Daecharkhom v. Waugh Real Estate Holdings

Summarized by Thomas Phinney , Felderstein Fitzgerald Willoughby Pascuzzi & Rios LLP
12 years 1 week ago

Citation:

BAP No. NV-13-1034-TaJuKi, February 18, 2014

Tag(s):

Ruling:

The BAP held that a debtor was entitled to its full reasonable attorneys fees of $8,456.30 under § 523(d) for defending a § 523(a)(2) nondischargeability action on a consumer debt, and reversed the bankruptcy court's reduction of such fees based upon special circumstances. "Under § 523(d) a fee award and the special circumstances exception are mutually exclusive determinations." Thus, the bankruptcy court has discretion to eliminate but not reduce a fee award based upon special circumstances, and must specify debtor misconduct of some kind that constitute special circumstances.

Procedural context:

The Debtor appealed from the bankruptcy court’s order awarding less than the full amount of his requested attorney’s fees and costs under § 523(d). The bankruptcy court determined that Creditor was not substantially justified in pursuing a § 523(a)(2) nondischargeability action on a consumer debt and that the requested fees and costs were reasonable. It then awarded reduced fees and costs based on a determination that special circumstances justified reduction. The BAP held a special circumstances determination within the meaning of § 523(d) requires a complete disallowance of fees and costs, and that special circumstances justifying fee disallowance did not exist. The BAP reversed and remanded.

Facts:

Creditor filed an adversary complaint against the Debtor and sought a nondischargeability determination under § 523(a)(2). The allegedly nondischargeable debt arose in the context of a consumer mortgage loan. The bankruptcy court entered a judgment after trial in favor of the Debtor. See Waugh Real Estate Holdings, LLC v.Daecharkhom (In re Daecharkhom), 481 B.R. 641 (Bankr. D. Nev. 2012) (creditor failed to provide evidence of the original lender’s reliance on the Debtor’s allegedly fraudulent statements). Following trial, the banrkuptcy court found that the debtor's reasonable attorneys fees and costs were $8,456.30, but reduced the award to $4,500 based upon unspecified "special circumstances."

Judge(s):

TAYLOR, JURY, and KIRSCHER

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