America’s Servicing Company v. Schwartz-Tallard
The Ninth Circuit Court of Appeals has granted a rehearing en banc in America’s Servicing Company v. Schwartz-Tallard, 765 F.3d 1096 (9th cir. 2014). The question presented in Schwartz-Tallard is whether debtor’s counsel may obtain a fee award for defending creditor’s appeal in stay violation cases. The Ninth Circuit’s original opinion turned on the application of a wrongly decided Ninth Circuit opinion of Sternberg v. Johnston, 595 F.3d 937 (9th Cir. 2010). In Sternberg, the Court held that debtor’s counsel could be awarded fees for ending a stay violation, but not for pursuing actual damages that resulted from the violation. The Sternberg decision has been emphatically rejected by every decision outside the Ninth Circuit. Its analysis has been described as “unpersuasive,” “odd,” and “simply wrong.”
The National Association of Consumer Bankruptcy Attorneys (NACBA) has filed an amicus brief in Schwartz-Tallard asking the court to reconsider its Sternberg opinion. We argue that the decision conflicts with the language and logic of section 362(k), misreads the American rule, departs from multiple principles of statutory construction, and creates an unworkable system that frustrates Congress’s objectives.
The rehearing en banc is set for argument in June, 2015.