FILED DEC 19 2023 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY.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-23-1050-LCF EARLE’S CUSTOM WINES, INC., dba Yuma’s Main Squeeze, Bk. No. 0:17-bk-00797-SHG Debtor.

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 Earle’s Custom Wines,

Inc., was employed to serve as attorney for the estate with the approval of

* 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, and “Rule” references are to the Federal Rules of Bankruptcy Procedure. 1 the bankruptcy court. Smith later filed a fee application seeking attorney’s

fees of $10,980, incurred during his administration of the estate. Based on

the U.S. Trustee’s (“UST”) opposition to the fee application and the

bankruptcy court’s independent analysis of the requested fees, the

bankruptcy court reduced the fees to $3,360. Smith appeals the reduction.

Seeing no error, we AFFIRM. 2

FACTS 3

A. The bankruptcy case and Smith’s activities

Earle’s Custom Wines, Inc. filed its chapter 7 petition on January 27,

2017. Smith was appointed trustee. Two weeks into the case, Smith filed a

two-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 was a sole practitioner and had no conflicts. There

being no objections, the application was approved.

On February 17, 2017, Smith filed a two-page “Trustee’s Application

for Authority to Sell Personal Property at Private Sale.” In the application,

Smith requested permission to sell the “Remaining Restaurant and Bar

Equipment located in leased premises” which he estimated to have a value

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 Figueroa), BAP No. AZ-23- 1048-LCF; and (3) Smith v. UST (In re Banghart), BAP No. AZ-23-1049-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 proceedings. See Atwood v. Chase Manhattan Mortg. Co. (In re Atwood),

, 233 n.9 (9th Cir. BAP 2003). 2 of $8,000 to $10,000. The application did not identify a buyer, nor did it

include a declaration or other evidence. As there were no objections, the

court approved it. About a month later, Smith filed a report of the sale

indicating he sold the equipment for $8,000.

On July 25, 2017, Smith filed a three-page adversary complaint

against Pinnacle Capital Partners, LLC seeking to avoid its alleged security

interest in a “table tap” wine dispenser on the basis that Pinnacle did not

perfect its interest by filing a UCC-1 (the “Pinnacle Litigation”). When

Pinnacle failed to answer the complaint, Smith filed a two-page motion for

entry of default, a two-page “statement of facts,” and a default judgment

which the court entered on September 25, 2017.

Also on July 25, 2017, Smith filed a four-page adversary complaint

against Yuma Industrial Buildings, LLC, the Debtor’s storage facility,

asserting that it refused Smith access to the premises and “may have

moved, sold or otherwise disposed of the business property which was

stored at the leased Warehouse Space” (the “Yuma Storage Facility

Litigation”). This matter was settled a few months later for $4,000, which

settlement the court approved.

Smith, in his capacity as trustee, addressed a number of other issues

typical of a commercial bankruptcy including the administrative rent with

the landlord, change of locks, release of an alleged landlord’s lien, a

security deposit issue, and investigation of potential recovery of other

assets.

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

a single proof of claim was filed on November 19, 2017, by an unsecured

creditor for $2,621.40.

B. The fee applications and UST’s objections

On December 23, 2019, Smith filed an “Application for Allowance of

Administrative Expense – and – Rule 2016 Disclosure.” The application

sought fees of $10,350 for 34.5 hours of work at $300 per hour and $26 for

costs. 4 Smith attached his billing statements which had category titles for

each entry but there was no summary of the time for each category, in the

application or the billing statements, and no correlation of the fees

requested to the value received for the estate. The application noted that if

there were no objections, Smith would reduce the amount of fees requested

to $8,000.5 There was no declaration to support the application.

The UST timely objected to Smith’s application, arguing that there

was improper lumping of time on specified time entries, and that Smith

should not be paid .8 hours for drafting and filing his own employment

application. The UST 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 circumvent the Supreme Court’s decision in Baker Botts

4 These fees are separate from, and in addition to, Smith’s right to a commission as a trustee under § 326(a), estimated by the UST to be $2,078 based on Smith’s Trustee Final Report (“TFR”). 5 It appears from the TFR that Smith had about $9,200 in his trust account at this

time. 4 LLP v. ASARCO LLC,

, 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

approximately nine months later, in October 2020, when Smith filed an

amended fee application which sought fees of $10,980 (a $630 increase

above the first application) for 36.6 hours (a 2.1 hour increase in time) 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 voluntary reduction in fees. It replaced the 2.0

hour entry for preparation of the original fee application with a 2.5 hour

entry for preparation of the amended application. There was no other

explanation why the total time increased by 2.1 hours.

The UST objected again that the application still had inappropriate

lumping and that the application sought attorney’s fees for “the

performance of . . . trustee’s duties.” The UST specifically identified the

following categories of entries as inappropriate for reimbursement, arguing

the efforts were part of the trustee’s duties rather than an attorney’s duties:

1. Resolution of Administrative Rent Claim;

2. City of Yuma Street Sidewalk Lease Security Deposit Issue;

3. P.O. Sale Ownership Issue;

4. Landlord’s Lien/Building Fixtures Issue;

5. Access to Leased Premises & Landlord’s Lien;

6. Recovery of Wine Making Equipment;

5 7. A.P.S. Advance Deposit Matter; and

8. Business Equipment Recovery & Sale.

The objection did not specify the amount of fees requested for each of

the above categories but noted the specific time entries on Smith’s billing

statements to which it objected. The UST generally did not object to the

entries relating to preparation or filing of pleadings in the two adversary

proceedings.

Shortly thereafter, the bankruptcy clerk filed a preprinted

Memorandum to Case Trustee noting that there had been no activity in the

case for more than one year and that “it is unclear as to whether this case is

continuing to be administered or whether an appropriate final report

should be filed and the case closed.”

C. The hearings on Smith’s Amended Fee Application

Neither Smith nor the UST timely responded to the case

memorandum; rather seven months later the UST filed a “request for status

hearing regarding Memorandum to Case Trustee and United States

Trustee’s Objection to First Amended Application for Allowance of

Administrative Expenses – Attorney’s Fees,” noting that there was no

activity in this case and that the Amended Fee Application was pending.

Thereafter, the bankruptcy court set a status hearing which was heard on

August 4, 2022.6

This was a combined hearing for all four of the cases for which the Panel heard 6

argument on September 28, 2023. 6 At the hearing, Smith suggested that the bankruptcy court simply

rule on the outstanding fee application and the objection without further

hearings. 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 six entries on Smith’s billing statements

“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 ordered Smith to

explain the need for the “research” entries and to “de-lump” each entry so

it could “accurately determine the reasonableness of the fees requested.”

The court instructed 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

review fee applications by independent counsel as it does to review those

by trustees also serving as attorneys for the estate.”

7 Smith’s response noted that his “legal efforts” resulted in a recovery

for the estate of $5,250 (net) for the sale of the equipment, 7 $4,000 in the

Yuma Storage Facility Litigation, and $800 in the Pinnacle Litigation. Smith

offered a cursory response regarding the research he undertook but

repeated his position that all his time billed 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’s 8 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.”

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

Required by 9/8/2022 Court Order” in which he annotated in handwriting

his “lumped” time entries showing how much time was spent on the

multiple portions of each entry.

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

7 As noted, Smith sold the equipment for $8,000 and later paid the landlord $2,750 for administrative rent for a net of $5,250. 8 Apparently the only other chapter 7 trustee in the Yuma, Arizona area.

8 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 and 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

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 recitation 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 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.

On December 20, 2022, the bankruptcy court conducted an

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

9 Smith testified summarily that “this was a difficult business case.” He

noted that it was a no-asset case from the beginning with numerous issues

which his efforts resolved. On cross-examination, Smith continued to insist

that he hired himself to do the legal work because “legal issues were

presented” and that all his time represented work typically performed by a

trustee’s attorney, not the trustee.

D. The bankruptcy court’s ruling on the Amended Fee Application

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”). In the Memorandum, the court specifically ruled on

each line item in Smith’s timesheets, about 120 entries in total. The court

concluded that twelve of the line items were compensable as attorney’s fees

and the remainder were not. The most common reason for the

disallowance was that the entries were “tasks routinely performed by

trustees without counsel assistance” or because Smith “failed to

demonstrate” how the efforts in the time entry “required legal expertise.”

The court separately categorized forty-four entries for the two adversary

proceedings and allowed one entry for the Yuma Storage Facility Litigation

(.3 hours for research re service on a foreign LLC), and four for the Pinnacle

Litigation (2.3 hours in total). As to the 3.3 hours for the employment and

fee applications, the court allowed that time, stating that the time was

compensable “as it is routine in this district for attorneys for the estate to

request compensation for preparing . . . the applications.” The court

10 allowed 5.3 additional hours for various other tasks it deemed appropriate

for counsel for the trustee. It disallowed everything else.

The bankruptcy court concluded that the disallowed “services were

neither reasonable nor necessary.” It stated, “Smith . . . failed to

demonstrate how any of those services performed involved legal expertise

beyond the duties routinely performed by trustees without counsel

assistance.” It further noted that the reduction “is warranted based on [the

court’s] review for reasonableness and necessity and the anticipated return

to creditors in this case.” The court reduced the attorney’s fees requested

from $10,980 to $3,360.

Smith timely appealed.

JURISDICTION

The bankruptcy court had jurisdiction under

and

157(b)(2)(A). We have jurisdiction under

.

ISSUE

Did the bankruptcy court abuse its discretion in reducing the

trustee’s attorney’s fee request from $10,980 to $3,360?

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),

(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

11 Nucorp Energy, Inc.,

(9th Cir. 1985); see also Dawson v.

Wash. Mut. Bank F.A. (In re Dawson),

(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.),

(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.,

(1948).

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

Springs Family Ltd. P'ship (In re Black),

(9th Cir. BAP 2013).

DISCUSSION

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

this appeal: 1) were the bankruptcy court’s conclusions disallowing the fees

“legally correct?”; 2) did the bankruptcy court err in finding that it was

Smith’s “burden of proof to establish each and every time entry was

compensable and that the objecting party (U.S. Trustee) did not have any

burden of proof?”; and 3) did the UST provide any evidence to support its

position?9

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.,

(9th Cir. 2017) (issue not argued in briefs is waived). 12 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.,

(Bankr.

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

Eliapo),

(9th Cir. BAP 2003) (stating that 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

(9th Cir.

2006). 10

10 Section 330(a) states in relevant part: (a)(1) [The bankruptcy court may award] – (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 13 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,

, 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

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,

(9th Cir. 2020). The skill 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

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 14 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

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

attorney was required.

A. The bankruptcy court properly ruled that Smith had the burden of proof to establish that his requested compensation complied with the Bankruptcy Code. Smith’s principal argument is that the party objecting to an

application for compensation has the burden of proof to show that fees are

unreasonable or unnecessary, citing Koncicky v. Peterson (In re Koncicky),

BAP No. WW-07-1170-MkPaJ,

(9th Cir. BAP Oct. 19,

2007). We agree that a party objecting to the fees must establish that the

(II) necessary to the administration of the case. 15 fees are unreasonable. But we do not agree that the burden of the objecting

party somehow relieves the professional from its burden to establish that

its requested fees are reasonable in the first instance. In Koncicky, the debtor

objected to the Trustee’s Final Report including the requested fees and

costs. The bankruptcy court overruled the objection on the basis that the

debtor offered no factual or legal basis for reversal.

. The Panel in

Koncicky noted that the record contained ample evidence to support the fee

award and affirmed the ruling.

Neither Koncicky nor any other authority creates a presumption in

favor of the trustee which can only be overcome by objection to the fee

application. The Bankruptcy Code permits a court to award fees to the

trustee as attorney but “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.” See § 328(b).11 The court is

required to find that the fees are reasonable and only for services actually

and necessarily rendered. See § 330(a). The Bankruptcy Code requires the

court to “tak[e] into account all relevant factors” including whether the

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. 16 services were “beneficial at the time at which the service was rendered”

and “reasonably likely to benefit the estate.” § 330(a)(3) and (4).

Smith asks the Panel to find that his fees were appropriate solely

because the UST did not establish that the fees were inappropriate. That

standard would stand the statute on its head. The burden is on the party

requesting allowance of the fees to establish that the requirements of the

Code have been met. See In re McKenna,

(Bankr. E.D. Cal.

1988); In re Gary Fairbanks, Inc.,

(Bankr. N.D. Iowa 1990)

(“The burden is on the trustee to demonstrate that services for which

attorney’s fees are sought are not duties generally performed without the

assistance of counsel.”). In In re King,

(Bankr. S.D. Tex.

2016), the court stated, “[w]here insufficient explanatory information is

provided for determining the precise nature of the services rendered, the

[C]ourt is compelled to determine that the services are not compensable as

legal services.” (Citation omitted) (alteration in original).

Smith also obliquely complains that, even if it is his burden of proof,

he should not have to support “each and every time entry.” We disagree.

Section 330(a) does not modify the professional’s or the court’s duties

based on the size of the time entry. Smith cites no authority to support his

position.

In the last analysis, the bankruptcy court reduced the requested

attorney’s fees, as it is expressly permitted to do in § 330(a)(2), because

Smith failed to offer sufficient evidence that the fees were reasonable and

17 necessary under the requirements of § 330(a).12 There is no erroneous

application of the law on this issue.

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 asserts to the Panel that his “[d]eclaration and testimony” in

support of the Amended Fee Application established that all of his time

entries “were legal services, which are routinely performed by Attorneys

employed in Chapter 7 Cases . . .” However, Smith’s Amended Fee

Application contained no separate declaration ascribed under penalty of

perjury supporting the proposition that the fees he incurred were

reasonable and necessary within § 330. And his 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[.]” He offered no

12 We note that the bankruptcy court referenced in its Memorandum that, for each time entry disallowed, the UST objection was sustained, even though the UST did not specifically object to some of the time entries. Because the bankruptcy court is required to make an independent determination of the allowability of each entry, we treat any error as harmless. 18 evidentiary support for that position beyond his bare conclusory

statements. 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 ten pages of “specific examples of

disallowance where the findings and conclusions are illogical, implausible

and without support in the record.” These “examples” and the related

explanations were not included in Smith’s pleadings to the bankruptcy

court nor in his testimony at the evidentiary hearing, certainly not with the

specificity laid out in the brief.

Smith failed to provide any such specificity to the bankruptcy court

and thus the factual arguments he seeks to make now could not be

evaluated by the court, and it is improper for Smith to raise these factual

issues before this Panel. “A litigant may waive an issue by failing to raise it

in a bankruptcy court.” Mano-Y & M, Ltd. v. Field (In re Mortg. Store, Inc.),

(9th Cir. 2014). “There is no bright-line rule to determine

whether a matter has been properly raised. A workable standard, however,

is that the argument must be raised sufficiently for the trial court to rule on

it.” O’Rourke v. Seaboard Sur. Co. (In re E.R. Fegert, Inc.),

(9th Cir. 1989) (internal citations omitted).

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

firm conviction that a mistake has been committed.

19 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 Amended Fee Application is that the

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

services which the trustee would generally undertake. Section 328(b)

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

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.” Ferrette & Slater v. U.S. Tr. (In re Garcia),

(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.

. The cryptic descriptions in the billing statements 20 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 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.

Many of the line entries in Smith’s billing statements are trustee’s

duties; that cannot be reasonably disputed. Such time entries include, for

example, meeting with the landlord to change the locks, discuss the

delinquent rent and other issues (.9); meeting with the landlord to resolve

administrative rent (.7); discussion with the utility company re the security

deposit (.9); meet with Fred Earle regarding equipment and the storage

facility (1.0); and negotiations with the buyer of the equipment (1.3) which

are all duties similar to the types of duties typically performed by trustees.

Smith offers no explanation about why those tasks would require expertise

beyond that of the usual chapter 7 trustee.

In addition, many of the line entries are tasks usually completed by

office staff. Smith’s billing statements include numerous entries of

preparing affidavits of service and notices of various types, reviewing the

docket, serving copies of various pleadings and documents. These tasks do

not require the special expertise of a bankruptcy attorney with forty years’

experience. Smith’s failure to concede even a single entry undercuts his

sincerity in insisting that none of the work was trustee work.

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

efforts disallowed by the bankruptcy court 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).

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.),

(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.),

, 961

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

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

22 Smith offered no explanation as to why having an attorney do many

of the tasks was required to monetize what was obviously going to be a

simple and nominal recovery for the estate. Smith offered no evidence that

he considered the potential for recovery and 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

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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