FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: NANCY ELAINE YBARRA,
Debtor,
BOEING NORTH AMERICAN, INC., No. 03-56314
Successor for Limited Purposes to
Rockwell International BAP No.
CC-02-01356-KBaP
Corporation,
Appellant, OPINION
v.
NANCY ELAINE YBARRA,
Appellee.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Perris, Klein and Baum, Bankruptcy Judges, Presiding
Submitted March 10, 2005*
Pasadena, California
Filed September 14, 2005
Before: Kim McLane Wardlaw, Richard A. Paez,
Circuit Judges, and Ralph R. Beistline, District Judge.**
Opinion by Judge Paez
*This panel unanimously finds this case suitable for decision without
oral argument. See Fed. R. App. P. 34(a)(2)
**The Honorable Ralph R. Beistline, United State District Judge for the
District of Alaska, sitting by designation.
13215
13218 IN RE: YBARRA
COUNSEL
Wayne R. Terry, Mitchell, Silberberg & Knupp LLP, Los
Angeles, California, for the appellant.
Nancy Elaine Ybarra, Santa Barbara, California, pro se for the
appellee.
OPINION
PAEZ, Circuit Judge:
After filing for bankruptcy protection, Nancy Elaine Ybarra
(“Ybarra”) persuaded a state court to vacate the dismissal of
IN RE: YBARRA 13219
an action she had filed against her former employer Rockwell
International Corporation (“Rockwell”) prior to filing for
bankruptcy. Rockwell prevailed and was awarded attorney
fees and costs by the state court. The bankruptcy court held
that despite Ybarra’s discharge in bankruptcy, Rockwell could
collect the portion of the fees and costs incurred after Ybarra
filed for bankruptcy. In a divided opinion, the Bankruptcy
Appellate Panel of the Ninth Circuit (“BAP”) reversed. The
BAP majority held that the entire award was encompassed in
the discharge. Boeing North American, Inc., as successor to
Rockwell, appealed. We hold that the fees and costs incurred
post-petition were not discharged, and therefore reverse.
I. Statement of Facts and Procedural History
In 1988, Ybarra sued Rockwell in Orange County Superior
Court. Ybarra’s Fifth Amended Complaint, filed in April of
1991, asserted two causes of action: 1) employment discrimi-
nation in violation of California Government Code section
12940; and 2) violation of the covenant of good faith and fair
dealing.
On December 10, 1991, Ybarra filed a Chapter 11 bank-
ruptcy petition. Ybarra did not initially schedule the cause of
action against Rockwell. Ybarra v. Boeing N. Am., Inc. (In re
Ybarra), 295 B.R. 609, 611 (BAP 9th Cir. 2003). Rockwell
first learned of the bankruptcy petition in 1993, and thereafter
promptly objected to Ybarra’s disclosure statement and
moved to convert the case to Chapter 7. The bankruptcy court
granted Rockwell’s motion and converted the case in June of
1993.
The trustee for Ybarra’s Chapter 7 bankruptcy estate agreed
with Rockwell to settle the case via a compromise in which
Rockwell would purchase Ybarra’s cause of action for
$17,500. Id. Although Ybarra objected to the proposed com-
promise, the bankruptcy court approved it on November 12,
13220 IN RE: YBARRA
1993. Thereafter the state court granted the trustee’s and
Rockwell’s motion to dismiss Ybarra’s lawsuit.
On September 29, 1993, Ybarra amended her schedule of
exempt property to add the cause of action against Rockwell.
The bankruptcy court sustained Rockwell’s objection to Ybar-
ra’s claim of exemption on February 24, 1994. The BAP
reversed this decision, and we affirmed the BAP. Ybarra v.
Rockwell Int’l Corp. (In re Ybarra), No. 96-55203, 1997 WL
579130 (9th Cir. Aug. 8, 1997).
On remand, the bankruptcy court ruled that the cause of
action was exempt. The court gave Ybarra the option of either
accepting $17,500 in full satisfaction and release of all claims
against Rockwell (“the Election”), or taking ownership of “all
right, title and interest” in the lawsuit.
Ybarra elected to take ownership of the cause of action.
Thereafter, Ybarra successfully persuaded the state court to
set aside the dismissal. Ybarra, 295 B.R. at 612. Ultimately,
the state court granted summary judgment in favor of Rock-
well. Rockwell then moved for an award of attorney fees and
costs pursuant to California Code of Civil Procedure sections
1032 and 1033.51 and California Government Code sections
12940(a) and 12965(b).2 The state court awarded Rockwell
$456,884.03 in attorney fees and costs. Ybarra appealed, and
the California Court of Appeal affirmed in 2001. Ybarra, 295
B.R. at 612.
Meanwhile, the bankruptcy court had granted Ybarra a dis-
charge in May of 1998 pursuant to 11 U.S.C. § 727. In light
of the discharge, Rockwell moved the bankruptcy court for
1
Section 1032(b) provides for the award of costs to prevailing parties.
Section 1033.5(a)(10) states that attorney fees are allowable costs under
§ 1032 where they are authorized by contract, statute, or law.
2
Section 12965(b) permits a court to award attorney fees and costs to
prevailing parties brought under that section.
IN RE: YBARRA 13221
leave to enforce its state court award of fees and costs. The
bankruptcy court partially granted Rockwell’s motion, hold-
ing that the portion of the award incurred after Ybarra filed
her bankruptcy petition ($159,030.78) was not discharged. It
held that Rockwell was free to collect this “Enforceable
Amount” without violating the discharge injunction of 11
U.S.C. § 524. In awarding Rockwell attorney fees incurred
after the filing of Ybarra’s bankruptcy petition, the bank-
ruptcy court relied on Siegel v. Federal Home Loan Mortgage
Corp., 143 F.3d 525 (9th Cir. 1998), which held that an award
of attorney fees incurred post-petition based on a pre-petition
cause of action was not discharged in bankruptcy.
Ybarra appealed the bankruptcy court’s decision to the
BAP. The BAP, in a divided decision, reversed, holding that
the entire fee and cost award was discharged in Ybarra’s
bankruptcy. Ybarra, 295 B.R. at 617. The majority opinion
relied on Abercrombie v. Hayden Corp. (In re Abercrombie),
139 F.3d 755 (9th Cir. 1998), and Kadjevich v. Kadjevich (In
re Kadjevich), 220 F.3d 1016 (9th Cir. 2000), both of which
held that claims for post-petition attorney fees could not be
granted administrative expense priority in the distribution of
bankruptcy assets. Ybarra, 295 B.R. at 612-16. This case,
however, involves whether Ybarra’s debt to Rockwell was
discharged, not whether Rockwell’s claim should be accorded
administrative expense priority in the distribution of the bank-
ruptcy estate’s assets. The BAP majority explained that it
relied on the administrative expense priority cases because
they turned on the issue of whether attorney fees were a pre-
petition claim. Id. at 612. The majority distinguished Siegel
on the ground that it involved a suit commenced post-petition.
Id. at 616. The dissent argued that Siegel should apply
because it involved the discharge of post-petition attorney
fees, which, it reasoned, is a “different concern” from the
issue of administrative expense priority in Abercrombie and
Kadjevich. Ybarra, 295 B.R. at 624 (Baum, J., dissenting).3
Rockwell timely appealed.
3
A concurring opinion by Judge Klein agreed that Abercrombie and
Kadjevich applied, but distinguished Siegel because it involved miscon-
duct on the part of the debtor. Ybarra, 295 B.R. at 617 (Klein, J., concur-
ring).
13222 IN RE: YBARRA
II. Jurisdiction and Standard of Review
We have jurisdiction to review decisions of the BAP pursu-
ant to 28 U.S.C. § 158(d). We review BAP decisions de novo,
and we independently review the bankruptcy court’s decision
on appeal from the BAP. Carrillo v. Su (In re Su), 290 F.3d
1140, 1142 (9th Cir. 2002). We review the bankruptcy court’s
conclusions of law de novo, and its findings of fact for clear
error. Id.
III. Analysis
Ybarra argues that the BAP should be affirmed because the
rule set forth in Abercrombie and Kadjevich applies to this
case. Rockwell advances the BAP dissent’s argument that Sie-
gel controls. As we explain below, we agree with the BAP
dissent’s conclusion that this case is governed by the dis-
charge principles recognized in Siegel, rather than the rules
relating to administrative expense priority claims. Accord-
ingly, we reverse the BAP’s judgment and remand with direc-
tions to enter a judgment affirming the bankruptcy court.
Because we conclude that this case is governed by the princi-
ples of discharge, we first address this area of bankruptcy law.
A. Discharge Pursuant to 11 U.S.C. § 727
[1] A Chapter 7 bankruptcy discharge releases the debtor
from personal liability for her pre-bankruptcy debts. United
States v. Hatton (In re Hatton), 220 F.3d 1057, 1059-60 (9th
Cir. 2000); 1 David G. Epstein et al., Bankruptcy § 1-7(e), at
12 (1992). A discharge is the “legal embodiment of the idea
of the fresh start; it is the barrier that keeps the creditors of
old from reaching the wages and other income of the new.”
2 id. § 7-16, at 312. If the debtor receives a discharge, the
creditor will receive only its pro-rata share of the distribution
of the property of the bankruptcy estate. 1 id. § 1-7, at 12.
IN RE: YBARRA 13223
[2] Specifically, § 727 of the Bankruptcy Code (“the Code”)4
“discharges the debtor from all debts that arose before the
date of the order for relief . . . .” 11 U.S.C. § 727(b). The
Code defines “debt” as “liability on a claim.” § 101(12).
“Claim” is defined as a “right to payment, whether or not such
right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal,
equitable, secured, or unsecured.” § 101(5)(A). “This ‘broad-
est possible definition’ of ‘claim’ is designed to ensure that
‘all legal obligations of the debtor, no matter how remote or
contingent, will be able to be dealt with in the bankruptcy
case.’ ” California Dep’t of Health Servs. v. Jensen (In re Jen-
sen), 995 F.2d 925, 929 (9th Cir. 1993) (quoting H.R. Rep.
No. 95-595, at 309 (1978), reprinted in 1978 U.S.C.C.A.N.
5963, 6266; S. Rep. No. 95-598, at 22 (1978), reprinted in
1978 U.S.C.C.A.N. 5787, 5808).
[3] The filing of a petition under Chapter 7 constitutes an
“order for relief.” See § 301. For the purposes of discharge,
conversion of a case from Chapter 11 to Chapter 7 constitutes
an order for relief, but does not change the date of the filing
of the petition or order of relief. § 348(a). Thus, the relevant
date in this case is December 10, 1991, the date of Ybarra’s
original bankruptcy petition. Rockwell argues that its claim
for attorney fees and costs did not arise before the order of
relief and therefore was not discharged.5
4
Title I of the Bankruptcy Reform Act of 1978, Pub. L. No. 95-598, 92
Stat. 2549, as amended; Title 11 United States Code.
5
The bankruptcy court noted, and on appeal the parties do not dispute,
that none of the § 523 exceptions to discharge apply to this case. See
§ 727(b). Similarly, Rockwell does not argue that the discharge was
improper under § 727(a). Rather, Rockwell argues that its claim was not
discharged because it did not arise before Ybarra filed her petition, the
effective date of the order of relief.
13224 IN RE: YBARRA
B. When a Claim Arises Under 11 U.S.C. § 727(b)
[4] “[A] claim arises, for purposes of discharge in bank-
ruptcy, at the time of the events giving rise to the claim . . . .”
O’Loughlin v. County of Orange, 229 F.3d 871, 874 (9th Cir.
2000). For example, in Jensen, we held that environmental
cleanup expenses incurred post-petition arising from pre-
petition conduct were discharged in bankruptcy. 995 F.2d at
931. In O’Loughlin, alleged violations of the Americans with
Disabilities Act, 42 U.S.C. §§ 12101-12213, that took place
before the date of confirmation6 met the definition of “claim”
and were discharged in Orange County’s bankruptcy, whereas
violations that took place after the date of confirmation were
not discharged. 229 F.3d at 874-75. We reasoned that the
County could not insulate itself from post-confirmation viola-
tions, despite its argument that they were part of the same
course of conduct as pre-confirmation violations. Id. at 875.
In Siegel, we addressed the issue of whether attorney fees
incurred post-petition were discharged in bankruptcy.7 There,
mortgagee Freddie Mac foreclosed on a property and filed
suit in federal district court, seeking a deficiency judgment
against Siegel, the mortgagor. Siegel, 143 F.3d at 528. Before
that case went to trial, Siegel filed for bankruptcy. Id. Freddie
Mac filed proofs of claim in the bankruptcy proceeding, to
which Siegel did not object. Id. The bankruptcy court granted
Freddie Mac relief from the automatic stay provisions of 11
U.S.C. § 362 so that it could foreclose on a second property.
Id. Siegel was then granted a discharge. Id.
6
O’Loughlin involved the adjustment of a municipality’s debts, in which
the debtor is discharged from debts that arose before the confirmation of
the adjustment plan. See 11 U.S.C. § 944(b). Thus, the key date was that
of confirmation, rather than the date the petition was filed, as it would
have been in a Chapter 7 case.
7
The Siegel opinion did not clarify whether the case involved a liquida-
tion under Chapter 7, although the BAP later surmised that it did. In re
Good Taste, Inc., 317 B.R. 112, 115 (Bankr. D. Alaska 2004).
IN RE: YBARRA 13225
After Siegel filed the bankruptcy petition, but two months
prior to the discharge, he sued Freddie Mac in state court,
alleging breach of duties under the deeds of trust. Id. at 528,
531. Freddie Mac removed the case to federal court. Id. at
528. The federal district court granted summary judgment to
Freddie Mac on the ground that the action was barred by the
res judicata effect of the bankruptcy proceeding. Id. The dis-
trict court awarded Freddie Mac attorney fees incurred in pur-
suing its rights under the deeds of trust, pursuant to a
provision in the deeds. Id. at 528, 531.
On appeal, Siegel argued that the claim for attorney fees
was discharged in the bankruptcy proceedings. Id. at 532. We
analyzed the issue under the framework of whether the claim
was “contingent” pursuant to § 101(5)(A). Id. A contingent
claim is “one which the debtor will be called upon to pay only
upon the occurrence or happening of an extrinsic event which
will trigger the liability of the debtor to the alleged creditor.”
Id. (quoting Fostvedt v. Dow (In re Fostvedt), 823 F.2d 305,
306 (9th Cir. 1987)). We reasoned that because, after being
“freed from the untoward effects of the contracts he had
entered into” through the discharge, Siegel voluntarily chose
to “return to the fray and to use the contract as a weapon,” it
was “perfectly just, and within the purposes of bankruptcy, to
allow the same weapon to be used against him.” Id. at 533.
We emphasized Siegel’s post-petition initiation of new litiga-
tion:
Siegel’s decision to pursue a whole new course of
litigation made him subject to the strictures of the
attorney’s fee provision. In other words, while his
bankruptcy did protect him from the results of his
past acts, including attorney’s fees associated with
those acts, it did not give him carte blanche to go out
and commence new litigation about the contract
without consequences.
13226 IN RE: YBARRA
Id. at 534. On the basis of this post-petition voluntary action
on the part of the debtor, we concluded that the award of post-
petition attorney fees was not discharged. Id.
Siegel cited with approval two opinions that shed light on
the boundaries of the definition of “claim” for the purposes of
discharge. Id. at 533. Shure v. Vermont (In re Sure-Snap), 983
F.2d 1015 (11th Cir. 1993), addressed the discharge of debt
under § 1141(d)(1)(A), which discharges a Chapter 11 debtor
from debts that arose before the date of the order confirming
the bankruptcy plan. After filing for bankruptcy but before the
order confirming the plan, the debtor sought a declaration
from the bankruptcy court that its mortgage agreement with
a creditor was void. Shure, 983 F.2d at 1017. The bankruptcy
court upheld the agreement, and then confirmed the Chapter
11 plan one week later. Id. The debtor then appealed, and the
district court affirmed. Id.
The creditor sought attorney fees and costs incurred in the
appeal pursuant to a contractual provision in the mortgage
agreement. Id. The Eleventh Circuit held that because the
debtor “voluntarily continued to litigate” after confirmation of
the plan, it did so “at the risk of incurring post-confirmation
costs involved in its acts.” Id. at 1018. The court characterized
the appeal as being “initiated” by the debtor, and reasoned
that the creditor “had no choice but to defend.” Id. It therefore
awarded the creditor attorney fees incurred in the post-
confirmation appeal, concluding that the fees were not dis-
charged. Id. at 1019.
In Siegel, 143 F.3d at 533, we also cited In re Hadden, 57
B.R. 187, 190 (Bankr. W.D. Wis. 1986), in which the bank-
ruptcy court declined to discharge attorney fees incurred post-
petition. In Hadden, the debtor initiated the state litigation
pre-petition, and voluntarily continued the litigation after fil-
ing under Chapter 7. Id. at 188. The bankruptcy court noted
that “bankruptcy was intended to protect the debtor from the
continuing costs of pre-bankruptcy acts but not to insulate the
IN RE: YBARRA 13227
debtor from the costs of post-bankruptcy acts.” Id. at 190. It
therefore balanced the competing policy concerns of provid-
ing debtors with a fresh start and preventing post-bankruptcy
acts taken with “impunity.” Id. The court concluded: “If the
debtor chooses to enjoy his fresh start by pursuing pre-
petition claims which have been exempted, he must do so at
the risk of incurring the post-petition costs involved in his
acts.” Id.; see also Big Yank Corp. v. Liberty Mutual Fire Ins.
Co. (In re Water Valley Finishing, Inc.), 139 F.3d 325, 328
(2d Cir. 1998) (holding that a claim for sanctions in the
amount of attorney fees was not discharged where, post-
petition, the debtor rejected the creditor’s settlement offer in
bad faith).
[5] In sum, we have held that post-petition attorney fee
awards are not discharged where post-petition, the debtor vol-
untarily “pursue[d] a whole new course of litigation,” com-
menced litigation, or “return[ed] to the fray” voluntarily.
Siegel, 143 F.3d at 533-34. We have also endorsed the notion
that by voluntarily continuing to pursue litigation post-
petition that had been initiated pre-petition, a debtor may be
held personally liable for attorney fees and costs that result
from that litigation.
C. Inapplicability of Administrative Expense Priority
Caselaw
Although administrative expense priority is not at issue in
this case, the BAP majority relied on Abercrombie and Kad-
jevich, both involving administrative expense priority,
because the outcome of those cases turned on whether attor-
ney fees arose from a pre-petition claim. Ybarra, 295 B.R. at
612. The BAP dissent found the administrative expense prior-
ity caselaw inapt because
[t]he purpose of administrative expense priority is to
facilitate the operation of the debtor in possession’s
business with a view to rehabilitation. . . . The pur-
13228 IN RE: YBARRA
pose of a discharge is to provide the debtor with a
fresh start, which is a different concern from deter-
mining administrative priority. The Ninth Circuit has
not concluded that the standard for determining
administrative expense status under § 503(b) and
dischargeability under § 727(b) is the same.
Id. at 624. We agree with the BAP dissent’s assessment and
hold that because our standards for determining administra-
tive expense priority are animated by different purposes than
are our standards for determining which claims are discharged
in bankruptcy, Kadjevich and Abercrombie do not control this
case.8
[6] Whereas in discharge cases, the personal liability of the
debtor is at issue, creditors seeking administrative expense
priority are pursuing property of the bankruptcy estate. Sec-
tion 507 of the Code sets forth the order of priority accorded
to various classes of unsecured creditors when a Chapter 7
bankruptcy estate is liquidated. Administrative expense
claims, defined in § 503, are accorded the first level of prior-
ity; these claims are paid in full before claims in a lower cate-
gory. See § 726(a)(1); In re Lazar, 207 B.R. 668, 673 (Bankr.
C.D. Cal. 1997). Allowable administrative expenses include
“the actual, necessary costs and expenses of preserving the
estate, including wages, salaries, or commissions for services
8
We note that the BAP majority perceived a discrepancy between our
determinations of whether attorney fees arose from a pre-petition claim in
Kadjevich and Siegel: while both cases involved fees awarded as a result
of the debtor’s voluntary post-petition conduct, in Siegel we held that the
fee award was not discharged, whereas in Kadjevich we held that the fee
award could not be granted administrative expense priority. As the splin-
tered BAP opinion reflects, this perceived discrepancy has led to some
confusion in the bankruptcy courts. See In re Good Taste, Inc., 317 B.R.
at 114-16, 120 (noting the “ambiguous state of the 9th Circuit authority”
in this area). Ultimately, because the contrasting outcomes in Kadjevich
and Siegel can be explained by the differing purposes of discharge and
administrative expense priority, we need not attempt to “harmonize” our
caselaw.
IN RE: YBARRA 13229
rendered after the commencement of the case.”
§ 503(b)(1)(A). To be deemed an administrative expense, the
claim must have arisen from a transaction with the debtor in
possession,9 and directly and substantially benefitted the
estate. Abercrombie, 139 F.3d at 757 (quoting Microsoft
Corp. v. DAK Indus. (In re DAK Indus.), 66 F.3d 1091, 1094
(9th Cir. 1995)).10 Thus, under the Code, only claims arising
from post-petition transactions may be granted such priority.
Kadjevich, 220 F.3d at 1019; Abercrombie, 139 F.3d at 758.
[7] The purpose of administrative priority status is to
encourage third parties to contract with the bankruptcy estate
for the benefit of the estate as a whole. See Christian Life Ctr.
Litig. Def. Comm. v. Silva (In re Christian Life Ctr.), 821 F.2d
1370, 1373 (9th Cir. 1987); Kadjevich, 220 F.3d at 1019 (not-
ing that the purpose of granting priority to post-petition debts
is “so that third parties will risk providing the goods and ser-
vices that are necessary for a struggling debtor to reorga-
nize”); see also Abercrombie, 139 F.3d at 757 (citing
encouragement of third parties to deal with the debtor in pos-
session and facilitate rehabilitation as purpose of the adminis-
trative expense priority). The central question in determining
whether a claim is granted administrative expense priority is
whether the third party should be paid at the expense of the
debtor’s existing unsecured creditors. See Total Minatome
9
The “debtor in possession” is a debtor in a Chapter 11 or Chapter 12
case or a person who has qualified as a trustee under § 322. § 1101; 1
Epstein et al., Bankruptcy § 1-4, at 9.
10
The Supreme Court carved out an exception to this “post-petition
transaction requirement” in Reading v. Brown, 391 U.S. 471 (1968). Aber-
crombie, 139 F.3d at 758. There, the Court determined that an award of
tort damages to victims of a fire caused by the Chapter 11 receiver’s negli-
gence was entitled to administrative expense priority, despite the fact that
victims did not transact with the receiver, nor did the estate benefit from
the event. Reading, 391 U.S. at 485. In the interests of “fairness to all per-
sons having claims against the insolvent,” id. at 477, the Court held that
tort claims arising post-petition were “actual and necessary expenses” of
preserving the estate. Id. at 482, 485.
13230 IN RE: YBARRA
Corp. v. Jack/Wade Drilling, Inc. (In re Jack/Wade Drilling,
Inc.), 258 F.3d 385, 389 (5th Cir. 2001).
[8] By contrast, in the discharge context, the question is
whether the debtor should be released from pre-petition debts
so that she can be given a “fresh start.” See Jensen, 995 F.2d
at 928. The discharge inquiry involves the existence of per-
sonal liability, while administrative expense priority concerns
the distribution of assets from a limited pool. Even if a cause
of action arose pre-petition, the discharge shield cannot be
used as a sword that enables a debtor to undertake risk-free
litigation at others’ expense. See Siegel, 143 F.3d at 533-34.
Personal liability for fees incurred through the voluntary pur-
suit of litigation initiated post-petition is more consistent with
the purpose of discharge. This policy difference supports our
conclusion that the administrative expense priority cases do
not control our determination of whether a claim is pre-
petition or post-petition in the discharge context.
[9] As the BAP noted, Siegel was decided less than six
weeks after Abercrombie but failed to cite it. Ybarra, 295
B.R. at 613. Kadjevich was decided two years after Siegel, but
does not discuss that case. In our view, the best explanation
for this lack of integration is that Siegel involved discharge,
while Abercrombie and Kadjevich involved administrative
expense priority — two distinct areas of bankruptcy law with
separate purposes. In sum, we conclude that the rules set forth
in Abercrombie and Kadjevich do not apply to the question of
whether debts are discharged.
D. Discharge of Rockwell’s Attorney Fees and Cost
Claims
[10] In light of the foregoing discussion, we reaffirm that
claims for attorney fees and costs incurred post-petition are
not discharged where post-petition, the debtor voluntarily
commences litigation or otherwise voluntarily “return[s] to
the fray.” See Siegel, 143 F.3d at 533-34. Whether attorney
IN RE: YBARRA 13231
fees and costs incurred through the continued prosecution of
litigation initiated pre-petition may be discharged depends on
whether the debtor has taken affirmative post-petition action
to litigate a prepetition claim and has thereby risked the liabil-
ity of these litigation expenses.
[11] In this case, after petitioning for bankruptcy, Ybarra
petitioned the bankruptcy court to exempt the state suit
against Rockwell, and then appealed the bankruptcy court’s
denial of this exemption to the BAP and this court. On
remand, Ybarra chose to pursue the state case rather than
accepting Rockwell’s $17,500 settlement offer. Ybarra
actively persuaded the state court to set aside the dismissal.
We conclude that by affirmatively reviving the state suit,
Ybarra “returned to the fray.” Thus, under Siegel, Rockwell’s
claim for attorney fees and costs incurred post-petition was
not discharged in the bankruptcy.
[12] The BAP reasoned that because the bankruptcy court’s
decisions not to exempt the lawsuit and to approve the settle-
ment were later overturned, Ybarra’s state suit should be con-
sidered continuous litigation, rather than the commencement
of a new suit post-petition. Ybarra, 295 B.R. at 616. We dis-
agree, and conclude that Ybarra’s actions to revive the state
suit were sufficiently voluntary and affirmative to be consid-
ered “returning to the fray.” Accordingly, we reverse the
BAP’s holding that the attorney fees incurred post-petition
were discharged.
IV. CONCLUSION
In light of the foregoing, we conclude that the award of
attorney fees and costs incurred post-petition was not dis-
charged in Ybarra’s bankruptcy.11 We therefore REVERSE.
11
Ybarra also challenges the BAP’s refusal to impose sanctions against
Rockwell for allegedly violating the discharge injunction of 11 U.S.C.
§ 524(a) by filing an abstract of judgment, reporting to a credit bureau,
13232 IN RE: YBARRA
and filing motions for Ybarra to appear for examination. As the BAP con-
cluded, this argument is without merit. See Ybarra, 295 B.R. at 617. As
the record reflects, Rockwell was proceeding pursuant to the bankruptcy
court’s order (“Leave Order”) which granted Rockwell’s motion to collect
the “Enforceable Amount” of its cost and fee award. Because Rockwell
was attempting to collect debts that the bankruptcy court held were not
discharged, these debts would not have been subject to the injunction. See
Ruvacalba v. Munoz (In re Munoz), 287 B.R. 546, 556 (BAP 9th Cir.
2002). Moreover, Ybarra did not move for a stay of the bankruptcy court’s
decision pending the appeal. See Fed. R. Bankr. Proc. 8017(a), (b). We
therefore affirm the BAP’s determination that Rockwell did not violate the
discharge injunction.
Ybarra next argues that we should exercise our discretion to award
sanctions against Rockwell for bringing a frivolous appeal. Her request for
sanctions on appeal is improper, because such a request must be made in
a separate motion pursuant to Federal Rule of Appellate Procedure 38. In
any event, in light of our disposition, sanctions would not be warranted.