In re: Paul Duncan Gillespie, NC-13-1455-KuDJu

Bechtold sued Gillespie and Dymatix in state court over collateral ownership and asserted postpetition attorney’s fees after state court judgment in Bechtold’s favor.
Gillespie filed for chapter 7 bankruptcy; state court and bankruptcy proceedings overlapped with Bechtold pursuing remedies in both forums.
Bankruptcy court initially ruled postpetition fees were not discharged under In re Ybarra due to Gillespie’s voluntary postpetition participation.
Bechtold’s state court judgment awarded Bechtold postpetition fees; Bechtold sought enforcement in bankruptcy court.
Bankruptcy court later reversed itself, concluding Ybarra did not apply or that Gillespie’s postpetition activity could be involuntary; this appeal followed.
We are reviewing whether the Bechtold fee claim is prepetition or postpetition for discharge purposes under the Bankruptcy Code.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Ybarra governs postpetition fees for discharge purposes	Bechtold	Gillespie	Ybarra applies; postpetition fees may be discharged if not voluntary
Whether Gillespie voluntarily returned to litigation postpetition	Bechtold asserts voluntariness	Gillespie argues partial involuntariness due to risk to collateral	Court should treat postpetition activity as voluntary if aimed at preserving disputed interests
Whether the state court actions were fundamentally defensive or assertive of prepetition claims	Bechtold/Bechtold’s claims were ongoing prepetition and continued postpetition	Gillespie framed actions as defensive	Focus is on purpose of postpetition litigation, not plaintiff/defendant labeling
How to apportion postpetition fees between discharged and non-discharged portions	Bechtold seeks restoration of non-discharged portion	Discharge may bar most postpetition fees tied to prepetition claims	Remand for factual apportionment; court did not decide allocation

In re Ybarra, 424 F.3d 1018 (9th Cir. 2005) (voluntary return to postpetition litigation governs postpetition fee discharge)
In re SNTL Corp., 571 F.3d 826 (9th Cir. 2009) (broad definition of claim and fair contemplation test for arising claims)
In re Zilog, Inc., 450 F.3d 996 (9th Cir. 2006) (discharge implications for prepetition claims with postpetition costs)
In re Jensen, 995 F.2d 925 (9th Cir. 1993) (broad purpose of discharge; fresh start policy)
In re Hassanally, 208 B.R. 46 (9th Cir. BAP 1997) (scope of discharge; analysis of pre/postpetition claims)
Siegel v. Fed. Home Loan Mortg. Corp., 143 F.3d 525 (9th Cir. 1998) (supports voluntariness analysis in postpetition actions)
In re Sure-Snap Corp., 983 F.2d 1015 (11th Cir. 1993) (relevance to voluntariness of postpetition litigation)