LUIS RAMIREZ FERNANDEZ

OCR transcription for search; preserved printed pages are authoritative

Case:@5-09792-SEK13 Doc#:67 Filed:10/10/07 Entered:10/10/07 13:56:10 Desc: Main

AUTHENTICATED / Q
U.S. GOVERNMENT
INFORMATION
GPO

Document Page 1 of 4 lriuep RE _
NTERED

IN THE UNITED STATES BANKRUPTCY cedure OCT 10 2007
FOR THE DISTRICT OF PUERTO RICO

CLERIC
U.S. BANKRUPTCY COURT

IN THE MATTER OF SENIUAN, PUERTO AICO

aa

LUIS RAMIREZ FERNANDEZ
CASE NO. 05-09792

DEBTOR : CHAPTER 13

OPINION AND ORDER

Pending before the court is Chapter 7 Trustee’s Application
for Allowance of Compensation in a case converted to Chapter 13
of the U.S. Bankruptcy Code. The Trustee seeks compensation for
services rendered to the estate before the case was converted,
even though no distribution was made. For reasons that follow,
we award the Trustee $500.00 for his services to the estate.

On September 30, 2005, Debtor filed for bankruptcy
protection under Chapter 7. The Trustee discovered Debtor had an
undivided interest of 66%, rather than the scheduled 50%, in his
residence. About one year later, Debtor requested a conversion
of the case to Chapter 13. The Trustee opposed this request.

During the hearing held to consider the matter, Trustee
withdrew his opposition, announcing his intention to seek
compensation for services rendered while the case was under
Chapter 7.

Upon conversion, the Trustee filed an application for
payment of his services in the amount of $1,100.00, based on a
quantum meruit. Debtor opposed the application claiming: 1) the
Trustee did not distribute funds; 2) the liquidation value of the

estate was zero under Chapter 7, and still is zero under Chapter

Case:(

5-09792-SEK13 Doc#:67 Filed:10/10/07 Entered:10/10/07 13:56:10 Desc: Main
Document Page 2 of 4

13; and, 3) there would be an interest for the benefit of the
estate, only if realty was valued at $180,000, or more. Two
appraisal reports filed by Debtor, unopposed by the Trustee,
valued the realty between $146,000 to $150,000. Thus, the Debtor
argued, the doctrine of quantum meruit does not apply to the
facts at hand.

We ordered the U. 8S. Trustee to express her position. She
did not oppose the Trustee’s request, stating: 1)Trustee
performed substantial services that resulted in discovery of
assets for the benefit of creditors; 2) the lack of marshaling of
assets was due to the conversion of the case to Chapter 13 of the
Code; and, 3) request for compensation was reasonable.

In a case originally filed under Chapter 7 and later
converted to Chapter 13, a Chapter 7 Trustee “may be compensated
on a quantum meruit basis when the trustee ‘performs substantial
services that result in discovery of assets for the benefit of
creditor’”. In re Bluewater Paimas, LTD, 2006 WL 3909925 *4
(Bankr. D.P.R.}) (Citations omitted). “When one considers an
award on equitable principles and based upon quantum meruit, one
must obviously consider the nature and extent of the services
rendered by the trustee.” In the matter of Pray, 37 B.R. 27,30
(Bankr. M.D. Florida 1983). “[TJhe burden is on the trustee to
establish entitlement to the fee through a detailed description
of the services provided. The application should demonstrate a
nexus between the trustee’s efforts and the uncovering of

assets.” In re Moore, 235 B.R. 414, 417 (Bankr. W.D. Ky. 1999).

Case:(b-09792-SEK13 Doc#:67 Filed:10/10/07 Entered:10/10/07 13:56:10 Desc: Main
Document Page 3 of 4

Finally, the trustee is entitled to compensation based on the
reasonable value of the actual and necessary services rendered.
Id.

When deciding whether to award compensation to a Chapter 7
Frustee for services rendered in discovering assets prior to a
conversion to Chapter 13, we must be mindful of two things.
First, not to encourage debtors to intentionally conceal assets,
and to encourage trustees’ diligent discovery of assets.

Second, not to encourage trustees’ oppositions to conversions to
Chapter 13, in order to collect from the liquidation and
distribution cf assets to creditors. Id. Hence, fees should he
awarded on a case by case basis.

A review of the invoice submitted by Trustee shows that fees
requested fall into four broad categories: 1})for uncovering
assets for the benefit of creditors, $620.00; 2)for opposing
Debtor’s motion to convert, $340.00; 3)for opposing Debtor’s
objection to the employment of realtor, $100.00; and, 4) for
preparing motions requesting entry of default and judgment by
default, $40.00.

The Trustee answers Debtor’s objection concerning the zero
liquidation value of the asset uncovered, averring that his
intention to sell this asset caused the Debtor to convert this
case to Chapter 13. Hence, his actions produced a benefit to the
estate. We disagree, as the Trustee should abandon an asset that
would not produce benefit for the estate. Trustee further claims

his greatest contribution was the discovery of assets for the

Case:45-09792-SEK13 Doc#:67 Filed:10/10/07 Entered:10/10/07 13:56:10 Desc: Main
Document Page 4 of 4

benefit of creditors. We agree, finding two hours worth $400.00,
is reasonable compensation for Trustee’s services in uncovering
this asset. Two hours is ample time for a Trustee to locate and
review Debtor’s late wife’s will, calculate the usufruct due to
the surviving spouse, and preparing a memo for the record.

Trustee requests $340.00 for opposing Debtor’s motion to
convert case to Chapter 13, but he did not explain how the
opposition benefitted creditors. We also note he withdrew his
opposition in open court at the hearing scheduled to consider the
matter. Thus, we deny compensation for this matter.

Finally, there is no entry of a request for judgment by
default on record. The Trustee did no explain this matter any
further. Hence, we deny the $40.00 requested.

Wherefore, we award $500.00 in compensation for Trustee’s
services rendered while this case was under Chapter 7 of the

Code.

SO ORDERED, in San Juan, Puergo Rico, on October 10, 2007

te

ARA DE JESUS
U.Sé Bankruptcy Judge