In re Tweeten Funeral Home, PC, Bankruptcy No. 84-05237

• Decision Date: 16 October 1987
• Docket Number: 84-05323 and 84-05327.,Bankruptcy No. 84-05237
• Citation: 78 BR 998
• Parties: In re TWEETEN FUNERAL HOME, PC Debtor. In re Carmen W. TWEETEN and Henrietta M. Twetten, Debtors. In re Konrad H. TWEETEN and Kathleen L. Tweeten, Debtors.
• Court: U.S. Bankruptcy Court — District of North Dakota

78 B.R. 998 (1987)

In re TWEETEN FUNERAL HOME, PC Debtor In re Carmen W. TWEETEN and Henrietta M. Twetten, Debtors In re Konrad H. TWEETEN and Kathleen L. Tweeten, Debtors.

Bankruptcy Nos. 84-05237, 84-05323 and 84-05327.

United States Bankruptcy Court, D. North Dakota.

October 16, 1987.

Max Rosenberg, Bismarck, N.D., for debtors.

Phillip D. Armstrong, Minot, N.D., trustee.

ORDER

WILLIAM A. HILL, Bankruptcy Judge.

Before the court is an Application For Quantum Meruit Trustee Fees filed in the above-captioned cases on September 8, 1987. By his motion, Phillip D. Armstrong, the trustee, asks for the sum of $2,205.92, an amount arrived at by calculating what the section 326(a) statutory fee would have been had he distributed $67,530.54 to the unsecureds. No distribution to creditors actually occurred in these cases because the Debtors paid the creditors directly. The Debtors resist the application.

These cases have been embroiled in fee disputes since the spring of 1986 when Mr. Armstrong, acting as attorney for the trustee, filed a request for attorney's fees in the sum of $32,745.00. The court allowed him $6,391.66, a result which spawned a motion for reconsideration and a motion to alter the conditions of compensation, neither of which were favorably entertained.

As will be recalled, the Tweeten Funeral Home case was commenced as a Chapter 11 in April, 1984 and converted to a Chapter 7 on June 14, 1984. The four principals of the funeral home filed separate Chapter 7 petitions in June, 1984, and Mr. Armstrong was appointed trustee for each of the cases shortly thereafter. After his appointment, Mr. Armstrong, in characteristic fashion, began to carry out his duties as trustee in the respective cases but his administration of the three cases was cut short when the Debtors, the trustee and other interested parties entered into an omnibus stipulation by which all administrative proceedings, adversary proceedings, and all claims secured and unsecured were settled. By the terms of the agreement filed September 4, 1985 and approved by the court on October 4, 1985, the Tweetens individually became obligated to pay in full all unsecured claims filed in the Tweeten Funeral Home, PC case as well as all administrative expenses incurred in all three cases. As a result of the stipulation no funds came into the hands of the trustee for distribution.

Trustee compensation is, by statute, fixed as a percentage of monies disbursed or turned over by a trustee to parties in interest. 11 U.S.C. § 326(a). Despite the statutory language, courts have exercised their equitable power to allow compensation to a trustee on a quantum meruit basis in situations where, although no money was disbursed or turned over by the trustee, he nonetheless performed substantial services to the estate. Matter of Parameswaran, 64 B.R. 341 (Bankr.S.D.N.Y.1986); In re Smith, 51 B.R. 273 (Bankr.D.D.C. 1984); In re Rennison, 13 B.R. 951 (Bankr. W.D.Ky.1981). The sentiment of these cases is that where a trustee devotes time and effort to a case which is not fully administered through no fault of his, he ought nonetheless receive payment for services rendered. As noted in Rennison, supra, "if section 326 were to be literally applied to such a case, the debtor would have enjoyed, cost free, the benefits of the bankruptcy law." This court agrees with the views expressed in the foregoing decisions but does not agree that quantum meruit awards should in every case be pegged against the statutory rate set out in section 326. This rate is the maximum rate allowed to a trustee for services rendered and may not necessarily be...