Kathryn R. Montgomery, Esq., AUST (Va. Bar No. 42380)

Shannon Pecoraro, Esq. (Va. Bar No. 46864)

Jason B. Shorter, Esq. (Va. Bar No. 80989)

Office of the United States Trustee

701 East Broad Street - Suite 4304

Richmond, VA 23219

Telephone (804) 771-2310

Facsimile (804) 771-2330

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA 

(Richmond Division)

In re:

CIRCUIT CITY STORES, INC., et al.,

Debtors. 

ALFRED H. SIEGEL, Trustee of the Circuit 

City Stores, Inc. Liquidating Trust, 

Plaintiff,

v. 

UNITED STATES TRUSTEE PROGRAM, 

et al., 

Defendants. 

Case No. 08-35653 (KRH) 

Chapter 11 

(Jointly Administered)

Adversary Case No. 19-03091 (KRH)

NOTICE OF APPEAL AND STATEMENT OF ELECTION

Part 1: Identify the appellant(s)

1. Name(s) of appellant(s):

John P. Fitzgerald, III, Acting United States Trustee for Region 4, United States Trustee 

Program, Ramona D. Elliott, Acting Director 

2. Position of appellant(s) in the adversary proceeding or bankruptcy case that is the subject 

of this appeal:

For appeals in an adversary 

proceeding.

For appeals in a bankruptcy case and not in 

an adversary proceeding.

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Document Page 1 of 19
 Plaintiff

Defendant

 Other (describe) 

 Debtor

 Creditor 

 Trustee

Other (describe)

Part 2: Identify the subject of this appeal

1. Describe the judgment, order, or decree appealed from: The Bankruptcy Court’s 

Memorandum Opinion and its Order, docketed, respectively, as Nos. 64 and 65 in 

Adversary Case No. 19-03091 

2. State the date on which the judgment, order, or decree was entered: December 15, 2022 

Part 3: Identify the other parties to the appeal

List the names of all parties to the judgment, order, or decree appealed from and the names, 

addresses, and telephone numbers of their attorneys (attach additional pages if necessary): 

1. Party: Alfred H. Siegel, Trustee of the Circuit City Stores, Inc. Liquidating Trust, 

represented by: 

Paula S. Beran

Lynn L. Tavenner 

Tavenner & Beran, PLC 

20 North Eighth Street 

2d Floor 

Richmond, VA 23219 

Telephone: (804) 783-8300 

Daniel L. Geyser

Haynes and Boone, LLP 

2323 Victory Avenue, Ste. 700 

Dallas, TX 75219 

Richard M. Pachulski

Andrew W. Caine 

Jeffrey N. Pomerantz

Pachulski Stang Ziehl & Jones LLP

10100 Santa Monica Blvd., 13th Floor 

Los Angeles, CA 90067-4100 

Telephone: (310) 277-6910 

Robert J. Feinstein 

Pachulski Stang Ziehl & Jones LLP 

780 Third Avenue, 34th Floor 

New York, NY 10017 

Part 4: Optional election to have appeal heard by District Court (applicable only in certain

districts)

Not applicable. 

Part 5: Sign below

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Date: December 26, 2022 Respectfully submitted, 

RAMONA D. ELLIOTT

Acting Director/General Counsel

P. MATTHEW SUTKO

Associate General Counsel

BETH A. LEVENE

Trial Attorneys

Department of Justice

Executive Office for United States Trustees

441 G Street, N.W., Suite 6150 

Washington, DC 20530 

(202) 307-1399 

Fax: (202) 307-2397 

John P. Fitzgerald, III

Acting United States Trustee, Region Four 

By: /s/ Kathryn R. Montgomery

Kathryn R. Montgomery 

(Va. Bar No. 42380) 

Department of Justice

Office of the United States Trustee

701 East Broad Street, Suite 4304 

Richmond, Virginia 23219 

(804) 771-2310 

Fax: (804) 771-2330 

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1 

UNITED STATES BANKRUPTCY COURT 

EASTERN DISTRICT OF VIRGINIA 

Richmond Division 

In re: CIRCUIT CITY STORES, INC., et al., Case No. 08-35653-KRH 

Debtors. Chapter 11 

(Jointly Administered) 

____________________________________ 

ALFRED H. SIEGEL, Trustee of the 

Circuit City Stores, Inc. Liquidating Trust, 

Plaintiff, 

v. Adv. Pro. No. 19-03091-KRH 

UNITED STATES TRUSTEE PROGRAM, et al., 

Defendants. 

_____________________________________ 

MEMORANDUM OPINION 

 This matter comes before the Court on the Defendants’ Motion to Dismiss and 

Memorandum in Support [ECF No. 45] (the “Motion to Dismiss”) filed in the above-captioned 

consolidated adversary proceedings (these “Adversary Proceedings”).1

 By their Motion to 

Dismiss, the Defendants2 seek dismissal of these Adversary Proceedings for failure to state a claim 

under Rule 12(b)(6) of the Federal Rules of Civil Procedure (the “Civil Rules”), as made applicable 

by Rule 7012 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”). Namely, 

the Defendants allege that Alfred H. Siegel, Trustee of the Circuit City Stores, Inc. Liquidating 

1

 In accordance with the Court’s Scheduling Order [ECF No. 41], as modified by the Order Dismissing Show Cause

[ECF No. 59], the Defendants have also filed the United States Trustee’s Answer to Complaint, Adv. No. 19-03091

[ECF No. 60] and United States Trustee’s Answer to Complaint, Adv. No. 19-03060 [ECF No. 61]. 

2

 “Defendants” shall refer to collectively United States Trustee Program (the “U.S. Trustee Program”), Ramona D. 

Elliott, Acting Director, and John P. Fitzgerald, III, Acting United States Trustee for Region 4. Although the 

Turnover Complaint originally named Clifford J. White III, Director, as a defendant, his successor, Ramona D. 

Elliott, Acting Director, has been substituted automatically as the proper party pursuant to Civil Rule 25(d), as 

incorporated by Bankruptcy Rule 7025. 

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2 

Trust (the “Trustee”) is not entitled to monetary relief on either his Motion of the Liquidating 

Trustee to Determine Extent of Liability for Post-Confirmation Quarterly Fees Payable to the 

United States Trustee Pursuant to 28 U.S.C. § 1930(a)(6) and Memorandum in Support [Adv. Pro. 

No. 19-03060, ECF No. 1] (the “Motion to Determine”) or his Complaint for Declaratory 

Judgement [sic] and Recovery of Amounts Owed Pursuant to 11 U.S.C. § 542 [ECF No. 1] (the 

“Turnover Complaint,” together with the Motion to Determine, the “Complaints”). The Trustee 

having filed an objection [ECF No. 46] (the “Objection”) and the Defendants having filed a reply 

[ECF No. 47] (the “Reply”), the Motion to Dismiss is now fully briefed and ripe for disposition. 

The Court has subject matter jurisdiction under 28 U.S.C. § 1334 and the General Order of 

Reference from the United States District Court for the Eastern District of Virginia dated August 

15, 1984. This is a core proceeding under 28 U.S.C. § 157(b)(2)(A), (E), (O). Venue is appropriate 

pursuant to 28 U.S.C. § 1409(a). After considering the pleadings, the arguments of counsel at the 

hearing on the Motion to Dismiss, and the applicable law, the Court denies the Motion to Dismiss 

and finds that the Trustee is entitled to monetary relief, as more fully detailed herein. 

Background 

 Congress established a dual system throughout the United States for the administration of 

bankruptcy cases.3

 In the six federal judicial districts comprising North Carolina and Alabama 

(the “BA Districts”), bankruptcy courts oversee the administrative aspects of bankruptcy cases as 

part of the Bankruptcy Administrator program (the “BA Program”). Siegel v. Fitzgerald, 142 S. 

3

 The history of the U.S. Trustee Program is more fully detailed in Siegel v. Fitzgerald, 142 S. Ct. 1770, 1772-76 

(2022). By that decision, the Supreme Court expressly declined to address “the constitutionality of the dual 

scheme of the bankruptcy system itself.” Id. at 1782. The uniformity issue can only be reasonably resolved 

through the exclusive use of either the U.S. Trustee Program or the BA Program. Resolution of that issue is not 

the province of this Court. As was the case after the Ninth Circuit decided St. Angelo v. Victoria Farms, Inc., 38 

F.3d 1525, 1532 (9th Cir. 1994), amended by 46 F.3d 969 (9th Cir. 1995), any decision by this Court that the dual 

system is unconstitutional would be non-binding on a BA District and, as such, would not effectuate any 

meaningful relief. 

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Ct. 1770, 1772-76 (2022). In every other judicial district within the United States (the “USTP 

Districts”), this role is filled by the U.S. Trustee Program, a component of the Department of 

Justice and a Defendant in this case. See id. at 1776. 

 This dual system has dual funding sources. The U.S. Trustee Program is entirely 

self-funded through user fees paid to the U.S. Trustee System Fund. 28 U.S.C. § 589a(b). A large 

portion of this funding comes from fees assessed against and paid in Chapter 11 cases4

 (the 

“Quarterly U.S. Trustee Fees”), which are statutorily charged based on quarterly disbursements. 

See id. § 1930(a)(6)(A). In contrast, the BA Program is funded by taxpayers through the general 

budget of the Judiciary.5

 Siegel, 142 S. Ct. at 1776. Initially, the BA Program did not collect 

Quarterly U.S. Trustee Fees in Chapter 11 cases. In 1994, the Ninth Circuit held such non-uniform 

treatment of debtors was unconstitutional. Id. (citing St. Angelo v. Victoria Farms, Inc., 38 F.3d 

1525, 1532-33 (9th Cir. 1994), amended by 46 F.3d 969 (1995)). Congress enacted a statute in 

response to the Ninth Circuit’s decision that permitted, but did not require, the Judicial Conference 

of the United States to assess debtors in the BA Districts Quarterly U.S. Trustee Fees equal to 

those imposed in USTP districts. Id. In turn, the Judicial Conference entered a standing order in 

2001 that directed the BA Districts to charge Quarterly U.S. Trustee Fees equal to those in USTP 

Districts. Id. (citation omitted). As a result, Quarterly U.S. Trustee Fees remained consistent 

between the BA and USTP Districts for the next 17 years. Id.

 This separate but equal fee system changed when Congress increased the amount of the 

Quarterly U.S. Trustee Fees for all pending Chapter 11 cases in USTP districts beginning in the 

first quarter of 2018 (the “2017 Act”). Id. at 1777 (citing Bankruptcy Judgeship Act of 2017, Pub. 

4

 Chapter 11 cases refers to reorganization cases commenced under 11 U.S.C. § 1101, et seq.

5

 The different funding mechanisms may result in different available services, particularly in light of the Judiciary’s 

increasingly thin budget as compared to a fully funded U.S. Trustee Program. 

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L. No. 115-72 § 1004, 131 Stat. 1224 (codified as amended at 28 U.S.C. § 1930(a)(6)(B) (2018)). 

Despite the 2001 standing order, the BA Districts did not immediately raise their fees to match the 

increased amounts assessed in the USTP Districts. Id. It was not until September of 2018 that the 

Judicial Conference ordered BA Districts to implement the new fee increase. Id. In so doing, the 

BA Districts only applied the fee increase to newly filed cases, beginning on October 1, 2018. Id. 

 The above-captioned Chapter 11 cases had long been pending when the 2018 fee increase 

took effect. The Modified Second Amended Joint Plan of Liquidation of Circuit City Stores, Inc. 

and Its Affiliated Debtors and Debtors in Possession and Its Official Committee of Creditors 

Holding General Unsecured Claims [Bankr. Case No. 08-35653, ECF No. 8555 Ex. A] (the 

“Liquidating Plan”) required the Trustee to “pay quarterly fees to the U.S. Trustee until the Chapter 

11 Cases are closed or converted.” Liquidating Plan Art. XII.D, ECF No. 8555 Ex. A at 101. The 

Trustee paid $632,542 in Quarterly U.S. Trustee Fees for the first three quarters of 2018. Siegel, 

142 S. Ct. at 1778. Absent the fee increase, the Trustee would have paid only $56,400 for that 

same period. Id.

 In 2019, the Trustee filed the Motion to Determine that the 2017 Act’s non-uniform fee 

increase was unconstitutional. Mot. to Determine ¶ 13, Adv. Pro. No. 19-03060, ECF No. 1 at 6. 

This Court granted the Trustee’s motion, In re Cir. City Stores, Inc., 606 B.R. 260, 271 (Bankr. 

E.D. Va. 2019), which decision the Defendants appealed. While the appeal was pending, the 

Trustee filed the Turnover Complaint, seeking, inter alia, recovery of the portion of Quarterly U.S. 

Trustee Fees paid by the Trustee to the Defendants that exceeded those the Trustee would have 

had to pay in a BA District. Turnover Compl. at ¶¶ 38-44, ECF No. 1 at 11. 

Congress amended section 1930 during the pendency of the appeal, to replace the word 

“may” with the word “shall” in the statute. Bankruptcy Administration Improvement Act of 2020, 

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Pub. L. No. 116-325, 134 Stat. 5086 (codified as amended at 28 U.S.C. § 1930(f)(7) (2021)). With 

such revision, the statute now provides that “the Judicial Conference of the United States shall

require the debtor in a case under chapter 11 of title 11 to pay fees equal to those imposed by 

paragraph (6) of this subsection.” 28 U.S.C. § 1930(f)(7) (emphasis added). 

 On June 6, 2022, the Supreme Court held the 2017 Act to be unconstitutional, but it did 

not determine the proper remedy. Siegel, 142 S. Ct. at 1783. Instead, the Supreme Court remanded 

this case to the Fourth Circuit for it to determine what remedy, if any, was available to the Trustee. 

The Fourth Circuit, in turn, remanded the case to this Court for the same purpose. 

Analysis 

 Defendants seek dismissal of this Adversary Proceeding because they believe that the relief 

the Trustee has requested – a refund – cannot be granted as a matter of law. The Court is aware 

that it is not the first to address the remedy issue since the Supreme Court decided Siegel. The 

Second Circuit and the Tenth Circuit have each ruled, albeit summarily, that the appropriate 

remedy is a refund in the amount of the portion of the quarterly fees paid that exceeded the amount 

the debtor would have had to pay in a BA District (the foregoing amount, the “Unconstitutional 

Overpayment”). Clinton Nurseries, Inc. v. Harrington (In re Clinton Nurseries, Inc.), 53 F.4th 15, 

29 (2d Cir. 2022) (“We see nothing in Siegel that calls into doubt our earlier holding, and so we 

reaffirm that, to the extent that Clinton has already paid the unconstitutional fee increase, it is 

entitled to a refund of the amount in excess of the fees it would have paid in a BA District during 

the same time period.”); In re John Q. Hammons Fall 2006, LLC, No. 20-3203, 2022 WL 3354682, 

at *1, 2022 U.S. App. LEXIS 22859, at *6 (10th Cir. Aug. 15, 2022). This Court agrees with 

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decisions reached in the Second and Tenth Circuits – the Trustee is entitled to a refund of the 

Unconstitutional Overpayment. 

I. Under Applicable Non-Bankruptcy Law, the Trustee is Entitled to a Refund of the 

Unconstitutional Overpayment 

 “It is a settled and invariable principle, that every right, when withheld, must have a 

remedy, and every injury its proper redress.” Marbury v. Madison, 5 U.S. 137, 147 (1803). The 

Supreme Court has already identified in Siegel the constitutional injury suffered in these cases – 

the Unconstitutional Overpayment. The question then becomes, what is the appropriate remedy 

to redress the Unconstitutional Overpayment? 

 As a preliminary matter, the Court rejects the Defendants’ argument that correcting the 

assessments on a going-forward basis is sufficient in and of itself to provide adequate relief. 

Prospective relief alone provides no relief. Prospective relief, by itself, would serve instead to 

cement the unconstitutional treatment. The Defendants, in support of their position, cite to two 

Supreme Court cases that permitted prospective relief.6

 Sessions v. Morales-Santa, 137 S. Ct. 

1678 (2017); Barr v. Am. Ass’n of Pol. Consultants, 140 S. Ct. 2335 (2020) (plurality opinion). 

These cases are easily distinguishable from the case at bar. There was no monetary relief at issue; 

and no monetary relief could possibly redress the constitutional injury. Sessions, 137 S. Ct. at 

1686 (declining to retroactively strip citizenship from children born to unwed mothers after finding 

the law unconstitutional that permitted such children to be eligible for citizenship earlier than those 

born to unwed fathers and married persons); Barr, 140 S. Ct. 2335 (after creating a new category 

6

 The Defendants also rely on the non-binding Ninth Circuit’s decision in St. Angelo v. Victoria Farms, Inc., 38 

F.3d 1525 (9th Cir. 1994), amended by 46 F.3d 969 (9th Cir. 1995), to assert that no retrospective relief is required. 

Mot. to Dismiss at 10, ECF No. 45 at 16. But Victoria Farms is the inverse of this case. Victoria Farms struck 

down as unconstitutional an extension of time given to the BA Districts to implement the U.S. Trustee Program 

– the amount of the Quarterly U.S. Trustee Fees were not at issue. Victoria Farms, 38 F.3d at 1533. In Siegel,

the Supreme Court struck down the 2017 Act’s increase in Quarterly U.S. Trustee Fees. 142 S. Ct. at 1775. 

Victoria Farms is neither binding nor on point. 

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of prohibited robocalls, declining retroactive punishment of such robocalls that were legal when 

made). 

 Rather than ineffectual prospective relief, “when the ‘right invoked is that to equal 

treatment,’ the appropriate remedy is a mandate of equal treatment, a result that can be 

accomplished by withdrawal of benefits from the favored class as well as by extension of benefits 

to the excluded class.” Heckler v. Mathews, 465 U.S. 728, 740 (1984) (emphasis in original) 

(citing Iowa-Des Moines Nat'l Bank v. Bennett, 284 U.S. 239, 247 (1931)). Heckler suggests that 

there are two possible remedies available here: (1) refunding debtors in USTP Districts the amount 

of the Unconstitutional Overpayment; or (2) assessing and billing debtors in the BA Districts the 

amount they would have paid if the statute had been applied uniformly to the USTP and BA 

Districts. See also McKesson Corp. v. Div. of Alcoholic Beverages & Tobacco, 496 U.S. 18, 40-41 

(1990). Numerous legal and practical hurdles stand in the way of imposing a retroactive 

assessment of debtors in BA Districts. A refund of the Unconstitutional Overpayment appears to 

be the more practical remedy. 

 An injured party should not be forced to wait for officials to act when it is uncertain how 

or when they would do so. Id. at 36. This Court lacks jurisdiction to command the BA Districts 

to retroactively assess fees, and the Court is unaware of any action on the part of the Defendants 

who are authorized to participate in BA Districts to move for the imposition of such retroactive 

fees.7

“[I]t is unnecessary to say more than that it nowhere appears that 

these [Defendants], if they possess the power [to assess back fees], 

have undertaken to exercise it or that they have any intention of ever 

doing so. It will be soon enough to invite consideration of this 

7

 The U.S. Trustee Program has the statutory right to appear and be heard in all bankruptcy cases, regardless of 

location. See 11 U.S.C. § 307. However, upon questioning at the Hearing, the Defendants conceded that they 

had made no efforts to seek retroactive payments in the BA Districts. 

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purely speculative suggestion when, if ever, the taxing officials shall 

have put it into practical effect.” 

Id. at 35 (quoting Mont. Nat’l Bank of Billings v. Yellowstone Cnty., 276 U.S. 499, 505 (1928)). 

The Trustee should not remain injured simply because the Defendants may one day seek to force 

BA Districts to retroactively impose greater fees. 

 It is also unclear how a retroactive fee assessment would work, either legally or practically. 

The Defendants propose that the Treasury Department could attempt to collect the back fees from 

debtors in BA Districts, but they do not address how such collections would work and they concede 

that any such collection attempts may be unsuccessful. See Reply at 7, ECF No. 47 at 11 

(conceding that “[i]f a debtor has dissolved or a liquidating trust has made all its distributions, then 

collection may not be successful.”). And, of course, that does not address how any such collection 

attempts would undoubtedly upset the expectations of parties who have extensively negotiated and 

consented to plan terms, only to have their expected distributions diluted through the payment of 

user fees and any attendant expenses – not to mention the flood of litigation that may ensue as 

those collection efforts are challenged. As such, even if this Court had the jurisdiction to do so, 

which it does not, impotently ordering collection in BA Districts is far too speculative and 

ineffective to accord proper relief to the Trustee. 

 Instead, the Court holds the first option provided by the McKesson Court – a refund – is 

the appropriate remedy here. There is ample precedent for ordering a refund for unconstitutional 

overpayments to a governmental entity. See McKesson Corp., 496 U.S. at 32-36 (collecting cases). 

The U.S. Courts of Appeal for the Second and Tenth Circuits have already ordered refunds in the 

wake of the Supreme Court’s decision in this case. In re Clinton Nurseries, Inc., 53 F.4th 15; In 

re John Q. Hammons Fall 2006, 2022 WL 3354682, 2022 U.S. App. LEXIS 22859, reinstating

15 F.4th 1011, 1026 (2021). Both appellate courts in considering the precise question now pending 

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in the case at bar made the same observation that they lacked jurisdiction over the BA Districts. 

See, e.g., In re John Q. Hammons Fall 2006, LLC, 15 F.4th at 1026 (ordering a refund of 

overpayment of fees while noting “[w]e lack authority over quarterly fees assessed in districts 

outside our circuit, and thus in Alabama or North Carolina . . . [b]ut Debtors are entitled to 

relief.”). 

 The Defendants’ argument against a refund as the appropriate remedy relies largely on 

congressional intent. But congressional intent provides little guidance here. Whatever the goals 

of Congress may have been in enacting the 2017 Act, when Congress became aware of the 2017 

Act’s constitutional infirmity it amended the statute. Congress could have chosen at that time to 

command the BA Districts to implement a retroactive fee increase – but it chose not to. Congress 

may well have made this decision out of a commitment to its carefully enacted Chapter 11 regime 

and the harm a retroactive fee assessment in BA Districts could cause. By the same token, 

Congress could have chosen to command the USTP Districts to issue a refund – it chose not to. 

This could be due to Congress’s commitment to its determination that the USTP Districts should 

be user rather than taxpayer funded. Only Congress knows which of these alternative objectives 

it values the most. Congress had the opportunity to choose between them. It declined to do so. 

Congressional intent is, at best, a wash.8

 As such, and with great deference to the two courts of 

appeal that have already ruled post-Siegel, this Court holds that the Trustee is entitled to relief. 

The Court therefore grants the only relief it has the power to provide – a refund. 

 In so ruling, the Court rejects the Defendants’ final argument that the Trustee reasonably 

could have declined to pay the Unconstitutional Overpayment pending a final determination from 

8

 Moreover, even if this Court were to hold that congressional intent required assessment of fees, there is no 

guarantee that the courts in the BA Districts would arrive at the same conclusion, further underscoring the 

speculative nature of the relief suggested by the Defendants. 

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this Court. Due Process is not satisfied if, inter alia, the payment was made under duress because 

the government imposed a penalty for failure to remit payment in a timely fashion or the citizen is 

placed at a serious legal disadvantage in a pre-deprivation action that would not exist if the citizen 

were to instead pay and seek a refund. See McKesson Corp., 496 U.S. at 38 n.21 (“[A] taxpayer 

pays ‘under duress’ when he proffers a timely payment merely to avoid a ‘serious disadvantage in 

the assertion of his legal . . . rights’ should he withhold payment and await a state enforcement 

proceeding in which he could challenge the tax scheme’s validity ‘by defen[s]e in the suit.’” 

(internal citation omitted)). Here, the Trustee was subject to unconstitutionally disparate financial 

treatment from the Government. Siegel, 142 S. Ct. at 1781-82. The Trustee is a fiduciary to the 

debtors’ bankruptcy estates and must act in their best interest. The Bankruptcy Code9

 provides 

that a court “shall” convert the case to Chapter 7 or dismiss the case altogether for failure to pay 

the Quarterly U.S. Trustee Fees. 11 U.S.C. § 1112(b)(1), (b)(4)(K). Had the Trustee refused to 

pay the Unconstitutional Overpayment, the Trustee would have run the risk of dismissal or 

conversion – either of which would have jeopardized over a decade of carefully negotiated 

restructuring and repayments to creditors. As such, the Trustee did not have a meaningful predeprivation opportunity to challenge the constitutionality the Unconstitutional Overpayment. 

 Having concluded that a refund is the proper relief for the Trustee’s injury, the Court must 

now determine what period the refund should cover. The Defendants assert that any retrospective 

relief should not extend to the first three quarters of calendar year 2018 because the BA Districts 

did not comply with the 2001 Standing Order of the Judicial Conference and match the fees 

imposed by the 2017 Amendment. However, the crux of the issue is not what the BA Districts 

did. It is what Congress did. Congress passed a statute that allowed for non-uniform fees. That 

9

 “Bankruptcy Code” refers to Title 11 of the United States Code. 

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unconstitutional statute – not the actions of the Judicial Conference – is what the Supreme Court 

identified as the source of the constitutional injury. Siegel, 142 S. Ct. at 1782 n.2 (rejecting the 

argument that “that any uniformity violation should be attributed to the Judicial Conference and 

not to Congress” because “the fee statute did not require the Judicial Conference to impose an 

equivalent increase” and “[i]t is that congressional decision that led to the disparities at issue 

here.”). Any non-uniform fees paid as a result of that statute are a constitutional injury suffered 

by the Trustee. This is just as true for the overpayments in the first three quarters of 2018 as it is 

for the remainder of the overpayments. The Court therefore rejects the Defendants’ argument and 

holds that the refund period shall include the first three quarters of 2018. 

II. Under Applicable Bankruptcy Law, the Trustee is Entitled to a Refund of the 

Unconstitutional Overpayment 

The Bankruptcy Code also provides a means of recovery of the Unconstitutional 

Overpayment. The Trustee may avoid unauthorized post-petition date transfers, 11 U.S.C. 

§ 549(a), and recover the same for the benefit of the estate, 11 U.S.C. § 550. Section 549 of the 

Bankruptcy Code requires “the satisfaction of four elements: (1) a transfer, (2) of property of the 

estate, (3) made after commencement of the case, and (4) that is not authorized under the 

Bankruptcy Code or by the bankruptcy court.” Devan v. Phx. Am. Life Ins. Co. (In re Merry-GoRound Enters.), 400 F.3d 219, 224 (4th Cir. 2005) (citing Hoagland v. Edward Hines Lumber Co. 

(In re LWMcK), 196 B.R. 421, 423 (Bankr. S.D. Ill. 1996); In re Watson, 65 B.R. 9, 11 (Bankr. 

C.D. Ill. 1986)). Section 550(a) of the Bankruptcy Code provides that “to the extent that a transfer 

is avoided under section . . . 549 . . . of this title, the trustee may recover, for the benefit of the 

estate, the property transferred, or, if the court so orders, the value of such property.” 11 U.S.C. 

§ 550(a). The trustee may seek recovery from either “the initial transferee of such transfer or the 

entity for whose benefit such transfer was made” or “any immediate or mediate transferee of such 

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initial transferee.” Id. § 550(a)(1), (2). The trustee’s power to recover from an initial transferee 

or the entity for whose benefit such transfer was made is absolute. Bowers v. Atlanta Motor 

Speedway (In re Se. Hotel Props. Ltd. P’shp.), 99 F.3d 151, 154 (4th Cir. 1996). 

 Although the Court had authorized the payment of Quarterly U.S. Trustee Fees generally 

as they became “due and payable,” see Liquidating Plan Art. VII.D, ECF No. 8555 Ex. A at 11, 

the Court did not authorize the payment of unconstitutional quarterly fees. See Colonial Auto Ctr. 

v. Tomlin (In re Tomlin), 105 F.3d 933, 941 (4th Cir. 1997) (“The bankruptcy court [is] ‘in the best 

position to interpret its own orders’” and “the bankruptcy court's interpretation of its own order 

here similarly warrants ‘customary appellate deference.’” (first quoting In re Chi., R. I. & P. R. 

Co., 860 F.2d 267, 272 (7th Cir. 1988); then citing Hastert v. Ill. State Bd. of Election Comm’rs, 

28 F.3d 1430, 1438 (7th Cir. 1993))). Similarly, although the Bankruptcy Code contemplates the 

payment of Quarterly U.S. Trustee Fees, see 11 U.S.C. § 1121(b)(4)(k), the Bankruptcy Code does 

not authorize the payment of unconstitutional fees. The Unconstitutional Overpayment by the 

Trustee to the Defendants was a transfer of property of the estate10 that occurred after the 

commencement of these bankruptcy cases and was not authorized under the Bankruptcy Code or 

by this Court.11 Accordingly, the Trustee can avoid the transfer of the Unconstitutional 

Overpayment pursuant to section 549 of the Bankruptcy Code. Once the transfers are avoided, the 

Trustee is entitled to recover the amount of the Unconstitutional Overpayment from the Defendants 

10 “Property of the estate” is a defined term under the Bankruptcy Code that includes “all legal or equitable interests 

of the debtor in property as of the commencement of the case.” 11 U.S.C. § 541(a)(1) The Unconstitutional 

Overpayment was made by the Trustee out of the liquidating trust res. The res of the liquidating trust consists of 

all assets of the underlying debtors’ bankruptcy estates. See Liquidating Plan Art. V.B.1, ECF No. 8555 at 78. 

Accordingly, the Unconstitutional Overpayment was made from property of the estate. 

11 These Adversary Proceedings were commenced by the filing of the Motion to Determine on March 28, 2019, 

Mot. to Determine at 14, Adv. Pro. No. 19-03060, ECF No. 1 at 16, well within two years after the date of the 

Unconstitutional Overpayment, see 11 U.S.C. § 549(d). 

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as the Defendants are collectively either the “initial transferee” and/or “the entity for whose benefit 

such transfer was made. 11 U.S.C. § 550(a)(1).12

 It is a core duty of the federal courts to provide remedies for legal injuries. The Trustee 

has suffered such an injury through the overpayment of fees under an unconstitutional statute. 

Under applicable non-bankruptcy law as well as under bankruptcy law, the Trustee is entitled to 

be made whole. As such, the Court holds that the Trustee may recover the amount of the 

Unconstitutional Overpayment. 

 A separate Order shall issue. 

Dated: December 15, 2022 /s/ Kevin R. Huennekens 

 UNITED STATES BANKRUPTCY JUDGE 

 Entered on Docket: 

12 The Government has waived sovereign immunity for any action brought under section 549 of the Bankruptcy 

Code. 11 U.S.C. § 106. 

Dec 15 2022

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UNITED STATES BANKRUPTCY COURT 

EASTERN DISTRICT OF VIRGINIA 

Richmond Division 

In re: CIRCUIT CITY STORES, INC., et al., Case No. 08-35653-KRH 

Debtors. Chapter 11 

(Jointly Administered) 

____________________________________ 

ALFRED H. SIEGEL, Trustee of the 

Circuit City Stores, Inc. Liquidating Trust, 

Plaintiff, 

v. Adv. Pro. No. 19-03091-KRH 

UNITED STATES TRUSTEE PROGRAM, et al., 

Defendants. 

_____________________________________ 

ORDER 

 Upon consideration of the Defendants’ Motion to Dismiss and Memorandum in Support 

[ECF No. 45] (the “Motion to Dismiss”) filed in the above-captioned consolidated adversary 

proceedings, the Court having reviewed the pleadings and having considered the arguments of 

counsel at the hearing conducted on November 15, 2022, for the reasons set forth in the 

accompanying Memorandum Opinion entered substantially contemporaneously herewith, it is 

hereby 

ORDERED, ADJUDGED, AND DECREED THAT: 

1. The Motion to Dismiss is DENIED. 

2. The Plaintiff is entitled to a refund in the amount of the portion of the quarterly 

U.S. Trustee fees paid that exceeded the amount the Plaintiff would have had to pay in a 

bankruptcy administrator district, inclusive of the first three quarters of calendar year 2018 (the 

“Unconstitutional Overpayment”). 

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3. The Court will reconvene on January 18, 2023, at 1:00 p.m. the pre-trial 

conference that had been continued generally on the Court’s docket (the “Pre-Trial Conference”) 

in order to, amoung other things, schedule the trial of this matter. The Pre-Trial Conference shall 

be conducted both in-person and by Zoom for Government. Persons wishing to appear at the 

Hearing may participate by either, at their option, appearing in person at Judge Huennekens’ 

Courtroom, 701 E. Broad St., Courtroom 5000, Richmond, Virginia, or registering in advance at: 

https://www.zoomgov.com/meeting/register/vJIscuqtrzovGFfOxcvK4FseAfd9d5Q4fsg

Dated: December 15, 2022 /s/ Kevin R. Huennekens 

 UNITED STATES BANKRUPTCY JUDGE 

 Entered on Docket: 

Copies to: 

Kathryn R. Montgomery 

Office of the United States Trustee 

701 East Broad Street, Ste. 4303 

Richmond, VA 23219 

Ramona D. Elliott 

P. Matthew Sutko 

Beth A. Levene 

Department of Justice 

Executive Office for United States Trustees 

441 G Street, N.W., Suite 6150 

Washington, DC 20530 

Paula S. Beran 

Lynn L. Tavenner 

Tavenner & Beran, PLC 

20 North Eighth Street, Second Floor 

Richmond, VA 23219 

Richard. M. Pachulski 

Andrew W. Caine 

Jeffrey N. Pomerantz 

Pachulski Stang Ziehl & Jones LLP 

10100 Santa Monica Boulevard, 13th Floor 

Los Angeles, California 90067-4100 

Dec 15 2022

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Robert J. Feinstein 

Pachulski Stang Ziehl & Jones LLP 

780 Third Avenue, 34th Floor 

New York, New York 10017 

Daniel L. Geyser 

Haynes and Boone, LLP 

2323 Victory Avenue, Ste. 700 

Dallas, Texas 75219 

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