FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: COOPER COMMONS LLC, 

W No. 06-55624 EINSTEIN, EISEN & WEISS; DAVID

R. WEINSTEIN; SHARON Z. WEISS, D.C. No.  Appellants, CV-05-05215-JVS

v. OPINION

DAVID A. GILL, Chapter 7 Trustee,

Appellee. 

Appeal from the United States District Court

for the Central District of California

James V. Selna, District Judge, Presiding

Argued and Submitted

December 3, 2007—Pasadena, California

Filed January 3, 2008

Before: Harry Pregerson, John T. Noonan, and

Stephen S. Trott, Circuit Judges.

Opinion by Judge Noonan

105
COUNSEL

David R. Weinstein, Jacquelyn H. Choi, Los Angeles, California, for the appellants. 

John J. Bingham, Jr., John N. Tedford, IV, Los Angeles, California, for the appellee.

OPINION

NOONAN, Circuit Judge: 

Bankruptcy is an intensely practical affair. Bankruptcy

seeks fair treatment for everyone. These two principles animate and guide the law within the statutory framework set by

the Bankruptcy Code. In this case they appear to clash. On

closer examination of the facts, the clash is chimerical. 

Weinstein, Eisen and Weiss (the Firm) appeals the judgment of the district court affirming the order of the bankruptcy judge in favor of David A. Gill, Chapter 11 Trustee

(the Trustee). In this case of first impression in the Ninth Circuit, we affirm the judgment of the district court. 

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FACTS AND PROCEEDINGS

On February 22, 2002, Cooper Commons, LLC (the

Debtor) filed a petition for relief under Chapter 11 of Title 11

of the Bankruptcy Code. The Debtor as debtor-in-possession

continued to operate the enterprise (the construction of housing). Prior to the bankruptcy filing, the Comerica Bank (the

Lender) had lent over $16 million to the Debtor. To save the

project, the Debtor entered into three agreements with the

Lender providing an additional $7 million. These agreements

were each approved by the bankruptcy court. Counsel for the

Debtor was the Firm. The Firm represented it in negotiating

the agreements. No provision was made in the agreements for

payment to the Firm from the Lender’s collateral. Each agreement waived any right of the Debtor to surcharge the funds

provided by the Lender. 

On November 20, 2002, the Trustee was appointed. The

Trustee negotiated over $7 million in new financing from the

Lender. The agreement with the Lender provided:

[t]he amounts to be funded to the Trustee pursuant

to this subparagraph shall include an amount of

$888,469, which sum shall be placed by the Trustee

in a separate account for the benefit of the Trustee

and his professionals, and which shall be used only

to pay the actual and necessary fees and costs of the

Trustee and his professionals (“Trustee’s Administrative Fund”). The professionals who may look to

this fund are the Trustee, all attorneys and accountants that may be employed by the Trustee at the

expense of the estate, as well as the fees and costs of

the Trustee’s field representative, Kenneth B.

Roelke, Inc. The Trustee’s Administrative Fund shall

be available for payment of such fees and costs

approved by an order of the Court after notice and an

opportunity for hearing. . . . 

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This agreement was approved by the bankruptcy court. 

On February 15, 2005, the Trustee moved to augment the

Trustee’s Administrative Fund by $250,000. These funds

would be subtracted from accumulated funds held as collateral for the Lender’s loans. No objection was made by the

Lender. The Firm did object: While the Trustee and his counsel were being taken care of, nothing was set aside to pay the

Firm for services rendered by it to the Debtor-in-possession.

The Bankruptcy Court granted the Trustee’s motion to augment his administrative fund and pay the specified expenses.

The Firm appealed to the district court. The district court

affirmed the order of the bankruptcy court. 

The Firm appeals to us. 

ANALYSIS

The Firm has attempted to persuade us that the future of

bankruptcy law is at stake in this case — that if we do not

reverse the district court we will have opened the door to side

deals with secured creditors by trustees that will permit the

trustee to rearrange the payment priorities set by statute and

to do so to the profit of the trustee. 

The actual case is less momentous. The Debtor as debtorin-possession negotiated three times with the Lender for

financing. In each negotiation the Debtor was represented by

the Firm. The agreements governing the financing stated:

“Neither the Bank [i.e. the Lender] nor any of the Collateral

shall at any time be subject to surcharge or assessment,

whether pursuant to Bankruptcy Code § 506(c) or otherwise.”

This waiver of surcharge or assessment against the collateral is comprehensive. It applies “at any time.” It waives

§ 506(c) claims in particular and other surcharge claims in

general. The waiver was “approved as to form and content”

IN RE: COOPER COMMONS LLC 109
by the Firm. It was executed by the Debtor. The bankruptcy

court entered its approval. 

Financing for the Debtor-in-possession was a practical

necessity if it was going to run the enterprise. The Debtor-inpossession bargained with the Lender to set the terms of this

financing. Part of the bargain was that neither the loan funds

nor the collateral for the loan should be subject to charge. In

marked contrast with the agreement later made by the Trustee

with the Lender, these earlier agreements carried no carve-out

from the collateral for administrative expenses. As it was

obvious, particularly to the Firm, that there would be administrative expenses, it was not through ignorance or inadvertence

that no provision was made to pay them. 

[1] The waiver effectively bars the claims of the Firm now

made. No wool was pulled over the Firm’s eyes — explicitly,

the Firm approved the agreement. Consequently, no claim of

the Firm against the collateral exists. Whatever claim the Firm

has is solely against funds unencumbered by the Lender’s

lien. The later agreement with the Lender by the Trustee did

not retroactively revive or prioritize the Firm’s claims. 

[2] The firm is incorrect that the establishment of the Trustee’s Administrative Fund required the application of § 506(c).

In light of the Lender’s consent, there was no need for

§ 506(c) as a statutory hook. The Trustee breached no duty in

limiting the allowed claimants under the fund. Claims were

limited to the services necessary for the ongoing management

by the Trustee of the estate. 

The result we reach rests on the conclusion that the Firm

has no direct, pecuniary interest in the encumbered assets of

the estate. It might be argued, therefore, that the Firm lacks

standing to maintain this appeal. Nonetheless, we believe that

the Firm made a sufficient showing of potential injury to its

interest for us, in this unusual case, not to apply the strict

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criteria for standing and to accept the appeal and adjudicate

it. 

The issue raised by the Firm as to the Trustee’s payment to

his field agent is not properly before the court. 

For the reasons stated, judgment of the district court is

AFFIRMED. 

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