F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

I N R E I R E N E M I C H E L L E S C H W

A R T Z

T A L L A R D , Debtor

,

A M E R I C A ’ S S E R

V I C I N G C O M P A

N Y , Appellant

,

v

.

I R E N E M I C H E L L E S C H W

A R T Z

T A L L A R D , A

ppellee

. N o. 12-60052

B AP No. 11-1429

OPI NI ON

Appeal from the Ninth Circuit B ankruptcy

Appellate Panel Kirscher, Pappas, and Dunn, B a nkruptcy J u d g es, Presiding

Arg ued and Submitted En B anc J une 17, 2015—San F rancisco, California

F iled October 14, 2015

B efore: Sidney

R. Thomas, Chief J udg e, and Stephen Reinhardt, Diarmuid F . O’Scannlain, M. Marg aret McKeown, W illiam A. F letcher, Richard C. Tallman, Carlos T. B ea, Milan D. Smith, J r., Sandra S. I kuta, Paul J

. W atford, and Andrew D. Hurwitz , Circuit J udg es.I N R E S C H W A R T Z

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A R D 2

O pinion by J udg e W atford; Concurrence by J udg e B ea; Dissent by

J udg e I k uta

SUMMARY *

Bankruptcy

Affirming the judg ment of the B an k r uptcy Appellate Panel, t h e en banc court held that 11 U.S.C. § 362(k) authoriz es an award o f attorney ’s fees reasonably incurred in

a debtor’s prosecution of a suit f or d amag es to provide redress for a violation of the automatic bankruptcy stay

.

W h en a debtor files for bankruptcy

, the B ankruptcy Code imposes an automatic stay on actions ag ainst the debtor to collect pre-petition debts. Sternberg v. Johnston

, 595 F

. 3d 9 37 ( 9th Cir. 2010), held that § 362(k) allowed a d ebt o r t o

recover o nly those fees incurred to e nd the stay vio l a t i o n itself, not the fees incurred to prosecute a da m a ge s action. A g reeing w ith other circuits, the e n b anc court held that § 362(k) authoriz es recovery of the fees incurred to prosecute a damag es a ction. T h e en banc court o verruled Sternberg to the ex tent it was inconsistent with t h e e n b anc court’s opinion.

Concurring in the judg ment, J udg e B ea, joined by J udg e O’Scannlain, concurred in the m a j o r ity ’s conclusion that § 362(k) has an unambig uous meaning allowing recovery of

* T h is s u m

m ary co n stitu

tes n o part o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.I N R E S C H W A R T Z

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A R D 3

attorney ’s fees incurred in prosecuting a damag es action. J udg e B e a wrote that the majority ’s discussion of Cong ress’s plan in enacting the autom a t ic-stay provision was unnecessary

. Dissenting

, J udg e I kuta w rote that the statutory tex t was ambig uous, and the en banc c ourt should have a dhered to the better reading

set forth in Sternsberg.

COUNSEL

Andrew J acobs (arg

ued), Snell & W ilmer, Tucson, Ariz o na; Kelly H. Dove, Snell & W ilmer, L as Veg as, Nevada, for Appellant.

Christopher P. B urke (arg ued), L aw Office of Christopher P. B urke, L as Veg as, Nevada, for Appellee.

D a n i e l L

. Gey ser (arg

ued), McKool Smith, Dallas, Tex as ; Tara Twomey
, N a t i o n a l A s s o c i a t i o n o f C o n s u m e r B ankruptcy Attorney s, S a n J ose, California, for Amicus Curi a e National Association of Consumer B ankruptcy Attorney s.

OP INION

W A TF ORD, Circuit J udg e:

W h en a debtor files for bankruptcy

, the B ankruptcy Code imposes an automatic stay on virtually all actions ag ainst the debtor to collect pre-petition debts. 11 U.S.C. § 3 62(a). T o deter violations o f the au t o m a tic stay and to provide redressI N R E S C H W A R T Z

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for those that do o c c u r , the Code permits injured debtors to

sue for “actual damag es, including costs and a ttorney s’ fees.” § 362(k). W ith one ex c eption, courts have uniformly h eld that this pr o v i s i on authoriz es a n award o f all attorney ’s fees reasonably incurred to remedy a stay violation, including fees incurred in prosecuting the damag es action that § 362(k) authoriz es. See, e.g. , In re Repine
, 536 F .3d 5 1 2
, 5 22 (5th Cir. 2008); In re Duby

, 451 B .R. 664, 674–77 (1st Cir. B AP 2011).

The o ne ex ception is our decision in Sternberg v

. Johnston

, 595 F .3d 937 (9th Cir. 2010). There, we h eld that § 362(k) allows a debtor to recover only those fees incurred
to end the stay violation itself, not the fe e s i n c urred to prosecute a damag es action. Id. at 947. Thus, under Sternberg

, once the stay violation has ended, no fees incurred after that point may be recovered. That holding has b een the subject of widespread c riticism. Hav ing reconsidered the matter, we conclude that S ternberg misconstrued the plain meaning of § 362(k). T o the ex tent it is inconsistent with this opinion, Sternberg

is overruled.

I

This case has a convoluted p r ocedural history , which for

our purposes can be briefly summ a ri z ed. The debtor, I rene S c h wartz

- Tallard, took out a mortg ag e on her ho m e i n Henderson, Nevada. After filing a Chapter 13 bankruptcy petition, she con t inued to make her monthly mortg ag e pa y m e nts to America’s Servicing Company (ASC), the
company servicing her loan. Due to a mistake on its part, ASC wrong ful l y foreclosed o n Schwartz -Tallard’s h ome. ASC purchased the home at the foreclosure sale and promptly served Schwartz -Tallard with an eviction notice. Schwartz

-I N R E S C H W A R T Z

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Tallard filed a moti o n i n the b ankruptcy court requesting relief u nder 1 1 U.S.C. § 362(k). She soug ht an order requiring ASC to recon v e y title to the home as well as an award of actual damag es , p u nitive damag es, a nd attorney ’s fees. The b a n k r uptcy court f ound that ASC’s actions constituted a willful vio lation of the automatic stay a nd ordered A SC to reconvey title to Schwartz -Tallard. The court also awa rd e d Schwartz

- Tallard $40,000 in economic a nd emotional distress damag es, $20,000 in punitive d amag es, and $20,000 in attorney ’s fees.

None of that relief is n ow at issue. ASC did not challeng e the reconvey a nce order; soon after the bankruptcy court issued the o r d e r , A S C complied with it. While ASC did challeng e the damag es award by pursuing an appeal in the district court, the district court ultimatel y u p h eld the award, and ASC chose not to seek further review in this court.

Afte r successfully defending the damag es award on appeal, Schwartz -Tallard returned to the bankru p t c y c o u r t a nd asked it to award her, under § 3 62(k), the roug hly $10,000 in additional attorney ’s fees she had incurred in the district court opposing ASC’s appeal. The bankruptcy court denied the motion. The court stated that a lthoug h it thoug h t Schwartz

Tallard should be en t i t led to recover her fees on appeal, it could not a

ward them under Sternberg

. The st ay violation ended, t h e court ex plained, once ASC reconvey ed title to Schwartz

- Tallard. B ecause Schwartz -Tallard incurred all o f her fees o n a ppeal after that point, the court held that Sternberg barred their recovery

.

S c h w a r t z

- T allard appealed, and the B ankruptcy Appell a t e Panel (B AP) reversed. I t concluded that Sternberg does not bar an award of attorney ’s fees t o a debtor who successfullyI N R E S C H W A R T Z

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defends a § 362(k ) d a m a ges award on appeal. In re Schwartz-Tallard

, 473 B .R. 340, 3 50 (9th Cir

. B AP 2012). A divided three-judg e panel of this c ourt affirmed. In re Schwartz-Tallard

, 765 F .3 d 1096 ( 9th Cir. 2014). The majority concluded that ASC’s reconvey ance o f title did not end the stay violation because, on appeal, ASC continued to challeng e the bankruptcy court’s dete r m i n ation that the automatic stay had been violated in the first place. Id. at 1102. J udg e W a llace dissented. I n his view, the stay violation ended once ASC reco n vey ed title to the home a nd chose not to challeng e the validity of the reconvey ance order

on appeal. B ecaus e S c hwartz -Tallard incurred all of her attorney ’s f

ees o n appeal after that point, J udg e W allace concluded th a t under Sternberg those fees could not be awarded. Id. at 1106 (W allace, J ., dissenting ).

I I

W e find it unnecessary to resolve the i s sue that divided th e t h ree-judg e panel. Rather than decide whether Sternberg ’s holding e x tends to the facts of this case, we think the better c ou rse is to jettison Sternberg ’s erroneous interpretation of § 362(k) altog ether.

A

W h en Cong ress enacted the B a nkruptcy Code in 1978, it included the automatic stay p r ovision now found in § 362. At the time, th e C o d e did not contain a provision specifically authoriz ing imposition of sanctions for violation s of the automatic stay

. Nonetheles s , c o u rts treated the automatic stay as akin to a c ourt o r der and r elied on their c ivil contempt powers to impose compensa t o r y sanctions on creditors w ho knowingl y violated the stay

. Those sanctions sometimesI N R E S C H W A R T Z

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included an award o f t he a ttorney ’ s fees the debtor incurred in prosecuting the co n tempt p roceeding

. See, e.g. , In re R oman , 283 B .R. 1, 14 (9th Cir. B A P 2002); In r e Z a r t u n , 30 B .R. 543, 546 (9th Cir. B AP 1 9 8 3 )

. Althoug h the “American Rule” usually requires parties to bear thei r o w n attorney ’s fees, a common-law ex ception to the rule permits fee awards in li t i gation broug h t to r emedy willful violations of court orders. F

leischmann Distilling C o r p

. v

. Maier Brewing Co. , 386 U.S. 714, 717–18 (1967).

Perhaps to eliminate any do u b t a bout the source of a court’s authority to remedy violations of t h e a utomatic stay , Cong r ess enacted § 362(h) in 198 4. Act of J uly 1 0, 1984, Pub. L

. N o

. 9 8

- 3 53, 9 8 Stat. 333, 3 52. Cong ress redesig nated the sta t u t e § 362(k) in 2005 and added the

ex c e ption n ow found in par a g r a p h ( 2), but its tex t has otherwise remained unchang ed. Act o f A pr. 20, 2005, Pub. L . No. 109-8, 119 Stat. 23, 114. I t provides in full:

(1 ) E x c ept as provided in parag raph (2),

an individual injured by any willful violation of a stay provided b y this section shall recover

a c tual d amag es, including costs and attorney s ’ fees, a nd, in appropriate circumstances, may recover punitive damag es.

(2) I f such violation is based on an action taken by a

n entity in the g ood f

aith belief that subsection (h) applies t o the debtor, the
recovery under parag raph (1) of this subsection ag ainst such entity shall be limited to actual damag es.

11 U.S.C. § 362(k).I N R E S C H W A R T Z

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I n some r espects the statute s t r eng thened the remedies previously av a ilable to debtors injured by willful stay violations. I t makes an award of actual da m a g e s a nd attorney ’s fees mandatory

, and g rants bankruptcy courts the discretion to impose punitive damag es in appropriate cases.

B

B o th parties ag r ee that § 362(k) authoriz es a n award o f attorney ’s fees incurred in e nding a v iolation of the automatic stay

. Those fees can b e incur r e d o u t of court, as w hen a debtor retains an attorney to call or write a creditor to demand that it end its stay -violating conduct. W hen those efforts f ail,

a debtor can also incur attorney ’s fees in court by pursuing injunctive relief aim e d a t ending the stay violation. No o ne disputes that, g iven the statute’s ex p licit reference to “costs”

a s w ell as “ attorney s’ fees,” at least some fees incurred i n litig ation are recoverable.

I f that much is true, and we ag ree that i t i s , t he question becomes : D i d Cong ress intend to a u thoriz e recovery o f attorney ’s f

ees incurred in litig ation for one purpose (ending the stay violation) b ut n ot f or another (recovering damag e s)? W e see nothing in the statute that sug g ests Cong ress intended
to cleave litig ation-related fees into two categ ories, o ne recoverable by the de b tor, the other not. The statute say s “includ i ng costs and attorney s’ f ees,” with no limitation on the remedy for which the fees we re incurred. To uphold Sternberg ’s interpretation of § 362(k), we would have to read into the statute limiting lang uag e—som e t h i n g l i k e , “ i n c luding
costs and attorne y s ’ fees incurred to end the stay violation ”—that is simply not present.I N R E S C H W A R T Z

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Sternberg concluded t h a t such a limitation should be inferred because the statute makes attorney ’s fees recoverable only as a component of the debtor’s “actual d amag es,” not a s attorney ’s fees as such. Section 3 62(k) is somewhat unusual in that reg ard. Most statutes that deviate from the American Rule authoriz e the award of “a reasonable attorney ’s fe e” to a “prevailing party ,” usually in the c ontex t of the action as a whole r ather than a discrete proceeding

. B a k e r Botts L.L.P.

v. ASARCO LLC
, 13 5 S

. C t

. 2158, 2164 (2015). Section 362(k) differs f

rom those statutes, b ut if a ny thing its phrasing sig nals an intent to permit, not preclude, an award of fees incurred in pursuing a damag es rec o v e ry

. U nder the American Rule, a statutory r ig ht to recover damag e s ordinarily “does not include an i m p l i cit authoriz ation to award attorney ’s fees” i n cu rred in bring ing the action. Summit Valley Industries, Inc. v

. Carpenters
, 456 U

. S

. 717, 722 ( 1982). That rule does not a p p l y , however, “where Cong r ess has made specific and e x plicit p r o v i sions f or the allowance of such fees.” Id. (internal qu otation marks omitted). Cong ress did just that in § 362(k), by stating specifically and ex p licitly that the debtor “shall recover actual damag es, including costs and attorneys’ fees .”

Sternberg ’s reading of § 362(k) mig ht have mad e sense if the statute had said that an injured individual “shall r ecover actual damag es,” perio d

. T hat phrasing mig ht well have
convey ed Cong r ess’ intent t o a d h ere to the default rule precluding a

n a ward o f attorney ’s fees incurred in prosecuting the damag es action itself. I n this case, Cong ress’ contrary intent is e vident not only from the ex plicit lang uag e o f § 362(k), but also from the historical backdrop ag ainst which the statute was enacte d

. As noted, at the time Cong ress enacted § 3 62(k), courts w ere already awarding debtors the attorney ’s fees incurred in prosecuting civi l c o ntemptI N R E S C H W A R T Z

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proceeding s. F ar from seeking to end that practice, Cong ress appears to have intended to provid e s tatutory authoriz ation for its continuance.

W e d o n o t think the lang uag e of § 3 62(k) is ambig uous, b u t e v en if it were, we would then b e required to d ecide which of the two competing reading s o f the statute more closely a lig ns with Cong ress’ “plan” in enacting the statute. King v. Burwell

, 135 S. Ct. 2480, 2496 (2015). That strikes
us as an easy

choice.

W e do not have leg islative history that speaks directly to Cong r ess’ purpose in enacting § 362(k). I t s e e m s evident, however, that Cong ress soug ht to encourag e injured d ebtors
to bring suit to vindicate their statutory rig ht to the automatic stay ’s protection, one of the most important rig hts afforded to debtors by the B ankruptcy Code. T he automatic s t ay provides the debtor with a “breathing spell” from the harassing actions of c reditors, and it protects the interests of all creditors b y preventing “ d ismemberment” of the debtor’s
assets before the debtor c an formulate a repay ment plan or, in liquidation cases, the court can oversee equitable distribution of the d ebtor’s assets. 3 C o l l ier o n Bankruptcy ¶ 362.03 at 362–23 & n.6 (Alan N

. Resnick & Henry J

. Somme r eds., 16th ed. 2015); see In re Bloom

, 875 F .2d 224, 226 (9th Cir. 1989). B y p r oviding robust remedies for debtors who prevail, the statute acts to deter creditors f rom violating the automatic stay in the first instance.

That leg islative plan can be c arried out, o f course, only if injured debtors are actually able to sue to rec over the damag es that § 362(k) authoriz es. Cong ress undoubte d ly knew that unless debtors c o u ld recover the attorney ’s fees they incurred in prosecuting a n a ction for damag es, manyI N R E S C H W A R T Z

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would lack the means o r financial incenti v e ( o r both) to pursue such a ctions. After all, the very class of p l aintiffs authoriz ed to su e—individual debtors in bankruptcy —by definition will ty

pically n ot have the resources to hire private counsel. And in many cases the actual damag es suffered b y the injured debtor will be too small to justify the ex pe nse o f litig ation, e ven i f t h e d ebtor can afford to hire counsel. See B rief fo r National A ssociation of Consumer B ankruptcy Attorney s as A micus Curiae at 22. Thus, Cong ress c ould not have e x pected § 362(k) to ser v e a s an effective deterrent unless it authoriz ed recovery o f the attorney ’s f e e s incurred in pros e c u t i ng an action for damag es. I n that respect, § 362(k) is n o different from the many statutes Cong ress has enacted “making it possi b l e for persons without means to b r i n g suit to vindicate their rig hts.” Perdue v. Kenn y A

. , 559 U.S. 542, 559 (2010).

F inally

, if w e needed further reason to reject Sternberg ’s reading of § 362(k), we could look as well to the difficulties

co u rts have encountered in administering it. W h en interpreting statutes that authoriz e a n award of attorney ’s fees, we try to a void construing them in a way t h a t w ill “multiply litig a tion.” Commis s ioner v

. Jean
, 496 U.S. 154, 163 (1990). Sternberg ’ s i nterpretation of § 3 6 2(k) violates that g uiding p rinciple. W h en a d e b tor sues under § 362(k) both f o r injunctive relief a imed at ending the stay violation and f or damag es, and the creditor does not end the violation until after litig ation has ensued, Sternberg re q u ires the bankruptcy court to sort out how much attorney time was devoted to ending the stay violation (recoverable) as opposed
to pursuing damag e s ( not recoverable). See, e.g. , In re Snowden

, 769 F

. 3d 651, 660 (9th Cir. 2014). I n addition, a s t h i s case well illustrates, Sternberg ’s reading of the statut e

can spa w n further litig ation over when, ex actly

, a stayI N R E S C H W A R T Z

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violation actually came to an end—a matter that can be deceptively tricky to r esolve. I t is hard to imag ine why C o n g ress would have wanted to invite litig ation over th e s e hig hly factbound matters, pa r t i c u larly since doing so would effectively undermine, rather than advance, the statutory aims Cong r ess soug ht to achieve by enacting § 362(k).

F or these reasons, § 362(k) is best read as authoriz ing an award o f attorney ’s fees incurred in prosecuting a n action for damag es u nde r t h e statute. Althoug h § 362(k) makes such fee awards mandatory rather th an discretionary

, we do not think that feature of t he statute will result in unnecessary litig ation broug ht solely to dri v e u p t h e award. Only an award o f fees reasonably incurred is mandated by the statute; courts a warding f ees under § 362(k) thus retain the discretion
to eliminate unnecessary or plainly ex cess i v e fees. In re D a wson , 390 F .3d 1139, 1 152 ( 9th Cir. 2004). So u n d

ex e r cise o f this discretion will provide a sufficient check on any abuses that mig ht otherwise arise.

I I I

Having determined tha t § 362(k) authoriz es an award o f attorney ’s f

e es incurred in prosecuting an action for d amag es,

we can quickly dispose o f this appeal. W hen a party is entit led to an award of attorney ’s fees in the court of first instance, as Schwartz

- Tallard w as here, she is ordinarily entitled to recover fees incurred in successfully defending the judg ment on appeal. Voice v. S tormans, Inc.
, 757 F .3d 1015, 1016 (9th Cir. 2 014). W e see no reason why fee awards und er § 362(k) should be subject to a different rule. Schwartz

- Tal l a rd is therefore entitled to recover the attorney ’s fees reasonably incurred in opposing ASC’s appeal in the district court.I N R E S C H W A R T Z

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The judg ment of the B a nkruptcy Appellate P a nel is AF F IRMED.

B EA, Circuit J u dg e, joined by O’SCANNL AI N, Circuit J udg e , concurring

in the judg ment:

I c oncur in the majo r i ty ’s conclusion that 11 U .S.C. § 362(k) has a n u nambig uous meaning which permits Schwartz

- Tallard to recover the attorney ’s f e e s she incurred in defending ag ainst ASC’s appeal. Maj. Op. at 3–9. I n my vi e w , however, this should b e the beg inning and end of our analy sis. I am troubled th a t t h e majority proceeds to speculate about “Cong ress’ p lan” in enacting the automaticstay provision of the B ankruptcy Code in reliance on King v

. Burwell

, 1 35 S. Ct. 2480 (2015). Maj. Op. at 10–11. Given
t h e m a j o r i t y ’ s acknowledg ment that § 362(k) is unambig uous, this discussion strikes me as unnecessary

. W e should alway s bear in mind the “cardinal principle of judicial restraint”: “if it is not necessary to decide more, it is necessary not to decide more.” PDK Labs., Inc. v. DEA
, 362 F .3d 786, 799 (D.C. Cir. 2004) (Roberts, J
., concurring in p art and c o n c u r ring in the judg ment).

“I f a court, employ ing tra d itional tools of statutory construction, ascertains that Cong ress had an intention on the precise question at issue, that intention is the law and must be
g iven effect.” Chevron, U.S.A., Inc. v. Nat ural Res. Def. Council, Inc.

, 467 U.S. 837, 843 n.9 (1984). I f the lang uag e of the statute is unambig u ous, t h a t i s the end of the inquiry

. See City of Arlington v. F CC
, 133 S. Ct. 1 8 6 3
, 1868 (2013) (“‘I f the intent of Cong r ess is c l e a r, that is the end of the matter; for the court

. . . m u s t g ive effect to theI N R E S C H W A R T Z

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unambig uously ex pressed inten t of Cong ress.’” (quoting Chevron , 467 U.S. at 842–43)).

Eng ag ing in g ratuitous speculation of what “Cong r e s s’ plan” must have been when it enacted § 3 62(k) ig n ores y ears of Supreme C ourt and Ninth Circuit precedent requiring judicial inquiry t o cease when a court finds a statute unambig uous.

“I f the statutory lang uag e is u nambig uous, in the absence of a clearly e x pressed leg islative i n t e n t t o the contrary , that lang uag e must ordinarily be reg arded as conclusive.” Reves

v

. Ernst & Y

oung , 5 0 7 U.S. 170, 177 (1993) (inter n al quotation ma r k s o mitted). “ [ E] ven the most formidable
arg ument concerning the statute’s purposes c ould not

ov er c ome the clarity [ of] the statute’s tex t.” Kloeckner v

. Solis

, 133 S. Ct. 5 96, 607 n.4 (2012). “The purposes of a law
must be ‘collected chiefly from its words,’ not ‘from e x trinsic circumstances.’” King v. Burwell

, 135 S. Ct. 2480, 2503 (2015) (Scalia, J
., dissenting ) (quo t i ng Sturges v

. Crowninshield

, 17 U.S. (4 W heat.) 122, 2 02 (1819) (Marshall, C.J .)); see also Exxon M o b i l Corp. v

. Allapattah Servs., I nc. , 5 45 U.S. 5 4 6
, 5 68 (2005) (“As we have repeatedly h eld, the authoritative statement is the statutory t e x t, not the leg islative history or any other e x trinsic material.”).

Here, the majority finds the lan gu ag e of § 362(k) to be unambig uous. Althoug h that should be the end of the inquiry

, the majority then looks to the leg islative history

, which it fin ds silent as to Cong ress’ purpose in enacting that provision. W ith the traditional tools o f statutory c onstruction

now far behind it, the majority proceeds to eng ag e in pure speculation as to Cong ress’ motivations in enacting § 362(k)I N R E S C H W A R T Z

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of the B a

nkruptcy Code. B ecause I believe t h at o u r constitutional role is c onfined to g iving effect only to the words that Cong ress wrote when the statutor y tex t is

u n ambig uous, I respectfully d ecline to join the majori t y ’s
unnecessary

discussion of “Cong ress’s plan.”

I KUTA, Circuit J udg e, dissenting :

I prefer the result reached by t h e m ajority

, which reads 11 U .S.C. § 362(k) as if it were a ty pical attorney s’ fees provision that shifts the fees incurred in b ring ing the damag e s action to a prevailing plaintiff. B ecause courts are familia r with th i s s o rt o f fee shifting statute, such a reading makes it

s i mpler for bankruptcy courts and district courts to a ppl y § 362(k). B ut the ord i n a r y tools of statutory interpretation compel me to conclude that this interpretation is n o t the best reading of the statutory tex t. B e cause our job is to do o ur best
to interpret the statute as Cong ress wrote it, we should adhere
to the b etter reading set forth in Sternberg v. Johnsto n , 595 F .3d 937 (9th Cir. 2010).

“The starting point in discerning cong ressional intent is the ex isting statutory

tex t.” Lamie v. U.S. Trustee , 540 U.S. 526, 534 (2004). T h e statutory tex t h ere states, “[ A] n individual injured by any willful violation of a stay provided by this section shall recover actual damag es, including costs and attorney s’ fees, and, i n a p propriate circumstances, may

recover p unitive damag es.” 11 U.S.C. § 362(k)(1). A s we acknowl edg ed in Sternberg

, the term “actual damag es” is ambig uous. 595 F .3d a t 9 47. I t mig h t refer to all of the costs resulting from a violation of the stay , i n c l uding the fees incurred in b r i ng ing the damag es action. Maj. Op. at 8–10.I N R E S C H W A R T Z

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B ut it is reasonable to interpret “actual damag es” as including only the fees incurred in correcting the automatic stay violati o n, and not the fees incurred in bring ing the lawsuit itself, because “actual d a m ag es” are “[ a] n amount awarded

. . . to compensate for a prov e n injury or loss; damag e s that
repay actual losses.” Id. (alterations in orig inal) (quoting B L A C K ’ S L A W D I C T I O N

A R Y 416 (8th ed. 2004)). And “[ o] nce the violation has ended, any fees the d ebtor incurs a fter that point in pursuit of a damag e a w ard wo u l d n o t be to compensate” the debtor for a violation of the stay

. Id.

As ex p lained in Sternberg

, a num b e r o f states have adopted a similar approach to c a ses in which attorney s’ fees

are part of the damag e s incurred from tortious conduct. Id. at 946. I n suits to recover attorney s’ fees for malpractice, or to obtain the benefits due under an insurance policy

, state courts have a llowed the p laintiff to r ecover onl y the damag es the
p l a intiff actually incurred from the underly ing tort, but not the attorney s’ fees incurred to bring the action f or d a m a g es. Id. I ndeed, the majority a cknowledg es that the phrase “ shall

recover actual damag es,” standing alone, is b e st read a s convey ing “ Cong ress’ intent to a dhere to the default rule precluding a

n award of a ttorney ’s fees incurred in prosecuting the damag es action itself.” Maj. Op. at 9.

W h en the lang uag e of a statute is ambig uou s, canons o f statutory interpretation are us e fu l r ules of thumb to h elp courts determine the meaning of leg islation. See Conn. Nat. Bank v. Germain
, 5 03 U.S. 249, 253 (1992). The most relevant canon here is that “ Cong ress leg islates ag a i n s t t he backdrop of the ‘American Rule.’” Sternberg

, 595 F. 3 d at 945–46 (citing Fogerty v. F a n t a s y , Inc.
, 510 U.S. 517, 533 (1994)). I n other words, statutes re ga r d ing attorney s’ fees should be r ead with a p resumption in favor of the AmericanI N R E S C H W A R T Z

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Rule, ex cept when a statutory purpose to the contrary is evident. Se e F

ogerty , 510 U.S. at 534. This principle supports the conclusion that Cong ress d id not intend to allow the debtor to r ecover the fees incurr e d in the action itself. I ndeed, as the majority a c k n o w ledg es, w hen Cong ress intends
to abrog ate the American Rule, it ty pically u ses different lang uag e. Maj. Op. at 9

. Most statutes that deviate from the American Rule d o not provide a cause o f action for “ a ctual damag es, including c osts and attorney s’ fees,” bu t i nstead authoriz e the award of “a rea s o n a ble attorney ’s fee” to a “prevailing p arty .” Maj. Op. a t 9

. Thus, Cong ress k nows how to include lang u a g e abrog ating the American Rule, and it chose different lang u ag e for § 362(k). Se e B a k e r Botts L.L.P. v. AS

A R C O LLC
, 135 S. Ct. 2158, 2164 (2015) (“Althoug h

. . . statutory chang e s to the American Rule take various forms, they tend to authoriz e the award o f ‘a reasonable attorney ’ s f

ee,’ ‘fees,’ o r ‘litig ation costs,’ a nd usually r efer to a ‘prevailing party ’ in the contex t o f an adversarial ‘action.’” (citations a nd internal quotation marks omitted)); id. at 2166 (“Had Cong ress w i s h e d t o shift the burdens of

. . . litig ation under [ the statute at issue] , it easily could have d one so. W e according ly r efuse to in v a d e t he leg islature’s province by redistributing litig a tion costs here.” (internal quotation marks omitted)).

I n reaching the opposite conclusion, the majority does not apply these o rdinary principles o f statutory construction. Ex cept f or making the c onclusory statement that the “ ex plicit lang uag e of § 3 62(k)” is u nambig u ous, Maj. Op. at 9 –10, the majority does n ot analy z e th e tex t or apply standard principles of statutory con s t r u c tion at all. I nstead, the

m a jority jumps immediately to the statute’s historical co n t e xt , its leg islative history

, and policy

, but none of these sources are particularly

helpful here.I N R E S C H W A R T Z

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No doub t t h e h i storical contex t of a statute can help a court interpret an otherwise ambig uous term. See D

. C. v

. Heller

, 554 U.S. 570, 605 (2008) (“[ T ]he ex amination o f a variety of leg al and other sources to determine the pu b lic understanding of a leg al tex t in the period after its enactment

. . . is a critical tool of

. . . interpretation.” ( e m p h a s i s

o mitted)). A s the majority ex plains, at the time C o n gr e s s enacted § 362(k), courts relied on their civil contempt powers to impose sanctions on creditors who wilfully vio l ated the automatic stay , and those san ct i o n s sometimes included an award of attorney s’ fees th e debtor incurred in the contempt proceeding

. Maj. Op. a t 9–10. Rely ing on this history

, the major ity say s that Cong ress “appears to have intended” § 362(k) to eliminate any doubt a bout the court’s a

uthority to remedy violations of the automatic stay , Maj. Op. at 7
, 9–10, and perhaps it did. B u t perhaps n ot: Rather than codify ing the c ourt’s civil contempt powers to award attor n ey s ’ fees, which Cong ress is c apable of doing

, see, e

. g

. , In re Pace
, 67 F

. 3d 187, 193 ( 9th Cir. 1995) (findi n g t h a t 11 U .S.C. § 105 auth o riz es bankruptcy courts to award costs a nd attorney s’ fees throug h civil contem p t sanctions), Cong ress enacted an entirely d ifferent sch eme, which g ives debtors a

cause of action to recover damag es caused by a stay violation. Unlike civil contempt sanctions, actual damag es under § 362(k) are mandatory

, and the bankruptcy court has the discretion to award punitive damag es. As the majority notes, § 362(k) “streng th e n ed the r emedies p reviously available to debtors injured by willful stay violations” rather than merely codify histo r i c a l p r actice. Maj. Op a t 8. I n other words, Cong r ess decided to enact something entirely different from past practice, so the past practice does not shed lig ht on what Cong r ess meant by the words “ ac t ual damag es, including costs and attorney s’ fees.”I N R E S C H W A R T Z

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Turning to leg islative history

, the majority acknowledg e s that there is none, so it proposes some of its own. M a j

. Op.
at 10–11. I t speculat e s t h a t Cong ress’ purpose must have been to protect debtors: After all, the automatic stay prevents creditors from collecting from a debtor who has decla red bankruptcy

, and interpret i n g § 362(k) to include the fees incurred in the damag e s action provides ex tra deter r e n t to prevent creditors from violating the stay

. Maj. Op. a t 10–11. The majority ’s interpretation also empowers the debtor to sue to recover the damag es, becau s e in some cases the damag e s will be too small to justify the ex p ense of litig ation. Maj. Op.
at 1 0–11. I t is possible that Cong ress ha d t hose purposes in mind, but because there is no ev i d e n c e of those purposes, they d o not support the majority ’s interpretation. See Baker Botts , 135 S.Ct. at 2169 (“W hether or not [ awarding fees] is de s i r able as a matter of p olicy

, Cong ress has n ot g ranted us roving authority to allow c o unsel fees whenever we mig ht deem them warranted. Our job is to follow th e tex t even if doing so will supposedly undercut a bas i c o b jective of the statute.” (citations and internal quotation marks omitted)). I n any event, even wit h o u t awarding fees incurred in the da m ag es action, the action itself deters creditors from violating the stay , and it i s p o s s ible that Cong ress did not want to encourag e costly litig ation f o r relatively min o r violation s o r v i olations that were not clearly willful. W hile it is true that depri v ing the debtor of the attorney s’ fees incurred in b ring ing the damag e s action fails to make the debtor whole, that is the ordinary result of the American Rule.

F inally

, the maj o ri ty turns toward the difficulties that have resulted from Sternberg ’s reading o f § 362(k). Maj. Op.
at 1 1. Here, I am in c omplete sy mpathy

. The interpretation provided by Sternberg is difficult to apply

, and has p uz z led bankruptcy courts and district courts a like. I n add i t i o n , theI N R E S C H W A R T Z

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Sternberg interpretation is counterintuitive; courts are used to fee-shifting provisions that shift fees incurred in bring ing the damag es action, as well as fees incurred as part of the damag es. I a m not aware, however, of any canon that g uides

us to select an interpretation of a statute based on the ease o r difficulty of administering it, a nd the majority d oes no t rely

on one. The majo r i t y s t a tes only that we try to avoid construin g s t atutes in a way that w ill “multiply litig ation,” Maj. Op. a t 11, but the majority ’s interpretation mig ht do just that b y creating an ex tra incentive to bring an action under § 362(k). T hus, the practical effects of interpreting § 362(k)

one w ay or the other also do not evince Cong ress’s intent to abrog ate the American Rule.

Althoug h I understand the impulse to improve Cong ress’s le g islative efforts, our role is a modest one, and we should simply do our best to g ive effect to the plain lang uag e of the
t ex t. Cong ress is a lway s free to correct our interpretation. Therefore, I

reluctantly

dissent.