IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
|DO NOT PUBLISH
This case disposition has no value as precedent and is not intended for publication. Any publication, either in print or electronically, is contrary to the intent and wishes of the court.
GATTLING-HOGUE/VALLEY No. 96-13258
Memorandum of Decision
Napa Valley Homes is a real estate brokerage owned by Dennis Rippey, who is also general
partner of the debtor in this Chapter 11 case. The debtor seeks to employ Napa Valley Homes
pursuant to section 327(a) of the Bankruptcy Code. The U.S. Trustee objects, arguing that Napa
Valley Homes is not eligible to be hired under that statute because of its connection to Rippey.
Real estate brokers are professionals within the meaning of section 327(a). In re Haley
F.2d 588 (9th Cir.1991). A debtor in possession may not hire a real estate broker which is an
insider, because the statute requires professionals to be "disinterested persons." Section
101(14)(A) provides that a person cannot qualify as disinterested if it is an insider. In re Yuba
, 157 B.R. 869 (Bkrtcy.N.D. Iowa 1993); In re Sky Valley, Inc.
, 135 B.R. 925,
934-36 (Bkrtcy.N.D. Ga.1992); In re Lakeside I Corp.
, 120 B.R. 231 (Bkrtcy.M.D.Fla. 1990).
The debtor concedes that Napa Valley Homes is an insider because it is owned by the debtor's
general partner. However, it argues that the individual employees of Napa Valley Homes who
are to share the commission are not insiders and may therefore be paid. This argument is not
consistent with state law.
Under California law, it is the broker
who is entitled to the commission. A real estate agent
cannot contract in her own name, nor can she accept compensation from anyone other than the
broker under whom she is licensed. Cal.Bus.&Prof.Code sec.10137; Grand v. Griesinger
160 Cal.App.2d 397. Since the debtor cannot hire the agent directly, it is of no consequence that
she herself may not be an insider.1
For the foregoing reasons, the objection of the U.S. Trustee will be sustained and the debtor's
motion to employ Napa Valley Homes as real estate broker will be denied. The U.S. Trustee
shall submit an appropriate form of order.
Dated: May 1, 1997 _______________________
U.S. Bankruptcy Judge
1. The definition of "insider" under the Code is not exclusive. Papers submitted by the debtor
indicate that the agent may in fact be an insider even though she has no formal relationship to
Rippey. However, there is no need to delve into this