shl Doc 19 Filed 05/16/13 Entered 05/16/13 16:45:07 Main Document Pg 1 of 68

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1 Pg 1 of 68 HEARING DATE AND TIME: May 30, 2013 at 11:00 a.m. (Eastern Time) OBJECTION DEADLINE: May 23, 2013 at 4:00 p.m. (Eastern Time) Stephen Karotkin Alfredo R. Pérez WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York Telephone: (212) Facsimile: (212) Attorneys for American Eagle Airlines, Inc., Defendant UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x : In re : Chapter 11 Case No. : AMERICAN EAGLE AIRLINES, INC., : (SHL) : Debtor. : Jointly Administered as : Case No (SHL) : x : HTL OPERATING, LLC d/b/a MCM : ELEGANTE HOTEL, : Plaintiff, : v. : : Adv. Proc. No (SHL) AMERICAN EAGLE AIRLINES, INC., : Defendant. : : x NOTICE OF HEARING ON MOTION OF AMERICAN EAGLE AIRLINES, INC. PURSUANT TO FED. R. BANKR. P. 7008(b) AND 7054(b) FOR ATTORNEYS FEES AND COSTS PLEASE TAKE NOTICE that a hearing on the annexed motion, dated May 16, 2013 (the Motion ), of American Eagle Airlines, Inc. ( American Eagle ), will be held before the Honorable Sean H. Lane, United States Bankruptcy Judge, in Room 701 of the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court ), One Bowling Green, New York, New York 10004, on May 30, 2013 at 11:00 a.m. (Eastern Time), US_ACTIVE:\ \8\

2 Pg 2 of 68 or as soon thereafter as counsel may be heard. PLEASE TAKE FURTHER NOTICE that any responses or objections to the Motion (the Objections ) must be in writing, shall conform to the Federal Rules of Bankruptcy Procedure and the Local Bankruptcy Rules for the Southern District of New York, and shall be filed with the Bankruptcy Court (a) by registered users of the Bankruptcy Court s case filing system, electronically in accordance with General Order M-399 (which can be found at and (b) by all other parties in interest, on a 3.5 inch disk, in textsearchable portable document format (PDF) (with a hard copy delivered directly to Chambers), in accordance with the customary practices of the Bankruptcy Court and General Order M-399, to the extent applicable, and served in accordance with General Order M-399 and on (i) the attorneys for American Eagle, Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York (Attn: Alfredo R. Pérez, Esq. and Eleanor Gilbane, Esq.), (ii) American Eagle, c/o AMR Corporation, 4333 Amon Carter Boulevard, MD 5675, Fort Worth, Texas (Attn: Russell Hubbard, Esq.), (iii) the Office of the United States Trustee for the Southern District of New York, 33 Whitehall Street, 21st Floor, New York, New York (Attn: Brian Masumoto, Esq.), and (iv) the attorneys for the Official Committee of Unsecured Creditors, Skadden, Arps, Slate, Meagher & Flom LLP, 155 North Wacker Drive, Chicago, Illinois (Attn: John Wm. Butler, Jr., Esq.) and Four Times Square, New York, New York (Attn: Jay M. Goffman, Esq.) so as to be received no later than May 23, 2013 at 4:00 p.m. (Eastern Time) (the Objection Deadline ). PLEASE TAKE FURTHER NOTICE that if no Objections are timely filed and served with respect to the Motion, the Debtor may, on or after the Objection Deadline, submit to the Bankruptcy Court an order seeking the relief requested in the Motion, substantially in the 2

3 Pg 3 of 68 form of the proposed order annexed to the Motion, which order may be entered with no further notice or opportunity to be heard. Dated: Houston, Texas May 16, 2013 /s/ Alfredo R. Pérez Stephen Karotkin Alfredo R. Pérez WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York Telephone: (212) Facsimile: (212) Attorneys for American Eagle Airlines, Inc., Defendant 3

4 Pg 4 of 68 HEARING DATE AND TIME: May 30, 2013 at 11:00 a.m. (Eastern Time) OBJECTION DEADLINE: May 23, 2013 at 4:00 p.m. (Eastern Time) Stephen Karotkin Alfredo R. Pérez WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York Telephone: (212) Facsimile: (212) Attorneys for American Eagle Airlines, Inc., Defendant UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x : In re : Chapter 11 Case No. : AMERICAN EAGLE AIRLINES, INC., : (SHL) : Debtor. : Jointly Administered as : Case No (SHL) : x : HTL OPERATING, LLC d/b/a MCM : ELEGANTE HOTEL, : Plaintiff, : v. : : Adv. Proc. No (SHL) AMERICAN EAGLE AIRLINES, INC., : Defendant. : : x MOTION OF AMERICAN EAGLE AIRLINES, INC. PURSUANT TO FED. R. BANKR. P. 7008(b) AND 7054(b) FOR ATTORNEYS FEES AND COSTS

5 Pg 5 of 68 TO THE HONORABLE SEAN H. LANE, UNITED STATES BANKRUPTCY JUDGE: American Eagle Airlines, Inc. ( American Eagle ), as debtor and debtor in possession, respectfully represents: Background 1. On November 29, 2011 (the Commencement Date ), AMR Corporation and its related debtors, including American Eagle (collectively, the Debtors or American ), each commenced a voluntary case under chapter 11 of title 11, United States Code (the Bankruptcy Code ). The Debtors have continued to operate their business and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in these chapter 11 cases. 2. On December 5, 2011, the United States Trustee for the Southern District of New York (the U.S. Trustee ) appointed the Official Committee of Unsecured Creditors (the UCC ). 3. Information regarding the Debtors business, capital structure, and the circumstances leading to the commencement of these chapter 11 cases is set forth in the Affidavit of Isabella D. Goren Pursuant to Rule of the Local Bankruptcy Rules of the Southern District of New York ( Local Rules ), sworn to on November 29, 2011 (Main Case ECF No. 4). 4. Prior to the Commencement Date, HTL Operating, LLC d/b/a MCM Elegante ( MCM Elegante ) and American Eagle entered into an accommodations agreement, effective as of December 2, 2010 (the Agreement ), a copy of which is included as Attachment A to the Declaration of Alfredo Pérez (the Pérez Declaration ) annexed hereto as Exhibit 1, that provided that MCM Elegante would hold a certain number of hotel rooms at 2

6 Pg 6 of 68 MCM Elegante in Odessa, Texas at a fixed rate to be reserved and used upon American Eagle s request for American Eagle s crew. 5. On June 26, 2012, MCM Elegante filed, in the Debtors jointlyadministered main case, Case No , a Motion to Allow the Determination that (i) MCM Elegante s Agreement with American Eagle is a Forward Contract and MCM Elegante a Forward Contract Merchant; (ii) that 11 U.S.C. 556 is Applicable to the Forward Contract; and (iii) that the Automatic Stay under 11 U.S.C. 362 does not apply to this Forward Contract (the Motion to Allow ) (Main Case ECF No. 3364). MCM Elegante amended its Motion to Allow on the same day (the Amended Motion to Allow ) in which it sought substantially the same relief as in the Motion to Allow (Main Case ECF No. 3367). 6. The Debtors objected to the Amended Motion to Allow on July 12, 2012 (the Debtors Objection ) (Main Case ECF No. 3502). In addition to objecting to the Amended Motion to Allow on the merits, the Debtors argued that the relief sought by MCM Elegante was declaratory in nature and, thus, the proper procedure for MCM Elegante would have been to file a complaint and commence an adversary proceeding. On July 19, 2012 the UCC filed a Joinder to the Debtors Objection (the Joinder ) (Main Case ECF No. 3510). 7. MCM Elegante filed a Reply to the Debtors Objection and the Joinder on July 31, 2012 (Main Case ECF No. 3776). 8. On August 3, 2012 MCM Elegante withdrew its Amended Motion to Allow without prejudice (Main Case ECF No. 3851). 9. On August 15, 2012, MCM Elegante filed the Amended Complaint of HTL Operating LLC d/b/a MCM Elegante for Declaratory Relief (the Complaint ) (Adv. Proc. ECF No. 2). By the Complaint, MCM Elegante sought a declaration on five counts that (I) the 3

7 Pg 7 of 68 Agreement was a forward contract as defined under section 101(25) of the Bankruptcy Code; (II) MCM Elegante is a forward contract merchant; (III) as a consequence, the automatic stay does not apply to MCM Elegante s termination of the Agreement by virtue of the exception in section 556 of the Bankruptcy Code; (IV) MCM Elegante has a right to terminate the Agreement; and (V) MCM Elegante has an allowed unsecured claim in the amount of $27, for prepetition amounts owed under the Agreement. Complaint (Adv. Proc. ECF No. 2). 10. On September 13, 2012, American Eagle filed a Motion for Entry of Order Dismissing Amended Complaint (the Motion to Dismiss ) (Adv. Proc. ECF No. 4), pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (the Federal Rules ) made applicable in this adversary proceeding by Rule 7012 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ). Both a hearing on the Motion to Dismiss and a pretrial conference in the adversary proceeding were scheduled for January 9, 2013 (the Hearing ). 11. Prior to the Hearing, MCM Elegante served upon American Eagle, Plaintiff s First Amended Notice of Intent to Take Oral Deposition (the Deposition Notice ), by which MCM Elegante noticed the deposition of its own Chief Operating Officer, Ed Lasater, to be taken on December 13, 2012 (the Lasater Deposition ). Despite its contention that the Deposition Notice was premature and inappropriate, on November 28, 2012, American Eagle served a Cross Notice of Deposition and Subpoena Duces Tecum (the Subpoena ) in order to attend and take the direct testimony of Mr. Lasater on December 13, 2012 and have an opportunity to review relevant documents beforehand. On December 11, 2012, two days prior to the Lasater Deposition, MCM Elegante responded to the Subpoena by producing 375 pages of 4

8 Pg 8 of 68 documents, which were later supplemented with a dozen more pages on December 12, 2012, a day before the Lasater Deposition. 12. The Lasater Deposition was held on December 13, American Eagle attended through its counsel and questioned the witness, while reserving its rights to object to the prematurity of the deposition and to continue the deposition at a later date. 13. On December 27, 2012, MCM Elegante filed Plaintiff s Response in Opposition to Defendant s Rule 12(b)(6) Motion (the MCM Objection ) (Adv. Proc. ECF No. 12). In the MCM Objection, MCM Elegante referred to, and attached as exhibits, the entire transcript of the Lasater Deposition and accompanying exhibits (the Deposition Exhibits ). 14. On January 4, 2013, American Eagle filed (i) a response to the MCM Objection and in Support of the Motion to Dismiss (the Reply ) (Adv. Proc. ECF No. 14); and (ii) a Motion Pursuant to Rules 7012 and 7026 of the Federal Rules of Bankruptcy Procedure to Strike the Deposition Testimony of Mr. Ed Lasater and the Accompanying Exhibits that had been attached to the MCM Objection (the Motion to Strike ) (Adv. Proc. ECF No. 15). 15. At the Hearing, the Bankruptcy Court granted the Motion to Dismiss on the record and held that MCM Elegante could not terminate the Agreement as a forward contract, as defined by the Bankruptcy Code, for four reasons. See Tr. of Hr g 96:17 18, Adv. Proc. ECF No. 18. First, the Bankruptcy Court found that the absence of the Debtor s obligation to purchase rooms coupled with its flexibility to terminate the Agreement for cause or convenience indicated that the Agreement was not designed to protect against market fluctuations, as forward contracts are designed to do. Id. at 97:21 23, 98:9 12. Second, the Bankruptcy Court held that hotel rooms are not commodities covered by section 556 of the Bankruptcy Code ( Section 556 ) which protects parties to forward contracts. Id. at 98: Third, the 5

9 Pg 9 of 68 Bankruptcy Court noted that, although not necessary given the plain language of the statute, the legislative history confirmed that the safe harbor in Section 556 was intended to protect contracts that implicated financial risk, which the Agreement did not. Id. at 101:6 16. Finally, the Bankruptcy Court found that the Agreement did not include a provision permitting termination upon the bankruptcy of a debtor, and thus did not fit within the statutory language of the Section 556 safe harbor. Id. at 102: With respect to the Motion to Strike, the Bankruptcy Court held that the evidence MCM Elegante offered, most notably the deposition of MCM s president and chief operating officer, was not persuasive, and was neither necessary or appropriate to address when ruling on a motion to dismiss. Id. at 103: Further, Mr. Lasater s testimony offered a legal conclusion, which the Bankruptcy Court noted is more appropriately determined by the Court based on the contract itself and the applicable law already discussed here today. Id. at 103:24 104:3. For that reason, and because the Bankruptcy Court granted the Motion to Dismiss, the Bankruptcy Court denied as moot the motion to strike. Id. at 104: On January 16, 2013, the Bankruptcy Court entered an order (the Order ): (i) granting the Motion to Dismiss; (ii) dismissing Counts I IV of the Complaint with prejudice for failure to state a claim upon which relief could be granted; (iii) dismissing Count V of the Complaint without prejudice as premature and noting that the matters alleged therein may be addressed in connection with the claims process in the Debtor s chapter 11 case; (iv) denying the Motion to Strike as moot in light of the dismissal of the Complaint; and (v) retaining jurisdiction to hear and determine all matters arising from or related to the Order (Adv. Proc. ECF No. 17). 6

10 Pg 10 of In light of the Bankruptcy Court s Order, Weil, Gotshal & Manges LLP ( Weil ), counsel for American Eagle, wrote a letter dated March 1, 2013, a copy of which is annexed hereto as Exhibit 2, on behalf of American Eagle, to counsel for MCM Elegante demanding reimbursement of $139, in attorneys fees and $ in expenses, for a total of $139,906.80, incurred by American Eagle in the process of defending against MCM Elegante s attempt to terminate the Agreement through legal proceedings in both the main case and this adversary proceeding. Counsel for MCM Elegante responded by its letter dated March 11, 2013, a copy of which is annexed hereto as Exhibit 3, refusing to reimburse American Eagle for its attorneys fees or costs. The parties continued correspondence, but because an amicable solution was not likely, American Eagle proceeded to file this Motion. See Ex. 4 (Letter from A. Pérez to B. Wells, dated Apr. 3, 2013); Ex. 5 (Letter from B. Wells to A. Pérez, dated Apr. 19, 2013). Jurisdiction 19. The Court has jurisdiction to consider this matter pursuant to 28 U.S.C. 157 and This is a core proceeding pursuant to 28 U.S.C. 157(b). Relief Requested 20. By this Motion, American Eagle seeks the entry of an order, substantially in the form annexed hereto as Exhibit 8, directing MCM Elegante to reimburse American Eagle for (i) $139, in attorneys fees and costs that American Eagle incurred while defending against MCM Elegante s attempts to terminate the Agreement and relieve itself of its obligations thereunder, and (ii) an undetermined amount of fees that American Eagle has and will continue to incur in connection with its attempts to recover attorneys fees and in filing this Motion. 7

11 Pg 11 of 68 (i) American Eagle Has an Enforceable Right to Reimbursement of Its Attorneys Fees 21. Prior to the Commencement Date, MCM Elegante and American Eagle expressly agreed that, in the event of a legal dispute between them (in law or in equity), the prevailing party could recover reasonable attorneys fees and costs. Specifically, the parties agreed that, If any legal proceeding at law or in equity arises between the parties in connection with this Agreement, the prevailing party shall be awarded costs, reasonable expert witness fees, and reasonable attorneys fees incurred in connection with such legal proceeding. Ex. 1 (Attachment A (Agreement 11.8)). 22. [A]n otherwise enforceable contract allocating attorney s fees (i.e., one that is enforceable under substantive, non-bankruptcy law) is allowable in bankruptcy except where the Bankruptcy Code provides otherwise. See Travelers Cas. & Sur. Co. of Am. v. Pac. Gas & Elec. Co., 549 U.S. 443, 448 (2007). In Travelers, the Supreme Court held that a party s entitlement to attorneys fees under state law is enforceable in a bankruptcy adversary proceeding, even though the underlying issues may be peculiar to federal bankruptcy law. Id. at Travelers arose from a lower court s reliance upon Fobian v. W. Farm Credit Bank, (In re Fobian), 951 F.2d 1149 (9th Cir. 1991), which held that attorneys fees were not recoverable for litigation in bankruptcy adversary proceedings. In a unanimous reversal, the Supreme Court rejected Fobian as a rule of th[e] court s own creation, and held that absent a provision to the contrary, claims for attorneys fees (if allowable under state law) would be allowable in bankruptcy proceedings. Id. at 451, 453; see also Ogle v. Fidelity Deposit Co. of Md., 586 F.3d 143, 147 (2d Cir. 2009) (extending Travelers to permit recovery of fees incurred post-petition under prepetition indemnity contract while litigating issues of more general contract law). 8

12 Pg 12 of Under Texas law, which governs the Agreement (Ex. 1 (Attachment A (Agreement 11.8)), a court may award attorneys fees to the prevailing party if provided for by statute or by contract. See, e.g., Debaillon v. Total Minatome Corp., 180 F.3d 265, No , 1999 WL , at *1 (5th Cir. May 5, 1999) (vacating for wrongful denial of fees); Greater Houston Radiation Oncology, P.A. v. Sadler Clinic Assoc. P.A., 384 S.W.3d 875, 895, 898 (Tex. App. 2012, pet. filed) (remanding, in part, for error for failure to grant fees authorized under statute and contract). This contractual and statutory exception to the traditional American Rule, which requires litigants to pay their own costs, was endorsed by the Supreme Court in the Travelers decision and prior thereto. See e.g., Travelers, 549 U.S. at 448; Fleishmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714 (1967). 24. American Eagle has a right to attorneys fees under the parties Agreement as the prevailing party in the legal proceedings with MCM Elegante. Under Texas law, a prevailing party is one who successfully prosecutes the action or successfully defends against the action on the main issue. Debaillon, 1999 WL , at *1; Fitzgerald v. Schroeder Ventures II, LLC, 345 S.W.3d 624, (Tex. App. 2011, no pet.) (holding that defendants who prevail against plaintiff s claims can be awarded fees and costs). By any measure, American Eagle prevailed by successfully defending against MCM Elegante s baseless attempt to terminate the Agreement. That there was no decision on the merits of the Motion to Strike or Amended Motion to Allow is of no consequence, because all of the legal fees that American Eagle incurred related to proceedings that furthered its ultimate goal of preventing MCM Elegante from terminating the Agreement, the main issue on which American Eagle prevailed. See id. at *2 (remanding for determination of main issue and for award of fees to the party that successfully prosecuted or defended such issue). 9

13 Pg 13 of By providing that the prevailing party shall be awarded costs, reasonable expert witness fees, and reasonable attorneys fees, the Agreement creates a mandatory obligation for MCM Elegante to reimburse American Eagle s attorneys fees and costs. Ex. 1 (Attachment A (Agreement 11.8) (emphasis added)). Additionally, the Agreement broadly awards fees and costs incurred in connection with any legal proceeding at law or in equity arising between the parties in connection with this Agreement. Id. (emphasis added). Courts have interpreted any legal proceeding to include breach of contract, tort litigation, or any other proceeding relating to the agreement. Fitzgerald, 345 S.W.3d at 630 (holding provision providing for attorneys fees in any legal proceeding brought under or with relation to this contract or this transaction extended to claims arising in tort); Fowler v. Epps, No CV, 2010 WL , at *3 (Tex. App. Feb. 10, 2010), rev d on other grounds, 351 S.W.3d 862 (Tex. 2011) (same). 1 In the prior proceedings between the parties, the parties litigated issues of whether: (i) the terms and purpose of the Agreement made it a forward contract, as defined in the Bankruptcy Code; (ii) MCM Elegante was a forward contract merchant, as defined in the Bankruptcy Code; and (iii) MCM Elegante had the right to terminate the Agreement upon American Eagle s filing for bankruptcy protection. Each of these issues was resolved through legal proceedings between the parties and such proceedings were in connection with the Agreement, because each required the consideration of the terms of the Agreement. See Fitzgerald, 345 S.W.3d at (reversing lower court for failure to consider broad language of attorneys fees provision). 1 MCM Elegante s Complaint sought declaratory judgments with respect to the terms and the treatment of the Agreement under the Bankruptcy Code. Initially, however, MCM Elegante alleged that American Eagle was in material breach of the Agreement due to nonpayment of prepetition amounts owed thereunder. See Exhibit 6 (Letter from E. Laster to American Eagle Airlines, Inc., dated Mar. 9, 2012) (also attached as Exhibit B to the Complaint (Adv. Proc. ECF No. 2-2)). Whether the relevant legal proceedings pertained to a declaratory judgment or to a breach of contract action, the language of the Agreement would extend to cover either type of dispute. Ex. 1 (Attachment A (Agreement 11.8)); Fitzgerald, 345 S.W.3d at

14 Pg 14 of Further, American Eagle and MCM Elegante intended that attorneys fees would be recoverable by the prevailing party in any proceeding at law or in equity. Ex. 1 (Attachment A (Agreement 11.8)). In this way, the parties expressly contemplated proceedings beyond those for breach of the Agreement and extended the universe of types of proceedings to which the provision could apply, a universe which includes bankruptcy litigation. Id. Accordingly, under the terms of the Agreement, MCM Elegante is required to reimburse American Eagle for the fees and costs incurred in the prior proceedings. 27. Additionally, the breadth of section 11.8 of the Agreement entitles American Eagle to reimbursement of its fees incurred during the process of establishing its right to legal fees and costs. This Motion for fees, and the parties dispute related thereto, qualify under the Agreement as legal proceedings... in connection with the Agreement. Ex. 1 (Attachment A (Agreement 11.8)). American Eagle has the right to recover fees incurred in preparation of this Motion because a party that has been awarded attorneys fees is generally entitled to recover the reasonable cost of making a fee application. Mawere v. Citco Fund Servs. (USA) Inc., 09 CIV 1342 BSJ DF, 2011 WL , at *7 (S.D.N.Y. Sept. 16, 2011) (noting that the court should evaluate the costs of preparing the [fee] motion not differently from the costs of litigating the underlying case ) (internal citations omitted). 28. [A]ttorneys fees for the preparation of the fee application are compensable because... if an attorney is required to expend time litigating his fee claim, yet may not be compensated for that time, the attorney s effective rate for all the hours expended on the case will be correspondingly decreased. Reed v. Lawrence & Co, Inc., 95 F.3d 1170, 1184 (2d Cir. 1996) (quoting Gagne v. Maher, 594 F.2d 336, 344 (2d Cir. 1979) (holding time reasonably spent by attorney in establishing fee award was compensable)). If American Eagle is 11

15 Pg 15 of 68 not compensated for the expense it incurs in establishing its right to fees and costs, then the purpose of the fee reimbursement provision in section 11.8 will be frustrated because the effort expended in seeking its fees and enforcing section 11.8 of the Agreement would result in an overall reduction of American Eagle s fee award. See Reed, 95 F.3d at 1184 (reversing district court for failure to grant prevailing party fees for her fee application under analogous statutory provision). The result could be that American Eagle, and similarly-situated debtors, could be reticent to pursue fees in other matters a result that could have great consequences on the administration of debtors estates. (ii) American Eagle s Attorneys Fees Are Reasonable 29. Weil was retained in accordance with section 327 of the Bankruptcy Code, and thus, the reasonableness of Weil s fees is measured by section 330 of the Bankruptcy Code ( Section 330 ). 11 U.S.C. 330(a)(1). Section 330 provides that a court may award a professional employed under section 327 of the Bankruptcy Code reasonable compensation for actual, necessary services rendered... and reimbursement for actual, necessary expenses. Id. at 330(a)(1). Section 330 requires that in determining the amount of reasonable compensation to be awarded the court should consider: the nature, the extent, and the value of such services, taking into account all relevant factors, including: (A) (B) the time spent on such services; the rates charged for such services; (C) whether the services were necessary to the administration of, or beneficial at the time at which the service was rendered toward the completion of, a case under this title; (D) whether the services were performed within a reasonable amount of time commensurate with the complexity, importance, and nature of the problem, issue, 12

16 Pg 16 of 68 or task addressed; (E) with respect to a professional person, whether the person is board certified or otherwise has demonstrated skill and experience in the bankruptcy field; and (F) whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title. Id. at 330(a)(3). The test for reasonableness of fees under Section 330 is similar to tests other courts apply when assessing reasonableness of attorneys fees. See In re 900 Corp., 327 B.R. 585, (Bankr. N.D. Tex. 2005) (applying factors similar to those in Section 330 to evaluate reasonableness of secured creditor s attorneys fees incurred post-petition under section 506(b) of the Bankruptcy Code rather than applicable state law reasonableness test which could be applied to fees incurred prior to the petition date) Weil s fees are already subject to Bankruptcy Court approval under Local Rule and sections 327 and 330 of the Bankruptcy Code, as well as the Second Amended Order Pursuant to 11 U.S.C. 105(a) and 331 Establishing Procedures for Interim Compensation and Reimbursement of Expenses of Professionals (Main Case ECF No. 1656), the 2 Should the Bankruptcy Court determine that Texas law instead of the Bankruptcy Code dictates the appropriate test of reasonableness in this matter, the standard set forth in Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812 (Tex. 1997) would apply. Arthur Andersen recommended that a court s assessment of the reasonableness of fees should consider factors including: 1) the time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal service properly; 2) the likelihood... that the acceptance of the particular employment will preclude other employment by the lawyer; 3) the fee customarily charged in the locality for similar legal services; 4) the amount involved and the results obtained; 5) the time limitations imposed by the client or by the circumstances; 6) the nature and length of the professional relationship with the client; 7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and 8) whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered. Id. at 818. The Arthur Andersen factors are substantially similar to those under Section 330, and the fees incurred in this case meet either standard of reasonableness. 13

17 Pg 17 of 68 U.S. Trustee Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. 330, and the Amended Guidelines for Fees and Disbursements for Professionals in Southern District of New York Bankruptcy Cases pursuant to General Order M-447 (Jan. 29, 2013). Nevertheless, American Eagle has identified and provided evidence of the reasonableness of the $139, in legal fees and costs it has already incurred in connection with these particular proceedings. The spreadsheet attached to the Pérez Declaration provides details of the tasks performed in connection with these matters organized by Weil professional, including a description of work performed and the amount of time devoted to each task. See Ex. 1. American Eagle does not yet know the total amount of its fees incurred in connection with this Motion, but Weil will provide such information in its fee applications to the Bankruptcy Court under section 330 of the Bankruptcy Code. 31. The hourly rates charged by Weil for its services provided to American Eagle in connection with the MCM Elegante proceedings are commensurate with the rates charged by comparable law firms and the amount of time spent on such matters is commensurate with the complexity, importance, and nature of the problems, issues, and tasks involved. Whenever possible, Weil utilized talented associate attorneys and paraprofessionals, reducing time billed by partners, including the services rendered in connection with the Lasater Deposition, which was taken by a senior associate, and the drafting of pleadings for these proceedings, for which Weil associates took the laboring oars. 32. In all instances, time spent on the legal services was efficient and necessary in accordance with requirements under Section 330. The services performed by Weil were reasonable, particularly given their benefit to American Eagle s estate and the complexity, importance, and nature of the issues addressed. Together, American Eagle and American 14

18 Pg 18 of 68 Airlines, Inc. have over four hundred accommodations contracts similar to the Agreement that provide for favorable rates on varying terms. Had MCM Elegante been able to terminate the Agreement, the Debtors would be subjected to similar proceedings initiated by hundreds of hotel operators. Such a result would exponentially increase the Debtors operating costs associated with crew accommodations and inhibit the Debtors efforts to reorganize. 33. The amount of hours expended in these proceedings is a direct result of from MCM Elegante s (i) persistence in its meritless position and filing of a baseless lawsuit, in an attempt to gain unfair leverage, despite American Eagle s warning that its actions were in violation of the automatic stay; 3 (ii) initial failure to properly seek relief in the form of a complaint in an adversary proceeding, thereby causing unnecessary briefing in the main case; (iii) insistence on noticing its own client s deposition prior to the Hearing on the Motion to Dismiss, over American Eagle s objection, thereby causing American Eagle to incur the unnecessary and premature expense of discovery; and (iv) improper inclusion of the Deposition Exhibits in the MCM Objection, thereby causing American Eagle to file its Motion to Strike. Additionally, MCM Elegante s unreasonable refusal to reimburse American Eagle for its attorneys fees and costs, despite its obligation to do so under controlling law and the plain language of the contract, caused American Eagle to expend further resources and incur additional legal fees in connection with this Motion. MCM Elegante should not be permitted to cause American Eagle to incur such expenses by bringing a baseless (and initially procedurally faulty) lawsuit, diverting the valuable resources of the Debtors estates while also evading the mandatory reimbursement provisions of the Agreement. 3 See from K. Soled to E. Lasater dated April 4, 2012, a copy of which is attached hereto as Exhibit 7 (also attached as Exhibit C to Complaint (Adv. Proc. ECF No. 2)). 15

19 Pg 19 of 68 (iii) American Eagle Adequately Requested Attorneys Fees Under Bankruptcy Rule 7008(b) 34. Bankruptcy Rule 7008(b) provides that attorneys fees may be requested in a complaint, cross-claim, third-party complaint, answer or reply as may be appropriate. Fed. R. Bankr. P. 7008(b). In its Reply, American Eagle asserted its entitlement to attorneys fees and specifically requested an opportunity, should it prevail on its Motion to Dismiss and/or the adversary proceeding, to seek reimbursement of its attorneys fees before this Court following the entry of an order in its favor. See Reply 18. American Eagle s request for attorneys fees in an enumerated paragraph in one of the types of pleadings listed in Rule 7008(b) is sufficient. Hartford Police F.C.U. v. DeMaio (In re DeMaio), 158 B.R. 890, 892 (Bankr. D. Conn. 1993) (citing Garcia v. Odom (In re Odom), 113 B.R. 623, 624 (Bankr. C.D. Cal. 1990), for requirement that a request for attorneys fees be made in a numbered paragraph as opposed to a prayer for relief). 35. Additionally, in this case, because the Agreement (which MCM Elegante attached to its Complaint) expressly stated that a prevailing party shall receive its fees and expenses, MCM Elegante had more than adequate notice that American Eagle would seek reimbursement upon prevailing, and thus, no pleading requirement existed. DeMaio, 158 B.R. at (listing cases interpreting Rule 7008(b) that hold no pleading requirement is necessary if creditor is on notice that the debtor may seek its fees) (citing First Nat l Bank v. Bernhardy, (In re Bernhardy), 103 B.R. 198, 199 (Bankr. N.D. Ill. 1989) ( no provision in the Code or the rules... requires [a debtor] to plead a request for attorney s fees ); Thorp Credit, Inc. v. Smith (In re Smith), 54 B.R. 299, 303 (Bankr. S.D. Iowa 1985) (no pleading requirement where notice provided by statute)). 16

20 Pg 20 of 68 (iv) Bankruptcy Rule 7054(b) Provides American Eagle with an Additional Right to Reimbursement of its Costs 36. Bankruptcy Rule 7054(b) provides American Eagle with additional support for the reimbursement of its costs. Bankruptcy Rule 7054(b) provides that, [t]he court may allow costs to the prevailing party except when a statute of the United States or these rules otherwise provides. Fed. R. Bankr. P. 7054(b). American Eagle prevailed on all issues and its estate should not be required to bear the cost of the meritless litigation and unnecessary expense of discovery caused by MCM Elegante. Super Bowl Corp. Ltd. v. Drexel Burnham Lambert Inc. (In re Drexel Burnham Lambert Grp., Inc.), 151 B.R. 49, 60 (S.D.N.Y. 1993) (granting debtor costs after prevailing on all issues). Moreover, American Eagle should not be forced to bear the cost of filing this Motion to enforce is clearly-stated contractual rights, particularly in light of its reasonable out-of-court attempts to recover such fees prior to the filing of this Motion. Conclusion 37. WHEREFORE American Eagle respectfully requests the entry of an order (i) directing MCM Elegante to reimburse American Eagle for attorneys fees in the amount of $139, and costs in the amount of $476.30; (ii) directing MCM Elegante to reimburse American Eagle for its attorneys fees and costs incurred in connection with filing this Motion; and (iii) granting any such other and further relief as is just. 17

21 Pg 21 of 68 Dated: Houston, Texas May 16, 2013 /s/ Alfredo R. Pérez Stephen Karotkin Alfredo R. Pérez WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York Telephone: (212) Facsimile: (212) Attorneys for American Eagle Airlines, Inc. Defendant 18

22 Pg 22 of 68 Exhibit 1 Pérez Declaration

23 Pg 23 of 68 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x : In re : Chapter 11 Case No. : AMERICAN EAGLE AIRLINES, INC., : (SHL) : Debtor. : Jointly Administered as : Case No (SHL) : x : HTL OPERATING, LLC d/b/a MCM : ELEGANTE HOTEL, : Plaintiff, : v. : : Adv. Proc. No (SHL) AMERICAN EAGLE AIRLINES, INC., : Defendant. : : x DECLARATION ON BEHALF OF WEIL, GOTSHAL & MANGES LLP IN CONNECTION WITH THE MOTION OF AMERICAN EAGLE INC. PURSUANT TO FED. R. BANKR. P. 7008(b) AND 7054(b) FOR ATTORNEYS FEES AND COSTS Alfredo R. Pérez makes this Declaration under 28 U.S.C. 1746: 1. I am a partner with Weil, Gotshal & Manges LLP ( Weil ), 1 with responsibility for the chapter 11 cases of AMR Corporation and its related debtors, as debtors and debtors in possession (collectively, the Debtors ) and the above-captioned adversary proceeding. 2. I submit this Declaration in connection with the Motion of American Eagle Airlines, Inc. ( American Eagle ) Pursuant to Rules 7008(b) and 7054(b) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ) for Attorneys Fees and Costs, dated May 16, 2013 (the Motion ). Unless otherwise stated in this Declaration, I have personal knowledge of 1 Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Motion.

24 Pg 24 of 68 the facts set forth herein. I have previously submitted declarations dated January 10, 2012, February 27, 2012, June 19, 2012, September 17, 2012, and January 18, 2013, and hereby incorporate by reference such declarations as if fully set forth herein. 3. Prior to the commencement of the Debtors chapter 11 cases, American Eagle and HTL Operating, LLC d/b/a MCM Elegante ( MCM Elegante ) entered into a certain accommodations agreement, effective as of December 2, 2010 (the Agreement a copy of which is annexed hereto as Attachment A ). In connection with the attempts of MCM Elegante to terminate the Agreement (the MCM Elegante Matters ), and in connection with the filing of the Motion, Weil charged American Eagle for services rendered at Weil s normal hourly rates in effect at the time such services were rendered. The 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. A spreadsheet detailing the fees charged in connection with the MCM Elegante Matters, organized by Weil professional and indicating the amount of time expended and description of work performed, is annexed hereto as Attachment B. Given the unsettled nature of these proceedings, the total amount of fees and costs incurred in connection with the Motion has not yet been determined. 4. Weil also sought reimbursement from American Eagle for the actual and necessary expenses incurred in connection with the MCM Elegante Matters in accordance with Weil s normal reimbursement policies. Weil s reimbursement policies pass through all out-ofpocket expenses at actual cost or an estimated actual cost when the actual cost is difficult to determine. A receipt showing the total sum of American Eagle s costs in connection with the MCM Elegante Matters is annexed hereto as Attachment C. 2

25 Pg 25 of The services performed by Weil in connection with the MCM Elegante Matters and this Motion were necessary under the circumstances to protect American Eagle s interests and preserve the assets of the Debtors estates. Further, the services performed by Weil in connection with the MCM Elegante Matters were reasonable given, inter alia, their benefit to American Eagle s estate and the complexity, importance, and nature of the issues addressed. Together, American Eagle and American Airlines, Inc. have over four hundred accommodations contracts similar to the Agreement that provide for favorable rates on varying terms. Had MCM Elegante been able to terminate the Agreement, the Debtors would be subjected to similar proceedings initiated by hundreds of hotel operators. Such a result would exponentially increase the Debtors operating costs associated with crew accommodations and inhibit the Debtors efforts to reorganize. 6. Additionally, the services performed by Weil in connection with this Motion have been reasonable given the potential benefit to American Eagle s estate resulting from the recovery of its attorneys fees and costs and the enforcement of its rights under the Agreement. If American Eagle is not permitted to recover its fees and costs incurred in connection with this Motion it could be reticent to pursue its fees in other matters a result that could have great consequences on the Debtors estates. 7. To the best of my knowledge, information, and belief formed after reasonable inquiry, the fees and disbursements sought in the Motion comply with section 330 and other applicable provisions of the Bankruptcy Code, Bankruptcy Rules 7008(b) and 7054(b), the Local Bankruptcy Rules of the Southern District of New York, and the Amended Guidelines for Fees and Disbursements for Professionals in Southern District of New York Bankruptcy Cases pursuant to General Order M-447 (Jan. 29, 2013). 3

26 Pg 26 of 68 I declare under penalty of perjury that, to the best of my knowledge and after reasonable inquiry, the foregoing is true and correct. Executed this 16th day of May, 2013 /s/ Alfredo R. Pérez Alfredo R. Pérez 4

27 Pg 27 of 68 Attachment A December 2, 2010 Services Agreement for Hotel Accommodations

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37 Pg 37 of 68 Attachment B Attorneys' Fees Incurred In Connection with MCM Elegante Matters

38 Attachment B Pg 38 of 68 Attorneys' Fees Incurred In Connection with MCM Elegante Matters Date Index Tkpr# Name Invoice Hours Amount Task Narrative Review motion to lift the automatic stay filed by MCM (.2); communications with K. Koorenny, K. Soled, L. Napoli, S. 6/27/ Perez, Alfredo R $ Youngman and M. Meises re: same (.3) 7/3/ Napoli, Laura A $ Research forward contracts re: motion to allow related to mcm 7/5/ Napoli, Laura A $ Call with A. Perez re: motion to allow related to mcm (.3); Research forward contracts and commodities re: motion to allow 160 (1.7) 7/5/ Perez, Alfredo R $ Review motion by HTL to declare that there is no automatic stay 7/5/ Perez, Alfredo R $ telephone conference with L. Napoli re: response to the HTL motion 7/6/ Napoli, Laura A $ Draft response to motion to allow re: mcm 7/7/ Napoli, Laura A $ Draft response to motion to allow re: mcm 7/8/ Napoli, Laura A $ Draft response to motion to allow re: mcm 7/9/ Napoli, Laura A $1, Draft response re: motion to allow related to mcm (.9); conduct research re: motion to allow (2.0); Revise response re: 160 motion to allow (.5) 7/9/ Perez, Alfredo R $ Various communications with L. Napoli, S. Youngman and M. Meises re: response to HTL motion (.3); review and revise 160 response to HTL motion (.5) 7/9/ Youngman, Stephen A $1, REVIEW HTL MOTION re: automatic stay AND FORWARD CONTRACTS AND REVIEW AND REVISE RESPONSE re: SAME 7/10/ Napoli, Laura A $2, Revise motion to dismiss/objection to motion to allow (3.3); Perform additional research re: motion to dismiss/objection to 160 motion to allow (2.8); confer with A. Perez re: same (.4). 7/10/ Perez, Alfredo R $1, Review and revise response to HTL objection (.7); communications with L. Napoli re: revisions (.4) 7/10/ Youngman, Stephen A $1, REVIEW AND REVISE RESPONSE re: HTL MOTION FOR automatic stay RELIEF BASED ON ASSERTION OF FORWARD CONTRACT 160 (1.3); telephone conference with L. NAPOLI re: SAME (.2) 7/11/ Perez, Alfredo R $1, Review and revise the revised HTL objection (.8); various communications with M. Meises and L. Napoli re: same (.3) 7/11/ Youngman, Stephen A $ telephone conference with L. NAPOLI re: HTL MOTION 7/11/ Napoli, Laura A $ Revise objection to motion to allow re: comments from M. Meises related to mcm (.8); Revise objection to motion to allow 170 re: comments from A. Perez (.3) 7/12/ Napoli, Laura A $ Perform final review re: objection to MCM Elegante motion (.1); Prepare hearing materials re: objection (1.4) 7/12/ Perez, Alfredo R $ Review the final version of the HTL objection (.4); review UCC's joinder to the objection (.2); communications with L. Napoli 160 re: same (.1) 7/12/ Youngman, Stephen A $ REVIEW AND REVISE HTL RESPONSE 7/16/ Napoli, Laura A $ Prepare hearing materials re: MCM Elegante motion. 7/17/ Perez, Alfredo R $2, telephone conference with C. Lipan and V. Borges re: MCM Elegante hearing (.3); telephone conference with K. Koorenny re: 60 MCM Elegante hearing (.1); 7/19/ Perez, Alfredo R $1, attend 12th omnibus hearings (1.5); 7/26/ Perez, Alfredo R $ Communications with W. Borges re: MCM Elegante 7/27/ Perez, Alfredo R $ Various communications with W. Borges and K. Koorenny re: MCM Elegante 7/31/ Napoli, Laura A $ Review MCM Elegante's reply and affidavit 8/1/ Napoli, Laura A $ Draft motion to expedite and motion to strike re: MCM Elegante reply 8/1/ Perez, Alfredo R $ communications with B. Wells and K. Koorenny re: MCM Elegante 8/2/ Napoli, Laura A $ conduct research re: commodities and assignment for HTL Operating motion response 8/6/ Perez, Alfredo R $ Review decision on forward contracts (.3); communications with K. Koorenny re: MCM Elegante (.1) Total for Motion in Main Case $24, shl Doc 19 Filed 05/16/13 Entered 05/16/13 16:45:07 Main Document 8/14/ Youngman, Stephen A $ REVIEW HTL ELEGANTE COMPLAINT re: HOTEL CONTRACT 8/14/ Perez, Alfredo R $ Review MCM complaint (.5); communications with L. Napoli re: response to MCM complaint (.2) 8/14/ Napoli, Laura A $ Review MCM Elegante complaint (.1); Determine answer deadline re: MCM Elegante adversary proceeding (.7)

39 Attachment B Pg 39 of 68 Attorneys' Fees Incurred In Connection with MCM Elegante Matters 8/15/ Napoli, Laura A $ Draft motion to dismiss re: MCM Elegante complaint 8/16/ Napoli, Laura A $ Revise and revise motion to dismiss re: MCM Elegante 8/17/ Napoli, Laura A $ Revise motion to dismiss re: MCM Elegante adversary proceeding 8/17/ Perez, Alfredo R $ Communications with W. Borges re: MCM Elegante adversary proceeding 8/20/ Perez, Alfredo R $ Review B. Wells re: MCM Elegante (.2); communications with K. Soled and K. Koorenny re: MCM Elegante (.2); start to 170 review draft motion to dismiss MCM complaint (.3) 8/20/ Napoli, Laura A $ Revise motion to dismiss re: MCM Elegante adversary proceeding 8/24/ Napoli, Laura A $ Research motion to dismiss standard re: MCM Elegante adversary proceeding (.7); Revise motion to dismiss re: MCM 170 Elegante complaint (.8) 8/27/ Napoli, Laura A $ Revise motion to dismiss re: MCM Elegante adversary proceeding 8/28/ Napoli, Laura A $ Revise motion to dismiss re: MCM Elegante complaint 8/29/ Napoli, Laura A $ Revise motion to dismiss re: MCM Elegante complaint 9/10/ Napoli, Laura A $1, Revise motion to dismiss re: MCM Elegante (1.1); Revise motion to dismiss re: MCM Elegante (1.5) 9/10/ Perez, Alfredo R $1, Telephone conference with L. Napoli re: MCM motion to dismiss (.2); review and revise motion to dismiss (.8); 170 Communications with K. Soled re: motion (.2) 9/12/ Napoli, Laura A $ Revise motion to dismiss re: MCM Elegante matter 9/12/ Perez, Alfredo R $1, revise MCM Elegante motion to dismiss (.6); review case law for motion (.4); communications with L. Napoli and S. 170 Youngman re: motion to dismiss (.3) 9/13/ Napoli, Laura A $ Finalize MCM Elegante motion for filing. 9/13/ Perez, Alfredo R $1, Review, revise and finalize motion to dismiss the MCM Elegante complaint (.6); communications with L. Napoli re: same (.3); 170 communications with B. Wells re: briefing schedule (.2) 9/25/ Napoli, Laura A $ Draft notice of adjournment re: MCM Elegante adversary proceeding (.6); Prepare MCM Elegante notice of adjournment for 170 filing (.2) 9/25/ Perez, Alfredo R $ Communications with C. Lipan re: MCM Elegante adversary (.1); communications with L. Napoli re: MCM Elegante adversary 170 (.1); review notice re: MCM Elegante adversary (.1) 10/22/ Perez, Alfredo R $ Various communications with B. Wells, K. Soled and K. Koorenny re: MCM Elegante's request for discovery 10/24/ Perez, Alfredo R $ Review communications from B. Wells re: MCM Elegante 11/7/ Perez, Alfredo R $ Various communications with B. Wells and K. Koorenny re: MCM Elegante 11/9/ Perez, Alfredo R $ Various communications with B. Wells, K. Soled and K. Koorenny re: MCM Elegante 11/12/ Perez, Alfredo R $ Review notice of deposition from MCM Elegante (.2); communications with K. Soled re: MCM Elegante (.1) 11/14/ Napoli, Laura A $ Draft notice of adjournment re: MCM Elegante motion to dismiss (.6); s to A. Perez, M. Meises and S. Roberts re: notice 170 of adjournment (.8) 11/14/ Roberts, Sarah B $ finalize, file and serve Notice of Adjournment of Hearing on Motion of American Eagle Airlines, Inc. for Entry of Order 170 Dismissing Amended Complaint in the Adv. Proc. No /15/ Napoli, Laura A $ A. Perez re: MCM Elegante document request 11/16/ Napoli, Laura A $ Review adjournment of pre trial conference re: MCM Elegante 11/26/ Gilbane, Eleanor H $ Review complaint and motion to dismiss and provided by A. Perez 11/26/ Napoli, Laura A $ A. Perez re: documents for MCM Elegante adversary proceeding 11/27/ Gilbane, Eleanor H $3, Review documents provided by A. Perez and rules re: subpoenas (.5); call with A. Perez and R. Hubbard (.1); call with R. Hubbard (.5); begin drafting subpoena and review documents in connection therewith (1.5); call with R. Hubbard to review 170 information (.5); continue to draft and revise subpoena duces tecum (1.5). 11/27/ Perez, Alfredo R $ Communications with E. Gilbane re: MCM Elegante 11/28/ Napoli, Laura A $ Review subpoena re: MCM Elegante (.1); documents to E. Gilbane re: MCM Elegante subpoena (.4)

40 Attachment B Pg 40 of 68 Attorneys' Fees Incurred In Connection with MCM Elegante Matters 11/28/ Gilbane, Eleanor H $1, Review and revise subpoena (.4); forward same to R. Hubbard for review (.1); call with R. Hubbard and B. Wells re: deposition and next steps (.6); follow up call with R. Hubbard (.1); finalize subpoena for service and send to B. Wells (.4); review documents re: adjournments and scheduling (.3); call with A. Perez re: status (.1). 11/28/ Perez, Alfredo R $ Review MCM Elegante subpoena (.2); various communications with E. Gilbane re: strategy with MCM Elegante (.4) 11/29/ Gilbane, Eleanor H $1, Review legislative history and prior briefing re: bankruptcy code provisions (1.6); continue to review legislative history re: 170 same (.4). 12/4/ Gilbane, Eleanor H $2, Review deposition rules and objections (.8); draft deposition outline re: HTL (2.9). 12/4/ Napoli, Laura A $ Review precedents re: reply for MCM Elegante motion to dismiss (.9); Call with S. Youngman re: reply for MCM Elegante (.1) 12/5/ Gilbane, Eleanor H $2, Continue to draft deposition outline re: HTL (1.7); review documents re: HTL deposition (1.0). 12/6/ Napoli, Laura A $ Review precedents for replies re: MCM Elegante adversary proceeding 12/6/ Gilbane, Eleanor H $ Revise HTL deposition outline. 12/10/ Gilbane, Eleanor H $1, Review cases in preparation for HTL deposition (.5); continue to draft HTL deposition outline (1.8). 12/11/ Napoli, Laura A $ Review documents filed in adversary proceeding in preparation for reply re: MCM Elegante 12/11/ Gilbane, Eleanor H $3, revise HTL deposition outline (1.1); opposing counsel re: documents (.1); review s from B. Wells (.5); R. Hubbard re: documents and deposition (.1); analyze HTL document production (2.7). 12/11/ Perez, Alfredo R $ Review MCM documents (.4); various communications with E. Gilbane re: documents and next steps (.2) 12/12/ Gilbane, Eleanor H $4, Revise deposition outline per new documents (1.0); continue to revise deposition outline per documents (2.5); call with R. Hubbard re: same (.5); review rules, etc. re: depositions (.4); continue to prepare for deposition (1.8); confer with A. Perez 170 (.2). 12/13/ Perez, Alfredo R $ Meet with R. Hubbard and E. Gilbane re: MCM deposition (.3); follow up communications re: results of deposition (.2) 12/13/ Gilbane, Eleanor H $5, Prepare for MCM deposition (2.5); meet with A. Perez and R. Hubbard re: same (.3); attend MCM deposition (4.6) 12/17/ Gilbane, Eleanor H $3, Research on standard for MCM brief (.5); with A. Perez re: next steps (.1); call to L. Napoli re: same and research (.2); review s from R. Hubbard re: hotel contract (.2); review cases and conduct research re: same (.4); draft MCM reply (2.6); review and respond to from B. Wells re: same (.3). 12/17/ Napoli, Laura A $1, conduct research re: Second Circuit case law on section 12(b)(6) motions for MCM Elegante adversary proceeding (.8); Research cases re: defendants introducing factual evidence for MCM Elegante reply (1.1); Research standard for summary 170 judgment motion for MCM Elegante reply (.3); Summarize and conduct research re: MCM Elegante reply (1.5) 12/17/ Perez, Alfredo R $ Various communications with E. Gilbane and L. Napoli re: MCM strategy 12/18/ Napoli, Laura A $1, Draft summary to E. Gilbane re: section 12(b)(6) research (.7); Research additional cases re: section 12(b)(6) motion for MCM Elegante reply (1.5); conduct research re: summary judgment conversion notice (1.4) 12/18/ Gilbane, Eleanor H $3, Review research from L. Napoli (.3); respond to L. Napoli re: research (.1); continue drafting reply while reviewing research and prior briefing (4.0); call with R. Hubbard re: next steps (.3); call with L. Napoli re: same (.1); call with R. hubbard re: 170 procedure (.1); review from L. Napoli re: procedure (.1). 12/19/ Napoli, Laura A $1, Review deposition transcript of E. Lasater re: MCM Elegante adversary proceeding 12/19/ Gilbane, Eleanor H $1, Review research on standard for MCM motion (.7); continue drafting MCM reply (.7). 12/20/ Gilbane, Eleanor H $3, Continue to review research and draft reply (1.1); R. Hubbard re: question (.1); continue to review research and draft 170 reply (2.8). 12/21/ Gilbane, Eleanor H $ Review critical vendor order and motion (.5); R. Hubbard re: same (.1). 12/27/ Perez, Alfredo R $ Review MCM papers (.4); various communications with R. Hubbard and E. Gilbane re: response (.3) 12/27/ Gilbane, Eleanor H $ Review MCM Objection (.5); review from R. Hubbard re: MCM Objection and respond (.1).

41 Attachment B Pg 41 of 68 Attorneys' Fees Incurred In Connection with MCM Elegante Matters 12/28/ Perez, Alfredo R $1, Review MCM response and draft Eagle's reply (.8); various communications with R. Hubbard and E. Gilbane re: reply (.3); 170 communications with B. Wells re: hearing (.1) 12/28/ Gilbane, Eleanor H $3, Draft reply brief (4.8); revise brief per comments from A. Perez (.4). 12/29/ Perez, Alfredo R $ Various communications with R. Hubbard and E. Gilbane re: comments to reply on MCM 12/29/ Gilbane, Eleanor H $ Review comments from R. Hubbard (.1); revise MCM brief (.7). 12/30/ Gilbane, Eleanor H $4, revise MCM brief (5.8); re: same to R. Hubbard and A. Perez (.1). 12/31/ Napoli, Laura A $ Review MCM Elegante's response to American Eagle's motion to dismiss 12/31/ Gilbane, Eleanor H $3, Draft motion to strike (4.2); review comments to reply brief and edit reply brief re: same (.9). 12/31/ Perez, Alfredo R $1, revise reply to MCM (.4); communications with E. Gilbane and R. Hubbard re: reply and motion to strike (.3); review motion 170 to strike (.3) 1/2/ Gilbane, Eleanor H $ Call to L. Napoli re: finalizing briefs (.1); to A. Perez re: same (.1): call with S. Schwarzbach to go over instructions for final cite check and blue booking (.2); draft proposed order for motion to strike (.4); with S. Schwarzbach re: same (.1); 170 S. Roberts re: filing of briefs (.1); A. Perez re: next steps (.1). 1/2/ Perez, Alfredo R $ Various communications with E. Gilbane re: MCM reply and motion to strike (.6) 1/2/ Schwarzbach, Stephen T $1, Review and revise Motion to Strike in MCM Elegante matter. 1/2/ Schwarzbach, Stephen T $1, Review and revise Reply to Plaintiff's Objection to motion to dismiss in MCM Elegante matter. 1/3/ Gilbane, Eleanor H $2, S. Schwarzbach re: briefs (.1); call with S. Schwarzbach re: same (.1); review revised draft (.2); M. Meises re: same (.1); further review revised draft and edit (.4); call with S. Schwarzbach re: same (.2); R. Hubbard, K. Koorenny and A. Perez re: same (.2); call with R. Hubbard re: comments (.5); revise brief per comments (.2); review comments from M. Meises (.1); revise briefs per comments from M. Meises (.6); re: revised motion to strike to M. Meises (.1); M. Meises, S. 170 Roberts, and S. Schwarzbach re: hearing/objection dates for motion to strike (.2); reply to A. Perez to review (.1). 1/3/ Perez, Alfredo R $ Various communications with E. Gilbane, R. Hubbard, K. Koorenny and S. Schwarzbach re: certain provisions of the reply to 170 MCM (.5); review and revise reply (.4) 1/3/ Meises, Michele J $1, REVISE REPLY TO OBJECTION OF MCM ELEGANTE TO MOTION TO DISMISS (1.1); CONFERENCE WITH E. GILBANE re: SAME (.2). 1/3/ Schwarzbach, Stephen T $1, Review and revise Reply to Plaintiff's Objection to motion to dismiss in MCM Elegante matter. 1/3/ Schwarzbach, Stephen T $1, Review and revise Motion to Strike in MCM Elegante matter. 1/4/ Perez, Alfredo R $1, Review and comment on the MCM reply and motion to strike (.8); various communications with E. Gilbane and S. Roberts re: 170 same (.4) 1/4/ Gilbane, Eleanor H $1, Revise reply and send to S. Roberts (.2); review and respond to s re: filing of reply (.1); review comments to motion to strike from M. Meises (.2); respond to question re: same (.1); A. Perez re: proposed order (.1): call with S. Schwarzbach re: revisions (.1); review and respond to from A. Perez re: prior correspondence (.1); review comments to Motion to 170 strike from A. Perez (.1); revise motion to strike per comments from A. Perez (.5). 1/4/ Schwarzbach, Stephen T $ Review and revise Reply to Plaintiff's Objection to motion to dismiss in MCM Elegante matter. 1/4/ Schwarzbach, Stephen T $1, Review and revise Motion to Strike in MCM Elegante matter. 1/7/ Perez, Alfredo R $1, Telephone conference with K. Koorenny and R. Hubbard re: MCM (.2); various communications with E. Gilbane re: MCM (.3); 170 prepare for MCM hearing (.8) 1/7/ Gilbane, Eleanor H $ Call with S. Roberts re: prep for hearing (.1); call with M. Jackson re: prep for hearing (.2); review pleadings to pull cases for binders (.4); conference with D. Mulligan re: cases (.1); call with M. Jackson re: cases (.1); review agenda and make 170 comments (.1); R. Hubbard re: materials for hearing (.1). 1/8/ Gilbane, Eleanor H $ with R. Hubbard re: hearing 1/8/ Perez, Alfredo R $3, PREPARE FOR HEARING ON MCM MOTION TO DISMISS INCLUDING REVIEW OF DEPOSITION TRANSCRIPT 1/9/ Perez, Alfredo R $4, participate in contested hearing docket (1.0); meet with K. Koorenny, R. Hubbard and M. Meises re: same (1.3); return for MCM ruling (.8); various communications with R. Hubbard and E. Gilbane form of order and strategy re: same (.2); communications with M. Meises and E. Gilbane re: revising form of order (.1);

42 Attachment B Pg 42 of 68 Attorneys' Fees Incurred In Connection with MCM Elegante Matters 1/9/ Meises, Michele J $ CONFERENCE WITH E. GILBANE re: MCM ORDER. 1/9/ Gilbane, Eleanor H $3, Review agenda and prepare for hearing (.1); call in for omnibus hearing (1.5); call in and time spent on MCM hearing (1.0); call with R. Hubbard re: same (.1); call with C. Lopez re: MCM adversary (.2); draft proposed order (.5); with M. Meises 170 re: same (.1); call with A. Perez re: proposed order and hearing (.2); B. Wells proposed order (.1). 1/10/ Gilbane, Eleanor H $1, Revise order per comments from M. Meises (.1); M. Meises re: same (.1); draft withdrawal notice (.5); review and respond to from M. Meises re: procedure (.2); revise order (.2); review and respond to s from A. Perez re: same 170 (.1); B. Wells re: revised order (.1). 1/11/ Gilbane, Eleanor H $ Review transcript for error and purposes of making sure that draft order is correct (.5); L. Napoli re: same (.1): S. 170 Roberts re: submitting order (.1). 1/14/ Gilbane, Eleanor H $ proposed order to A. Perez and M. Meises for sign off (.1). 1/16/ Gilbane, Eleanor H $ Review from B. Wells (.1); exchange s with A. Perez and M. Meises re: same (.2); call with S. Roberts re: same (.1); call to chambers to follow up on entry of proposed order (.1): revise notice of withdrawal (.1); B. Wells re: order (.1); 170 review order and rules re: time for notice of appeal (.1); A. Perez and schedule deadline on calendar (.1). 1/16/ Perez, Alfredo R $ Communications with B. Wells and E. Gilbane re: MCM Total for Adversary $114, shl Doc 19 Filed 05/16/13 Entered 05/16/13 16:45:07 Main Document Total for All $139,430.50

43 Pg 43 of 68 Attachment C Costs Incurred In Connection with MCM Elegante Matters

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46 Pg 46 of 68 Exhibit 2 March 1, 2013 Letter from A. Pérez to B. Wells

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49 Pg 49 of 68 Exhibit 3 March 11, 2013 Letter from B. Wells to A. Pérez

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54 Pg 54 of 68 Exhibit 4 April 3, 2013 Letter from A. Pérez to B. Wells

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57 Pg 57 of 68 Exhibit 5 April 19, 2013 Letter from B. Wells to A. Pérez

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61 Pg 61 of 68 Exhibit 6 March 9, 2012 Letter from E. Lasater to American Eagle

62 shl Doc 2 Pg 62 of Filed 08/15/12 Entered 08/15/ :49:34 Exhibit B Pg1of1 c' (I jj Pl.)NDorne March 9, 2012 American Eagle Airlines, Inc. Attn: Director of Operations Finance 4333 Amon Carter Boulevard, MD 5494 Fort Worth, TX Certified Mail Re: Termination of Services Agreement for Hotel Accommodations Dear Sir: This letter is written as a follow up to our letter January 30, 2012, terminating that one certain agreement between your company and MCM Elegante Hotel, Odessa, TX. I am in receipt of an from Fannie Liu, of API Hotels, purporting to ask for clarification on your behalf, of our reasons for terminating the contract. I have attached and incorporated both Ms. Liu's and my response herein. To further clarify, American has refused to pay service invoices within the time frame specified in the service agreement in the amount of $27,679.35, and is in material breach of the agreement. Accordingly, unless the aforementioned sums are paid in full on or before 30 days from today, the services agreement will be terminated at the end of said 30 day term. Please make arrangements to either pay the bill or to use another hotel. Stncç rely, 2TC Edlas Cep, ' esident MCM Elegante Hotels 700 N. Grant, Suite 600 Odessa, TX / Corporate Offices Fax 700 N. Grant Suite 600 Odessa, Texas P.O. Box 2969 Odessa, Texas, EXHIBIT "B"

63 Pg 63 of 68 Exhibit 7 April 4, from K. Soled to E. Lasater

64 Pg 64 of shl Doc elof2 Z-33 Filed 08/15/12 Entered 08/15/ :49:34 ExhibiPt Pg1of2 l D. Brent Wells From: Ed Lasater [edlasater@mcmelegante.com ] Sent: Thursday, April 05, :52 AM To: bwells@wellscuellar.com Subject: FW: Response to Your March 9, 2012 Correspondence From: Soled, Kate [mailto: Kate.Soled@aa.com] Sent: Wednesday, April 04, :16 AM To: edlasater@mcmelegante.com Cc: Hollinger, Nicholas Subject: Response to Your March 9, 2012 Correspondence Dear Mr. Lasater, I am the General Counsel of American Eagle Airlines, Inc. ("American Eagle"). Your letter dated March 9, 2012 to American Eagle referenced "Termination of Services Agreement for Hotel Accommodations" was recently brought to my attention. This correspondence threatens to terminate the agreement for the provision of hotel rooms to our crew members between MCM Elegante Hotel and American Eagle in 30 days in the event that the hotel is not paid pre-petition debt in the amount of $27, Such a threat is a violation of the Automatic Stay that was granted to American Eagle on November 29, 2011 upon the filing by it of a petition for protection under Chapter 11 of the United States Bankruptcy Code. I have reviewed the agreement in question and want to make sure that you clearly understand American Eagle's position relative to this matter, namely, that MCM Elegante Hotel has violated the Automatic Stay and that it absolutely does not have the legal right to terminate the agreement. Creditors of American Eagle are subject to the "Automatic Stay" and prohibited from taking adverse action against it in connection with prepetition debt, other than as permitted under the Code. Furthermore, nonpayment of prepetition debt cannot be claimed to constitute a default of the agreement, meaning that the agreement remains in effect in accordance with its terms. The remedy for nonpayment of prepetition debt is provided under the Code and does not include a unilateral ability to terminate or alter the terms of the agreement. Since nonpayment of prepetition debt cannot be deemed a default under a contract, you do not have any means within the terms of the contract to effectuate a termination and both you and American Eagle are contractually bound to continue fulfilling their respective obligations under the contract (subject to American Eagle's later election to either assume or reject the contract). Thus, it is our view that should MCM Elegante Hotel wrongfully treat the contract as terminated and fail to provide our crews with hotel rooms in accordance with the terms of the agreement it will be 1) in further violation of the Automatic Stay and 2) in breach of contract, Should this occur American Eagle will make alternative arrangements and seek, as part of its damages, any difference in rate that it may be forced to pay for hotel rooms for our crews for as long as it is forced to utilize the alternative arrangement, up to and including the natural expiry date of the agreement, December 1, American Eagle also reserves the right to bring the matter before the Bankruptcy Court for a determination that MCM Elegante Hotel is in fact violating the Automatic Stay and requesting such relief as the court deems appropriate. I strongly urge you to seek the advice of competent bankruptcy counsel before taking the action 4/5/2012 EXHIBIT "C"

65 Pg 65 of shl Doc 2-3% Filed 08/15/12 Entered 08/15/1217:49:34 Exhibit ~ge 2 of 2 Pg 2 of 2 threatened in your March 9 th correspondence. If you are represented by counsel I suggest that your counsel contact me at (817) Please confirm to me at your earliest convenience MCM Elegante Hotel's agreement to abide by the terms of the agreement. Kathleen A. Soled Vice President & General Counsel NOTICE: This and any attachments are for the exclusive and confidential use of the intended recipient(s). If you are not an intended recipient, please do not read, distribute, or take action in reliance upon this message. If you have received this in error, please notify me immediately by return and promptly delete this message and its attachments from your computer. 4/5/2012