well next matter please now out of that thirty one dollars telson the st people to be paid as i understand the priority system would be the trustee of the trustees lawyer so we're going to as you know look the trustees lawyer and the trustee will no doubt charge much more than three thousand dollars in fees so if the settlement goes forward they will be paid st and  stay in the various other but i mean the commission isn't calculated on the care and the exemption either by statute so i don't think that that's the problem here i prime reason why this settlement should not go forward is that the amas chapman has an incentive to maximize the settlement for not only you know not only to make sure she recovers as much as she can personally but also to make sure that tax debts are paid to the extent they can be paid and that i think that gives her standing on the i'm not personally convinced that she doesn't have standing to be her but i also think the fiduciary has exactly that same incentive to maximize recovery as a compensation as a trustee is paid based on the amounts he distributes the more money he brings in the more money he sends out the more money he makes maximize the recovery to the state i am not quite sure that's how it works the trustees incentive has another incentive is if you tries to prosecute this case on an hourly basis  you know that will take up a large amount of time and a large amount of fees and it will also hold up the case in probably hold up the case in the way any recovery he may get paid quickly too but that gives them an incentive that is contrary to miss chats chapman's and sort of which is to litigate the adversary complaint for violation of the automatic stay to that but that argument that the kind the trustee in any trustees council is in conflict with every unsecured creditors well i because that you want to get paid you should just turn it because you're the top of the wine  i don't think that is going to bear a whole lot of weight well then then you have to explain we have to explain why you know why thirty one thousand dollars settlement that is not even the cost of defense settle been a case like i mean the the idea is you settle a case you settle a case and that you know and i don't mean to be flippant but you settle a case to avoid a risk and that's that's true in both sides but but i didn't want to get as much as you can witness who's credible who can get you beyond an early point in the case what are the legal infirmities you have and to see a lot of problems with this case it does not present i think the judge saw the problems and into the estate during the eleven he's got the right to proceed to prosecute it but it's their joint let's say that their joint interest in seeing it be pursued so what was it that it's not like her attorney went over and  representing the defendants correct no it's not like that ok so why is that side switching it is because of the because because in the peculiar bankruptcy context it puts information the trustees lawyer acquired from the donor the only way that's a problem is if he knows that her case is to use a technical legal term garbage at i mean you know if he knows i'm just talking about put that aside ok and let's say there is one but she did a you know she did an analysis and we're getting to twenty two separate so i'm going to finish this and then let you think about it she did an analysis that was sort of a classic a n c properties analysis way in the various risk in saying in effect i think this is within the realm of reason given what i know and i don't see anything in that record that is an overt fight and let me just say this will come out of your time i think those cases involve a slightly different situation where rather than an attorney with louis or what we're really talking about is potentially compensation issue and did he use confidential information when his client its is though your client became incompetent and a trustee was appointed for her in that capacity and he didn't use that information there on the maximized to those creditors and han't settlement would do that so does isn't that enough of a hook to get them in the door i don't believe so your honour's i have not found a case where a creditors planes being reduced would translate into a surplus for purposes of standing but isn't it generally if offshoot of the surplus that is going for the debtors benefit and it's somewhat context in that that claim is high enough the priority food chain that there may be a factual context where it would derive to the benefit but that's not the test i've seen in the cases or on the test i've seen is whether there is a net monetary recovery to the debtor that's the form rather than the substance because it is going for the debtors ultimate benefit was not going to wreck lead to this that or in this scenario it does relieve her of not dischargeable debt giving her a indirect in q neary benefit again your honour's all i can say is i've not seen any case which was applied or not way and it would seem to me odd to say well it's a surplus if the debtor is not actually getting the money if you were to take that approach all creditors who get a benefit no because i think george taylor has hit the nail on the head peculiar interest and i think it's you will exit bankruptcy in cumbered whatever the text did and you know if we didn't have a new not dischargeable death here you're right i also have to disagree with opposing counsel's characterization of the interest of the trustee and the trustees counsel of settling cases as quickly as possible my experience has been their interest is maximizing recovery i've never seen a trustee say wow i can get rid of this month now for less and earn less for myself in the state therefore i'm going to do that and move on unless of course it's because the year is such a significant risk factor in the case that the trustee is going to wind up with nothing it's not uncommon of course for debtors counsel in bankruptcy to wind up representing an arm's length good they've negotiation and as such we reached the settlement which it paid the problem of the alleged conflict if there is one at all is between represent us bank they they rip they stayed on the same side of the ledger exactly your honor and their remedy again is against the counsel if they find there's a problem and the case they side of us specifically said ok here we find there was a conflict or at least a potential conflict we're going to send it back to look at this a little more but the remedy is not invalidating the settlement the remedy is we're not to let the attorney get its fees the attorney will not benefit from the conflict but we're not throwing out the baby with the bathwater the debtor was of course represented by independent counsel inviting against the compromise and they argue conflict they did not show that there was an actual conflict they made general arguments there was no evidence of confidential knowledge that was used there was no evidence of a bias other than the debtor wanted a different result than the trustee did i have not found a single case in searching through westlaw which was invalidated a settlement based upon a claim of conflict the court also did  here the issue of course is the argument that there was a violation of the stand judge jury it mid that she had no authority for finding that seeking in rem relief was a violation was just seeking in room relief constitutes a violation of the state and there's a reason for that in rim really is different in rim really can apply to bar people who are not a part of the bankruptcy there was notice of the in room motion that was provided to the debtor sent to the property address where she supposedly worked in owned the property  she had the ability to go in and seek to challenge that interim relief she did not do so instead she filed this adversary proceeding if there are no other questions  you there actually is a case that voice a settlement when there is a conflict of interest it is not a bankruptcy case it is a california supreme court case dealing with the rules of professional responsibility and it's called bla supreme court held that you cannot enter into a settlement without the client's consent and therefore the settlement was void now said steve rules of professional responsibility in california are sort of incorporated into bankruptcy practice in the central district under so but in this case again the the client was the trustee in the trustee by virtue of acquiring control of the claim was the person whose consent had to be obtained that this could be could have been resolved quite simply with a conflict waiver i don't know why one was not done but be that as it may it is a classic conflict situation and you're going to see it's not a conflict is to basically say that there incentives are aligned in all situations the incentives of the debtor and the incentive of the trustee or law and in all situations and there is good in theory and certainly that is you know certainly that is the ideal reflected in these in the statutes but there were reality we have here is different there was a conflict maximize to get a greater recovery of the trustee had economic incentives to settle now rather than try to get together what we saw as economic incentives three thousand dollars was really do be split pro rata by the professors they was the settled this to get paid suggesting that this is the source of that payment so there's three thousand dollars if we are correct in i think we think we are that the exemption is going to go straight to your client ok so that seems to actually cut against your argument that they were so greedy that they needed to split up three thousand dollars rather that kind of seems to indicate that they didn't really think that was that great of a case other than they're willing to say the cases that was worth three thousand dollars worth less than three thousand dollars that the idea is i you know i'm not sure that i'm not sure that even though it's worth thirty one it's just that twenty eight of that's going to your client right  assumption here we can see in an ideal world you know the trustees it for us or the debtors interest or a line in typically that's true i would hope but this is not the ideal world this is the case we have seven situation where a debtor is injured pre partition and has an automobile accident claim that then the trustee has a right to control yes and then hires debtors lawyer to be the counsel for the trustee to settle the claim with the defendant and settles the claim for an amount that substantially less than the plaintiff wants this claim to settle for but the trustee believes it's fair and reasonable and pays it is much to the estate as he can get or she can get it doesn't that create the same situation that you're describing it happens in thousands of cases across the country every day it does your honor and there's a simple solution to it which i would have which i would do if i were the personal injury lawyer for the debtor i would get a conflict waiver from my quiet before entered and representation i'm not i'm not clear that that happens in every instance i'm i am a lawyer i'm just clear that it's a routine practice for the client like counsel for the for the debtor to actually work for the trustee because they are there could their interests are aligned now ultimately it may not satisfy the debtor but it's a a violation of the rules professional responsibility and i did you know i don't think that has to be done i think cos it wavered takes care of the problem that's what should have been done here and i think miss chapman probably would have given away if you like