New York Chambers of Hon. Sean H. Lane U. S. Bankruptcy Court Southern District of New York One Bowling Green New York, New York Russell Hubbard American Eagle c/o AMR Corporation 4333 Amon Carter Boulevard, MD 5675 Fort Worth, Texas Brian Masumoto Office of the United States Trustee 33 Whitehall Street, 21 st Floor New York, New York John Wm. Butler, Jr. Skadden, Arps, Slate, Meagher & Flom, LLP 155 North Wacker Drive Chicago, Illinois Jay M. Goffman Skadden, Arps, Slate, Meagher & Flom, LLP 4 Times Square New York, New York x025.pjj /s/ D. Brent Wells 19

20 Exhibits A-C Pg 1 of 33

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24 Exhibits A-C Pg 5 of 33

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27 Exhibits A-C Pg 8 of 33

28 Exhibits A-C Pg 9 of 33

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30 Exhibits A-C Pg 11 of 33

31 Exhibits A-C Pg 12 of 33

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53 shl Doc 23-2 Filed 06/05/13 Entered 06/05/13 14:19:28 Exhibit Proposed Order Pg 1 of 2 D. Brent Wells James E. Cuellar WELLS & CUELLAR, P.C. 440 Louisiana, Suite 718 Houston, Texas Telephone: (713) Facsimile: (713) UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK IN RE: Chapter 11 AMERICAN EAGLE AIRLINES, INC., Debtor. HTL OPERATING, LLC d/b/a MCM ELEGANTE HOTEL, Plaintiff, v. (Jointly Administered) Case No (SHL) Adv. Pro. No shl AMERICAN EAGLE AIRLINES, INC, Defendant. ORDER DENYING MOTION OF AMERICAN EAGLE AIRLINES, INC. PURSUANT TO FED. R. BANKR. P. 7008(B) AND 7054(B) FOR ATTORNEYS FEES AND COSTS [DKT. 19] BE IT REMEMBERED that on this the day of, 2013, came on to be heard the Motion of American Eagle Airlines, Inc. Pursuant to Fed. R. Bankr. P. 7008(b) and 7054(b) for Attorneys Fees and Costs [Dkt. 19]. The Court, upon due consideration of such Motion, and the Response in Opposition thereto timely filed on June 5, 2013 by Plaintiff HTL OPERATING,

54 shl Doc 23-2 Filed 06/05/13 Entered 06/05/13 14:19:28 Exhibit Proposed Order Pg 2 of 2 LLC d/b/a MCM ELEGANTE HOTEL, together with the arguments, authorities, and evidence of the parties, is of the opinion that such Motion should be denied. It is therefore, hereby ORDERED, ADJUDGED, AND DECREED that the Motion of American Eagle Airlines, Inc. Pursuant to Fed. R. Bankr. P. 7008(b) and 7054(b) for Attorneys Fees and Costs [Dkt. 19] is hereby DENIED in its entirety. SIGNED this the day of, BANKRUPTCY JUDGE