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FILED

JUN 12 2015

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP Nos. EC-14-1195-PaJuKu

) EC-14-1273-PaJuKu

CWS ENTERPRISES, INC., ) (consolidated)1

)

Debtor. ) Bankr. No. 09-26849

______________________________)

)

CHARLES W. SILLER, )

)

Appellant, )

)

v. ) M E M O R A N D U M2

)

BIG HILL LOGGING AND ROAD ) 

BUILDING COMPANY, INC., ) 

)

Appellee. ) 

______________________________)

Argued and Submitted on May 14, 2015

at Sacramento, California

Filed - June 12, 2015

Appeal from the United States Bankruptcy Court

for the Eastern District of California

Honorable Christopher M. Klein, Chief Bankruptcy Judge, Presiding

 

Appearances: Randy E. Michelson of Michelson Law Group argued

for appellant Charles W. Siller; Jeremy Luke

Hendrix of Desmond, Nolan, Livaich & Cunningham

argued for appellee Big Hill Logging and Road

Building Company, Inc.

 

Before: PAPPAS, JURY, and KURTZ, Bankruptcy Judges.

1 These appeals, involving the same parties, issues and

order on appeal, were consolidated by the Panel in an order

entered on June 13, 2014.

2 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.

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Charles W. Siller (“Charles”)3 appeals the bankruptcy court’s

order allowing a claim for an administrative expenses for creditor

Big Hill Logging and Road Building Company, Inc. (“Big Hill”) in

the chapter 114 case of CWS Enterprises, Inc. (“Debtor”). We

AFFIRM.

I. FACTS

The Parties

Debtor owned the 180-acre parcel of land in Oroville,

California, that is the focus of this dispute (“the Property”). 

Charles owns 100 percent of the stock in Debtor and is its

executive officer.

The other party in this dispute is Big Hill, a corporation

involved in logging, road building, and forestry. Dane Siller

(“Dane”) and his father, Mac Siller (“Mac”), are the principals of

Big Hill. Dane is the nephew, and Mac is the brother of Charles.

The Courtesy Notice

Before Debtor owned the Property, it was the site of a mining

and dredging operation. Before and after Debtor acquired the

Property, “illegal dwellings,” consisting primarily of tarps and

lean-tos used by transient and homeless people, littered the

Property. As a result of the dredging operation, there were also

large piles of tailings on the Property, ranging from ten to

thirty feet high, overgrown with vegetation. There were also

3 Some of the parties in these appeals are family members

with the same surname. For clarity, we refer to them by their

first names. No disrespect is intended.

4 Unless otherwise indicated, all chapter, section and rule

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.

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large areas of standing water and ponds on the Property that would

impede police and emergency service workers’ access to the

Property. 

In February 2009, the City of Oroville, CA ("City") issued a

Courtesy Notice to Debtor citing several code violations

constituting nuisances and dangers to public safety on the

Property. The Courtesy Notice warned Debtor that “to avoid

further code enforcement action,” it must promptly correct the

violations.

Charles engaged Big Hill to perform cleanup operations in

response to the Courtesy Notice. Between February 7 and May 4,

2009, Big Hill’s crews cleared the Property by removing the

dwellings and associated trash; reducing the height of the

tailings by spreading them out over fifty acres of the Property; 

removing the vegetation; and filling ponds. The Big Hill charges

for these services totaled $91,864. 

The Bankruptcy Case

On April 10, 2009, following the entry of a money judgment

against it in favor of a creditor, Debtor filed a petition for

relief under chapter 11. In June 2009, at the request of Debtor’s

two largest creditors and the U.S. Trustee, the bankruptcy court

appointed a chapter 11 trustee, David D. Flemmer (“Flemmer”), to

serve in the bankruptcy case. Thereafter, Flemmer and Debtor

cooperated to obtain confirmation of Debtor’s Third Amended Plan

of Reorganization on April 16, 2012 (the “Plan”), with an

effective date of May 1, 2012. Flemmer became Plan Administrator

under the Plan; he paid all administrative expense claims that had

been approved by the bankruptcy court as of the effective date,

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all undisputed prepetition claims, and the allowed portion of the

one disputed claim.5 The Plan provided for the payment of all

administrative expense claims, but did not set a cutoff date for

filing those claims.

Flemmer filed a motion on December 19, 2013, for an order

approving his proposal to pay Big Hill’s May 4, 20096 invoice for

$91,865 in full, as a contractual obligation of Debtor’s

bankruptcy estate (the “Contract Motion”).7 Charles opposed the

Contract Motion8 because Big Hill had not filed a proof of claim. 

The bankruptcy court conducted an evidentiary hearing on the

Contract Motion on January 29, 2014. Dane, Charles, and Flemmer

appeared.

The bankruptcy court denied the Contract Motion because,

5 The bankruptcy court allowed the disputed prepetition

claim of a creditor, Spiller McProud, only in part. The court’s

ruling on this claim was apparently appealed to the U.S. District

Court, but the record does not indicate the outcome of that

appeal. Regardless, the bankruptcy court found that the Plan

Administrator had sufficient funds to pay the Big Hill claim in

dispute here, as well as the Spiller McProud claim in full.

6 There is no indication in the record when this invoice was

actually sent to Flemmer.

7 Flemmer also sought permission in the motion to pay Big

Hill $3,431.31 for four replacement tires. The bankruptcy court

denied this request, and its decision is not implicated in these

appeals.

8 Charles’ standing to oppose the Contract Motion, or in

this appeal, has not been challenged. It is undisputed that all

of Debtors’ undisputed unsecured creditors have been paid, and an

allowance has been made for the one disputed unsecured claim. 

Charles owns 100 percent of the equity in Debtor, and in the words

of the bankruptcy court, “all of the claims that get paid come out

of [Charles] Siller’s hide[.]” Hr’g Tr. 62:8-9, January 29, 2014. 

A party who is potentially injured by the payment of a claim has

standing to oppose allowance of the claim. Duckor Spradling &

Metzger v. Baum Trust (In re P.R.T.C., Inc.), 177 F.3d 774, 777-79

(9th Cir. 1999).

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first, the Plan had rejected all prebankruptcy executory

contracts, including the agreement between Debtor and Big Hill,

and second, because Big Hill’s proof of claim was submitted long

after the claims bar date for prepetition claims. In reaching

these conclusions, however, the court expressly refrained from

considering whether any other legal basis existed to pay Big

Hill’s invoice. Significantly, in its oral decision, the

bankruptcy court observed that, based on its review of the record,

and considering the weather conditions, between 50 and 80 percent

of the work represented in the invoice was likely performed by Big

Hill after the filing of the chapter 11 petition.9

After the denial of the Contract Motion, Big Hill submitted

an Amended Proof of Claim asserting an administrative expense for

$76,923.31, representing 80 percent of its total original invoice. 

Big Hill then filed a motion for allowance of this amount as an

administrative expense claim on February 12, 2014. Charles again

opposed, arguing that Big Hill’s claim did not arise from a

transaction with the debtor in possession; that the claim, if any,

was discharged in the confirmed plan; and that Big Hill had not

demonstrated excusable neglect in failing to timely file the

claim.

The initial hearing on Big Hill’s motion took place on

March 26, 2014. After hearing arguments of counsel, the

9 The court stated:

I am persuaded that about 80% of the work was done postpetition. . . . It might have been more than 20% was

done beforehand but certainly not more than half, so at

least half of the work was done post-petition. 

Hr’g Tr. 63:16—64:1, January 29, 2014.

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bankruptcy court determined that an evidentiary hearing was

required, because there were disputed factual issues; the court

also directed the parties to consider whether restitution

principles should be applied in resolving the issues. 

A second, evidentiary, hearing occurred on April 7, 2014. 

Charles, Big Hill, and Flemmer were represented by counsel. The

bankruptcy court heard testimony from Charles and Dane. The court

also admitted into evidence two declarations from Dane and the

declaration of Flemmer. Of significance to the court was Charles’

Exhibit 3, a two-page report from the Western Regional Climate

Center, National Oceanic and Atmospheric Administration, detailing

rainfall in the Oroville area for February thru May, 2009. 

At the close of arguments, the bankruptcy court announced its

extensive findings of fact and conclusions of law. They included

the following:

- With one exception, the court adopted the findings of fact

and conclusions of law it had made after the evidentiary hearing

on January 29, 2014. 

- The court observed that the new evidence regarding the

rainfall amounts caused it to change its earlier allocation of the

work performed by Big Hill before and after the petition was

filed. Based on the new evidence, the bankruptcy court now found

that 50 percent, not 50–80 percent, of the Big Hill services were

rendered during the bankruptcy case. 

- The court reasoned that, under California law, and the

general principles of the law of restitution, Big Hill had

established an allowable claim for the services performed postpetition, and that under the Ninth Circuit case law, this claim

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should be allowed as an administrative expense in the bankruptcy

case. 

The bankruptcy court entered an order approving Big Hill’s 

administrative expense claim for $45,912.50 (i.e., 50 percent of 

the invoice amount) on April 8, 2014. Charles filed a timely

appeal.

II. JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334

and 157(b)(2)(A) and (B). We have jurisdiction under 28 U.S.C.

§ 158. 

III. ISSUE

Whether the bankruptcy court abused its discretion in

allowing Big Hill’s administrative expense claim.

IV. STANDARD OF REVIEW

We review a bankruptcy court's order allowing or disallowing

an administrative claim for abuse of discretion. Gonzalez v.

Gottlieb (In re Metro Fulfillment, Inc.), 294 B.R. 306, 309 (9th

Cir. BAP 2003) (citing Teamsters Indus. Sec. Fund v. World Sales,

Inc. (In re World Sales, Inc.), 183 B.R. 872, 875 (9th Cir. BAP

1995)). A bankruptcy court abuses its discretion if it applies an

incorrect legal standard or its factual findings are illogical,

implausible, or without support from evidence in the record. 

United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009)

(en banc). The bankruptcy court’s factual findings related to

administrative claims are reviewed for clear error. Einstein/Noah

Bagel Corp. v Smith (In re BCE W. L.P.), 319 F.3d 1166, 1172 (9th

Cir. 2003).

Whether a claim for restitution is barred by the doctrine of

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laches is reviewed for abuse of discretion. Huseman v. Icicle

Seafoods, Inc., 471 F.3d 1116, 1125 (9th Cir. 2006).

V. DISCUSSION

A. The bankruptcy court did not abuse its discretion in

allowing an administrative expense to Big Hill for

$45,912.50.

Section 507(a)(2) accords the administrative expenses of a

bankruptcy estate second priority among claims for payment in a

bankruptcy case. Administrative expenses are given priority to

encourage creditors to provide goods and services to a chapter 11

debtor or trustee that are necessary for the orderly

administration of the estate. Christian Life Ctr. Litig. Def.

Comm. v. Silva (In re Christian Life Ctr.), 821 F.2d 1370, 1373

(9th Cir. 1987); In re Palau, 139 B.R. 942, 944 (9th Cir. BAP

1992). 

Section 503(b)(1)(A) identifies the claims that may be

allowed as administrative expenses, "including . . . the actual,

necessary costs and expenses of preserving the estate, including

wages, salaries, or commissions for services rendered after the

commencement of the case[.]" In re Metro Fulfillment, Inc.,

294 B.R. at 309. Ordinarily, the terms “actual” and “necessary”

as used in § 503(b)(1)(A) are construed narrowly. Id. This

strict construction implements a presumption that a bankruptcy

estate has limited resources which should be equally distributed

among creditors. Boeing N. Am., Inc. v. Ybarra (In re Ybarra),

424 F.3d 1018, 1026 (9th Cir. 2005) (citing Total Minatome Corp.

v. Jack/Wade Drilling, Inc. (In re Jack/Wade Drilling, Inc.),

258 F.3d 385, 389 (5th Cir. 2001)) (explaining that “[t]he central

question in determining whether a claim is granted administrative

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expense priority is whether the third party should be paid at the

expense of the debtor's existing unsecured creditors.”). However,

the Ninth Circuit has instructed that, in deciding whether to

allow an administrative expense, the bankruptcy court may exercise

“broad discretion.” Microsoft Corp. v. DAK Indus. (In re DAK

Indus.), 66 F.3d 1091, 1094 (9th Cir. 1995); In re Dant & Russell,

Inc., 853 F.2d at 706. 

The burden of establishing an allowed administrative expense

claim is on the claimant by a preponderance of the evidence. Gull

Indus. v. John Mitchell, Inc. (In re Hanna), 168 B.R. 386,

388 (9th Cir. BAP 1994). In this Circuit, to be allowed, a

claimant must show that the debt asserted to be an administrative

expense:

(1) arose from a transaction with the

debtor-in-possession as opposed to the

preceding entity (or, alternatively, that the

claimant gave consideration to the

debtor-in-possession); and (2) directly and

substantially benefitted the estate. 

In re DAK Indus., 66 F.3d at 1094); see also Abercrombie v. Hayden

Corp. (In re Abercrombie), 139 F.3d 755,757 (9th Cir. 1998)

(quoting In re DAK Indus.).10 

Debtor filed the chapter 11 petition on April 10, 2009. A

chapter 11 trustee was not appointed until June 19, 2009. Thus,

between April 10 and June 19, Debtor was a debtor in possession

under the Bankruptcy Code. § 1108 (providing that “the trustee”

may operate the debtor’s business); § 1107(a) (providing that,

10 In his briefs, Charles misquotes both In re DAK Indus. and

In re Abercrombie by deleting the critical phrase, “(or,

alternatively, that the claimant gave consideration to the

debtor-in-possession)”.

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unless the court orders otherwise, the debtor shall have all

rights of a trustee in a chapter 11 case). It is not disputed

that Charles was the executive officer and responsible person for

Debtor while it served as debtor in possession, and that he was

clothed with authority to make decisions for Debtor. Thus,

decisions made by Charles from April 10 to May 4, 2009, regarding

the Property, constitute actions by Debtor as the debtor in

possession.

There is evidence in the record that Charles induced Big Hill

to provide the clearing and other services on the Property from

April 10 to May 4, 2009. As Dane testified,

Q: This is the work [Charles] asked you to

perform when?

Dane: He asked me to start the work after the city

had given permission in February. But when we

got done dealing with the city, the west side

of 7th avenue was not within the city’s scope. 

But he wanted us to do that since we were

there already. . . .

Q: When did [Charles] ask you to perform that

work?

Dane: After the city area was satisfied.

Q: Was that before or after CWS filed bankruptcy?

Dane: Post-Petition.

Q: After bankruptcy?

A: After.

Hr’g Tr. 28:20—29:11, April 7, 2014.

Based upon this testimony and the other evidence, the

bankruptcy court found that:

Certain potential fines . . . were anticipated with

respect . . . to the portion of the Property that was

located within the control of the City, and that was not

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threatened with respect to the adjacent property that

was not under the control of the City. I conclude that

the decision was made by Charles Siller to just take

care of the whole situation all at once and get the old

mine dredge tailings leveled out, eliminate the ponds on

the Property, get rid of the vegetation that was causing

problems.

Hr’g Tr. 73:25—74:10.

The bankruptcy court found, on the basis of evidence

presented at the hearing, that work was done by Big Hill both

before and after the bankruptcy case was commenced. There is

considerable evidence that Charles and Dane made a minimum of

three visits to the Property together between April 10 and May 4,

observing and discussing the ongoing work, including the work on

the non-City sections of the Property that were not included in

the original contract. 

Moreover, even if it could be argued that there was no actual

agreement struck between Debtor and Big Hill to perform postbankruptcy services for Debtor, Charles cannot persuasively

dispute that Big Hill provided sufficient consideration to Debtor

as a debtor in possession to support an administrative expense

claim. Such consideration may consist of the provision of

services. In re Abercrombie, 139 F.3d at 757. Again, it is not

disputed that Big Hill performed services post-petition that it

was not obligated to provide by contract (insofar as the contract

had been rejected in the chapter 11 case as of the petition date). 

It is the consensus of authority that when third parties are

induced to supply goods or services to a debtor in possession,

their claims should be accorded administrative expense status. 

Id.; In re DAK Indus., 66 F.3d at 1094; In re Jartran, 732 F.2d

584, 587 (7th Cir. 1984); In re Mammoth Mart, Inc., 536 F.2d at

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954. 

On this record, we conclude that the first criterion for an

administrative expense set forth in In re DAK Indus. has been

satisfied. There is ample evidence in the record that during the

bankruptcy case, Charles, acting on behalf of Debtor as the debtor

in possession, induced Big Hill to continue work on the Property,

and then accepted consideration from Big Hill in the form of

services provided post-petition.

The second In re DAK Indus. criterion is also established by

this record, in that Big Hill’s services “directly and

substantially benefitted the estate.” The Courtesy Notice advised

Debtor that there were nuisance conditions on the Property that

must be promptly addressed or code enforcement actions might

ensue. In response, Debtor, through Charles, elected to engage

Big Hill to remedy the nuisances described in the Courtesy Notice. 

Failure by Debtor to comply could have resulted in fines and other

expenses to the estate. The bankruptcy court’s conclusion that

Big Hill’s services were beneficial to Debtor was a sound one.11

Finally, we consider whether the bankruptcy court erred in

allowing 50 percent of the Big Hill invoice amount as the amount

of the administrative expenses. Based upon the uncontradicted

evidence in the first hearing, the court determined that as much

as 80 percent, but no less than 50 percent, of the work performed

by Dane on the Property occurred post-petition. Then, in the

second hearing, the bankruptcy court accepted additional evidence

11 To the extent that the invoice may have included services

performed on the adjacent land and not subject to the Courtesy

Notice, it is still likely that the services benefitted the estate

by removing hazardous conditions on the adjacent land.

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on rainfall patterns in the post-petition period, noting: "I am

going to reopen the evidentiary record from the prior hearing

because it's a subsequent motion."12 Hr’g Tr. 9:10-20, April 7,

2014. 

Of course, it was not error for the bankruptcy court to take

this approach, since the second evidentiary hearing involved a

different motion than was before the court in the first

evidentiary hearing. But even if the hearing on the motion for

allowance of the administrative expense claim were somehow viewed

as a continuation of the proceedings concerning the Contract

Motion, the bankruptcy court did not abuse its discretion in

“reopening” the evidentiary record. Keith v. Volpe, 858 F.2d 467,

478 (9th Cir. 1988) (court may sua sponte reopen the evidentiary

record after trial and before judgment); Students of Cal. School

for the Blind v. Honig, 736 F.2d 538, 540 (9th Cir. 1984), vacated

and remanded on other grounds, 471 U.S. 148 (1985) (noting that

reopening evidence is within the discretion of the trial court

12 Charles objected to what he considered to be a “reopening”

of the evidentiary record. The bankruptcy court, sensitive to

creating an adequate record, responded:

. . . I think it’s a practical matter to do that. I

have enough discretion to do that. And the reason —

when I resolve this matter, I want to make findings of

fact and conclusions of law; and if that means the

appellate review, which I assume will occur, will be

based on [] what I have right now. If I rule right now,

we have appellate looking at a summary, saying a

statement might lead to this and that and, Judge, we

think you might want to try that. I want to eliminate

that possibility and make sure we’ve nailed down

everything.

I have all of my notes from the prior testimony. I

have the transcript.

Hr’g Tr. 8:9-23, April 7, 2014.

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where new evidence should both be important as a matter preventing

injustice and reasonably available).

At the first hearing concerning the Contract Motion, the

bankruptcy court based its decision on Dane’s uncontradicted, but

poorly supported, testimony about how rainfall affected the work

on the Property. In contrast, at the second hearing concerning

the administrative expense claim, the bankruptcy court was given a

government report on rainfall patterns and amounts from the

Western Regional Climate Center, National Oceanic and Atmospheric

Administration, Exhibit 3.13 Based upon this new evidence, the

court revised its estimate of the work performed both pre- and

post-petition, to reach what it decided was a more accurate

estimate of the allocation. As this was a disputed issue of fact,

and there were two permissible views of the evidence on this

issue, the fact finder’s choice between them cannot be clearly

erroneous. Anderson v. City of Bessemer City, N.C., 470 U.S. 564,

574 1985).14

13 The bankruptcy court admitted this report as a selfauthenticating government document under Fed. R. Evid. 901(7) and

803(8).

14 As discussed above, Charles argues in this appeal that the

bankruptcy court abused its discretion because it should have

treated Big Hill’s motion for administrative expense claim as a

reconsideration motion of the court’s decision on the Contract

Motion. The bankruptcy court noted that there were some

similarities between the administrative expense motion and the

Contract Motion, observing that whether it was a motion for an

administrative expense claim or a reconsideration of the Contract

Motion was a “debatable point.” Hr’g Tr. 10:16-20, July 7, 2014. 

However, it also correctly noted that the parties were different

and the relief requested was different. Indeed, in ruling on the

Contract Motion, the bankruptcy court expressly declined to

speculate whether Big Hill might have other rights to relief based

upon its status as something other than a prebankruptcy creditor.

(continued...)

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B. The bankruptcy court did not abuse its discretion in

supporting its award of an administrative claim to

Big Hill on a theory of restitution.

The bankruptcy court had held that Big Hill’s original

contract with Debtor to perform services was rejected by

confirmation of the chapter 11 plan. However, the bankruptcy

court invited the parties to address the implications of the

Restatement (Third) of Restitution and Unjust Enrichment and

California case law as a possible basis for allowing an

administrative expense claim for the post-bankruptcy work of Big

Hill. After the evidentiary hearing, the court then found that

restitution principles indeed supported such an award. 

The Restatement (Third) of Restitution § 1 provides that, “ A

person who is unjustly enriched at the expense of another is

subject to liability in restitution.” Relying on either this or

earlier, nearly identical editions of the Restatement, California

courts have recognized that unjust enrichment may require

restitution. Ghirardo v. Antonioli, 14 Cal. 4th 39, 51 (1996)

(“Under the law of restitution, an individual may be required to

make restitution if he is unjustly enriched at the expense of

another. A person is unjustly enriched if he receives a benefit

at another’s expense.”); Hirsch v. Bank of Am., 107 Cal. App. 4th

708, 721-22 (2003); Dunkin v. Boskey, 82 Cal. App. 4th 171, 195

(2000); First Nationwide Sav. v. Perry, 11 Cal. App. 4th 1657,

14(...continued)

The court indicated that it had made a choice in the manner in

which it was treating the two motions: “It’s fundamentally in my

discretion and I want to make sure that I’m making a fair

determination.” Hr’g Tr. 11:1-8, July 7, 2014. The court did not

abuse its discretion in not treating the administrative expense

motion as a request for reconsideration of its decision concerning

the Contract Motion.

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1662 (1992). Notably, “a benefit conferred is not only when one

adds to the property of another, but also when one saves the other

from expense or loss.” Ghirardo, 14 Cal. 4th at 51. These

equitable principles are consistent with the cases discussed above

that instruct the bankruptcy court to allow administrative

priority to claimants who provide post-petition consideration to a

debtor in possession, or who are induced to provide services to

the debtor in possession. In re Abercrombie, 139 F.3d at 757;

In re DAK Indus., 66 F.3d at 1094; In re Jartran, 732 F.2d at 587;

In re Mammoth Mart, Inc., 536 F.2d at 954. We agree with the

bankruptcy court that the restitution principles articulated and

adopted in the California case law support the bankruptcy court’s

decision to allow an administrative expense.15

Finally, we address Charles’ argument that the doctrine of

laches barred allowance of Big Hill’s claim. Charles argues that

because Big Hill delayed five years in filing its proof of claim

in the bankruptcy case, that Charles, an 87-year old man, was

prejudiced. But the bankruptcy court disagreed that prejudice had

been shown.

Assuming without deciding that laches can constitute a

15 Charles argues that the bankruptcy court erred in

including in its restitution comments about Cal. Code Civ. Proc. 

§ 871.1(a). That statute provides: “As used in this chapter,

‘good faith improver’ means [a] person who makes an improvement to

land in good faith and under the erroneous belief, because of a

mistake of law or fact, that he is the owner of the land." Of

course, since it is undisputed that Debtor, not Big Hill, owned

the Property, this provision does not strictly apply in this case. 

But that the statute does not cover these facts is of no moment

because the bankruptcy court did not rely upon it. Rather, the

court explained that, in reaching its decision, the statute and

related cases “informs the [court’s] analysis of what is a

legitimate administrative expense in this case.” Hr'g Tr.

73:19-22. We find no error in the court’s observation.

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defense to Big Hill’s claim under these circumstances, application

of the doctrine requires proof by Charles of (1) a lack of

diligence by Big Hill, and (2) resulting prejudice to Charles. 

Huseman, 471 F.3d at 1126. Both elements must be proven by

preponderance of the evidence. Id. Of the two elements, the more

important is prejudice. Beaty v. Selinger (In re Beaty), 306 F.3d

914, 924 (9th Cir. 2002) (“[L]aches is not a doctrine concerned

solely with timing. Rather, it is primarily concerned with

prejudice.").

The bankruptcy court found after hearing testimony from Dane

and Charles that Charles and Debtor were not prejudiced by the

delay in submitting the administrative claim:

If this had been presented earlier, like in 2009,

[Charles] would have been 82 years old, and that

memories have faded in the ensuing years. . . . I am

not satisfied that providing some sort of remedy would

be unfairly prejudicial to CWS Enterprises and to

Charles Siller who controls CWS Enterprises.

Hr’g Tr. 76:15-21, ER at 511. Although the bankruptcy court did

not discuss Big Hill’s diligence in asserting its claim, laches

requires proof of both elements. The court’s finding that Charles

and Debtor suffered no prejudice from any delay in submitting the

claim was not clearly erroneous. As a result, the bankruptcy

court did not abuse its discretion in declining to disallow Big

Hill’s claim based upon laches under the circumstances of this

case.

VI. CONCLUSION

We AFFIRM the order of the bankruptcy court.

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