               FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


IN RE: HOKULANI SQUARE, INC., a          No. 11-60072
Hawaii corporation,
                          Debtor,          BAP No.
                                           10-1468

BRADLEY R TAMM, Chapter 7
Trustee,                                  OPINION
                      Appellant,

                v.

UST - UNITED STATES TRUSTEE,
HONOLULU,
                        Appellee.


            Appeal from the Ninth Circuit
             Bankruptcy Appellate Panel
 Pappas, Dunn, and Jury, Bankruptcy Judges, Presiding

              Argued and Submitted
        October 10, 2013—Honolulu, Hawaii

                Filed January 26, 2015

      Before: Alex Kozinski, Raymond C. Fisher,
         and Paul J. Watford, Circuit Judges.

             Opinion by Judge Kozinski
2               IN RE: HOKULANI SQUARE, INC.

                           SUMMARY*


                            Bankruptcy

    The panel affirmed the Bankruptcy Appellate Panel’s
reversal of the bankruptcy court’s award of compensation to
a chapter 7 trustee.

    The trustee’s compensation is calculated based on the
value of the bankruptcy estate assets he disburses. In this
case, secured creditors made a winning credit bid on real
property of the bankruptcy estate, using money the estate
owed them, rather than cash. The panel held that 11 U.S.C.
§ 326(a) does not permit a trustee to collect fees on a credit
bid transaction in which the trustee disburses only property,
not “moneys,” to the creditor.


                            COUNSEL

Bradley R. Tamm (argued); Lissa D. Shults and Melissa A.
Miyashiro, Shults & Tamm, ALC, Honolulu, Hawaii, for
Appellant.

Noah M. Schottenstein (argued), Trial Attorney, Ramona
Elliot, Deputy Director/General Counsel, P. Matthew Sutko,
Associate General Counsel, Executive Office for the United
States Trustees, Washington, D.C.; Tiffany Carroll, Acting
United States Trustee for Region 15, Curtis B. Ching,
Assistant United States Trustee, United States Department of

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
               IN RE: HOKULANI SQUARE, INC.                    3

Justice, Office of the United States Trustee, Honolulu,
Hawaii, for Appellee.

Daniel M. Benjamin, Ballard Spahr LLP, San Diego,
California, for Amicus Curiae Carl A. Eklund.


                          OPINION

KOZINSKI, Circuit Judge:

    In bankruptcy, it’s the trustee’s job to manage the estate.
Often, this means liquidating all the estate’s assets and
distributing the proceeds to creditors, shareholders and other
interested parties. Some of the proceeds are awarded to the
trustee as compensation, which is calculated based on the
value of the assets he disburses. We address whether the
trustee’s compensation may reflect the value of what is
known as a “credit bid.”

                            FACTS

    Hokulani Square, Inc., filed for bankruptcy in May 2007.
Bradley Tamm was appointed as the chapter 7 trustee. One
of Hokulani’s principal assets was a set of condominiums that
exposed the estate to serious liabilities. Recognizing the risks
of owning the condominiums, Tamm moved to auction them
off. Two groups of secured creditors, both of which had liens
on the condominiums, jointly submitted the winning bid at
$1.5 million.

    To pay, the secured creditors exercised their right to credit
bid under 11 U.S.C. § 363(k). This means that they used the
money the estate owed them, rather than cash, in making their
4               IN RE: HOKULANI SQUARE, INC.

bid. In such a transaction, the creditors get the property, and
the estate’s debt is reduced by the amount of the bid.

    Tamm petitioned the bankruptcy court for compensation
in the amount of $109,293. He came up with this number by
including the $1.5 million credit bid in his calculations. The
United States Trustee objected on the ground that including
the value of the credit bid was not authorized by 11 U.S.C.
§ 326(a). Excluding the credit bid would reduce Tamm’s fee
by approximately $40,000.

    The bankruptcy court awarded Tamm the full $109,293,
but the Ninth Circuit Bankruptcy Appellate Panel (BAP)
reversed. Tamm appeals. We have jurisdiction under
28 U.S.C. § 158(d) and review the BAP’s interpretation of
section 326(a) de novo. See In re Sasson, 424 F.3d 864, 867
(9th Cir. 2005).

                          DISCUSSION

    1. The bankruptcy court has discretion to award a trustee
fees up to a cap that is calculated as a percentage of “all
moneys disbursed or turned over in the case by the trustee to
parties in interest.” 11 U.S.C. § 326(a) (emphasis added).
Because “moneys disbursed or turned over” isn’t defined in
the Code, it retains its ordinary meaning. See Ransom v. FIA
Card Servs., N.A., 131 S. Ct. 716, 724 (2011). There are
numerous ways to define “moneys,”1 but dictionaries mostly



    1
     The statute uses the plural “moneys” and not “money,” the more
common collective-noun form. The plural “is frequently used, especially
in financial and legal contexts, to denote ‘discrete sums of money’ or
‘funds.’” Bryan A. Garner, Garner’s Modern American Usage 529 (2d
                IN RE: HOKULANI SQUARE, INC.                          5

agree that the term refers to a generally accepted medium of
exchange. See, e.g., Third New Int’l Dictionary 1458 (2002)
(“something generally accepted as a medium of exchange,
measure of value, or a means of payment”); Black’s Law
Dictionary 1158 (10th ed. 2014) (“The medium of exchange
authorized or adopted by a government as part of its currency;
esp. domestic currency”); Oxford English Dictionary 992 (2d
ed. 1989) (“[c]urrent coin . . . in pieces of portable form as a
medium of exchange and measure of value”). It’s also clear
that “disburse” means to “pay out,” Black’s Law Dictionary
561 (10th ed. 2014), and “turn over” means to “deliver” or
“surrender,” Webster’s New Collegiate Dictionary 1262 (8th
ed. 1977). Taken together, this language seems to say that the
trustee may collect fees only on those transactions for which
he pays interested parties (in this case, secured creditors) in
some form of generally accepted medium of exchange.

     In a credit bid transaction, the trustee turns property over
to the creditor, and the creditor reduces the amount the estate
owes him by the value of his bid. The only thing “disbursed
or turned over” by the trustee is the underlying property, in
this case, a set of condominiums. However broadly we define
“moneys,” the term can’t be expansive enough to encompass
real estate, which is about as far from a “medium of
exchange” as one can get. See, e.g., Ping Cheng, et al.,
Illiquidity and Portfolio Risk of Thinly Traded Assets, 36 J.
Portfolio Mgmt. 126, 126 (2010) (categorizing real estate as
a highly illiquid asset). Congress elected to restrict the
trustee’s maximum compensation using the narrow term
“moneys,” as opposed to a broader term such as “property”
or “assets,” and we must “assume that the legislative purpose


ed. 2003). We can discern no significance to use of the plural here, and
the parties have suggested none.
6             IN RE: HOKULANI SQUARE, INC.

is expressed by the ordinary meaning of the words used.”
INS v. Phinpathya, 464 U.S. 183, 189 (1984) (internal
quotation marks omitted).

    The statute’s legislative history confirms this view. A
report of the House Judiciary Committee says that section
326(a) covers “the situation where the trustee liquidates
property subject to a lien and distributes the proceeds.” H.R.
Rep. No. 95-595, at 327 (1977). The report is careful to note
that section 326(a) “does not cover cases in which the trustee
simply turns over the property to the secured creditor, nor
where the trustee abandons the property and the secured
creditor is permitted to foreclose.” Id. This passage suggests
that Congress considered the possibility of paying trustees for
turning over property to creditors, and worded section 326(a)
so as to preclude it.

    Looking at the same legislative history, two of our sister
circuits have also concluded that section 326(a) permits no
pay for property disbursements in satisfaction for creditors’
claims. The Fifth Circuit decided that section 326(a) doesn’t
allow a trustee to collect on the value of property given to
creditors in exchange for a reduction in the amount they’re
owed. In re England, 153 F.3d 232, 235 (5th Cir. 1998). It
reasoned that “[t]he plain language of § 326(a) indicates that
the statute caps a trustee’s compensation based upon only the
moneys disbursed, without any allowance for the property
disbursed.” Id. And the Third Circuit held that “Congress
did not intend to include credit bids in the trustee’s
compensation” because in a credit bid transaction “the
secured creditor receives [] property in satisfaction of its
secured claim.” In re Lan Assocs. XI, L.P., 192 F.3d 109,
117–18 (3d Cir. 1999).
              IN RE: HOKULANI SQUARE, INC.                  7

    2. Tamm and amicus ask us to interpret section 326(a) to
align with bankruptcy practice prior to the 1978 Bankruptcy
Act. While it’s true that we typically “will not read the
Bankruptcy Code to erode past bankruptcy practice,” Pa.
Dept. of Pub. Welfare v. Davenport, 495 U.S. 552, 563
(1990), even the most well-established pre-Code practice
can’t overcome language of the Code that “leaves no room
for clarification,” Hartford Underwriters Ins. Co. v. Union
Planters Bank, N.A., 530 U.S. 1, 11 (2000). And, as noted,
section 326(a) leaves little to the imagination. Given
Congress’s clear statement that trustees may be compensated
for nothing but “moneys disbursed,” historical practice is
beside the point.

    Even if we did seek guidance from past practices, it
would make no difference. Tamm and amicus cite a few pre-
Code lower court cases that allowed fees on transactions
where the trustee returned property to a lienholder in
satisfaction of a secured claim. Interpreting section 326(a)’s
predecessor, these cases reasoned that the trustee
constructively disbursed moneys to creditors, even if he never
paid the creditors in cash. See, e.g., In re Columbia Cotton
Oil & Provision Corp., 210 F. 824, 827–28 (4th Cir. 1913).
But a mere handful of lower court decisions, without more,
does not demonstrate a “widely accepted and established”
practice. See Hartford Underwriters, 530 U.S. at 9–10
(internal quotation marks omitted) (concluding that “a
number of lower court cases” were insufficient to show a
clearly established pre-Code practice); cf. In re Bonner Mall
P’ship, 2 F.3d 899, 912 (9th Cir. 1993) (deferring to a pre-
Code practice that “several Supreme Court cases had
mentioned” and where there was direct evidence Congress
had knowledge of the practice).
8              IN RE: HOKULANI SQUARE, INC.

    Furthermore, Tamm and amicus overlook pre-Code cases
concluding that section 326(a)’s predecessor was “plain and
unambiguous” in providing that “it is the moneys disbursed
or turned over, and not property, that forms the basis for” the
trustee’s fee. In re Morris Bros., 8 F.2d 629, 630 (D. Or.
1925); see also, e.g., In re Brigantine Beach Hotel Corp.,
197 F.2d 296, 299 (3d Cir. 1952) (“It is clear that the word
‘moneys’ in the clause ‘. . . upon all moneys disbursed or
turned over . . .’ is not the equivalent of property.”).
Considering the sparse and conflicting evidence of any
historical practice of compensating trustees for credit bids, we
doubt that this was “the type of rule that . . . Congress was
aware of when enacting the Code.” Hartford Underwriters,
530 U.S. at 10 (internal quotation marks omitted).

    Tamm also contends that our decisions—specifically York
Int’l Bldg., Inc. v. Chaney, 527 F.2d 1061 (9th Cir. 1975), and
Sw. Media, Inc. v. Rau, 708 F.2d 419 (9th Cir. 1983)—permit
trustee compensation where no money changes hands but the
trustee nonetheless “has properly performed services in
relation” to “the particular property.” Id. at 423 n.4 (quoting
In re Schautz, 390 F.2d 797, 800 (2d Cir. 1968)). But our
cases adopt no such theory. In York, which was decided
before the Code, we said in a footnote without explanation
that, “[f]or the purpose of calculating the trustee’s fee under
this section, we treat the assumption of the existing
mortgages as a disbursement.” York, 527 F.2d at 1074 n.12.
Not only does York fail to address credit bids, but it also
doesn’t discuss the meaning of “moneys disbursed.” Instead,
York applies a different statute, one that doesn’t tie a trustee’s
compensation to the amount of “moneys disbursed.”
Southwestern Media is equally inapplicable; it concerns not
trustees’ fees but whether a trustee violated his fiduciary
duties. While that opinion contains some advisory language
               IN RE: HOKULANI SQUARE, INC.                    9

about trustee compensation, we made clear that we were “not
decid[ing] how the trustee’s fee base would [be] defined,”
rendering any language about section 326(a) rank dicta. Sw.
Media, 708 F.2d at 424.

    Finally, Tamm argues that our reading of section 326(a)
produces absurd results. See Green v. Bock Laundry Mach.
Co., 490 U.S. 504, 527 (1989) (Scalia, J., concurring).
According to Tamm, taking the text literally means that the
difference for a trustee between being paid for his services
and working for free may turn on trivialities. When a third
party wins an auction, the money collected counts in
calculating the trustee’s fee, but if a secured creditor tops the
third party’s bid by a mere dollar, the trustee gets nothing,
even though he does the same work and achieves the same
result for the estate.

    The distinction drawn by section 326(a) may be harsh and
misguided, but it is not absurd. The absurdity canon isn’t a
license for us to disregard statutory text where it conflicts
with our policy preferences; instead, it is confined to
situations “where it is quite impossible that Congress could
have intended the result . . . and where the alleged absurdity
is so clear as to be obvious to most anyone.” Public Citizen
v. U.S. Dep’t of Justice, 491 U.S. 440, 471 (1989) (Kennedy,
J., concurring); see also Antonin Scalia & Bryan Garner,
Reading Law 234 (2012). If the text of section 326(a) is not
wise, it is at least rational. Excluding credit bids may have
been meant to motivate trustees to seek out third party buyers
and thus get better results for the estate. The legislators may
have estimated that this benefit of excluding credit bids from
trustees’ fees outweighed any of the problems described
above. Congress made a policy judgment in selecting the
10             IN RE: HOKULANI SQUARE, INC.

words of section 326(a), and we are in no position to
contradict it.

               *               *              *

    In drafting section 326(a), Congress may not have chosen
the most sensible path. But between the statute’s clear
language and on-the-button legislative history, it appears that
Congress’s choice was deliberate. We hold that section
326(a) does not permit a trustee to collect fees on a credit bid
transaction in which the trustee disburses only property, not
“moneys,” to the creditor. Other courts of appeals have
reached the same conclusion and we find no basis for creating
a circuit conflict.

     AFFIRMED.
