United States District Court, M.D. Georgia, Macon Division
ORDER GRANTING RECEIVER'S FIRST MOTION FOR
E. SELF, III, JUDGE
before the Court is Receiver John F. Kennedy's Motion for
Receiver's Fees [Doc. 46], to which Plaintiff VC Macon,
GA, LLC objects. For the reasons stated herein, Mr.
Kennedy's Motion is GRANTED.
November 14, 2018, the Court entered an Order appointing Mr.
Kennedy as the receiver in this case and granting Defendants
Virginia College, LLC ("Virginia College") and
Education Corporation of America's ("EGA")
Motion for Preliminary Injunction. [Doc. 26]. In the Order,
the Court authorized Mr. Kennedy, upon the filing of a
statement of account, to receive payment on a monthly basis
for "reasonable receiver fees [ ] at Receiver's
standard rates and for [his] reasonable monthly
expenses" and for "reasonable professional fees and
expenses incurred on or prior to the date of the entry of
this Order and hereafter." [Doc. 26, pp. 13-14]. The
Order further provided that any objections to the fees must
be filed within 5 days of the filing of a motion for fees.
[Id. at p. 14]. Mr. Kennedy filed his motion for
fees, along with the required statement of account on
November 30th [Doc. 46], and Plaintiff filed the only
objection [Doc. 54].
Plaintiff argues that Mr. Kennedy's expenses for the
month of November 2018 are unreasonable-and therefore
uncollectible-because (1) Mr. Kennedy is not entitled to
reimbursement of fees incurred prior to the entry of the
Order appointing him as receiver; (2) several fees and
expenses are unnecessary or excessive; and (3) Mr. Kennedy
did not comply with the Court's instructions. See
generally [Doc. 54].
receiver is entitled to compensation when he "reasonably
and diligently discharges his duties." SEC v.
Elliott, 953 F.2d 1560, 1577 (11th Cir. 1992). In
considering whether to fully compensate the receiver, the
Court must first determine the "lodestar," or the
base compensation amount, which is equal to "the number
of hours reasonably expended on the litigation multiplied by
a reasonable hourly rate." Hensley v.
Eckerhart, 461 U.S. 424, 433 (1983); see also Norman
v. Hous. Auth. of Montgomery, 836 F.2d 1292, 1299 (11th
Cir. 1988). When seeking compensation, the receiver
"bears the burden of establishing entitlement to an
award and documenting the appropriate hours expended and
hourly rates," Hensley, 461 U.S. at 437 (1983),
but the Court is ultimately the "expert on the question
of reasonableness and may consider its own knowledge and
experience concerning reasonable and proper fees."
SEC v. Mikula, No. 1:08-CV-3097-BBM, 2009 WL
10669959, at *2 (N.D.Ga. Mar. 20, 2009) (quoting
Norman, 836 F.2d at 1303 (11th Cir. 1988)).
initial matter, the Court is quite familiar with Mr. Kennedy
and his reputation and performance as a receiver, having
previously appointed him on a number of
occasions. Based on this experience, the Court finds
Mr. Kennedy's hourly rates and the rates sought in his
fee application to be patently reasonable, considering the
relevant legal market and the experience of each lawyer in
his firm for which he seeks payment. The Court now turns to
regard to its first objection, Plaintiff states:
Between November 7 and November 14, 2018, the Receiver
invoiced 80.7 hours between numerous 'timekeepers'
(including Receiver) totaling $19, 273.50. All of these hours
were expended prior to the entry of the Order [appointing Mr.
Kennedy as the receiver in this case]. . . . Receiver had no
authority to act on behalf of Defendants prior to the entry
of the Order. In other words, Receiver is seeking fees for
anticipatory work, which is not reasonable.
[Doc. 54, p. 3]. However, the Order appointing Mr. Kennedy as
receiver specifically provided that he is entitled to
reimbursement "for reasonable professional fees and
expenses incurred on or prior to the date of the
entry of this Order." [Doc. 26, pp. 13-14] (emphasis
added). Thus, the expenses incurred by Mr. Kennedy prior to
being named receiver are not inherently unreasonable simply
because they were incurred before the Court entered the
second objection, Plaintiff urges the Court to reduce Mr.
Kennedy's requested fees on the basis that the hours
expended on certain tasks are unreasonable. [Doc. 54, p. 3].
However, the Court has thoroughly and painstakingly reviewed
the individual time entries and expenses and finds them to be
reasonable. Although Mr. Kennedy and his firm have certainly
expended considerable time since the inception of this case,
the Court remains mindful that this case is not an ordinary
receivership. For example, this Receivership Estate consists
of the assets of a company that operated in several states,
maintained a $600, 000 daily payroll, carried more than 3,
000 employees and enrolled in excess of 20, 000 students. To
complicate matters further, Virginia College, New England
School of Business and ECA operated in a complex regulatory
environment involving not only the United States Department
of Education and the Financial Services Administration, but
the comparable regulatory bodies of each individual state
where a school was located. Further, the Receiver has gone to
Herculean lengths attempting to have current and potential
investors inject additional capital into the Estate. Given
these complexities and the sheer amount of work for the
Receiver to do in order to effectively be able to administer
the Receivership Estate, the Court overrules the objection
and finds the hours expended to be reasonable.
Court has considered the remaining objections and finds them
to be without merit as they may relate to ...