Bankruptcy Law News

Debtor Gets Attorneys’ Fees for Challenging Automatic Stay Violation

Dec. 21, 2018, 5:34 PM

Debtors can collect attorneys’ fees and costs when challenging or defending an award of sanctions for creditors’ violations of the automatic stay in bankruptcy cases, the U.S. Court of Appeals for the Ninth Circuit ruled.

Creditors who willfully violate the automatic stay must pay debtors under Bankruptcy Code Section 362(k) reasonable damages and attorneys’ fees and costs to make them whole.

A 2015 Ninth Circuit ruling allows the bankruptcy court to award reasonable attorney’s fees and costs incurred on appeal in defending a judgment under Section 362(k).

The Ninth Circuit clarified that Section 362(k) also provides for attorneys’ fees and costs a debtor incurs on appeal to challenge an award. No other case has previously ruled addressing fees when the debtor is challenging an award, rather than defending it, Judge Milan D. Smith Jr. wrote Dec. 20.

When an appeal is necessary to get damages and attorneys’ fees and costs, those fees and costs “should be granted to a successful debtor regardless of which party brings the appeal,” the court said.

Judge Raymond C. Fisher and Judge Lawrence L. Piersol of the U.S. District Court for the District of South Dakota, sitting by designation, joined the opinion.

Christopher P. Burke, Las Vegas, Nev., represented Charles B. Easley; Patricia Halstead, Reno, Nev., represented Collection Service of Nevada.

The case is Easley v. LDG Collection Serv. of Nev., 2018 BL 472169, 9th Cir., No. 17-16506, 12/20/18.

To contact the reporter on this story: Diane Davis in Washington at ddavis@bloomberglaw.com

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