Mantiply v. Horne (In re Horne)

• Decision Date: 05 December 2017
• Docket Number: No. 16-16789,16-16789
• Citation: 876 F.3d 1076
• Parties: IN RE: Richard D. HORNE, Patricia Nelson Horne, Debtors, Mary Beth Mantiply, Plaintiff-Appellant, v. Richard D. Horne, Defendant, Patricia Nelson Horne, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

876 F.3d 1076

IN RE: Richard D. HORNE, Patricia Nelson Horne, Debtors,

Mary Beth Mantiply, Plaintiff-Appellant,

v.Richard D. Horne, Defendant,Patricia Nelson Horne, Defendant-Appellee.

No. 16-16789

United States Court of Appeals, Eleventh Circuit.

December 5, 2017

Thomas M. O'Hara, O'Hara Law Firm, LLC, DAPHNE, AL, Thomas R. McAlpine, Whitfield & McAlpine, PC, MOBILE, AL, for Plaintiff-Appellant.

Suzanne Paul, Charles Michael Smith, Paul & Smith, PC, MOBILE, AL, Marion Everett Wynne, Jr., Wilkins Bankester Biles & Wynne, PA, FAIRHOPE, AL, for Defendant-Appellee.

Before ED CARNES, Chief Judge and BLACK, Circuit Judge, and MAY,^* District Judge.

MAY, District Judge:

Mary Mantiply appeals the district court's order awarding Richard and Patricia Horne¹ the attorneys' fees and costs that they incurred because of her unsuccessful appeal of the damages award to the Hornes for her violation of the Bankruptcy Code's automatic stay provision. This case involves an issue of first impression in this Circuit: whether the Bankruptcy Code authorizes payment of attorneys' fees and costs incurred by debtors in successfully pursuing an action for damages resulting from the violation of the automatic stay and in defending the damages award on appeal. After careful consideration, and with the benefit of oral argument, we affirm the district court.

I. BACKGROUND

The Hornes filed for Chapter 7 bankruptcy on January 10, 2011. In re Horne, 630 Fed.Appx. 908, 909 (11th Cir. 2015) (per curiam) (unpublished). They were discharged from bankruptcy on May 10, 2011. Id. The filing of the Hornes' bankruptcy triggered an automatic stay of any litigation against them under 11 U.S.C. § 362(a)(1). Id. Despite the stay, however, Ms. Mantiply—an attorney—filed a civil action on behalf of her clients against Mr. Horne in state court. See id. And even after being informed of the stay, Ms. Mantiply repeatedly refused to voluntarily dismiss the action she had filed. Id. Eventually it was dismissed in November 2011. Id.

The Hornes filed a motion in the bankruptcy court seeking damages for Ms. Mantiply's violation of the automatic stay under Section 362(k)(1). Id. The bankruptcy court awarded the Hornes $81,714.31 in damages, including $41,714.31 in attorneys' fees. Id. Ms. Mantiply appealed that decision to the district court, which affirmed and also awarded the Hornes an additional $34,551.28 in attorneys' fees incurred in the appeal of the damages award. Id.

Ms. Mantiply then filed two identical motions in the bankruptcy court and the district court seeking the bankruptcy judge's recusal.² Id. at 910. The bankruptcy court denied Ms. Mantiply's recusal motion. Id. Ms. Mantiply appealed that decision to the district court, which affirmed but denied the Hornes' motion for attorneys' fees incurred in defending the appeal of the recusal order. Id.

Ms. Mantiply appealed the district court's affirmance of her denied recusal motion, and the Hornes cross-appealed the district court's denial of their motion for attorneys' fees incurred defending the recusal order on appeal to the district court. Id. This Court affirmed in part and remanded. Id. at 913–14. First, we affirmed the district court's conclusion that the bankruptcy judge's recusal was not required in this case. Id. at 910–12. Second, we remanded for the district court to either award the Hornes attorneys' fees under the mandatory fees provision of Section 362(k), or explain why the recusal motion did not involve litigation over the stay violation and thus did not entitle the Hornes to attorneys' fees. Id. at 912–13. On remand, the district court found that the Hornes' requested attorneys' fees were indeed mandatory and awarded an additional $14,918.60 to the Hornes.

Meanwhile, Ms. Mantiply petitioned for a writ of certiorari with the Supreme Court to review this Court's decision affirming the denial of her recusal motion. The Hornes filed a brief in response. The Supreme Court denied Ms. Mantiply's petition on June 27, 2016.

The Hornes then filed motions with this Court for attorneys' fees incurred in defending against Ms. Mantiply's appeal to the Eleventh Circuit as well as her petition for certiorari (collectively, the "appellate fees"). We sua sponte transferred those motions to the district court to consider in the first instance whether the Hornes were legally entitled to their requested appellate fees and, if so, whether they were reasonable. The district court found that the Hornes were entitled to the appellate fees and that they were reasonable. In determining that the requested appellate fees were reasonable, the district court pointed out that the amount of fees and costs, while large, was reasonable given the time and labor required to defend Ms. Mantiply's many appeals. The district court also found that the skill and experience required of counsel in defending the appeals, the favorable results obtained, and the undesirability of the case—which required undertaking legal action against a fellow lawyer—supported finding the requested attorneys' fees to be reasonable as well. Based on these findings, the district court awarded the Hornes appellate fees and costs of $92,495.86. This appeal followed.

II. APPELLATE FEES

We first address Ms. Mantiply's main argument that the Hornes were not entitled to appellate fees as a matter of law under Section 362(k)(1). She contends that the statute provides mandatory fees for damages and attorneys' fees incurred in ending a stay violation, but not attorneys' fees incurred in pursuing a damages award nor fees incurred in defending that award on appeal. We review de novo an interpretation of the Bankruptcy Code, which is a question of law. Pollitzer v. Gebhardt, 860 F.3d 1334, 1338 (11th Cir. 2017).

As set out above, once the Hornes filed for Chapter 7 bankruptcy, an automatic stay took effect. See 11 U.S.C. § 362(a)(1). It is undisputed that Ms. Mantiply willfully violated this automatic stay. When willful violations occur, Section 362(k)(1) provides that:

(1) Except as provided in paragraph (2), an individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys' fees , and, in appropriate circumstances, may recover punitive damages.

Id. § 362(k)(1) (emphasis added).

Ms. Mantiply relies primarily on the Supreme Court's recent decision in Baker Botts L.L.P. v. ASARCO LLC, 576 U.S. ––––, 135 S.Ct. 2158, 192 L.Ed.2d 208 (2015), which warned that courts should not depart from the American Rule—"the rule that each side must pay its own attorney's fees"—absent explicit statutory authority. Id. at 2163–64. In ASARCO, the Supreme Court held that Section 330(a)(1) of the Bankruptcy Code, which states that a bankruptcy court "may award ... reasonable compensation for actual, necessary services rendered by" certain types of professionals (one of which is attorneys), was not a fee-shifting statute. Id. (quoting 11 U.S.C. § 330(a)(1) ). The Supreme Court reasoned that the statute's plain language indicated that an attorney could receive payment for fees incurred in service of a bankruptcy estate, but was not explicit enough to extend to time spent litigating a fee application against an administrator of a bankruptcy estate. See id. at 2164–65. The latter, the Supreme Court explained, could not fall within Section 330(a)(1)'s text, which required service rendered to the estate. Id. at 2165.

In stark contrast to Section 330(a)(1), Section 362(k)(1) of the Bankruptcy Code specifically and explicitly contemplates at least some departure from the American Rule by including "costs and attorneys' fees" in the damages due to an individual injured by a willful violation of an automatic bankruptcy stay. 11 U.S.C. § 362(k)(1) ; see also Jove Eng'g, Inc. v. IRS, 92 F.3d 1539, 1559 (11th Cir. 1996) (describing the attorneys' fees imposed by Section 362(k)(1) as "mandatory"). Even Ms. Mantiply concedes that Section 362(k) authorizes a departure from the American Rule to the extent that it shifts fees incurred in ending a violation of an automatic stay. But we have never had occasion to examine the legal question Ms. Mantiply's appeal raises—that is, the precise scope of the fees. Relying on ASARCO, Ms. Mantiply argues we must read Section 362(k) narrowly against the background presumption of the American Rule and allow attorneys' fees to be shifted under this statute only when they are incurred in ending the stay violation, not in pursuing the damages remedy or defending the judgment on appeal.

We start with the text. Section 362(k)(1) specifically provides for the recovery of "actual damages, including costs and attorneys' fees." 11 U.S.C. § 362(k). This Court has recognized that "[u]nlike general, special, and compensatory damages, [ ] ‘actual damages' has no consistent legal interpretation." Fitzpatrick v. IRS, 665 F.2d 327, 329 (11th Cir. 1982), abrogated on other grounds by Doe v. Chao, 540 U.S. 614, 124 S.Ct. 1204, 157 L.Ed.2d 1122 (2004). However, our interpretive task with regard to Section 362(k)(1) is made easier by the fact that Congress added "including costs and attorneys' fees" to the term "actual damages." The Supreme Court has instructed that "[i]t is our duty to give effect, if possible, to every clause and word of a statute." United States v. Menasche, 348 U.S. 528, 538–39, 75 S.Ct. 513, 99 L.Ed. 615 (1955) (quotation omitted). In keeping with this duty, we read the phrase "including costs and attorneys' fees" as broadening the notion of actual damages beyond the immediate injury incurred in ending the violation of a stay. Based on the text of Section 362(k)(1), it is clear that Congress intended that the word "including" serve as a word of enlargement. See Include, Black's Law Dictionary 524 (" ‘Including’ within statute is interpreted as a word of enlargement or of illustrative application....").

This interpretation accords with our precedent. In In re Rosenberg, 779 F.3d 1254 (11th...