Help Center

Creditors Can Recover Attorney Fees Pursuant to a Contract or State Statute According to New ABI Poll

Contact: John Hartgen
             (703) 739-0800
                jhartgen@abiworld.org

CREDITORS CAN RECOVER ATTORNEY FEES PURSUANT TO A CONTRACT OR STATE STATUTE, ACCORDING TO NEW ABI POLL

November 20, 2006, Alexandria, Va. — A majority (58 percent) of respondents in a recent American Bankruptcy Institute online poll disagreed that a party may not recover attorneys’ fees pursuant to a contract or state statute where the issues involve federal bankruptcy law because only federal law may authorize such a recovery. Thirty-six percent of respondents “strongly disagreed” and another 22 percent “disagreed somewhat” that attorney fees connected to a contract or state statute could not be recovered where the issues involve federal bankruptcy law.

Thirty-four percent agreed that attorneys’ fees may not be recovered through a contract or state statute as only federal bankruptcy law may authorize such a recovery. Twenty-three percent of respondents “agreed strongly,” while 11 percent “somewhat agreed” that a party may not recover attorney fees pursuant to a contract or state contract where the issues involve federal bankruptcy law. Eight percent did not know or had no opinion on the issue.

The poll question is based on a case, Travelers Casualty and Surety Co. v. Pacific Gas and Electric Co., 167 Fed. Appx. 593, 593-94 (9th Cir. 2006), that was recently granted certiorari by the Supreme Court. The appeal, brought by Travelers Casualty and Surety Co. of America, seeks review of the Ninth Circuit's holding that creditors are only entitled to attorneys’ fees for litigating substantive state law issues (if provided for by contract), but not issues 'peculiar to bankruptcy law,' including disclosure statement and chapter 11 plan objections.

ABI members and members of the public were welcome to submit their response to the statement: “A party may not recover attorney fees pursuant to a contract or state statute where the issues involve federal bankruptcy law because only federal law may authorize such a recovery (Travelers Casualty v. PG&E; 9th Cir.).” The latest ABI Quick Poll was open for voting from Nov. 10-Nov. 16.

ABI’s weekly Quick Poll is posted on ABI’s home page, www.abiworld.org. ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit http://www.abiworld.net/quickpoll/ to access the results of previous ABI Quick Polls.

###

ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 11,500 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.