Opinion
NOT FOR PUBLICATION
ORDER ON FEE APPLICATION
Peter W. Bowie, Chief Judge, United States Bankruptcy Court
This matter came on regularly for hearing on the application of the trustee's lawyers for fees and costs. The application initially stated it was a first and final application, but counsel has since requested it be treated as an interim application. The application seeks fees of $10,522.50 and costs of $121.40. Debtor has objected to some of the fees sought, contending they are excessive.
The Court has subject matter jurisdiction over the proceeding pursuant to 28 U.S.C. § 1334 and General Order No. 312-D of the United States District Court for the Southern District of California. This is a core proceeding under 28 U.S.C. § 157(b)(2)(A), (B).
The gist of the debtor's objections to the fees sought by trustee's counsel is that debtor provided the information the trustee needed concerning the residence, and that debtor and his counsel prepared the objections to claims. Therefore, argues debtor, the trustee and his counsel should have found it unnecessary to put in time on the same efforts. The Court understands the debtor's argument, but disagrees with some of his conclusions.
In support of his position, the debtor stresses how cooperative and open he has been amending his Schedules to add previously undisclosed bank accounts, a possible community property interest in the wife's LLC and, after the trustee discerned a possible interest in a Prius, also the Prius. In reality, the trustee and his counsel have a duty to the estate to not just accept without reservation that a debtor, however apparently cooperative, has disclosed everything.
The debtor specifically challenges the fees sought concerning 1) whether the estate had a community property interest in the residence; 2) the Prius; 3) claims objections; and 4) the settlement agreement. The debtor's schedules listed his joint tenancy interest in the residence and, were it community property, there might have been equity for the benefit of creditors. Gathering and reviewing the documents that ultimately satisfied the trustee that the estate did not have a community property interest took time and effort. The fact that it did not yield a return to the estate does not mean that the time and effort should not be compensated. It was clearly time and effort intended to benefit the estate when undertaken. No reduction is warranted.
The debtor's objection to fees concerning the Prius are centered on the argument that some of the activity should have been performed by the trustee, not by separately compensated counsel. While the line is not always clear, it is true the trustee by statute is charged with efforts such as ascertaining a value for the estate's interest in the vehicle. The Court concludes the fees allowed for work on the Prius issue should be reduced by $700.
The central issue concerning the claims objections filed by the debtor was whether his personal bankruptcy estate had any liability for them. Debtor's position was that the bulk of claims were filed for liabilities of a failed business, Danky's, and were not the personal liabilities of the debtor. While a trustee certainly is empowered to review and object to claims, in this case a legal issue concerning liability intruded. No reduction in fees is warranted for the work on the claims objections.
The fourth area objected to by the debtor is the complexity of the settlement agreement, which debtor contends was unnecessarily so. The Court disagrees. Because of the way debtor and his spouse chose to conduct their business affairs, settlement was necessary to bring closure to the issues concerning not only the real property and the Prius, but also the non-filing spouse's possible interest in the tax refund the debtor properly turned over to the trustee. Moreover, that settlement needed to be noticed out to creditors to ensure full closure.
Conclusion
For the foregoing reasons, the application of trustee's counsel for fees and costs on an interim basis is granted in large part. Fees are allowed in the amount of $9,922.50 and costs are allowed in the amount of $121.40.
IT IS SO ORDERED.