Court Opinion

ID: 9911293
Source: CourtListenerOpinion
Date Created: 2023-12-19 20:02:04.127378+00
Date Added: 2024-06-11T12:57:08.874674
License: Public Domain

FILED
                                                                                    DEC 19 2023

                          NOT FOR PUBLICATION                                   SUSAN M. SPRAUL, CLERK
                                                                                  U.S. BKCY. APP. PANEL
                                                                                  OF THE NINTH CIRCUIT

           UNITED STATES BANKRUPTCY APPELLATE PANEL
                     OF THE NINTH CIRCUIT

In re:                                               BAP No. AZ-23-1048-LCF
PEDRO FIGUEROA and FLOR M.
FIGUEROA,                                            Bk. No. 0:17-bk-08550-SHG
            Debtors.

JIM D. SMITH,
                     Appellant,
v.                                                   MEMORANDUM*
UST-UNITED STATES TRUSTEE,
PHOENIX,
             Appellee.

               Appeal from the United States Bankruptcy Court
                          for the District of Arizona
                 Scott H. Gan, Bankruptcy Judge, Presiding

Before: LAFFERTY, CORBIT, and FARIS, Bankruptcy Judges.

                                  INTRODUCTION

       Jim D. Smith, trustee of the chapter 71 estate of Pedro and Flor M.

Figueroa, was employed to serve as attorney for the estate with the

       *
         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.
       1 Unless specified otherwise, all chapter and section references are to the

Bankruptcy Code, 11 U.S.C. §§ 101–1532, “Rule” references are to the Federal Rules of
Bankruptcy Procedure, and “Civil Rule” references are to the Federal Rules of Civil
                                            1
approval of the bankruptcy court. After the case was reopened and an

additional asset recovered, Smith filed a second fee application seeking an

additional $1,982.50 in fees for his services as attorney for the estate after

the reopening. Smith also filed a second Trustee’s Final Report (“TFR”) and

an application requesting trustee’s commission of $1,648.20 for the case.

The request for commission as trustee further sought permission to pay

himself $1,292.28 in unpaid attorney’s fees owed from the initial fee

application. Based on the U.S. Trustee’s (“UST”) opposition to the second

fee application and the bankruptcy court’s independent analysis of the

requested fees, the bankruptcy court allowed the trustee’s commission of

$1,648.20, reduced the fees requested in the second fee application to $540,

but did not permit Smith to pay himself the unpaid portion of the fees

allowed in the first fee application. Smith appeals the rulings. Seeing no

error, we AFFIRM.2

                                        FACTS 3

A.    The bankruptcy case and Smith’s activities

      Pedro and Flor M. Figueroa filed their chapter 7 petition on July 25,

2017. Smith was appointed trustee. Two months later, Smith filed a two-

Procedure.
        2 This appeal was concurrently heard with three others: (1) Smith v. UST (In re

Rivera), BAP No. AZ-23-1047-LCF; (2) Smith v. UST (In re Banghart), BAP No. AZ-23-
1049-LCF; and (3) Smith v. UST (In re Earle’s Custom Wines, Inc.), BAP No. AZ-23-1050-
LCF. These companion appeals are the subject of their own separate written decisions.
        3 We exercise our discretion to take judicial notice of documents electronically

filed in the underlying bankruptcy case and adversary proceeding. See Atwood v. Chase
Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).
                                            2
page application to have himself appointed attorney for the estate.

Concurrent with the application, Smith filed a one-page declaration which

simply stated that he is a sole practitioner and had no conflicts. There being

no objections, the application was approved.

      On October 12, 2017, Smith filed a three-page “Trustee’s Complaint

to Recover Preference” against State Farm Mutual Automobile Insurance

Company (“State Farm”). The complaint asserted that State Farm had

garnished $2,337.41 from Mr. Figueroa’s wages within 90 days of the

petition date and that the garnishment constituted a preference. When

State Farm failed to respond, a default judgment was entered. At about the

same time, State Farm paid Smith $1,636.19 which Smith, according to the

TFR, apparently accepted as full payment, abandoning the remaining

balance.

      On October 26, 2017, Smith filed a two-page “Motion for Turnover of

Non-Disclosed Estate Asset,” specifically a “2003 Polaris ATV.” The motion

contained no declaration or other evidence to support the allegations.

There being no objections, the motion was granted. The ATV was

ultimately abandoned to the Debtors. 4

      On June 26, 2018, Smith received the Debtors’ 2017 income tax refund

totaling $2,110 from the IRS. He subsequently paid $335.44 to the Debtors

for their portion of the refund which was approved by the court.

      4
          The TFR identified the undisclosed ATV with a value of $25.
                                            3
      On February 13, 2019, Smith filed a two-page objection to State

Farm’s proof of claim, asserting that it was filed after the bar date and

therefore should be subordinated to timely filed proofs of claim. State Farm

did not respond, and the objection was sustained.

      The court clerk filed and served a Notice of Bar Date, and ultimately

three proofs of claim were filed totaling $26,240.27.

B.    The fee applications and UST’s objections

      On December 4, 2019, Smith filed an eight-page “Application for

Allowance of Administrative Expense – and – Rule 2016 Disclosure.” The

application sought fees of $4,980 for 16.6 hours of work at $300 per hour.

The fee request pertained to the following categories: 8.9 hours for the State

Farm matters; 3.4 hours for the ATV turnover activities; .8 hours for the

preparation of the employment application documents; and 1.5 hours for

the fee application. The 16.6 hours included an anticipated 2.0 hours for

preparing for and attending a hearing on the application should there be

objections to the fee request. Smith noted that if there were no objections,

he would reduce the amount requested to $2,250. Again, Smith included no

declaration to support the application.

      The UST timely objected to the application, arguing that there was

improper lumping of time in Smith’s time entries and that Smith should

not be paid for drafting and filing his own employment application. It also

objected to Smith’s proposed reduction in fees if there were no objections to

the fee application, arguing that the adjustment was an attempt to

                                       4
circumvent the Supreme Court’s decision in Baker Botts LLP v. ASARCO

LLC, 576 U.S. 121, 131 (2015), that an attorney may not be paid for efforts

responding to objections to the application.

      There was no further activity on the fee application until almost ten

months later when Smith filed an amended fee application which sought

fees of $4,350 for 14.5 hours at $300 per hour (the “Amended Fee

Application”). The Amended Fee Application provided more detail in

response to the UST’s lumping objection and removed the request for fees

to appear at a hearing should that become necessary. It reduced the time

sought for the State Farm matters from 8.9 to 7.7 hours and the turnover

motion from 3.4 to 3.0 hours. It increased the time for preparation of the

employment application documents from .8 to .9 hours and the fee

application from 1.5 to 2.0 hours. There was no explanation for the change

in the total hours requested for compensation. The Amended Fee

Application falsely stated that Smith had filed no “previous fee

applications in this case.”

      The UST did not object to the Amended Fee Application. Smith

thereafter filed a Certificate of No Objection which stated that he had

“received no response nor opposition to the Application or Notice.” Based

thereon, an order was entered approving the Amended Fee Application

allowing $4,350 as attorney’s fees.

      On December 21, 2020, Smith filed his Trustee Final Report (the “First

TFR”) which disclosed that the estate had $2,960.75 in funds on hand.

                                      5
Smith proposed to pay himself that amount as a portion of the fees allowed

in the Amended Fee Application. The court docket indicates that the UST

reviewed the First TFR and had no objections. There was no separate

application for trustee’s commission.

         The case was closed on March 4, 2021.

C.       Reopening the case and further activities

         On August 11, 2021, Smith filed a one-page motion to reopen the case

to recover a non-disclosed insurance refund. The motion was granted and

Smith was reinstated as the trustee.

         Two weeks later, Smith filed a two-page complaint against Wells

Fargo Bank (“WFB”) for turnover of $5,571.26 representing a “refund

resulting from a pre-bankruptcy repossession of a vehicle.” A month later,

Smith and WFB “settled” for the full amount owed. Smith filed a two-page

application for approval of the settlement which was approved 30 days

later.

         On October 25, 2021, Smith filed a further application for allowance

of attorney’s fees with respect to fees incurred since the case was reopened,

seeking an additional $1,982.50 in fees and $23.85 in expenses (the “Second

Fee Application”). The fees requested were categorized as: 1.5 hours of

attorney time for preparing the fee application, .9 hours of

“paraprofessional” time (at $125 per hour) for the fee application; 4.4 hours

of attorney time for the WFB “litigation”; and .8 hours of paraprofessional

time for the WFB “litigation.” The Second Fee Application made no

                                        6
disclosures concerning previously filed applications. The UST did not

object to the Second Fee Application, and an order was entered approving

the fees and expenses. On November 22, 2021, Smith paid himself $2,005.85

from the estate bank account.

     On February 2, 2022, Smith filed an amended TFR (the “Second

TFR”) which included an accounting from the petition date. The Second

TFR disclosed that after payment to himself of the fees and costs from the

two fee applications, banking expenses and filing fees, there remained

$2,933.29 in the estate account. Concurrently, Smith filed an “Application

for Compensation and Reimbursement of Expenses” (the “Trustee

Commission Request”) which proposed that Smith use those funds to pay

himself $1,648.20 in trustee’s commission, $46.17 in trustee’s expenses, and

$1,292.28 as the remaining fees still owed from the Amended Fee

Application. There would be no distribution to creditors. The court docket

indicates that the UST reviewed the Second TFR the same day it was filed

and had no objections.

     Approximately three weeks later, the UST filed an objection to

Smith’s Trustee Commission Request. It recounted the events in the case

and argued that Smith was improperly seeking compensation as an

attorney for tasks that should have been completed by the trustee. It

                                     7
requested that the court deny the “submitted TFR in its current form” and

“deny the [Second Fee Application] in its entirety.” 5

D.    The hearings on the Second Fee Application and the Second TFR

      The court held a hearing on the Second Fee Application, the Second

TFR, and the Trustee’s Commission Request on August 4, 2022. 6 At the

hearing, Smith suggested to the bankruptcy court that it simply rule on the

pleadings to date without further hearings, and the UST agreed. The court

invited Smith to file a response to the UST’s objection, but Smith demurred.

The court then stated on the record that the matter was submitted.

      On September 8, 2022, the bankruptcy court entered its order

requiring simultaneous further responses from Smith and the UST and

setting a further hearing on the fee application. In its order, the court made

tentative findings including that five of the entries included in the two fee

applications “may be compensable for attorney’s fees, provided there is

further explanation from Mr. Smith[,]” suggesting that the remainder of the

time would be disallowed. (Emphasis added). The court invited Smith to

respond to the UST objections as well as its tentative findings.

      As to the UST, the court ordered the UST to file a reply “describing

its procedure for identifying such violations when it reviews fee

applications and whether it uses the same procedure and scrutiny to

      5 The objection made no comments about its previous approval of the Second Fee
Application and the Second TFR or Civil Rule 60(b).
      6 This was a combined hearing for all four of the cases for which the Panel heard

argument on September 28, 2023.
                                           8
review fee applications by independent counsel as it does to review those

by trustees also serving as attorneys for the estate.”

      Smith’s response repeated his position that all of his billed time was

for services “routinely performed” by attorneys employed by chapter 7

trustees. The response further complained that the UST was not objecting

to the fees requested by trustee Lawrence Warfield’s7 attorney who “was

paid over $800,000 in the Year 2021 . . . for representing Chapter 7 Case

Trustees in cases where issues similar to this Case were made and

litigated.”

      The UST’s response summarized its process for reviewing chapter 7

fee applications.

      On November 1, 2022, the bankruptcy court conducted a second

hearing and advised the parties that its review of the supplemental

responses left it with questions and further concerns directed at both

parties. After lengthy colloquy between the court and the parties, the court

invited the parties to file further supplemental pleadings regarding its

specific concerns. The court requested “case law” from the parties that

differentiated a trustee’s efforts as trustee from those of trustee’s counsel.

The court stated that it wished to better understand the UST’s position on

that issue so that it could “more clearly set a standard . . . to apply across

the board.” As to Smith, the court asked him to “take a hard look” at his

      7
          Apparently, the only other chapter 7 trustee in the Yuma, Arizona area.
                                             9
time entries as some appeared to be administrative overhead expense.

Over Smith’s objection, the court set an evidentiary hearing in December.

      Subsequently, the UST filed a further memorandum which

essentially repeated its earlier statement of its procedures regarding fee

applications. It attached numerous exhibits containing turnover motions

filed by trustees without counsel arguing that this type of turnover action is

routinely done by trustees without counsel.

      Smith filed a “Notice of Filing ‘De-Lump’ Time Entries as Required

by 9/8/2022 Court Order” in which he added additional detail to his time

entries. He also filed a separate list of thirty-four “recent” cases purporting

to establish that “the Attorney for the Chapter 7 Trustee was compensated

(without objection) for services which the U.S. Trustee now claims are

services that must be provided by the Chapter 7 Trustee, not an Attorney.”

The list contained some details about each case and a “[d]escription of the

work” but contained no analysis or statement by Smith establishing a

direct relationship between those cases and his case nor showing any

relevance to the tasks Smith performed.

      Smith also filed a Proof of Pre-Litigation Demands which contained

copies of two short letters and two short emails from Smith to WFB,

including WFB’s letter to Smith advising him of the refund, and a

subsequent WFB letter advising him that the refund had been mistakenly

sent to the Debtors. All of the communications were dated prior to the

filing of the motion to reopen the case.

                                      10
      On December 20, 2022, the bankruptcy court conducted an

evidentiary hearing at which Smith testified and was cross-examined.

Smith testified that he discovered the WFB refund several months before

he reopened the case. He had demanded turnover of the refund, but WFB

mistakenly turned it over to the Debtors, and thereafter, according to

Smith, ignored his request for the funds. He explained that he had no

choice but to reopen the case and file the adversary complaint.

E.    The bankruptcy court’s ruling on the Second Fee Application and
      the Second TFR
      The bankruptcy court issued its Ruling on United States Trustee’s

Objection to Jim Smith’s Attorney Fee Application on February 21, 2023

(the “Memorandum”). The bankruptcy court first addressed the Trustee

Commission Request ruling that it was not appropriate to deny the

commission provided to the trustee under § 326(a) on the basis that “Smith

previously received attorney’s fees.” It next addressed the procedural

concern that the fees in the Second Fee Application had already been

approved. The court stated that under Civil Rule 60(b), it would grant the

UST relief from that approval based on excusable neglect because a review

of the application did not alert the UST to the fact that the requested fees

would result in no distribution to creditors.8

      8
        As to the Civil Rule 60(c)(1) requirement that the request be made within one
year, the court noted that the UST filed its objection three months after entry of the
order approving the Second Fee Application, which was within the one-year limit.
                                           11
      On the merits of the allowance of the Second Fee Application, the

court disallowed all the line entries for the WFB litigation and allowed 1.8

hours or $540 to prepare the fee application. As to each of the disallowed

entries, the court stated that “[t]his time entry is not compensable for

attorney’s fees. Objection sustained.” As to the fee application, the court

stated that the time was “compensable as attorneys for the estate routinely

request compensation for preparing fee applications in this district.”

      The bankruptcy court specifically found that “Wells Fargo [was]

responsive and compliant with Mr. Smith’s requests.” It concluded that the

disallowed “services were neither reasonable nor necessary.” It stated that

“Smith . . . failed to demonstrate how any of those services performed

involved legal expertise beyond the duties routinely performed by trustees

without counsel assistance.”

      The court concluded that “[i]t is inconceivable that Mr. Smith seeks

approval to pay himself compensation totaling $8,050.22 as both the

Chapter 7 trustee and counsel to the chapter 7, because the total amount of

net funds he recovered without any contested litigation was only

$7,859.87.” The court noted that even as reduced by the court’s orders,

Smith nonetheless earned a combined total of $5,178.95 of trustee’s

compensation under § 326(a) and attorney’s fees compensation under § 330

for the case.

      Smith timely appealed.

                                      12
                                JURISDICTION

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

157(b)(2)(A). We have jurisdiction under 28 U.S.C. § 158.

                                      ISSUE

      Did the bankruptcy court abuse its discretion in reducing Smith’s

attorney’s fee request in the Second Fee Application from $1,982.50 to $540?

                         STANDARDS OF REVIEW

      We review for abuse of discretion a bankruptcy court’s order

awarding compensation to an estate professional under § 330. Hopkins v.

Asset Acceptance LLC (In re Salgado-Nava), 473 B.R. 911, 915 (9th Cir. BAP

2012). We will not disturb a bankruptcy court’s award of attorney’s fees

“absent an abuse of discretion or an erroneous application of the law.” In re

Nucorp Energy, Inc., 764 F.2d 655, 657 (9th Cir. 1985); see also Dawson v.

Wash. Mut. Bank F.A. (In re Dawson), 390 F.3d 1139, 1145 (9th Cir. 2004).

      Factual findings made in the course of awarding compensation are

not disturbed unless clearly erroneous. See Friedman Enters. v. B.U.M. Int'l,

Inc. (In re B.U.M. Int'l, Inc.), 229 F.3d 824, 830 (9th Cir. 2000). A finding is

not “clearly erroneous” unless, based on the entire evidence, the reviewing

court is left with the definite and firm conviction that a mistake has been

committed. United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948).

      We review for abuse of discretion decisions on relief from judgment

under Civil Rule 60(b). See Flores v. Rosen, 984 F.3d 720, 731 (9th Cir. 2020)

(citation omitted).

                                        13
       We may affirm on any basis supported by the record. Black v. Bonnie

Springs Family Ltd. P'ship (In re Black), 487 B.R. 202, 211 (9th Cir. BAP 2013).

                                     DISCUSSION

       In his opening brief, Smith cites two specific issues to be resolved in

this appeal: 1) was the bankruptcy court “legally correct in vacating a

previous Order Allowing Administrative Fee Allowance of $1,982”; and 2)

did the bankruptcy court properly allow “only $540 for the legal services in

the Wells Fargo Adversary Litigation[?]” 9

       There are reasons why a court of appeals defers to the trial court,

especially when reviewing attorney’s fee applications. Fundamentally, the

Bankruptcy Code and cases interpreting § 330 make clear that the trial

court has an independent obligation, whether a party objects or not, to

review, critique, and reduce the fees requested if necessary, using the given

standards. See In re Crown Orthodontic Dental Grp., 159 B.R. 307, 309 (Bankr.

C.D. Cal. 1993). See also Law Offices of David A. Boone v. Derham-Burk (In re

Eliapo), 298 B.R. 392, 402 (9th Cir. BAP 2003) (the court has “wide discretion

in determining reasonable and necessary fees under § 330(a)”), aff’d in part,

rev’d in part and remanded by 468 F.3d 592 (9th Cir. 2006).10

       9 Smith does not argue for reversal on the basis that the UST targeted him by
objecting to his fee application while at the same time not objecting to similar fee
applications by other trustees. That issue is therefore waived and not discussed herein.
Maloney v. T3Media, Inc., 853 F.3d 1004, 1019 (9th Cir. 2017) (issue not argued in briefs is
waived).
       10 Section 330(a) states in relevant part:

               (a)(1) [The bankruptcy court may award] –
                                             14
      The basis for the extremely deferential standard is that the

bankruptcy court is uniquely in the best position to assess the amount of

work done, its contribution to the administration of the estate, and its

benefit to the stakeholders; and thus to determine the appropriate amount

of fees. See Phillips v. Gilman (In re Gilman), CC-18-1101-STaL, 2019 WL

3074607, at *4 (9th Cir. BAP July 12, 2019) (“It is uniquely the province of

the bankruptcy court to determine the level of review and the basis for

             (A) reasonable compensation for actual, necessary services
      rendered by the . . . attorney . . . employed by [the trustee];
             ...
             (2) The court may . . . award compensation that is less than the
      amount of compensation that is requested.
             (3) In determining the amount of reasonable compensation to be
      awarded . . . the court shall consider the nature, the extent, and the value
      of such services, taking into account all relevant factors, including—
             (A) the time spent on such services;
             (B) the rates charged for such services;
             (C) whether the services were necessary to the administration of, or
      beneficial at the time at which the service was rendered toward the
      completion of, a case under this title;
             (D) whether the services were performed within a reasonable
      amount of time commensurate with the complexity, importance, and
      nature of the problem, issue, or task addressed;
             (E) with respect to a professional person, whether the person is
      board certified or otherwise has demonstrated skill and experience in the
      bankruptcy field; and
             (F) whether the compensation is reasonable based on the customary
      compensation charged by comparably skilled practitioners in cases other
      than cases under this title.
             (4)(A) . . . the court shall not allow compensation for—
             (i) unnecessary duplication of services; or
             (ii) services that were not—
             (I) reasonably likely to benefit the debtor’s estate; or
             (II) necessary to the administration of the case.
                                          15
critique in fee review, and a reviewing court should defer as thoroughly to

that decision by the bankruptcy court as it would to any other decision

concerning reasonableness of fees[.]”) (citations omitted), aff'd, 836 F. App’x

511 (9th Cir. 2020). The skills requisite to achieve those results may be

much more obvious in mid-size or larger cases of some complexity than

they may be in cases such as the one before this Panel where there is very

little activity and the court simply does not have the same opportunity to

assess the nature of the work or whether it was actually necessary.

      These cases represent exactly that dilemma. While we do not suggest

that in every small case the court should schedule a hearing to probe the

necessity of employing counsel, neither do we accept the proposition that

the court must rely on the general assertion by the trustee in the

employment application regarding the need for attorney assistance as

establishing that any particular services actually rendered required the

expertise of counsel.

      The Bankruptcy Code requires the trustee to do his or her own work;

this requirement sometimes creates a tension in small cases like these

between the work that should be done by the trustee and that which

genuinely requires the assistance of an attorney. Therefore, it is not

surprising that the only meaningful review of the fees in small cases occurs

at the end of the case and may frequently be predicated on an objection, or

the court’s independent concern, that the services for which compensation

                                      16
is requested do not rise to the level of tasks for which the expertise of an

attorney was required.

A.    The bankruptcy court did not abuse its discretion in granting Civil
      Rule 60(b) relief to the UST.
      Civil Rule 60(b), made applicable to this matter by Rule 9024, permits

a court to “relieve a party . . . from a final judgment, order or proceeding

for [among other reasons] . . . (1) mistake, inadvertence, surprise, or

excusable neglect; . . . or (6) any other reason that justifies relief.”

      The bankruptcy court specifically found excusable neglect justifying

relief under Civil Rule 60(b)(1) because a review of the Second Fee

Application did not alert the UST to the fact that the requested fees would

result in no distribution to creditors. The court’s ruling under these

circumstances was not illogical, implausible, or without support in

inferences that may be drawn from the facts in the record.

B.    The bankruptcy court did not abuse its discretion in disallowing
      the requested compensation.
      1.    There was insufficient evidence to permit the bankruptcy
            court to find that the services were reasonable and necessary.
      Section 330 requires that an applicant establish that the fees incurred

were reasonable and necessary as the bankruptcy court correctly ruled.

Smith’s application simply does not demonstrate adherence to that

standard.

      Smith’s Second Fee Application contained no separate declaration

ascribed under penalty of perjury or narrative in the application itself that

                                        17
would support the proposition that the services rendered were reasonable

and necessary within § 330. The single-sentence explanation in the fee

application for the work is: “[t]hat the legal services rendered in this Case

were required and benefitted the Estate including (but not limited to) the

following: Legal work to prosecute and settle Adversary Litigation to

recover the Bankruptcy Estate’s interest in non-exempt Insurance Refund

Claim.”

      Smith’s response to the UST objection contained his short declaration

which simply concluded that “in [his] legal opinion,” the services

performed were “not duties which are required to be performed by a

chapter 7 Trustee[.]” His testimony at the evidentiary hearing was no more

than that: a few conclusory comments of the work he did and his belief that

he should be paid for it.

      In his opening brief, Smith set forth nineteen time entries that are

“specific examples of disallowance where the findings and conclusions are

illogical, implausible and without support in the record.” For these entries,

Smith offers a cursory explanation:

            The Court’s conclusion that the Wells Fargo Adversary
      Litigation was unnecessary is not supported by the record.
      During the eight (8) month period prior to filing the Wells
      Fargo Adversary Litigation, requests were made to Wells Fargo
      for payment. The Court documents evidence the dispute and
      the Court Ordered Proof of pre-litigation demands clearly show
      that there was a dispute.

                                      18
      That conclusory statement is woefully short of the sort of factual

support necessary to establish that the requested fees were reasonable and

necessary. And identifying a task as related to a dispute does not remove it

from the trustee’s obligations.

      The bankruptcy court’s ruling does not leave us with a definite and

firm conviction that a mistake has been committed.

      2.        There was insufficient evidence to permit the bankruptcy
                court to find that the disallowed services required special
                expertise.
      The UST’s main objection to the fee application was that the services

performed by Smith, purportedly as the trustee’s attorney, were services

which the trustee would generally undertake on his or her own. Section

328(b) 11 unambiguously requires that the fees awarded to an attorney

representing a trustee in a bankruptcy case must not include any time for

“performance of any of the trustee’s duties that are generally performed by

a trustee without the assistance of an attorney . . . for the estate.”

      Section 704 sets forth the trustee’s duties which include collecting

and reducing to money the property of the estate, investigating the

financial affairs of the debtor, examining the proofs of claim with a view

      11   Section 328(b) states in relevant part:
      (b) If the court has authorized a trustee to serve as an attorney . . . for the
      estate under section 327(d) of this title, the court may allow compensation
      for the trustee’s services as such attorney . . . only to the extent that the
      trustee performed services as attorney . . . for the estate and not for
      performance of any of the trustee’s duties that are generally performed by
      a trustee without the assistance of an attorney . . . for the estate.
                                               19
toward objecting to allowance, and preparing the trustee’s final account.

The role of counsel for the trustee is to perform those tasks that require

special expertise beyond that expected of an ordinary trustee. “Only when

unique difficulties arise may compensation be provided for services which

coincide or overlap with the trustee’s duties and only to the extent of

matters requiring legal expertise.” See Ferrette & Slater v. U.S. Tr. (In re

Garcia), 335 B.R. 717, 725 (9th Cir. BAP 2005) (quotation marks and citation

omitted). Attorneys must therefore present sufficient evidence including

billing records with enough detail to establish that the services rendered

went beyond the scope of the trustee’s statutory duties and involve unique

difficulties. Id. at 727. The cryptic descriptions in the billing statements

provoked the court’s concern about Smith’s dual role in this case. Even the

bankruptcy court’s entreaties to Smith before the evidentiary hearing did

not prompt Smith to adequately explain why the WFB related tasks

required attorney expertise. Smith’s failure to adequately explain the

context of the time entries prevented the court from making the required

findings in Smith’s favor.

      There is nothing in the record that would support a finding that the

fees disallowed by the bankruptcy court were for services which required

expertise beyond that expected of an ordinary trustee. It is not clear error to

find that these and similar entries are efforts Congress intended to be

undertaken by the trustee and compensated under § 326(a).

                                        20
      3.    Section 330 implicitly requires counsel to exercise billing
            discretion; therefore, the bankruptcy court properly
            considered the anticipated return to creditors standard when
            disallowing the time and fees.
      Beyond the literal language that the services must be reasonable and

necessary to be compensable, “[p]rofessionals have an obligation to

exercise billing judgment.” Lobel & Opera v. U.S. Tr. (In re Auto Parts Club,

Inc.), 211 B.R. 29, 33 (9th Cir. BAP 1997). Having an attorney perform a task

does not compel a finding that the fees were necessary per se, and we

implicitly rely on the trustee to exercise appropriate discretion before

burdening the estate, and in particular a small estate, with attorney’s fees

where the task might well have been performed by the trustee.

      The “actual and necessary” prong of § 330(a)(1) requires the trustee

to consider the potential for recovery and balance the effort required

against the results that might be achieved. See Unsec. Creditors' Comm. v.

Puget Sound Plywood, Inc. (In re Puget Sound Plywood, Inc.), 924 F.2d 955, 961

(9th Cir. 1991) (“Absent unusual circumstances, an attorney must scale his

or her fee at least to the reasonably expected recovery.”).

      Smith offered no explanation as to why having an attorney do the

paperwork for the WFB dispute was required to monetize what was going

to be a simple and nominal recovery for the estate. Smith offered no

evidence that he considered the potential for recovery or did any balancing

assessment before incurring attorney’s fees. That was his burden, and we

cannot second guess the bankruptcy court’s finding that the expertise of an

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attorney was not necessary. Smith’s blind insistence that it was

compensable professional time because he said so is not sufficient to satisfy

the requirements of the Bankruptcy Code.

                              CONCLUSION

     For these reasons set forth above, we AFFIRM.

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