FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: WIND N’ WAVE, 

Debtor,

No. 05-56254

NORTH SPORTS, INC.; SALOMON BAP No.

NORTH AMERICA; NITRO; LAW CC-04-01462-

OFFICES OF DAVID B. BLOOM, APC,  BKMa

Appellants, ORDER AND

v. AMENDED

OPINION NANCY KNUPFER, Chapter 7

Trustee,

Appellee. 

Appeal from the Ninth Circuit

Bankruptcy Appellate Panel

Marlar, Klein, and Brandt, Bankruptcy Judges, Presiding

Argued and Submitted

June 6, 2007—Pasadena, California

Filed November 1, 2007

Amended December 3, 2007

Before: Cynthia Holcomb Hall and Consuelo M. Callahan,

Circuit Judges, and Lyle E. Strom,* Senior District Judge.

Opinion by Judge Hall

*The Honorable Lyle E. Strom, United States District Judge for the District of Nebraska, sitting by designation. 

15501
COUNSEL

James E. Adler, Law Offices of David B. Bloom, Los Angeles, California, for the appellants. 

IN RE WIND N’ WAVE 15503
Eric P. Israel and Frank X. Ruggier, Danning, Gill, Diamond

& Kollitz, Los Angeles, California, for the appellee. 

ORDER

The opinion filed November 1, 2007, is hereby superseded

by the amended opinion below. 

OPINION

HALL, Circuit Judge: 

Pursuant to Bankruptcy Code Section 503(b)(4),1 Appellant

creditors petitioned the bankruptcy court to recover legal fees

incurred in connection with filing an involuntary Chapter 7

petition against the debtor. The bankruptcy court denied the

fees, but the Bankruptcy Appellate Panel of the Ninth Circuit

(“BAP”) reversed, ruling that the creditors’ attorneys were

eligible under Section 503(b)(4) for compensation for their

services in connection with the involuntary petition. The trustee’s appeal of that decision was voluntarily dismissed. The

instant appeal is from the BAP’s subsequent order denying

the creditors’ motion for fees on appeal. The creditors argue

that Section 503(b)(4) entitles them to attorney’s fees for the

successful appeal of the lower court’s decision. We agree, and

hold that it was error for the BAP to deny the fee motion

without explaining that the denial was without prejudice to

filing the appropriate Section 503(b)(4) fee request in the

bankruptcy court. 

28 U.S.C. § 158(d) grants us jurisdiction to hear this

appeal. We VACATE the BAP’s denial of the fee award and

1Unless otherwise noted, all chapter and section references are to the

Bankruptcy Code, 11 U.S.C. §§ 101-1330. 

15504 IN RE WIND N’ WAVE
REMAND with instructions to clarify that the BAP’s denial

of the fee request is without prejudice to the creditors seeking

a Section 503(b)(4) award from the bankruptcy court in compliance with proper procedures. 

FACTUAL BACKGROUND AND PROCEDURAL

HISTORY2

In December 1999, Salomon North America, Inc., North

Sports, Inc., and NITRO (collectively the “Petitioning Creditors”) filed an involuntary Chapter 7 petition against the

debtor, Wind N’ Wave. An Order for Relief was entered by

the Bankruptcy Court in March of the next year, and a Trustee

was appointed. In April 2000, the attorneys for Petitioning

Creditors, the Law Offices of David Bloom, filed an application for payment of their fees under Section 503(b)(4) of the

Bankruptcy Code. The bankruptcy court denied the request. It

declined to follow the Ninth Circuit BAP’s opinion in In re

Sedona Institute, 220 B.R. 74 (9th Cir. BAP 1998) and held

that a creditor was not entitled to attorney’s fees under Section 503(b)(4) when it has not incurred an allowable expense

under Section 503(b)(3). 

The Petitioning Creditors appealed to the Ninth Circuit

BAP. The BAP, reversing the Bankruptcy Court’s decision,

held that Sedona was controlling and that “an independent

allowable expense claim under [§ 503](b)(3) is not a prerequisite to an award of reasonable fees under § 503(b)(4).” In re

Wind N’ Wave, 328 B.R. at 183 (quoting Sedona, 220 B.R. at

81). The BAP remanded to the lower court to determine

appropriate fees. Id. at 180-83. In a motion decided a month

later, the BAP summarily denied the creditors’ request to have

the BAP award fees incurred in the BAP appeal; it did not

explain that its decision was without prejudice to the creditors

2For a more in-depth discussion of the facts of this litigation, see the

BAP’s decision, In Re: Wind N’ Wave, 328 B.R. 176, 177-79 (9th Cir.

BAP 2005). 

IN RE WIND N’ WAVE 15505
filing a fee application in the bankruptcy court. The creditors

now seek the attorney’s fees incurred in appealing the fee

award to the BAP, as well as their fees and costs incurred in

bringing the instant appeal. 

DISCUSSION

Though this court generally reviews BAP decisions de

novo, In re Am. Wagering, Inc., 465 F.3d 1048, 1050-51 (9th

Cir. 2006), a BAP’s finding regarding an entity’s eligibility

for attorney’s fees is reviewed for abuse of discretion, In re

Del Mission, 98 F.3d 1147, 1152 (9th Cir. 1996). An erroneous interpretation of a statute is an abuse of discretion, see id.,

Koon v. United States, 518 U.S 81, 100 (1996), and we review

de novo questions of law presented by a BAP’s statutory construction. See In re Nucorp Energy, 764 F.2d 655, 657 (9th

Cir. 1985); In re Sedona, 220 B.R. at 77. 

I. Section 503(b)(4)

[1] This appeal presents an issue of first impression and

turns on the interpretation of Bankruptcy Code Section

503(b)(4), which governs compensation for creditors’ attorneys in bankruptcy cases. Section 503 is entitled “Allowance

of administrative expenses” and subsection (b) provides for

certain priority expenses to be paid out of the debtor’s estate.

Section 503(b)(3)(A), in combination with 503(b)(4), grants

creditors costs incurred in connection with filing an involuntary bankruptcy petition. See 11 U.S.C. §§ 503(b)(3)(A);

503(b)(4). Subsection (b)(4) specifically allows compensation

for services rendered by a creditor’s attorney, and sets forth

compensation standards that mirror those governing fee

awards for debtors’ attorneys under Section 330(a) of the

Bankruptcy Code. 

The statute is silent regarding expenses incurred by a creditor in appealing or defending a lower court’s award or denial

15506 IN RE WIND N’ WAVE
of fees.3

 However, we do not find, as respondents urge us to,

that statutory silence forecloses a fee award here. Along with

other circuits, we have granted compensation for litigation

over a fee award under fee shifting statutes even when those

statutes did not expressly allow for it. See , e.g., Southeast

Legal Defense Group v. Adams, 657 F.2d 1118, 1126 (9th Cir.

1981) (holding that “42 U.S.C. § 1988 authorizes the grant of

attorneys fees for services on appeal” though statute does not

specifically so provide) (relying on Hutto v. Finney, 437 U.S.

678, 693, 700 (1978)); Manhart v. Los Angeles Dep’t of

Water & Power, 652 F.2d 904, 909 (9th Cir. 1981) (holding

that plaintiffs are entitled to attorney’s fees for time spent litigating the fees issue on appeal under Title VII’s attorney’s fee

provision) (citing Williams v. Alioto, 625 F.2d 845, 849-50

(9th Cir. 1980)); Hairston v. R & R Apartments, 510 F.2d

1090, 1093 (7th Cir. 1975) (remanding for fees for services

performed on appeal under the attorney’s fees provision of the

Fair Housing Act (42 U.S.C. § 3612(c)), which only allows

for “reasonable attorney fees in the case of a prevailing plaintiff”); Prandini v. National Tea Co., 585 F.2d 47, 52-53 (3d

Cir. 1978) (“[A]ttorneys are entitled to be compensated for

time spent successfully appealing the first fee award” under

Title VII). 

3Section 503(b)(4) reads in relevant part: 

(b) After notice and a hearing, there shall be allowed administrative expenses, . . . including

. . . 

(4) reasonable compensation for professional services rendered

by an attorney or an accountant of an entity whose expense is

allowable under [503(b)(3)], based on the time, the nature, the

extent, and the value of such services, and the cost of comparable

services other than in a case under this title, and reimbursement

for actual, necessary expenses incurred by such attorney or

accountant. 

11 U.S.C. 503(b)(4). 

IN RE WIND N’ WAVE 15507
We have applied the logic from these cases in the bankruptcy context and held that, in certain situations, debtors’

attorneys are entitled to compensation from the bankruptcy

estate for fee award preparation and litigation, notwithstanding statutory silence on the subject. See In re Smith, 317 F.3d

918, 928 (9th Cir. 2002), abrogated on other grounds by

Lamie v. United States Tr., 540 U.S. 526, 531-39 (2004);

Nucorp, 764 F.2d 655, 660-63. The same rationale applies in

the instant case, and leads us to conclude that the BAP erred

by not clarifying that its action in denying creditors’ motion

for fees incurred on appeal was without prejudice to Petitioning Creditors filing the appropriate application under Section

503(b)(4) in the bankruptcy court pursuant to proper procedures.4

II. Nucorp and Smith 

[2] In In re Nucorp Energy, we held that the bankruptcy

court erred in concluding that services related to the preparation and presentation of attorney fee applications were not

compensable under Section 330(a). The bankruptcy court had

awarded debtor’s counsel compensation and reimbursements

in the full amounts requested, with the exception of fees

incurred in preparing the fee applications. The court reasoned

that “time devoted to fee application preparation should not

be compensable because such efforts benefit only the law firm

and not the estate.” Nucorp, 764 F.2d at 657. 

[3] We disagreed, and reversed, holding that a fee award

was necessary to adequately compensate bankruptcy counsel.

Focusing on the language of the statute, which provides that

counsel be compensated “based on the time, the nature, the

extent, and the value of the services and the cost of comparable services [in non-bankruptcy cases],” id. at 657, and citing

legislative history, we explained that the purpose of Section

4Federal Rules of Bankruptcy Procedure 2002(a)(6) and 2016(a) explain

the proper procedures for filing a fee application. 

15508 IN RE WIND N’ WAVE
330(a) was “to ensure adequate compensation for bankruptcy

attorneys so that highly qualified specialists would not be

forced to abandon the practice of bankruptcy law in favor of

more remunerative kinds of legal work.” Id. at 658. Accordingly, we found that it was both inconsistent with the policy

of the Bankruptcy Reform Act and “fundamentally inequitable” to demand that counsel prepare and present extensive fee

applications and yet simultaneously “deny[ ] compensation

for the efforts necessary to comply with those requirements.”

Id. at 659. Moreover, in dicta, we stressed that litigation over

a fee award should also be compensable, otherwise fee awards

would be diluted: “If an attorney is required to expend time

litigating his fee claim, yet may not be compensated for that

time, the attorney’s effective rate for all the hours expended

on the case will be correspondingly decreased.” Id. at 660

(quoting Prandini, 585 F.2d at 52-53). Dilution is “precisely

the result that statutory fee award provisions are designed to

prevent.” Id. at 661. 

In In re Smith, 317 F.3d 918 (9th Cir. 2002), we again

endorsed the anti-dilution rationale and applied it in a case

involving litigation over a fee award. In Smith, the debtor

challenged fees awarded to attorneys for services arising out

of the successful defense of the initial fee award. Id. at 927.

Relying on Nucorp, we affirmed the award. Id. at 928-29.

While recognizing that Section 330(a) was silent as to the

issue of compensation for litigation of fee applications, we

noted that Nucorp’s dicta regarding dilution suggested that

compensation for time and expenses spent litigating a fee

application may be appropriate. Id. (citing Nucorp, 764 F.2d

at 660-61). 

[4] We also acknowledged, though, that we had previously

reached a contrary result in In re Riverside-Linden, 945 F.2d

320 (9th Cir. 1991). In that case, we declined to overturn the

BAP’s denial of attorney’s fees for unsuccessful litigation

over a fee award. We expressed concern that compensating

unsuccessful litigation over fee applications might lead to

IN RE WIND N’ WAVE 15509
frivolous fee requests, and accordingly refused to adopt a per

se rule that all litigation over fee awards should be compensated. However, Riverside-Linden left open the question of

whether such litigation “under some other set of circumstances may be found necessary within the meaning Section

330(a).” Id. at 323. We addressed this inquiry a decade later

in Smith, and held that recovery of legal fees for litigation

over a fee application was appropriate if two factors were

present: 1) the services for which compensation is sought satisfy the requirements of 330(a), and 2) the case “exemplifies

a ‘set of circumstances’ where the time and expense incurred

by the litigation is ‘necessary.’ ” 317 F.3d at 928. We held

that the Smith attorneys met this standard and affirmed the

district court’s award of fees in that case.

[5] We read these three cases together to stand for the proposition that, where a creditor receives attorney’s fees under

Section 503(b)(4), the time and expenses devoted to securing

the attorney’s fee award are also compensable if the Smith test

is met. We believe that this holding is necessary because of

the risk of dilution expressed in Nucorp, and is consistent

with our holdings in Smith and Riverside-Linden. 

We recognize that Nucorp, Smith, and Riverside-Linden

dealt with Section 330(a) of the Bankruptcy Code—which

addresses compensation for debtor’s attorneys—while the

instant case falls under Section 503(b)(4), which governs

compensation for creditors’ attorneys. We do not find that this

distinction affects our holding. Section 503(b)(4) states that

the court shall allow “reasonable compensation” for services

rendered by a creditor’s attorney “based on the time, the

nature, the extent, and the value of such services, and the cost

of comparable services other than in a case under this title.”

11 U.S.C. § 503(b)(4). This language was adopted as part of

the Bankruptcy Reform Act of 1978, and is nearly identical

to the language used in that Act to compensate officers under

Section 330(a).5See Pub. L. 95-598 (allowing under Section

5With the very minor exception that Section 330(a) referred to the

“value of the services” when it was enacted whereas Section 503(b)(4)

15510 IN RE WIND N’ WAVE
330(a)(1) an award of reasonable compensation for debtor’s

attorneys “based on the time, the nature, the extent, and the

value of the services, and the cost of comparable services

other than in a case under this title”). 

It is a “ ‘normal rule of statutory construction’ that ‘identical words used in different parts of the same act are intended

to have the same meaning.’ ” Dep’t of Revenue of Ore. v.

ACF Indus., Inc., 510 U.S. 332, 342 (1994) (quoting Sorenson

v. Sec’y of Treasury, 475 U.S. 851, 860 (1986)), and we see

no reason to depart from that maxim in this case. Indeed,

Congress took pains to ensure that the standards for compensation embedded in 330(a) and 503(b)(4) were indistinguishable; in enacting 503(b)(4), the Senate specifically deleted

language that would have provided different criteria for compensating debtors and creditors. See S. Rep. No. 95-989

(1978) (“Section 503(b)(4) of the House amendment conforms to the provision contained in H.R. 8200 as passed by

the House and deletes language contained in the Senate

amendment providing a different standard of compensation

under section 330 of that amendment.”). 

Respondents attempt to distinguish between Sections

330(a) and 503(b)(4) by noting that Section 330(a) explicitly

provides for compensation for fee application preparation, see

11 U.S.C. § 330(a)(6), and disallows compensation for services not reasonably likely to benefit the debtor’s estate or

necessary for the administration of the case, see 11 U.S.C.

330(a)(4), whereas Section 503(b)(4) has no such provisions.

We acknowledge that the statutes differ slightly (with Section

330(a) imposing more requirements on debtors than 503(b)(4)

places on creditors) but maintain that the relevant provisions

—those governing calculation of the attorney’s fees—were

identical when the Bankruptcy Reform Act of 1978 was

refers to the “value of such services.” See Pub. L. 95-598; 11 U.S.C.

§ 503(b)(4). 

IN RE WIND N’ WAVE 15511
enacted,6

 and that Congress intended both creditors’ and debtors’ attorneys to be compensated in a manner similar to attorneys working in other fields. 

In Nucorp, we read the language in Section 330(a) (as

enacted) as indicating Congress’s intent to avoid dilution of

the effective rate for bankruptcy counsel that would result if

fees incurred in successfully obtaining or defending an award

were not compensated, at least where such expenses are typically awarded in the non-bankruptcy context. Nucorp, 764

F.2d at 659-61. In reaching that interpretation, we focused

specifically on the following phrase from Section 330(a) as it

read at the time: “[Debtor’s attorneys should be compensated]

based on the time, the nature, the extent, and the value of the

services and the cost of comparable services other than in a

case under this title.” Because this language is effectively the

same as the current language in Section 503(b)(4), we find it

reasonable to apply the same rationale to cases involving the

latter statute. 

We are not alone in finding that the anti-dilution principle

applies with equal force to creditors and debtors. In In re Hers

Cosmetics Corp., 114 B.R. 240 (C.D. Cal. Bankr. 1990), the

creditors’ attorneys sought reimbursement under Section

503(b)(4) for expenses incurred during the successful defense

of a lower court’s fee award. The court followed the reasoning of Nucorp and awarded the fees. Noting that “Congress

made the decision under § 330 and § 503(b)(4) to reimburse

[both creditors’ and debtors’] attorneys fees from the estate”

on a priority basis, the court held that “the underlying purpose

of [both Sections 330(a) and 503(b)(4)] would be subverted

if the fee award could be diluted through the appeal process.”

Id. at 244; In re On Tour, 276 B.R. 407, 418 (D. Md. Bankr.

6While Section 503(b)(4) has remained largely unchanged since 1978,

Section 330(a) was expanded in 1994. The portion addressing reasonableness of compensation now includes more detail regarding each factor that

a court is to consider. See 11 U.S.C. § 330(a)). 

15512 IN RE WIND N’ WAVE
2002) (“This court had taken the majority position set out in

cases such as [Nucorp] . . . that bankruptcy counsel should be

compensated for preparing and defending fee applications. . . .

This court sees no basis for applying a different rule when

applying for compensation under 11 U.S.C. § 503(b) than

used when applying for compensation under 11 U.S.C.

§ 330.”); see also In re Celotex, 227 F.3d 1336, 1341 (11th

Cir. 2000) (“Section 503(b)(4) expressly provides that allowable attorney compensation should be ‘based on the time, the

nature, the extent, and the value of such services, and the cost

of comparable services other than in a case under this title

. . . ’ This standard is identical to the standard in § 330(a)(1)

which provides for attorney’s fees for counsel to the bankruptcy trustee.”) (internal citations omitted); In re Sedona,

220 B.R. 74, 78 (9th Cir. BAP 1998) (“It is important to

observe the integration in section 503(b)(4) of the standards

of section 330(a)(1) applicable to professional services rendered to the trustee for which compensation is sought. The

legislative comments to section 330 are surely applicable here

as well.”) (quoting 4-503 Collier on Bankruptcy 15th Ed.

503.11). 

[6] In sum, Congress enacted Sections 330(a) and 503(b)(4)

of the Bankruptcy Code at the same time, chose the same language for the two sections, and intended that both debtors and

creditors be compensated on a priority basis at levels reflecting fees in other fields. Thus, we see no reason why the common sense principles of Nucorp, Smith, and Riverside-Linden

should not apply in cases involving creditors as well as debtors. Our holding that creditors who receive compensation

under 503(b)(4) should also be compensated for costs

incurred in litigating a fee award, so long as the services meet

the Section 503(b)(4) requirements and the case “exemplifies

a ‘set of circumstances’ where litigation was ‘necessary,’ ” is

not only consistent with our analysis of compensation for

debtor’s attorneys in Smith and Riverside-Linden, but is necessary to prevent the dilution that would result if creditors’

attorneys were forced to absorb the time devoted to successIN RE WIND N’ WAVE 15513
fully litigating a fee award—an outcome that would be contrary to Congressional intent against fee award dilution. 

III. Application to the Instant Case 

Here, the BAP held that the attorneys for Petitioning Creditors were eligible for an award of compensation under Section

503(b)(4). Therefore, the litigation over the award is also

compensable so long as the services for which compensation

are sought meet the requirements of Section 503(b)(4), and

the case “exemplif[ies] a ‘set of circumstances’ where the

time and expense incurred by the litigation is ‘necessary’ ”

per Smith. 

[7] That standard is easily met here. The compensation that

Petitioning Creditors seek meets the statutory requirements

because the creditors demonstrated an allowable expense

under 503(b)(3) (specifically, filing an involuntary petition

under 503(b)(3)(A)), and there is no dispute that the amount

of compensation they are pursuing for their appellate work is

reasonable. See 11 U.S.C. § 503(b)(4) (allowing for “reasonable compensation for professional services rendered by an

attorney . . . of an entity whose expense is allowable under

[503(b)(3)]”). 

[8] Further, the appellate litigation in this case was necessary because, like the attorneys in Smith, the attorneys for

Petitioning Creditors did not frivolously appeal the lower

court’s decision merely to acquire litigation fees.7 To the contrary, the fact that Petitioning Creditors were erroneously

denied their fee award in the bankruptcy court—

notwithstanding Ninth Circuit precedent urging otherwise—

7The respondents attempt to assert that “willfully deciding . . . to prosecute an appeal” of a denial of a fee award, as is the case here, is somehow

less worthy of compensation than defending a fee award, as was the case

in Smith. We see no distinction between pursuit or defense for the purposes of determining whether litigation was “necessary.” 

15514 IN RE WIND N’ WAVE
suggests that the litigation expenses incurred on appeal were

unavoidable, as appeal to the BAP was the only avenue

through which the creditors could receive their due compensation. Thus, because the BAP determined that the attorneys for

Petitioning Creditors were entitled to an award of compensation under Section 503(b)(4), and because the litigation leading up that decision satisfies the Smith standard, we hold that

the BAP erred by not clarifying that its action in denying the

motion for fees was without prejudice to Petitioning Creditors

making the appropriate application under Section 503(b)(4) in

the bankruptcy court in compliance with 11 U.S.C. § 503(b)

and Federal Rules of Bankruptcy Procedure 2002(a)(6) and

2016(a). While we recognize that this holding may result in

the drawing down of an already limited estate, that cannot

deter us from the correct result. 

Conclusion

The BAP erred in summarily denying Petitioning Creditors

compensation for services arising out of the successful appeal

of the lower court’s denial of a fee award. We VACATE the

BAP’s denial of the fee motion and REMAND with instructions to clarify that the BAP’s denial of the motion is without

prejudice to Petitioning Creditors seeking a Section 503(b)(4)

award from the bankruptcy court pursuant to proper procedures. 

IN RE WIND N’ WAVE 15515