In re Miller, Bankruptcy No. 00-50064. Adversary No. 00-5014.

CourtUnited States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — Eastern District of Kentucky
PartiesIn re Walter J. MILLER, Debtor. Bank of America, Plaintiff, v. Walter J. Miller, Defendant.
Docket NumberBankruptcy No. 00-50064. Adversary No. 00-5014.
Decision Date26 June 2000

250 B.R. 294 (2000)

In re Walter J. MILLER, Debtor.
Bank of America, Plaintiff,
Walter J. Miller, Defendant.

Bankruptcy No. 00-50064. Adversary No. 00-5014.

United States Bankruptcy Court, E.D. Kentucky, Lexington Division.

June 26, 2000.

250 BR 295

Linda J. West, Frankfort, KY, for plaintiff.

Sidney N. White, Lexington, KY, for defendant.


WILLIAM S. HOWARD, Bankruptcy Judge.

This matter has come before the Court for a ruling on the defendant's Motion to Amend Judgment (Doc. # 14). The defendant seeks to have the Court amend the Order Sustaining Motion for Summary Judgment of May 4, 2000 (Doc. # 12) to grant him a reasonable attorney fee in the amount of $1,000.00 pursuant to 11 U.S.C. § 523(d). This section allows attorney fees to a debtor who prevails in a nondischargeability action initiated by a creditor, when the creditor was not "substantially justified" in its position. This Court has jurisdiction of this matter pursuant to 28 U.S.C. § 1334(b); it is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I).

The plaintiff filed a Complaint to Determine Dischargeability of Debt (Doc. # 1) on February 25, 2000, seeking to have the defendant's debt to it declared nondischargeable pursuant to 11 U.S.C. §§ 523(a)(2)(A) and 523(a)(2)(C), alleging that the debt in the amount of $1,181.58 was incurred by false pretenses, false representation and fraud. The defendant filed a Motion for Summary Judgment (Doc. # 5) on March 22, 2000 seeking dismissal of the Complaint and discharge of the subject debt. The plaintiff filed a Response (Doc. # 9) on April 12, 2000. A hearing on the Motion and Response was held on May 4, 2000, and the defendant's Motion was sustained. The Order Sustaining Motion for Summary Judgment was entered that same day as set out

250 BR 296
above. The Order set out that the Court reserved for future determination the allowance of costs and attorney fees

The defendant now seeks attorney fees pursuant to 11 U.S.C. § 523(d) which provides:

If a creditor requests a determination of dischargeability of a consumer debt under subsection (a)(2) of this section, and such debt is discharged, the court shall grant judgment in favor of the debtor for the costs of, and a reasonable attorney\'s fee for, the proceeding if the court finds that the position of the creditor was not substantially justified, except that the court shall not award such costs and fees if special circumstances would make the award unjust.

The issue before the Court is therefore whether the plaintiff was "substantially justified" in its position. As the plaintiff points out in its Response to Defendant's Motion to Amend Judgment (Doc. # 15), the concept of substantial justification arose in the Equal Access to Justice Act, 28 U.S.C. § 2412(d)(1)(A). The Supreme Court (in a context other than bankruptcy) has interpreted the term to mean "justified in substance or in the main-that is, justified to a degree that could satisfy a reasonable person." Pierce v. Underwood, 487 U.S. 552, 565-66, 108 S.Ct. 2541, 2550, 101 L.Ed.2d 490 (1988).

Some courts have articulated this standard as one of reasonableness, i.e., to be substantially justified a creditor's position must be reasonable in both law and fact. This has been expressed as a three-part test: (1) a reasonable basis in law for the theory propounded; (2) a reasonable basis in truth for the facts alleged; and (3) a reasonable connection between the facts alleged and the legal theory advanced. See In re Napier, 205 B.R. 900 (Bkrtcy. N.D.Ill.1997), inter alia. Further, a determination of substantial justification

should turn on a totality of the circumstances. This analysis permits a trial court to examine a number of factors, including, but not limited to, whether the creditor attended the 341

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