By its recent decision in In re Horne, 876 F.3d 1076 (11th Cir. 2017), the United States Court of Appeals for the Eleventh Circuit broadened the scope of attorney’s fees that are recoverable pursuant to section 362(k) of the Bankruptcy Code. In doing so, the Eleventh Circuit adopted the Ninth Circuit’s interpretation of fee awards under section 362(k) in In re Schwartz-Tallard, 803 F.3d 1095 (9th Cir. 2015).
The Eleventh Circuit’s decision highlights the need for attorneys representing both debtors and creditors to be aware of the broad application of section 362(k)(1), and the possibility that violations of the “automatic stay” may result in awards of substantial attorney’s fees for responding to, and stopping, any stay violation of the “automatic stay” and, additionally, for related proceedings such as appeals.
Facts
The Hornes filed for chapter 7 bankruptcy in 2011. The filing of the Hornes’ bankruptcy triggered an automatic stay of any litigation against them pursuant to section 362(a)(1) of the Bankruptcy Code. Despite the automatic stay, however, Mary Mantiply, an attorney, filed a civil action on behalf of her clients against Mr. Horne in Alabama state court. After being informed of the automatic stay by the Hornes, Ms. Mantiply repeatedly refused to voluntarily dismiss the action she had filed.
The Hornes filed a motion in the bankruptcy court seeking damages for Ms. Mantiply’s violation of the automatic stay. The bankruptcy court awarded the Hornes $81,714.31 in damages, of which $41,714.31 were attorney’s fees. Ms. Mantiply appealed that decision to the district court, which affirmed the bankruptcy court’s decision and awarded the Hornes an additional $34,551.28 in attorney’s fees incurred in the appeal of the damages award.
Ms. Mantiply then filed motions in the bankruptcy court and district court seeking the bankruptcy judge’s recusal. After the bankruptcy court denied the motion for recusal, Ms. Mantiply appealed that decision to the district court, which affirmed the bankruptcy court’s decision.
Ms. Mantiply then appealed the district court’s affirmance of her denied recusal motion. The Eleventh Circuit affirmed the denial of the recusal motion and remanded the case to district court to determine whether the Hornes were entitled to the attorney’s fees incurred in defending the appeal. On remand, the district court found that the Hornes were entitled to an additional $14,918.60 in attorney’s fees.
Meanwhile, Ms. Mantiply...
