PAPPAS, Bankruptcy Judge.
The United States Trustee ("the UST") appeals the order of the bankruptcy court approving the application for final compensation
Hokulani Square, Inc. ("Debtor") filed a petition for relief under chapter 11 on May 10, 2007. Debtor's principal asset was a nineteen-unit condominium project (the "Property"). From the beginning of this bankruptcy case, it was clear that the Property was fully encumbered by mortgages held by secured creditors Investors Funding Corporation and Walter and Sylvia Chang (together, the "Secured Creditors").
After two years of alleged mismanagement of its business in the chapter 11 case by the Debtor, on March 30, 2009, the Secured Creditors filed a motion to convert the bankruptcy case to chapter 7, or for the appointment of a chapter 11 trustee. Although the bankruptcy court initially granted the motion and converted the case to chapter 7, the UST was unable to entice any of the local chapter 7 panel trustees to serve in the case. As a result, the bankruptcy court vacated the conversion order and, instead, directed appointment of a chapter 11 trustee. Tamm was appointed chapter 11 trustee.
Tamm promptly determined that there was no reasonable likelihood of rehabilitating the Debtor's financial affairs under chapter 11 and, on May 26, 2009, moved to again convert the case to chapter 7. The bankruptcy court immediately granted Tamm's request and converted the case. Tamm was then appointed by the UST to serve as chapter 7 trustee.
Tamm experienced considerable pressure to dispose of the Property. Apparently, a "Condominium Public Report" issued by the Hawaii State Department of Commerce and Consumer Affairs, the conditions of which would govern any sale of the Property, was scheduled to expire on August 15, 2009, and Tamm had determined that any attempt to extend the authorized sale date would result in a substantial expense to the bankruptcy estate. Tamm therefore entered negotiations with the Secured Creditors to sell the Property to them. A deal was struck whereby the Secured Creditors agreed to purchase the Property by submitting a credit bid totaling $1,500,000, as authorized by § 363(k).
Tamm filed a motion in the bankruptcy court on July 10, 2009, to approve the sale of the Property, free and clear of liens or other interests, pursuant to §§ 363(f) and
Tamm completed administration of the bankruptcy estate and submitted his Final Report on July 1, 2010. In the Final Report, Tamm represented that he had made, or would make from funds on hand, a total of $2,720,000 in disbursements to creditors in the bankruptcy case. Of course, that amount included the credit bid made by the Secured Creditors for the purchase of the Property, which Tamm entered in the Final Report as an offset against the Secured Creditors' claims secured by the Property.
In his request for compensation and expenses accompanying the Final Report, Tamm requested $109,293 in compensation for his services, the maximum he alleged was available to him under the "caps" established in § 326(a).
The UST objected to Tamm's fee application. The UST's sole objection was that, because the amount that Tamm alleged he had disbursed improperly included the $1,500,000 credit bid for the sale of the Property, Tamm's compensation request exceeded the maximum allowed for a trustee under § 326(a). In its objection, the UST argued that the Secured Creditors' credit bid was not "moneys disbursed" for purposes of § 326(a) in calculating the trustee's maximum compensation.
In Tamm's response to the UST's objection, he discussed what he believed was the extraordinary complexity of the bankruptcy case, detailed his many efforts in
At the hearing on Tamm's Final Report and request for compensation, the bankruptcy court began by repeating the conclusions expressed in a pre-hearing tentative ruling: "My view is that the Ninth Circuit would hold that credit bids should be treated as moneys disbursed [for purposes of § 326(a)]. And my main reason for coming to that conclusion is it makes the substance consistent with the form." After acknowledging that Tamm had done a creditable job in a difficult case, the UST nevertheless argued that the Bankruptcy Code and case law simply did not allow credit bids to be included in computing a trustee's compensation. Tamm, of course, disagreed.
After hearing the parties' arguments, the bankruptcy court approved the full amount requested by Tamm in his fee application. In doing so, however, the court acknowledged that the case law on including credit bids in calculating chapter 7 trustee compensation was unsettled: "The clearest authority goes against me. It's from outside the circuit. I think that the Court of Appeals for this circuit would probably stick with [the Ninth Circuit cases decided under the Bankruptcy Act], but maybe we'll see." Tr. Hr'g 16:14-17, November 10, 2010.
The bankruptcy court entered an order approving Tamm's Final Report and application for compensation on November 12, 2010. The UST filed a timely notice of appeal.
The bankruptcy court had jurisdiction under 28 U.S.C. § 1334 and 157(b)(2)(A). The Panel has jurisdiction under 28 U.S.C. § 158.
Did the bankruptcy court err in including the amount of the credit bid as "moneys disbursed" under § 326(a) in calculating the maximum allowed for chapter 7 trustee compensation?
We review the bankruptcy court's construction of the Bankruptcy Code de novo. Educ. Credit Mgmt. Corp. v. Mason (In re Mason), 464 F.3d 878, 881 (9th Cir.2006); W. States Glass Corp. v. Barris (In re Bay Area Glass, Inc.), 454 B.R. 86, 88 (9th Cir. BAP 2011).
The parties agree that the outcome of this dispute is controlled by the construction of § 326(a). However, there is a marked difference in how they frame the precise issue for decision by the Panel. The UST casts the issue on appeal as:
UST Op. Br. at 1. In contrast, according to Tamm,
Tamm Br. at 1.
As can be seen, presumably for strategic reasons, Tamm attempts to distinguish the sale of the Property that occurred in this bankruptcy case from the usual transaction wherein a secured creditor employs a credit bid under § 363(k) to purchase its collateral at a trustee's sale. In this case, Tamm points to the facts and insists that the Property was actually sold to non-creditor third parties. In doing so, Tamm attempts to align his position with the facts presented to the Ninth Circuit in Sw. Media, Inc. v. Rau, 708 F.2d 419 (9th Cir. 1983), considered in detail below.
We disagree with Tamm's characterization of the sale. No doubt, the sale closing documents show that the Property was conveyed to the Purchasing Entities, and not to the Secured Creditors. However, as Tamm conceded at oral argument, as authorized in Tamm's sale motion, the Purchasing Entities were the designees of the Secured Creditors to receive title to the Property. Indeed, it appears that the Purchasing Entities had not even been legally formed until after Tamm's sale motion was submitted to the bankruptcy court.
More importantly, after the sale Tamm referred to the Secured Creditors as the purchasers of the Property via their credit bid. In particular, barely one month after the sale was approved by the bankruptcy court, on September 29, 2009, Tamm and all three of the Secured Creditors executed and filed a Settlement Agreement in the case in which the Secured Creditors agreed with Tamm to dismiss their pending adversary proceedings against the bankruptcy estate related to the Property, and instead to assert their rights through the claims process. In the parties' settlement agreement, they recite that "On August 14, 2009, pursuant to an order filed in the Case, the Secured Creditors acquired by credit bid the Estate's then remaining interest in the [ ] Property." Settlement Agreement, Paragraph J, at dkt. no. 510.
Because we think it is disingenuous, we decline Tamm's invitation to recast the facts here to characterize his sale of the Property to "third parties," and not to the Secured Creditors. The UST's formulation of the issue on appeal, whether the amount offset from a sales price as the result of a secured creditor's credit bid constitutes "money disbursed" by a chapter 7 trustee to a secured creditor under § 326(a), is the correct one.
We next highlight a matter that is not before the Panel. Throughout Tamm's
On the other hand, to the extent that Tamm suggests that the bankruptcy court, or this Panel, should engage in equitable considerations in construing § 326(a) based upon the quantity and quality of Tamm's services, Tamm is incorrect. It was the charge of the bankruptcy court, and now this Panel, solely to interpret the Code, and not to determine, as Tamm asks, whether the bankruptcy estate was "justifiably administered." Tamm's Op. Br. at 12, 25. Although a bankruptcy court has broad discretion in determining reasonable compensation, it has no discretion to award an amount exceeding § 326(a)'s cap, based on equitable or any other grounds. As the Ninth Circuit has explained, "Congress, not the judiciary, must make any necessary changes in the system of trustee compensation created by the Bankruptcy Code." Boldt v. U.S. Tr. (In re Jenkins), 130 F.3d 1335, 1341 (9th Cir.1997); see also Gill v. von Wittenburg (In re Fin. Corp. of Am.), 114 B.R. 221, 224 (9th Cir. BAP 1990) ("The maximum fee set by § 326(a) has no correlation with fair value for services."), aff'd and adopted sub nom. Tiffany v. Gill (In re Fin. Corp. of Am.), 946 F.2d 689, 690 (9th Cir.1991). Any judicial attempt to relax the § 326(a) caps based on notions of fairness or equity would undermine Congress's intent to cap trustee fees under section 326(a). In re Jenkins, 130 F.3d at 1341.
In this case, the bankruptcy court properly rejected Tamm's arguments that "the equities" should be considered in determining his compensation:
Tr. Hr'g 15:14-18. We agree with the bankruptcy court and the UST that the only issue in this dispute is whether the Secured Creditors' credit bids constitute "moneys disbursed" for purposes of § 326(a).
Although the bankruptcy court's focus was the proper one, we disagree with its interpretation of § 326(a), which it summarized at the hearing:
Of course, construing the Code begins with the plain meaning of its language. United States v. Ron Pair Enters., 489 U.S. 235, 241, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989). "Courts properly assume, absent sufficient indication to the contrary, that Congress intends the words in its enactments to carry `their ordinary, contemporary, common meaning.'" Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. Partnership, 507 U.S. 380, 388, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993) (quoting Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 62 L.Ed.2d 199 (1979)).
Where a term is defined within the statute, that definition controls its interpretation. Colautti v. Franklin, 439 U.S. 379, 392, 99 S.Ct. 675, 58 L.Ed.2d 596 (1979). But, in this case, the Bankruptcy Code does not define either "money" or "moneys disbursed." In the absence of a statutory definition, "we construe a statutory term in accordance with its ordinary or natural meaning." FDIC v. Meyer, 510 U.S. 471, 476, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994). A court "may follow the common practice of consulting dictionaries to determine how the terms were defined at the time the statute was adopted." Sanford v. MemberWorks, Inc., 625 F.3d 550, 559 (9th Cir.2010); see also Ransom v. FIA Card Servs., N.A., ___ U.S. ___, 131 S.Ct. 716, 724, 178 L.Ed.2d 603 (2011) (consulting, in a recent bankruptcy case, both Webster's Third New International Dictionary ("Webster's") and the Oxford English Dictionary ("OED") for the ordinary meaning of "applicable.").
The OED defines money: "[a]ny generally accepted medium of exchange which enables a society to trade goods without the need for barter; any objects or tokens regarded as a store of value and used as a medium of exchange. a. Coins and banknotes collectively as a medium of exchange." (3d ed. online, 2002). Webster's defines it as "something generally accepted as a medium of exchange, measure of value or a means of payment." Webster's 1458 (2002). Black's Law Dictionary states that money is "[t]he medium of exchange authorized or adopted by a government as part of its currency." Black's Law Dictionary 1096 (9th ed. 2009). As can be seen, the common element in all these definitions is the notion that money is a "medium of exchange."
That phrase, in turn, has an ordinary and plain meaning in the principal dictionaries. A medium of exchange is "something commonly accepted in exchange for goods and services and recognized as representing a standard of value." Webster's 1403 (2002). The OED delves deeper, noting that a medium of exchange is "anything commonly agreed as a token of value and used in transactions in a trading system; esp. freely circulating units of money,
The term "disbursement" also has an accepted dictionary definition. It means to "pay out or expend money." OED (Online, 3d ed. 2002); accord, Webster's 644 (2002); Black's Law Dictionary 1096 (9th ed. 2009) (to "disburse" is "[t]he act of paying out money[.]").
Thus, according to the dictionaries, money is a medium of exchange "commonly accepted in exchange for goods and services" or "used in transactions in a trading system." A disbursement occurs when money is paid out.
In our view, the Secured Creditors' credit bid submitted to Tamm in connection with the bankruptcy sale in this case falls outside the common dictionary meaning of "moneys disbursed." Tamm has not shown how a credit bid is commonly accepted as a medium of exchange for the purchase and sale of goods or services, nor that a credit bid is commonly used in transactions in a trading system. Fairly understood, in this context, a secured creditor's credit bid is strictly a creature of the Bankruptcy Code, having a single application, as an offset against the purchase price for property of a bankruptcy estate being sold by a trustee under § 363(k). By no reasonable interpretation can a credit bid be commonly accepted as a medium of exchange.
As explained by the dictionaries, in employing the term "moneys disbursed" in connection with capping trustee compensation, § 326(a) refers to the payment by a trustee to creditors of some form of a medium of exchange that is commonly accepted in exchanges and commercial transactions—in other words, cash, currency or its equivalent. In this context, we believe the ordinary and natural meaning of "moneys disbursed" would not include the Secured Creditors' credit bid.
Although the Ninth Circuit has not directly addressed the meaning of "moneys disbursed" in § 326(a), our construction of the Code here is consistent with the only two decisions by courts of appeals to have considered this issue. See Staiano v. Cain (In re Lan Assocs. XI, LP), 192 F.3d 109, 118 (3d Cir.1999); Pritchard v. U.S. Tr. (In re England), 153 F.3d 232, 235 (5th Cir.1998).
The Lan Assocs. decision is closely on point with the facts of this case. The fee applicant was the trustee, appointed in a chapter 11 case, who continued to serve
The Third Circuit affirmed the district court's conclusion that the credit bid must be excluded in computing the trustee's compensation. In re Lan Assocs. XI, LP, 192 F.3d at 109. The court quoted legislative history to § 326(a):
S.Rep. No. 95-989, 95th Cong. 2d Sess. 37-38 (1978); H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 327 (1977), reprinted 1978 U.S.C.C.A.N. 5963, 6283-84 (emphasis added). Id. at 116-17. The court observed that, as shown by the legislative history to § 326(a), the primary duty imposed by § 704(a)(1) on a chapter 7 trustee is to reduce property to money, such that "Congress intended to distinguish between the concepts of property and money.... The emphasis on `moneys,' rather than property or value, accords with the drafter's understanding that `the trustee's principal duty is to collect and reduce to money property of the estate for which he serves.'" Id. at 117 (quoting H.R.Rep. No. 95-595, at 379 (1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6335). Based on its analysis, the Third Circuit concluded that Congress intended moneys disbursed in § 326(a) to be construed in its narrow sense, as "something generally accepted as a medium of exchange," consistent with the definition given in Webster's. In re Lan Assocs. XI, LP, 192 F.3d at 119.
In addition to courts within the Third Circuit, other courts have recently chosen to follow the reasoning in Lan Assocs. See In re Am. Canadian Invests., Inc., 353 B.R. 852, 856 (Bankr.E.D.Va.2006) (relying on Lan Assocs., the bankruptcy court concluded that "it is quite clear that Congress intended for `moneys disbursed' to mean actual money, not property, turned over by the trustee to secured creditors."); In re Circle Invests., Inc., 2008 WL 910062, *3 (Bankr.S.D.Tex.2008) (citing Lan Assocs. for its conclusion that "a trustee's compensation must be based only on moneys actually disbursed or turned over to parties in interest, not on constructive disbursements").
In the other circuit-level case, In re England, the Fifth Circuit reversed a district court's order that had, in turn, reversed the bankruptcy court's order reducing a trustee's compensation because the trustee had included a credit bid transaction in the fee computation. The court decided that the bankruptcy court's ruling was correct and that only moneys disbursed, not other property, could be included in calculating trustee's fees. However, in contrast to the Third Circuit's discussion of the legal issue, the Fifth Circuit avoided legislative history and instead
In re England, 153 F.3d at 235.
In sum, our plain meaning analysis of moneys disbursed is consistent with the only two published circuit-level decisions analyzing the phrase.
In addition to the plain meaning given to a term in dictionaries, the Supreme Court counsels that the meaning assigned to terms in the Bankruptcy Code should also reflect the statutory context, including the use of the subject term elsewhere in the Bankruptcy Code or related laws. Ransom, 131 S.Ct. at 724. Our research shows that the word "money" as used in other provisions of the Bankruptcy Code, and in other related statutes, almost always refers to cash, currency or its equivalent.
Significantly, in § 704(a)(1), one of the fundamental duties of a chapter 7 trustee is to "collect and reduce to money the property of the estate." As can be seen, in this provision, Congress clearly creates a distinction between "money" and other kinds of property.
In the case law, the courts have used the terms "money" and "cash" as synonymous in applying § 704(a)(1). See Gordon v. Hines (In re Hines), 147 F.3d 1185, 1189 (9th Cir.1998) ("Section 704(1) directs a Chapter 7 trustee to collect and reduce to money the property of the estate.... There is no requirement that in acting pursuant to that statutory directive the trustee must obtain court approval before reducing the estate property to cash."); In re Murdock Mach. & Eng'g Co., 990 F.2d 567, 571 (10th Cir.1993) (describing the trustee's primary responsibility under § 704(a)(1) to "obtain, reduce to cash, and distribute all of the estate's assets"); Hyman v. Plotkin (In re Hyman), 967 F.2d 1316, 1320 (9th Cir.1992) (noting that "[a trustee's] obligation under 11 U.S.C. § 704(1) [is] to act in `the best interest of parties in interest' in reducing estate property to cash."); Zupansic v. Hyman (In re Zupansic), 259 B.R. 388, 390 (M.D.Fla. 2001) ("[A] trustee has a duty to attempt to collect and reduce the property to cash for the benefit of creditors, consistent with the trustee's duties pursuant to 11 U.S.C.
There are other examples in the Bankruptcy Code where Congress has used the term "money" as a manifest reference to cash, currency or the equivalent. For example, § 345(a) commands a trustee to deposit and invest "money of the estate" so as to achieve "the maximum reasonable net return on such money." By its terms, money in § 345(a) can only be interpreted as cash or currency, because only money as cash or currency can be deposited or invested. Moreover, a trustee may be liable to the estate when he or she does not invest or deposit moneys in interest-bearing accounts or use funds for an income-producing investment. U.S. Tr. v. Columbia Gas Sys. (In re Columbia Gas Sys.), 33 F.3d 294, 301 (3d Cir.1994); see also In re Moon, 258 B.R. 828 (Bankr.N.D.Fla. 2001) (trustee liable for difference between interest that could have been earned from certificates of deposit and interest actually earned in money-market account).
Other textual clues to the Code's meaning of "money" abound. Section 347(b) distinguishes money from securities and "other property" in the distribution of unclaimed property. Section 748(a) instructs that a trustee "reduce to money" any securities held as property of an estate. In a commodity broker liquidation under § 766(f), the trustee "shall reduce to money... all securities and other property... held as property of the estate." And while not part of the Bankruptcy Code, 28 U.S.C. § 1930(a)(6), the statute governing the amount of quarterly fees payable to the U.S. Trustee in chapter 11 cases, bases that computation on the cash (dollar) amounts of "disbursements" made by the debtor or trustee.
Based upon how the terms money and disbursement are used in the Code and related statutes, we do not think Congress intended that "moneys disbursed" in § 326(a) would include the Secured Creditors' credit bid.
Of course, the plain meaning of a Code provision will not control if such a construction yields an absurd result. Lamie v. U.S. Tr., 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004). On the other hand, even if the plain meaning of terms employed in the Code by Congress fosters harsh results, "courts may not soften the import of Congress's chosen words." Id. at 538, 124 S.Ct. 1023.
Apparently, the bankruptcy court was concerned that the UST's construction of § 326(a) could lead to absurd results. In explaining its interpretation of the Code, the court worried that: "If credit bids weren't treated as moneys disbursed, then Trustees would simply insist that potential credit bidders hand them a check ... and the Trustee would then hand it right back to the creditor." Rather than "force people to go through that little ritual," the court ruled that it was appropriate to
While the UST's interpretation of § 326(a) will significantly reduce Tamm's compensation in this case, he would still presumably receive approximately $70,000 for his services. And as noted above, "absurdity" does not necessarily result from a harsh outcome. Lamie, 540 U.S. at 538, 124 S.Ct. 1023; Nixon v. Mo. Mun. League, 541 U.S. 125, 141, 124 S.Ct. 1555, 158 L.Ed.2d 291 (2004) (Scalia, J., concurring) ("The avoidance of unhappy consequences is not an adequate basis for interpreting a text.").
As in this case, in adopting a "moneys disbursed" standard for capping trustee fees in § 326(a), Congress perhaps concluded that it was inappropriate to compensate trustees for selling estate property to the secured creditors holding liens on that property, where no cash changes hands, and the results of the transaction provide no quantifiable return to the estate or additional disbursements to unsecured creditors. Indeed, the effect of adopting Tamm's interpretation of § 326(a) here is to compensate him for selling the Property to the Secured Creditors for no net return to the estate, with the payment of his enhanced fees from monies that would otherwise be distributed to unsecured creditors.
Tamm insists that the Ninth Circuit's decisions in York Int'l Building, Inc. v. Chaney (In re York), 527 F.2d 1061 (9th Cir.1976), and Sw. Media, Inc. v. Rau, 708 F.2d 419 (9th Cir.1983), compel us to include the amount of the Secured Creditors' credit bids as "moneys disbursed" under § 326(a). The UST is equally vociferous that those decisions are neither precedential, nor particularly relevant, in resolving this appeal.
As noted above, the bankruptcy court did not suggest that these two Ninth Circuit decisions were binding precedent. Indeed, the bankruptcy court noted that York and Rau were decided "under the [Bankruptcy] Act and arguably distinguishable and perhaps not as thoroughly reasoned as one would hope." Tr. Hr'g 3:10-15. On the other hand, the court acknowledged that the only two circuit-level decisions construing § 326(a), Lan Assocs. and England (discussed supra), are "the clearest authority that goes against me." Tr. Hr'g 16:14. Nevertheless, the bankruptcy court looked to the Ninth Circuit's decisions interpreting former law for an indication of where this issue "would come out" if it were to decide the question on appeal. Tr. Hr'g 3:14.
While both of the cited cases were decided under the former Bankruptcy Act, not the modern Bankruptcy Code, we acknowledge the a longstanding principle of construction of bankruptcy statutes that "we will not read the Bankruptcy Code to erode past bankruptcy practice absent a clear indication that Congress intended such a departure." Pa. Pub. Welfare Dep't v. Davenport, 495 U.S. 552, 563, 110 S.Ct. 2126, 109 L.Ed.2d 588 (1990). However, in adopting § 326(a), Congress did clearly depart from the Bankruptcy Act's method of calculating trustee compensation. In addition, neither York nor Rau dealt with whether credit bids should be included in "moneys disbursed" by the trustee for purposes of computing maximum fees, the issue in this appeal.
In York, the Ninth Circuit reviewed the amount of reasonable compensation payable for a trustee's services in a chapter X case under the Bankruptcy Act. York, 527 F.2d at 1069. In that case, the trustee in reorganization, Mr. Chaney, sold the debtor's property, and the sale was approved by the district court. Id. at 1074. But Chaney's compensation as trustee of the sale was not the focus of the disputes. Instead, the court's principal concern was the reasonableness of the compensation Chaney was seeking for services rendered while wearing his three other hats: At the time of the property sale, he was also functioning as manager of the building, owner of the company providing janitorial services to the building, and the broker who arranged the sale and was seeking a broker's commission.
In its discussion of Chaney's compensation as trustee, in a footnote, the Ninth Circuit allowed as a disbursement a purchaser's assumption of the existing mortgages on the property.
The footnote Tamm champions provides neither clear nor unequivocal support for his position and, indeed, does not even constitute a holding in the decision. More precisely, the Ninth Circuit acknowledged in York that under chapter X, the fee caps in § 76 of the Act simply do not apply: "§ 48 of the Bankruptcy Act (11 U.S.C. § 76) dealing with the compensation of trustees in ordinary bankruptcy, is expressly made inapplicable to fees allowed in Chapter X proceedings by 11 U.S.C. § 641[.]"
Rau, decided in 1983, is also a Bankruptcy Act case. Southwest Media, Inc. had filed a chapter XI case, and Albert Rau was appointed receiver and, later, trustee. Southwest Media operated a radio station and had purchased from KBUZ, Inc. two broadcasting licenses and broadcasting equipment for $1,200,000, paying $200,000 down and issuing a promissory note for the $1 million balance. Rau sold all assets of the corporation for $1,500,000, which included assumption of KBUZ's lien. Rau, 708 F.2d at 421. Later, when Rau sought compensation as trustee of about $66,000, the debtor and other creditors challenged his inclusion of the full sale price, including the value of the liens, in calculating his compensation. Id. at 422.
The important issue before the Rau court was whether the term "moneys disbursed" in calculating trustee compensation was limited to the "net equity value" realized by the estate, or whether that term included the amount of the lien assumed by the purchaser as part of the property sale. In resolving this question, the court in Rau opined that, "When assets of the estate are sold free and clear of liens held by secured creditors, the entire sale price, including the amount used to pay off the liens, is counted for purposes of establishing the trustee's fee base." Rau, 708 F.2d at 423.
Again, Rau is not precedential here. Whether a credit bid should be included in calculation of trustee fees was not argued before the Ninth Circuit, nor was it determined with the full and careful consideration of the court. As with York, any discussion of this issue is dictum.
We conclude that York and Rau are neither binding, nor particularly relevant, in deciding the current appeal.
We believe the plain meaning of the term "moneys disbursed" in § 326(a) as
We think that the plain meaning of "moneys disbursed," the use by Congress of these terms in other parts of the Code, the statutory context of the Code, and the legislative history instruct that we reject Tamm's interpretation of § 326(a).
Finally, we disagree with Tamm, and the bankruptcy court, that the decisions of the Ninth Circuit construing the Bankruptcy Act support the notion that the Secured Creditors' credit bids be included in computing his fees.
Because we conclude that "moneys disbursed" in § 326(a) does not include the Secured Creditors' credit bids in calculating Tamm's maximum compensation as trustee in this case, we REVERSE the bankruptcy court's order awarding Tamm compensation, and REMAND this matter to the bankruptcy court with instructions to recalculate the amount of his compensation consistent with this decision.
Use, sale, or lease of property
(k) At a sale under subsection (b) of this section of property that is subject to a lien that secures an allowed claim, unless the court for cause orders otherwise the holder of such claim may bid at such sale, and, if the holder of such claim purchases such property, such holder may offset such claim against the purchase price of such property.
Limitation on compensation of trustee
(a) In a case under chapter 7 or 11, the court may allow reasonable compensation under section 330 of this title of the trustee for the trustee's services, payable after the trustee renders such services, not to exceed 25 percent on the first $5,000 or less, 10 percent on any amount in excess of $5,000 but not in excess of $50,000, 5 percent on any amount in excess of $50,000 but not in excess of $1,000,000, and reasonable compensation not to exceed 3 percent of such moneys in excess of $1,000,000, upon all moneys disbursed or turned over in the case by the trustee to parties in interest, excluding the debtor, but including holders of secured claims.
Blair is no help to Tamm. Blair was an unpublished decision, containing an express warning that the panel did not intend it to be precedential. See also (then) 9th Cir. BAP Local R. 8013-1. In addition, in Blair the Panel was reviewing a bankruptcy court decision involving a "constructive disbursement" by the trustee, in the form of a cash disbursement made from the sale proceeds by an escrow agent acting on instructions from the trustee. The Blair panel never ruled that York and Rau controlled the outcome of the current issue before this Panel.
