In re Makris

Summarized by Ericka Johnson , Bayard, P.A.
13 years 9 months ago

Citation:

In re Makris, Case No. 11-1666, 2012 U.S. App. LEXIS 10359 (3d Cir. May 23, 2012) (Not Precedential)

Tag(s):

Ruling:

The Third Circuit Court of Appeals VACATED an order of the United States District Court for the District of New Jersey that affirmed the bankruptcy court’s award of fees on fees incurred by the creditor bank in determining the debtor’s liability for fees associated with enforcing a third party guaranty. The Third Circuit Court of Appeals held that the fees on fees award was not authorized under the terms of the mortgage note, which permitted fees associated with enforcement of the note, and remanded for a proper determination of the amount of fees to be awarded.

Procedural context:

Appeal to the Third Circuit Court of Appeals of a bankruptcy court fee award that was affirmed by the United States District Court for the District of New Jersey.

Facts:

In 2002, the debtor defaulted on a mortgage note that was personally guaranteed by a third party. The bank pursued the guarantor for payment and sought to charge the debtor for fees associated with the guarantor litigation. In a prior appeal, the United States District Court for the District of New Jersey held that the bank was not entitled to fees associated with the guarantor litigation and remanded for a proper determination of the fees. On remand, the bank revised its fee application and removed costs associated with litigating with the guarantor; however, it included fees incurred by the bank in determining whether the debtor was liable for the fees incurred in the guarantor litigation (fees on fees). The bankruptcy court ultimately awarded the bank the fees, the majority of which consisted of fees on fees. The United States District Court for the District of New Jersey affirmed and the debtor successfully appealed to the Third Circuit Court of Appeals.

Judge(s):

Vanaskie, Barry, and Cudahy

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