FILED NOV 17 2025 ORDERED PUBLISHED 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 Nos. EC-25-1077-CBS DONALD ALFRED GILSVIK, EC-25-1079-CBS Debtor. (Related Appeals)

DONALD ALFRED GILSVIK; GARY Bk. No. 25-20121 FRALEY, Appellants. OPINION

Appeal from the United States Bankruptcy Court for the Eastern District of California Christopher D. Jaime, Bankruptcy Judge, Presiding

APPEARANCES: Gary Ray Fraley of Fraley & Fraley, PC on brief for appellants.

Before: CORBIT, BRAND, and SPRAKER, Bankruptcy Judges.

CORBIT, Bankruptcy Judge:

INTRODUCTION

Chapter 71 debtor Donald Gilsvik (“Mr. Gilsvik”) and his attorney

1 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code,

, all “Rule” references are to the Federal Rules of Bankruptcy Procedure, and all “LBR” references are to the Local Bankruptcy Rules Gary Fraley (“Mr. Fraley”) each appeal the bankruptcy court’s order

determining the reasonable amount of Mr. Fraley’s attorney’s fees. Because

the bankruptcy court did not abuse its discretion, we AFFIRM. We publish

this decision to recognize again the duty that bankruptcy courts have to

ensure attorney’s fees are reasonable under the Bankruptcy Code and that

counsel receiving such fees bears the burden of proof.

FACTS

On January 13, 2025, Mr. Fraley of Fraley & Fraley PC (the “Law

Firm”) filed a skeletal chapter 7 petition on behalf of Mr. Gilsvik to stop an

imminent foreclosure. Attached to the petition was an attorney

compensation disclosure form which advised the court that the Law Firm

was paid $7,199.00 from Mr. Gilsvik’s friend for legal services related to the

bankruptcy.2

The skeletal petition was missing the required schedules A-J, the

statement of monthly income, the statement of financial affairs, and the

summary of assets and liabilities. Accordingly, the clerk of the bankruptcy

for the Eastern District of California. 2 At the time of his filing, Mr. Gilsvik’s source of income consisted of Social Security payments. Despite the payment of over $7,000 for legal fees, Mr. Gilsvik sought and was granted a waiver of the chapter 7 filing fee. Mr. Gilsvik provided no explanation as to why he could not pay the fee in installments. Payment of attorney’s fees or the promise to pay is among the factors a court may consider when determining whether a debtor is able to pay the fee in installments. In re Hayes,

, 516 (Bankr. W.D. Mich. 2018). Filing fees support the bankruptcy system in several ways including assuring that trustees receive some compensation for their work in even the smallest no asset cases. See, e.g., In re Gjerde,

(Bankr. E.D. Cal. 2015). 2 court entered a notice of incomplete filing and an intent to dismiss the case

if the schedules and required documents were not filed by January 27,

2025.

On January 27, 2025, Vhal Roncesballes, another attorney with the

Law Firm, sought and was granted an additional 14 days to file Mr.

Gilsvik’s required schedules and documents.

On January 29, 2025, the bankruptcy court sua sponte entered an order

to show cause why Mr. Fraley should not be sanctioned for noncompliance

with the local bankruptcy rules (“OSC”). In the OSC, the bankruptcy court

noted that Mr. Fraley’s attorney compensation disclosure form expressly

excluded representing the debtor in motions for relief from the automatic

stay despite the local bankruptcy rule, LBR 2017-1(a)(1), which requires

attorneys to include this service in their bankruptcy representation. 3 The

OSC noted that the court routinely issued such orders and listed

twenty-one other cases in which a similar OSC was issued.

Yuhua Song, another attorney at the Law Firm, filed a response to the

court’s OSC. Ms. Song’s response did not address the court’s concern that

Mr. Fraley’s scope of representation conflicted with what was required by

Mr. Fraley’s compensation disclosure form stated, “By agreement with the 3

debtor(s), the above-disclosed fee does not include the following service: Representation of the debtors in any . . . relief from stay actions.” LBR 2017-1(a)(1) states: “An attorney who is retained to represent a debtor in a bankruptcy case constitutes an appearance for all purposes in the case, including, without limitation, motions for relief from the automatic stay, motions to avoid liens, objections to claims, and reaffirmation agreements.” 3 the local bankruptcy rules. Rather, Ms. Song appeared to believe that the

OSC was issued because Mr. Fraley failed to include the attorney

disclosure compensation statement with the petition. Ms. Song apologized

for failing to submit the disclosure form with the bankruptcy petition.

Ms. Song asked the court to not impose sanctions and to accept her

assurance that the failure to file the compensation disclosure form would

not occur again.

At the hearing on the OSC, both Mr. Fraley and Ms. Song appeared.

Mr. Fraley acknowledged that Ms. Song’s response did not address the

issue identified in the OSC. Mr. Fraley assured the court that he now

understood the court’s concerns and had filed an amended attorney

compensation disclosure statement which removed the limiting language.

Mr. Fraley stated that the limiting language was inadvertently added by a

software update.

The bankruptcy court accepted Mr. Fraley’s explanation and stated

that the purpose of the OSC was not to sanction Mr. Fraley, but to bring the

issue to Mr. Fraley’s attention so he could fix it. Based on Mr. Fraley’s

assurances that the language in his attorney disclosure statement was

corrected, the bankruptcy court discharged the OSC.4

At the same hearing, the bankruptcy court queried Mr. Fraley as to

4 A review of the twenty-one other cases in which the court issued a similar OSC demonstrates similar outcomes − the issue was corrected, and no sanctions were ordered. 4 the amount of attorney’s fees he had charged. The bankruptcy court asked

Mr. Fraley, “don’t you think $7199 is a little high for a run of the mill

Chapter 7 case?” Mr. Fraley replied that he believed that $7,199 was an

“appropriate” flat fee based on “25 or so factors” he looked at when setting

fees. 5

The bankruptcy court was not convinced, stating, “it takes five

minutes” to file a petition even if it is an emergency filing because “it’s all

electronic.” The bankruptcy court reasoned that even including charges for

a foreclosure and tax returns, the total should not be more than $5,000.

Mr. Fraley responded that his firm routinely did extra work that

“other attorneys should do but don’t.” The bankruptcy court questioned

such justification reasoning that was the nature of a flat fee, “sometimes

you’re going to do more work. Sometimes you’re going to do less work.”

The bankruptcy court communicated its intent to reduce Mr. Fraley’s fees

to “no more than $5,000 for this case.”

When Mr. Fraley continued to object to any reduction, the

bankruptcy court challenged Mr. Fraley to identify the number of other

attorneys in the district who charged $7,200 for a chapter 7 case. Mr. Fraley

responded that he did not know but would be “happy” to research it. The

bankruptcy court accepted Mr. Fraley’s response, stating, “[h]ere’s what

Mr. Fraley stated that some of the factors that he considered when setting fees 5

are whether the debtor is married, owns a residence, is facing foreclosure, or has unfiled tax returns. 5 I’m going to do. I’ll give you an opportunity to convince me otherwise. I’m

going to set an order to show cause . . . for you to show cause . . . in

writing why your fee of $7,199 for this chapter 7 case is reasonable.”

Following the hearing, consistent with its oral ruling, the bankruptcy

court issued an “amended order to show cause and notice of intent to

disgorge attorney’s fees (“Fee OSC”).6 The Fee OSC stated in relevant part:

The court has conducted its own independent review of attorney’s fees charged by 20 bankruptcy practitioners who regularly represent debtors in chapter 7 cases filed in the Eastern District of California bankruptcy court and who have appeared in chapter 7 cases assigned to Department B in the past 3 months. The attorney’s fees charged by the attorneys in this sample range from a low of $750.00 to a high of $4,000.00. Notably, this sample includes attorney Fraley who has charged between $2,249.00 and $3,349.00.

In this court’s view, $7,199.00 exceeds the reasonable value of services to be provided in this individual chapter 7 case. The court intends to disgorge and order Attorney Fraley to return $3,199.00 to the debtor or other source of payment from which attorney’s fees for this chapter 7 were received resulting in attorney’s fees for the reasonable value of services in this chapter 7 case of $4,000.00. See

(b).

As stated on the record on February 11, 2025, Attorney Fraley is ORDERED to show cause, in writing filed by April 1, 2025, why $7,199.00 is the reasonable value of services to be provided in this chapter 7 case and why $3,199.00 should not be disgorged and ordered returned. Attorney Fraley is cautioned that his

6 The bankruptcy court granted Mr. Fraley’s request to extend the response time to sixty days. 6 written response is subject to and will be reviewed under Fed. R. Bankr. P. 9011.

Mr. Fraley, Ms. Song, Mr. Roncesballes, and Mr. Gilsvik each filed a

response to the Fee OSC. Mr. Fraley argued that his rate was reasonable

because of the amount of work required in this case. Mr. Fraley argued that

he had provided prepetition planning, contacted and coordinated with a

personal injury attorney regarding Mr. Gilsvik’s possible personal injury

claims, and provided post-filing services to “avoid foreclosure on Debtor’s

home after the case [was] completed.” Mr. Fraley also argued that he had

to spend additional time on the case because he had problems getting

information and documents from Mr. Gilsvik. Mr. Fraley acknowledged

that he charged more than most attorneys but asserted that this fact was

fully disclosed to clients prior to engagement of his services. Much of

Mr. Fraley’s response was devoted to his belief that the fee was justified

because of his skill and experience.

As to the specific information requested by the court − identifying the

number of attorneys in the same district who were charging over $7,000 for

a no-asset chapter 7 case − Mr. Fraley stated he needed additional time.

Mr. Fraley asserted that to compile such information would take him

additional weeks and hundreds of phone calls. Mr. Fraley made this

assertion despite the bankruptcy court explaining in the Fee OSC that the

information was readily available by reviewing the court’s dockets and the

court collected the information in less than a day.

7 Ms. Song’s and Mr. Roncesballes’s responses claimed that Mr.

Gilsvik’s case contained multiple complexities requiring additional hours

of work that were not apparent from the schedules. Both lawyers admitted

that Mr. Fraley’s fees were higher than other attorneys. Mr. Gilsvik

requested that the court allow Mr. Fraley’s fees at the full amount because

he hired Mr. Fraley “for a reason – his office is the best in town.”

Mr. Gilsvik also believed his case required a lot of work.

After reviewing the responses and attached exhibits, the bankruptcy

court issued an order sustaining the Fee OSC and determining that the

reasonable amount of attorney’s fees for this no-asset chapter 7 case was

$4,000 (“Fee Order”). The Fee Order noted that the case was designated a

no asset case and that Mr. Fraley “failed to present evidence that the

$7,199.00 in attorney’s fees he charged debtor . . . in this individual chapter

7 case are reasonable and consistent with attorney’s fees charged by

similarly-situated attorneys who routinely file and appear in individual

chapter 7 cases in the Eastern District of California.” The Fee Order denied

Mr. Fraley’s request for additional time because the court gathered the

information in less than one day. Therefore, the bankruptcy court reasoned

that Mr. Fraley could have, but did not, make a similar effort during the

time he was given to respond. The bankruptcy court ordered Mr. Fraley to

return all fees he had received over $4,000.

Mr. Gilsvik and Mr. Fraley each timely appealed the Fee Order.

8 JURISDICTION

The bankruptcy court had jurisdiction under

and

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

ISSUE

Whether the bankruptcy court’s Fee Order was an abuse of its

discretion.

STANDARD OF REVIEW

An order reviewing fees and directing a debtor’s attorney to disgorge

excessive amounts paid prior to the bankruptcy filing under § 329(b) is

reviewed for abuse of discretion. Hale v. United States Tr.,

(9th Cir. 2007). The Panel “will not disturb a bankruptcy court’s

award of attorney’s fees ‘absent an abuse of discretion or an erroneous

application of the law.’” Law Offices of David A. Boone v. Derham–Burk (In re

Eliapo),

(9th Cir. 2006) (quoting In re Nucorp Energy, Inc.,

(9th Cir. 1985)). Thus, if the bankruptcy court applied the

correct legal rule, we reverse only if the bankruptcy court’s application of

the law to the facts was “illogical, . . . implausible, . . . or without support in

inferences that may be drawn from the record”—in other words, clearly

7 We have considered Mr. Gilsvik’s standing and have determined that Mr. Gilsvik has standing to appeal despite ostensibly benefiting from the Fee Order. The Fee Order is contrary to Mr. Gilsvik’s expressed wishes and potentially “detrimentally affects [his] rights” because it may interfere with his future ability to hire the Law Firm. See, e.g., Harkey v. Grobstein (In re Point Ctr. Fin., Inc.),

(9th Cir. 2018). 9 erroneous. United States v. Hinkson,

(9th Cir. 2009) (en

banc).

DISCUSSION

A. Statutes and standards related to attorney’s fees.

On appeal, Appellants argue that the amount of attorney’s fees set by

the bankruptcy court was arbitrary because it was contrary to the debtor’s

wishes and the bankruptcy court failed to consider all relevant factors.

Appellants’ arguments lack merit.

First, the bankruptcy court has the authority and an independent

duty to monitor and regulate compensation to a debtor’s attorney

“notwithstanding the absence of objections by the trustee, debtor or

creditors.” Lobel & Opera v. United States Tr. (In re Auto Parts Club),

(9th Cir. BAP 1997) (citing In re Busy Beaver Building Centers, Inc.,

(3d Cir. 1994)). “The integrity of the bankruptcy system is at

stake in the issue of a bankruptcy judge’s performance of the duty to

review fee applications sua sponte.” In re Sann,

, at *8

(Bankr. D. Mont. Dec. 15, 2016) (citation modified) .

Section 329 governs the duties of the attorney and the court regarding

compensation. Section 329(a) requires an attorney representing a debtor in

a bankruptcy case to file a statement regarding the amount of

compensation agreed to be paid for services, along with the source of the

compensation. Section 329(b), in turn, provides that “[i]f such

compensation exceeds the reasonable value of any such services, the 10 [bankruptcy] court may . . . order the return of any such payment[.]”

(Emphasis added). Section 329 is implemented by Rules 2016 and 2017.

Rule 2016(b) confirms the duty of the debtor’s attorney to file the § 329(a)

attorney fee disclosure statement, while Rule 2017(a) confirms the court’s

ability, on its own initiative, to determine whether any payment to the

attorney is excessive.

Second, the reasonable value of services rendered by a debtor’s

attorney is a question of fact to be determined by the bankruptcy court. See,

e.g., Am. L. Ctr. PC v. Stanley (In re Jastrem),

(9th Cir. 2001).

“As the fact finder, the bankruptcy court has great discretion in evaluating

the sufficiency of the evidence provided by an attorney in support of the

fees being requested.” Young v. Brumgard (In re Brumgard), BAP No. AZ-06-

1238-SPaD,

, at *11 (9th Cir. BAP June 7, 2007).

When assessing the reasonable value of the services rendered by an

attorney to a debtor, the court is directed to consider the same criteria set

forth for determining the proper amount of compensation for estate

professionals under § 330(a). Hale v. United States Tr. (In re Basham),

(9th Cir. BAP 1997), aff’d sub nom., Hale v. United States Tr. (In re

Byrne),

(9th Cir. 1998). Accordingly, the bankruptcy court is

directed to consider the nature, extent, and value of the services rendered,

taking account of all relevant factors, including the time spent on the

services, the rates charged for the services, and the customary

compensation of comparably skilled attorneys in other cases. § 330(a)(3).

11 Importantly, the bankruptcy court may consider fees awarded to

others in the same locality for similar cases and may rely on its “own

knowledge of customary rates and [its] experience concerning reasonable

and proper fees.” Ingram v. Oroudjian,

(9th Cir. 2011); In re

Thueson, No. 4-08-BK-10121-JMM,

, at *14 (Bankr. D. Ariz.

Mar. 12, 2009) (“a court may utilize its own knowledge of, and experience

with, market rates and fees charged in comparable cases as a guide”).

Finally, the burden is always upon the applicant to demonstrate that

the fees requested are reasonable. See Hensley v. Eckerhart,

(1983). Supporting evidence may include proof “that the requested rates

are in line with those prevailing in the community for similar services by

lawyers of reasonably comparable skill, experience and reputation.” Blum

v. Stenson,

, 895 n.11 (1984).

B. The Fee Order was not an abuse of the bankruptcy court’s discretion.

Here, there are no allegations that the partial fee disgorgement was

based on negligent representation or a violation of the Code. Rather, the

Fee OSC put Mr. Fraley on notice that, based on the court’s familiarity with

the prevailing rates charged for similar no-asset chapter 7 bankruptcy cases

in the Eastern District of California, $7,199 was not reasonable. The

bankruptcy court provided Mr. Fraley an opportunity to provide evidence

demonstrating that his fee was reasonable. Specifically, the bankruptcy

court ordered Mr. Fraley to provide evidence demonstrating that his fee

12 was commensurate with fees charged by other attorneys in the same

district for similar chapter 7 services.

Mr. Fraley did not provide such evidence but now complains that the

bankruptcy court failed to consider other relevant factors listed in

§ 330(a)(3). While Mr. Fraley is correct that the bankruptcy court did not

make express findings as to each of the factors, the record is sufficient to

permit us to conduct a meaningful review. Amantea-Cabrera v. Potter,

(9th Cir. 2002) (“If the [bankruptcy] court’s findings are

sufficient to indicate the factual basis for its ultimate conclusion, in light of

the record viewed in its entirety, then it is not clearly erroneous.”); Optyl

Eyewear Fashion Int’l Corp. v. Style Cos.,

, 1051 (9th Cir. 1985)

(“A [bankruptcy] court’s failure to make express findings does not require

a remand if ‘a complete understanding of the issues may be had [from the

record] without the aid of separate findings.’”) (quoting Swanson v. Levy,

(9th Cir. 1975)).

Here, the record demonstrates that Mr. Fraley submitted a copy of his

fee agreement with Mr. Gilsvik and a detailed list of the services he

rendered in this case. Therefore, despite the lack of express findings, we

may assume that the bankruptcy court fully considered the nature and

extent of services Mr. Fraley provided to Mr. Gilsvik. It appears that the

bankruptcy court determined that because there were no legal complexities

related to this case, customary charges for similar services was the most

important factor in determining the reasonableness of fees. The bankruptcy

13 court conducted its own review in which it determined that in the previous

three months, no other chapter 7 attorneys in the same district had charged

more than $4,000. Despite the opportunity, Mr. Fraley failed to present

evidence to the contrary. Indeed, Mr. Fraley failed to provide any evidence

of fees customarily charged by other attorneys in the Eastern District of

California.

Importantly, the Panel reviews fee awards through a lens of broad

deference to the bankruptcy court “because of its ‘superior understanding

of the litigation and the desirability of avoiding frequent appellate review

of what essentially are factual matters.’” Phillips v. Gilman (In re Gilman),

BAP No. CC-18-1101-STaL,

, at *3 (9th Cir. BAP July 12,

2019) (quoting Rodriguez v. Disner,

(9th Cir. 2012)), aff’d sub

nom., Phillips v. Gilman,

(9th Cir. 2020). Additionally, “[i]t

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 . . . to that decision[.]” In re Gilman,

, at *4

(citation omitted). Therefore, when considered in their entirety, the

bankruptcy court’s findings related to Mr. Fraley’s attorney’s fees are

adequately explained and are supported by the record.8

8 Mr. Fraley also argues that the Fee Order was error because it “presumably, triggered a report against Appellant to the State Bar of California.” Any such problems with the California Bar Association are not relevant to the issue of whether the Fee Order was an abuse of the bankruptcy court’s discretion. Regardless, no credible evidence was produced that the Fee Order caused a report to be submitted against 14 CONCLUSION

Based upon the record before it, as informed by the experience of the

seasoned bankruptcy judge, the bankruptcy court determined that $4,000

was a reasonable fee for Mr. Fraley’s services under the facts of this no

asset case, in which there were no disputed or complex matters outside of

the fee dispute. Because we are not left with a “definite and firm conviction

that the bankruptcy court committed clear error in the conclusion it

reached after weighing all of the relevant factors,” In re Eliapo,

, we AFFIRM.

Mr. Fraley with the California State Bar. The Fee Order simply determined the reasonable attorney’s fees for Mr. Gilsvik’s chapter 7 case. It made no findings regarding Mr. Fraley’s compliance with ethical obligations or his competence to practice law. 15