750 F.3d 392
4th Cir.2014Background
- This appeal concerns whether, post-BAPCPA, Chapter 7 trustees are to be paid on a commission basis absent extraordinary circumstances.
- The case centers on H. Jason Gold, a Chapter 7 trustee, whose requested fee was reduced by the bankruptcy court.
- The bankruptcy court reduced Gold's fee from $17,254.61 to $8,020.00 for purported nonperformance.
- The district court affirmed the bankruptcy court's non-commission-based award.
- The Fourth Circuit held that, absent extraordinary circumstances, § 330(a)(7) requires a commission-based calculation under § 326(a), and remanded for proper application of that standard.
- The opinion addresses due-process concerns related to notice and opportunity to present evidence before the fee reduction, ultimately directing remand to determine the correct commission-based fee.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Chapter 7 trustees must be paid on a commission basis absent extraordinary circumstances. | Gold argued for commission-based fees under § 330(a)(7) read with § 326(a). | Bankruptcy court/ district court applied non-commission-based compensation due to alleged extraordinary factors. | Yes; absent extraordinary circumstances, commission-based fees apply. |
| Whether this case should be remanded to apply the correct standard after an evidentiary hearing due to due-process concerns. | Gold contends due process was violated by reduced compensation without notice or opportunity to present evidence. | Lower courts should have opportunity to apply proper standard on remand. | Remand to district court with instructions to vacate and return to bankruptcy court for proper commission-based determination. |
Key Cases Cited
- In re Salgado-Nava, 473 B.R. 911 (Bankr.E.D.N.C. (2012)) (supports commission-based default and extraordinary-circumstances framework under § 330(a)(7) and § 326(a))
- In re Rowe, 484 B.R. 667 (Bankr.E.D.VA. (2012)) (discusses extraordinary circumstances in reducing trustee fees)
- In re Brous, 370 B.R. 563 (Bankr.S.D.N.Y. (2007)) (notes § 326(a) sets limits but not a right to its application without review)
- In re Clemens, 349 B.R. 725 (Bankr.D.Utah (2006)) (prior view on reasonableness of fees after BAPCPA amendments)
- Gilbert v. Residential Funding LLC, 678 F.3d 271 (4th Cir. 2012) (cuss on plain meaning of statutes and regulatory coherence)