In Re Express Car & Truck Rental, Inc.
440 B.R. 422
Bankr. E.D. Pa.2010Background
- Involuntary petitions were filed against Express Car & Truck Rental, Inc. and Repete Associates by a single petitioning creditor, Stuski.
- The court dismissed both involuntary petitions on July 20, 2009 and retained jurisdiction over fees under 11 U.S.C. § 303(i).
- Former Debtors seek attorney's fees totaling $34,524.00 under § 303(i).
- Stuski opposed any § 303(i) attorney's fees award, arguing the petitions were filed in good faith and should be dismissed voluntarily.
- Judge Frank found a reasonable basis to award fees under § 303(i), concluded some reduction was appropriate, and entered judgment for $26,495.00.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether dismissal was ‘other than on consent’ under § 303(i). | Stuski asserts dismissal was on consent, so § 303(i) cannot apply. | Former Debtors contend the reservation of § 303(i) rights means dismissal was not by consent. | Dismissal was not on consent; § 303(i) award permitted. |
| Whether § 303(i) authorizes an award of attorney's fees despite lack of bad faith. | Stuski argues no fee since no bad faith and voluntary dismissal. | Debtors rely on presumption in favor of fees and totality of circumstances. | Presumption in favor of fee awards under § 303(i) applies; award upheld. |
| Whether the amount of fees ($34,524) is reasonable and should be awarded in full. | Stuski argues not applicable; no fee. | Fees reasonable for actions to dismiss and to litigate fee entitlement. | Fees reduced to $26,495.00 as reasonable and compensable. |
| Whether the petitioning conduct supports awarding fees and justifies the fee amount. | Filing was warranted due to alleged settlement and concerns about payments. | Filing lacked merit and showed inadequate due diligence. | Petitioning conduct supports fee award; however, some pretrial work was excessive, leading to reductions. |
| Whether the court can award ‘fees on fees’ to compensate time spent securing the fee award. | Yes; the court awarded fees for time spent litigating entitlement to § 303(i) fees. |
Key Cases Cited
- In re Ross, 135 B.R. 230 (E.D. Pa. 1991) (award of fees under § 303(i) not contingent on bad faith; supports fee award upon dismissal)
- In re Reid, 854 F.2d 156 (7th Cir. 1988) (presumes fee entitlement under § 303(i) when dismissal is not on consent)
- In re S. Cal. Sunbelt Developers, 608 F.3d 456 (9th Cir. 2010) (fee-shifting with presumption in favor of § 303(i) awards; factors for overcoming presumption)
- In re Diloreto, 388 B.R. 637 (Bankr. E.D. Pa. 2008) (discusses presumption and factors; fee award framework)
- In re Landmark Distribs., 189 B.R. 290 (Bankr. D.N.J. 1995) (factors for determining fee awards under § 303(i))
- In re Petersen Construction, 951 F.2d 1175 (10th Cir. 1991) (analysis of consent issue under § 303(i))
- In re Tama Mfg. Co., Inc., 436 B.R. 763 (Bankr. E.D. Pa. 2010) (clarifies bona fide dispute and diligence in filing)