Where the creditor raised all its defenses to the debtors’ contempt motion in a collateral adversary complaint, the debtors were entitled to at least a portion of their attorney fees incurred in litigating the adversary proceeding under section 362(k)(1). Moon v. Rushmore Loan Management Services, LLC., No. 20-1199 (B.A.P. 9th Cir. Feb. 4, 2021) (unpublished). Read More
Tag Archive: Attorney Fees
-
Debtors Entitled to Fees for Creditor’s Collateral Attack on Contempt Motion
Posted by NCBRC - March 5th, 2021
-
$67,000 in Fees and Costs Reasonable for Stay Litigation
Posted by NCBRC - June 13th, 2020
The debtors’ attorney was entitled to approximately $67,000.00 in attorney’s fees and expert witness fees and costs for his representation of the debtors in their action against the creditor for violation of the automatic stay. In re Moon, No. 13-12466 (Bankr. D. Nev. May 29, 2020).
After they had obtained their discharge, the debtors reopened their bankruptcy with new counsel, Christopher Burke, in order to file a motion to hold Rushmore Loan Management Services, LLC, in contempt for violation of the automatic stay and the discharge injunction. After an evidentiary hearing, the bankruptcy court found Rushmore in violation of the automatic stay, but because the date Rushmore learned of the discharge was not established, the court did not find it in violation of the discharge injunction. The bankruptcy court awarded the debtors over $100,000 in actual damages, $200,000 in punitive damages, and attorney’s fees and costs under section 362(k)(1).
Mr. Burke then submitted his fee application seeking $56,150 in fees based on 112.3 hours of work at $500.00/hour, $1,950.30 in costs, and $8,907.64 in witness fees for the expert testimony of John Rao. He further sought an order enhancing his fees by a multiplier of 1.5. Rushmore objected to the fee application generally, arguing that because he did not have a written fee agreement with the debtors, Mr. Burke did not comply with ethics requirements. Rushmore further argued that Mr. Burke’s hourly rate and the expert witness fee were excessive. Finally, Rushmore argued that Mr. Burke was not entitled to a fee enhancement. Read More
-
Court Has Discretion to Reimburse Expenses Not Included in No-Look Fee Order
Posted by NCBRC - May 22nd, 2019
Under the bankruptcy court’s no-look fee standing order, debtor’s counsel could not obtain reimbursement for advancing pre-petition costs including filing fees and credit counseling, but the court had discretion to allow those expenses as part of counsel’s compensation. McBride v. Riley (In re Riley), No. 18-30535 (5th Cir. May 13, 2019).
Under its “no money down” fee agreement, the McBride Law Firm advanced the chapter 13 debtor’s filing fees, credit counseling, and the cost of obtaining credit reports. McBride later sought to recover the advance along with its regular fees under the bankruptcy court’s no-look fee standing order. The bankruptcy court found that the attorney fees were limited to those fees specified in the standing order, and it further held that it had no authority to award additional fees or reimbursements. At the same time, the bankruptcy court denied reimbursement of pre-petition expenses in eighteen other cases in the district. McBride and the attorneys from two of the other cases appealed to the district court. That court affirmed. Read More
-
SCOTUS Hears Arguments on Discharge Violation Sanctions
Posted by NCBRC - April 27th, 2019
Addressing the reach of a bankruptcy court’s contempt powers in the context of a violation of the discharge injunction, the Supreme Court heard arguments on April 24, in the case of Taggart v. Lorenzen, No. 18-489.
Daniel Geyser appeared for the debtor, Bradley Taggart. Nicole Saharsky represented the creditor, Shelley Lorenzen, executor. Sopan Joshi, from the office of the Solicitor General, argued as amicus not in support of either party. NACBA submitted an amicus brief in support of reversal.
The controversy hinged on a state court finding that Mr. Taggart’s creditor could seek contractual attorney fees in the litigation before it, even though those fees would have been subject to the discharge order injunction had Mr. Taggart not “returned to the fray.” The bankruptcy court found that the “returned to the fray” doctrine did not apply and that the litigation violated the discharge injunction. It awarded sanctions, at least in part representing the debtor’s attorney’s fees. The Ninth Circuit ultimately reversed the sanctions stating broadly that a creditor acting in good faith cannot be held liable for discharge injunction violation even if that belief is unreasonable. Lorenzen v. Taggart (In re Taggart), 888 F.3d 438 (9th Cir. 2018). Read More
-
Bifurcated Attorney Fee Agreement Gets Thumbs Up
Posted by NCBRC - April 16th, 2019
A Utah bankruptcy court upheld a chapter 7 debtor’s attorney’s bifurcated fee agreement in the face of a motion for sanctions by the U.S. Trustee. In re Hazlett, No. 16-30360 (Bankr. D. Utah Apr. 10, 2019).
Attorney Russell B. Weekes, of Capstone Law, entered into a fee agreement with the chapter 7 debtor, Brett Hazlett, under which Mr. Hazlett would pay no retainer fee, but would pay post-petition costs and expenses in the amount of $2,400 in ten monthly installments. Capstone had an arrangement with BK Billing, under which BK Billing would buy the account from Capstone for $1,800 and collect the fee payments from Mr. Hazlett. Mr. Weekes explained that arrangement to Mr. Hazlett. Mr. Weekes filed all the necessary bankruptcy papers and Mr. Hazlett received his chapter 7 discharge without complications in March of 2017. Read More
-
Attorney Fee Award Upheld Against Student Loan Servicer
Posted by NCBRC - March 21st, 2019
The district court found that the bankruptcy court did not abuse its discretion in holding the student loan servicer in contempt for failing to apply the student debtor’s payments outside the plan in accordance with pre-petition payments as required by the debtor’s confirmed chapter 13 plan. Penn. Higher Educ. Assistance Agency v. Berry, No. 18-444 (D. S.C. March 5, 2019).
Berry had student loans issued by the Department of Education (DOE) and administered by the Pennsylvania Higher Education Assistance Agency (PHEAA). She was paying off her loans under an Income-Driven Repayment plan (IDR) and a Public Service Loan Forgiveness (PSLF) program. In her chapter 13 bankruptcy, her confirmed amended plan provided for continued payments on her student loan debts outside the plan with those payments being applied exactly as before thereby allowing her to continue to benefit from the IDR and PSLF. The PHEAA, however, put the loans into administrative forbearance under which it applied the payments to principal and interest. Ms. Berry filed a Motion to Enforce seeking sanctions in the amount of $22,317.30, representing the attorney fees she incurred pursuing proper application of the payments. The DOE eventually settled its portion of the action for $6,000 and Ms. Berry sought the remaining amount from PHEAA. The bankruptcy court granted Ms. Berry’s entire attorney fee request consisting of $22,317.30 of which, after the DOE’s $6,000 settlement, the PHEAA owed $16,317.30. Read More
-
District Court Addresses Due Process in Fee Hearing
Posted by NCBRC - February 21st, 2019
The district court found that the chapter 7 trustee’s legal representative was deprived of due process when the bankruptcy court reduced a portion of its fees without providing notice and an opportunity to be heard. Arnall, Golden, Gregory, LLP, v. Stroud, No. 18-3755 (N.D. Ga. Jan. 28, 2019).
Appellant, Arnall, Golden, Gregory, LLP, sought $13,607.09 in attorney fees for services performed for the chapter 7 trustee in connection with the debtor/appellee’s motion to reconvert her case to chapter 13. After a fee hearing, the court found that $3,575.50 of the appellant’s fees were for services constituting trustee duties, and that $3,000 of the $6,000 in fees claimed for work on litigation of the conversion motion, were not reasonable and necessary. The court thus reduced the fees to $7,000.00. Read More
-
Bankruptcy Court Says Call First Before Seeking Attorney’s Fees
Posted by NCBRC - January 23rd, 2019
The Bankruptcy Court for the Eastern District of Michigan recently ruled whether a creditor must pay attorney’s fees to the objecting party when the creditor filed a claim with deficient information. In re Ball, No. 17-22574 (Bankr. E.D.MI. Jan. 22, 2019).
The issue was brought before the court by the chapter 13 trustee. A creditor, Financial Edge Credit Union (FECU), was owed a debt for overdraft charges which was an open-end consumer debt. FECU filed a deficient proof of claim that only attached a copy of the deposit account contract and did not include the last payment date or the date of the debtor’s last transaction.
-
Debtor Must Exhaust Administrative Remedies to Get Damages and Fees from IRS
Posted by NCBRC - July 3rd, 2018
A debtor seeking recovery of damages, fees, or costs from the IRS in connection with a discharge injunction violation must first exhaust administrative remedies as required by the Internal Revenue Code. In re Thal, No. 09-12434, In re Slattery, No. 11-20554, 2018 Bankr. LEXIS 1308 (Bankr. S.D. Fla. May 8, 2018).
The chapter 13 debtors, Lucy Thal and Robert Slattery, filed plans in their separate bankruptcy cases under which they paid priority IRS tax debts in full and treated their remaining tax liability as general unsecured debt. Both debtors completed their plans and obtained discharges. Nonetheless, after discharge, the IRS sent both debtors levy notices. It also intercepted a portion of Ms. Thal’s social security benefits, which it later returned, and Mr. Slattery’s tax refunds, which it did not return. In both cases, the debtors filed motions for contempt for violation of the discharge injunction. Read More
-
Court Takes Self-Enriching Chapter 7 Trustee to Task
Posted by NCBRC - May 21st, 2018
The district court went beyond the issue of whether the bankruptcy court properly denied the debtor’s motion for reconsideration, and addressed the unappealed substantive issue of whether the chapter 7 trustee, Kevin McCarthy, properly discharged his duties when he generated substantial fees and costs in pursuit of certain creditor claims. Skubal v. McCarthy, No. 1:17-cv-936 (E.D. Va. May 16, 2018).
Chapter 7 debtor, Megan Skubal, co-owned two real estate parcels as joint tenants with her father, Thomas Skubal. When she filed for bankruptcy, two unsecured creditors filed proofs of claim for a total of approximately $600. The trustee then contacted two additional unsecured creditors to urge them to file proofs of claim. Those creditors were Ms. Skubal’s student loan lender, ASC Education Services, to whom Ms. Skubal owed $46,171.47, and Midland Credit Management, for a credit card debt of $25,818.06. As both creditors declined to file proofs of claim, and despite the U.S. Trustee’s opposition, Mr. McCarthy filed the proofs of claim on their behalf. Mr. McCarthy then sought to sell Ms. Skubal’s real property to pay the $600 claims, the student loan claim, the credit card claim, and his fees and administrative expenses. Read More
-
Request Assistance
Request assistance with a case.
-
Help NCBRC
NCBRC needs your support to protect the rights of consumer bankruptcy debtors. The most effective way to support NCBRC is with a direct donation.
There are many other ways to give to NRBRC:
iGive.com: When you purchase items at over 1,400 online stores, a percentage of your purchase will be donated to NCBRC. Stores include Macy’s, Melissa and Doug, Bed Bath & Beyond, Nike, Petsmart, and more. Shop and Give today!
-
Keep up with NCBRC
Thank you!
Thank you to the following organizations without whose support our work would not be possible.
American College of Bankruptcy
The American College of Bankruptcy is an honorary public service association of bankruptcy and insolvency professionals who are invited to join as Fellows based on a proven record of the highest standards of professionalism plus service to the profession and their communities. Together with its affiliated Foundation, the College is the largest financial supporter of bankruptcy and insolvency-related pro bono legal service programs in the United States.NACBA
Visit NACBA.org
The only national organization dedicated to serving the needs of consumer bankruptcy attorneys and protecting the rights of consumer debtors in bankruptcy. Formed in 1992, NACBA has more than 3,000 members located in all 50 states and Puerto Rico.