Steven Gibbs and Deane Gibbs

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UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re 	) Case No. 10-31683 TEC
)
STEVEN GIBBS, aka STEVEN ALAN 	) Chapter 7
GIBBS, aka STEVE GIBBS, dba 	)
BLUE RIDGE MASONRY, INC., and 	)
DEANE GIBBS, aka DEANE ANNE GIBBS, )
aka DINA GIBBS, aka DEANE COCKBURN,)
fka DEANE MARTINEZ, 	)
)
)
)
Debtors. 	)
)
MEMORANDUM RE TRUSTEE’S APPLICATION FOR COMPENSATION
The court held a hearing on September 6, 2011 regarding
Trustee’s application for compensation. 	E. Lynn Schoenmann
appeared in pro per as Trustee.
Trustee seeks $50,835, the maximum compensation permissible
under section 326(a) of the Bankruptcy Code. 	For the reasons set
forth below, I determine that the amount sought is unreasonably
large.
This court has previously held that the maximum amount
permissible under section 326(a) will generally, but not always, be
allowed as reasonable compensation to a trustee in a chapter 7
case.
MEMORANDUM RE TRUSTEE’S
APPLICATION FOR COMPENSATION
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Signed and Filed: September 14, 2011
________________________________________
THOMAS E. CARLSON
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
September 15, 2011
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 10-31683 Doc# 71 Filed: 09/14/11 Entered: 09/15/11 10:03:45 Page 1 of 4

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[T]here may be cases where the amount of “moneys
disbursed” by the trustee may be very high in relation to
the services performed, presenting a risk that a trustee
may be overcompensated by applying the commission
percentage. . . . cases where there are significant
disbursements without a proportionate effort by the
trustee, are examples of cases where the commission fee
may not be reasonable. 	In such cases, even if all the
services were properly performed, courts will need to
assess whether the implied hourly rate is so high as to
render the fee not reasonable.
In re McKinney, 374 B.R. 726, 731-32 (Bankr. N.D. Cal. 2007)
(quoting L. King, Collier on Bankruptcy, ¶ 330.03[1][a] at pp. 330-
15-330-16 (15th ed. rev’d 2006)).
In the present case, the maximum fee is substantially
disproportionate to the services performed by Trustee. 	First,
Trustee did not engage in any complex and difficult recovery of
assets; Trustee merely sold the Debtors’ house and two cars.
Second, Trustee never was at risk that her fees would not be paid.
Third, Trustee effected the sale of the house and cars with
substantial help from various professionals who were paid
substantial fees for that work. 	Trustee and buyer both employed
real estate brokers to handle the sale of the house. 	Trustee hired
an auctioneer to effect the sale of the two cars. 	Trustee’s
counsel was paid approximately $7,800 for work related to the sale
of the house and cars. 	Fourth, Trustee herself expended little
time on this case. 	Her time records show that she expended 25.2
hours on the entire case, and only 8.3 hours on the sale of the
house and cars. 	Paying Trustee the $50,836 statutory maximum would
be equivalent to paying her more than $2,000 per hour for work that
can only be described as routine.
Trustee argued at the hearing that reducing her compensation
MEMORANDUM RE TRUSTEE’S
APPLICATION FOR COMPENSATION
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Case: 10-31683 Doc# 71 Filed: 09/14/11 Entered: 09/15/11 10:03:45 Page 2 of 4

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would result in no benefit to creditors. 	This is so, she argued,
because the estate would have just enough to pay allowed priority
claims almost in full if her fees are allowed as requested, but
would have to engage in expensive claims litigation if any amount
is left for general unsecured creditors (GUCs). 	She acknowledges
that she has not engaged in any close analysis of GUCs, but noted
that Debtors listed most of the scheduled GUCs as disputed.
Trustee’s argument is not persuasive. 	First, GUCs with valid
claims would benefit from any savings in Trustee’s compensation
fee, even if Trustee did not review claims and object to
questionable ones – something is better than nothing. 	Second, it
appears that Trustee has already found wanting the grounds upon
which Debtors scheduled GUCs as disputed. 	With respect to every
disputed claim save one, Debtors stated that they disputed the
claim on the basis that the claim was properly a liability of their
wholly owned corporation. 	Among those claims were several claims
for unpaid wages. 	Yet Trustee has included those wage claims among
the priority claims to be paid, without raising the objection
asserted by Debtors. 	Trustee may have concluded that grounds exist
to disregard the corporate form. 	Among filed GUCs totaling
$300,000, the only claim that the Debtors disputed on any other
basis is a $6,000 deficiency claim asserted by Toyota following the
Debtors’ surrender of their vehicle. 	Given the above, Trustee may
very well conclude that no objections to claim are warranted.
Trustee may do either of the following. 	If Trustee
determines, from what the court has noted here as well as her prior
knowledge of the case, that it would not be cost effective to
review claims further or to object to claims, she may pay herself
MEMORANDUM RE TRUSTEE’S
APPLICATION FOR COMPENSATION
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Case: 10-31683 Doc# 71 Filed: 09/14/11 Entered: 09/15/11 10:03:45 Page 3 of 4

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compensation in the amount of $12,500, and distribute the newly
available funds to filed priority creditors and GUCs without
further notice or hearing. 	If Trustee determines that further
review of claims or objections to claims would be cost effective,
she may continue to administer the case and file an amended fee
application upon the completion of such duties. 	Trustee should
advise the court as to which course she determines to be
appropriate, and the court will thereupon enter an appropriate
order.
**END OF MEMORANDUM**
MEMORANDUM RE TRUSTEE’S
APPLICATION FOR COMPENSATION
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Case: 10-31683 Doc# 71 Filed: 09/14/11 Entered: 09/15/11 10:03:45 Page 4 of 4