Medina, 5:23-cv-04988

Jose Medina filed for Chapter 13 bankruptcy and sold his residential property, with the sale proceeds distributed by the Chapter 13 Trustee, Devin Derham-Burk, to creditors.
The Trustee calculated her statutory fee (10%) based on the first proof of claim (Claim #10-1) on file at the time, amounting to $24,143.72.
Shortly after the sale, a second, lower proof of claim (Claim #10-2), with less documentation, was filed by the creditors’ new attorney but not the prior loan servicer.
Medina filed a Motion to Disgorge, seeking recovery of the difference in Trustee fees, arguing that the Trustee improperly used Claim #10-1 instead of the subsequently filed Claim #10-2.
The Bankruptcy Court denied Medina’s motion and later dismissed the bankruptcy case for lack of prosecution.
On appeal, the District Court was asked to review whether the Trustee breached her fiduciary duty and whether Medina was entitled to a return of fees.

Issue	Medina's Argument	Trustee's Argument	Held
Did the Trustee breach fiduciary duty by using Claim #10-1 for the fee calculation?	The Trustee should have waited or used Claim #10-2, which reflected a smaller debt, thus a lower fee.	Only Claim #10-1 was valid and on file at the time of disbursement; Claim #10-2 was unsupported and filed late.	No breach; Trustee acted properly using Claim #10-1.
Was Medina entitled to disgorgement of excess trustee fees?	Trustee retained a windfall by calculating fees on the larger, outdated claim, demanding disgorgement.	Fee was correctly calculated per statute; no evidence of improper conduct or personal gain.	No disgorgement required; Trustee followed statutory procedures.
Did the Trustee have a duty to object to Claim #10-2?	The Trustee’s lack of objection to Claim #10-2 proves she accepted its validity, contradicting her use of Claim #10-1.	Claim #10-2 lacked required documentation and legal sufficiency; no need to object as Claim #10-1 controlled.	No duty to object because Claim #10-2 was not valid or controlling.
Should the Trustee return all fees after case dismissal per In re Evans?	Bankruptcy plan was never confirmed; the Trustee must return all collected fees upon dismissal.	Not addressed, as this matter was not ripe at the time of the contested order.	Medina must seek return of fees in Bankruptcy Court post-dismissal; affirmed.

In re Evans, 69 F.4th 1101 (9th Cir. 2023) (Trustee must return Chapter 13 fees if plan not confirmed and case dismissed)
In re Icenhower, 757 F.3d 1044 (9th Cir. 2014) (review standards for bankruptcy appeals)
Reeder v. Specialized Loan Servicing LLC, 52 Cal. App. 5th 795 (Cal. Ct. App. 2020) (statute of frauds applies to extensions of maturity dates under California law)