What No One Told Me About Adversary Pleading

Higher_learning-wikimediaWhen I learn something new about bankruptcy after 30 years of practice, I don’t know whether to be ecstatic or scared witless.

But learn something I did when I read the ABI Journal’s article on FRBP 7008(b).

In short, FRBP 7008(b) requires that claims for an award of attorneys fees in an adversary complaint must include a separate cause of action for the fees.

Rule 7008. General Rules of Pleading

(b) Attorney’s fees. A request for an award of attorney’s fees shall be pleaded as a claim in a complaint, cross-claim, third-party complaint, answer, or reply as may be appropriate.

The article acknowledges that some courts have approached the rule in a relaxed manner.  They have treated the pleadings as amended to conform to evidence at trial.  The cases cited include DiSalvo, 221 B.R. 769 (9th Cir. BAP 1998 and Richele, 302 B.R. 113 (8th Cir. BAP 2003).

Close isn’t good enough

The other view of 7008(b) comes from the District Court in the very district in which I practice.  On appeal, attorneys fees awarded by the bankruptcy court were disallowed on appeal.

There is no question that Appellee was entitled to attorney’s fees under the California Corporations Code…..However, Appellee did not claim an entitlement to attorneys fees until it submitted Proposed Findings of Fact and Conclusions of Law.

The District Court continued to make the point:  “requests for attorney’s fees in the prayers for relief in the complaint, not pled as separate claims in the complaint, were denied as insufficient.”  Fotouhi, 427 B.R. 798, 805 (D. ND Cal. 2010).

And this is not just a Left Coast phenomenon.  See DeMaio, 158 B.R. 890 (Bankr. D. Conn. 19930.

Break it out

So, when you file any complaint in which you claim a right to recover attorneys fees for your client, add a cause of action for attorneys fees.  You don’t want to be the case in which your court reverses its usual relaxed approach to Rule 7008(b).

And I’m left wondering what else I haven’t learned in decades of bankruptcy practice.

Image courtesy of Wikimedia

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