In re Dengel

• Decision Date: 11 August 2003
• Docket Number: No. 02-30929.,No. 02-30574.,02-30574.,02-30929.
• Citation: 340 F.3d 300
• Parties: In the matter of Carl A. DENGEL, debtor. R. Michael Bolen, United States Trustee, Region 5, Appellee, v. Carl A. Dengel, Appellant. Carl A. Dengel, Appellant, v. Bank One, National Association, successor by name change to Bank One, Louisiana, National Association & successor by merger & name change to First National Bank of Commerce, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

340 F.3d 300

In the matter of Carl A. DENGEL, debtor R. Michael Bolen, United States Trustee, Region 5, Appellee, v. Carl A. Dengel, Appellant.

Carl A. Dengel, Appellant, v. Bank One, National Association, successor by name change to Bank One, Louisiana, National Association & successor by merger & name change to First National Bank of Commerce, Appellee.

No. 02-30574.

No. 02-30929.

United States Court of Appeals, Fifth Circuit.

August 11, 2003.

As Amended October 1, 2003.

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Kevin C. O'Bryon (argued), O'Bryon & Schnabel, New Orleans, LA, for Appellant.

Kathleen A. Kane (argued), William Kanter, U.S. Dept. of Justice, Civil Div.— Appellate Staff, Anthony John Ciccone, Jr., U.S. Dept. of Justice, Executive Office of the U.S. Trustee, Washington, DC, for Bolen.

Brandon Kelly Black (argued), Brett P. Furr, Taylor, Porter, Brooks & Phillips, Baton Rouge, LA, for Bank One, Nat. Ass'n.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before JOLLY, HIGGINBOTHAM and STEWART, Circuit Judges.

CARL E. STEWART, Circuit Judge:

In this consolidated civil action, Carl A. Dengel ("Dengel") filed suit against the United States Trustee ("UST") and Bank One for withholding his standing trustee compensation and expenses. In particular, this dispute stems from the UST's interpretation of 28 U.S.C. § 586(e). The district court rendered judgment in favor of the UST and dismissed Dengel's law suit against Bank One. For the reasons that follow, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In 1987 Dengel was appointed to be a Chapter 12 standing trustee for the U.S. Bankruptcy Court for the Eastern District of Louisiana. Standing trustees are appointed by the UST with the approval of the Attorney General consistent with 28 U.S.C. § 586 to facilitate the resolution of farmers' bankruptcies in designated regions. Dengel served as a standing trustee until he resigned on September 30, 1995. For performing these services, the standing trustee collects fees. A standing trustee's fees are made up of a percentage amount charged on payments made in individual bankruptcy cases and constitutes gross revenue to the standing trustee. Generally, the statute caps the percentage amount at 10%. From the fees, the standing trustee receives his compensation which is tantamount to his net income. His actual compensation may not exceed 5% of the payments made in bankruptcy cases. Also from the fees, the standing trustee is reimbursed for expenses which are the overhead costs for running the standing trustee's office (i.e, rent, insurance, administrative staff, etc.). The standing trustee's fees are governed by 28 U.S.C. § 586(e).

In addition, in 1989, the Executive Office of the U.S. Trustee ("EOUST") created a policy Handbook promulgating a method for calculating the fees. The EOUST Handbook requires that standing trustees first pay all expenses with the remaining fees allocated to compensation. In effect, this policy promulgates the "expense first, funds available" method of calculating fees. The Handbook also allows for unpaid expenses to be carried over from one year to the next, but not unpaid compensation. Beginning in 1989 Dengel submitted annual reports to the UST indicating the fees collected, the allocation of the fees to compensation and expenses, and the remaining surplus or deficit. Despite the Handbook policy, Dengel continued to allocate 5% of fees to expenses and 5% to compensation, rather than employing the "expense first" method of disbursement. Dengel also calculated his loss carryforward of compensation and expenses from year to year resulting in paying his compensation before all of the year's expenses had been paid in violation of the Handbook policy.

In November 1994, Dengel initiated litigation against the UST contesting the Handbook's "expense first, funds available" method of calculation. In that case, Dengel interpled approximately $5,787 representing a 10% fee from certain pending Chapter 12 cases. These funds were deposited in the court's registry. The district court dismissed that case for lack of subject matter jurisdiction consistent with § 586(b). Dengel did not appeal this decision. Thereafter, Dengel deposited the disputed compensation and expense checks written after November 1994 into an interest bearing account at Bank One that he called "TF12." These checks were derived from Chapter 12 cases under Dengel's administration between November 1994 and October 1995. The total deposited in that account is approximately $26,000. Except for one $14,000 disbursement authorized by the UST, the funds remain in the TF12 account. Ultimately, $5,786.80 remains on deposit in the court's registry and $11,950.63 remains in the TF12 account.

During Dengel's tenure, the Office of Inspector General ("OIG") periodically audited Dengel's annual reports. Both the 1992 and 1994 reports found deficiencies in Dengel's record keeping. In the 1995 audit report, the OIG found that Dengel had not corrected the prior deficiencies and that he was incorrectly carrying over unpaid compensation as well as expenses. Following Dengel's resignation, the OIG ordered a routine close-out audit. His records, however, were not auditable and had to be reconstructed by his successor trustee. This 1997 Audit was focused solely on the incorrect payment of fees. Following the compensation policies in the Handbook, the OIG concluded that Dengel received a net overpayment, and therefore, the funds escrowed in the court's registry and the TF12 account should be turned over to the UST. Moreover, the OIG concluded that Dengel actually owed the UST an additional $2,843.

In 1998, the UST initiated a declaratory judgment action against Dengel in the bankruptcy court. The suit was then lodged in the district court after Dengel responded with compulsory counterclaims and third party claims against Bank One, the former UST, Region 5 and the Assistant UST, Region 5. In April 2000, the district court referred the action to the bankruptcy court. In July 2000, Bank One filed a Rule 12(b)(6) motion to dismiss. Bank One also moved to interplead seeking to deposit the funds in the trustee account in the registry of the court. In September 2001, the bankruptcy court issued its report and recommendations in which it gave the EOUST Handbook deference in interpreting § 586(e) and concluded that the UST's calculation of Dengel's compensation was correct. In March 2002, the district court reviewed the bankruptcy court's recommendations de novo and rendered judgment in favor of the UST's interpretation giving some deference to the policy in the Handbook and finding that the agency's interpretation has "the power to persuade." In July 2002, the district court granted Bank One's motion to dismiss for the reasons set forth in the bankruptcy court's recommendations and reasons. Dengel now appeals both the judgment in favor of the UST's interpretation and calculation as well as the order granting Bank One's 12(b)(6) motion to dismiss.

DISCUSSION

I. Statutory Interpretation

Dengel argues that the district court erred when it granted judicial deference to the UST's interpretation of 28 U.S.C. § 586¹ as outlined in the EOUST Handbook² under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). We conclude that the district court did not err because under Christensen v. Harris County, 529 U.S. 576, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000), such a handbook may be strongly persuasive. Moreover, we conclude that the UST's interpretation was reasonable and comports with its statutory authority to develop such a method of calculation.

A. Standard of Review

We review the district court's interpretation of § 586 de novo. United States v. Rasco, 123 F.3d 222, 226 (5th Cir.1997). To the degree that any factual determinations of the district court are at issue, we review for clear error. In re Miller, 290 F.3d 263, 266 n. 2 (5th Cir. 2002). The crux of the issues on appeal is whether the district court appropriately gave deference to the Handbook's interpretation of 28 U.S.C. § 586(e). This is a matter of statutory interpretation. "Hence we must decide (1) whether the statute unambiguously forbids the Agency's interpretation, and if not, (2) whether the interpretation, for other reasons, exceeds the bounds of the permissible." Barnhart v. Walton, 535 U.S. 212, 122 S.Ct. 1265, 1269, 152 L.Ed.2d 330 (2002).

B. The Executive Office of the U.S. Trustee has authority under the statute.

Dengel argues that the EOUST Handbook is not entitled to deference for interpreting § 586(e) because § 586 does not confer authority upon the EOUST to create laws or regulations relating to compensation of standing trustees. Dengel refers to the concept of expressio unius est exclusio alterius as support for his argument. The district court determined that § 586(e)(1) delegates authority to fix a maximum annual compensation and percentage fee to the Attorney General. To support its conclusion, the district court reviewed the entire statute and determined that the Attorney General has a variety of authority under § 586(c) and (d). The UST asserts that the Attorney General has broad statutory authority to set a fee within the parameters stated in the statute. The UST argues that Dengel's expressio unius est exclusio alterius argument is misguided and that the statutory maximum of standing trustee compensation does not place a limit on the Attorney General's, through the EOUST's, authority to determine the manner and order in which compensation and expenses are to be paid. We are persuaded by the UST's argument. Based on the plain language of the statute, Congress has delegated broad authority to the agency to regulate standing trustee compensation and the percentage fee. Section 586(e)(1) specifically prescribes that "The Attorney General ... shall fix ... a...