Oregon bankruptcy court awards debtor fees for defending motion for relief from stay under state reciprocal fee statute

In a decision that may have reflected some frustration at the creditor’s conduct, the a bankruptcy court in Oregon granted the debtor’s request for $4,123.50 in fees for defending a motion for relief from stay on an automobile lease with a subsidiary of Nissan Motor Acceptance Company that had gone to final evidentiary hearing, when the creditor’s counsel produced no evidence at such trial.  The case involved a confirmed chapter 13 plan which had assumed the automobile lease.   Nissan filed a motion for relief from stay asserting that the debtor had defaulted by missing three payments.  The Debtor denied the amount of default alleged, and offered to cure any default.  Nissan then acknowledged that in fact only one payment had been missed, but asserted that the payment had increased post-petition.  No explanation had been given for the reason for such increase.  Nissan refused to accept any payments following the motion for relief from stay.  Nissan did not respond to repeated requests for information from Debtor’s counsel, including counsel’s request for production.

Trial was set on the request, and debtor’s counsel filed an exhibit list, a witn4ess list, and a copy of the exhibit to be introduced at trial.  No documents were filed by Nissan, and at trial Nissan did not have any witnesses available to testify or any documents to produce.  Debtor’s counsel made an offer of proof that debtor had tendered sufficient funds to cure the alleged default, and that Nissan never sent a statement showing the increase in the lease payment or provided any explanation for the increase.  At the hearing, Nissan’s counsel explained for the first time that the increase was due to Debtor’s move to a different state post-petition, but produced no evidence to that effect.  The Court found that Nissan failed to produce evidence of the increase in the lease payment to sustain a finding of default, and that Nissan failed to carry it’s burden of proof to show a default supporting the request for relief from stay, and thus denied the request to lift stay.  The court directed Nissan to provide payment instructions to Debtor, and absent such instructions Debtor would be deemed current.

Following trial Debtor’s counsel requested $4,123.50 in fees pursuant to Fed. R. Civ. P. 54(d), made applicable to contested matters by Fed. R. Bankr. P. 9014(c) asserting he was the prevailing party on the motion for relief from stay and entitled to fees under Oregon’s reciprocal fee statute.  In keeping with it’s prior conduct, Nissan failed to timely respond to the motion.  After being given an additional 14 days to respond, Nissan objected alleging that the motion was denied for failure to prosecute rather than on the merits.

The court initially concluded that Debtor was the prevailing party in the matter, in that he was the party who received a favorable judgment on the claim.  The court went into much more depth in discussing whether the action was to enforce a judgment.

Oregon’s reciprocal fee statute: ORS 20.096 provides in part:

In any action or suit in which a claim is made based on a contract that specifically provides that attorney fees and costs incurred to enforce the provisions of the contract shall be awarded to one of the parties, the party that prevails on the claim shall be entitled to reasonable attorney fees in addition to costs and disbursements, without regard to whether the prevailing party is the party specified in the contract and without regard to whether the prevailing party is a party to the contract.

ORS 20.096(1).

  The court cited the Supreme Court’s decision in Travelers Cas. & Sur. Co. of Am. v. Pac. Gas & Elec. Co., 549 U.S. 443, 451-52, 127 S. Ct. 1199, 167 L. Ed. 2d  178 (2007)  which found that an award of attorneys fees based on a contract is not precluded simply because the fees were incurred in bankruptcy litigation.  The bankruptcy court went on to conclude that if a motion for relief from stay requires the court to determine and enforce contractual provisions, then such action is based on a contract.  As the only allegation ultimately relied on by Nissan was that the Debtor was in default due to an increase in the lease payment pursuant to paragraph 17 of the lease, such action was based on a contract.  The court noted this distinguished the case from motions based on adequate protection, equity 8in property, or the necessity of the property for a successful reorganization.

   Given the lack of any objection to the reasonableness of the fees, the court also found that the fees requested were reasonable.  The court noted no fees were requested attributable to the single missed payment on the lease.

Michael Barnett
Michael Barnett, PA
506 N Armenia Ave.
Tampa, Fl 33609-1703
813 870-3100