Court Opinion

ID: 9700426
Source: CourtListenerOpinion
Date Created: 2023-08-25 21:27:27.566296+00
Date Added: 2024-06-11T18:21:08.970179
License: Public Domain

MARLAR, Bankruptcy Judge,
dissenting in part and concurring in part:
I respectfully dissent from the panel’s conclusion that § 303(i)(l) attorney’s fees and costs are allowable for a § 305(a) dismissal. To my mind, to conclude otherwise illustrates how a logical syllogism can be crafted to undo the clear intention and meaning of a statute.
Section 305(a)(1) is a benign dismissal statute as plainly written. Its focus encompasses any reason which is in the best interests of the creditors and the debtor. Sanctions of any type would, among other things, chill out-of-court workouts, be a disincentive to dismiss cases not worthy of a full-blown administrative procedure, or militate against dismissal of cases which are proceeding efficiently in another forum.
*258It is apparent that § 303(i) provides a continuum of sanctions for the unsuccessful petitioner, from a simple award of attorney’s fees on one end of the spectrum to compensatory and punitive damages for bad-faith petitioners on the other. See Miles, 430 F.3d 1083, 1090; Kidwell, 158 B.R. at 213; see also 1 Norton Bankr.L. & Prac.2d, supra, § 21:16 (“The court may grant any or all of the damages provided for under Code § 303(i), and such damages may be alternatively or cumulatively assessed.”). I see no purpose in delving into the legislative history of § 303(i) in order to analyze a perceived and gossamer-thin “distinction” between “damages” and “fees and costs,” when it comes to understanding that § 305(a)(1) simply does not require any judicial assistance or enlargement.
As I read the language of § 303(i), its remedies clearly apply only to dismissals of petitions “under this section.” The majority has somewhere located and painstakingly applied the “last antecedent rule” by ignoring the words “under this section” as limiting the word “dismisses.” But the doctrines of statutory construction would not render any statutory terms inoperative or superfluous. Sutherland Stat. Constr., supra, § 46:06. The Ninth Circuit has held that “[w]hen ... the doctrine of the last antecedent is inconsistent with the plain language and the legislative history of the statute, a court must adhere to a logical plain reading of the statute.” Am. Fed. of Gov’t Employees, AFL-CIO Local 2152 v. Principi, 464 F.3d 1049, 1055 (9th Cir.2006).
Nor would the “whole statute” interpretation apply to link §§ 305 and 303, because, while § 305(a)(1) is utilized to dismiss involuntary as well as voluntary cases, it says nothing specifically about the dismissal of involuntary petitions, nor about awarding fees upon dismissal. In addition, where Congress has inserted language in one statute (the remedial and fee-shifting language of § 303(i)), but has excluded it in another (§ 305(a)), the panel should not imply the language as being included in that from which it was excluded. Sutherland Stat. Constr., supra, § 46:05. Section § 303(i) clearly provides compensation to an alleged debtor for dismissals of involuntary petitions under § 303 (“this section”), while § 305(a) neither provides for attorney’s fees and costs, nor does it refer the practicing bar back to § 303(i) as a guide for the assessment of fees and costs in the event of a dismissal.
“[T]he circumstances under which attorney’s fees are to be awarded and the range of discretion of the courts in making those awards are matters for Congress to determine .... Congress itself presumably has the power and judgment to pick and choose among its statutes and to allow attorney’s fees under some, but not others.” Alyeska Pipeline, 421 U.S. at 262-63, 95 S.Ct. 1612.
Logically, it seems apparent that Congress wanted to encourage out-of-court cooperation and other resolution of creditors’ claims and thus declined to impose any monetary sanctions or attorney’s fees under the many iterations of a § 305(a) dismissal, when that result is determined to be, simply, in the best interests of both creditors and the debtor. “[T]here is no need to invoke the machinery of the bankruptcy process if there is an alternative means of achieving the equitable distribution of assets.” In re Michael S. Starbuck, Inc., 14 B.R. 134, 135 (Bankr.S.D.N.Y.1981). A § 305(a)(1) dismissal is just a dismissal, nothing more or less. It is neither mystical nor sinister, nor does it summon forth all the awesome machinery of a court’s inherent equitable powers. Cases are dismissed for all kinds of reasons, and § 305(a) facilitates this process. *259Congress left this option open because it was aware that debtors and their creditors might be able to resolve their financial troubles more quickly and inexpensively outside of the bankruptcy court, if they were left without the worry of which side had to pay fees. See generally S. Block-Lieb, Why Creditors File so New Involuntary Petitions and Why the Number is Not Too Small, 57 BROOK. L.Rev. 803 (1991).
The weight of authority holds that the § 303(i) attorneys’ fee awards are not available in § 305 dismissals. See Koffman, 182 B.R. at 127 (exercising jurisdiction to award fees after abstaining from jurisdiction would be “paradoxical”); In re Iowa Coal Mining Co., 242 B.R. 661, 673 (Bankr.S.D.Iowa 1999); R.V. Seating, 8 B.R. at 666 (stating that another reason to deny attorney’s fees or damages was that there was no authorization in § 305(a)); Sun World Broadcasters, 5 B.R. at 722; Luftek, 6 B.R. at 549 & n. 6; 2 Collier on Bankruptcy, supra, ¶ 303.15[11], at 303-127 to 303-128 (“Thus, the better argument, despite the possibility of some harsh results in select cases, is that abstention under section 305 precludes a recovery of money under section 303(i).”); 1 Norton Bankr.L. & Prac.2d, supra, § 21:16 (a court may not make such an award of costs, fees and damages under § 303(i) if it dismisses an involuntary petition pursuant to Code § 305)18; Hon. Alan M. Ahart, Cal. Prac. Guide: Enforcing Judgments and Debts § 5:294 (2006) (“Also, unlike a nonconsensual dismissal (11 USC § 303(i), there is no provision in § 305 for assessing costs and damages against any of the petitioners.”); D. Epstein, S. Nickles & J. White, Bankruptcy, § 2-5g at 35 (1992). But see Kidwell, 158 B.R. at 216-17.
In summary, I would hold that the plain language of each statute governs each independently, such that § 303(i)(l) cannot be engrafted onto § 305(a) for policy or equitable reasons. If Congress had wanted a § 305(a)(1) dismissal to include optional fee awards similar to a § 303© dismissal, it would have said so. It did not. Moreover, Macke risked denial of its attorney’s fees and costs by pleading in the alternative and prevailing under the more compassionate statute.
After careful consideration, I conclude that no attorney’s fees and costs are authorized for a 305(a)(1) dismissal and, therefore, I would reverse the bankruptcy court’s opposite ruling on that issue. For that reason, I must dissent from the path chosen by my colleagues on this issue only.
On each of the other issues discussed in the opinion, I concur and join the majority.

. This appears to be a change from the Norton Editors' Comment to the legislative history of former § 303(i), see supra at n. 12, which stated that the contraindication for an award of damages under § 305 might not encompass attorney's fees and costs.