In re Bradley Edward Koeberer and Nancy Louise Koeberer

Background

During their Chapter 7 bankruptcy case, Bradley Edward Koeberer and Nancy Louise Koeberer accused California Bank of Commerce of willfully violating the automatic stay, the legal protection that generally pauses collection activity when a bankruptcy case begins. The bankruptcy court found that the Bank technically violated the stay but concluded that the Koeberers had suffered no damages and initially awarded no attorneys’ fees or costs.

The Koeberers appealed to the Bankruptcy Appellate Panel, which affirmed the finding that the Bank violated the stay and that the Koeberers had not proved actual or punitive damages. It vacated the denial of attorneys’ fees and costs and sent the matter back for a determination of what fees and costs were reasonable. The bankruptcy court later awarded the Koeberers $19,946.50 in fees and $548.92 in costs for the appeal—70 percent of the requested fees and all requested costs. The Bank appealed that order to the district court.

Legal principles and analysis

Section 362(k)(1) of the Bankruptcy Code requires recovery of actual damages, including reasonably incurred attorneys’ fees and costs, for an individual injured by a willful stay violation. The district court concluded that this provision allowed the Koeberers to recover reasonable fees and costs for their successful appeal concerning the denial of fees. The court explained that the statute did not require them to prove damages separate from fees and costs. It also rejected the Bank’s arguments that only the Bankruptcy Appellate Panel could award appeal-related costs and that fees were unavailable because the Koeberers had not defended an appeal.

The district court held, however, that the bankruptcy court abused its discretion by failing to explain the fee award. The bankruptcy court’s order did not explain why the 69.5 hours claimed by counsel were reasonably spent or why the court reduced the lodestar—the preliminary calculation of reasonable hours multiplied by a reasonable rate—to 70 percent. A reference to the parties’ earlier discussion about apportioning fees was not enough because the bankruptcy court had not yet explained its reasoning at that time.

Disposition

The district court AFFIRMED in part the March 14, 2022 bankruptcy-court order, VACATED the award of attorneys’ fees and costs, and REMANDED for the bankruptcy court to explain the basis for a reasonable award. The parties were also referred to the district court’s mediation program.