N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
SEC UR ITIES AND EXC HANGE C OM M ISSION, Plaintiff - Appe lle e , v. J T WALLENB R OC K & ASSOC IATES, De fe nda

nt, And JAM ES H. DONELL, R

e c e ive r - Appe l la

nt. No. 12-57009

D.C . No. 2:02-c v-00808-R -SH
M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the C e ntra l Distric t of C a lifornia M anue l L. R e a l , Distric t Judge , Pre siding Subm itte d July 11, 2014 ** Pa sa de n a , C a l ifornia 

# FIL ED
AUG 01 2014 M OLLY C. DW Y ER, CLERK U

. S

. CO URT O F APPEALS

* This disposition is not a ppropria te for public a t ion a

nd is not pre c e de nt e xc e pt a s provide d

by 9th C ir. R . 36-3. ** The pa

ne l una nim ously c onc lude s this c a se is suita ble for de c ision without ora l a

rgum e nt. Se e Fe d. R . App. P. 34(a )(2).B e fore : B ENAVIDES, *** W ARDLAW , a nd C LIFTON, C irc uit Judge s. Jam e s H. Donne ll, the re c e ive r in this SEC c ivil e nforc e m e nt a c tion, a ppe a l s the d istric t c o urt’ s de nia l of re c e ive rship fe e s for the pe riod of Ja nua ry 1, 2010 to M ay 31, 2012 a

nd fe e s for te rm inating there c e ive rship. The SEC , whic h stipula te d to the fe e s be low, supports the re c e ive r’ s position tha

t the re que ste d fe e s we re
re a s ona ble . W e a gre e and re ve rse . In a se c uritie s fra

ud a c tion, thedistric t c ourt m ay e sta b lish a re c e ive rship to pre v e n t the de fe nda

nts from furthe r dissipa

ting theinve stors’ a sse ts. SEC v . W e n c k e , 783 F.2d 829, 837 n.9 (9th C ir. 1986). Thec ourt supe rvise s the re c e ive r, who is e ntitle d to re a sona b l e fe e s a n d e xpe nse s, subje c t to thec ourt’ s a pprova l. Se e SEC v . Hardy , 803 F.2d 1034, 1037 (9th C ir. 1986). The distric t c ourt a

b use d its disc re tion in de ny ing fe e s for the pe riod of Ja nua ry 1, 2010 to M ay

31, 2012. The re c e i ve r atta c he d hundre ds of pa ge s of billing sta te m e nts to e sta

blish tha t the fe e s we re re a sona

ble . The distric t judge , noting tha

t “ [t] he stipula

tion did not provide

for e xpla nation of thefe e s,” a

ppe ars to ha ve ove rlooke d the se atta c hm e nts. M ore o ve r, the re c e ive r’ s e fforts in this pe riod pla inly

be ne fitte d inve stors. He obta ine d ove r $800,000 for le s s tha n

*** The Honora

ble Fortuna

to P. B e nav ide s, Se nior C irc uit Judgefor the U.S. C ourt of Appe a l s for the Fifth C i rc uit, sitting by de s igna tion. 2$200,000 in fe e s. W e are the re fore le ft with a “ d e finite and firm c onvic tion tha

t the distric t c o urt c om

m itte d a c l e ar e rror of judgm e nt,” pa rtic ula rly give n the SEC ’ s support for the re q

ue s te d fe e s. V

aldiv i a v . Sc hw arze ne

gge r , 599 F.3d 984, 988 (9th C ir. 2010). Like wise , the distric t c o urt’ s de nia l of e stim a te d fina l fe e s wa s a n a buse of disc re tion. In winding down the re c e ive rship, there c e i ve r be ne fitte d inve stors by
c losing the

sa le of re a l prope rty

and filing ta

x re turns. Te rm ination is a ne c e ssa ry ste p of a ny re c e ive rship, a

nd in norm a l c i rc um sta

nc e s, the re c e i ve r should be
re a s ona bly c om p e nsat e d for it. Although the distric t c ourt’ s de c ision to term inate the re c e ive rship m ay

have be e n re a sona

ble , the distric t c ourt a

buse d its disc re tion by de ny ing re c e ive rship fe e s for a n orde rly and be ne fic i a l te rm ination. W e re ve rse an d re m an d with instruc tions to gra nt the re c e ive r’ s fe e s, a s stipula te d, for the pe riod of Ja

nua ry 1, 2010 to M a

y 31, 2012, a

nd to gra nt fina l fe e s for te rm inat ing the re c e ive rship. C osts on a ppe a l sha ll not betaxe d a ga inst a ny pa rty . On re m and, the re c e ive r’ s re a sona b le attorne y s’ fe e s and c osts inc urre d from this a ppe a l sha ll be awarde d from the e sta te . RE V E RSE D AND RE M ANDE D

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