Opinion ID: 792059
Heading Depth: 2
Heading Rank: 4

Heading: Discharge of Rockwell's Attorney Fees and Cost Claims

Text: 36 In light of the foregoing discussion, we reaffirm that claims for attorney fees and costs incurred post-petition are not discharged where post-petition, the debtor voluntarily commences litigation or otherwise voluntarily return[s] to the fray. See Siegel, 143 F.3d at 533-34. Whether attorney fees and costs incurred through the continued prosecution of litigation initiated pre-petition may be discharged depends on whether the debtor has taken affirmative post-petition action to litigate a prepetition claim and has thereby risked the liability of these litigation expenses. 37 In this case, after petitioning for bankruptcy, Ybarra petitioned the bankruptcy court to exempt the state suit against Rockwell, and then appealed the bankruptcy court's denial of this exemption to the BAP and this court. On remand, Ybarra chose to pursue the state case rather than accepting Rockwell's $17,500 settlement offer. Ybarra actively persuaded the state court to set aside the dismissal. We conclude that by affirmatively reviving the state suit, Ybarra returned to the fray. Thus, under Siegel, Rockwell's claim for attorney fees and costs incurred post-petition was not discharged in the bankruptcy. 38 The BAP reasoned that because the bankruptcy court's decisions not to exempt the lawsuit and to approve the settlement were later overturned, Ybarra's state suit should be considered continuous litigation, rather than the commencement of a new suit post-petition. Ybarra, 295 B.R. at 616. We disagree, and conclude that Ybarra's actions to revive the state suit were sufficiently voluntary and affirmative to be considered returning to the fray. Accordingly, we reverse the BAP's holding that the attorney fees incurred post-petition were discharged.