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FILED

DEC 19 2013

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. CC-12-1516-DKiTa

)

SEYED SHAHRAM HOSSEINI, ) Bk. No. 10-16228

)

Debtor. ) Adv. No. 10-01385

______________________________)

)

SEYED SHAHRAM HOSSEINI, )

)

Appellant, )

)

v. ) M E M O R A N D U M1

)

KEY BANK, N.A., )

)

Appellee. )

______________________________)

Argued and Submitted on November 21, 2013

at Pasadena, California

Filed - December 19, 2013

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable William V. Altenberger, Bankruptcy Judge, Presiding 

Appearances: Denise M. Fitzpatrick, Esq. for Appellant, Seyed

Shahram Hosseini; Holly Jo Nolan, Esq. of Solomon,

Grindle, Silverman & Wintringer, APC for Appellee,

Key Bank, N.A. 

Before: DUNN, KIRSCHER and TAYLOR, Bankruptcy Judges.

FILED

DEC 19 2013

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

1 This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may

have (see Fed. R. App. P. 32.1), it has no precedential value. 

See 9th Cir. BAP Rule 8013-1.
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The debtor, Seyed Shahram Hosseini, appeals the bankruptcy

court’s order 1) denying his motion for attorney’s fees and

2) allowing only costs for service of process requested in his

bill of costs.2 We AFFIRM.

FACTS

Prepetition, the debtor obtained a total of $280,046.34 in

student loans (“student loan debt”) from Key Bank, N.A. (“Key

Bank”) to fund his medical school education. Despite several

attempts, he was unable to pass the medical licensing exam. The

debtor did not become a physician, as he had hoped, but instead

became a night security guard earning only $13.50 per hour. He

also was beset with various physical and mental ailments,

including diabetes and depression.

The debtor filed a chapter 7 bankruptcy petition on May 24,

2010. He initiated an adversary proceeding to discharge the

student loan debt under § 523(a)(8). Two years after Key Bank

filed its answer in the adversary proceeding, the bankruptcy

court held a trial. It granted judgment in the debtor’s favor,

discharging his entire student loan debt to Key Bank (“Discharge

Order”).

Shortly after the bankruptcy court entered the Discharge

Order, the debtor filed a bill of costs (“Cost Bill”) seeking a

2 Unless otherwise indicated, all chapter and section

references are to the federal Bankruptcy Code, 11 U.S.C.

§§ 101-1532, and all “Rule” references are to the Federal Rules

of Bankruptcy Procedure, Rules 1001-9037. The Federal Rules of

Civil Procedure are referred to as “Civil Rules.”

The Local Bankruptcy Rules for the United States Bankruptcy

Court for the Central District of California are referred to as

“LBR.”

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total of $4,960.39 in expenses incurred by his attorney, Denise

Fitzpatrick, in the adversary proceeding.3

 Along with the Cost

Bill, he submitted a declaration by Ms. Fitzpatrick (“Cost Bill

Declaration”), which included an itemization of each cost sought

to be recovered by him (“Cost Bill Itemization”).

According to the Cost Bill Itemization, the debtor sought

$101.20 for copying and printing (mostly for documents served

electronically), $20.90 for faxing (all for evidentiary documents

from the debtor to Ms. Fitzpatrick), $107.74 for “service of

process” (postage for service of summons, status reports and

other documents mailed by Ms. Fitzpatrick), and $4,730.55 for

miscellaneous costs (consisting of messenger service fees, online

software purchases, exhibit preparation costs, transportation

costs for Ms. Fitzpatrick’s meetings with co-counsel and/or the

debtor, “research and document retrieval” costs, phone charges

for a status conference through Court Call, a $2,500 “consultant

fee” to Charles Murray4 (“Murray consultation fee”), and a $500

fee to Hector Vega for “[consultation] and appearance – necessary

3

 The debtor initially sought $6,210.39 in costs.

4

 Ms. Fitzpatrick employed Mr. Murray as a “consultant” to

help her during trial. She filed a notice of association of

counsel on July 17, 2012, indicating that Mr. Murrary was

co-counsel in the adversary proceeding. According to

Ms. Fitzpatrick, Mr. Murray “did the oral arguments” at trial.

The bankruptcy court determined that Mr. Murray was not a

consultant but an attorney as he “[had] tried the case.” Tr. of

September 10, 2012 hr’g, 29:4. The bankruptcy court therefore

found that the $2,500 “consultant fee” for Mr. Murray actually

was an attorney’s fee to be included in the Attorney Fee Motion.

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to obtain trial continuance and prevent dismissal.”5

The debtor also filed a motion for allowance of attorney’s

fees (“Attorney Fee Motion”), seeking a total of $110,701.50 “for

reasonable and necessary fees incurred [by Ms. Fitzpatrick] in

[the adversary proceeding].”6

In support of the Attorney Fee Motion, the debtor relied on

a provision (“fee provision”) in the promissory note for the

student loans (“promissory note”), which he claimed authorized

him to seek attorney’s fees as the prevailing party in the

adversary proceeding.7 The fee provision stated:

When and as permitted by applicable law, I [the

borrower] agree to pay your [the lender] reasonable

amounts, including reasonable attorney’s fees for any

5

 Ms. Fitzpatrick failed to appear at the trial set for

April 25, 2012. She had Mr. Vega specially appear to represent

the debtor in her stead. It seems that the $500 fee to Mr. Vega

was for his special appearance at the April 25, 2012 hearing.

6 In her declaration filed in support of the Attorney Fee

Motion (“Attorney Fee Declaration”), Ms. Fitzpatrick claimed that

she spent a total of 316.29 hours litigating the adversary

proceeding. She attached to her declaration an “attorney time

log” that described the various tasks she performed, the time

spent on each task and the amount due.

7 The debtor also referenced LBR 7054-1(g)(1), which allows

a prevailing party to file a motion for an award of attorney’s

fees where such fees may be awarded, within 30 days after entry

of judgment.

LBR 7054-1(g) provides:

(1) If not previously determined at trial or other hearing,

a party seeking an award of attorneys’ fees where such 

fees may be awarded must file and serve a motion not 

later than 30 days after the entry of judgment or other

final order, unless otherwise ordered by the court.

(2) The requirements of LBR 9013-1 through LBR 9013-4 apply

 to a motion for attorneys’ fees under this rule.

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attorney who is not your regularly salaried employee and

court and other collection costs, that you incur in

enforcing the terms of the [promissory] Note if I am in

default.

He further relied on California Civil Code (“Civil Code”)

§ 1717, arguing that Civil Code § 1717 reinforced the fee

provision through reciprocity.8 According to the debtor, Civil

Code § 1717 “require[d] payment of attorney fees to prevailing

parties when attorney fees are afforded to any contracting

party.”

Key Bank opposed the Cost Bill, contending that the debtor

8 Civil Code § 1717 provides, in relevant part:

(a) In any action on a contract, where the contract

specifically provides that attorney’s fees and costs,

which are incurred to enforce that contract, shall be

awarded either to one of the parties or to the

prevailing party, then the party who is determined to

be the party prevailing on the contract, whether he or

she is the party specified in the contract or not,

shall be entitled to reasonable attorney’s fees in

addition to other costs.

Where a contract provides for attorney’s fees, as set

forth above, that provision shall be construed as

applying to the entire contract, unless each party was

represented by counsel in the negotiation and execution

of the contract, and the fact of that representation is

specified in the contract.

Reasonable attorney’s fees shall be fixed by the court,

and shall be an element of the costs of suit.

Attorney’s fees provided for by this section shall not

be subject to waiver by the parties to any contract

which is entered into after the effective date of this

section. Any provision in any such contract which

provides for a waiver of attorney’s fees is void.

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could not recover certain costs because they were not allowed

under LBR 7054-1. Specifically, it opposed the debtor’s request

for recovery of costs for every copy ever made in the adversary

proceeding because LBR 7054-1 allowed recovery of costs of copies

of documents admitted into evidence only if the original

documents were not available. It further opposed recovery for

postage, Court Call charges, fax charges, messenger and delivery

charges, software costs, transportation costs, PACER research

charges and the Murray consultation fee because LBR 7054-1 did

not include such expenses as recoverable costs.

Key Bank also opposed the Attorney Fee Motion, arguing that

there was no statutory basis for an award of attorney’s fees

under § 523(a)(8) as required under the American Rule.

Key Bank also contended that the fee provision only applied

to actions seeking to enforce the terms of the promissory note. 

Here, the debtor had initiated the adversary proceeding to

discharge his student loan debt under § 523(a)(8), not to enforce

the promissory note’s terms. The debtor therefore could not seek

attorney’s fees because he prevailed on a claim to relieve

himself from his debts under federal law, not on a Key Bank claim

to recover following a default under the promissory note.

Key Bank further asserted that Civil Code § 1717 did not

apply because the promissory note contained a provision stating

that Ohio law, not California law, governed the prevailing

party’s recovery of attorney’s fees (“governing law provision”).

 Specifically, the governing law provision stated: 

I understand and agree that (i) you are located in

Ohio, (ii) that this Note will be entered into in Ohio

and (iii) that your decision on whether to lend me

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money will be made in Ohio. CONSEQUENTLY, THE

PROVISIONS OF THIS NOTE WILL BE GOVERNED BY FEDERAL

LAWS AND THE LAWS OF THE STATE OF OHIO, WITHOUT REGARD

TO CONFLICT OF LAW RULES. I agree that any suit I

bring against you (or against any subsequent holder of

this Note) must be brought in a court of competent

jurisdiction in the county in which you maintain your

(or the county in which the subsequent holder maintains

its) principal place of business.

On September 10, 2012, the bankruptcy court held a hearing

on the Cost Bill and the Attorney Fee Motion.

After hearing extensive argument from counsel, the

bankruptcy court first addressed the Cost Bill. The bankruptcy

court agreed with Key Bank that LBR 7054-1 allowed for the

recovery of filing fees and certain of the service of process

fees, but not for the other fees requested by the debtor.

The bankruptcy court then turned to the Attorney Fee Motion. 

It began by recognizing that, under the American Rule, a

prevailing party may not recover attorney’s fees unless there was

a statute or a contract authorizing such recovery. The

bankruptcy court acknowledged that the fee provision allowed Key

Bank to recover any attorney’s fees incurred in enforcing the

terms of the promissory note if the debtor defaulted. It also

acknowledged that Civil Code § 1717 provided that, in any action

on a contract where the contract specifically provided for the

recovery of attorney’s fees incurred by the prevailing party to

enforce the contract, the prevailing party was entitled to

recover reasonable attorney’s fees. The bankruptcy court noted

that Key Bank did not dispute that if it could recover attorney’s

fees as the prevailing party, the debtor also could recover

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attorney’s fees if he were the prevailing party.9

The bankruptcy court ultimately decided that the debtor was

not entitled to recover attorney’s fees under the American Rule. 

In making its determination, the bankruptcy court focused on the

purpose of the adversary proceeding. It emphasized that the

debtor initiated the adversary proceeding to discharge his

student loan debt to Key Bank, not to enforce the terms of the

promissory note or contest the amount of the debt to Key Bank. 

Because the sole legal basis for recovery of attorney’s fees did

not apply – i.e., the fee provision – the bankruptcy court denied

the Attorney Fee Motion.

On September 26, 2012, the bankruptcy court entered an order

on both the Cost Bill and the Attorney Fee Motion (“Cost and Fee

Order”). In the Cost and Fee Order, the bankruptcy court allowed

the debtor $10.82 in costs for service of process but denied all

other costs.10 It denied the Attorney Fee Motion in its

9

 The bankruptcy court also observed:

No matter how you look at this or how you cut it,

[the amount was] way too much in the way of attorney’s

fees in a case for hardship, to have his student loans

declared to be a hardship, and therefore,

dischargeable.

It’s either a case of over-lawyering, or a case

where the lawyer was not familiar with bankruptcy law

or bankruptcy trials, because there’s no way that a

two-hour trial or three-hour trial, should require

preparation time and trial time that totals $125,000.

Tr. of September 10, 2012 hr’g, 30:23-25, 31:1-6.

10 Although it allowed the debtor to recover filing fees and

(continued...)

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entirety.

The debtor timely appealed the Cost and Fee Order.

JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C.

§§ 1334 and 157(b)(2)(I). We have jurisdiction under 28 U.S.C.

§ 158.

ISSUES

(1) Did the bankruptcy court abuse its discretion in

allowing $10.82 in costs for service of process only?

(2) Did the bankruptcy court abuse its discretion in

denying the Attorney Fee Motion in its entirety?

STANDARDS OF REVIEW

We review a bankruptcy court’s refusal to award attorney’s

fees for an abuse of discretion. Renfrow v. Draper, 232 F.3d

688, 693 (9th Cir. 2000); Dinan v. Fry (In re Dinan), 448 B.R.

775, 782 (9th Cir. BAP 2011). We also review a bankruptcy

court’s allowance or disallowance of costs for abuse of

discretion. Young v. Aviva Gelato, Inc. (In re Aviva Gelato,

Inc.), 94 B.R. 622, 624 (9th Cir. BAP 1988), aff’d, 930 F.2d 26

(9th Cir. 1991)(table).

We apply a two-part test to determine objectively whether

the bankruptcy court abused its discretion. United States v.

Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009)(en banc). First,

10(...continued)

costs for service of process, the bankruptcy court noted that the

debtor was not required to pay the filing fee for the adversary

proceeding. It therefore determined the amount for filing fees

to be zero.

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we “determine de novo whether the bankruptcy court identified the

correct legal rule to apply to the relief requested.” Id.

Second, we examine the bankruptcy court’s factual findings under

the clearly erroneous standard. Id. at 1262 & n.20. A

bankruptcy court abuses its discretion if it applied the wrong

legal standard or its factual findings were illogical,

implausible or without support in the record. TrafficSchool.com

v. Edriver Inc., 653 F.3d 820, 832 (9th Cir. 2011).

We review de novo the bankruptcy court’s decision to deny

attorney’s fees under state law. See Dinan, 448 B.R. at 783

(citing Bertola v. N. Wis. Produce Co., Inc. (In re Bertola),

317 B.R. 95, 99 (9th Cir. BAP 2004)).

We may affirm on any ground supported by the record. Shanks

v. Dressel, 540 F.3d 1082, 1086 (9th Cir. 2008).

DISCUSSION

A. Cost Bill

Rule 7054(b) provides in relevant part: “The court may allow

costs to the prevailing party except when a statute of the United

States or these rules otherwise provides.” Rule 7054(b) arises

from Civil Rule 54(d)(1), which provides in relevant part:

“Unless a federal statute, these rules, or a court order provides

otherwise, costs – other than attorney’s fees – should be allowed

to the prevailing party.”

Civil Rule 54(d)(1) appears mandatory in nature, as it

states that costs “should be allowed,” unless it or federal

statute or rule otherwise directs. See 10 Collier on Bankruptcy

¶ 7054.05 (Alan N. Resnick & Henry J. Sommer, eds., 16th ed. rev.

2013)(“[A]lthough ultimately leaving the question of costs to the

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discretion of the court, [Civil Rule 54(d)] provides that the

court ‘should’ allow costs to the prevailing party unless it, a

federal statute or a Civil Rule otherwise directs.”)(hereinafter

referred to as “Collier on Bankruptcy”). Nonetheless, Civil

Rule 54(d)(1) generally grants a federal court discretion to

refuse to tax costs in the prevailing party’s favor. Crawford

Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 442 (1987).

On the other hand, Rule 7054(b) is permissive in nature, as

it states that the bankruptcy court “may allow costs.” See

In re Aviva Gelato, Inc., 94 B.R. at 624 (“Although [Civil]

Rule 54(d) appears to be more mandatory in nature than

[Rule] 7054(b), the Ninth Circuit has consistently recognized

that the trial court has discretion as to what costs to allow.”)

(citation omitted). See also 10 Collier on Bankruptcy ¶ 7054.05. 

Although it has broad discretion in determining whether to deny

costs, the bankruptcy court must state its reasons for denying

them. In re Aviva Gelato, Inc., 94 B.R. at 624.

The debtor contends that the bankruptcy court erred in

limiting recoverable costs to those listed in the Court Manual

pursuant to LBR 7054-1(d). Instead, according to the debtor, the

bankruptcy court should have referenced 28 U.S.C. § 1920, which

permits recovery of reasonable out-of-pocket expenses typically

charged to clients by their attorneys.

We decline to consider the debtor’s argument regarding

28 U.S.C. § 1920, as he did not raise it before the bankruptcy

court. See Enewally v. Wash. Mut. Bank (In re Enewally),

368 F.3d 1165, 1173 (9th Cir. 2004)(“As a general rule, issues

not presented to the trial court cannot generally be raised for

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the first time on appeal,” unless one of the four recognized

exceptions apply.)(quoting United States v. Flores-Payon,

942 F.2d 556, 558 (9th Cir. 1991)(internal quotation marks

omitted)).

As for the bankruptcy court’s reliance on LBR 7054-1, we

conclude there was no error. The general rule is that the

bankruptcy court’s authority to tax a cost must come from “a

federal statute or rule of court, or in the custom, practice and

usage applicable in a particular district, and in some instances

by the exercise of the court’s general equitable discretion.” 

10 Collier on Bankruptcy ¶ 7054.05. According to

LBR 1001-1(b)(2), the Local Bankruptcy Rules “apply to all

bankruptcy cases and proceedings . . . pending in the United

States Bankruptcy Court for the Central District of California.”

Here, the bankruptcy court’s authority to allow or deny

costs arose from the local rules of its district. It therefore

could allow such costs within the parameters of the local rules –

specifically, those costs listed in the Court Manual pursuant to

LBR 7054-1(d).

LBR 7054-1 provides, in relevant part:

i. Who May Be Awarded Costs. When costs are allowed

by the FRBP or other applicable law, the court may

award costs to the prevailing party. No costs

will be allowed unless a party qualifies as, or is

determined by the court to be, the prevailing

party under this rule. Counsel are advised to

review 28 U.S.C. § 1927 regarding counsel’s

liability for excessive costs. . . . .

iv. Items Taxable as Costs. A list of the items

taxable as costs is contained in the Court Manual

available from the clerk and on the court’s

website. . . . .

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Section 2.8 of the Court Manual for the United States

Bankruptcy Court for the Central District of California provides,

in relevant part:

2.8 Miscellaneous

. . . 

(d) Bill of Costs [LBR 7054-1].

A bill of costs filed electronically or nonelectronically must comply with LBR 7054-1. 

The prevailing party who is awarded costs 

must file and serve a bill of costs not later

 than 30 days after entry of judgment. Each 

item claimed must be set forth separately in 

the bill of costs.

(e) Items Taxable as Costs. Pursuant to LBR 

7054-1, the following items are taxable as 

costs:

(1) Filing Fees. The clerk’s filing fees;

(2) Fees for Service of Process. Fees for 

service of process (whether served by 

the United States Marshal or in any 

other manner authorized by FRBP 7004);

(3) United States Marshal’s Fees. Fees of 

the United States Marshal collected and 

taxed as costs pursuant to 28 U.S.C. 

§ 1921;

(4) Clerk’s Fees. Fees for certification of

 documents necessary for preparation for 

a hearing or trial; and

(5) Transcripts and Digital Recordings. The

 costs of the original and one copy of 

all or any part of a trial transcript, 

daily transcript, or a transcript of 

matters occurring before or after trial,

 if requested by the court or prepared 

pursuant to stipulation. The cost of a 

digital recording, if requested by the 

court or obtained pursuant to

stipulation.

(6) Depositions. Costs incurred in 

connection with taking depositions, 

including:

. . . (7) Witness Fees. Fees paid to witnesses . . . (8) Interpreter’s and Translator’s Fees. Fees paid to interpreters and 

translators . . . 

(9) Docket Fees. Docket fees as provided by

 28 U.S.C. § 1923.

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(10) Certification, Exemplication, and

Reproduction of Documents. Document 

preparation costs, including:

(A) The cost of copies of an exhibit 

attached to a document necessarily 

filed and served;

(B) The cost of copies of a document 

admitted into evidence when the 

original is not available or the 

copy is substituted for the 

original at the request of an 

opposing party;

(C) Fees for an official certification 

of proof respecting the nonexistence of a document or record;

(D) Patent Office charges for the 

patent file wrappers and prior art 

patents necessary to the 

prosecution or defense of a 

proceeding involving a patent;

(E) Notary fees incurred in notarizing 

a document when the cost of the 

document is taxable; and

(F) Fees for necessary certification or

 exemplication of any document. . . . (12) Other Costs. Upon order of the court, 

additional items, including the 

following, may be taxed as costs:

(A) Summaries, computations, polls, 

surveys, statistical comparisons, 

maps, charts, diagrams, and other 

visual aids reasonably necessary to

assist the court or jury in 

understanding the issues at the 

trial;

(B) Photographs, if admitted in 

evidence or attached to documents 

necessarily filed and served upon 

the opposing party; and

(C) The cost of models if ordered by 

the court in advance of or during 

trial. . . . .

Reviewing the Cost Bill Itemization, we conclude that only

one of the requested costs – the certified mail postage for

service of the alias summons and notice of the status conference

– was recoverable under LBR 7054-1(d).

Ms. Fitzpatrick listed costs for printing status reports,

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summons, orders, notices, responses to interrogatories,

stipulations, briefs, declarations and exhibit lists, none of

which qualify as document preparation costs under

Section 2.8(e)(10) of the Court Manual. She also listed costs

for numerous faxes from the debtor, explaining that these faxes

were “evidentiary documents.” Ms. Fitzpatrick failed to specify

these “evidentiary documents” and to explain their purpose. 

Given her lack of explanation, we only can assume that she

printed documents and had documents faxed to her for her

convenience or her records. See, e.g., Fressell v. AT&T Tech.,

Inc., 103 F.R.D. 111, 115 (N.D. Ga. 1984)(denying successful

defendant’s request for photocopying charges “for the

convenience, preparation, research, or records of counsel” under

28 U.S.C. § 1920).

She also listed postage for the service of various

documents. Section 2.8(e)(2) of the Court Manual allows for the

recovery of postage fees for documents served in the manner

required by Rule 7004. Ms. Fitzpatrick included postage, not

only for the alias summons, but for scheduling orders, responses

to interrogatories, status reports, trial briefs and

stipulations. Rule 7004 only requires a particular manner of

service for the summons and complaints. See 10 Collier on

Bankruptcy ¶ 7004.01. The other postage costs are not covered

under Section 2.8(e)(2) of the Court Manual.

Ms. Fitzpatrick further listed various miscellaneous costs,

such as telephone charges, messenger services, transportation,

online software purchases, research and document retrieval

charges and fees for two attorneys. Again, none of these costs

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are listed in Section 2.8(e) of the Court Manual.

Based on the foregoing, we conclude that the bankruptcy

court did not abuse its discretion in denying all but the service

costs requested in the Cost Bill.

B. Attorney’s Fee Motion11

On appeal, the debtor mainly contends that the bankruptcy

11 The debtor challenges the bankruptcy court’s ruling on

several grounds, which we’ve distilled down to two.

First, he argues that the bankruptcy court unfairly and

erroneously relied on Krasinski v. Goldstein (In re Goldstein),

2011 WL 3608243 (Bankr. D. Ariz. 2011), an unpublished decision. 

According to the debtor, the bankruptcy court denied the Attorney

Fee Motion based on the reasoning set forth in the Goldstein

decision. The debtor claims that he could not effectively refute

the reasoning in the Goldstein decision because he could not

obtain a copy of the Goldstein decision. He further asserts that

Goldstein was legally and factually distinguishable from the

underlying matter.

Contrary to the debtor’s assertion, the bankruptcy court did

not rely on the Goldstein decision in denying the Attorney Fee

Motion. Because Key Bank cited the Goldstein decision, the

bankruptcy court believed it “[was] going to have to read this

Goldstein opinion.” Tr. of September 10, 2012 hr’g, 27:16-17. 

Upon reading it, the bankruptcy court acknowledged that “in this

case, we have a little slightly different situation [than that in

the Goldstein decision].” Tr. of September 10, 2012 hr’g,

34:1-2. The bankruptcy court took care to distinguish the

instant matter from Goldstein, stressing that Key Bank did not

“sue [the debtor]. It was [the debtor] who sought to have the

debt declared [dischargeable]. There was no dispute under the

contract as to whether he owed any sums or not. The dispute was

whether this should be discharged as a hardship debt or not.” 

Tr. of September 10, 2012 hr’g, 34:3-8.

Second, the debtor contends that the bankruptcy court should

have allowed his attorney’s fees in full unless Key Bank

demonstrated, through evidence, that they were unreasonable. 

However, the bankruptcy court would not get to reasonableness,

unless it first determined that there was a statutory or

contractual basis for an award of fees.

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court erred in denying the Attorney Fee Motion by ignoring Civil

Code § 1717.12 He insists that Civil Code § 1717 applies.13

We disagree. There simply is no statutory or contractual

basis allowing the debtor to recover his attorney’s fees here. 

12 The debtor also relies on Civil Code § 1021 in support of

his argument. Because the debtor did not raise Civil Code § 1021

as an issue before the bankruptcy court, we decline to address it

here. See Enewally, 368 F.3d at 1173.

13 The debtor also claims that the bankruptcy court

acknowledged the applicability of Civil Code § 1717 but

misapplied it.

At the hearing, the bankruptcy court mentioned that the

debtor relied on Civil Code § 1717. It also stated that it had

“the California statute that says, okay, what’s good for the

goose is good for the gander, so to speak.” Tr. of September 12,

2012 hr’g, 32:18-20.

Given the bankruptcy court’s reasoning as stated on the

record at the hearing, we do not believe that the bankruptcy

court applied Civil Code § 1717 at all. The bankruptcy court

denied the Attorney Fee Motion because the legal basis for

recovery of attorney’s fees, the fee provision, did not apply as

the adversary proceeding arose from a federal claim (i.e.,

§ 523(a)(8)), not a contract claim.

Moreover, California courts uniformly have ruled that Civil

Code § 1717 is to be narrowly applied, and is available to a

party only if the dispute involves litigation of a contract

claim. Santisas v. Goodin, 951 P.2d 399, 409 (Cal. 1998)

(“[S]ection 1717 applies only to attorney fees incurred to

litigate contract claims.”). The BAP previously has relied upon

Santisas on this specific issue. Redwood Theaters, Inc. v.

Davison (In re Davison), 289 B.R. 716, 723 (9th Cir. BAP 2003)

(“[W]e will follow [the Santisas] holding and narrowly apply

[Civil Code] § 1717 and approve attorney’s fees only if the

action involves a contract claim.”). Based on California

controlling law and BAP authority, we have held that Civil Code

§ 1717 only can be applied to attorney’s fees disputes based on

contract claims. Hamilton v. Charalambous (In re Charalambous),

2013 WL 3369299 at 5 (9th Cir. BAP 2013). We follow that holding

here.

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Ordinarily, under the American Rule, a prevailing party may not

recover attorney’s fees except as provided for by contract or by

statute. Travelers Cas. & Sur. Co. of Am. v. Pac. Gas & Elec.,

Co., 549 U.S. 443, 448 (2007); Dinan, 448 B.R. at 784.

No general right to recover attorney’s fees exists under the

Bankruptcy Code. Dinan, 448 B.R. at 784. Also, nothing in

§ 523(a)(8) authorizes a debtor to recover attorney’s fees when

he or she prevails in discharging his or her student loan debt.14

Interestingly, Ohio law has established that a contractual

provision allowing for the recovery of attorney’s fees to enforce

a defaulted debt obligation is unenforceable as against public

policy.15 See Simons v. Higher Educ. Assistance Found., 119 B.R.

14 In contrast, § 523(d) provides:

If a creditor requests a determination of

dischargeability of a consumer debt under subsection

[523(a)(2)], and such debt is discharged, the court

shall grant judgment in favor of the debtor for the

costs of, and a reasonable attorney’s fee for, the

proceeding if the court finds that the position of the

creditor was not substantially justified, except that

the court shall not award such costs and fees if

special circumstances would make the award unjust.

Accordingly, it appears that Congress considered when it

would be appropriate to award costs and attorney’s fees to a

prevailing debtor in dischargeability litigation and did not

expressly allow for an award of fees to the prevailing debtor in

§ 523(a)(8) adversary proceedings.

15 According to the Ohio Supreme Court, although Ohio

generally follows the American Rule, attorney’s fees “may be

awarded when a statute or an enforceable contract specifically

provides for the losing party to pay the prevailing party’s

attorney fees . . . or when the prevailing party demonstrates bad

(continued...)

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589, 593-94 (Bankr. S.D. Ohio 1990)(denying a student loan

lender’s request for attorney’s fees incurred in litigating a

debtor’s § 523(a)(8) claim because, in Ohio, “stipulations in

promissory notes providing for the payment of attorney’s fees,

arising in connection with the failure to pay the principal and

interest balance at maturity, are contrary to public policy and

are void,” and “[n]o provision exists for the granting of

attorneys’ fees in proceedings brought pursuant to 11 U.S.C.

§ 523(a)(8)(B).”)(citation omitted). See also McLeod v.

Diversified Collection Servs. (In re McLeod), 176 B.R. 455, 458

(Bankr. N.D. Ohio 1994)(quoting Simons, 119 B.R. at 593-94).

Moreover, as the bankruptcy court pointed out, the fee

provision did not come into play here. The fee provision

specifically states that Key Bank has the right to recover

15(...continued)

faith on the part of the unsuccessful litigant . . . .” Wilborn

v. Bank One Corp., 121 Ohio St. 3d 546, 548 (Ohio 2009)(citations

omitted). Contracts providing for payment of attorney’s fees

“are generally enforceable and not void as against public

policy,” so long as the parties to the contract entered into it

freely (i.e., equal bargaining power was present and no indicia

of compulsion or duress were present) and the fees awarded were

fair, just and reasonable. Id. at 548-49.

However, “contracts for the payment of attorney fees upon

the default of a debt obligation are void and unenforceable.” 

Id. at 549. “‘It is the settled law of this state that

stipulations incorporated in promissory notes for the payment of

attorney fees, if the principal and interest be not paid at

maturity, are contrary to public policy and void.’” Id. (quoting

Leavans v. Ohio Nat’l Bank, 50 Ohio St. 591 (Ohio 1893)

(addressing foreclosure actions)). That is, “a provision in a

mortgage or promissory note that awards attorney fees upon the

enforcement of the lender’s rights when the borrower defaults,

such as a foreclosure action that has proceeded to judgment, is

unenforceable.” Id. at 550.

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attorney’s fees incurred in enforcing the promissory note’s

terms. However, the debtor had initiated the adversary

proceeding under § 523(a)(8) to discharge the student loan debt,

not to contest its terms or amount. As the bankruptcy court

explained, the adversary proceeding was not “a contract dispute

arising out of the borrowing on the [promissory] note,” but “an

action brought by the Debtor to have the debt declared

[discharged].” Tr. of September 10, 2012 hr’g, 34:12-13,

34:11-12.

Neither federal nor Ohio or California law authorizes the

debtor to recover the attorney’s fees he incurred in discharging

his student loan debt under § 523(a)(8). Moreover, the fee

provision did not come into effect as the thrust of the adversary

proceeding was to discharge a student loan debt, not to enforce

the promissory note’s terms. Because the debtor has no statutory

or contractual basis on which to recover attorney’s fees, the

bankruptcy court did not abuse its discretion in denying the

Attorney Fee Motion.

CONCLUSION

For the foregoing reasons, we conclude that the bankruptcy

court did not abuse its discretion in allowing recovery of only

the debtor’s service costs and in denying recovery of the

debtor’s attorney’s fees. We AFFIRM.

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