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NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. NC-14-1480-TaDKi

)

MICHAEL JAMES HICKEY; ) Bk. No. 09-42629

MERCEDES HICKEY, )

)

Debtors. )

______________________________)

)

DOROTHY D. GUILLORY, )

)

Appellant, )

)

v. ) MEMORANDUM*

)

MICHAEL JAMES HICKEY; )

MERCEDES HICKEY, )

)

Appellees. )

______________________________)

Submitted Without Oral Argument**

on May 14, 2015 

Filed - July 16, 2015

Appeal from the United States Bankruptcy Court

for the Northern District of California

Honorable William J. Lafferty, III, Bankruptcy Judge, Presiding

 

FILED

JUL 16 2015

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

* 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(c)(2).

** After examination of the briefs and record, and after

notice to the parties, in an order entered March 16, 2015, the

Panel unanimously determined that oral argument was not needed

for this appeal. See Fed. R. Bankr. P. 8019(b); 9th Cir. BAP

Rule 8019-1.
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Appearances: Dorothy D. Guillory, pro se, on brief; Chris D.

Kuhner of Kornfield, Nyberg, Bendes & Kuhner, PC

on brief, for appellees Michael James Hickey and

Mercedes Hickey. 

 

Before: TAYLOR, DUNN, and KIRSCHER, Bankruptcy Judges.

INTRODUCTION

The bankruptcy court found appellant Dorothy D. Guillory in

contempt for violation of the discharge injunction issued in the

chapter 71 case of debtors Michael James Hickey and Mercedes

Velasquez Hickey. It subsequently awarded damages to the

debtors in the form of an attorney’s fees and costs award

against Guillory. Guillory appeals from this award. We AFFIRM

the bankruptcy court’s decision to award damages; but, we VACATE

the award and REMAND to the bankruptcy court for the limited

purpose of clarifying its order so that it clearly states that

Guillory’s co-contemnors are jointly and severally liable for

these damages under a separate order.

FACTS

In 2009, the Debtors filed a chapter 7 petition. The case

proceeded routinely; the Debtors promptly received their

bankruptcy discharge, and the bankruptcy court promptly closed

the case.

Four years later, however, the Debtors successfully

reopened their case and commenced an adversary proceeding

1 Unless otherwise indicated, all chapter and section

references are to the 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 Federal Rules

of Civil Procedure.

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against William De Vine, Jr. and his company, W.E. De Vine &

Company, LLC (collectively “De Vine”), and Guillory. The

adversary complaint alleged that the defendants violated the

discharge injunction through De Vine’s commencement of a 2011

state court collection action (the “Collection Action”) against

the Debtors; Guillory represented De Vine in the Collection

Action at a point after filing of the complaint. Apparently,

the Debtors advised De Vine and Guillory of the bankruptcy

discharge and unsuccessfully sought dismissal. The Debtors also

filed a motion for a contempt order in the adversary proceeding,

which they later re-filed in the bankruptcy case.2

The bankruptcy court ultimately determined that four of the

six Collection Action causes of action violated the discharge

injunction; it thus found De Vine and Guillory in contempt and

issued an order so determining (the “Contempt Order”). The

Contempt Order, however, also established a deadline for De Vine

to file a § 523 nondischargeability complaint, and Guillory, on

behalf of De Vine, thereafter filed “counterclaims” seeking to

except these four alleged claims from discharge under

§ 523(a)(2) and (a)(6).

In the background during this time, Guillory was in

disciplinary proceedings before the State Bar of California; she

2 The Debtors created a complex procedural path to the

bankruptcy court’s final determination that discharge violations

occurred and that actual damages resulted. They utilized both

an adversary proceeding and two motions. Because the details of

this procedural confusion do not impact our decision, we

hereafter refer to the adversary proceeding and motion jointly

as the Discharge Violation Proceedings, unless a more specific

reference is appropriate.

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was subsequently suspended from practice for a three-year

period. De Vine then attempted to handle his § 523 action by

himself but eventually dismissed the counterclaims with

prejudice. 

After dismissal, the Debtors sought an award of

compensatory damages based on the discharge injunction

violation; they initially requested an award only against DeVine

of $58,077.513 on account of fees and costs incurred in the

Collection Action and in the Discharge Violation Proceedings. 

The award requested in connection with the Discharge Violation

Proceedings included fees and costs incurred as a result of the

§ 523 counterclaims. After adjusting the requested amount

downward based on a determination that some services were

duplicative, the bankruptcy court granted the request; it

awarded the Debtors $53,077.51, plus interest, solely against

De Vine. De Vine did not appeal from this order, and it is now

final.

The Debtors then sought a second award, this time in the

amount of $24,172, again on account of fees and costs incurred

in connection with the discharge injunction violation (“Guillory

Motion for Damages”) and requested recovery jointly and

severally, from De Vine and Guillory. The Debtors calculated

their alleged damages by reducing actually incurred fees and

3 The Debtors’ request for fees and costs in the adversary

proceeding consisted of: $21,311.40 incurred by Chris Kuhner,

Debtors’ bankruptcy counsel, in 2013; $11,573.51 incurred by

Kuhner in 2014; $19,531.87 incurred by David Ginn, Debtors’

state court counsel, in the state court action; and $5,660.73

incurred by Ginn in the adversary proceeding.

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costs in the Collection Action and in a portion of the Discharge

Violation Proceedings, using a percentage based on the number of

Collection Action causes of action that violated the discharge

injunction. In particular, the new motion did not seek any

recovery in connection with the defense of the § 523

counterclaims. The fees and costs requested in connection with

the Guillory Motion for Damages, thus, duplicated a portion of

the damages already awarded solely against De Vine. Only

Guillory opposed this motion.

At the hearing both De Vine and Guillory appeared pro se. 

Guillory initially argued that the automatic stay in her

husband’s bankruptcy filing prevented the Debtors from obtaining

an order against her. The bankruptcy court disagreed. Debtors’

counsel clarified on the record that the fees and costs

requested in the Guillory Motion for Damages duplicated, in

part, those already awarded against De Vine. The Debtors then

requested a second sanctions award only against Guillory. After

it once again discounted the amount requested for duplicative

services, the bankruptcy court granted the Guillory Motion for

Damages. It thereafter entered an order awarding damages on

account of fees and costs in the amount of $20,822.50 (“Guillory

Damages Award”), plus interest, solely against Guillory. She

timely appealed.

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

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

§ 158.

///

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ISSUE

Whether the bankruptcy court abused its discretion in

awarding damages against Guillory for violation of the discharge

injunction.

STANDARD OF REVIEW

We review the decision to award sanctions for an abuse of

discretion. See Knupfer v. Lindblade (In re Dyer), 322 F.3d

1178, 1191 (9th Cir. 2003); Rosales v. Wallace (In re Wallace),

490 B.R. 898, 904-05 (9th Cir. BAP 2013). The underlying

factual findings are reviewed for clear error. In re Dyer,

322 F.3d at 1191.

A bankruptcy court abuses its discretion if it applies the

wrong legal standard, misapplies the correct legal standard, or

if its factual findings are illogical, implausible, or without

support in inferences that may be drawn from the facts in the

record. See TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d

820, 832 (9th Cir. 2011) (citing United States v. Hinkson,

585 F.3d 1247, 1262 (9th Cir. 2009) (en banc)).

DISCUSSION

Guillory advances a number of arguments, some raised for

the first time on appeal. These include the assertion that the

Guillory Damages Award was based on an impermissible pro-rata

allocation of fees; she contends that counsels’ timesheets did

not distinguish the time spent on the discharge injunction

violative and non-violative Collection Action causes of action. 

As a result, she urges remand for a re-calculation of the

Guillory Damages Award. She also argues that the Guillory

Motion for Damages was time-barred under the doctrine of laches. 

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Guillory, however, did not raise either of these issues before

the bankruptcy court; thus, we do not address them on appeal. 

See Mano-Y&M, Ltd. v. Field (In re The Mortg. Store, Inc.),

773 F.3d 990, 998 (9th Cir. 2014).

A. Although the Contempt Order was a judgment within the

meaning of Civil Rule 54, the Guillory Motion for Damages

was not “time-barred.”

Guillory first argues that because the Contempt Order was a

judgment, Civil Rule 54 required that the Debtors file a motion

for fees and costs within 14 days of entry of the Contempt

Order. She argues that the Guillory Motion for Damages, filed

more than a year after the Contempt Order, therefore, was timebarred. We disagree.

A contempt proceeding for violation of the § 524 discharge

injunction is initiated by motion in the bankruptcy case as a

contested matter under Rule 9014. Barrientos v. Wells Fargo

Bank, N.A., 633 F.3d 1186, 1191 (9th Cir. 2011). A contempt

determination is deemed final for the purposes of appeal. See

In re Dyer, 322 F.3d at 1186. Under Civil Rule 54(a),4 a

judgment includes an “order from which an appeal lies.” Thus,

the Contempt Order was a “judgment” subject to Civil Rule 54.

Civil Rule 54(d)(2) provides that a claim for attorney’s

fees must be made by motion within 14 days after the entry of

judgment, but includes a limitation on this requirement where:

“the substantive law requires those fees to be proved at trial

4 Civil Rule 54 is made applicable in bankruptcy cases by

Rules 7054 and 9014.

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as an element of damages.”

The Guillory Motion for Damages sought recovery of fees and

costs in the Collection Action and the Discharge Violation

Proceedings only as actual damages sustained by the Debtors as a

result of the discharge violation. The fees awarded constituted

compensatory damages; they fell outside the scope of Civil

Rule 54(d)(2) and were not subject to the procedural

requirements of that rule.5 As a result, the Guillory Motion

for Damages was not time-barred.

The bankruptcy court further found that Guillory suffered

absolutely no prejudice from the timing of the Motion for

Damages. On this record, we agree. Once the Contempt Order

issued, Guillory was on notice that sanctions would follow. At

the hearing on contempt, the bankruptcy court made this clear,

and Debtors’ counsel expressly reserved the Debtors’ rights to

sanctions. The Contempt Order then more formally preserved the

Debtors’ rights. Guillory could not reasonably assume that the

Debtors would pursue and obtain a contempt determination, but

then stop short of recovering actual damages. Guillory’s

argument as to the delay is also disingenuous. As the

bankruptcy court observed and the record confirms, the delay

resulted from De Vine’s assertion of § 523 counterclaims against

the Debtors. On this record, the gap in time between the

Contempt Order and the Motion for Damages does not reflect

5 Even if the Guillory Damages Award was subject to Civil

Rule 54(d)(2), the bankruptcy court was well within its

discretion to enlarge the time to file the motion pursuant to

Rule 9006. The record is consistent with the conclusion that,

if necessary, the bankruptcy court implicitly did so.

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unscrupulous conduct or any nefarious motive.

B. Fees and costs included in the Guillory Damages Award.

Guillory next argues that the bankruptcy court erred when

it included in the Guillory Damages Award fees incurred in the

Collection Action and for reopening the bankruptcy case. She

contends that the only appropriate fees were those incurred to

enforce the Bankruptcy Code and that an appropriate award should

not include fees to reopen the bankruptcy case to pursue the

contempt proceeding. 

If a bankruptcy court finds that a party willfully violated

the discharge injunction, it may award sanctions in the form of

compensatory damages, including attorney’s fees. Espinosa v.

United Student Aid Funds, Inc., 553 F.3d 1193, 1205 n.7 (9th

Cir. 2008), aff’d, 559 U.S. 260 (2010); In re Dyer, 322 F.3d at

1195. Here, the fees incurred in the Collection Action

constituted damages that flowed from the discharge injunction

violation; had De Vine - aided by Guillory’s representation –

not commenced and then continued to litigate the Collection

Action, the Debtors would not have incurred attorneys fees and

costs in defending the discharge violative causes of action. 

And, to the extent that the bankruptcy court subsequently deemed

two of the six state court causes of action non-violative of the

discharge injunction, counsel accounted for that by requesting

only 66% of the fees and costs incurred.

It is true that reopening the bankruptcy case was not

required to consider a discharge injunction violation. 

Bankruptcy counsel’s time itemization reflects minimal fees and

costs of $1,044.30 in relation to reopening the case, while

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state court counsel’s time itemization includes no fees or costs

in connection with the motion to reopen. Thus, even if the fees

incurred to reopen the case were improperly included as

compensatory damages, the Damages Award reflected a built-in

discount that accounted for more than those fees. As was true

with state court counsel, the Debtors requested only 66% of

bankruptcy counsel’s fees. Error, if any, was harmless.

C. Entry of the Damages Award only against Guillory.

Guillory complains briefly that the bankruptcy court failed

to explain the entry of the Damages Award solely against her,

when the Debtors moved for an award against both her and

De Vine. The record belies Guillory’s complaint. At the final

hearing, however, Debtors’ counsel clarified that the Guillory

Motion for Damages related only to Guillory, as the Debtors had

already obtained their requested relief against De Vine. 

Guillory was present at the hearing; her complaint on this point

is meritless. 

D. Whether the Guillory Damages Award provided an

impermissible double recovery or unfair windfall.

Finally, Guillory argues that the bankruptcy court abused

its discretion by twice awarding the same fees and costs as

damages. We agree in part. The awards do not constitute an

impermissible double recovery or unfair windfall. In the

Guilory Motion for Damages, the Debtors initially sought an

award against De Vine and Guillory based on joint and several

liability. In light of the award of $53,077.51 against De Vine,

however, the Debtors eventually clarified that they sought

relief only as to Guillory; this avoided a double recovery by

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the Debtors. That the Damages Award includes damages already

awarded against De Vine reflects intended joint and several

liability among Guillory and De Vine for a portion of the

Debtors’ damages, or $20,822.50. It is of no moment that the

awards were entered separately and individually against the cocontemnors. Apparently Guillory does not appreciate that she is

neither jointly nor severally liable with De Vine for the fees

and costs incurred by the Debtors in defending against the

counterclaims – a not insignificant difference of $32,255.01.

We also conclude, however, that the Guillory Damages Award

is ambiguous. It is not facially clear that Guillory is jointly

and severally liable with De Vine; any third party, including a

hypothetical judgment purchaser, would not appreciate from the

face of either award that any shared liability exists. 

Understanding this critical fact would require reading the

Guillory Motion for Damages and the transcript of the September

2014 hearing. Guillory is entitled to an award that is clear on

its face. To the extent De Vine pays the Debtors on account of

their damages award against him, they cannot recover against

Guillory.6

As a result, we VACATE the Guillory Damages Award and

REMAND to the bankruptcy court for the limited purpose of

entering an order that clearly states that Guillory’s liability

is joint and several with that of De Vine under the prior

contempt award to the extent of $20,822.50.

6 We take no position as to what rights De Vine might have

against Guillory in such a case.

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CONCLUSION

Based on the foregoing, we AFFIRM the bankruptcy court’s

decision to award damages, but VACATE the award and REMAND for

the bankruptcy court to clarify that the Guillory Damages Award

is joint and several with the Debtors’ damages award against

De Vine.

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