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In re Gilman

United States Bankruptcy Appellate Panel of the Ninth Circuit

July 12, 2019

In re: Kevan Harry Gilman, Debtor.
v.
Kevan Harry Gilman, Appellees. Tammy R. Phillips; Tammy R. Phillips, A Professional Law Corporation, Appellants, Tammy R. Phillips; Tammy R. Phillips, A Professional Law Corporation, Appellants,
v.
Kevan Harry Gilman, Appellee. Adv. No. 1:11-ap-01389-VK

          Argued and Submitted on November 29, 2018 at Pasadena, California

          Appeal from the United States Bankruptcy Court for the Central District of California Honorable Victoria S. Kaufman, Bankruptcy Judge, Presiding

          Charles Quentin Jakob argued for Appellants;

          Mark E. Ellis of Ellis Law Group, LLP, argued for Appellee

          Before: TAYLOR, LAFFERTY, and SPRAKER, Bankruptcy Judges.

          OPINION

          TAYLOR, BANKRUPTCY JUDGE

         INTRODUCTION

         Appellants, Tammy R. Phillips and Tammy R. Phillips, a Professional Corporation (jointly, "Creditors"), obtained an $8, 250 judgment against debtor, Kevan Gilman. Under California law, they were entitled to recover reasonable attorneys' fees in obtaining and collecting this amount, and the state court awarded them about $100, 000 in prepetition fees. Apparently other state court fee requests were pending or are anticipated as they asserted that total state court fees approximate $1, 000, 000.

         In this chapter 7 case, they obtained a determination that Debtor was not entitled to a discharge. They also actively litigated issues in the main case itself. The bankruptcy court determined that they were entitled to an award of reasonable fees in connection with this activity. Creditors requested approximately $750, 000 in fees arising from main case activity and $1, 400, 000 in fees in the adversary proceeding. They also requested costs. The bankruptcy court awarded $137, 907.66 and $166, 453.58, respectively, in fees and costs. This appeal arises from the reduced awards.

         Given that proportionality is not a hallmark of Creditors' approach, the appeals before us raise a multitude of issues. We address the appeals in three documents that we file concurrently. In this opinion, we address an issue of first impression that was a partial basis for fee reduction in both the main case and the adversary proceeding: the applicability of CCP § 685.080, [1] which creates a two-year deadline for requesting fees incurred in collection activities, and § 108(c)(2), which tolls the time for certain actions during the pendency of a bankruptcy case. We conclude the bankruptcy court correctly found CCP § 685.080 applicable to these requests for an award of postpetition fees and unaffected by § 108(c). Accordingly, we discern no error in the reduction of the requested fees on this basis and AFFIRM the bankruptcy court's orders in this regard. In separate, unpublished decisions, we address the bankruptcy court's further reduction of the requested fees.

         FACTS

         In 2011, Debtor filed a chapter 7 petition and scheduled his debt to Creditors. He also scheduled an ownership interest in real property in Van Nuys, California and, in relation to this real property, claimed an enhanced homestead exemption.

         Creditors actively participated in the bankruptcy case. They filed an adversary proceeding and obtained a judgment under § 727 that denied Debtor a discharge. During the course of this litigation and four years after filing the adversary proceeding, they filed a motion for partial judgment on the pleadings as to an attorneys' fees claim for relief, seeking a determination that they were entitled to recover fees and costs incurred in the discharge litigation; but they did not seek an immediate award of fees. The bankruptcy court granted the motion and specified that the adversary litigation was enforcement of a judgment for purposes of CCP § 685.040. As Creditors did not request it, the order did not rule on the appropriateness of any specific fees and costs.

         Through litigation in the main case, Creditors also successfully blocked Debtor's request for a homestead exemption enhancement. Litigation continues on their attempt to block the entirety of Debtor's asserted homestead exemption.

         Having prevailed (in part) on their exemption objection, Creditors filed a motion in the main case under CCP § 685.040 and other theories to recover their attorneys' fees and costs. They requested a lodestar award of $756, 425 plus other costs. All of the requested fees and costs were incurred postpetition and in the bankruptcy proceeding.

         In the meantime and after denial of Debtor's discharge, Creditors filed a motion in the adversary proceeding and requested an award of $1, 400, 000 in attorneys' fees plus other costs associated with the adversary proceeding under CCP § 685.040.

         After a hearing, the bankruptcy court entered memorandum decisions and separate orders granting in part and denying in part the two CCP § 685.040 motions. It awarded Creditors $134, 214.50 in fees and $3, 693.16 in costs in the main case and $162, 613.60 in fees and $3, 839.98 in costs in the adversary proceeding. In determining these reductions, it found that $322, 000.05 of the fees in the main case and $942, 154 of the fees in the adversary proceeding were time-barred and subject to disallowance under CCP § 685.080.

         Creditors timely appealed.

         JURISDICTION

         The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and 157(b)(2)(B). We have jurisdiction under 28 U.S.C. § 158.

         ISSUES

         Do CCP §§ 685.040 and 685.080 apply to Creditors' fee request? Does § 108(c) toll the time limits of CCP § 685.080 in this case?

         STANDARD OF REVIEW

         We review "de novo questions of law concerning entitlement to attorney's fees." PSM Holding Corp. v. Nat'l Farm Fin. Corp., 884 ...


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