Tamm v. UST-United States Trustee (In Re Hokulani Square, Inc.)
776 F.3d 1083
9th Cir.2015Background
- Hokulani Square, Inc. filed chapter 7; Bradley Tamm was appointed trustee.
- Trustee moved to sell condominium complex at auction to avoid estate liability; two secured creditor groups submitted the winning $1.5M bid.
- Secured creditors used a credit bid under 11 U.S.C. § 363(k), applying their claim against the estate instead of paying cash; the trustee turned over the property and the estate’s debt was reduced.
- Tamm calculated his statutory fee under 11 U.S.C. § 326(a) including the $1.5M credit bid and requested $109,293; the U.S. Trustee objected, arguing credit bids aren’t “moneys disbursed.”
- Bankruptcy court awarded full fee; BAP reversed; Ninth Circuit reviewed de novo and affirmed the BAP.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 326(a) permits trustee fees calculated on the value of a credit bid | Tamm: trustee’s work on a sale/turnover justifies counting credit bid value as part of “moneys disbursed” | U.S. Trustee: “moneys disbursed” means cash/monetary payments only; property turned over in satisfaction is not a money disbursement | Held: § 326(a) bars counting credit bids; fees limited to actual moneys disbursed or turned over |
| Whether pre‑Code practice or prior Ninth Circuit dicta require including credit bids | Tamm: historical practice and case language support treating property turnovers as constructive disbursements | U.S. Trustee: Code’s clear text and legislative history control; prior cases don’t compel a different reading | Held: legislative text and history control; cited pre‑Code authority is insufficient to override § 326(a) plain meaning |
| Whether treating credit bids as excluded produces an absurd result warranting departure from text | Tamm: excluding credit bids can produce arbitrary differences for identical trustee work | U.S. Trustee: statutory text is rational and reflects policy choices by Congress | Held: not absurd enough to override statutory text; courts must follow Congress’ language |
| Whether precedent supports a fee base broader than cash disbursements | Tamm relied on York and Southwestern Media; argued trustee services justify fee | U.S. Trustee: those cases are inapplicable or dicta and do not define § 326(a) | Held: those cases don’t control; § 326(a) governs and excludes credit bids |
Key Cases Cited
- In re England, 153 F.3d 232 (5th Cir.) (§ 326(a) caps trustee compensation to moneys disbursed and excludes property given to creditors)
- In re Lan Assocs. XI, L.P., 192 F.3d 109 (3d Cir.) (Congress did not intend to include credit bids in trustee compensation)
- Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1 (2000) (clear statutory text controls over reliance on past practice)
- York Int’l Bldg., Inc. v. Chaney, 527 F.2d 1061 (9th Cir.) (pre‑Code footnote treating mortgage assumption as disbursement—court found it inapplicable here)
- Sw. Media, Inc. v. Rau, 708 F.2d 419 (9th Cir.) (discusses trustee duties; advisory language about fee base held to be dicta)
- In re Sasson, 424 F.3d 864 (9th Cir.) (standard of review: de novo for statutory interpretation in bankruptcy appeals)