In Re: East Coast Foods, Inc.

• Court: District Court, C.D. California
• Decided: August 6, 2021
• Docket: 2:20-cv-10982
• Status: Unknown

Opinion

1 JS-6 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 CENTRAL DISTRICT OF CALIFORNIA 8 LOS ANGELES DIVISION 9 IN RE: EAST COAST FOODS, INC. CASE NO. CV 20-10982 MWF 10 11 ORDER RE: CONSOLIDATED 12 APPEAL FROM THE UNITED 13 STATES BANKRUPTCY COURT’S ORDERS 14 15 Before the Court is an appeal from the United States Bankruptcy Court (the 16 Honorable Sheri L. Bluebond, United States Bankruptcy Judge). Appellant Clifton 17 Capital Group, LLC (“Clifton Capital”) appeals two orders of the Bankruptcy Court: 18 (1) the Order Granting the Application for Payment of Final Fees and/or Expenses 19 (the “Second Fee Order”) in the amount of $1,155,944.71; and (2) the Order 20 Granting Motion to Strike Declarations of John L. Sadd, Jed Sanford, and Sam 21 White Filed by Clifton Capital Group, LLC (“Clifton Capital”), in Opposition to 22 Trustee’s Final Fee Application (the “Strike Order”) (collectively, the “Orders”). 23 The Bankruptcy Court entered the Orders in connection with its granting of the 24 Fourth and Final Application for Compensation and Reimbursement of Fees and 25 Expenses (the “Final Fee Application”), filed by Bradley D. Sharp, the former 26 chapter 11 trustee (the “Trustee”) in the bankruptcy case of East Coast Foods, Inc. 27 (“ECF”). 1 Appellant Clifton Capital submitted its Opening Brief (“OB”) on February 2, 2 2021. (Docket No. 15). On May 14, 2021, Appellee Bradley D. Sharp, Chapter 11 3 Trustee, submitted his Reply Brief (“AB”). (Docket No. 16). On June 11, 2021, 4 Clifton Capital submitted its Reply Brief (“RB”). (Docket No. 23). The Court has 5 read and considered the papers filed in this appeal and held a Zoom video hearing 6 on July 7, 2021. 7 For the reasons discussed below, the Court rules as follows: 8  The Second Fee Order is AFFIRMED. The Bankruptcy Court neither erred 9 nor abused its discretion in awarding the Trustee a fee enhancement above the 10 lodestar figure. 11  The Strike Order is AFFIRMED. The Bankruptcy Court neither erred nor 12 abused its discretion in granting the Trustee’s motion to strike Clifton 13 Capital’s declarations submitted in connection with its supplemental brief on 14 remand because the Trustee did not introduce any new evidence in his 15 supplemental brief. 16 I. BACKGROUND 17 On November 18, 2018, the Bankruptcy Court granted the Trustee’s Final Fee 18 Application (the “First Fee Order”), on the basis that the requested fee was 19 reasonable because it equaled the amount set forth under 11 U.S.C. § 326(a), or 20 alternatively, because “this was an exceptional case” warranting compensation in 21 excess of the lodestar figure. See In re East Coast Foods, Inc., CV 18-0098 MWF, 22 2019 WL 6893015 at *4 (C.D. Cal. Dec. 18, 2019). 23 On December 19, 2019, the Court entered the Order Re the Bankruptcy 24 Court’s Order (the “Prior Order”), reversing and remanding the Bankruptcy Court’s 25 order on the basis that Bankruptcy Court did not make detailed findings as to why 26 the Trustee is entitled to an amount significantly higher than the lodestar figure. 27 (Id.). 1 In so doing, the Court held as follows: (1) the lodestar approach is 2 “presumptively reasonable” for purposes of determining the Trustee’s compensation 3 under 11 U.S.C. § 330; (2) the Trustee must “come forward with specific evidence 4 showing why the results obtained were not reflected in either his standard hourly 5 rate or the number of hours allowed” and “must also show that the bonus is 6 necessary to make the award commensurate with compensation for comparable 7 nonbankruptcy services”; and (3) if the Bankruptcy Court determines that a bonus is 8 justified, it must make detailed findings that actually support that determination. 9 (Id.) (citing In re Manoa Finance Co., Inc., 853 F.2d 687, 692 (9th Cir. 1988)). The 10 Court also noted that “while the Bankruptcy Court observed that the Trustee faced 11 various challenges in this action, it is not clear why such considerations would not 12 have been encompassed in the lodestar figure, or would justify such a substantial 13 bonus.” (Id. at *4). 14 On remand, the parties provided supplemental briefing in light of this Court’s 15 ruling, and the Bankruptcy Court held a continued hearing on the Trustee’s Final 16 Fee Application (the “Fee Application”). At that hearing, the Bankruptcy Court 17 stated: 18 It’s difficult for a lower court on remand to adjudicate an issue when it firmly believes the appellate court made an error of law on appeal. This 19 court remains of the view that Congress intended for the compensation 20 formula set forth in Section 326(a) to be presumptively reasonable and generally in the nature of a commission . . . and that the citations offered 21 by the District Court are not on point. 22 (Excerpts of Record (“ER”) 7-8) (Docket No. 16)). The Bankruptcy Court 23 nonetheless acknowledged that this Court’s prior decision was “law of the case” and 24 that the Bankruptcy Court “need[s] to follow it, but it kind of makes it a little bit — 25 you know, I have to do it with a couple of brain cells tied behind my back. It makes 26 [it] a little more challenging.” (ER 8-9). 27 1 The Bankruptcy Court ultimately determined on remand that the lodestar 2 amount in this case is $758,951.70 (the “Lodestar”). (ER 10-12, 30-31). The 3 Bankruptcy Court then awarded the Trustee compensation with the same fee 4 enhancement as before, in the total amount of $1,155,844.71. (ER 17-18, 42-44). 5 The Bankruptcy Court also entered findings of fact and conclusions of law in 6 support of the Second Fee Order. (ER 45-100). Finally, the Bankruptcy Court 7 entered the Strike Order, striking certain declarations submitted by Clifton Capital. 8 (ER 101-102). 9 The Court incorporates by reference the factual and procedural background 10 set forth in the Prior Order as if fully set forth herein. (See Prior Order at 2-4). 11 II. STANDARD OF REVIEW 12 A bankruptcy court’s conclusions of law are reviewed de novo, and findings 13 of fact are reviewed for clear error. Zurich Am. Ins. Co. v. Int’l Fibercom, Inc., 503 14 F.3d 933, 940 (9th Cir. 2007). Pertinent to this appeal, a bankruptcy court’s award 15 of professional fees “will not [be] disturb[ed] . . . unless the bankruptcy court abused 16 its discretion or erroneously applied the law.” In re Strand, 375 F.3d 854, 857 (9th 17 Cir. 2004). “A bankruptcy court abuses its discretion if it applies the wrong legal 18 standard or its findings are illogical, implausible or without support in the record.” 19 In re Cook Inlet Energy LLC, 583 B.R. 494, 500 (B.A.P. 9th Cir. 2018). 20 III. LEGAL STANDARD 21 Pursuant to § 330, a bankruptcy court “may award to a trustee, . . . or a 22 professional person employed under section 327 or 1103 (A) reasonable 23 compensation for actual, necessary services rendered by the trustee . . . ; and (B) 24 reimbursement for actual, necessary expenses.” 11 U.S.C. § 330(a)(1)-(2). 25 In determining reasonable compensation for a chapter 11 trustee, courts shall 26 consider 27 the nature, the extent, and the value of such services, taking into account all relevant factors, including — (A) the time spent on such services; (B) 1 the rates charged for such services; (C) whether the services were necessary to the administration of, or beneficial at the time at which the 2 service was rendered toward the completion of, a case under this title; 3 (D) whether the services were performed within a reasonable amount of time commensurate with the complexity, importance, and nature of the 4 problem, issue, or task addressed; (E) with respect to a professional 5 person, whether the person is board certified or otherwise has demonstrated skill and experience in the bankruptcy field; and (F) 6 whether the compensation is reasonable based on the customary 7 compensation charged by comparably skilled practitioners in cases other than cases under this title. 8

9 Id. § 330(a)(3). Section 326(a) sets a statutory cap for chapter 11 trustee 10 compensation depending on the amount disbursed to creditors. Id. § 326(a). 11 A trustee has the burden of demonstrating that its requested compensation is 12 reasonable and satisfies these requirements. See Hale v. United States Trustee (In re 13 Basham), 208 B.R. 926, 931-32 (B.A.P. 9th Cir. 1997). 14 The primary method used to determine a reasonable fee under § 330(a)(3) is 15 to calculate the lodestar. See In re Buckridge, 367 B.R. 191, 201 (Bankr. C.D. Cal. 16 2007) (citing In re Eliapo, 468 F.3d 592, 598 (9th Cir. 2006); Yermakov v. 17 Fitzsimmons (In re Yermakov), 718 F.2d 1465, 1471 (9th Cir. 1983)). The lodestar 18 is computed by multiplying the number of hours reasonably expended by a 19 reasonable hourly rate. See Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S. Ct. 20 1933, 1939, 76 L. Ed. 2d 40 (1983). 21 IV. DISCUSSION 22 A. Standing 23 As a preliminary matter, the Court rejects the Trustee’s argument that Clifton 24 Capital lacks standing to bring this appeal. (See AB at 43). In the Prior Order, 25 faced with the exact same evidence and argument, the Court concluded that Clifton 26 Capital had standing to bring this appeal because the record indicated that the estate 27 did not have sufficient capital to pay all creditors: 1 Although neither party provides case law directly on point on the issue, the Court finds Clifton Capital’s argument to be more persuasive. 2 Clifton Capital’s claim is “subordinated to . . . all allowed and secured 3 and unsecured claims and approved administrative expenses.” (SER 46; AB at 15-16). This is important because to date, there is not sufficient 4 capital to pay all creditors. Because the increased compensation to the 5 Trustee will further subordinate Clifton Capital’s claim, the Court concludes that Clifton Capital is directly and adversely affected by the 6 Final Fee Order, giving it standing to pursue this appeal. See Salomon 7 v. Logan (In re International Envtl. Dynamics, Inc.), 718 F.2d 322, 326 (9th Cir. 1983) (“[I]n a case involving competing claims to a limited 8 fund, a claimant has standing to appeal an order disposing of assets from 9 which the claimant seeks to be paid.”); In re P.R.T.C., Inc., 177 F.3d 774, 778 (9th Cir. 1999) (“A creditor does . . . have a direct pecuniary interest 10 in a bankruptcy court’s order transferring assets of the estate.”). 11 (Prior Order at 5) (emphasis added). 12 The Trustee acknowledges that the Court previously rejected this argument 13 and that “no new facts have arisen that bear on this question.” (AB at 4). Because 14 the Court has already rejected this argument, the Court declines to address it in 15 detail here. The Court is satisfied that Clifton Capital has standing for the same 16 reasons set forth in the Prior Order. 17 B. Specific Evidence in Support of Fee Enhancement 18 Clifton Capital argues that the Bankruptcy Court erred in awarding the 19 Trustee a fee enhancement above the lodestar figure of $758,951.70 because the 20 Trustee failed to show that (1) the bonus was necessary to make the award 21 commensurate with compensation for comparable nonbankruptcy services; and (2) 22 the quality of the results obtained were not reflected in its standard hourly rate or the 23 number of hours allowed. (OB at 19-20) (citing Prior Order at 4). 24 In In re Manoa Finance Co., Inc., the Ninth Circuit explained that “[t]here is 25 a strong presumption that [an award based on the lodestar] was ‘reasonable 26 compensation.’” 853 F.2d at 692. Therefore, 27 1 [i]n order to justify a bonus [beyond the lodestar figure], appellant must come forward with specific evidence showing why the results obtained 2 were not reflected in either his standard hourly rate or the number of 3 hours allowed. He must also show that the bonus is necessary to make the award commensurate with compensation for comparable 4 nonbankruptcy services. 5 Id. “If the bankruptcy court determines that a bonus is justified, it must make 6 detailed findings in support of that determination.” Id. (emphasis added). 7 When granting a fee enhancement, courts may not rely on factors subsumed 8 within the initial calculation of the lodestar. In re Buckridge, 367 B.R. at 204 (citing 9 Blum v. Stenson, 465 U.S. 886 (1984)). Factors typically subsumed into the 10 lodestar, and which cannot serve as an independent basis for an upward adjustment, 11 include: (1) the novelty and complexity of the issues, (2) the special skill and 12 experience of the professional, (3) the quality of the services, and (4) the results 13 obtained. Id. at 202; see also In re Manoa Fin. Co., Inc., 853 F.2d at 691. Because 14 these factors are ordinarily accounted for in the lodestar figure, “they can support an 15 upward adjustment only when it is shown by specific evidence that they are not fully 16 reflected in the lodestar.” In re Manoa Fin. Co., Inc., 853 F.2d at 691 (citations 17 omitted). 18 With respect to the first requirement — that the award be commensurate with 19 compensation for comparable nonbankruptcy services — the Court notes that there 20 is no direct analog to a chapter 11 trustee outside of bankruptcy, and there is no easy 21 benchmark against which to measure. On the one hand, Clifton Capital points out 22 that the Trustee repeatedly represented below that “[t]he rates provided are the 23 normal hourly rates which [the Trustee] charges to its regularly paying, non- 24 bankruptcy clients for similar services.” (ER 933). On the other hand, the 25 Bankruptcy Court reasoned that, outside of the bankruptcy context, a professional 26 performing services similar to the Trustee might be entitled to a fee enhancement: 27 1 Unlike with attorneys and other professionals who provide services outside of bankruptcy similar to those they provide in bankruptcy cases, 2 there is no such thing as a chapter 11 trustee outside of bankruptcy. The 3 closest analog may be a chief restructuring officer hired to run a company. It is not uncommon for such non-bankruptcy professionals to 4 be entitled to success fees or bonuses when they deliver exceptional 5 results. For a company such as the Debtor, a CRO could easily be entitled to additional compensation in the form of a success fee or bonus 6 in excess of the fee enhancement sought by the Trustee in this case. 7 (ER 95). 8 The Court determines that this reasoning is sound, and that the Bankruptcy 9 Court’s conclusion therefore was not an abuse of discretion. See In re Cook Inlet 10 Energy LLC, 583 B.R. at 500 (“A bankruptcy court abuses its discretion if it applies 11 the wrong legal standard or its findings are illogical, implausible or without support 12 in the record.”). 13 With respect to the second requirement — that the quality of the result 14 obtained was not already reflected in the Lodestar calculations — the Bankruptcy 15 Court explained that this was an exceptionally difficult and complex case, and that 16 the complexities of this case did not necessarily result in an increase in the number 17 of hours spent by the Trustee and its staff. (ER 14). Specifically, the Bankruptcy 18 Court found this to be an exceptional case for the following reasons: 19 [t]he trustee assumed control over an operating business with several 20 locations and was called upon to keep those restaurants operating in a 21 profitable manner while dealing with the fact that there were effectively no internal controls, no reliable accounting methods or records, a toxic 22 corporate culture that had resulted in large employee tort claims, years 23 of unfiled tax returns and unpaid sales taxes, an owner who had siphoned off and was attempting to continue to siphon off estate assets and 24 resources to benefit or support other business and his competing 25 restaurants, numerous related party contracts and a principal who failed to cooperate in discovery or obey court orders. The analogy that comes 26 to mind here is of the plate-spinners that used to appear on the Ed 27 Sullivan show who worked furiously to keep multiple plates in the air at the same time. 1 (ER 86). 2 The Bankruptcy Court reasoned that, “[i]n light of the high level of expertise 3 and experience required to perform these tasks in the manner in which they were 4 performed,” “[t]he number of hours spent working on the case is not a measure of 5 the difficulty or skill level required to perform the required services in an 6 exceptional manner.” (Id.). The Bankruptcy Court specifically noted that, “if the 7 complexities merely increased the number of hours that the trustee spent working on 8 the case, this would be reflected in, and therefore compensated by, the lodestar 9 calculation.” (Id.). 10 Given that the complexity of the case and the special skill of the professional 11 are typically subsumed into the lodestar, the question becomes whether the Trustee 12 has shown “by specific evidence” that they are not fully reflected in the Lodestar. 13 See In re Manoa Fin. Co., Inc., 853 F.2d at 691. 14 The Bankruptcy Court’s thorough analysis of the record demonstrates that the 15 Bankruptcy Court relied on the specific evidence set forth above in concluding that 16 the complexity is not accurately reflected in the Lodestar. This is a factual question 17 and the Bankruptcy Court is in the best position to make this determination. 18 Because the Bankruptcy Court’s conclusion is based on specific evidence and is 19 neither implausible nor illogical, the Court determines that the Bankruptcy Court did 20 not abuse its discretion. 21 C. Risk of Underpayment or Loss 22 Clifton Capital argues that the Bankruptcy Court erred by basing its award of 23 a bonus to the Trustee on a risk of underpayment or loss. (OB at 22). Specifically, 24 Clifton Capital argues that (1) risk of underpayment or loss cannot be considered as 25 a matter of law under § 330; and (2) even if it could be considered, the record 26 establishes that there was no risk of nonpayment in this case. (Id.). 27 1 With respect to the first point, Burlington v. Dague, 505 U.S. 557 (1992), and 2 In re Cedic Dev. Co., 219 F.3d 1115 (9th Cir. 2000), are instructive. In Burlington, 3 the Supreme Court held that enhancements to the lodestar figure are not permitted 4 based on risk of loss or contingency risk. 505 U.S. at 564-67 (“[E]nhancement for 5 contingency is not permitted under the fee-shifting statutes at issue.”). In Cedic, the 6 bankruptcy court awarded a fee enhancement because the attorney’s hourly rates did 7 not take into account the results obtained or the risk of nonpayment. 219 F.3d at 8 1116. The district court reversed the bankruptcy court, interpreting Burlington as 9 prohibiting enhancements based on risk of nonpayment. Id. The Ninth Circuit 10 expressly rejected that reading of Burlington, reversed the district court, and 11 reinstated the fee award. Id. at 1116-17. The Ninth Circuit distinguished Burlington 12 as a case about contingent fees: 13 City of Burlington is a case about contingent fees. It holds that the risk created by a contingency fee does not justify an increase beyond the 14 lodestar. The case is not controlling here, because the risk of 15 nonpayment by Cedic was not created by any contingency in the merits of the litigation but by the conduct of Cedic that suggested that it didn’t 16 like to pay its lawyers. 17 Id. (citations omitted). The Ninth Circuit explained “that the general principles 18 applicable to fee-shifting statutes ‘may require some accommodation to the 19 peculiarities of bankruptcy.’” Id. at 1116-17 (quoting Manoa, 853 F.2d at 691). 20 Here, the Bankruptcy Court explained that the risk of underpayment stemmed 21 from (1) the risk of the Trustee being awarded less in fees than the Trustee might be 22 awarded on an hourly fee basis, and (2) the risk that the Trustee may receive only a 23 pro rata distribution of fees if the estate has insufficient funds to pay for the full cost 24 of services rendered: 25 [I]n addition to the inherent risk of underpayment faced by all chapter 26 11 professionals, chapter 11 trustees face an additional underpayment 27 risk because of § 326(a). In the Court’s experience, because of § 326(a), chapter 11 trustees are very often awarded less fees than they 1 would be awarded on hourly-fee bases.

2 This was true in this case for the first two interim periods. For the first 3 interim period, the Trustee requested fees of $252,997.09, while hours spent multiplied by hourly rates charged for non-trustee matters totaled 4 $347,741.50. After the second interim period, the Trustee had been 5 paid $524,184.36 pursuant to § 326(a), while hours spent multiplied by hourly rates charged for non-trustee matters totaled $566,133.00. If the 6 case had faltered during those interim periods, the fee awarded would 7 have been less than any amount calculated in accordance with hourly rates charged by the Trustee’s firm for non-trustee matters. 8

9 Because of § 326(a), chapter 11 trustees face a double risk of underpayment. First, the amount of fees awarded is very often less 10 than the amount they would be awarded if their fees were based on 11 hourly rates charged by their firms for their non-trustee services. Second, based on that already-reduced amount, the trustee may receive 12 only a pro rata distribution. This double risk is not “priced into” the 13 normal hourly rate charged by a firm for the trustee’s non-trustee services. 14

15 (ER 88-91). 16 On the one hand, the inherent risk of underpayment here faced by all chapter 17 11 professionals does somewhat resemble a contingent fee: the Trustee’s 18 entitlement to a fee award here is contingent upon the quality of his performance 19 because he may receive only a pro rata distribution of fees if the estate has 20 insufficient funds to pay for the full cost of services rendered. The Bankruptcy 21 Court explained that “this inherent risk of underpayment is already priced into the 22 hourly rates identified by attorneys, accountants, and other estate professionals when 23 they are being employed under § 327(a) of the Code.” (ER 89). 24 On the other hand, the Trustee faces an additional risk of underpayment 25 because of § 326(a): the Trustee may be awarded less in fees than he would be 26 awarded on an hourly-fee basis. The Bankruptcy Court recognized that this “double 27 1 risk is not ‘priced into’ the normal hourly rate charged by a firm for the trustee’s 2 non-trustee services.” (ER 91). 3 Given that the Trustee here faced two different types of underpayment risk, 4 and that this “double risk” was not priced into the normal hourly rate, the Court 5 determines that the risk of underpayment here is likely not the type of “contingent 6 fee” that cannot justify an increase beyond the Lodestar pursuant to Burlington. See 7 Burlington, 505 U.S. at 559 (a contingent fee is one where the party’s attorneys 8 assume “the risk of receiving no payment at all for their services”). This conclusion 9 is consistent with the Ninth Circuit’s determination in Cedic that “the general 10 principles applicable to fee-shifting statutes ‘may require some accommodation to 11 the peculiarities of bankruptcy.’” 219 F.3d at 1116-17 (quoting Manoa, 853 F.2d at 12 691). Therefore, the Court determines that the Bankruptcy Court did not err by 13 basing its Lodestar enhancement on a risk of underpayment or loss. 14 With respect to Clifton Capital’s second point, Clifton Capital argues that 15 there was never a real risk of underpayment here because the Trustee inherited “an 16 operating, successful, and profitable business generating millions of dollars in 17 revenue and more than sufficient funds to pay the Trustee and estate professionals.” 18 (OB at 24). Clifton Capital points out that, “[a]t the time of each of Trustee’s four 19 fee applications, the estate had more than enough cash on hand to pay not only the 20 Trustee’s requested fees and expenses, but all administrative fees and costs.” (Id.). 21 Clifton Capital is essentially arguing that the Trustee’s job in managing the business 22 here was not difficult enough to create a significant risk of the business becoming 23 insolvent. 24 This argument does not even attempt address the specific factual findings set 25 forth by the Bankruptcy Court as to why the managing the business was particularly 26 difficult here: 27 In light of the numerous challenges this trustee faced and the manner in which the trustee rose to the occasion to resolve these challenges, 1 producing exceptional results, this Court finds that the trustee utilized in connection with the administration of this estate levels of strategic 2 thinking and diplomacy above and beyond those normally employed by 3 a trustee in a chapter 11 case. The trustee assumed control over an operating business with several locations and was called upon to keep 4 those restaurants operating in a profitable manner while dealing with the 5 fact that there were effectively no internal controls, no reliable accounting methods or records, a toxic corporate culture that had resulted 6 in large employee tort claims, years of unfiled tax returns and unpaid 7 sales taxes, an owner who had siphoned off and was attempting to continue to siphon off estate assets and resources to benefit or support 8 other business and his competing restaurants, numerous related party 9 contracts and a principal who failed to cooperate in discovery or obey court orders. 10

11 (ER 86). In light of all of the difficulties faced by the Trustee, the fact that the estate 12 had enough cash on hand to pay the Trustee’s requested fees and expenses, as well 13 as all administrative fees and costs, appears to support, rather than discount, the 14 Bankruptcy Court’s conclusion that the Trustee produced exceptional results under 15 these circumstances. And Clifton Capital has failed to explain why the difficulties 16 identified by the Bankruptcy Court did not put the business in any real danger of 17 insolvency. The Bankruptcy Court’s factual findings are supported by the record. 18 Therefore, the Court is not convinced by Clifton Capital’s conclusory assertion that 19 there was no real risk of underpayment here. 20 Accordingly, the Second Fee Order is AFFIRMED. 21 D. Strike Order 22 Clifton Capital argues that the Bankruptcy Court erred by striking the 23 declarations that Clifton Capital submitted in response to the Trustee’s supplemental 24 brief on remand. (OB at 52). Specifically, Clifton Capital argues that it is entitled 25 to present countervailing evidence because the Trustee’s supplemental brief cited to 26 evidence not previously submit in connection to the Final Fee Application. (Id.) 27 (citing In re Colusa Reg’l Med. Ctr., 604 B.R. 839, 852 (B.A.P. 9th Cir. 2019) 1 against it and an opposing party should have both the ability to do so in writing and 2 to produce counterevidence.”)). The Court disagrees. 3 Clifton Capital acknowledges that the Trustee’s supplemental brief did not 4 introduce new evidence. (OB at 53). The supplemental brief cited to the same 5 evidence introduced in the Trustee’s original reply brief, i.e., evidence that was 6 already in the record. (Id.) (“Clifton Capital took issue with these ‘four pages of 7 things’ at the original hearing on the Final Fee Application, pointed out that the 8 Trustee had raised new arguments and purported evidence in his reply, and 9 requested the opportunity to respond before the Court ruled.”). 10 When discussing this precise issue before the Bankruptcy Court on remand, 11 Clifton Capital represented to the Bankruptcy Court that it was comfortable with the 12 record as it currently existed, and that it would seek additional discovery only in the 13 event that the Trustee attempted to provide additional evidence in the supplemental 14 brief: 15 So if we’re limited to the record as is, we’re comfortable with that. To the extent, however, that Mr. Sharp attempts to provide any additional 16 evidence that’s not currently in the record to support an enhancement, 17 we feel that we should be entitled to discovery on that additional evidence, and then a supplement — and then a briefing schedule that’s 18 — flows from that. 19 (ER 2109). Because the Trustee’s supplemental brief cited to evidence previously 20 submitted in connection with its reply brief, the Trustee’s supplemental brief did not 21 introduce new evidence. 22 Even assuming that the Bankruptcy Court should have stricken the evidence 23 submitted in connection with the Trustee’s reply brief in the first place — a 24 conclusion this Court does not endorse — Clifton Capital failed to raise this issue in 25 its first appeal, and has therefore waived its right to make that argument here. 26 Accordingly, the Strike Order is AFFIRMED. 27 1||V. CONCLUSION 2 The Second Fee Order is AFFIRMED. The Bankruptcy Court neither erred 3 || nor abused its discretion in awarding the Trustee a fee enhancement above the 4 || Lodestar. 5 The Strike Order is AFFIRMED. The Bankruptcy Court neither erred nor 6 || abused its discretion in granting the Trustee’s motion to strike Clifton Capital’s 7 ||newly submitted declarations because the Trustee did not introduce any new 8 || evidence. 9 IT IS SO ORDERED. 10 1 | DATED: August 6, 2021. hse YV. a),

13 MICHAEL W. FITZGERALD 14 United States District Judge 15 16 7 CC: Bankruptcy Court 18 19 20 21 22 23 24 25 26 27 28