St. Angelo v. Vict. Farms

St. Angelo v. Vict. Farms

Opinion

 [*1528]  OPINION

REINHARDT, Circuit Judge:

I. Facts

In 1979, debtor Victoria Farms, Inc. ("Victoria Farms") mortgaged its farm to Equitable Life Assurance Society of the United States ("Equitable"). See S.E.R. tab 1, Ex. A, at 7. The mortgage took the form of a "deed of trust," which simply granted Equitable a lien on the property. In return, Victoria Farms received $ 350,000.00.

In 1988, Victoria Farms mortgaged its farm to a second creditor, Visalia Production Credit Association ("Visalia"). See id. at 9. This second mortgage also took the form of a "deed of trust." In return, Victoria Farms received $ 376,720.00 [**2]  from Visalia.

II. Prior Proceedings

A. Bankruptcy Court. In 1990, Victoria Farms voluntarily filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. Pursuant to the bankruptcy court's approval, Victoria Farms sold the farm in the fourth quarter of 1991 for $ 594,804.60. Of this amount, $ 421,447.57 was paid to the first mortgagee (Equitable) by the escrow agent, and $ 37,150.05 was paid for various closing costs.

The remainder ($ 136,206.98) was placed in an impound account, which was administered by Victoria Farm's lawyer. The lawyer distributed $ 130,434.98 in the first quarter of 1992 to the second mortgagee (Visalia). Although Victoria Farms still owed Visalia $ 52,051.64, Visalia accepted the disbursement as payment in full. Victoria Farms kept the remaining $ 5,772.00. ¹

In 1992, the bankruptcy court dismissed the case. The court held that Victoria [**3]  Farms was required to pay St. Angelo, the regional United States trustee, only $ 400.00 in fees under 28 U.S.C. § 1930(a)(6). ² [**4]  In calculating the fees, the court excluded the sale proceeds from the farm because it had been "indirectly" distributed by others (i.e., the escrow agent and the lawyer). Thus, it concluded that the trustee was only entitled to the minimum amount under the bankruptcy statute. ³

B. District Court. St. Angelo appealed the bankruptcy court's judgment to the district court, claiming that under 28 U.S.C. § 1930(a)(6) he was in fact entitled to $ 4,250.00 in fees. St. Angelo argued that, under the terms of the statute, he was entitled to (i) $ 3,750.00 for the $ 594,804.60 disbursement to the first creditor, and (ii) $ 500.00 for the $ 130,434.98 disbursement to the second creditor. See id. Without providing any explanation, the district court rejected St. Angelo's argument and held that the term "disbursement" in 28 U.S.C. § 1930(a)(6) excludes all payments made to a secured creditor from the sale proceeds of the secured property. St. Angelo timely appeals.

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