Memorandum of Decision Re: Commission in 363(h) Sale

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Decisions
IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re HERBERT L. HOLM,                                                                   No. 1-87-00559      Debtor. ___________________________/ HERBERT L. HOLM,      Plaintiff,    v.                                                                                                  A.P. No. 94-1197 LYNN ALTO,      Defendant. ______________________________/
Memorandum of Decision
     Lynn Alto was the co-owner of an apartment building with Chapter 11 debtor in possession Herbert Holm. In May of 1994, Holm commenced an adversary proceeding pursuant to section 363(h) of the Bankruptcy Code seeking to sell Alto's interest along with that of the estate. On July 22, 1994, the parties entered into a stipulated judgment which provided that the property may be sold subject to the provisions of section 363(h).      On April 24, 1995, Holm filed a "motion for clarification." In it, he seeks to compel Alto to pay her share of the real estate commission due on the sale, which has been consummated. Alto takes the position that she had a right to approve the sale price and did not, or did so only net of a commission, so that she is not liable for a commission.      Alto's position has little merit. A judgment, even if entered by stipulation, resolves all issues which were raised, or could have been raised, between the parties. 21 Fed.Proc.L.Ed., Judgments and Orders, section 51:199. Because the judgment did not reserve to Alto the right to approve the sale price, she had no such right. She did have a right of first refusal, pursuant to section 363(i), which she apparently did not exercise. The judgment is silent as to the commission. However, section 363(j) of the Bankruptcy Code specifically provides that after a sale pursuant to section 363(h), the trustee shall distribute the proceeds, less costs and expenses of the sale, according to the interest of the co-owner. A real estate commission is a cost of sale. In re Marino, 794 F.2d 1367 (9th Cir.1986). Thus, by operation of statute Alto must bear half of the commission.      In opposing this motion, Alto has also attacked the propriety of the order allowing the employment of the broker. She has never noticed a hearing on this, and has so mixed up the issues and garbled the captions that several papers relating to this adversary proceeding were misfiled in the base case and papers relating to the employment order were misfiled in this adversary proceeding. The order allowing the employment of the broker was a base case matter, and must be raised by a base case motion and a hearing.      However, it does appear that the order authorizing the employment may have been improvidently entered. While Holm and the broker disclosed that Holm's son was employed by the broker, they failed to disclose that the son was the listing agent and was to receive a portion of the commission.      For the foregoing reasons, counsel for Holm shall submit a form of amended judgment in this adversary proceeding providing that the proceeds of sale shall be distributed in accordance with section 363(j) of the Bankruptcy Code. Counsel for Alto shall submit an order in the base case and having only a base case caption providing that the commission shall continue to be held in trust until the court has ruled on the motion the court assumes Alto will file in the base case and set for hearing seeking to vacate the order employing the broker. Both sides shall serve the U.S. Trustee with all papers relating to this issue.
Dated: September 15, 1995                                                                                                  _______________________                                                                                                                                                     Alan Jaroslovsky                                                                                                                                                    U.S. Bankruptcy