Don Cruz Datanagan

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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1The maximum amount of compensation that a court may allow
to a trustee in bankruptcy is a function of the amount the
trustee distributes to parties in interest other than the debtor.
Bankruptcy Code § 326(a). 	The basis for Datanagan’s objection to
Mansdorf’s fees and costs appears to be limited to the fact that,
if Datanagan’s disputed claim of exemption is allowed in full,
then Mansdorf would have no funds remaining to distribute to any
persons other than Datanagan.
Decision
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	Case No. 	10-71909 EDJ
Chapter 7
DON CRUZ DATANAGAN,
Debtor./
DECISION
Paul J. Mansdorf, trustee in bankruptcy (“Mansdorf”), has
objected to an amended claim of exemption by Don Cruz Datanagan, the
above debtor (“Datanagan”), as to a federal tax refund in the sum of
$4,504. 	Datanagan opposes Mansdorf’s objection, and in turn, has
objected to the allowance of the fees and costs requested by
Mansdorf for his services in this bankruptcy case. 1
A debtor generally has a right to amend his or her schedules,
Signed: June 22, 2011

EDWARD D. JELLEN
U.S. Bankruptcy Judge

Entered on Docket
June 22, 2011
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 10-71909 Doc# 34 Filed: 06/22/11 Entered: 06/22/11 16:42:56 Page 1 of 4

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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2Datanagan denies any fraudulent intent. 	See Datagan’s
Opposition to Trustee’s Application, filed June 9, 2011. 	It
follows that, as to any intentional concealment, an issue of fact
is present that the court cannot resolve absent an evidentiary
hearing. 	When the court offered an evidentiary hearing to the
parties, however, neither Mansdorf nor Datanagan accepted.
3Datanagan’s Opposition to Trustee’s Application, page 2,
paragraph 1.
2	Decision
including scheduled claims of exemption, until a bankruptcy case is
closed. 	Fed. R. Bankr. P. 1009(a). 	However, amended claims of
exemption may be disallowed in the event a debtor is guilty of bad
faith or when the amendment will unfairly prejudice a third party.
In re Magallanes, 96 B.R. 253, 256 (9th Cir. BAP 1988).
“The usual ground for a finding of ‘bad faith’ is the debtor’s
attempt to hide assets.” 	In re Arnold, 252 B.R. 778, 785 (9th Cir.
BAP 2000). 	Here, the record now before the court clearly shows that
Datanagan did not initially schedule the tax refund as an asset.
Absent an evidentiary hearing, however, the record is not sufficient
to permit a finding that Datanagan’s initial failure to schedule the
tax refund as an asset, or to claim it as exempt, was necessarily an
effort on Datanagan’s part to hide assets. 2
Even so, the court may permissibly surcharge a claim of
exemption for a trustee’s fees and costs when the equities so
demand. 	Arnold, 252 B.R. at 788-89 and cases cited therein at 789.
Here, the equities so demand. 	Of particular importance is the
fact that Datanagan was aware of his right to the tax refund no
later than November 12, 2010, 3 and yet allowed Mansdorf to perform a
Case: 10-71909 Doc# 34 Filed: 06/22/11 Entered: 06/22/11 16:42:56 Page 2 of 4

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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4Mansdorf filed his motion for turnover of the tax refund on
November 17, 2011. 	As mentioned, Datanagan did not file his
amended Schedule C claiming the tax refund as exempt until
January 17, 2011. 	The work Mansdorf performed in the interim is
set forth in Mansdorf’s Reply to Opposition, filed June 10, 2011.
3	Decision
substantial amount of work to obtain the refund or its value, see
Bankruptcy Code § 542(a), before he (Datanagan) amended his
schedules on January 17, 2011 to claim the refund as exempt. 4
The court will therefore issue its order allowing Datanagan’s
amended claim of exemption in the tax refund, subject, however, to a
surcharge in the sum of $1,197.11, representing the amount of fees
and costs to which Mansdorf would have been entitled for his efforts
if Datanagan had not amended his schedules to claim the refund as
exempt after Mansdorf had performed substantial work in connection
therewith.
** END OF DECISION **
Case: 10-71909 Doc# 34 Filed: 06/22/11 Entered: 06/22/11 16:42:56 Page 3 of 4

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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4	Decision
COURT SERVICE LIST
Kevin J. Stewart
Law Offices of Kevin J. Stewart
4100 Redwood Rd. #387
Oakland, CA 94619
Paul Mansdorf
1563 Solano Ave. #703
Berkeley, CA 94707
Case: 10-71909 Doc# 34 Filed: 06/22/11 Entered: 06/22/11 16:42:56 Page 4 of 4