Alerts

Supreme Court Allows Unsecured Lender To Recover Contractual Legal Fees In Bankruptcy Case

March 21, 2007

The Supreme Court unanimously held on March 20, 2007, that an unsecured lender could recover contract-based legal fees “incurred in [post-bankruptcy] litigation” on “issues of bankruptcy law.” Travelers Casualty & Surety Co. of America v. Pacific Gas & Elec. Co., __ U.S. __ (March 20, 2007).  Op., at 1, 3.  In doing so, the court vacated a summary ruling by the Ninth Circuit last year. 167 Fed. Appx. 593 (9th Cir. 2006) (held, “attorney fees… not recoverable in bankruptcy for litigating issues ‘peculiar to federal bankruptcy law.’“), citing In re Fobian, 951 F.2d 1149, 1153 (9th Cir. 1991) (held, when “litigating issues involving not basic contract enforcement questions, but issues peculiar to federal bankruptcy law, attorney’s fees will not be awarded absent bad faith or harassment by the losing party.”).