Award of Attorneys' Fees

In In re Behn, 245 B.R. 444 (Bankr. W.D.N.Y. 2000), Chief Bankruptcy Judge Michael J. Kaplan addressed the issue of the award of attorneys' fees to a judgment creditor that prevailed in a dischargeability action. Relying on Cohen v. De La Cruz, 523 U.S. 213 (1998), the court held that if the allegations supporting a claim of non-dischargeablility are initially tried and adjudicated in bankruptcy court, attorneys' fees must be awarded if a statute, contract or black-letter principle of law that acts in abrogation of the American rule would command an award of attorneys' fees. The court further held that such fees might be awarded if a statute, contract, or black-letter principle of law permits, but does not require, such an award. Further, if the underlying claim was tried and adjudicated before the bankruptcy and was found to warrant an award of attorneys' fees because of statute, contract or black-letter principle of law, then the debtor "must ask herself whether what she is going to ask the bankruptcy court to decide (by defending the action) is the same thing as what was decided before, albeit under 11 U.S.C. §523 rather than under non-bankruptcy law. She defends at her own peril because if the court concludes that there is no distinction, she will not be permitted to have foisted on her opponents the cost of demonstrating a second time in a second forum what the substance and nature of the claim and injury actually were. But if the court concludes that she is correct, that she is entitled to a new trial under §523 because the prior adjudication is not dispositive of the matter of a bankruptcy discharge of the debt, then she will not suffer the award of additional attorneys fees for the part of the litigation here [in bankruptcy court] that established her right to a new day in court."

PACA "Dealers"

Oh, the ever-elusive search for certainty! In In re Old Fashion Enterprises Inc. 245 B.R. 639 (Bankr. D. Neb. 2000), the court held that restaurant/debtors are not "dealers" subject to the Perishable Agricultural Commodities Act (PACA) trust provisions. In the very same volume, in In re Country Harvest Buffet Restaurants Inc., 245 B.R. 650 (9th Cir. BAP 2000), the court held that Congress wrote an expansive definition of the term "dealer" in PACA and that the debtor, as the operator of a restaurant chain was a "dealer" within the meaning of PACA.

Insider Preference Payments

In In re Le Café Crème Ltd., 244 B.R. 221 (Bankr. S.D.N.Y. 2000), Chief Bankruptcy Judge Tina L. Brozman addressed the issue of whether payments in connection with a purchase agreement of stock fell within the one-year preference payment for insiders. The court noted that, pursuant to the terms of the stock purchase agreement, payments were required to be made on a prescribed schedule and that the defendants could recover their shares if there was a default. Further, as the defendants' stock was deposited into escrow, and as they could require the stock to be delivered to them upon default, they effectively remained in control. The court further noted that the agreement provided that the other shareholders could not sell or transfer any of their interests without the consent of the defendants, who agreed not to unreasonably hold or delay consent. As a result, the defendants controlled whether there could be any new shareholders, and as a result, the defendants retained "incidents of control" sufficient to have them held to be insiders.

Miscellaneous

• Larami Ltd. v. Yes! Entertainment Corp., 244 B.R. 56 (D. N.J. 2000) (automatic stay did not prevent a patent infringement action alleging post-petition patent infringing activity, nor did it prohibit a claim for injunctive relief);
• In re World Auxiliary Power Co., 244 B.R. 149 (Bankr. N.D. Cal. 1999) (a security interest in unregistered copyright can be perfected in accordance with state law by the filing of a financing statement in the appropriate state office if the copyright is registered, and the security interest must be filed in accordance with the Copyright Act);
• In re Enriquez, 244 B.R. 156 (Bankr. S.D. Cal. 2000) (a debtor can "strip off" a lien on real property where there is no equity);
• In re Barbieri, 199 F.3d 616 (2nd Cir. 1999) ("a debtor has an absolute right to dismiss a chapter 13 petition under §1307(b), subject only to the limitation explicitly stated in that provision"); and
• In re Wintersilks Inc., 243 B.R. 351 (Bankr. W.D. Wisc. 1999) (the trustee's quarterly fees after plan confirmation are to be based on disbursements made pursuant to the confirmed plan and may not be calculated on payments made in the ordinary course of the reorganized debtor's business).

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