Court Opinion

ID: 4514583
Source: CourtListenerOpinion
Date Created: 2020-03-11 00:01:45.105096+00
Date Added: 2024-06-11T12:34:09.403780
License: Public Domain

FILED
                                                           JUL 12 2019
                      ORDERED PUBLISHED                SUSAN M. SPRAUL, CLERK
                                                         U.S. BKCY. APP. PANEL
                                                         OF THE NINTH CIRCUIT

         UNITED STATES BANKRUPTCY APPELLATE PANEL
                   OF THE NINTH CIRCUIT

In re:                                    BAP No. CC-18-1066-TaLS

KEVAN HARRY GILMAN,                       Bk. No. 1:11-bk-11603-VK

                Debtor.

TAMMY R. PHILLIPS; TAMMY R. PHILLIPS, A
PROFESSIONAL LAW CORPORATION,

                Appellants,

v.                                             OPINION

KEVAN HARRY GILMAN,

                Appellees.

TAMMY R. PHILLIPS; TAMMY R. PHILLIPS, A   BAP No. CC-18-1101-STaL
PROFESSIONAL LAW CORPORATION,
                                          Bk. No. 1:11-bk-11603-VK
                Appellants,
                                          Adv. No. 1:11-ap-01389-VK
v.

KEVAN HARRY GILMAN,

                Appellee.
               Argued and Submitted on November 29, 2018
                        at Pasadena, California

                             Filed – July 12, 2019

              Appeal from the United States Bankruptcy Court
                   for the Central District of California

       Honorable Victoria S. Kaufman, Bankruptcy Judge, Presiding

Appearances:      Charles Quentin Jakob argued for Appellants; Mark E.
                  Ellis of Ellis Law Group, LLP, argued for Appellee.

Before: TAYLOR, LAFFERTY, and SPRAKER, Bankruptcy Judges.

TAYLOR, Bankruptcy Judge:

                             INTRODUCTION

      Appellants, Tammy R. Phillips and Tammy R. Phillips, a Professional

Corporation (jointly, “Creditors”), obtained an $8,250 judgment against

debtor, Kevan Gilman. Under California law, they were entitled to recover

reasonable attorneys’ fees in obtaining and collecting this amount, and the

state court awarded them about $100,000 in prepetition fees. Apparently

other state court fee requests were pending or are anticipated as they

asserted that total state court fees approximate $1,000,000.

      In this chapter 7 case, they obtained a determination that Debtor was

not entitled to a discharge. They also actively litigated issues in the main
case itself. The bankruptcy court determined that they were entitled to an

award of reasonable fees in connection with this activity. Creditors

requested approximately $750,000 in fees arising from main case activity

and $1,400,000 in fees in the adversary proceeding. They also requested

costs. The bankruptcy court awarded $137,907.66 and $166,453.58,

respectively, in fees and costs. This appeal arises from the reduced awards.

      Given that proportionality is not a hallmark of Creditors’ approach,

the appeals before us raise a multitude of issues. We address the appeals in

three documents that we file concurrently. In this opinion, we address an

issue of first impression that was a partial basis for fee reduction in both

the main case and the adversary proceeding: the applicability of CCP

§ 685.080,1 which creates a two-year deadline for requesting fees incurred

in collection activities, and § 108(c)(2), which tolls the time for certain

actions during the pendency of a bankruptcy case. We conclude the

bankruptcy court correctly found CCP § 685.080 applicable to these

requests for an award of postpetition fees and unaffected by § 108(c).

Accordingly, we discern no error in the reduction of the requested fees on

this basis and AFFIRM the bankruptcy court’s orders in this regard. In

separate, unpublished decisions, we address the bankruptcy court’s further

      1
       Unless specified otherwise, 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, all “Civil Rule” references are to the Federal Rules of Civil
Procedure, and all “CCP” references are to the California Code of Civil Procedure.

                                           3
reduction of the requested fees.

                                    FACTS

      In 2011, Debtor filed a chapter 7 petition and scheduled his debt to

Creditors. He also scheduled an ownership interest in real property in Van

Nuys, California and, in relation to this real property, claimed an enhanced

homestead exemption.

      Creditors actively participated in the bankruptcy case. They filed an

adversary proceeding and obtained a judgment under § 727 that denied

Debtor a discharge. During the course of this litigation and four years after

filing the adversary proceeding, they filed a motion for partial judgment on

the pleadings as to an attorneys’ fees claim for relief, seeking a

determination that they were entitled to recover fees and costs incurred in

the discharge litigation; but they did not seek an immediate award of fees.

The bankruptcy court granted the motion and specified that the adversary

litigation was enforcement of a judgment for purposes of CCP § 685.040. As

Creditors did not request it, the order did not rule on the appropriateness

of any specific fees and costs.

      Through litigation in the main case, Creditors also successfully

blocked Debtor’s request for a homestead exemption enhancement.

Litigation continues on their attempt to block the entirety of Debtor’s

asserted homestead exemption.

      Having prevailed (in part) on their exemption objection, Creditors

                                       4
filed a motion in the main case under CCP § 685.040 and other theories to

recover their attorneys’ fees and costs. They requested a lodestar award of

$756,425 plus other costs. All of the requested fees and costs were incurred

postpetition and in the bankruptcy proceeding.

      In the meantime and after denial of Debtor’s discharge, Creditors

filed a motion in the adversary proceeding and requested an award of

$1,400,000 in attorneys’ fees plus other costs associated with the adversary

proceeding under CCP § 685.040.

      After a hearing, the bankruptcy court entered memorandum

decisions and separate orders granting in part and denying in part the two

CCP § 685.040 motions. It awarded Creditors $134,214.50 in fees and

$3,693.16 in costs in the main case and $162,613.60 in fees and $3,839.98 in

costs in the adversary proceeding. In determining these reductions, it

found that $322,000.05 of the fees in the main case and $942,154 of the fees

in the adversary proceeding were time-barred and subject to disallowance

under CCP § 685.080.

      Creditors timely appealed.

                              JURISDICTION

      The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and

157(b)(2)(B). We have jurisdiction under 28 U.S.C. § 158.

                                   ISSUES

      Do CCP §§ 685.040 and 685.080 apply to Creditors’ fee request?

                                      5
      Does § 108(c) toll the time limits of CCP § 685.080 in this case?

                              STANDARD OF REVIEW

      We review “de novo questions of law concerning entitlement to

attorney’s fees.” PSM Holding Corp. v. Nat'l Farm Fin. Corp., 884 F.3d 812,

828 (9th Cir. 2018).

                                     DISCUSSION

      The bankruptcy court disallowed 3,200.39 in billed hours, amounting

to $1,264,154.05 in fees, because they were incurred more than two years

before the motions were filed. In doing so, the bankruptcy court enforced

CCP § 685.080. Creditors argue, on appeal, that CCP § 685.080 is not

applicable to their fee request for a variety of reasons and that § 108(c)

tolled the application of the two year period.2 We begin with their first

position; we disagree.

      A.       California Code of Civil Procedure §§ 685.040 and 685.080
               govern Creditors’ fee request.

      Under CCP § 685.040, a judgment creditor “is entitled to the

reasonable and necessary costs of enforcing a judgment[,]” including, in

some situations, attorneys’ fees. Cal. Code Civ. Proc. § 685.040. Under CCP

§ 685.040, attorneys’ fees are collectible only when otherwise provided by

law. Id. Here, neither party disputes that the statute supporting the $8,250

judgment, the Rosenthal Fair Debt Collection Act, allows a prevailing party

      2
          Creditors raise substantially the same arguments in the two appeals.

                                             6
to collect fees.

      Neither we nor the parties located a case discussing the intersection

of CCP § 685.040 and § 108(c). The Ninth Circuit, however, has applied

CCP § 685.040 in a federal diversity case. Federal diversity litigants may

invoke CCP § 685.040 through Civil Rule 69, which applies in bankruptcy

proceedings through Rule 7069. See Carnes v. Zamani, 488 F.3d 1057, 1060

(9th Cir. 2007); Fed. R. Bankr. P. 7069. CCP § 685.040 is not, however,

without limitations. As the Ninth Circuit noted in Carnes v. Zamani:

“Because their right to recover post-judgment attorney fees is dependent

on [CCP § 685.040], the Carneses were required to comply with the

timeliness requirements for post-judgment attorney fee motions set forth in

the [California Enforcement of Judgments Law].” 488 F.3d at 1061. The

Ninth Circuit noted that these requirements include CCP § 685.080. Id.

      CCP § 685.080 limits the amount that a judgment creditor may

otherwise recover under CCP § 685.040: “The judgment creditor may claim

costs authorized by [CCP §] 685.040 by noticed motion. The motion shall be

made before the judgment is satisfied in full, but not later than two years

after the costs have been incurred.” Cal. Code Civ. Proc. § 685.080(a).

      In its ruling, the bankruptcy court concluded that CCP § 685.040

applied and that, under CCP § 685.080, only fees incurred within two years

of the fee motions were eligible for allowance.

      Creditors first argue that the statute’s “two-year provision” is purely

                                      7
procedural state law and thus does not apply in a federal bankruptcy court.

They try to distinguish Carnes by saying that it involved application of Civil

Rule 69, while the present case involves Civil Rule 54 motions for prevailing

on the merits. But Civil Rule 54, made applicable in bankruptcy cases by

Rule 7054, does not provide an independent basis for an award of attorneys’

fees following success in a § 727 action or an objection to exemptions.

Similarly, neither § 727 nor any other provision of the Code or Rules include

a relevant, statutory fee-shifting provision, and Civil Rule 54 awards

attorneys’ fees only when a judgment, statute, or rule so provides. Fed. R.

Civ. P. 54(d)(2)(B)(ii).

       For that matter, Creditors never told the bankruptcy court they were

relying on Civil Rule 54. In their main case motion, Creditors never

discussed Civil Rule 54; they relied on CCP §§ 685.040 and 685.080, the

common fund doctrine, and the private attorney general doctrine. So too in

the adversary proceeding motion, they sought fees solely under CCP §

685.040. Creditors again made this clear in their main case reply paper filed

with the bankruptcy court: “Plaintiffs claim fees under [CCP] 685.040.” Bk

Dkt No. 510 at 12.3 So we reject Creditors’ suggestion that they moved under

       3
        Creditors’ characterizing their motions as under Civil Rule 54 for “prevailing on
the merits” is blatantly inconsistent with their previous position. In the main case and
adversary proceeding reply brief they filed with the bankruptcy court, they excoriated
Debtor for suggesting otherwise: “The opposition memorandum is full of whoppers.
Section 685.040 does not require Plaintiffs to prove they are ‘prevailing parties.’ ” Bk
                                                                              (continued...)

                                             8
Civil Rule 54 and that Carnes is thus distinguishable. They did not; it is not.

       Second, Creditors suggest that the two-year look-back provision

would not begin to run until the denial of discharge. They reason: a chapter

7 debtor is presumptively entitled to a discharge; a judgment creditor must

prevail in a non-dischargeability proceeding to avoid that result; if the

judgment creditor fails, then the debt and associated right to enforcement

costs, is discharged; as a result, because the denial of discharge is an

independent precondition to an award of fees, the two-year period begins

to run from the denial of discharge. We disagree.

       In their motions, Creditors claimed they were seeking fees under

CCP § 685.040 (i.e., collecting their state court judgment), not for seeking

denial of discharge or for excepting their claim from the discharge

injunction; and the bankruptcy court concluded fees were warranted

because Creditors’ collection activities were compensable under CCP

§ 685.040. On appeal Creditors would now have us treat the denial of

discharge as the CCP § 685.040 judgment. But this is inapt; they are entitled

       3
        (...continued)
Dkt No. 510 and AP Dkt No. 700 at 5 (same page in each document); see also id. at 9
(“[CCP 685.040] does not require courts to determine ‘prevailing parties’ as the identity
of such parties is already known (they are ‘judgment creditors’).”); id. at 18 (“There is no
‘prevailing party’ analysis under Section 685.040.”). Similarly, in the adversary
proceeding motion, they affirmatively stated: “Plaintiffs do not need to establish
themselves as ‘prevailing partes,’ at least for purposes of securing an award of
attorneys’ fees as enforcement costs under Code of Civil Procedure 685.040.” AP Dkt
No. 674-10 at 26.

                                             9
to fees only because they incurred the fees in the adversary proceeding and

main case in an attempt to collect the statue court judgment.4

       Third, Creditors argue that equitable tolling, federal preemption, and

the rule against interpreting statutes to permit mischief or absurdity apply.

None of these arguments are persuasive. They cite no caselaw saying that

equitable tolling applies to CCP § 685.080.5 And they argue no facts that

       4
        Further, Creditors’ present argument (i.e., that they could wait until after
discharge was denied to file their fee request) is different from the approach they
argued in their main case reply filed with the bankruptcy court:

       The argument that a fee motion should be delayed until an appeal is
       decided is part of a playbook of dirty tactics used by losing attorneys who
       hope delay will give them leverage (or assuage angry clients). It is
       routinely ignored. In fact, federal courts have developed a body of law
       allowing parties to seek “interim fees” to avoid the liquidity problems
       defense counsel seeks to cause.

Bk Dkt No. 510 at 8 (citations omitted). In short, Creditors themselves point out that
they could have sought “interim fees.”

       Finally, at the hearing, the bankruptcy court noted that Creditors knew some
time ago that CCP § 685.040 applied: “This was the first time that you requested fees
and costs pursuant to the statute, even though you had filed a request to determine if
the statute was applicable, which is . . . something you did long ago. You could have
requested them then.” Hr’g Tr. (June 7, 2017) 32:10–15. Creditors’ counsel replied:
“Yeah, yes.” Id. at 32:16. The bankruptcy court then faulted Creditors for not seeking
fees earlier. Id. at 32:21–24, 33:1–5.
       5
        Creditors claim Gray1 CPB, LLC v. SCC Acquisitions, Inc., 233 Cal. App. 4th 882,
897 (2015) stands for the proposition that CCP §§ 685.070 and 685.080’s timing
provisions are subject to equitable tolling. It does not:

                                                                           (continued...)

                                            10
justify a conclusion that the bankruptcy court erred in refusing to apply the

doctrine. They twice refer to preemption. The first time, they state that

§ 108(c) preempts CCP § 685.080’s two-year limitation. But this is not quite

accurate. As discussed below, § 108(c) does not apply to the present

circumstances, so whether it preempts CCP § 685.080 is immaterial. That

said, when § 108(c) does apply, it does “not operate without regard to

existing nonbankruptcy law to stop the running of any periods of

limitation.” Smith v. Smith (In re Smith), 352 B.R. 702, 706 (9th Cir. BAP

2006); Aslanidis v. U.S. Lines, Inc., 7 F.3d 1067, 1073 (2d Cir. 1993) (“The

(...continued)
      Lastly, Gray1 urges us to find sections 685.070, subdivision (b) and
      685.080, subdivision (a) were equitably tolled, thus making its motion for
      postjudgment costs timely. Equitable tolling is a judicially created doctrine
      that permits the tolling of a statute of limitations. (McDonald v. Antelope
      Valley Community College Dist. (2008) 45 Cal. 4th 88, 100, 84 Cal. Rptr. 3d
      734, 194 P.3d 1026.) Equitable tolling is invoked “ ‘ “[w]hen an injured
      person has several legal remedies and, reasonably and in good faith,
      pursues one.” ’ [Citations.]” (Ibid.) The Enforcement of Judgments Law
      provides two remedies through which a judgment creditor may obtain an
      order for postjudgment attorney fees as costs: section 685.070, subdivision
      (b) [memorandum of costs] and section 685.080, subdivision (a) [motion
      for costs]. Equitable tolling does not apply in this matter because Gray1's
      action to set aside fraudulent liens was an effort to satisfy Gray1's
      judgment, not an effort to collect postjudgment attorney fees that had not
      yet been awarded by the court.

Gray1 CPB, LLC v. SCC Acquisitions, Inc., 233 Cal. App. 4th 882, 897 (2015). In any event,
Creditors did not seek attorneys’ fees by a memorandum of costs as opposed to their
present motion for costs, so they did not pursue one remedy in good faith over the other
and, thus, equitable tolling would not apply.

                                           11
reference in § 108(c)(1) to ‘suspension’ of time limits clearly does not

operate in itself to stop the running of a statute of limitations; rather, this

language merely incorporates suspensions of deadlines that are expressly

provided in other federal or state statutes.”). As the plain language of

§ 108(c) states, the prepetition statute of limitations expires the later of

either the end of the period or 30 days after termination of the stay.

11 U.S.C. § 108(c). The second time they refer to preemption is in a heading,

but they do not elaborate on it any further. Last, the bankruptcy court’s

decision does not lead to mischief.

      Fourth, Creditors argue that the bankruptcy court inconsistently

“derided” them for filing numerous discovery and sanctions motions while

simultaneously holding that, under CCP § 685.080, they needed to file their

fee requests earlier. We disagree: each type of motion relies on a different

source of authority; as a result, each motion is constrained by that

particular controlling authority’s limitations.

      Fifth, Creditors perfunctorily state that judicial estoppel, equitable

estoppel, and quasi-estoppel apply, but they either provide no analysis for

these points or repeat arguments that we have already addressed. We

consider them no further. Christian Legal Soc. Chapter of Univ. of California v.

Wu, 626 F.3d 483, 487 (9th Cir. 2010) (“[W]e won’t consider matters on

appeal that are not specifically and distinctly argued in appellant’s opening

brief. Applying this standard, we’ve refused to address claims that were

                                        12
only argued in passing or that were bare assertions . . . with no supporting

argument.”) (internal quotation marks and alterations omitted).

      Last, in connection with the adversary proceeding, Creditors argue

that Debtor was required to plead the time limitation as an affirmative

defense because it is in the nature of a statute of limitations and a

limitations defense is forfeited if not timely raised. Again, we disagree.

Creditors cite no authority holding that CCP § 685.080’s time limitation is

forfeitable. To the contrary, the time limitations are built into the statute

itself and are more properly read as an element of recovery. See Carnes, 488

F.3d at 1061 (“Because their right to recover post-judgment attorney fees is

dependent on [CCP § 685.040], the Carneses were required to comply with

the timeliness requirements for post-judgment attorney fee motions set

forth in the [California Enforcement of Judgments Law].”).

      In sum, Creditors rely on CCP § 685.040 to recover attorneys’ fees.

But CCP § 685.080 limits the reach of CCP § 685.040 to attorneys’ fees

incurred within two years. So says California law; and, according to the

Ninth Circuit, this limitation applies in federal courts when a movant

invokes CCP § 685.040. Accordingly, in the absence of § 108(c) tolling, the

bankruptcy court appropriately disallowed recovery of fees and costs

incurred more than two years before the motions were filed. We now turn

to the tolling question.

                                       13
      B.    Section 108(c) does not toll application of CCP § 685.080 to
            postpetition fees.

      To reach our conclusion, we consider the plain language of the

statute and the Code’s purposes.

      The statute’s plain language. We begin, as usual, with the statute’s

text. United States v. Ron Pair Enters., 489 U.S. 235, 241 (1989). Section 108(c)

provides:

      Except as provided in section 524 of this title, if applicable
      nonbankruptcy law, an order entered in a nonbankruptcy
      proceeding, or an agreement fixes a period for commencing or
      continuing a civil action in a court other than a bankruptcy
      court on a claim against the debtor, or against an individual
      with respect to which such individual is protected under
      section 1201 or 1301 of this title, and such period has not
      expired before the date of the filing of the petition, then such
      period does not expire until the later of–

            (1) the end of such period, including any
            suspension of such period occurring on or after the
            commencement of the case; or

            (2) 30 days after notice of the termination or
            expiration of the stay under section 362, 922, 1201,
            or 1301 of this title, as the case may be, with respect
            to such claim.

11 U.S.C. § 108(c).

      Application of § 108(c) turns in the present case on consideration of

the following five elements: (1) applicable nonbankruptcy law; (2) must fix

                                        14
a period; (3) to commence or continue a civil action on a claim against the

debtor; (4) in a court other than a bankruptcy court; and (5) that period

must not have expired when the petition is filed.

      The first three elements are present. The applicable nonbankruptcy

law is CCP §§ 685.040 and 685.080. Under CCP § 685.040, a judgment

creditor “is entitled to the reasonable and necessary costs” of collecting a

judgment, including, as here, attorneys’ fees. Cal. Code Civ. Proc. § 685.040.

CCP § 685.080 also limits the amount that a judgment creditor may

otherwise recover under CCP § 685.040 by imposing two time limits: “The

judgment creditor may claim costs authorized by [CCP §] 685.040 by

noticed motion. The motion must be made before the judgment is satisfied

in full, but not later than two years after the costs have been incurred.” Cal.

Code Civ. Proc. § 685.080(a). In § 108(c)’s terms, CCP § 685.080 fixes a

period in which a judgment creditor may commence a claim for collection

costs against the debtor. So the first three elements of § 108(c) are present in

this case.

      The fourth and fifth elements, however, have not been met.

      Creditors filed their CCP § 685.080 motions with the bankruptcy

court, thereby affirmatively invoking the bankruptcy court’s jurisdiction

and asking it for relief. This was appropriate as all requested fees relate to

postpetition activity before the bankruptcy court and related to the

bankruptcy case. By their conduct, Creditors demonstrate that CCP

                                       15
§ 685.080 did not require Creditors to act “in a court other than a bankruptcy

court”; this fact alone renders § 108(c) inapplicable to their motions. And,

the fact that the automatic stay did not prevent Creditors from filing their

motions with the bankruptcy court underscores this point.

       Next, Creditors sought approval under CCP § 685.080 for attorneys’

fees incurred postpetition. By its plain language, § 108(c) extends prepetition

statutes of limitation or duration at risk of expiring postpetition; it applies

if “such period has not expired before the date of the filing of the petition

. . . .” 11 U.S.C. § 108(c).6 Because all of the fees were incurred postpetition,

CCP § 685.080’s two-year period did not commence prepetition and, again,

§ 108(c) does not apply.

       A plain language application of § 108(c), then, compels this result:

§ 108(c) did not suspend the application of CCP § 685.080 when Creditors

filed their motions, seeking approval of attorneys’ fees incurred

postpetition, with the bankruptcy court.

       The Code’s purposes. As we interpret § 108(c), we recognize that the

Ninth Circuit’s § 108(c) decisions have consistently looked at the purposes

       6
         Section 108(a), which extends time periods for a trustee, has nearly identical
temporal language. It begins: “If applicable nonbankruptcy law, an order entered in a
nonbankruptcy proceeding, or an agreement fixes a period within which the debtor
may commence an action, and such period has not expired before the date of the filing
of the petition . . . .” 11 U.S.C. § 108(a). And § 108(a) “applies only to causes of action
which the debtor possesses on the date of the order for relief and not to those which
arise or are acquired by the trustee thereafter.” 2 Collier on Bankruptcy 108.02[4] (16th
ed. 2019).

                                             16
of the Code. For instance, in West v. United States (In re West), the Ninth

Circuit rejected what it called a plain language (or literal) interpretation of

§ 108(c). 5 F.3d 423, 426 (9th Cir. 1993). Under the Code, a chapter 13 plan

must provide for full payment of claims entitled to priority under § 507;

§ 507, in turn, gives priority to tax debts assessed within 240 days

prepetition. Id. at 424–25. The debtors filed a joint chapter 13 petition; the

IRS asserted a priority claim for taxes; and the debtors then dismissed the

case but later filed individual chapter 13 petitions. Id. at 424. The Internal

Revenue Service argued that its tax claims were entitled to priority because

§ 108(c) and Internal Revenue Code § 6503 suspended the 240-day priority

period in § 507. Id. at 424. On appeal, the Ninth Circuit agreed with the IRS.

      In doing so, the Ninth Circuit noted that a plain language

interpretation of § 108(c) would have “frustrate[d] the Bankruptcy Code’s

intricate scheme for the payment of tax claims . . . .” 5 F.3d 423, 426 (9th Cir.

1993). “Interpreting § 108(c) literally[,]” it said, “would allow a debtor to

create an ‘impenetrable refuge’ by filing a bankruptcy petition, waiting for

§ 507(a)(7)’s priority periods to expire, and then dismissing the case and

refiling shortly thereafter.” Id. Instead, the Ninth Circuit concluded that

§ 108(c) incorporated provisions of the Internal Revenue Code that

suspended the statute of limitations on tax collections while a debtor was

in bankruptcy. Id. at 427 (adopting the reasoning of Brickley v. United States

(In re Brickley), 70 B.R. 113 (9th Cir. BAP 1986)).

                                        17
      Our interpretation of § 108(c) here does not frustrate the Code’s

purposes.7 Unlike the situation confronted in West, the Code does not have

an intricate scheme devoted to affording Creditors additional rights or

treatment: they were unsecured creditors, and they remain unsecured

creditors. Rather, matters affecting a claim may be fully litigated before the

bankruptcy court.

      Nor, for that matter, does our decision frustrate the purpose of CCP

§ 685.080’s time limit. Quite to the contrary, our decision is entirely

consistent with CCP § 685.080, which imposes two time limitations on a

CCP § 685.040 motion. First, the motion must be filed before the judgment

is satisfied; and, second, it must be filed within two years of the date the

costs were incurred. The California Supreme Court explained the policy

purpose behind the first limitation:

      Moreover, section 685.080’s time limit serves a policy purpose
      of its own, to prevent unfair surprise to the judgment debtor.
      [T]he statutory purpose of requiring that the motion for

      7
         Our considering the Code’s purposes is further sanctioned by the Ninth
Circuit’s § 108(c) precedent, past and recent. In Miner Corporation v. Hunters Run Limited
Partnership (In re Hunters Run Limited Partnership), a case we discuss below, the Ninth
Circuit referred, approvingly, to a then-recent Second Circuit decision, In re Morton: “As
we do, the In re Morton court based its conclusion on statutory language. In addition,
the Second Circuit demonstrated persuasively that adherence to congressional purpose
also required its result.” 875 F.2d 1425, 1427 (9th Cir. 1989) (citation omitted) (citing
Morton v. Nat’l Bank of N.Y.C. (In re Morton), 866 F.2d 561, 566 (2d Cir. 1989)). More
recently, the Ninth Circuit “expressly adopt[ed]” In re Morton. Daff v. Good (In re
Swintek), 906 F.3d 1100, 1106 (9th Cir. 2018).

                                            18
      enforcement costs be brought ‘before the judgment is satisfied
      in full’ (§ 685.080, subd. (a)) is to avoid a situation where a
      judgment debtor has paid off the entirety of what he
      [justifiably] believes to be his obligation in the entire case, only
      to be confronted later with a motion for yet more fees.” (Lucky
      United Properties Investment, Inc. v. Lee, supra, 185 Cal. App. 4th
      at p. 144, 110 Cal. Rptr. 3d 159.)

Conservatorship of McQueen, 59 Cal. 4th 602, 615–16 (2014). In short, the time

limits in CCP § 685.080 serve to prevent the judgment debtor from

unnecessary surprise in relation to the quantum of collection expense.8 Our

present ruling is in full accord with this policy.9

      In sum, the bankruptcy court correctly excluded the attorneys’ fees

incurred more than two years before Creditor’s motion seeking collection.

      C.     The Ninth Circuit’s § 108(c) caselaw does not require a
             different result.

      Our decision, phrased differently, states: even if the automatic stay

      8
        A typical chapter 7 debtor would be indifferent to a CCP § 685.080 motion if the
creditor holds a dischargeable, unsecured claim.
      9
         In its order on Creditors’ motion for a judgment as a matter of law in the
adversary proceeding, the bankruptcy court stated that it would determine the
reasonableness of attorneys’ fees at the conclusion of the adversary proceeding; then, as
already noted, at the conclusion of the adversary proceeding the bankruptcy court
concluded that Creditors needed to file motions on an interim basis. On its face, this
appears discordant. But this is not enough to reverse the bankruptcy court’s decision.
First, the bankruptcy court did not prohibit Creditors from filing CCP § 685.040 motions
or memoranda at two-year intervals. Far from it. Instead, it stated that it would rule on
the motions at the conclusion of the litigation. Second, litigants are obliged to preserve
their rights to the extent they believe courts commit reversible error.

                                           19
blocks acts taken in a nonbankruptcy forum, § 108(c) does not toll a

deadline when the creditor can obtain the specific relief at issue from the

bankruptcy court. This arguably conflicts with language used by the Ninth

Circuit in previous § 108(c) cases—in them, the Ninth Circuit identifies that

one factor dictates whether § 108(c) applies: whether the automatic stay

applies. Daff v. Good (In re Swintek), 906 F.3d 1100, 1105 n.4 (9th Cir. 2018)

(“[T]he determinative factor for tolling is whether the stay prevented [the

judgment creditor] from enforcing her judgment by executing on her

lien.”); Spirtos v. Moreno (In re Spirtos), 221 F.3d 1079, 1081 (9th Cir. 2000)

(“Here, [the judgment creditor] is barred by the automatic stay from

collecting on a judgment by attaching the debtor’s assets which have

become property of the estate. It is the creditor’s inability to enforce the

judgment for a portion of the ten-year period that keeps the period of

duration open under section 108(c).”); Miner Corporation v. Hunters Run

Limited Partnership (In re Hunters Run Limited Partnership), 875 F.2d 1425,

1427 (9th Cir. 1989) (“Applicability of section 108(c) in this case hinges on

the applicability of another section of the Bankruptcy Code, the automatic

stay provisions of 11 U.S.C. § 362.”).

      We recognize that the stay prevented Creditors from enforcing their

judgment against Debtor outside the bankruptcy claims process. So a

hyper-literal read of the Ninth Circuit’s language suggests that § 108(c)

should apply. But we reach a different result because, for § 108(c) to apply,

                                         20
all of its elements must be met.

      In each of those cases, the creditor was required to act in a non-

bankruptcy forum to preserve or enforce its rights (i.e., our fourth

identified element). In Hunters Run, the applicable non-bankruptcy law

required the judgment creditor to file an action “in the proper court” to

enforce a lien—and the stay prohibited the creditor from doing that.

875 F.2d at 1426 n.2 (quoting Wash. Rev. Code Ann § 60.04.100 (West Supp.

1989)). In In re Spirtos, the applicable non-bankruptcy law required the

judgment creditor to “fil[e] an application for renewal of the judgment with

the court in which the judgment was entered.” Cal. Civ. Proc. Code § 683.120(a)

(emphasis added); see In re Spirtos, 221 F.3d at 1080 (referring to Cal. Civ.

Proc. Code § 683.110). And in In re Swintek, the applicable non-bankruptcy

law stated that the lien would expire in one year “unless extended or

sooner terminated by the [state] court.” In re Swintek, 906 F.3d at 1103

(emphasis added) (quoting Cal. Civ. Proc. Code § 708.110(d)). The

application of § 108(c) in those contexts, then, makes sense: § 108(c) applies

when applicable nonbankruptcy law sets a deadline “for commencing or

continuing a civil action in a court other than a bankruptcy court . . . .” 11

U.S.C. § 108(c). As we note above, Creditors filed their motions with the

bankruptcy court.10 And nothing—not even the automatic stay—prevented

      10
           In Duchek v. Jacobi, the Ninth Circuit held that a district court, sitting in
                                                                                    (continued...)

                                                21
Creditors from doing so. Snavely v. Miller (In re Miller), 397 F.3d 726, 730

(9th Cir. 2005) (“The automatic stay does not apply to proceedings initiated

against the debtor if the proceedings are initiated in the same bankruptcy

court where the debtor’s bankruptcy proceedings are pending.”).

      In addition, in each of the cases, the creditor was prevented by the

automatic stay from preserving prepetition rights that were at risk of

expiring postpetition (i.e., our fifth identified element). In Hunters Run, the

lien was created in September 1985 and set to expire in May 1986, but the

debtor filed bankruptcy in March 1986. 875 F.2d at 1425–26. In In re Spirtos,

the judgment was acquired in 1983 and set to expire in 1993, but the debtor

filed bankruptcy in 1987. 221 F.3d at 1080. In In re Swintek, the lien was

acquired in June 2010 and set to expire in June 2011, but the debtor filed

bankruptcy in August 2010. 906 F.3d at 1102. In the present case, Creditors’

time to seek recovery of postpetition fees began to run postpetition and

expired two years after postpetition fees were incurred. As to fees

disallowed under CCP § 685.080 in this case, the petition had been filed

before that time period.

      In short, § 108(c) does not apply to the present facts for reasons not

      10
        (...continued)
diversity and through Civil Rule 69, could use state court procedures to enforce the
judgment even though the state court procedures limited jurisdiction to state courts. 646
F.2d 415 (9th Cir. 1981). This does not undercut our point; Duchek does not stand for the
proposition that a judgment creditor could, for instance, renew their state court
judgment or ORAP lien by filing a renewal with the bankruptcy court.

                                           22
addressed in the Ninth Circuit’s previous § 108(c) precedent. Put

differently, in each of the prior cases, the Ninth Circuit considered a

different part of the statute than we do now. In Hunters Run, the Ninth

Circuit held: first, that the relevant language of § 108(c) had been updated

to include statutes of duration in addition to statutes of limitation; second,

that Washington law did not require the commencement of foreclosure

proceedings before a lien was “perfected”; and, third, as a result,

commencement of foreclosure proceedings was not exempted from the

automatic stay by § 546(b). 875 F.2d at 1426–28. In In re Spirtos, the Ninth

Circuit was concerned with when the limitations period expired. 221 F.3d at

1081 (“Thus, the period of duration under Cal. Civ. Pro. Code § 683.020 will

not expire until 30 days after all the assets in [the debtor’s] estate have been

finally distributed, an event that has not yet occurred.”). Last, In re Swintek

analyzed the third element. 906 F.3d at 1103–04 (“Specifically, we must

determine whether the period in which a creditor may execute on an ORAP

lien constitutes ‘commencing or continuing a civil action’ under the

bankruptcy code’s tolling provision.”); cf. id. at 1107 (Wardlaw, J.,

dissenting) (“I respectfully dissent. The plain language of 11 U.S.C.

§ 108(c), the Bankruptcy Code's extension provision, applies to fixed

periods of time only ‘for commencing or continuing a civil action . . . .’ ”).

      Last, the present situation does not involve a judgment creditor

potentially losing its prepetition claim by not acting within a particular

                                       23
time period, as in In re Spirtos and Hunters Run. Nor, for that matter, does it

involve a judgment creditor losing the secured status of its prepetition

claim, as in In re Swintek. Instead, here, Creditors assert an unsecured claim

and they, through their motions, seek to increase the amount of that

unsecured claim by adding postpetition attorneys’ fees for collection efforts

to the judgment’s principal. Lucky United Properties Inv., Inc. v. Lee, 185 Cal.

App. 4th 125, 138 (2010), as modified on denial of reh’g (June 28, 2010) (“When

postjudgment enforcement costs are allowed, they become part of the

principal amount of the judgment.”). Despite our ruling, Creditors remain

unsecured creditors subject to the same treatment as all other unsecured

creditors.

                                CONCLUSION

      In sum, we conclude that, when a creditor voluntarily files a CCP

§ 685.080 motion with the bankruptcy court for an award of postpetition

attorneys’ fees, § 108(c) does not toll the two-year limitation in CCP

§ 685.080. As a result, Creditors have not shown that the bankruptcy court

erred when it disallowed fees on this basis. Accordingly, we AFFIRM.

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