FILED
FEB 2 2022
NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: BAP No. CC-21-1162-FLS
JAMES LLOYD WALKER,
Debtor. Bk. No. 6:15-bk-21418-MH
JAMES LLOYD WALKER,
Appellant,
v. MEMORANDUM*
ROBERT S. WHITMORE, Attorney,
Chapter 7 Trustee,
Appellee.
Appeal from the United States Bankruptcy Court
for the Central District of California
Mark D. Houle, Bankruptcy Judge, Presiding
Before: FARIS, LAFFERTY, and SPRAKER, Bankruptcy Judges.
INTRODUCTION
Chapter 71 debtor James Lloyd Walker appeals the bankruptcy
court’s order awarding nearly $90,000 in fees and costs to the chapter 7
*
This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
1
Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code,
11 U.S.C. §§ 101-1532, and all “Rule” references are to the Federal
Rules of Bankruptcy Procedure.
trustee and his counsel. We agree with the bankruptcy court, appellee, and
Mr. Walker’s own counsel that the unusually large fee award was the
result of Mr. Walker’s obstructive and obstreperous conduct. We discern
no error and AFFIRM.
FACTS 2
A. Mr. Walker’s chapter 7 petition
Mr. Walker, through counsel, filed a chapter 7 petition in November
2015. Appellee Robert S. Whitmore (“Trustee”) was appointed chapter 7
trustee. In March 2016, the Trustee sought to retain the law firm of Best
Best & Krieger LLP (“BBK”). Over Mr. Walker’s objection, the bankruptcy
court granted the application.
Meanwhile, the Trustee had filed a motion for turnover of
Mr. Walker’s books and records. He asserted that Mr. Walker’s schedules
disclosed only two pieces of real property,3 yet his 2014 tax return listed
five rental properties. He also stated that Mr. Walker twice failed to appear
at his § 341 meeting of creditors and, when he finally appeared, he
mentioned assets that were not listed in his schedules. The Trustee
requested certain documents from Mr. Walker but received no response.
Mr. Walker opposed the motion through his second attorney, arguing
2
We exercise our discretion to review the bankruptcy court’s docket in this case,
as appropriate. See Woods & Erickson, LLP v. Leonard (In re AVI, Inc.),
389 B.R. 721, 725 n.2
(9th Cir. BAP 2008).
3
The Trustee abandoned the two scheduled properties in December 2017.
2
that his prior counsel filed the chapter 7 petition fraudulently without his
approval. He requested that the bankruptcy court dismiss his case or
convert it to one under chapter 13. The bankruptcy court held a hearing
and granted the turnover motion.
In July 2016, the U.S. Trustee filed an adversary complaint to deny
Mr. Walker’s discharge based on his failure to disclose assets, false
statements, and the like. Very soon thereafter, in August 2016, Mr. Walker
waived his discharge.
Creditors filed only five proofs of claim. The Trustee successfully
objected to two claims, and the remaining creditors withdrew their claims
or amended their claim to $0.
B. The sale of Mr. Walker’s rental property
The Trustee continued his investigation into Mr. Walker’s assets. In
March 2018, the Trustee filed a motion for turnover of an undisclosed
rental property located in Hesperia, California.
Mr. Walker, represented by his third counsel, filed a very brief
opposition to the motion for turnover. He argued that there were no
unsecured creditors remaining in his case. He offered to pay the existing
administrative claims in lieu of turning over the rental property.
Mr. Walker’s counsel explained in his declaration that Mr. Walker
initially agreed to pay the administrative expenses and not oppose the
turnover motion. Counsel had communicated that decision to the Trustee,
and the parties agreed to continue the hearing on the turnover motion
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multiple times. When Mr. Walker discovered that the Trustee’s expenses
were $50,000, he insisted that he did not have to pay anything.
After a hearing, the court granted the motion and ordered
Mr. Walker to turn over to the Trustee possession and control of the rental
property, its books and accounting records, and its postpetition proceeds.
Mr. Walker continued to refuse to turn over the rental property or
cooperate with the Trustee. The Trustee filed a motion for an order to show
cause why Mr. Walker should not be held in contempt. The bankruptcy
court issued the order to show cause and set a hearing date. Mr. Walker
did not respond. After multiple continuances, the bankruptcy court issued
an interim order directing Mr. Walker to cooperate with the Trustee and
allow the Trustee access to the rental property.
The Trustee next filed a motion for approval to sell the rental
property. Mr. Walker did not file an opposition to the sale motion. After a
hearing, the bankruptcy court approved the sale of the rental property for
$310,000, subject to overbid.
Soon thereafter, the Trustee filed an emergency application for an
amended order to sell the property, asserting that Mr. Walker’s wife was
impeding the sale of the rental property. The bankruptcy court issued an
amended order clarifying that Mrs. Walker’s community property interest
was also subject to the sale order and allowing the Trustee to execute
documents on her behalf.
The Trustee reported in August 2019 that he successfully sold the
4
rental property for $310,000.
C. The Trustee’s request for administrative fees
In the meantime, BBK filed an interim application for fees and costs
totaling approximately $43,000. Mr. Walker did not file any objection. After
a hearing, the court reduced the amount requested and awarded BBK
$34,358.50 in fees and $2,029.19 in costs.
Mr. Walker appealed the interim fee award to the BAP. He sought a
stay pending appeal, which the Trustee opposed; the bankruptcy court
denied the stay. Mr. Walker then successfully moved to dismiss the appeal.
Inexplicably, he filed an application for a writ of mandamus with the Ninth
Circuit, but the Ninth Circuit denied his application.
The Trustee’s accountant filed an application for fees totaling $1,838
and costs totaling $277.80. Mr. Walker did not oppose the application.
In November 2020, BBK filed a final application for compensation. It
sought an additional $42,006.00 in fees and $4,812.26 in costs that it
represented were incurred as a result of Mr. Walker’s obstructive conduct.
Mr. Walker did not oppose the application.
In May 2021, the Trustee filed his final report and request for
compensation. He reported that he had realized $310,365.92 for the estate
and incurred a total of $24,751.96 in administrative expenses plus
compensation for himself, BBK, and the Trustee’s accountant in the amount
of $95,574.83, leaving a balance of $190,039.13 payable to Mr. Walker. (As is
noted above, the Trustee had eliminated all unsecured claims.)
5
Mr. Walker objected to the fee application. He argued that the
requested administrative expenses were excessive, given the limited
unsecured claims. He argued that he should have had the opportunity to
pay the Trustee’s fees rather than lose the rental property. He contended
that BBK should not have run up fees trying to sell the rental property.
The Trustee pointed out that the fees were largely due to
Mr. Walker’s own obstructive and obstreperous conduct. He also argued
that he had tried to settle the matter with Mr. Walker multiple times and
years before filing the motion for turnover, yet Mr. Walker was either
unresponsive or chose to renege on the proposed settlement agreement.
At the hearing on the fee application, counsel for Mr. Walker argued
that BBK’s fees were unusually high, but the bankruptcy court commented
that, as “a result of the debtor’s actions the Trustee was forced to do much
more than would otherwise be the case and, as a consequence, the fees are
much higher than one would normally expect in a situation like this.” It
said that “[t]he problem again in Mr. Walker’s case was Mr. Walker. He . . .
was his own worst enemy.”
Mr. Walker’s attorney agreed with the court’s assessment of his
client’s behavior. He said that he was not arguing that BBK did not do the
work but rather that some of the work was unnecessary and the Trustee
could have accomplished his goal of obtaining control of the rental
property with only a few hours’ work or by seeking to have the U.S.
Marshals evict Mr. Walker’s tenant.
6
The bankruptcy court continued the hearing to further review the fee
application. The court issued a tentative ruling acknowledging that most of
the fees were incurred due to Mr. Walker’s obstruction but criticized
certain billing entries as “excessive, vague, and unnecessary billing by
Counsel.” It was inclined to reduce BBK’s fees by $5,952 to $36,054.
Combined with the earlier interim fee award, BBK’s fees totaled $70,412.50,
and its expenses totaled $6,841.45. The court stated that it was inclined to
award the Trustee most of his requested fees and costs.
At the continued hearing, Mr. Walker’s counsel stated that the court’s
tentative ruling was “very fair” and submitted the matter on the tentative
ruling. BBK took issue with some of the bankruptcy court’s harsher
criticism in the tentative ruling. The bankruptcy court agreed that the
language should have been “toned down” and conveyed an “incorrect
message.” The court granted the fee application and approved the fees and
expenses in the amounts stated in the tentative ruling.
Mr. Walker timely appealed.
JURISDICTION
The bankruptcy court had jurisdiction under
28 U.S.C. §§ 1334 and
157(b)(2)(A). We have jurisdiction under
28 U.S.C. § 158.
ISSUE
Whether the bankruptcy court abused its discretion in its award of
fees and costs to BBK and the Trustee.
7
STANDARD OF REVIEW
“A bankruptcy court’s award of attorney fees will not be disturbed
unless the bankruptcy court abused its discretion or erroneously applied
the law.” Tevis v. Wilke, Fleury, Hoffelt, Gould & Birney, LLP (In re Tevis),
347
B.R. 679, 685 (9th Cir. BAP 2006). To determine whether the bankruptcy
court has abused its discretion, we conduct a two-step inquiry: (1) we
review de novo whether the bankruptcy court “identified the correct legal
rule to apply to the relief requested” and (2) if it did, we consider whether
the bankruptcy court’s application of the legal standard was illogical,
implausible, or without support in inferences that may be drawn from the
facts in the record. United States v. Hinkson,
585 F.3d 1247, 1262-63 & n.21
(9th Cir. 2009) (en banc).
DISCUSSION
A. The bankruptcy court may award reasonable compensation to
professionals providing services to the Trustee.
“Section 330(a)(1) provides that, after notice and a hearing, the court
may award to counsel for the trustee reasonable compensation for actual,
necessary services rendered and reimbursement for actual and necessary
expenses.” In re Tevis,
347 B.R. at 694. Section 330(a)(3) directs the
bankruptcy court to consider “the nature, the extent, and the value of such
services” as determined by factors including:
(A) the time spent on such services;
(B) the rates charged for such services;
8
(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, or task
addressed[.]
§ 330(a)(3)(A)-(D); see also § 330(a)(4) (prohibiting compensation for
“(ii) services that were not – (I) reasonably likely to benefit the debtor’s
estate; or (II) necessary to the administration of the case”); Roberts, Sheridan
& Kotel, P.C. v. Bergen Brunswig Drug Co. (In re Mednet),
251 B.R. 103, 108
(9th Cir. BAP 2000) (“A bankruptcy court also must examine the
circumstances and the manner in which services are performed and the
results achieved in order to arrive at a determination of a reasonable fee
allowance.”).
B. The bankruptcy court did not err in awarding fees to BBK.
Mr. Walker complains that BBK ran up its fees by “churning” the
case. We reject these arguments.
The bankruptcy court carefully reviewed BBK’s billing entries and
reduced its requested fees by approximately fifteen percent. It provided
clear reasons for its reductions and otherwise found the fees reasonable. In
particular, the bankruptcy court found that BBK reasonably incurred the
allowed fees in dealing with Mr. Walker’s obstructive and difficult
behavior. The bankruptcy court acted within its discretion, and we discern
9
no error.
1. Necessity of BBK’s work
Mr. Walker argues that BBK’s fees were excessive and unnecessary,
given that there was no distribution to unsecured creditors, and contends
that the rental property was liquidated merely to enrich the Trustee and his
professionals. We reject this argument.
Mr. Walker ignores the fact, acknowledged by his own counsel, that
BBK’s fees were incurred as a result of his own obstructive conduct: he
failed to cooperate with the Trustee, concealed his business and property
interests, and tried to prevent the Trustee from selling the rental property,
necessitating multiple motions for turnover, an order to show cause, and
further motions. The bankruptcy court did not err in determining that
BBK’s actions were necessary and reasonable given Mr. Walker’s
unreasonable posture.
Mr. Walker argues that he should not be punished for being a
“confused and frightened” pro se debtor who did nothing. But Mr. Walker
was represented by counsel for much of the proceedings, and his
intermittent pro se status is no reason to overlook his failure to cooperate
with the Trustee and comply with his responsibilities as a chapter 7 debtor.
See In re Morris, BAP No. NC-19-1071-FBG,
2019 WL 5846841, at *3 (9th Cir.
BAP Nov. 6, 2019) (“While courts construe pro se litigants’ filings liberally,
pro se litigants must still comply with all procedural rules and must
provide the information that is necessary to administer the bankruptcy case
10
and evaluate their entitlement to relief.”); § 521(a)(3) (the debtor shall
“cooperate with the trustee as necessary to enable the trustee to perform
the trustee’s duties”); Rule 4002(a)(4) (the debtor shall “cooperate with the
trustee in the preparation of an inventory, the examination of proofs of
claim, and the administration of the estate”). Furthermore, Mr. Walker did
not merely “do nothing”; he often strenuously opposed the Trustee’s
motions and sought to thwart the Trustee’s efforts to recover his
administrative expenses, thus forcing the Trustee and BBK to respond
accordingly.
2. Writ of assistance
Mr. Walker argues that the Trustee should have obtained a writ of
assistance and directed the U.S. Marshals Service to evict his tenants
quickly and inexpensively. Mr. Walker offers no support for the
astonishing proposition that “one hour of work” could have resulted in a
“simple” eviction “within a week.” He conveniently forgets that he resisted
turnover of the rental property and refused to give the Trustee information
about and access to the rental property. Mr. Walker did everything he
could to ensure that the process was not “simple.”
3. Fraud
Mr. Walker argues for the first time on appeal that BBK’s fee
application was false and fraudulent. He never made this contention in the
bankruptcy court. In fact, his own counsel told the bankruptcy court that
he did not contest the accuracy of the billing records. Mr. Walker has thus
11
waived this argument on appeal. See Padgett v. Wright,
587 F.3d 983, 985 n.2
(9th Cir. 2009) (we do not consider arguments and allegations raised for the
first time on appeal).
Even if we were to consider this argument, we would find no merit.
Mr. Walker did not identify any instance of fraud concerning BBK’s billing
records. Contrary to his assertions, the bankruptcy court never suggested
that the Trustee or BBK engaged in fraud. Although the court criticized
some of the billing entries, it later tempered its criticism and found the
remainder of BBK’s fees reasonable. This was not error.
C. The bankruptcy court did not err in awarding fees to the Trustee.
Mr. Walker argues (without support) that the Trustee ran up his bills.
We reject this argument for the same reasons stated above.
He also contends that the Trustee’s fees were limited by a statutory
maximum in § 326. However, Mr. Walker did not raise any objection in the
bankruptcy court on the basis that the Trustee’s fee exceeded the statutory
cap. He has waived this argument on appeal. See Padgett,
587 F.3d at 985
n.2. In any event, the Trustee’s fees, as documented in his final report,
comport with § 326. 4
4
Contrary to Mr. Walker’s hopes, § 326 does not limit BBK’s fees. That section
refers to compensation awarded to the case trustee, not his professionals. See § 326(a)
(“the court may allow reasonable compensation under section 330 of this title to the
trustee for trustee’s services”). Section 328, which governs compensation of
professionals, imposes no percentage cap.
12
CONCLUSION
The bankruptcy court did not err in its award of administrative
expenses to BBK or the Trustee. We AFFIRM.
13
