1

NOT FOR PUBLICATION FILED

FEB 4 2021

SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re:

WILLIE N. MOON and ADNETTE M. 

GUNNELS-MOON,

Debtors.

BAP No. NV-20-1199-BFL 

 

Bk. No. 13-12466-MKN

MEMORANDUM1

WILLIE N. MOON; ADNETTE M. 

GUNNELS-MOON,

Appellants,

v.

RUSHMORE LOAN MANAGEMENT

SERVICES, LLC,

Appellee.

Appeal from the United States Bankruptcy Court

for the District of Nevada

Mike K. Nakagawa, Bankruptcy Judge, Presiding

Before: BRAND, FARIS, and LAFFERTY, Bankruptcy Judges.

INTRODUCTION

Appellants Willie N. Moon and Adnette M. Gunnels-Moon appeal an 

order denying their request for attorney's fees and costs under § 362(k)(1)2 for

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 8024-1.

2 Unless specified otherwise, all chapter and section references are to the 
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defending against an adversary proceeding filed by Rushmore Loan 

Management Services, LLC ("Rushmore") that Rushmore later voluntarily 

dismissed. Because the adversary proceeding, in part, sought to challenge the 

Moons' earlier contempt proceeding against Rushmore for willfully violating 

the automatic stay, we conclude that at least some of the fees and costs were 

recoverable by the Moons under § 362(k)(1).Therefore, we VACATE and 

REMAND.

FACTS

A. Previous events and appeals

The Moons filed their chapter 13 bankruptcy case on March 26, 2013. At 

the time, their home ("Residence") was subject to two liens. Rushmore held 

the second lien, which appeared to be entirely underwater. 

Thereafter, the Moons moved to value the Residence under § 506(a) to 

strip off Rushmore's entirely unsecured lien. Rushmore did not respond. On 

December 5, 2013, the bankruptcy court entered an order granting the 

valuation motion ("Lien Avoidance Order"). The Lien Avoidance Order 

provided that Rushmore's claim was reclassified from a secured claim to an 

unsecured claim, and that its second deed of trust would be avoided upon the 

Moons' successful completion of their chapter 13 plan.

On April 7, 2014, the bankruptcy court entered an order confirming the 

Moons' amended chapter 13 plan ("Confirmation Order"). On September 28, 

Bankruptcy Code, 11 U.S.C. §§ 101–1532, all "Rule" references are to the Federal Rules of 

Bankruptcy Procedure, and all "Civil Rule" references are to the Federal Rules of Civil 

Procedure.
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2016, the bankruptcy court entered an order of discharge for the Moons, 

discharging their prepetition unsecured debt, including the debt owed to 

Rushmore. A final decree closing the case was entered on October 3, 2016.

As it turns out, no documents filed during the Moons' chapter 13 case 

— the bankruptcy notice, any motions, applications, notices of hearings, court 

orders or other papers — were served on Rushmore due to an address error. 

The address error stemmed from a mistake made in the creditor matrix when 

the case was filed and continued throughout the case.

After reopening their bankruptcy case, the Moons filed a motion 

against Rushmore, seeking to hold Rushmore in contempt for violation of the 

automatic stay and the discharge injunction ("First Contempt Motion"). The 

Moons alleged that, between November 2013 and October 2018, Rushmore 

sought to collect the debt through numerous monthly mortgage statements 

and other collection letters and hundreds of telephone calls to the Residence. 

The Moons sought damages for their emotional distress, punitive damages, 

and attorney's fees.

After an evidentiary hearing in September 2019, the bankruptcy court 

entered an Order and Memorandum Decision on February 25, 2020, granting 

the First Contempt Motion and awarding the Moons $100,742.10 in 

compensatory damages (including $100,000 to Mr. Moon for his emotional 

distress) and $200,000 in punitive damages for Rushmore's willful violation of 

the automatic stay under § 362(k)(1) ("First Contempt Order"). In re Moon, 613 

B.R. 317, 361 (Bankr. D. Nev. 2020). The court declined to award any damages 
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for Rushmore's violation of the discharge injunction because the Moons had 

not established when Rushmore became aware of the discharge order.

On appeal to the BAP, the Panel reversed the bankruptcy court's 

$100,000 damage award to Willie for lack of standing, and vacated and 

remanded the $200,000 punitive damages award for further consideration by 

the bankruptcy court in light of the significantly reduced compensatory 

award. The Panel affirmed the bankruptcy court's decision with respect to the 

discharge injunction. See Rushmore Loan Mgmt. Servs., LLC v. Moon (In re 

Moon), BAP Nos. NV-20-1057-BGTa & NV-20-1070-BGTa, 2021 WL 62629 (9th 

Cir. BAP Jan. 7, 2021).

Meanwhile, the Moons sought all of the attorney's fees and costs they 

incurred for the First Contempt Motion under § 362(k)(1) ("First Fee Motion").

Rushmore opposed the First Fee Motion, arguing that the Moons had not 

"incurred" any attorney's fees as "actual damages" under § 362(k)(1), because 

there was no agreement obligating them to pay their attorney, Mr. 

Christopher P. Burke. Rushmore also argued that if the court was inclined to 

award the Moons their attorney's fees, any award should be limited to the 

time spent on their stay violation claim.

After a hearing, the bankruptcy court granted the First Fee Motion, 

awarding the Moons their attorney's fees and costs of $67,007.94 under 

§ 362(k)(1). The court denied the Moons' request for a fee enhancement. 

On appeal, while the Panel agreed that the Moons were entitled to 

attorney's fees and costs under § 362(k)(1) and affirmed the cost award, it 
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vacated and remanded the fee award for further findings and consideration 

by the bankruptcy court. See Rushmore Loan Mgmt. Servs., LLC v. Moon (In re 

Moon), BAP Nos. NV-20-1144-BTaF & NV-20-1155-BTaF, 2021 WL 62630 (9th 

Cir. BAP Jan. 7, 2021).

B. Rushmore files and dismisses its adversary proceeding.

Meanwhile, on September 4, 2019, just two weeks before the evidentiary 

hearing on the First Contempt Motion, Rushmore filed an adversary proceeding 

against the Moons seeking declaratory relief ("Rushmore Adversary"). Rushmore 

contended that its second deed of trust was a constitutionally protected property 

right, that entry of the Lien Avoidance Order without notice violated its due 

process rights, and that any potential violations of the automatic stay or the 

discharge injunction by Rushmore were created by the Moons' failure to serve 

Rushmore. In its prayer, Rushmore sought judgment against the Moons as 

follows: (1) that the court declare Rushmore was never personally served in the 

Moons' bankruptcy until the First Contempt Motion; (2) that the court strike the 

First Contempt Motion because it was a result of a constitutional deprivation of 

notice to Rushmore and unclean hands by the Moons; (3) that the court strike the 

Lien Avoidance Order or, alternatively, that Rushmore be awarded monetary 

damages for the full value of its second deed of trust; and (4) that Rushmore be 

awarded all attorney's fees and costs for the Rushmore Adversary and the First 

Contempt Motion.

The Moons moved to dismiss the Rushmore Adversary under Civil 

Rule 12(b)(6). In short, the Moons argued that the Rushmore Adversary was 
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an improper collateral attack on the Lien Avoidance Order. They further 

argued that Rushmore should have sought such relief by motion.

Rushmore opposed the motion to dismiss and moved for summary

judgment ("MSJ"). Many, if not all, of the exhibits attached to Rushmore's MSJ 

were the same exhibits Rushmore offered into evidence at the evidentiary 

hearing on the First Contempt Motion. In support of its MSJ, Rushmore

argued that the Moons' failure to serve Rushmore violated its due process 

rights and the opportunity to participate in the case and defend its property 

interest. Rushmore contended that both the Confirmation Order and the Lien 

Avoidance Order were void as to Rushmore for lack of notice and lack of 

personal jurisdiction. Rushmore further argued that the First Contempt 

Motion was brought in bad faith or, at minimum, with unclean hands, 

because they inappropriately pushed forward with seeking sanctions even 

though their new attorney was aware of the prior service errors. 

The Moons filed a reply to their motion to dismiss and an opposition to 

Rushmore's MSJ. The hearings for the competing motions were initially 

continued pending the outcome of the First Contempt Motion, and once that 

was resolved, were finally scheduled for May 7, 2020.

On May 6, 2020, the Moons sought leave to file a supplemental 

opposition to the MSJ, which consisted of a declaration from their former 

bankruptcy attorney and three certified mail receipts in connection with the 

Moons' service of the valuation motion on Rushmore in September 2013. 

Rushmore denied receiving service of the valuation motion. In light of the 
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Moons' new documents, the parties agreed to continue the hearing for the

Moons' motion to dismiss and Rushmore's MSJ until June 4, 2020.

On May 22, 2020, Rushmore filed a notice of voluntary dismissal of the 

Rushmore Adversary under Civil Rule 41(a)(1)(A)(i),

3 which the Moons did 

not oppose. After a hearing, the bankruptcy court agreed to take all pending 

matters off calendar and direct the clerk to close the Rushmore Adversary.

C. Moons file their second request for attorney's fees and costs.

The Moons then sought the attorney's fees and costs they incurred in 

defending against the Rushmore Adversary under § 362(k)(1) ("Second Fee

Motion"). The Moons argued they were entitled to a reasonable attorney's fee 

of $14,398.50 and costs of $12.00, for what they contended was Rushmore's 

continuing stay violation by filing the Rushmore Adversary which sought to 

"strike" the First Contempt Motion. Mr. Burke stated in his declaration that he 

spent 9.4 hours at his previous hourly rate of $500.00 and 16.3 hours at his 

new hourly rate of $595.00 "dealing with the actions caused by Rushmore's 

willful stay violation." A billing summary reflecting the services Mr. Burke 

provided was attached.

Rushmore opposed the Second Fee Motion, arguing that (1) its filing of 

an adversary proceeding based on the Moons' failure to properly serve it with 

notice of the bankruptcy or the motion attempting to strip its lien was not a 

"continuing" violation of the automatic stay, (2) the Moons had not presented 

3 Civil Rule 41(a)(1)(A)(i), applicable here by Rule 7041, provides that a plaintiff 

may dismiss an action without a court order before the opposing party files an answer or a 

motion for summary judgment.
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any legal basis to recover attorney's fees related to the Rushmore Adversary, 

and (3) the bankruptcy court lacked jurisdiction to award attorney's fees 

related to the now-dismissed proceeding.

In reply, the Moons argued it was not their contention that the filing of 

the Rushmore Adversary itself was a stay violation. Rather, they were 

arguing that having to defend against the Rushmore Adversary, which 

sought to justify, defend, and negate Rushmore's stay violation and to "strike" 

the First Contempt Motion, invoked the attorney's fees provision of 

§ 362(k)(1). The Moons further argued that, because the bankruptcy case was 

still open, the court had jurisdiction to consider the Second Fee Motion 

despite the voluntary dismissal of the Rushmore Adversary. The Moons 

requested an additional $2,439.50 for the attorney's fees they incurred in

defending the Second Fee Motion.

After a hearing, the bankruptcy court entered an order denying the 

Second Fee Motion. It determined that Rushmore's filing of the Rushmore 

Adversary was not a continuation of pre-discharge conduct that violated the 

automatic stay post-discharge warranting an award of attorney's fees and 

costs under § 362(k)(1). The Moons timely appealed.

JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and 

157(b)(1) and (2)(A). We have jurisdiction under 28 U.S.C. § 158.

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ISSUE

Did the bankruptcy court abuse its discretion in not awarding the 

Moons any attorney's fees or costs under § 362(k)(1) for defending against the 

Rushmore Adversary?

STANDARDS OF REVIEW

We review de novo questions of subject matter jurisdiction. Montana v. 

Goldin (In re Pegasus Gold Corp.), 394 F.3d 1189, 1193 (9th Cir. 2005); Davis v. 

Courington (In re Davis), 177 B.R. 907, 910 (9th Cir. BAP 1995).

The bankruptcy court's decision whether to award attorney's fees is 

reviewed for abuse of discretion. See Easley v. Collection Serv. of Nev., 910 F.3d 

1286, 1289 (9th Cir. 2018). However, when the principal issue raised on 

appeal is legal in nature, we review the bankruptcy court's award de novo. 

See id.

The bankruptcy court abuses its discretion if it applies the wrong legal 

standard or its findings of fact are clearly erroneous. Olomi v. Tukhi (In re 

Tukhi), 568 B.R. 107, 112-13 (9th Cir. BAP 2017) (citing United States v. Hinkson, 

585 F.3d 1247, 1261-62 & n.20 (9th Cir. 2009) (en banc)).

DISCUSSION

In the First Contempt Order entered in February 2020, the bankruptcy 

court found that Rushmore had willfully violated the automatic stay with its 

repeated collection efforts from December 20, 2014, the date Rushmore was 

deemed to have had actual knowledge of the Moons' bankruptcy, to 

September 28, 2016, the date of their discharge. The court awarded the Moons 
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compensatory damages, punitive damages, and, ultimately, attorney's fees

and costs under § 362(k)(1). However, the court denied the Moons any 

attorney's fees or costs under § 362(k)(1) for the Rushmore Adversary, finding 

that the Rushmore Adversary was not a continuing stay violation and that 

the Moons could not recover fees and costs incurred as a result of its filing 

and dismissal years after the automatic stay expired, and years after the 

discharge was entered.

The Moons argue that the bankruptcy court erred by not awarding the 

attorney's fees and costs they incurred for having to defend against the 

Rushmore Adversary, which they contend was filed offensively to strike the 

First Contempt Motion and justify Rushmore's stay violation. Rushmore 

counters that the Moons are attempting to raise a new argument on appeal, 

that fees may be awarded under § 362(k)(1) because the Rushmore Adversary 

was a "collateral attack" on the First Contempt Motion. Rushmore also argues 

that once the Rushmore Adversary was dismissed, the bankruptcy court lost 

jurisdiction over the adversary and could not award fees.

While the Moons did argue before the bankruptcy court that the filing 

of the Rushmore Adversary was a "continuing" stay violation entitling them 

to fees and costs under § 362(k)(1), an argument we too reject, they also 

argued that having to defend against the Rushmore Adversary, which in part 

sought to defend Rushmore's stay violation and to "strike" the First Contempt 

Motion, warranted fees and costs under § 362(k)(1). In other words, the 

Moons did raise the "collateral attack" argument. Unfortunately, the 
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bankruptcy court did not address it, nor did it address Rushmore's threshold 

argument that the court lacked jurisdiction to consider a fee award since the 

Rushmore Adversary had been voluntarily dismissed under Civil Rule 

41(a)(1)(A).

Rushmore had every right to challenge the validity of the Lien 

Avoidance Order and the Confirmation Order given the Moons' failure to 

provide notice, and perhaps the First Contempt Motion was not the best 

action in which to resolve those issues. However, the Rushmore Adversary, 

filed just two weeks before the evidentiary hearing on the First Contempt 

Motion and not dismissed until three months after the First Contempt Order, 

went further than that. It sought to "strike" the First Contempt Motion and 

establish that the Moons were responsible for Rushmore's stay violation.

Rushmore never filed a substantive response to the First Contempt Motion 

despite having months to do so, and failed to engage in any meaningful 

discovery before the evidentiary hearing or file a trial brief. Rushmore chose 

instead to assert its defenses to the First Contempt Motion in the Rushmore 

Adversary, which the bankruptcy court aptly described as a "discrete and 

perhaps unnecessary act undertaken as a belated response to the First 

Contempt Motion."

"Under the 'American Rule,' we follow 'a general practice of not 

awarding fees to a prevailing party absent explicit statutory authority.'" 

Easley, 910 F.3d at 1290 (quoting Key Tronic Corp. v. United States, 511 U.S. 809, 

819 (1994)). Here, the explicit statutory authority is § 362(k)(1), which 
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authorizes an award of attorney's fees and costs to the debtor for successfully 

prosecuting an action for damages under § 362(k)(1). Am.'s Servicing Co. v. 

Schwartz-Tallard (In re Schwartz-Tallard), 803 F.3d 1095, 1101 (9th Cir. 2015) (en 

banc); see also Ramirez v. Fuselier (In re Ramirez), 183 B.R. 583, 589 (9th Cir. BAP 

1995) (an award of costs and attorney's fees is mandatory upon a finding that 

the stay was willfully violated). 

In the Rushmore Adversary, the Moons were compelled to defend

against certain arguments Rushmore should have, but failed to, raise in 

defense of the First Contempt Motion. And the Moons had to continue to 

defend against those arguments after the bankruptcy court had already 

rejected them in the First Contempt Order and awarded the Moons damages 

for Rushmore's willful stay violation. The Moons incurred attorney's fees and 

costs as a result.4 Rushmore cannot now shield itself from those fees and costs 

simply because their defense to the First Contempt Motion was brought 

under the guise of an adversary proceeding. That amounts to an end run 

around the statute and exalts form over substance. In fact, we see no other 

reason for why Rushmore chose to raise nearly all of its defenses to the First 

Contempt Motion in the Rushmore Adversary, other than to avoid payment 

of the Moons' attorney's fees and costs under § 362(k)(1). Thus, despite labels, 

at least some of the fees and costs the Moons incurred in the Rushmore 

4 We, as did another Panel, reject Rushmore's argument that the Moons did not 

"incur" any attorney's fees as "actual damages" under § 362(k)(1), even though they had no 

personal obligation to pay Mr. Burke out-of-pocket for his services. See Rushmore Loan 

Mgmt. Servs., LLC v. Moon (In re Moon), BAP Nos. NV-20-1144-BTaF & NV-20-1155-BTaF, 

2021 WL 62630 (9th Cir. BAP Jan. 7, 2021).
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Adversary were incurred as part of their stay violation damages claim against 

Rushmore under § 362(k)(1).

In addition, we reject Rushmore's argument that the bankruptcy court 

was divested of jurisdiction to consider the Second Fee Motion given the 

voluntary dismissal of the Rushmore Adversary. In support of its argument, 

Rushmore cites American Soccer Co., Inc. v. Score First Enterprises, a Division of 

Kevlar Industries, 187 F.3d 1108 (9th Cir. 1999). There, the plaintiff filed a 

notice of voluntary dismissal under Civil Rule 41(a)(1)(A)(i), dismissing the 

complaint without prejudice. After the defendant successfully moved to 

vacate the dismissal, the district court dismissed the complaint with prejudice 

and ordered the plaintiff to pay attorney's fees to the defendant. The Ninth 

Circuit Court of Appeals reversed, holding that under Civil Rule 41(a)(1) a 

plaintiff has an "absolute right" to voluntarily dismiss an action when the 

defendant has not yet served an answer or motion to dismiss, and that such 

right may not be extinguished or circumscribed by the court. Id. at 1110. 

Accordingly, the district court lacked jurisdiction to vacate the voluntary 

dismissal and rule on the merits. Id. at 1112.

American Soccer did not hold, as Rushmore contends, that a voluntary 

dismissal prevents a defendant from moving for attorney's fees and costs. 

That is because "[i]t is well established that a federal court may consider 

collateral issues after an action is no longer pending[,]" including a request 

for attorney's fees. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395 (1990);

Teece v. Kuwait Fin. House (Bahrain) B.S.C., 667 F. App'x 931, 932 (9th Cir. Aug. 
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3, 2016) (holding that the district court had jurisdiction over the "collateral 

matter" of defendant's motion for attorney's fees despite plaintiff's voluntary 

dismissal under Civil Rule 41(a)(1)(A)(i)); Budanio v. Saipan Marine Tours, Inc., 

22 F. App'x 708, 710 (9th Cir. Oct. 2, 2001) (holding that the district court 

retained jurisdiction to consider a request for attorney's fees despite plaintiff's 

voluntary dismissal); Turner v. Vilsack, No. 3:13-cv-1900, 2016 WL 1048893, at 

*3 (D. Or. Mar. 14, 2016) (applying the same rule to a stipulated dismissal 

under Civil Rule 41(a)(1)(A)(ii) in a case under the Equal Access to Justice 

Act).5

Consequently, the Moons are entitled to attorney's fees for the 

Rushmore Adversary under § 362(k)(1), at least those fees they incurred in 

defending against Rushmore's arguments in defense of its stay violation. On 

remand, the bankruptcy court must award the Moons a reasonable attorney's 

fee and costs.

CONCLUSION

For the reasons stated above, we VACATE and REMAND the Second 

Fee Order for further proceedings consistent with our decision.

5 Rushmore asserted in the notice of voluntary dismissal that the Rushmore 

Adversary was dismissed "with prejudice" as to the claims raised in that proceeding. 

However, the bankruptcy court noted in the Second Fee Order that, because the issue of 

Rushmore's notice of the automatic stay was never litigated in the Rushmore Adversary,

preclusive effect could not be given to the voluntary dismissal with prejudice, citing 

Amadeo v. Principal Mutual Life Insurance Co., 290 F.3d 1152, 1159 (9th Cir. 2002) and Board of 

Trustees. v. Noorda, No. 2:16-cv-00170, 2018 WL 1568679, at *3 (D. Nev. Mar. 30, 2018).