In California, bringing litigation with a marginal possibility of success could be a bad bet whenever a contract permits one side to recover attorneys’ fees.
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Case Details
Case Citation
Sibayan v. De Guzman (In re De Guzman), 24-02029 (Bankr. E.D. Cal. June 9, 2025)
Case Name
Sibayan v. De Guzman (In re De Guzman)
Case Type
Consumer
"What if a debtor litigates
"What if a debtor litigates and loses a claim objection involving a contract calling for fee-shifting? Is the award of fees against the debtor an administrative claim or a prepetition unsecured claim?" -- At least in the Ninth Circuit, a claim for fees incurred by the creditor postpetition is part of the creditor's prepetition claim. In re SNTL Corp., 571 F.3d 826 (9th Cir. 2009) (prepetition agreement containing attorneys' fees provision gives rise to a contingent, unliquidated attorney-fee claim allowable under section 502); see also In re Castellino Villas, A. K. F. LLC, 836 F.3d 1028, 1034 (9th Cir. 2016).