In re Moon

• Decision Date: 24 January 2023
• Docket Number: 13-12466-MKN
• Citation: In re Moon, 13-12466-MKN (Bankr. Nev. Jan 24, 2023)
• Parties: In re: WILLIE N. MOON and ADNETTE M. GUNNELS-MOON, Debtors.
• Court: U.S. Bankruptcy Court — District of Nevada

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In re: WILLIE N. MOON and ADNETTE M. GUNNELS-MOON, Debtors.

No. 13-12466-MKN

United States Bankruptcy Court, D. Nevada

January 24, 2023

Chapter 13

Date August 3, 2022

Time 2:30 p.m.

ORDER ON MOTION FOR ATTORNEY FEES AND COSTS ^[1]

MIKE K. NAKAGAVA UNITED STATES BANKRUPTCY JUDGE

On August 3, 2022, the court heard the Motion for Attorney Fees and Costs ("Third Fee Motion") filed in the above-captioned case. The appearances of counsel were noted on the record. After arguments were presented, the matter was taken under submission.

BACKGROUND

On February 25, 2020, the court entered its Memorandum Decision After Evidentiary Hearing ("Contempt Decision") along with its Order After Evidentiary Hearing ("Contempt Order").^[2] (ECF Nos. 157 and 158). That Contempt Decision set forth the court's findings of fact and conclusions of law on the Motion to Hold Creditor Rushmore Loan Management in Contempt for Violation of the Automatic Stay Under §362(a) and for Violation of the Discharge Injunction Under 11 U.S.C. §524(a)(2) and to Hold Creditor SN Servicing Corporation in Contempt for Violating the Discharge Injunction Under 11 U.S.C. §524(a)(2) and for Actual Damages, Emotional Distress Damages, Punitive Damages and Attorney Fees, and Sanctions Against Both Creditors, Rushmore Loan Management and SN Servicing Corporation ("Contempt Motion"). The Contempt Order awarded damages under Section 362(k)(1) in favor of Willie N. Moon ("Willie Moon") and Adnette M. Gunnels-Moon ("Adnette Moon") (jointly "Debtors") against creditor Rushmore Loan Management Services, LLC ("Rushmore"). Debtors had commenced the above-captioned Chapter 13 proceeding on March 26, 2013, and received their Chapter 13 discharge on September 28, 2016.

On July 21, 2020, the court entered its Final Order on Motion for Contempt Against Rushmore Loan Management Services for Violation of the Courts Order Confirming Plan #2 Against Creditor, Rushmore Loan Management Services, LLC and for its Continuing Violation of the Stay and Damages for Both and to Confirm Avoidance of Rushmore's Second Mortgage under FRBP 5009(d) ("Second Contempt Decision"). (ECF No. 295). The Contempt Decision, Contempt Order, Second Contempt Decision, and several related orders with respect to Debtors' two separate requests for attorney's fees and expenses were appealed to the Bankruptcy Appellate Panel of the Ninth Circuit ("BAP").

On January 7, 2021, the BAP entered a memorandum decision affirming in part, reversing in part, and vacating in part the Contempt Decision and Contempt Order ("BAP Contempt Memorandum Decision"). (ECF Nos. 369 and 372). The matters were remanded to the bankruptcy court for further proceedings.

On January 7, 2021, the BAP also entered a memorandum decision affirming in part, vacating in part, and remanding in part the bankruptcy court's orders with respect to the Debtors request for attorney's fees and reimbursement of expenses ("BAP First Fee Memorandum Decision"). (ECF Nos. 375 and 378). The BAP affirmed the bankruptcy court's awards of attorney's fees for the automatic stay violation, but remanded for an explanation of the amount awarded for the automatic stay violation rather than a discharge violation.^[3] Thereafter, certain additional appeals to the Ninth Circuit Court of Appeals ("Ninth Circuit") were dismissed for lack of jurisdiction. To address the matters required by the appellate mandates, status hearings were held by the bankruptcy court.

On November 1, 2021, an order was entered scheduling oral argument on remand. (ECF No. 413). The order established a briefing schedule and set oral argument to be held on January 13, 2022.

On January 13, 2022, oral arguments were presented on all remanded matters and the matters were taken under submission.

On June 13, 2022, the court entered its Memorandum Decision on Remand ("Remand Decision") along with an Order After Remand ("Remand Order").^[4] (ECF Nos. 423 and 424).^[5]The Remand Decision and Remand Order addressed the Debtors two prior requests for recovery of attorney's fees and expenses as actual damages under Section 362(k)(1).

On June 24, 2022, an appeal of the Remand Decision and the Remand Order was filed on behalf of Rushmore. (ECF No. 430).^[6]

On June 27, 2022, Debtors filed the instant Third Fee Motion^[7] that was noticed to be heard on August 3, 2022. (ECF Nos. 432 and 433).^[8] On July 20, 2022, Rushmore filed its objection to the Third Fee Motion ("Objection"). (ECF No. 467).

On July 27, 2022, Debtors filed their reply ("Reply"). (ECF No. 471).

DISCUSSION

As discussed in the Remand Decision, the Contempt Decision was affirmed in part, reversed in part, and remanded in part by the BAP.^[9] As required by the mandates of the BAP the Remand Decision addressed various related appeals with respect to the attorney's fees and costs sought by the Debtors under Section 362(k)(1). The Remand Order specifically awarded the following amounts, inter alia, in favor of the Debtors:

. actual damages in the amount of $71,250.04 representing out of pocket expenses of $742.10 as well as attorney's fees and costs of $70,507 94 in presenting the Contempt Motion pursuant to Section 362(k)(1).

. actual damages of $14,827.00 representing attorney's fees and costs incurred in responding to Adversary Proceeding No. 19-01090-MKN pursuant to Section 362(k)(1).^[10]

. appellate attorney's fees and costs in the total amount of $115,651.77 pursuant to Section 362(k)(1).

See Remand Order at 2:1-20.

By the instant Third Fee Motion, Debtors now seek additional attorney's fees incurred from June 7, 2021 through August 3, 2022, i.e., after the matters were remanded to this court. See Third Fee Motion at 1:18 to 3:2. The total amount sought is $21,360.50. That amount represents 35.9 hours of services provided by Debtors' bankruptcy counsel, Christopher Burke ("Attorney Burke") at a $595.00 hourly rate. See Remand Burke Declaration at ¶¶ 7-10 and attached Billing Statement.^[11] No reimbursement of costs is requested.

In response, Rushmore primarily maintains^[12] that because the Contempt Motion sought sanctions for violation of the discharge injunction as well as the automatic stay, the Third Fee Motion does not sufficiently identify the fees available under Section 362(k)(1). See Objection at 3-6. Rushmore also argues that Adnette Moon is not entitled to actual damages in the form of attorney's fees because she is not an individual injured by a willful violation of the automatic stay. Id. at 6-8. See 11 U.S.C. § 362(k)(1) (Except as provided in Paragraph (2), an individual injured by any willful violation of a stay…shall recover actual damages, including costs and attorney's fees…")

In reply, Debtors argue that the discharge and automatic stay violations were inextricably intertwined, thereby permitting the entire amount requested by the Third Fee Motion to be awarded. See Reply at 2:11-19. Moreover, Debtors maintain that Rushmore has never disputed the pecuniary losses sustained by Adnette Moon, has raised a new argument, and has waived any claim of lack of injury. Id. at 2:20-26.

The court having considered the written and oral argument of counsel, along with the extensive record in these proceedings, finds that the attorney's fees requested by the Debtors are reasonable, and concludes that the amount should be awarded under Section 362(k)(1). The objections presented by Rushmore are overruled and the Third Fee Motion will be granted for three primary reasons.

First, the bankruptcy court remains bound by the rule of mandate. See Remand Decision at 8:8-19. After the BAP Contempt Memorandum Decision was entered on January 7, 2021, as well as the BAP First Fee Memorandum Decision, the appellate mandate to the bankruptcy court was confined to Adnette Moon's claim for actual damages, including attorney's fees, under Section 362(k)(1). As Rushmore never appealed this court's prior finding that it willfully violated the automatic stay under Section 362(k) and never appealed the award of compensatory damages of $742.10, see Remand Decision at 4:14-16, Rushmore's violation of the discharge injunction^[13] is immaterial to the merits of the Third Fee Motion. In other words, the determinations required by the Third Fee Motion are not, and need not be inextricably intertwined^[14] with the substance of the discharge violation.

Second, the bankruptcy court previously found that Adnette Moon suffered economic injury from Rushmore's willful violation of the automatic stay, see Contempt Decision at 30-43, and awarded actual damages. Id. at 46-55. Rushmore's decision not to appeal that finding or the damage award effectively waived any contrary contention on remand.^[15] The court's uncontested prior legal conclusion that Adnette Moon is an individual injured by a willful violation of the automatic stay is the law of the case. See United States v. Lummi Indian Tribe, 235 F.3d 443, 52 (9th Cir. 2000); Marina Dist. Dev. Co., LLC v. AC Ocean Walk, LLC, 2021 WL 107201, at *2 (D. Nev. Jan 11, 2021).

Third no evidence has been presented disputing the reasonableness of the time expended by Attorney Burke nor the necessity and accuracy of the services described in the Billing Statement. No evidence has been presented contesting the experience and qualifications of Attorney Burke in representing the Debtors in pursuing the Contempt Motion. No evidence has been presented, nor has a suggestion been made, that the hourly rates charged by Attorney Burke are unwarranted. Having reviewed the services provided and the amount requested, the court concludes that the expenditure of 35.9 hours at a $595.00 hourly rate is reasonable. Compare Remand Order at 22:15 to 23:10 (awarding fees to Attorney Burke in responding to...