FILED 1 ORDERED PUBLISHED JUL 25 2012 SUSAN M SPRAUL, CLERK 2 U.S. BKCY. APP. PANEL O F TH E N IN TH C IR C U IT 3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 6 In re: ) BAP No. ID-11-1389-MkHJu ) 7 ANDY N. SALGADO-NAVA, ) Bk. No. 09-41646 ) 8 Debtor. ) ) 9 ) R. SAM HOPKINS, Chapter 7 ) 10 Trustee, ) ) 11 Appellant, ) ) 12 v. ) O P I N I O N ) 13 ASSET ACCEPTANCE LLC; RECOVERY) MANAGEMENT SYSTEMS CORP.; ) 14 BONNEVILLE BILLING & ) COLLECTIONS; NCO PORTFOLIO ) 15 MANAGEMENT; EASTERN IDAHO RMC;) SPRINT NEXTEL CORRESPONDENCE; ) 16 AMERICAN INFOSOURCE LP, ) ) 17 Appellees.* ) ) 18 Argued and Submitted on June 14, 2012 19 at Boise, Idaho 20 Filed - July 25, 2012 21 Appeal From The United States Bankruptcy Court for the District of Idaho 22 23 * Appellant named all unsecured creditors who filed proofs of 24 claim in the debtor’s bankruptcy case as appellees. While none of them actively participated in the bankruptcy court proceedings 25 leading up to this appeal or in the appeal itself, naming them as appellees was not inappropriate because each of them might be 26 affected by the relief appellant seeks on appeal. See generally 27 Int’l Ass’n of Firefighters, Local 1186 v. City of Vallejo (In re City of Vallejo), 408 B.R. 280, 298-99 (9th Cir. BAP 2009) 28 (discussing criteria for appellee standing). 1 Honorable Jim D. Pappas, Bankruptcy Judge, Presiding 2 3 Appearances: Monte Gray of the Gray Law Offices, PLLC argued for appellant R. Sam Hopkins, chapter 7 trustee; 4 Ronald R. Peterson of Jenner & Block LLP argued for amici curiae Jeremy Gugino and the National 5 Association of Bankruptcy Trustees; and Cameron M. Gulden argued for amicus curiae the 6 Office of the United States Trustee. 7 8 Before: MARKELL, HOLLOWELL and JURY, Bankruptcy Judges. 9 MARKELL, Bankruptcy Judge: 10 11 INTRODUCTION 12 R. Sam Hopkins (“Hopkins”) sought $1,315.41 in fees for his 13 service as a chapter 71 bankruptcy trustee. He based his request 14 on the trustee compensation rates set forth in § 326(a). The 15 bankruptcy court, however, found that the reasonable value of his 16 services only amounted to $750 and limited Hopkins’s fees to that 17 amount. 18 We REVERSE the bankruptcy court’s fee award and REMAND with 19 instructions to enter a fee award of $1,315.41, the full amount 20 Hopkins requested. 21 FACTS 22 Andy N. Salgado-Nava (“Salgado-Nava”) commenced his 23 voluntary chapter 7 bankruptcy case by filing his bankruptcy 24 petition on October 22, 2009. Hopkins was then appointed to 25 26 1 Unless specified otherwise, all chapter and section 27 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and all Rule references are to the Federal Rules of Bankruptcy 28 Procedure, Rules 1001-9037. 2 1 serve as trustee for Salgado-Nava’s chapter 7 bankruptcy estate. 2 Hopkins initially determined that there were no non-exempt 3 assets to distribute to creditors. He thus categorized Salgado- 4 Nava’s case, in line with most chapter 7 cases, as a no-asset 5 case.2 Hopkins had reached his decision after performing a 6 number of tasks, including reviewing Salgado’s schedules, his 7 statement of financial affairs, his tax returns, and his 8 responses to Hopkins’s examination questions at the first meeting 9 of creditors held pursuant to § 341(a). Because of Hopkins’s no- 10 asset determination, creditors and other parties in interest were 11 told in January 2010 not to file proofs of claim in the case. 12 See Rule 2002(e). Hopkins’s only income expectation was a small 13 $60 fee.3 14 2 15 Approximately 90% of all chapter 7 cases are classified as no-asset cases. LOIS R. LUPICA , THE CONSUMER BANKRUPTCY FEE STUDY FINAL 16 REPORT 47 (2011), available at http://bapcpafeestudy.com/tag/final-report/ (last visited July 17 20, 2012) (finding 89.4% of chapter 7 cases after the 2005 Bankruptcy Code amendments are no-asset cases); see also W. 18 Clarkson McDow, Jr., Protecting the Integrity of the Bankruptcy 19 System in Chapter 7 No-Asset Cases, NABTALK (Fall 2001), available at 20 http://www.justice.gov/ust/eo/public_affairs/articles/docs/nabtal kfall2001.htm (last visited July 20, 2012) (estimating 21 approximately 96% of chapter 7 cases were no-asset cases). 22 That no-asset cases are all-too-common is underscored by Rule 2002(e), which allows trustees and clerks generally to tell 23 creditors to dispense with filing proofs of claim unless the creditors are later notified that there will be assets to 24 disburse. 25 3 In a no-asset case such as Salgado-Nava’s, Hopkins and all 26 other trustees receive only a $60 fee, regardless of how much work is undertaken. § 330(b)(1) & (2). This amount has not 27 changed since 1994, and Congress has not made this amount subject to the Code’s provision indexing various amounts for inflation. 28 (continued...) 3 1 But Hopkins had also sent routine notices to various taxing 2 authorities, including the State of Idaho. These notices told of 3 Salgado-Nava’s bankruptcy filing. They also requested that the 4 recipients advise Hopkins of any tax refunds owed to Salgado- 5 Nava, as Hopkins claimed that such refunds were property of the 6 bankruptcy estate under § 541. 7 These notices brought results. As it turned out, Salgado- 8 Nava had overpaid his state taxes for 2009 and 2010 by 9 approximately $10,000. In compliance with the notices, Idaho 10 sent Hopkins Salgado-Nava’s tax refunds. Hopkins then withdrew 11 his no-asset report. He also issued a new notice advising 12 creditors that there might be a distribution of assets and 13 directing them to file proofs of claim in order to share in that 14 distribution. Seven creditors, appellees here, did so. 15 After Hopkins received the tax refunds, Salgado-Nava amended 16 his bankruptcy schedules to list the tax refunds as assets and to 17 claim $4,160 of his 2009 refund as exempt. No one contested 18 Salgado-Nava’s exemption claim. As a consequence, the exemption 19 was deemed allowed pursuant to § 522(l) and Rule 4003(b). Part 20 of his 2010 refund also was excluded from the estate.4 21 When all was said and done, Hopkins collected $11,099 in 22 assets. He paid $5,445 to Salgado-Nava in respect of his allowed 23 exemptions, which left $5,654 available to pay creditor dividends 24 3 (...continued) 25 See § 104. 26 4 Hopkins paid Salgado-Nava $1,285 of the 2010 refund because 27 he determined that it had accrued postpetition, and thus was not property of the estate as it related to postpetition service 28 income. See § 541(a)(6). 4 1 and Hopkins’s chapter 7 trustee fees and expenses. Based on the 2 trustee compensation rates set forth in § 326(a),5 Hopkins filed 3 a request in March 2011, along with his Final Report, asking the 4 bankruptcy court to award him fees in the amount of $1,315.41, 5 plus actual expenses of $46.10.6 6 Before hearing the matter, the bankruptcy court requested 7 Hopkins provide additional information. Specifically, the court 8 requested Hopkins file: 9 a sworn affidavit in support of his requested compensation and expenses which includes an itemization 10 setting for[th] the date and time spent providing all services rendered by Trustee for which he seeks 11 compensation, together with a narrative discussion or explanation of any other information he wishes the 12 Court to consider in support of his application. 13 Order to Trustee to File Supplementation of Record (April 12, 14 2011) at p. 1. 15 In response, Hopkins filed a one-page document entitled 16 “Supplement to Trustee Fee Application,” which provided a brief 17 narrative summary of the services that Hopkins had provided in 18 5 19 Those rates are based on amounts disbursed or turned over by the trustee to parties in interest other than the debtor 20 according to the following schedule: 25% of the first $5,000 or less; 10% for amounts in excess of $5,000 but not in excess of 21 $50,000; 5% for amounts in excess of $50,000 but not in excess of 22 $1,000,000; and 3% for amounts in excess of $1,000,000. See § 326(a). 23 6 The Idaho district court had jurisdiction over the fee 24 request as a matter “arising under” title 11, 28 U.S.C. § 1334(b), and then referred to the bankruptcy court from the 25 district court under the district court’s general order of 26 reference permitted by 28 U.S.C. § 157(a). THIRD AMENDED GENERAL ORDER NO. 38 (D. Idaho April 24, 1995). The fee request was a 27 core matter under 28 U.S.C. § 157(b)(2)(A), and thus the bankruptcy court could hear and determine the matter under 28 28 U.S.C. § 157(b)(1). 5 1 the bankruptcy case. It also summarized the results of those 2 services: Hopkins had cash on hand which he estimated would be 3 sufficient, after the payment of his requested trustee’s fees, to 4 pay $4,292 to unsecured creditors who had filed proofs of claim. 5 This would result in a 39% dividend to creditors. 6 The Trustee also filed time records detailing the amount of 7 time and services he and his staff had performed in the 8 bankruptcy case. According to Hopkins, he and his staff spent 9 approximately 14 hours on the case: Hopkins personally spent 10 3 hours, his bankruptcy administrator spent 6 hours, his office 11 clerk spent 1 hour, and his paralegals accounted for the final 12 4 hours. 13 After the hearing, the bankruptcy court issued a memorandum 14 decision awarding Hopkins only $750 of the $1,315.41 in fees 15 requested. Relying on In re B & B Autotransfusion Servs., Inc., 16 443 B.R. 543 (Bankr. D. Idaho 2011), and on the other cases cited 17 in B & B, the court held that $750 was a reasonable fee for 18 Hopkins’s services. According to the court, based on its 19 consideration of the extent and difficulty of the services 20 Hopkins and his paralegals had provided, the requested fees were 21 unreasonable. In making this determination, the court reasoned: 22 The only assets requiring administration by Trustee in this case were Debtor’s tax refunds. Trustee has not 23 shown that any significant efforts on his part were required to secure the refunds from Debtor; apparently, 24 Debtor surrendered them to Trustee promptly. Beyond accepting and holding the tax refunds, Trustee was 25 required to perform only routine, simple administrative tasks in this case. While all of those services are 26 compensable (i.e., actual and necessary), they required no special skills or expertise, and required no 27 significant amounts of time to complete. Indeed, most of those services were not performed personally by 28 Trustee at all, but, instead, were provided by 6 1 Trustee’s support staff of “paralegals” and others. . . . When the Court focuses upon only those 2 services of Trustee and his paralegals, and assigns appropriate reasonable value to those services, the 3 requested fee is not a reasonable one. 4 Mem. Dec. (June 23, 2011) at pp. 3-4 (footnote omitted). 5 In addition, the bankruptcy court rejected Hopkins’s 6 argument that, under § 330(a)(7), he should receive $1,315.41 in 7 fees as a commission based on the compensation rates set forth in 8 § 326(a). As the court put it, § 326(a) in essence “caps” 9 trustee compensation but does not alter or limit the court’s duty 10 and authority to determine a reasonable fee. 11 On June 30, 2011, the bankruptcy court entered its order 12 approving Hopkins’s Final Report and awarding Hopkins $750 in 13 fees and $46.10 in expenses. The Trustee timely filed a notice 14 of appeal on July 13, 2011, which gave us jurisdiction under 28 15 U.S.C. § 158(b). 16 DISCUSSION 17 A. Standard of Review 18 Although this Panel reviews a bankruptcy court’s fee award 19 pursuant to § 330(a) for abuse of discretion, Ferrette & Slater 20 v. U.S. Trustee (In re Garcia), 335 B.R. 717, 723 (9th Cir. BAP 21 2005), we still must “determine de novo whether the [bankruptcy] 22 court identified the correct legal rule to apply to the relief 23 requested.” United States v. Hinkson, 585 F.3d 1247, 1262 (9th 24 Cir. 2009) (en banc). And that is the issue here: what is the 25 “correct legal rule” set forth in § 330(a)(7)? 26 B. Interpreting § 330(a)(7) 27 We start with the paragraph’s provenance. Congress added 28 § 330(a)(7) when it adopted § 407 of the Bankruptcy Abuse 7 1 Prevention and Consumer Protection Act of 2005, Pub. L. 109-8, 2 § 407, 119 Stat. 23, 106 (2005) (“BAPCPA”). To determine what 3 this new paragraph means and what it added, we begin with the 4 text of the statute itself. Ransom v. FIA Card Servs., N.A., ––- 5 U.S. ––--, 131 S. Ct. 716, 723–24, 178 L. Ed. 2d 603 (2011) 6 (quoting United States v. Ron Pair Enters., Inc., 489 U.S. 235, 7 241 (1989)). 8 Section 330(a)(7) provides: 9 In determining the amount of reasonable compensation to be awarded to a trustee, the court shall treat such 10 compensation as a commission, based on section 326. 11 Somewhat surprisingly, the published decisions construing this 12 paragraph conclude that it added little to the law of trustee 13 compensation. These decisions rest primarily on the view that 14 trustee compensation is always subject to a review for 15 reasonableness. See, e.g., In re B & B Autotransfusion Servs., 16 Inc., 443 B.R. 543, 550 (Bankr. D. Idaho 2011); In re Healy, 440 17 B.R. 834, 835-36 (Bankr. D. Idaho 2010); In re Ward, 418 B.R. 18 667, 675-78 (W.D. Pa. 2009); In re Coyote Ranch Contractors, LLC, 19 400 B.R. 84, 94-95 (Bankr. N.D. Tex. 2009); In re McKinney, 383 20 B.R. 490, 493-94 (Bankr. N.D. Cal. 2008); In re Phillips, 392 21 B.R. 378, 389-90 (Bankr. N.D. Ill. 2008) In re Mack Props., Inc., 22 381 B.R. 793, 799 (Bankr. M.D. Fla. 2007); In re Clemens, 349 23 B.R. 725, 729-31 (Bankr. D. Utah 2006). 24 There is, however, an alternate view of § 330(a)(7). This 25 view, adopted by the Office of the United States Trustee,7 26 7 27 Trustee Compensation, in FREQUENTLY ASKED QUESTIONS (FAQS ) FOR TRUSTEES (2006), available at 28 (continued...) 8 1 focuses on § 330(a)(7)’s terms – particularly the use of the term 2 “commission” – which seem to alter the court’s role in reviewing 3 trustee compensation. See Kenneth N. Klee & Brendt C. Butler, 4 The Bankrutpcy Abuse Prevention and Consumer Protection Act of 5 2005 – Business Bankruptcy Amendments, 28 CAL . BANKR . J. 270, 336 6 (2006) (stating that § 330(a)(7) is “supposed to ensure that the 7 court will award compensation to a trustee on a commission basis 8 using the upper limit in section 326 as a standard”); see also 9 Tally M. Wiener & Nicholas B. Malito, On the Nature of the 10 Chapter 7 Bankruptcy Trustee Fee, 18 NORTON J. BANKR . L. & PRAC . 11 No. 2, Art. 3 (2009) (“The nature of the Chapter 7 trustee fee 12 under the revised Bankruptcy Code is that it is a commission. It 13 makes sense from a policy perspective to award Chapter 7 trustees 14 commission-based awards because this method of compensation 15 focuses on results achieved.”); Samuel K. Crocker & Robert H. 16 Waldschmidt, Impact of the 2005 Bankruptcy Amendments on Chapter 17 7 Trustees, 79 AM. BANKR . L.J. 333, 364 (2005) (stating that 18 § 330(a)(7) “appears to overrule the circuit court decisions 19 which have computed trustee compensation pursuant to the lodestar 20 method, adjusted by enhancing factors such as the complexity of 21 the case and extraordinary results.”). 22 1. Parsing § 330(a)(7) 23 It is against this background of published cases, 24 administrative commentary, and academic opinion that we interpret 25 § 330(a)(7). On its face, § 330(a)(7) is made up of an 26 7 27 (...continued) http://www.justice.gov/ust/eo/bapcpa/trustees_faqs.htm#trust_issue4 28 (last visited July 20, 2012). 9 1 introductory dependent clause – “In determining the amount of 2 reasonable compensation to be awarded to a trustee” – followed by 3 an independent clause – “the court shall treat such compensation 4 as a commission, based on section 326.” In reading this 5 statutory directive, we think the most natural reading of this 6 provision is that the independent clause states a mandatory rule, 7 while the dependent clause states when that rule applies. 8 a. The Commission Clause 9 If this reading is accepted, it means that we should start 10 with the independent clause – which we will call the commission 11 clause. On its face, this clause requires bankruptcy courts to 12 treat a trustee’s fee request as if the trustee were requesting 13 payment of a commission – a fixed amount – based on the rates set 14 forth in § 326. If correct, this reading would change our prior 15 view that § 326 simply “capped” trustee compensation by setting 16 forth maximum compensation rates. See Arnold v. Gill (In re 17 Arnold), 252 B.R. 778, 788 n.12 (9th Cir. BAP 2000). 18 This change is warranted. Congress’s addition of the 19 commission clause changed both the function of § 326 and its 20 relationship with § 330(a). The amendment fixed a statutory 21 commission for chapter 7 trustees tied to – or, in the language 22 of the last provision of the commission clause, “based on” – 23 § 326’s compensation scheme. 24 No other reading of the phrase “based on section 326" seems 25 plausible, especially given the use of the word “commission.” If 26 Congress did not want to link a trustee’s commission to the rates 27 set forth in § 326, it could have ended the commission clause 28 after the word “commission;” that is, it could have omitted the 10 1 phrase “based on section 326.” Or it could have created a new 2 and separate list of commission rates. Moreover, if Congress had 3 merely meant to reiterate in § 330(a)(7) that a trustee’s 4 commission was subject to the caps set forth in § 326, it could 5 have used the phrase “subject to section 326.” For an example of 6 how that phrasing would work, one only has to look at § 330(a)(1) 7 (“subject to section[] 326, . . . the court may award . . .”). 8 But Congress chose to use different words to refer to § 326 9 in §§ 330(a)(1) and (a)(7). The use of different words 10 presumably means that Congress intended that the different words 11 had different meanings and effects. See Sosa v. Alvarez–Machain, 12 542 U.S. 692, 711 n.9 (2004). Put another way, standard canons 13 of statutory interpretation require us to give “based on section 14 326" a different interpretation from one we would give if the 15 phrase read, as its cognate phrase in § 330(a)(1) does, “subject 16 to section 326.” In short, we follow established precedent by 17 giving each word and provision of the commission clause meaning. 18 See Corley v. United States, 556 U.S. 303, 314 (2009) (“[a] 19 statute should be construed so that effect is given to all its 20 provisions, so that no part will be inoperative or superfluous, 21 void or insignificant . . .” (internal quotation marks omitted)); 22 see also Meyer v. Renteria (In re Renteria), 470 B.R. 838, 843 23 (9th Cir. BAP 2012) (interpreting § 1322(b)(1) so as to give 24 effect to all of the words and phrases in the statute). 25 That said, we need to examine the remainder of the 26 commission clause, including the relationship the phrase “based 27 on” has to the word “commission” and, in turn, the meaning of the 28 word “commission.” One key indicator of the substantive 11 1 relationship among these terms and phrases is indicated by the 2 spatial relationship of each in the statute’s text. The words 3 “based on” follow the main portion of the commission clause, a 4 placement and ordering which generally means that the former 5 limits, qualifies or refines the meaning of the latter. See In 6 re Renteria, 470 B.R. at 842 (citing 2A NORMAN J. SINGER , SUTHERLAND 7 ON STATUTORY CONSTRUCTION § 47.33 (7th ed. 2011) (explaining the rule 8 of the last antecedent). In short, the use of “commission” 9 before the words “based on” indicates that the normal meaning of 10 commission starts the analysis of the main text, with the 11 addition of “based on section 326" indicating a refinement or 12 limitation of that accepted meaning. 13 Turning to the accepted meaning of “commission” in normal 14 parlance, a “commission” is a form of compensation set as a fixed 15 percentage of what is sold or transferred. See BLACK ’S LAW 16 DICTIONARY 306 (9th ed. 2009) (defining commission as “[a] fee 17 paid to an agent or employee for a particular transaction, 18 usu[ally] as a percentage of the money received from the 19 transaction .”); OXFORD ENGLISH 20 DICTIONARY (2d ed. 1989), available at 21 http://www.oed.com/view/Entry/37135 (last visited July 20, 2012) 22 (defining commission as “[a] remuneration for services or work 23 done as agent, in the form of a percentage on the amount involved 24 in the transactions; a pro rata remuneration to an agent or 25 factor.”). 26 Outside of bankruptcy, commissions generally are not subject 27 to a review for reasonableness unless an agreed-upon commission 28 rate is not duly fixed before the commission is earned. As 12 1 stated in the Restatement (Third) of Agency: 2 The amount of compensation due may be determined by the terms of agreement between principal and agent and may 3 be fixed in amount or made contingent on whether the agent achieves stated outcomes or on other 4 criteria. . . . If an agent has a right to be paid compensation by a principal but the amount due cannot 5 be determined on the basis of the terms of the parties’ agreement, the agent is entitled to the value of the 6 services provided by the agent. 7 RESTATEMENT (THIRD ) OF AGENCY § 8.13, Comment d (2006).8 8 Much the same analysis applies in bankruptcy when, for 9 example, a court pre-approves a professional’s percentage-based 10 fee or a contingency fee arrangement before the work is 11 performed. See § 328. If the fee arrangement is properly 12 authorized under § 328, the bankruptcy court does not conduct a 13 standard § 330(a) reasonableness review of contingency fees or 14 percentage-based fees it has pre-approved under § 328. See 15 Friedman Enters. v. B.U.M. Int’l, Inc. (In re B.U.M. Int’l, 16 Inc.), 229 F.3d 824, 829 (9th Cir. 2000) (citing Pitrat v. 17 Reimers (In re Reimers), 972 F.2d 1127, 1128 (9th Cir. 1992)); 18 see also In re Confections by Sandra, Inc., 83 B.R. 729, 731-32 19 (9th Cir. BAP 1987). Indeed, a bankruptcy court only can disturb 20 such pre-approved fees when it finds that the pre-approval of 21 such fees turned out to be “improvident in light of developments 22 not capable of being anticipated at the time” the court fixed the 23 fees. § 328(a); see also In re Reimers, 972 F.2d at 1128. 24 8 This concept is not new to the law of agency. Both the 25 Restatement (Second) of Agency and the initial Restatement of 26 Agency articulate the same concept and reference cases and annotations reflecting the existence of this concept. See 27 RESTATEMENT (SECOND ) OF AGENCY § 443 (1958) and accompanying comments, annotations and cases; RESTATEMENT OF AGENCY § 443 (1933) and 28 accompanying comments, annotations and cases. 13 1 As a result of this analysis, the plain language of the 2 commission clause leads us to conclude that § 330(a)(7) sets 3 commissions for bankruptcy trustees based on the rates set forth 4 in § 326. Given this, if the commission clause stood alone, 5 independent of the rest of § 330, we could immediately hold that 6 trustee fees should not be disturbed absent circumstances like 7 those required in order to disturb fees pre-approved under § 328, 8 or like the circumstances that might justify reformation or 9 rescission of a commission agreement outside of bankruptcy. 10 b. Section 330(a)(7)’s Dependent Clause 11 But the commission clause does not stand alone. We still 12 must construe the remainder of § 330(a)(7), because ascertaining 13 the plain meaning of statutory text requires a contextual 14 reading. State Comp. Ins. Fund v. Zamora (In re Silverman), 616 15 F.3d 1001, 1006 (9th Cir. 2010) (“To determine plain language we 16 consider the language itself, the specific context in which that 17 language is used, and the broader context of the statute as a 18 whole.” (internal quotation marks omitted)); Carpenters Health & 19 Welfare Trust Funds for Cal. v. Robertson (In re Rufener Constr., 20 Inc.), 53 F.3d 1064, 1067 (9th Cir. 1995) (“When we look to the 21 plain language of a statute in order to interpret its meaning, we 22 do more than view words or sub-sections in isolation. We derive 23 meaning from context, and this requires reading the relevant 24 statutory provisions as a whole.”) 25 This requires us to look at the dependent clause that 26 immediately precedes the commission clause. Its wording and 27 placement suggests that bankruptcy courts still must consider the 28 reasonableness of trustee fees because it specifies that 14 1 bankruptcy courts must apply the commission clause “in 2 determining the amount of reasonable compensation to be awarded 3 to a trustee . . . .” We should not ignore the contents of this 4 dependent clause any more than we should ignore the contents of 5 the commission clause itself.9 6 The starting place for a reasonableness analysis component 7 of trustee compensation might be § 330(a)(3). Before BAPCPA’s 8 enactment in 2005, § 330(a)(3) required bankruptcy courts, when 9 considering the reasonableness of all trustee fees under all 10 relevant chapters, including chapters 7, 11, 12, and 13, to 11 consider: 12 (A) the time spent on such services; 13 (B) the rates charged for such services; 14 (C) whether the services were necessary to the administration of, or beneficial at the time at which 15 the service was rendered toward the completion of, a case under this title; 16 (D) whether the services were performed within a 17 reasonable amount of time commensurate with the complexity, importance, and nature of the problem, 18 issue, or task addressed; and 19 (E) whether the compensation is reasonable based on the customary compensation charged by comparably skilled 20 practitioners in cases other than cases under this title. 21 22 BAPCPA changed this. It amended § 330(a)(3) so that the 23 only types of trustees that come within its ambit are chapter 11 24 trustees; chapter 7 trustees no longer are subject to its terms. 25 BAPCPA, Pub. L. 109-8, § 407, 119 Stat. 23, 106 (2005). As a 26 9 27 Nor can we ignore the language in § 326 and elsewhere in § 330(a) indicating that bankruptcy courts are authorized to 28 award trustee fees only to the extent those fees are reasonable. 15 1 consequence, the factors of reasonableness specified in paragraph 2 (3) no longer directly apply to chapter 7 trustees such as 3 Hopkins when reviewing their fee requests. 4 Section 330(a)(7), however, applies to all trustees under 5 all chapters. This indicates a shift in treatment and analysis 6 of chapter 7 trustee fees from paragraph (3) and its catalogue of 7 factors, to paragraph (7) and its explicit incorporation of 8 commission rates. 9 But the shift was not complete. Notwithstanding the 10 applicability of paragraph (7) to chapter 11 trustees, they are 11 still specifically included in paragraph (3) with its litany of 12 reasonableness factors. As a result, we cannot construe 13 paragraph (7) to require a fixed commission in all cases 14 regardless of chapter. Otherwise, we would create an absurd 15 situation in which § 330(a)(3) requires what § 330(a)(7) 16 prohibits. 17 This requires us to search for an interpretation of the 18 § 330(a)(7) that harmonizes the various provisions. See, e.g., 19 Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 20 644, 661-66 (2007); Mountain States Tel. & Tel. Co. v. Pueblo of 21 Santa Ana, 472 U.S. 237, 249 (1985). In this endeavor, it is not 22 our role to pick and choose between statutory provisions and only 23 give effect to some of them. See Nigg v. U.S. Postal Serv., 555 24 F.3d 781, 785-86 (9th Cir. 2009) (citing Morton v. Mancari, 417 25 U.S. 535, 551 (1974)).10 26 10 27 If either provision had to give way, it would be § 330(a)(3). As later enacted and more specific, § 330(a)(7) 28 (continued...) 16 1 c. Synthesis: Fixed Commissions for Non-extraordinary Duties 2 3 The challenge is, if possible, to give a meaning to both 4 § 330(a)(3) and § 330(a)(7) that can be applied in all cases 5 regardless of the applicable chapter.11 In the process, we must 6 try to minimize any potential conflict between the two 7 provisions. Fortunately, non-bankruptcy federal law suggests a 8 possible solution. There are certain instances outside of 9 bankruptcy when federal law requires federal agencies and federal 10 courts to consider the reasonableness of percentage-fee or 11 commission-based compensation. See Bjustrom v. Trust One Mortg. 12 Corp., 322 F.3d 1201, 1207-08 (9th Cir. 2003) (applying a two- 13 part test developed by the U.S. Dept. of Housing and Urban 14 Development to determine whether certain fees paid to mortgage 15 brokers were reasonable and hence permissible under § 8(c) of the 16 Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. 17 § 2607(c)); Schuetz v. Banc One Mortg. Corp., 292 F.3d 1004, 1014 18 19 20 21 10 (...continued) 22 would be entitled to primacy. See Bulova Watch Co. v. United States, 365 U.S. 753, 758 (1961). 23 11 We could give an alternate and plausible meaning to both 24 § 330(a)(3) and § 330(a)(7) if we were to assume that Congress actually meant for § 330(a)(7) to apply to all trustees except 25 chapter 11 trustees, who would be subject only to § 330(a)(3). 26 But we cannot assume that Congress inadvertently included chapter 11 trustees within the scope of § 330(a)(7). If Congress’s 27 inclusion of chapter 11 trustees in § 330(a)(7)’s coverage was inadvertent, it is up to Congress to fix the statute. See Lamie 28 v. U.S. Trustee, 540 U.S. 526, 542 (2004). 17 1 (9th Cir. 2002) (same);12 see also Bank of Lexington & Trust Co. 2 v. Vining-Sparks Sec., Inc., 959 F.2d 606, 613-14 (6th Cir. 1992) 3 (applying test articulated by Municipal Securities Rulemaking 4 Board to determine whether securities broker’s markup on certain 5 securities constituted an unreasonable and hence fraudulent fee 6 under the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), 7 and under SEC Rule 10b-5).13 8 While these types of reasonableness reviews vary somewhat, 9 their overarching purpose is consistent and clear: to determine 10 whether there is a rational relationship between the duties to be 11 compensated by the commission rate and the nature and range of 12 services actually provided. When a rational relationship exists, 13 the fee is presumed reasonable. Moreover, in each of these 14 instances, federal courts applied standards that did not require 15 a lodestar analysis to determine the reasonableness of the fees 16 in question. 17 We acknowledge that these nonbankruptcy commission cases are 18 12 19 The Bjustrom/Schuetz test provides that a mortgage broker’s fees are reasonable for purposes of RESPA § 8(c) when: 20 “(1) the mortgage broker performed services that contributed to the transaction, and (2) . . . the total compensation received by 21 the mortgage broker . . . was reasonably related to the services 22 provided.” Bjustrom, 322 F.3d at 1207 (citing Schuetz, 292 F.3d at 1006). 23 13 The Bank of Lexington test “requires brokers to sell 24 municipal securities at a price that is ‘fair and reasonable, taking into consideration all relevant factors, including the 25 best judgment of the broker . . . as to the fair market value . . 26 . , the expense involved in effecting the transaction, the fact that the broker . . . is entitled to a profit, and the total 27 dollar amount of the transaction.’” Bank of Lexington & Trust Co., 959 F.2d at 613 (quoting Municipal Securities Rulemaking 28 Board Manual-General Rules, G-30 (CCH) ¶ 3646 (1985)). 18 1 not directly comparable with § 326’s commission rates. Most 2 significantly, Congress has set chapter 7 trustee commission 3 rates rather than the market. But we know of no reason why 4 courts should second-guess Congress’s clearly expressed intent to 5 fix trustee commission rates for the vast majority of cases, 6 especially given that Congress has set the duties that trustees 7 such as Hopkins must perform to earn that commission. 8 Accordingly, absent extraordinary circumstances, chapter 7, 9 12 and 13 trustee fees should be presumed reasonable if they are 10 requested at the statutory rate. Congress would not have set 11 commission rates for bankruptcy trustees in §§ 326 and 330(a)(7), 12 and taken them out of the considerations set forth in 13 § 330(a)(3), unless it considered them reasonable in most 14 instances. Thus, absent extraordinary circumstances, bankruptcy 15 courts should approve chapter 7, 12 and 13 trustee fees without 16 any significant additional review. Indeed, the Office of the 17 United States Trustee has indicated that it will not object in 18 these circumstances if the trustee does not even keep 19 contemporaneous time records.14 20 21 14 The statement appears on the United States Trustee’s web site in the form of a Frequently Asked Question on Trustee 22 Compensation as follows: 23 Q: Are time records necessary to support a trustee’s compensation? 24 A: United States Trustees will not require a trustee to provide time records to support trustee 25 compensation with regard to cases filed after October 26 17, 2005. It may, however, be prudent for a trustee to keep time records to address objections raised by other 27 parties or to satisfy requirements of the court. FREQUENTLY ASKED QUESTIONS (FAQS ) FOR TRUSTEES , available at 28 (continued...) 19 1 Against this background, we must assume that Congress 2 already has approved fees set as commissions in § 326 as 3 reasonable for the duties it has set out for such trustees in 4 § 704 and elsewhere in the Code. In effect, Congress has set 5 both the duties of a trustee and the “market” rate for 6 compensation related to the delivery of those services. 7 On the other hand, if extraordinary circumstances exist, or 8 if chapter 11 trustee fees are at issue, the bankruptcy court may 9 be called upon in those cases to determine whether there exists a 10 rational relationship between the amount of the commission and 11 the type and level of services rendered. In the case of a 12 chapter 11 trustee, this determination necessarily requires 13 consideration of the § 330(a)(3) factors, and also ordinarily 14 includes a lodestar analysis. As for chapter 7, 12, and 13 15 trustee fees, when confronted with extraordinary circumstances, 16 the bankruptcy court’s examination of the relationship between 17 the commission rate and the services rendered may, but need not 18 necessarily include, the § 330(a)(3) factors and a lodestar 19 analysis. But bankruptcy courts still must keep in mind that 20 tallying trustee time expended in performing services and 21 multiplying that time by a reasonable hourly rate ordinarily is 22 beyond the scope of a reasonableness inquiry involving 23 commissions. Simply put, a bankruptcy court that diminishes a 24 trustee’s compensation from the statutorily-set rate errs if the 25 only basis offered for this diminution is a lodestar analysis. 26 14 27 (...continued) http://www.justice.gov/ust/eo/bapcpa/trustees_faqs.htm#trust_issue4 28 (last visited July 20, 2102). 20 1 Although the legislative history is silent on the specific 2 meaning and purpose of § 330(a)(7), our construction of 3 § 330(a)(7) generally is consistent with the overall purpose of 4 § 330, pursuant to which Congress sought to balance the general 5 bankruptcy interest of conserving estate assets with the goal of 6 fairly compensating bankruptcy trustees and professionals.15 7 Especially now, when the most a chapter 7 trustee can expect in 8 90% of his or her cases is a flat $60 fee, a commission-based 9 system for the other 10% has a certain symmetry to it. Under the 10 system as Congress envisaged it, competent individuals with 11 marketable skills and experience will have incentives to work in 12 the bankruptcy area. In that sense, § 330(a)(7) represents 13 Congress’s latest effort to balance various competing policy 14 interests with respect to the work assigned and the compensation 15 paid to chapter 7 trustees. 16 C. Applying § 330(a)(7) to This Case 17 Based on the law set forth above, the bankruptcy court erred 18 in determining Hopkins’s fees. The bankruptcy court did not 19 treat Hopkins’s compensation as a commission based on § 326(a). 20 Instead, the court compared the fees requested to what it 21 considered a reasonable rate of compensation for the time Hopkins 22 and his paralegals actually spent working on the case. The court 23 offered no other grounds for its decision. In short, the 24 bankruptcy court substituted a different standard for the 25 15 26 For a detailed discussion of this legislative history, see Burgess v. Klenske (In re Manoa Fin. Co.), 853 F.2d 687, 689-90 27 (9th Cir. 1988) (citing H.R. Rep. No. 95-595, at 329-30 (1978), reprinted in 1978 U.S.C.C.A.N. 5963, 6286; and, 124 Cong.Rec. 28 33,994 (1978), reprinted in 1978 U.S.C.C.A.N. 6505, 6511). 21 1 appropriate method and rate of compensation for Hopkins in place 2 of the method and rate set by Congress. 3 When the bankruptcy court does not select and apply the 4 correct law, we typically remand so that the bankruptcy court can 5 apply the correct law to the facts of the case. However, an 6 appellate court may decide a case on the facts previously found 7 when the record is sufficiently developed and there is no doubt 8 as to the appropriate outcome. See, e.g., Wharf v. Burlington N. 9 R.R. Co., 60 F.3d 631, 637 (9th Cir. 1995); see also Weisgram v. 10 Marley Co., 528 U.S. 440, 456 (2000); Cuddeback v. Florida Bd. of 11 Educ., 381 F.3d 1230, 1236 n.5 (11th Cir. 2004). 12 In this instance, no further proceedings are necessary to 13 apply the facts to the correct law. The record is complete and 14 establishes that there was nothing unusual, let alone 15 extraordinary, about the bankruptcy case or Hopkins’s services.16 16 17 16 We thus leave for another day the issue of what facts might qualify as extraordinary for purposes of activating the 18 bankruptcy court’s duty to determine the reasonableness of the 19 § 326(a) commission rates. Cf. Trustee Compensation, in the United States Trustee’s 20 Frequently Asked Questions about trustee compensation: Q: Is a trustee entitled to full statutory trustee 21 fees in all circumstances? A: 11 U.S.C. § 330(a)(7) provides that the trustee 22 fee is to be “treated as a commission.” Absent 23 extraordinary factors, the United States Trustee will not object to a trustee receiving full commission on 24 all “moneys disbursed or turned over in the case by the trustee to parties in interest, excluding the debtor, 25 but including holders of secured claims.” Extraordinary 26 factors are expected to arise only in rare and unusual circumstances and include situations such as where the 27 trustee’s case administration falls below acceptable standards, or where it appears a trustee has delegated 28 (continued...) 22 1 Indeed, the bankruptcy court described both the case and 2 Hopkins’s services as “routine.” Based on the law we have 3 articulated above, we are left with no doubt that, on these 4 facts, the court should have awarded Hopkins $1,315.41 in fees – 5 the full amount Hopkins had requested based on the compensation 6 rates set forth in § 326(a). 7 CONCLUSION 8 For the reasons set forth above, we REVERSE the bankruptcy 9 court’s fee award and REMAND this matter, with an instruction to 10 enter a new fee award in the full amount requested by Hopkins, 11 $1,315.41. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 16 (...continued) 26 a substantial portion of his duties to an attorney or other professional. 27 FREQUENTLY ASKED QUESTIONS (FAQS ) FOR TRUSTEES , available at http://www.justice.gov/ust/eo/bapcpa/trustees_faqs.htm#trust_issue4 28 (last visited July 20, 2012). 23