Fear v. U.S. Trustee (In re Ruiz)

Summarized by Thomas Phinney , Felderstein Fitzgerald Willoughby Pascuzzi & Rios LLP
10 years 2 months ago

Citation:

9th Cir. BAP No. EC-15-1133-DJuF (Dec. 11, 2015) (published)

Tag(s):

Ruling:

Chapter 7 trustee compensation exceeding distributions to unsecured creditors is not per se an "extraordinary circumstance" that justifies disallowance of the trustee's full "commission" under Section 326. The case was remanded for further findings.

Procedural context:

Chapter 7 trustee's fee application was allowed in part and disallowed in part, and the Chapter 7 trustee appealed. The BAP remanded to the bankruptcy court for additional findings.

Facts:

From an auction sale of the Debtor's truck, the Trustee netted $3,195.16, which the Trustee proposed to distribute as follows: $2,300 to the Trustee for his fees and $52.44 for his expenses; and the remaining $842.72 to general unsecured creditors. The Trustee's commission "cap" under § 326 was $2,850, but the Trustee requested $550 less than his cap to provide a greater distribution to creditors. No objections were filed to the Final Report, but the bankruptcy court set the matter for hearing. Under In re Salgado-Nava, 473 B.R. 911 (9th Cir. BAP 2012), a trustee’s commission as calculated under § 326 is presumptively reasonable except in "extraordinary circumstances." The bankruptcy court relied on In re Scoggins, 517 B.R. 206 (Bankr. E.D. Cal. 2014), which held that “[a] chapter 7 trustee’s request for compensation that exceeds the amount of money the trustee proposes to distribute to unsecured creditors constitutes one of those ‘extraordinary circumstances’ which commands a review of the fees for reasonableness.” The BAP held, however, that trustee compensation exceeding distributions to unsecured creditors is not per se an extraordinary circumstance justifying departure from the presumption in favor of the commission, and thus remanded for further findings.

Judge(s):

DUNN, JURY, and FARIS

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