FOR THE NORTHERN DISTRICT OF CALIFORNIA In re JOHN EVERETT CALDWELL II,                                       No. 1-87-01859      Debtor. ___________________________/ Memorandum of Decision      In April of 1989, the trustee appointed in this Chapter 11 case signed a listing agreement with real estate broker Robert Northrup whereby the trustee agreed to pay Northrup a seven percent commission if he produced a buyer for a parcel of real property. The agreement also made the estate liable for a commission if the property was withdrawn from sale during the listing period.      Northrup actively marketed the property, finding several potential purchasers. In addition, he actively protected the marketability of the property by attending meetings of county officials in order to preserve a lot split necessary to sell the property. Also, he hired a civil engineer out of his own pocket to resolve an issue regarding access to the property.      While the agreement was in effect, Northrup produced an offer which was acceptable to the trustee. Just as the trustee was about to notice the sale, however, the debtor proposed a plan to pay off all creditors in full without selling the property. The debtor's parents, who had become involved in his finances and were facing the prospect of avoidance actions by the trustee, agreed to fund the plan. As a consequence of this development, the sale did not come before the court for approval.      Northrup sought fees of $20,650.00 which were approved by the court through a series of errors made by both sides. The trustee had never obtained court approval of her agreement with Northrup, and Northrup never noticed his application for compensation. However, when the matter came on for hearing it was clear that all creditors were being paid in full, so that any fees allowed would come out of only the debtor's pocket. The debtor's counsel was at the hearing and expressly stated that the debtor had no objection to Northrup's fees. Accordingly, they were approved without review by the court and paid by the trustee.      Subsequently, the debtor realized that his attorney had erred in stating that the debtor agreed to Northrup's fees. The court granted his motion to reconsider the matter. Now before the court is Northrup's application for retroactive approval of his listing agreement and approval of his fees. The debtor has objected.      he court begins its deliberation by noting that each side has committed procedural errors which warrant a substantial penalty. Through counsel, Northrup sought fees without being appointed and without giving notice as required by the Federal Rules of Bankruptcy Procedure. Through counsel, the debtor misled the court into allowing fees which should not have been awarded. The court considers the effect of these errors as cancelling each other out. It will accordingly decide the issue as if neither mistake had been made.      The court is satisfied that under the criteria set forth in In re Twinton Properties, 27 B.R. 817, 819-20 (Bkrtcy.M.D.Tenn.1983), and cited with approval in In re Kroeger Properties & Dev., Inc., 57 B.R. 993 (9th Cir.BAP 1986), Northrup should be employed retroactively. He was always qualified to be employed; he did quite a bit of quality work which benefitted the estate; and, most importantly, it appears that the failure to obtain timely approval was a failure of the trustee, not Northrup. It would be unfair to Northrup, and a windfall for the estate, to deny him compensation because the trustee failed to proceed properly.      However, approval of employment does not mean that Northrup is entitled to the full amount in the listing agreement for two reasons. First, the listing agreement is expressly subject to court approval, which is only now being granted. Second, section 328(a) of the Bankruptcy Court expressly allows the court to grant compensation to a professional different from that initially agreed upon if circumstances changed. The agreement by the debtor's parents to fund a plan changed things and obviated the need to sell the property. Accordingly, award of a full commission is not warranted. In marketing the property, preserving the possibility of a lot split, and finding a potential buyer acceptable to the trustee, it appears that Northrup did about two-thirds of the total work necessary to close a sale. The court will award him $13,773.55 for these services. He must therefore return the sum of $6,876.45 to the trustee.      Accordingly, counsel for Northrup shall submit a form of order which (1) approves Northrup's employment retroactively, but on a quantum meruit basis rather than for the commission stated in the listing agreement, and (2) awards him fees of $13,773.55, with the balance of $6,876.45 to be returned to the trustee. Counsel for the debtor shall approve the form of the order as conforming to this decision.
Dated: December 6, 1993                                                                               _______________________                                                                                                                       Alan Jaroslovsky                                                                                                                        U.S. Bankruptcy