Court Opinion

ID: 3062525
Source: CourtListenerOpinion
Date Created: 2015-10-14 17:01:32.876225+00
Date Added: 2024-06-11T11:50:02.283315
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

IN RE IRENE MICHELLE SCHWARTZ-              No. 12-60052
TALLARD,
                         Debtor,              BAP No.
                                              11-1429

AMERICA’S SERVICING COMPANY,
                      Appellant,              OPINION

                  v.

IRENE MICHELLE SCHWARTZ-
TALLARD,
                      Appellee.

              Appeal from the Ninth Circuit
               Bankruptcy Appellate Panel
Kirscher, Pappas, and Dunn, Bankruptcy Judges, Presiding

             Argued and Submitted En Banc
        June 17, 2015—San Francisco, California

                  Filed October 14, 2015

  Before: Sidney R. Thomas, Chief Judge, and Stephen
    Reinhardt, Diarmuid F. O’Scannlain, M. Margaret
  McKeown, William A. Fletcher, Richard C. Tallman,
Carlos T. Bea, Milan D. Smith, Jr., Sandra S. Ikuta, Paul J.
    Watford, and Andrew D. Hurwitz, Circuit Judges.
2                  IN RE SCHWARTZ-TALLARD

                   Opinion by Judge Watford;
                   Concurrence by Judge Bea;
                     Dissent by Judge Ikuta

                           SUMMARY*

                            Bankruptcy

    Affirming the judgment of the Bankruptcy Appellate
Panel, the en banc court held that 11 U.S.C. § 362(k)
authorizes an award of attorney’s fees reasonably incurred in
a debtor’s prosecution of a suit for damages to provide
redress for a violation of the automatic bankruptcy stay.

    When a debtor files for bankruptcy, the Bankruptcy Code
imposes an automatic stay on actions against the debtor to
collect pre-petition debts. Sternberg v. Johnston, 595 F.3d
937 (9th Cir. 2010), held that § 362(k) allowed a debtor to
recover only those fees incurred to end the stay violation
itself, not the fees incurred to prosecute a damages action.
Agreeing with other circuits, the en banc court held that
§ 362(k) authorizes recovery of the fees incurred to prosecute
a damages action. The en banc court overruled Sternberg to
the extent it was inconsistent with the en banc court’s
opinion.

    Concurring in the judgment, Judge Bea, joined by Judge
O’Scannlain, concurred in the majority’s conclusion that
§ 362(k) has an unambiguous meaning allowing recovery of

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                IN RE SCHWARTZ-TALLARD                      3

attorney’s fees incurred in prosecuting a damages action.
Judge Bea wrote that the majority’s discussion of Congress’s
plan in enacting the automatic-stay provision was
unnecessary.

    Dissenting, Judge Ikuta wrote that the statutory text was
ambiguous, and the en banc court should have adhered to the
better reading set forth in Sternsberg.

                        COUNSEL

Andrew Jacobs (argued), Snell & Wilmer, Tucson, Arizona;
Kelly H. Dove, Snell & Wilmer, Las Vegas, Nevada, for
Appellant.

Christopher P. Burke (argued), Law Office of Christopher P.
Burke, Las Vegas, Nevada, for Appellee.

Daniel L. Geyser (argued), McKool Smith, Dallas, Texas;
Tara Twomey, National Association of Consumer
Bankruptcy Attorneys, San Jose, California, for Amicus
Curiae National Association of Consumer Bankruptcy
Attorneys.

                         OPINION

WATFORD, Circuit Judge:

    When a debtor files for bankruptcy, the Bankruptcy Code
imposes an automatic stay on virtually all actions against the
debtor to collect pre-petition debts. 11 U.S.C. § 362(a). To
deter violations of the automatic stay and to provide redress
4                IN RE SCHWARTZ-TALLARD

for those that do occur, the Code permits injured debtors to
sue for “actual damages, including costs and attorneys’ fees.”
§ 362(k). With one exception, courts have uniformly held
that this provision authorizes an award of all attorney’s fees
reasonably incurred to remedy a stay violation, including fees
incurred in prosecuting the damages action that § 362(k)
authorizes. See, e.g., In re Repine, 536 F.3d 512, 522 (5th
Cir. 2008); In re Duby, 451 B.R. 664, 674–77 (1st Cir. BAP
2011).

    The one exception is our decision in Sternberg v.
Johnston, 595 F.3d 937 (9th Cir. 2010). There, we held that
§ 362(k) allows a debtor to recover only those fees incurred
to end the stay violation itself, not the fees incurred to
prosecute a damages action. Id. at 947. Thus, under
Sternberg, once the stay violation has ended, no fees incurred
after that point may be recovered. That holding has been the
subject of widespread criticism. Having reconsidered the
matter, we conclude that Sternberg misconstrued the plain
meaning of § 362(k). To the extent it is inconsistent with this
opinion, Sternberg is overruled.

                               I

    This case has a convoluted procedural history, which for
our purposes can be briefly summarized. The debtor, Irene
Schwartz-Tallard, took out a mortgage on her home in
Henderson, Nevada. After filing a Chapter 13 bankruptcy
petition, she continued to make her monthly mortgage
payments to America’s Servicing Company (ASC), the
company servicing her loan. Due to a mistake on its part,
ASC wrongfully foreclosed on Schwartz-Tallard’s home.
ASC purchased the home at the foreclosure sale and promptly
served Schwartz-Tallard with an eviction notice. Schwartz-
                 IN RE SCHWARTZ-TALLARD                        5

Tallard filed a motion in the bankruptcy court requesting
relief under 11 U.S.C. § 362(k). She sought an order
requiring ASC to reconvey title to the home as well as an
award of actual damages, punitive damages, and attorney’s
fees. The bankruptcy court found that ASC’s actions
constituted a willful violation of the automatic stay and
ordered ASC to reconvey title to Schwartz-Tallard. The court
also awarded Schwartz-Tallard $40,000 in economic and
emotional distress damages, $20,000 in punitive damages,
and $20,000 in attorney’s fees.

    None of that relief is now at issue. ASC did not challenge
the reconveyance order; soon after the bankruptcy court
issued the order, ASC complied with it. While ASC did
challenge the damages award by pursuing an appeal in the
district court, the district court ultimately upheld the award,
and ASC chose not to seek further review in this court.

    After successfully defending the damages award on
appeal, Schwartz-Tallard returned to the bankruptcy court and
asked it to award her, under § 362(k), the roughly $10,000 in
additional attorney’s fees she had incurred in the district court
opposing ASC’s appeal. The bankruptcy court denied the
motion. The court stated that although it thought Schwartz-
Tallard should be entitled to recover her fees on appeal, it
could not award them under Sternberg. The stay violation
ended, the court explained, once ASC reconveyed title to
Schwartz-Tallard. Because Schwartz-Tallard incurred all of
her fees on appeal after that point, the court held that
Sternberg barred their recovery.

    Schwartz-Tallard appealed, and the Bankruptcy Appellate
Panel (BAP) reversed. It concluded that Sternberg does not
bar an award of attorney’s fees to a debtor who successfully
6                IN RE SCHWARTZ-TALLARD

defends a § 362(k) damages award on appeal. In re
Schwartz-Tallard, 473 B.R. 340, 350 (9th Cir. BAP 2012).
A divided three-judge panel of this court affirmed. In re
Schwartz-Tallard, 765 F.3d 1096 (9th Cir. 2014). The
majority concluded that ASC’s reconveyance of title did not
end the stay violation because, on appeal, ASC continued to
challenge the bankruptcy court’s determination that the
automatic stay had been violated in the first place. Id. at
1102. Judge Wallace dissented. In his view, the stay
violation ended once ASC reconveyed title to the home and
chose not to challenge the validity of the reconveyance order
on appeal. Because Schwartz-Tallard incurred all of her
attorney’s fees on appeal after that point, Judge Wallace
concluded that under Sternberg those fees could not be
awarded. Id. at 1106 (Wallace, J., dissenting).

                               II

    We find it unnecessary to resolve the issue that divided
the three-judge panel.        Rather than decide whether
Sternberg’s holding extends to the facts of this case, we think
the better course is to jettison Sternberg’s erroneous
interpretation of § 362(k) altogether.

                              A

    When Congress enacted the Bankruptcy Code in 1978, it
included the automatic stay provision now found in § 362. At
the time, the Code did not contain a provision specifically
authorizing imposition of sanctions for violations of the
automatic stay. Nonetheless, courts treated the automatic
stay as akin to a court order and relied on their civil contempt
powers to impose compensatory sanctions on creditors who
knowingly violated the stay. Those sanctions sometimes
                IN RE SCHWARTZ-TALLARD                     7

included an award of the attorney’s fees the debtor incurred
in prosecuting the contempt proceeding. See, e.g., In re
Roman, 283 B.R. 1, 14 (9th Cir. BAP 2002); In re Zartun,
30 B.R. 543, 546 (9th Cir. BAP 1983). Although the
“American Rule” usually requires parties to bear their own
attorney’s fees, a common-law exception to the rule permits
fee awards in litigation brought to remedy willful violations
of court orders. Fleischmann Distilling Corp. v. Maier
Brewing Co., 386 U.S. 714, 717–18 (1967).

    Perhaps to eliminate any doubt about the source of a
court’s authority to remedy violations of the automatic stay,
Congress enacted § 362(h) in 1984. Act of July 10, 1984,
Pub. L. No. 98-353, 98 Stat. 333, 352. Congress re-
designated the statute § 362(k) in 2005 and added the
exception now found in paragraph (2), but its text has
otherwise remained unchanged. Act of Apr. 20, 2005, Pub.
L. No. 109-8, 119 Stat. 23, 114. It provides in full:

           (1) Except as provided in paragraph (2),
       an individual injured by any willful violation
       of a stay provided by this section shall recover
       actual damages, including costs and attorneys’
       fees, and, in appropriate circumstances, may
       recover punitive damages.

           (2) If such violation is based on an action
       taken by an entity in the good faith belief that
       subsection (h) applies to the debtor, the
       recovery under paragraph (1) of this
       subsection against such entity shall be limited
       to actual damages.

11 U.S.C. § 362(k).
8                IN RE SCHWARTZ-TALLARD

    In some respects the statute strengthened the remedies
previously available to debtors injured by willful stay
violations. It makes an award of actual damages and
attorney’s fees mandatory, and grants bankruptcy courts the
discretion to impose punitive damages in appropriate cases.

                               B

     Both parties agree that § 362(k) authorizes an award of
attorney’s fees incurred in ending a violation of the automatic
stay. Those fees can be incurred out of court, as when a
debtor retains an attorney to call or write a creditor to demand
that it end its stay-violating conduct. When those efforts fail,
a debtor can also incur attorney’s fees in court by pursuing
injunctive relief aimed at ending the stay violation. No one
disputes that, given the statute’s explicit reference to “costs”
as well as “attorneys’ fees,” at least some fees incurred in
litigation are recoverable.

    If that much is true, and we agree that it is, the question
becomes: Did Congress intend to authorize recovery of
attorney’s fees incurred in litigation for one purpose (ending
the stay violation) but not for another (recovering damages)?
We see nothing in the statute that suggests Congress intended
to cleave litigation-related fees into two categories, one
recoverable by the debtor, the other not. The statute says
“including costs and attorneys’ fees,” with no limitation on
the remedy for which the fees were incurred. To uphold
Sternberg’s interpretation of § 362(k), we would have to read
into the statute limiting language—something like, “including
costs and attorneys’ fees incurred to end the stay
violation”—that is simply not present.
                 IN RE SCHWARTZ-TALLARD                        9

    Sternberg concluded that such a limitation should be
inferred because the statute makes attorney’s fees recoverable
only as a component of the debtor’s “actual damages,” not as
attorney’s fees as such. Section 362(k) is somewhat unusual
in that regard. Most statutes that deviate from the American
Rule authorize the award of “a reasonable attorney’s fee” to
a “prevailing party,” usually in the context of the action as a
whole rather than a discrete proceeding. Baker Botts L.L.P.
v. ASARCO LLC, 135 S. Ct. 2158, 2164 (2015). Section
362(k) differs from those statutes, but if anything its phrasing
signals an intent to permit, not preclude, an award of fees
incurred in pursuing a damages recovery. Under the
American Rule, a statutory right to recover damages
ordinarily “does not include an implicit authorization to
award attorney’s fees” incurred in bringing the action.
Summit Valley Industries, Inc. v. Carpenters, 456 U.S. 717,
722 (1982). That rule does not apply, however, “where
Congress has made specific and explicit provisions for the
allowance of such fees.” Id. (internal quotation marks
omitted). Congress did just that in § 362(k), by stating
specifically and explicitly that the debtor “shall recover actual
damages, including costs and attorneys’ fees.”

     Sternberg’s reading of § 362(k) might have made sense
if the statute had said that an injured individual “shall recover
actual damages,” period. That phrasing might well have
conveyed Congress’ intent to adhere to the default rule
precluding an award of attorney’s fees incurred in prosecuting
the damages action itself. In this case, Congress’ contrary
intent is evident not only from the explicit language of
§ 362(k), but also from the historical backdrop against which
the statute was enacted. As noted, at the time Congress
enacted § 362(k), courts were already awarding debtors the
attorney’s fees incurred in prosecuting civil contempt
10               IN RE SCHWARTZ-TALLARD

proceedings. Far from seeking to end that practice, Congress
appears to have intended to provide statutory authorization
for its continuance.

    We do not think the language of § 362(k) is ambiguous,
but even if it were, we would then be required to decide
which of the two competing readings of the statute more
closely aligns with Congress’ “plan” in enacting the statute.
King v. Burwell, 135 S. Ct. 2480, 2496 (2015). That strikes
us as an easy choice.

     We do not have legislative history that speaks directly to
Congress’ purpose in enacting § 362(k). It seems evident,
however, that Congress sought to encourage injured debtors
to bring suit to vindicate their statutory right to the automatic
stay’s protection, one of the most important rights afforded to
debtors by the Bankruptcy Code. The automatic stay
provides the debtor with a “breathing spell” from the
harassing actions of creditors, and it protects the interests of
all creditors by preventing “dismemberment” of the debtor’s
assets before the debtor can formulate a repayment plan or, in
liquidation cases, the court can oversee equitable distribution
of the debtor’s assets. 3 Collier on Bankruptcy ¶ 362.03 at
362–23 & n.6 (Alan N. Resnick & Henry J. Sommer eds.,
16th ed. 2015); see In re Bloom, 875 F.2d 224, 226 (9th Cir.
1989). By providing robust remedies for debtors who prevail,
the statute acts to deter creditors from violating the automatic
stay in the first instance.

    That legislative plan can be carried out, of course, only if
injured debtors are actually able to sue to recover the
damages that § 362(k) authorizes. Congress undoubtedly
knew that unless debtors could recover the attorney’s fees
they incurred in prosecuting an action for damages, many
                 IN RE SCHWARTZ-TALLARD                      11

would lack the means or financial incentive (or both) to
pursue such actions. After all, the very class of plaintiffs
authorized to sue—individual debtors in bankruptcy—by
definition will typically not have the resources to hire private
counsel. And in many cases the actual damages suffered by
the injured debtor will be too small to justify the expense of
litigation, even if the debtor can afford to hire counsel. See
Brief for National Association of Consumer Bankruptcy
Attorneys as Amicus Curiae at 22. Thus, Congress could not
have expected § 362(k) to serve as an effective deterrent
unless it authorized recovery of the attorney’s fees incurred
in prosecuting an action for damages. In that respect,
§ 362(k) is no different from the many statutes Congress has
enacted “making it possible for persons without means to
bring suit to vindicate their rights.” Perdue v. Kenny A.,
559 U.S. 542, 559 (2010).

    Finally, if we needed further reason to reject Sternberg’s
reading of § 362(k), we could look as well to the difficulties
courts have encountered in administering it.            When
interpreting statutes that authorize an award of attorney’s
fees, we try to avoid construing them in a way that will
“multiply litigation.” Commissioner v. Jean, 496 U.S. 154,
163 (1990). Sternberg’s interpretation of § 362(k) violates
that guiding principle. When a debtor sues under § 362(k)
both for injunctive relief aimed at ending the stay violation
and for damages, and the creditor does not end the violation
until after litigation has ensued, Sternberg requires the
bankruptcy court to sort out how much attorney time was
devoted to ending the stay violation (recoverable) as opposed
to pursuing damages (not recoverable). See, e.g., In re
Snowden, 769 F.3d 651, 660 (9th Cir. 2014). In addition, as
this case well illustrates, Sternberg’s reading of the statute
can spawn further litigation over when, exactly, a stay
12               IN RE SCHWARTZ-TALLARD

violation actually came to an end—a matter that can be
deceptively tricky to resolve. It is hard to imagine why
Congress would have wanted to invite litigation over these
highly factbound matters, particularly since doing so would
effectively undermine, rather than advance, the statutory aims
Congress sought to achieve by enacting § 362(k).

     For these reasons, § 362(k) is best read as authorizing an
award of attorney’s fees incurred in prosecuting an action for
damages under the statute. Although § 362(k) makes such
fee awards mandatory rather than discretionary, we do not
think that feature of the statute will result in unnecessary
litigation brought solely to drive up the award. Only an
award of fees reasonably incurred is mandated by the statute;
courts awarding fees under § 362(k) thus retain the discretion
to eliminate unnecessary or plainly excessive fees. In re
Dawson, 390 F.3d 1139, 1152 (9th Cir. 2004). Sound
exercise of this discretion will provide a sufficient check on
any abuses that might otherwise arise.

                              III

    Having determined that § 362(k) authorizes an award of
attorney’s fees incurred in prosecuting an action for damages,
we can quickly dispose of this appeal. When a party is
entitled to an award of attorney’s fees in the court of first
instance, as Schwartz-Tallard was here, she is ordinarily
entitled to recover fees incurred in successfully defending the
judgment on appeal. Voice v. Stormans, Inc., 757 F.3d 1015,
1016 (9th Cir. 2014). We see no reason why fee awards
under § 362(k) should be subject to a different rule.
Schwartz-Tallard is therefore entitled to recover the
attorney’s fees reasonably incurred in opposing ASC’s appeal
in the district court.
                 IN RE SCHWARTZ-TALLARD                       13

  The judgment of the Bankruptcy Appellate Panel is
AFFIRMED.

BEA, Circuit Judge, joined by O’SCANNLAIN, Circuit
Judge, concurring in the judgment:

     I concur in the majority’s conclusion that 11 U.S.C.
§ 362(k) has an unambiguous meaning which permits
Schwartz-Tallard to recover the attorney’s fees she incurred
in defending against ASC’s appeal. Maj. Op. at 3–9. In my
view, however, this should be the beginning and end of our
analysis. I am troubled that the majority proceeds to
speculate about “Congress’ plan” in enacting the automatic-
stay provision of the Bankruptcy Code in reliance on King v.
Burwell, 135 S. Ct. 2480 (2015). Maj. Op. at 10–11. Given
the majority’s acknowledgment that § 362(k) is unambiguous,
this discussion strikes me as unnecessary. We should always
bear in mind the “cardinal principle of judicial restraint”: “if
it is not necessary to decide more, it is necessary not to decide
more.” PDK Labs., Inc. v. DEA, 362 F.3d 786, 799 (D.C. Cir.
2004) (Roberts, J., concurring in part and concurring in the
judgment).

    “If a court, employing traditional tools of statutory
construction, ascertains that Congress had an intention on the
precise question at issue, that intention is the law and must be
given effect.” Chevron, U.S.A., Inc. v. Natural Res. Def.
Council, Inc., 467 U.S. 837, 843 n.9 (1984). If the language
of the statute is unambiguous, that is the end of the inquiry.
See City of Arlington v. FCC, 133 S. Ct. 1863, 1868 (2013)
(“‘If the intent of Congress is clear, that is the end of the
matter; for the court . . . must give effect to the
14               IN RE SCHWARTZ-TALLARD

unambiguously expressed intent of Congress.’” (quoting
Chevron, 467 U.S. at 842–43)).

    Engaging in gratuitous speculation of what “Congress’
plan” must have been when it enacted § 362(k) ignores years
of Supreme Court and Ninth Circuit precedent requiring
judicial inquiry to cease when a court finds a statute
unambiguous.

    “If the statutory language is unambiguous, in the absence
of a clearly expressed legislative intent to the contrary, that
language must ordinarily be regarded as conclusive.” Reves
v. Ernst & Young, 507 U.S. 170, 177 (1993) (internal
quotation marks omitted). “[E]ven the most formidable
argument concerning the statute’s purposes could not
overcome the clarity [of] the statute’s text.” Kloeckner v.
Solis, 133 S. Ct. 596, 607 n.4 (2012). “The purposes of a law
must be ‘collected chiefly from its words,’ not ‘from extrinsic
circumstances.’” King v. Burwell, 135 S. Ct. 2480, 2503
(2015) (Scalia, J., dissenting) (quoting Sturges v.
Crowninshield, 17 U.S. (4 Wheat.) 122, 202 (1819)
(Marshall, C.J.)); see also Exxon Mobil Corp. v. Allapattah
Servs., Inc., 545 U.S. 546, 568 (2005) (“As we have
repeatedly held, the authoritative statement is the statutory
text, not the legislative history or any other extrinsic
material.”).

    Here, the majority finds the language of § 362(k) to be
unambiguous. Although that should be the end of the inquiry,
the majority then looks to the legislative history, which it
finds silent as to Congress’ purpose in enacting that
provision. With the traditional tools of statutory construction
now far behind it, the majority proceeds to engage in pure
speculation as to Congress’ motivations in enacting § 362(k)
                 IN RE SCHWARTZ-TALLARD                      15

of the Bankruptcy Code. Because I believe that our
constitutional role is confined to giving effect only to the
words that Congress wrote when the statutory text is
unambiguous, I respectfully decline to join the majority’s
unnecessary discussion of “Congress’s plan.”

IKUTA, Circuit Judge, dissenting:

     I prefer the result reached by the majority, which reads
11 U.S.C. § 362(k) as if it were a typical attorneys’ fees
provision that shifts the fees incurred in bringing the damages
action to a prevailing plaintiff. Because courts are familiar
with this sort of fee shifting statute, such a reading makes it
simpler for bankruptcy courts and district courts to apply
§ 362(k). But the ordinary tools of statutory interpretation
compel me to conclude that this interpretation is not the best
reading of the statutory text. Because our job is to do our best
to interpret the statute as Congress wrote it, we should adhere
to the better reading set forth in Sternberg v. Johnston,
595 F.3d 937 (9th Cir. 2010).

    “The starting point in discerning congressional intent is
the existing statutory text.” Lamie v. U.S. Trustee, 540 U.S.
526, 534 (2004). The statutory text here states, “[A]n
individual injured by any willful violation of a stay provided
by this section shall recover actual damages, including costs
and attorneys’ fees, and, in appropriate circumstances, may
recover punitive damages.” 11 U.S.C. § 362(k)(1). As we
acknowledged in Sternberg, the term “actual damages” is
ambiguous. 595 F.3d at 947. It might refer to all of the costs
resulting from a violation of the stay, including the fees
incurred in bringing the damages action. Maj. Op. at 8–10.
16               IN RE SCHWARTZ-TALLARD

But it is reasonable to interpret “actual damages” as including
only the fees incurred in correcting the automatic stay
violation, and not the fees incurred in bringing the lawsuit
itself, because “actual damages” are “[a]n amount awarded
. . . to compensate for a proven injury or loss; damages that
repay actual losses.” Id. (alterations in original) (quoting
BLACK'S LAW DICTIONARY 416 (8th ed. 2004)). And “[o]nce
the violation has ended, any fees the debtor incurs after that
point in pursuit of a damage award would not be to
compensate” the debtor for a violation of the stay. Id.

    As explained in Sternberg, a number of states have
adopted a similar approach to cases in which attorneys’ fees
are part of the damages incurred from tortious conduct. Id. at
946. In suits to recover attorneys’ fees for malpractice, or to
obtain the benefits due under an insurance policy, state courts
have allowed the plaintiff to recover only the damages the
plaintiff actually incurred from the underlying tort, but not
the attorneys’ fees incurred to bring the action for damages.
Id. Indeed, the majority acknowledges that the phrase “shall
recover actual damages,” standing alone, is best read as
conveying “Congress’ intent to adhere to the default rule
precluding an award of attorney’s fees incurred in prosecuting
the damages action itself.” Maj. Op. at 9.

    When the language of a statute is ambiguous, canons of
statutory interpretation are useful rules of thumb to help
courts determine the meaning of legislation. See Conn. Nat.
Bank v. Germain, 503 U.S. 249, 253 (1992). The most
relevant canon here is that “Congress legislates against the
backdrop of the ‘American Rule.’” Sternberg, 595 F.3d at
945–46 (citing Fogerty v. Fantasy, Inc., 510 U.S. 517, 533
(1994)). In other words, statutes regarding attorneys’ fees
should be read with a presumption in favor of the American
                  IN RE SCHWARTZ-TALLARD                        17

Rule, except when a statutory purpose to the contrary is
evident. See Fogerty, 510 U.S. at 534. This principle
supports the conclusion that Congress did not intend to allow
the debtor to recover the fees incurred in the action itself.
Indeed, as the majority acknowledges, when Congress intends
to abrogate the American Rule, it typically uses different
language. Maj. Op. at 9. Most statutes that deviate from the
American Rule do not provide a cause of action for “actual
damages, including costs and attorneys’ fees,” but instead
authorize the award of “a reasonable attorney’s fee” to a
“prevailing party.” Maj. Op. at 9. Thus, Congress knows
how to include language abrogating the American Rule, and
it chose different language for § 362(k). See Baker Botts
L.L.P. v. ASARCO LLC, 135 S. Ct. 2158, 2164 (2015)
(“Although . . . statutory changes to the American Rule take
various forms, they tend to authorize the award of ‘a
reasonable attorney’s fee,’ ‘fees,’ or ‘litigation costs,’ and
usually refer to a ‘prevailing party’ in the context of an
adversarial ‘action.’” (citations and internal quotation marks
omitted)); id. at 2166 (“Had Congress wished to shift the
burdens of . . . litigation under [the statute at issue], it easily
could have done so. We accordingly refuse to invade the
legislature's province by redistributing litigation costs here.”
(internal quotation marks omitted)).

     In reaching the opposite conclusion, the majority does not
apply these ordinary principles of statutory construction.
Except for making the conclusory statement that the “explicit
language of § 362(k)” is unambiguous, Maj. Op. at 9–10, the
majority does not analyze the text or apply standard
principles of statutory construction at all. Instead, the
majority jumps immediately to the statute’s historical context,
its legislative history, and policy, but none of these sources
are particularly helpful here.
18               IN RE SCHWARTZ-TALLARD

    No doubt the historical context of a statute can help a
court interpret an otherwise ambiguous term. See D.C. v.
Heller, 554 U.S. 570, 605 (2008) (“[T]he examination of a
variety of legal and other sources to determine the public
understanding of a legal text in the period after its enactment
. . . is a critical tool of . . . interpretation.” (emphasis
omitted)). As the majority explains, at the time Congress
enacted § 362(k), courts relied on their civil contempt powers
to impose sanctions on creditors who wilfully violated the
automatic stay, and those sanctions sometimes included an
award of attorneys’ fees the debtor incurred in the contempt
proceeding. Maj. Op. at 9–10. Relying on this history, the
majority says that Congress “appears to have intended”
§ 362(k) to eliminate any doubt about the court’s authority to
remedy violations of the automatic stay, Maj. Op. at 7, 9–10,
and perhaps it did. But perhaps not: Rather than codifying
the court’s civil contempt powers to award attorneys’ fees,
which Congress is capable of doing, see, e.g., In re Pace,
67 F.3d 187, 193 (9th Cir. 1995) (finding that 11 U.S.C.
§ 105 authorizes bankruptcy courts to award costs and
attorneys’ fees through civil contempt sanctions), Congress
enacted an entirely different scheme, which gives debtors a
cause of action to recover damages caused by a stay violation.
Unlike civil contempt sanctions, actual damages under
§ 362(k) are mandatory, and the bankruptcy court has the
discretion to award punitive damages. As the majority notes,
§ 362(k) “strengthened the remedies previously available to
debtors injured by willful stay violations” rather than merely
codify historical practice. Maj. Op at 8. In other words,
Congress decided to enact something entirely different from
past practice, so the past practice does not shed light on what
Congress meant by the words “actual damages, including
costs and attorneys’ fees.”
                 IN RE SCHWARTZ-TALLARD                      19

     Turning to legislative history, the majority acknowledges
that there is none, so it proposes some of its own. Maj. Op.
at 10–11. It speculates that Congress’ purpose must have
been to protect debtors: After all, the automatic stay prevents
creditors from collecting from a debtor who has declared
bankruptcy, and interpreting § 362(k) to include the fees
incurred in the damages action provides extra deterrent to
prevent creditors from violating the stay. Maj. Op. at 10–11.
The majority’s interpretation also empowers the debtor to sue
to recover the damages, because in some cases the damages
will be too small to justify the expense of litigation. Maj. Op.
at 10–11. It is possible that Congress had those purposes in
mind, but because there is no evidence of those purposes,
they do not support the majority’s interpretation. See Baker
Botts, 135 S. Ct. at 2169 (“Whether or not [awarding fees] is
desirable as a matter of policy, Congress has not granted us
roving authority to allow counsel fees whenever we might
deem them warranted. Our job is to follow the text even if
doing so will supposedly undercut a basic objective of the
statute.” (citations and internal quotation marks omitted)). In
any event, even without awarding fees incurred in the
damages action, the action itself deters creditors from
violating the stay, and it is possible that Congress did not
want to encourage costly litigation for relatively minor
violations or violations that were not clearly willful. While
it is true that depriving the debtor of the attorneys’ fees
incurred in bringing the damages action fails to make the
debtor whole, that is the ordinary result of the American Rule.

    Finally, the majority turns toward the difficulties that
have resulted from Sternberg’s reading of § 362(k). Maj. Op.
at 11. Here, I am in complete sympathy. The interpretation
provided by Sternberg is difficult to apply, and has puzzled
bankruptcy courts and district courts alike. In addition, the
20               IN RE SCHWARTZ-TALLARD

Sternberg interpretation is counterintuitive; courts are used to
fee-shifting provisions that shift fees incurred in bringing the
damages action, as well as fees incurred as part of the
damages. I am not aware, however, of any canon that guides
us to select an interpretation of a statute based on the ease or
difficulty of administering it, and the majority does not rely
on one. The majority states only that we try to avoid
construing statutes in a way that will “multiply litigation,” aj.
Op. at 11, but the majority’s interpretation might do just that
by creating an extra incentive to bring an action under
§ 362(k). Thus, the practical effects of interpreting § 362(k)
one way or the other also does not evince Congress’s intent
to abrogate the American Rule.

    Although I understand the impulse to improve Congress’s
legislative efforts, our role is a modest one, and we should
simply do our best to give effect to the plain language of the
text. Congress is always free to correct our interpretation.
Therefore, I reluctantly dissent.