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Margaret Kinney v. HSBC Bank USA

Summarizing by Lars Fuller

Mantiply v. Horne (In re Horne)

Circuit court broadly interprets fee shifting in Section 363(k) for a willful stay violation.

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Case Type:
Case Status:
16-16789 (11th Circuit, Dec 05,2017) Published
On an issue of first impression, the Eleventh Circuit concluded that section 362(k) of the Bankruptcy Code authorizes the payment of attorney's fees and costs incurred by debtors in stopping a violation of the automatic stay, pursuing an action for damages resulting from the stay violation, and defending the award on appeal. The Eleventh Circuit held that, unlike section 330, section 362(k) specifically provides for the recovery of "costs and attorney's fees" in the measure of damages arising from a willful violation of the automatic stay, allowing for a departure from the American Rule.
Procedural context:
Appeal from the United States District Court for the Southern District of Alabama, affirmed.
The debtors filed a chapter 7 petition and received their discharge four months after the bankruptcy case was filed. While the debtors' bankruptcy case was pending, a civil action was filed against the debtors in state court. The plaintiff's attorney repeatedly refused to voluntarily dismiss the action. The debtors sought damages for the stay violation in state court, and the bankruptcy court awarded $81,714.31 in damages, which included $41,714.31 in attorney's fees. The plaintiff's attorney appealed the bankruptcy court's order awarding damages to the district court. The district court affirmed and awarded additional attorney's fees. Next, the plaintiff's attorney unsuccessfully sought to recuse the bankruptcy judge by filing motions in both the bankruptcy court and the district court. The plaintiff's attorney then appealed the bankruptcy court's order denying the recusal to the district court. The district court affirmed the denial of the recusal motion, but declined to award the debtors' fees incurred in defending the appeal of the recusal order. Plaintiff's attorney then appealed to the Eleventh Circuit the district court's affirmance of the denied recusal motion, and the debtors cross-appealed the denial of their attorney's fee motion. The Eleventh Circuit affirmed the recusal order, but remanded to the district court to award the debtors their attorney's fees or determine why the debtors were not entitled to fees under section 362(k). On remand, the district court awarded additional fees to the debtors. Undaunted by her lack of success on prior appeals, plaintiff's attorney petitioned for a writ of certiorari with the Supreme Court regarding the affirmance of the denial of the recusal motion, but the petition was denied. The debtors then filed motions with the Eleventh Circuit for additional attorney's fees incurred in connection with the appeal and the petition for certiorari. The Elevent Circuit referred the motions to the district court to determine whether the debtors were entitled to the additional fees and the reasonableness of the fees sought. The district court awarded additional attorney's fees of $92,495.86. Plaintiff's attorney appealed yet again.
Ed Carnes, Chief Judge, and Black, Circuit Judge, and May, District Judge

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