Appeal from the United States Bankruptcy Court for the Southern District of California Honorable Louise DeCarl Adler, Bankruptcy Judge, Presiding Bk. No. 10-17726
SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT
Submitted Without Oral Argument on November 15, 2012*fn2
Filed - December 14, 2012
Before: JURY, MARKELL, and PAPPAS Bankruptcy Judges.
Appellant, Paula A. Besset, appeals from the bankruptcy court's orders approving the final fee applications of appellees: (1) Ronald E. Stadtmueller, chapter 7*fn3 trustee; (2) Pyle Sims Duncan & Stevenson APC (PSDS), the trustee's counsel; and (3) R. Dean Johnson (Johnson), accountant to the trustee.*fn4 We AFFIRM.
Appellant and Pascal Besset commenced proceedings for the dissolution of their marriage in the Superior Court of California, County of San Diego in 2007. On September 28, 2010, the California family court entered a judgment of dissolution terminating the marriage. An attachment to the dissolution judgment gave appellant the right to purchase Pascal's equity in the family home by a date in September 2010, or the property was to be sold. If the property was listed for sale, appellant, who was living in the home with the couple's two children, was responsible for all delinquent mortgage payments. Appellant never purchased Pascal's equity or made any mortgage payments on 1 the home.
2 On October 1, 2010, Pascal filed his chapter 7 petition and 3 Stadmueller was appointed trustee. In December 2010, the 4 bankruptcy court approved PSDS's employment as trustee's 5 counsel. In July 2011, the bankruptcy court approved Johnson's 6 employment as accountant for the trustee.
7 The primary asset of the estate was the family home. In 8 Schedule D, debtor valued the home at $960,000, encumbered by a 9 first lien for $673,000 in favor of Deutsche Bank (Bank), four 10 liens totaling over $200,000 which were recorded against the 11 property by attorneys who had represented debtor or appellant in 12 their marital dissolution proceeding, and a lien for $3,105.35 13 filed by the State of California Employment Development 14 Department.
15 On November 30, 2010, the Bank filed a motion for relief 16 from the automatic stay (RFS) to foreclose on the property. 17 With the possibility of their liens being wiped out in a 18 foreclosure sale, the attorney lien creditors approached the 19 trustee to have him conduct a sale of the property. On 20 December 10, 2010, the trustee and the Bank agreed to extend the 21 time for the trustee to file an opposition to the motion for 22 RFS.
23 On December 17, 2010, the bankruptcy court entered an order 24 granting the Bank's motion for RFS after the Bank inadvertently 25 submitted the order in contravention of the agreement it had reached with the trustee.*fn5
Meanwhile, the trustee and attorney lien creditors negotiated a settlement for payment of the attorney liens in contemplation of selling the property to a third party for $850,000. The trustee estimated that after paying the Bank, costs of sale and taxes, there would be approximately $56,000 remaining from the sales price. Under the terms of the settlement, the attorney lien creditors would receive the sum of $20,000 to be divided equally among them in exchange for subordinating the balance of their secured claims to all costs of administration of the bankruptcy estate and claims of unsecured creditors.
On June 16, 2011, the trustee filed a motion to sell the property for $850,000 free and clear of liens under § 363(f). The trustee opined that the sale of the property free and clear of appellant's interest was proper because ...