America's Servicing Co. v. Schwartz-Tallard (In Re Schwartz-Tallard)
751 F.3d 966
9th Cir.2014Background
- Schwartz-Tallard filed Chapter 13; ASC serviced her mortgage and moved to lift the stay for foreclosure.
- Stay was reinstated orally May 13, 2009; ASC did not appear at that hearing and sold the home May 20, 2009.
- Written order reinstating the stay was entered June 3, 2009, after the sale.
- Schwartz-Tallard alleged ASC violated the stay and sought damages including attorneys’ fees and punitive damages; bankruptcy court awarded damages.
- ASC appealed; the district court largely affirmed the stay violation finding and damages; Schwartz-Tallard sought attorneys’ fees incurred defending ASC’s appeal.
- Bankruptcy Appellate Panel (BAP) held fees defending the appeal were actual damages under § 362(k)(1); ASC petitioned for review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sternberg controls whether defense fees are actual damages | Schwartz-Tallard entitled to fees as actual damages for enforcing stay | Sternberg bars fees incurred in pursuing or defending damages from a stay violation | Sternberg does not apply to defense of a stay-violation appeal |
| Whether the fees incurred defending ASC's appeal are 'actual damages' under § 362(k)(1) | Fees are necessary to remedy the stay violation and preserve damages award | Fees are for litigation attenuated from the stay violation; not recoverable | Fees defense of appeal qualify as actual damages |
| Whether the fees should be granted absent explicit statutory language authorizing such fee shifting | Plain text includes fees as actual damages; purpose supports award | American Rule requires explicit statutory language; no explicit authorization here | Explicit statutory language not required in this context; held for Schwartz-Tallard |
| Whether Sternberg’s rationale aligns with financial and non-financial purposes of the stay | Awarding fees furthers stay’s purposes by deterring violations | More litigation undermines the breathing spell and benefits no one | Award furthers stay’s purposes; affirmed |
Key Cases Cited
- Sternberg v. Johnston, 595 F.3d 937 (9th Cir. 2010) (limits on recoverable fees; stay as shield, not sword)
- In re Walsh, 219 B.R. 873 (9th Cir. BAP 1998) (previously held fees on appeal are recoverable; later overruled by Sternberg)
- In re Schwartz-Tallard, 473 B.R. 340 (9th Cir. BAP 2012) (BAP held defense fees on appeal were actual damages)
- Sternberg v. Johnston (cited within opinion), 595 F.3d 937 (9th Cir. 2010) (reiterates holding about ‘actual damages’ and the American Rule)