FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In the Matter of: MAPLE- 

WHITWORTH, INC.,

Debtor

No. 07-56537

MICHAEL N. SOFRIS, aka Sofris BAP No.

APC, CC-06-01098-KNB

Appellant,  Central District of

California, v.

Los Angeles

MAPLE-WHITWORTH, INC.; UNITED

OPINION STATES TRUSTEE; LARRY

WEINSTOCK; MICA BINTU-BROWN;

and EMANUEL PEREZ,

Appellees. 

Appeal from the Ninth Circuit

Bankruptcy Appellate Panel

Klein, Nielsen, and Brandt, Bankruptcy Judges, Presiding

Argued and Submitted

December 9, 2008—Pasadena, California

Filed February 10, 2009

Before: John T. Noonan and Barry G. Silverman,

Circuit Judges, and Suzanne B. Conlon,* District Judge.

Opinion by Judge Conlon

*The Honorable Suzanne B. Conlon, United States District Judge for

the Northern District of Illinois, sitting by designation. 

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COUNSEL

Michael N. Sofris, Michael N. Sofris APC, Beverly Hills,

California, for appellant Michael N. Sofris, aka Sofris APC.

Jerry Kaplan; David Scott Kadin, Kaplan, Kenegos & Kadin,

Beverly Hills, California, for appellee Maple-Whitworth, Inc.

OPINION

CONLON, District Judge: 

This appeal involves an award of $42,257 in attorneys’ fees

and costs pursuant to 11 U.S.C. § 303(i)(1), after dismissal of

an involuntary bankruptcy petition. The purported debtor,

Maple-Whitworth, Inc., sought fees and costs against only

one petitioner, appellant Michael N. Sofris. But the bankruptcy court entered the award against some of the other petiIN THE MATTER OF MAPLE-WHITWORTH 1621
tioners who were served with the motion, under a theory of

joint and several liability. The bankruptcy court failed to rule

on a challenge to the award based on a waiver theory. A

divided Bankruptcy Appellate Panel (BAP) affirmed the

award to fewer than all petitioners. The majority held that

§ 303(i)(1) is governed by the common law theory of joint

and several liability. The BAP also found that the bankruptcy

court properly handled the waiver issue. 

We have jurisdiction pursuant to 28 U.S.C. § 158(d)(1).

The § 303(i)(1) award is affirmed in part, reversed in part, and

remanded to the bankruptcy court for resolution of the waiver

issue. 

The Bankruptcy Court Proceedings

This litigation arose from a dispute over control and ownership of a Maple-Whitworth apartment building in Beverly

Hills, California. Two groups claimed control. Sofris was

aligned with the Mayman-Nathan faction, while appellee

Maple-Whitworth sided with the Marlowe-Shlush faction.

Sofris, joined by others in the Mayman-Nathan faction, filed

an involuntary Chapter 7 petition against Maple-Whitworth

under 11 U.S.C. § 303(a)-(b). The bankruptcy court dismissed

the petition. 

Maple-Whitworth viewed Sofris as the ringleader of the

Mayman-Nathan faction and sought attorneys’ fees and costs

only against him under § 303(i). In opposing the motion,

Sofris offered evidence that Robert Nathan, a MaymanNathan faction member, executed a release on behalf of

Maple-Whitworth, waiving its right to costs and fees. MapleWhitworth contested Nathan’s authority to waive its rights. 

Initially, the bankruptcy court ruled that fees and costs must

be awarded against all petitioners as a class, and ordered

Maple-Whitworth to serve all petitioners with its § 303(i)

motion. The bankruptcy court’s award was entered against all

1622 IN THE MATTER OF MAPLE-WHITWORTH
petitioners effectively served with the motion. The court

based its decision on the tort theory of joint and several liability. The court did not make findings regarding the validity of

Nathan’s release, but rather observed that the issue of control

over Maple-Whitworth would be resolved in pending state

court proceedings. 

The Bankruptcy Appellate Panel Decision

A divided BAP affirmed the bankruptcy court’s award of

attorneys’ fees and costs. Michael N. Sofris, APC v. MapleWhitworth, Inc. (In re Maple-Whitworth, Inc.), 375 B.R. 558

(B.A.P. 9th Cir. 2007). The majority agreed liability under

§ 303(i) is governed by the common law tort doctrine of joint

and several liability. It also held that a debtor may bring a

§ 303(i) motion against fewer than all petitioners. The BAP

concluded that the bankruptcy court correctly handled Sofris’

waiver claim based on the Nathan release. Sofris timely

appeals.

Standard of Review

The bankruptcy court’s conclusions of law are reviewed de

novo, and its factual findings for clear error. Hanf v. Summers

(In re Summers), 332 F.3d 1240, 1242 (9th Cir. 2003). The

bankruptcy court’s interpretation of bankruptcy statutes are

conclusions of law subject to the de novo standard. Beam v.

IRS (In re Beam), 192 F.3d 941, 943 (9th Cir. 1999). A decision whether to award attorneys’ fees and costs under

§ 303(i)(1) is reviewed for an abuse of discretion. Higgins v.

Vortex Fishing Systems, Inc., 379 F.3d 701, 705 (9th Cir.

2004). Decisions of the BAP are reviewed de novo. In re

Summers, 332 F.3d at 1242. 

Discretionary Relief under § 303(i)

[1] Section 303(i) provides that a court may grant a debtor

reasonable attorneys’ fees and costs upon dismissal of an

IN THE MATTER OF MAPLE-WHITWORTH 1623
involuntary bankruptcy petition. 11 U.S.C. § 303(i)(1)(A)-

(B). Statutory relief is unavailable only if all parties consent

or the debtor waives relief. Id. § 303(i). 

The bankruptcy court erred by interpreting the unambiguously discretionary language of the statute as requiring that

all petitioners be joined and served with the motion because

all were jointly and severally liable as a class. The BAP

majority correctly recognized that a debtor may seek costs

and fees from fewer than all petitioners. However, the majority erroneously adopted the bankruptcy court’s interpretation

of § 303(i) as incorporating the common law doctrine of joint

and several liability. See In re Maple-Whitworth, 375 B.R. at

567-68 (citing only the Second and Third Restatements of

Torts as authority). 

The BAP’s use of common law tort principles to interpret

§ 303(i) and to impose joint and several liability on all petitioners as a class is contrary to the individualized exercise of

discretion unambiguously authorized by the statute, and

ignores the consideration of the totality of the circumstances

in imposing liability required by our precedent. Higgins, 379

F.3d at 705. As aptly observed in the BAP dissent:

The majority’s thorough discussion of joint and several liability, contribution and indemnity highlights

the mischief that can occur by the wholesale application of common law tort concepts into an exclusively

bankruptcy statutory cause of action. 

In re Maple-Whitworth, 375 B.R. at 578-79 (Nielsen, B.J.,

dissenting). 

[2] The BAP majority and dissent both recognized the

broad discretion delegated to bankruptcy courts by § 303(i).

Id. at 564-65, 577. In exercising its discretion, a bankruptcy

court must consider the totality of the circumstances, not principles of tort liability. When an involuntary bankruptcy peti1624 IN THE MATTER OF MAPLE-WHITWORTH
tion is dismissed, the debtor is presumed to be entitled to

reasonable fees and costs. Higgins, 379 F.3d at 707. In exercising its discretion whether to award fees and costs, the

bankruptcy court may consider factors such as relative culpability among the petitioners, the motives or objectives of individual petitioners in joining in the involuntary petition, the

reasonableness of the respective conduct of the debtors and

petitioners, and other individualized factors. See id. Tort concepts and class theories of liability are irrelevant to these discretionary and flexible considerations. In light of Higgins, a

bankruptcy court has discretion to hold all or some petitioners

jointly or severally liable for costs and fees, to apportion liability according to petitioners’ relative responsibility or culpability, or to deny an award against some or all petitioners,

depending on the totality of the circumstances. 

[3] The involuntary bankruptcy petition against MapleWhitworth was dismissed.1

 Accordingly, there was a rebuttable presumption it was entitled to reasonable fees and costs.

Id. The burden was on Sofris to rebut the presumption by

establishing that fees and costs were unwarranted under the

totality of circumstances. Id. Sofris failed to do so. Even

though the bankruptcy court applied an incorrect standard, it

did not abuse its discretion in awarding attorneys’ fees and

costs against Sofris. 

The Waiver Defense

Sofris argues the bankruptcy court erred by not ruling on

his defense that Maple-Whitworth waived § 303(i)(1) relief,

based on the Nathan release. Maple-Whitworth contested

Nathan’s authority to release or waive its rights. The bankruptcy court declined to rule on this material issue of fact. If

resolved in Sofris’ favor, the Nathan release would preclude

§ 303(i) relief. The bankruptcy court deferred to pending state

1The bankruptcy court denied Maple-Whitworth’s § 303(i)(2) claim for

$100,000 in punitive damages because bad faith was not established. 

IN THE MATTER OF MAPLE-WHITWORTH 1625
court proceedings to resolve the issue of corporate control,

and thus determine Nathan’s authority to sign a release of the

company’s rights. At oral argument, Maple-Whitworth’s

counsel stated this issue is moot because the state court found

that Nathan’s faction did not own Maple-Whitworth, in practical effect nullifying his release. Sofris disputed whether the

issue is moot.

[4] Section 303(i)(1) precludes relief to a prevailing debtor

if it has waived that right. It was an abuse of discretion not

to resolve the contested waiver issue before awarding fees and

costs. This issue may well be moot in light of the intervening

outcome of state court proceedings concerning corporate control. Nonetheless, the bankruptcy court has a non-delegable

statutory obligation to make findings on this contested issue

because it directly affects Maple-Whitworth’s right to

§ 303(i)(1) relief. The case is remanded to the bankruptcy

court for findings on the waiver issue. 

The parties shall bear their own costs on appeal. See Fed.

R. App. P. 39(a)(4). 

AFFIRMED IN PART, REVERSED IN PART, AND

REMANDED.

1626 IN THE MATTER OF MAPLE-WHITWORTH