OPINION 1
In rеsponse to Involuntary Petitions filed under Chapter Seven of the United States Bankruptcy Code by Attorney Jayne Shinko, (hereinafter “Shinko”), the above-captioned Debtors, (hereinafter сollectively “Miele”), filed a Motion to Dismiss the Involuntary Petitions and to Impose Sanctions against Shinko. 2 I issued an Opinion and Order (Doc. # 21 and # 22, respectively) on March 16, 2001, dismissing the Involuntary Petitions and grаnting Miele’s Motion for Sanctions. I awarded reasonable costs, expenses and attorney’s fees in favor of Miele under both Rule 9011 and 11 U.S.C. § 303®. In that regard, I directed Miele to file an itemization of costs and fees with the Court and gave Shinko time to respond thereto. Additionally, I assessed Shinko the sum of $1,000.00 as punitive damages under both Rule 9011 and Section 303®. 3 Shinko filed a timely Appeal of the March 16, 2001 Order which was affirmed by the District Court on July 6, 2001. While the District Court affirmed my imposition of costs and punitive damages, it also dismissed that portion of the underlying Order relating to the imposition of sanctiоns against Shinko in the form of Miele’s attorney’s fees as premature because it was not final at the time of the Appeal. The District Court, however, awarded costs of the Appeаl to Miele exclusive of attorney’s fees in accordance with Federal Rule of Bankruptcy Procedure 8014.
Shinko appealed the District Court decision to the United States Court оf Appeals for the Third Circuit which, by Judgment dated March 19, 2002, affirmed the decision of the District Court in accordance with an Opinion of the same date. The Circuit Court found the Bankruptcy Court was “justified in dismissing thе petition under this Circuit’s case law permitting dismissal when petitions are filed in bad faith .... ” Further, “the Bankruptcy Court properly exercised its discretion to impose reasonable attorney’s fеes and costs under 11 U.S.C. § 303(i)(l) and punitive damages under 11 U.S.C. § 303(i)(2).” (See Judgment and Opinion of the Circuit Court attached as Exhibit D to Defendant’s Motion for Award of Attorney’s Fees, Costs and Punitive Damages Pursu
Miele’s Motion fоr Award of Attorney’s Fees, Costs and Punitive Damages filed to Document No. 38 supplements its earlier itemizations of fees and costs (Document No. 25 filed April 2, 2001) and requests fees and costs from March 30, 2001 through and including July 12, 2002, which is for the time involved in defending the appeals of this Court’s March 16, 2001 Order.
I scheduled a hearing on the initial itemization of costs and fees by Miele (Doc. # 25) and the request for attоrney’s fees, costs and punitive damages pursuant to the Order of March 16, 2001 (Doc. # 38) and entered two Orders on December 4, 2002. The first Order, Document No. 46, awarded William J. Miele attorney’s fees and сosts of $2,641.71 together with punitive damages of $1,000.00 payable by Jayne Shinko within ten (10) days of that Order. The second Order, Document No. 47, which addressed Miele’s Motion for award of appellate fees and costs, was taken under advisement. This Opinion and Order addresses Miele’s request for appellate fees and costs.
Central to Miele’s arguments is that Congress authorized Bankruptcy Courts under 11 U.S.C. § 303(f)(2) to award attorney’s fees and costs required to defend against involuntary petitions including appellate legal fees and expenses. Miele argues this subsection proteсts the debtor by making a creditor liable for “any damages proximately caused by such filing” and that, in this case, all of the litigation, including that in the appellate courts, stems directly from the filing of thеse involuntary bankruptcy petitions. Moreover, all legal fees and expenses, including those at the appellate level, can be viewed as out-of-pocket damagеs proximately resulting from the bad faith filing. In support of this position, Miele relies primarily on the cases of
In re Advance Press & Litho, Inc.,
Shinko’s response refers to the procedural rules for both the District Court and the Court of Appeals which provide specific vehicles for the recovery of attorney’s fees in those courts and these rules may not be bypassed by an overly broad reading of Section 303(f)(2). In short, the proper forum in which to request monetary relief because of a frivolous appeal was not by way of a request for fees in the form of damages in the bankruptсy court but, rather, by motion in the appellate courts under the applicable appellate rules.
Any award under 11 U.S.C. § 303(i) is discretionary. See 2 Lawrence P. King Collier on Bankruptcy, ¶ 303.15[3] at 303-96 n. 22 (15th еd. rev.2002) (citations omitted). I further recognize there are several bankruptcy court decisions which have authorized, under Section 303(i), appellate-related costs and attornеy’s fees. See
In re Atlas Machine and Iron Works, Inc.,
While arguably these three cases do support Miele’s position, they have found
I see the better view for resolution of this matter as that adopted by the court in
In re Allen-Main Associates, Ltd.,
If a district court or bankruptcy appellate panel determines that an appeal from an order, judgment, or decree of a bankruptcy judge is frivolous, it may, after a separately filed motion or notice from the district court or bankruptcy appellate panel and reasonable opportunity to respond, award just damages аnd single or double costs to the appellee.
Miele did not request attorney’s fees at either appellate level under the applicable rules. Like the
Allen-Main
court, I can conceive of no reason to distinguish the
Vasseli
ruling under Section 523(d) frоm the current situation. See also
Glatzer v. Montmartco, Inc.,
Finally, I find that by adopting the approach of
In re Vasseli
and
Allen-Main,
the alleged debtor, subject to an involuntary petition under 11 U.S.C. § 303, is still protected from the serious negative consequences that may be entailed in defending an involuntary bankruptcy petition, whether or not filed in bad faith. Section 303 provides both protection to the alleged debtor and authority to the court to protect against such filings by awarding attorney’s fees and costs in situations where a successful defense to an involuntary petition is advanced by the alleged debtor. The remedies are not exclusive in that the court need not make a finding of bad faith in order to award attorney’s fees and costs. Furthermore, the Federal Rules of Bankruptcy Procedure, specifically Rule 8020, and the Federal Rules of Appellate Procedure at Rule 38, provide protection for the alleged debtor at the appellate
Based upon the foregoing, I deny Miele’s request for fees and costs incurred in this matter at the appellate levels.
An Order will follow.
ORDER
For those reasons indicated in the Opinion filed this date, IT IS HEREBY
ORDERED the request of William J. Miele for fees and costs incurred at the appellate levels in defending the underlying involuntary bankruptcy petitions is denied.
Notes
. Drafted with the assistance of Richard P. Rogers, Law Clerk.
. While reference in the body of this Opinion is made to documents filed in Bankruptcy Case No. 5-00-02480, note that the substantive matters addressed herein also apply to parallel litigatiоn in Bankruptcy Case No. 5-00-02481.
.For a more detailed discussion of the procedural and substantive aspects of the original Motion for Sanctions and dismissal, attention should be directed to the underlying Opinion of this Court’s Order of March 16, 2001. (See Doc. #21.)
.
In re Allen-Main Associates, Ltd.,