Opinion ID: 504821
Heading Depth: 2
Heading Rank: 2

Heading: The Award of Costs and Attorneys' Fees

Text: 24 This court has already upheld the initial order of the bankruptcy court finding plaintiffs in civil contempt for wilfully disobeying the order of the bankruptcy court and the provisions of the automatic stay. We found that the plaintiffs could offer no justification for their actions in attempting to circumvent the order of the bankruptcy court. This finding is res judicata as to those questions and will not be reconsidered. Therefore, the only question before us is whether the bankruptcy court abused its discretion in determining the amount of legal fees and expenses awarded to the trustee. Apparently, plaintiffs concede that the trustee was entitled to recover costs associated with bringing the initial contempt motion against the plaintiffs before the bankruptcy court. Plaintiffs, however, contend that the trustee should not be allowed to recover any of the costs incurred as a result of defending plaintiffs' subsequent appeals of the contempt order before the district court and before this court. We disagree. 25 Under the American Rule, attorneys' fees are generally not recoverable by the prevailing litigant in a federal civil action absent a specific statutory grant of authority for the award of fees. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 258-59 (1975). A well recognized exception to this rule, however, exists by virtue of the inherent power of a court to enforce its own orders. Courts have inherent authority to enforce their judicial orders and decrees in cases of civil contempt by assessing attorneys' fees. Cook v. Ochsner Foundation Hospital, 559 F.2d 270 (5th Cir.1977). Thus, attorneys' fees may be awarded to the prevailing party for the wilfull disobedience of a court order ... as part of the fine to be levied on the defendant. Alyeska, 421 U.S. at 258. 26 The determination of assessable items of cost in civil contempt cases is within the discretion of the court whose dignity has been offended and it is no abuse of discretion to impose as a penalty the expenses incurred in defending the propriety of the original imposition of sanctions in the trial court. See Cook, 559 F.2d at 272; Crane v. Gas Screw Happy Pappy, 367 F.2d 771 (7th Cir.1966), cert. denied sub nom. Borrowdale v. Reuland, 386 U.S. 959 (1967); Schauffler v. United Association of Journeymen & Apprentices, 246 F.2d 867, 870 (3d Cir.1957). 27 In Schauffler, a local union and two union officers were held in contempt for violation of an injunction against work stoppages. The United States Court of Appeals for the Third Circuit held that the district court could award the Regional Director of the National Labor Relations Board litigation expenses for the prosecution of the contempt cases both in the district court and on appeal. The Schauffler court stated: 28 Because it was the order of the district court which was violated, the court may assess costs of litigation in the contempt proceedings regardless of the court in which the expenses were incurred. 29 246 F.2d at 870 (citing Toledo Scale Co. v. Computing Scale Co., 261 U.S. 399, 428 (1923) (charging contemnor with expenses incurred in defending suit brought by contemnor in violation of another court's decree) ). 30 In Crane v. Gas Screw Happy Pappy, the appellant was held in civil contempt for refusing to comply with the district court's order that certain property be returned to the appellee. The United States Court of Appeals for the Seventh Circuit affirmed the district court's finding of contempt and assessed against appellant the costs of the appeal: 31 The flagrant and contumacious character of the appellant's defiance of the court's orders makes it appropriate that appellee be reimbursed for items of expenses necessarily incurred on appeal for the court in defending the adjudication of the District Court. 32 367 F.2d at 775 (citations omitted). 33 In awarding the trustee attorneys' fees and expenses incurred on appeal, the bankruptcy court relied in part upon Tamari v. Bache & Co. (Lebanon), S.A.L., 729 F.2d 469 (7th Cir.1984), a case involving a statutory exception to the American Rule. In Tamari, the Court of Appeals for the Seventh Circuit awarded appellate expenses as part of sanctions under Fed.R.Civ.P. 37(b), for the failure to appear for court ordered discovery depositions. The Tamari court stated: 34 We conclude that appellate expenses to Bache is consistent with the mandate of Rule 37(b). The rule awards expenses caused by the failure of the disobedient party to comply with a court order. Bache's appellate costs essentially were caused by the Tamari's and the Firm's failure to comply with the court's original deposition deadline. When the Firm chose to appeal the court's imposition of the Rule 37(b) sanction, it caused Bache to incur additional expenses in order to defend the court's sanction. 35 729 F.2d at 475 (citation omitted). 36 The reasoning of the court in Tamari applies with equal force in the present case. Plaintiffs' defiance of the order of the bankruptcy court caused the trustee of the Crabtree estate to incur expenses in bringing the violation to the attention of the court. Plaintiffs' unsuccessful appeals of the civil contempt order forced the trustee to incur expenses in defending the court's order. The trustee's appellate expenses stemmed directly from plaintiffs' intentional disregard of the initial order of the bankruptcy court. 37 Plaintiffs attempt to distinguish Tamari and other cases on the basis that they involve statutory exceptions to the American Rule, whereas, in the instant case, the bankruptcy court relied on its inherent judicial authority to impose attorneys' fees as a sanction for civil contempt. We find no principled basis for distinguishing between common law and statutory exceptions to the American Rule. Regardless of the source of the exception, fees and expenses incurred on appeal are allowable. Therefore, in the instant case, we find no abuse of authority on the part of the bankruptcy judge in awarding legal fees and expenses incurred in defending against plaintiffs' unsuccessful appeals of the contempt order to the district court and to this court. 38 Plaintiffs claim that they purged themselves of contempt shortly after the bankruptcy court's contempt order was issued on January 25, 1984, by dismissing their action which had been pending before the Florida bankruptcy court. Plaintiffs contend that they cannot be held liable for any costs which were incurred by the trustee subsequent to the cessation of their contumacious conduct. In support of their argument, plaintiffs cite to the decision of the Court of Appeals for the Fifth Circuit in Cook v. Ochsner Foundation Hospital, 559 F.2d 270, 272 (5th Cir.1977): 39 The theory for allowing attorneys' fees for civil contempt is that civil contempt is a sanction to enforce compliance with an order of the court or to compensate for losses or damages sustained by reason of noncompliance. 40 Plaintiffs argue that the award of costs incurred on appeal of the contempt order could not be justified as a sanction to enforce compliance since plaintiffs had already complied with the order by discontinuing their suit in Florida. Moreover, plaintiffs claim that the trustee was not directly injured by their contumacious conduct. Thus, plaintiffs conclude that the American Rule applies to the fees incurred in connection with defending the contempt finding on appeal. We disagree. 41 The paragraph in Cook v. Ochsner, from which the foregoing quotation was taken, also contains the following language: 42 Courts have, and must have, the inherent authority to enforce their judicial orders and decrees in cases of civil contempt. Discretion, including the discretion to award attorneys' fees, must be left to a court in the enforcement of its decrees. 43 559 F.2d at 272. In the instant case, there is no question that the bankruptcy court had the authority to award attorneys' fees against the plaintiffs to compensate the trustee for bringing plaintiffs' contempt to the court's attention. Subsequent to the finding of civil contempt by the bankruptcy court, the trustee was forced to defend plaintiffs' challenges to the contempt order before the district court and then on appeal before this court. As previously noted, the costs associated with these appeals were a direct result of the plaintiffs' initial contumacious conduct. The trustee was forced to incur these costs to defend the contempt order on appeal, regardless of whether or not the actual contumacious conduct which had given rise to the contempt order had ceased. Therefore, we find that the bankruptcy judge did not abuse his discretion by awarding attorneys' fees and expenses incurred by the trustees as a result of the plaintiffs' unsuccessful appeals of the orders holding them in contempt. 44 For the foregoing reasons, the judgment of the district court below is AFFIRMED.