Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-04334/USCOURTS-cand-3_07-cv-04334-0/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 11:101 Bankruptcy

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

DON OBERLE,

Plaintiff/Appellee,

 v.

JEAN WHITLEY, et al.

Defendants/Appellants. /

No. C 07-04334 WHA

ORDER AFFIRMING

BANKRUPTCY COURT

DECISION

INTRODUCTION

In this bankruptcy appeal, defendants-appellants seek to reverse the bankruptcy court’s

award of attorney’s fees. This order finds that the bankruptcy court did not abuse its discretion

in awarding attorney’s fees. Accordingly, the decision of the bankruptcy court is AFFIRMED.

STATEMENT

In 2006, appellants filed an involuntary bankruptcy petition against appellee Don

Oberle, who in turn filed an adversary proceeding against appellants for damages in the amount

of $307,488, including attorney’s fees. The bankruptcy court dismissed the involuntary petition

and appellants defaulted to the adversary complaint. Judgment was then entered against

appellants for the adversary proceeding even though appellants were found to have appeared in

the action. Pursuant to FRCP 55(b)(2), the bankruptcy court then held a default hearing to

determine damages given the large sum requested by Oberle. At the hearing, the bankruptcy

court heard testimony by Oberle regarding consequential and punitive damages, but did not give

appellants an opportunity to cross-examine Oberle. The bankruptcy court then issued a ruling

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United States District Court

For the Northern District of California

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denying Oberle recovery of any punitive and consequential damages but granting attorney’s

fees in the amount of $7,480 for defense of the involuntary petition, and reducing Oberle’s

request for attorney’s fees from $11,694.77 to $2,500 for prosecution of the adversary

proceeding. Appellants now appeal the bankruptcy court’s award of attorney’s fees on the

ground that they were not given an opportunity to confront and cross-examine all adverse

witnesses.

ANALYSIS

A bankruptcy court’s decision to award attorney’s fees is reviewed for abuse of

discretion or erroneous application of the law. Findings of fact are reviewed under a clearly

erroneous standard, and findings of law are reviewed de novo. Accordingly, a bankruptcy

court’s award of attorney’s fees will not be disturbed “unless the bankruptcy court abused its

discretion or erroneously applied the law.” Higgins v. Vortex Fishing Systems, Inc., 379 F.3d

701, 705 (9th Cir. 2004) (internal citations omitted).

A formal hearing to determine attorney’s fees in the case of default is not required in

every case. Under FRCP 55(b)(2) (emphasis added): 

If, in order to enable the court to enter judgment or carry it

into effect, it is necessary to take an account or to

determine the amount of damages or to establish the truth

of any averment by evidence or to make an investigation of

any other matter, the court may conduct such hearings or

order such references as it deems necessary and proper . . .

.”

A court may base its judgment entirely on affidavits or declarations submitted by the plaintiff or

a defaulting defendant who has appeared in the action. See Davis v. Fendler, 650 F.2d 1154,

1161–62 (9th Cir. 1981). This decision is within the sole discretion of the court.

The bankruptcy court’s award of attorney’s fees was not an abuse of discretion. The

bankruptcy court was under no obligation to hold a default hearing to determine attorney’s fees,

at least for amounts as small as those awarded here. The decision by the bankruptcy court to

deny all damages and award attorney’s fees indicates that the bankruptcy court only used

Oberle’s testimony to deny consequential and punitive damages, not in the determination of

attorney’s fees. The bankruptcy court relied solely on the declarations submitted by Oberle in

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arriving at what it determined was a reasonable award for attorney’s fees (Opn. 5). There is no

indication that Oberle’s testimony at the hearing was used at all in the calculus of arriving at the

award. As the bankruptcy court held (Opn. 5):

As to the amount, Oberle incurred attorney’s fees . . . in the

sum of $7,480. Oberle incurred these fees in defending the

ill-grounded involuntary peition. The amount appears

reasonable, and the court will include this amount in the

award.

The bankruptcy court went on to find Oberle’s request for fees in the amount of $11,694.77 for

prosecution of the adversary proceeding excessive given the amount of time spent and

preparation required by counsel. Reduced attorney’s fees in the sum of $2,500 were awarded

based on what the bankruptcy found to be reasonable (Opn. 6). Appellants were given ample

notice and opportunity to file their own declarations and opposition to any amount awarded. 

The bankruptcy court did not abuse its discretion in choosing to rely on the declarations

submitted by Oberle and its own judgment in arriving at what it found to be a reasonable

amount. 

CONCLUSION

For the above-stated reasons, the bankruptcy court’s decision to award attorney’s fees is

AFFIRMED.

IT IS SO ORDERED.

Dated: February 27, 2008. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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