Paul Neal

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
PAUL NEAL, JR.,
Debtor.
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Case No. 05-01676
(Chapter 7)
ORDER DENYING MOTION TO AVOID LIEN
The debtor has moved to avoid a lien held by State
Department Financial Credit Union (the “Credit Union”) on the
debtor’s 1993 Lexus SC 400 automobile. The debtor presents no
actionable grounds for the relief requested in his motion, and
the court can see no reason to give the debtor title to his car
free and clear of the lien held by the Credit Union when the
debtor has stated repeatedly that he will surrender his car to
the Credit Union due to his admitted delinquency on the note
securing the automobile. The court will deny the debtor’s
motion.
The Credit Union requests an award of costs and attorney’s
fees as a form of sanctions due to the debtor’s “bad faith” in
The order below is hereby signed.
Signed: February 24, 2006.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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1 The Credit Union has submitted a proposed order that
would direct the debtor to surrender the automobile at issue to
the Credit Union within fifteen days of the entry of the order.
The court declines to grant such relief, as the Credit Union has
not yet filed a motion requesting relief from the automatic stay
imposed by 11 U.S.C. § 362 and there are better mechanisms in
place for enforcing such relief in the applicable state or local
court with jurisdiction over the parties’ dispute.
2
filing the instant motion (Opp. ¶ 7).1 Ordinarily, “[b]ankruptcy
law is loath to award attorney’s fees absent some basis in
statute or contract.” Seimer v. Nangle (In re Nangle), 281 B.R.
654, 658 (B.A.P. 8th Cir. 2002). “Congress has created
attorney’s fees provisions in the Bankruptcy Code in limited
instances, such as sections 362(h) and 506(b), and certainly
under section 330 for professionals employed under sections 327
or 328.” Northwestern Corp. v. Magten Asset Mgmt. Corp. (In re
Northwestern Corp.), 326 B.R. 519, 524 (Bankr. D. Del. 2005).
Aside from these few statutory exceptions, “where the
litigated issues involve not basic contract enforcement
questions, but issues peculiar to federal bankruptcy law,
attorney’s fees will not be awarded absent bad faith or
harassment by the losing party.” Fobian v. Western Farm Credit
Bank (In re Fobian), 951 F.2d 1149, 1153 (9th Cir. 1991). “The
bad faith exception permits an award upon a showing that the
claim is entirely without color and has been asserted wantonly
for purposes of harassment or delay, or for other improper
purpose.” Colombrito v. Kelly, 764 F.2d 122, 133 (2d Cir. 1985)
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3	O:\Andrew Fausett Temp Docs\order_lien avoidance & fees_denial_Neal.wpd
(internal quotation omitted). “Neither meritlessness
alone, . . . nor improper motives alone, . . . will suffice.”
Id. (internal citations omitted).
Given the exacting standards for awarding attorney’s fees,
the Credit Union’s conclusory assertion that the debtor’s motion
was filed in “bad faith” must be rejected. There is no evidence
before the court to suggest that the debtor has “acted in bad
faith, vexatiously, wantonly, or for oppressive reasons” in
filing his motion. Chambers v. NASCO, Inc., 501 U.S. 32, 45-46
(1991) (citations omitted). Indeed, there is no evidence
regarding the debtor’s intentions in this matter at all due to
the Credit Union’s failure to follow the procedure for sanctions
outlined in Rule 9011 of the Federal Rules of Bankruptcy
Procedure. See FED. R. BANKR. P. 9011(c). Accordingly, it is
ORDERED that the debtor’s Motion to Avoid Lien (D.E. No. 26,
filed January 5, 2006) is DENIED; and it is further
ORDERED that the request for costs and attorney’s fees made
by the State Department Federal Credit Union in its Opposition to
Motion to Avoid Lien (D.E. No. 38, filed February 17, 2006) is
DENIED.
[Signed and dated above.]
Copies to: Debtor; debtor’s counsel; counsel for the State
Department Federal Credit Union
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