Countrywide Home v. Hoopai

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

In the Matter of: LEHUA HOOPAI, 
Debtor,
No. 07-15868
COUNTRYWIDE HOME LOANS, INC.,
Appellant,  BAP No.
HI-06-01328-KMoB
v. OPINION
LEHUA HOOPAI,
Appellee.

Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Klein, Brandt, and Montali, Bankruptcy Judges, Presiding

Argued and Submitted
November 20, 2008—Honolulu, Hawaii

Filed September 14, 2009

Before: Mary M. Schroeder, Richard A. Paez, and
N. Randy Smith, Circuit Judges.

Opinion by Judge Paez

13321
 COUNTRYWIDE HOME LOANS v. HOOPAI 13325
COUNSEL

Brian C. Walsh and Cullen K. Kuhn, Bryan Cave LLP, St.
Louis, Missouri, and Katherine M. Windler, Bryan Cave LLP,
Santa Monica, California, for the appellant.

Lissa D. Schults and Bradley R. Tamm, Shults & Tamm,
LLP, Honolulu, Hawaii, for the appellee.

OPINION

PAEZ, Circuit Judge:

Countrywide Home Loans, Inc. appeals from the Bank-
ruptcy Appellate Panel’s vacature of a bankruptcy court order
awarding Countrywide $83,542.87 in attorneys’ fees and
costs pursuant to Hawaii Revised Statutes section 607-14.
Countrywide argues that it is entitled to the fees as an overse-
cured creditor pursuant to 11 U.S.C. § 506(b) (2000), or,
alternatively, as the prevailing party pursuant to Hawaii state
law, section 607-14. Because § 506(b) governs an overse-
cured creditor’s entitlement to attorneys’ fees incurred prior
to confirmation of a Chapter 13 plan and preempts state law,
we conclude that both the bankruptcy court and the Bank-
ruptcy Appellate Panel (“BAP”) erred in evaluating Country-
wide’s fee claim as falling entirely under Hawaii law. We
further conclude that debtor Lehua Hoopai was the prevailing
party under Hawaii Revised Statutes section 607-14. We
therefore vacate the bankruptcy court’s order, and remand for
the court to award reasonable pre-confirmation fees to Coun-
trywide pursuant to § 506(b), and to reconsider Hoopai’s
claim for fees as the prevailing party pursuant to section 607-
14.
13326 COUNTRYWIDE HOME LOANS v. HOOPAI
I. Background

A. Pre-Chapter 13 Background

The genesis of the dispute between appellee Lehua Hoopai
(“Hoopai”) and appellant Countrywide Home Loans, Inc.
(“Countrywide”), was Hoopai’s default on two loans from
Countrywide, which were secured by mortgages on her real
property in Kamuela, Hawaii. Following the default, Country-
wide scheduled a non-judicial foreclosure sale for April 23,
2004.

But on the day the sale was to be held, Hoopai filed a pro
se petition under Chapter 11 of the Bankruptcy Code, auto-
matically staying the sale. There were numerous problems
with the filing, described by the bankruptcy court as possess-
ing “many of the hallmarks of a bad faith filing.” Hoopai
claimed as assets trademarks and copyrights covering her own
name, failed to list Countrywide as a creditor, and filed finan-
cial schedules that “contained numerous questionable
entries.” Additionally, she lacked sufficient funds to service
her secured debts. The Office of the United States Trustee
moved to dismiss or convert the case to Chapter 7, and Hoo-
pai herself later moved to dismiss the case. The bankruptcy
court ultimately dismissed the case on September 8, 2004, and
Countrywide rescheduled the foreclosure sale for October 15,
2004.

Unbeknownst to Countrywide, on September 21, 2004,
Hoopai signed a contract to sell the property to Anna Fern
White (“White”) for $300,000. The contract provided for a
deposit of $1,000, with the remainder of the sale price depen-
dent on White’s acquisition of a new mortgage. Hoopai also
allowed White to take possession of the property.

With Countrywide unaware of Hoopai’s contract with
White, the foreclosure sale went forward as planned on Octo-
ber 15. The Maluhia Trust (“Maluhia”) offered a high bid of
 COUNTRYWIDE HOME LOANS v. HOOPAI 13327
$159,000, which was accepted; Maluhia paid the full price at
the conclusion of the auction. However, Countrywide did not
record the affidavit of sale as required by Hawaii Revised
Statutes section 667-5 to conclude the sale.

B. Post-Petition/Pre-Confirmation Period

Three days after the sale, Hoopai filed another bankruptcy
petition, this time under Chapter 13, commencing the current
case. Hoopai’s Chapter 13 plan envisioned completion of the
sale to White and full payment of Countrywide’s claims from
the sale’s proceeds. An automatic stay enjoined Countrywide
from completing the sale.

Seeking to complete the sale to Maluhia, Countrywide filed
a motion, joined by Maluhia, for relief from the stay. Coun-
trywide argued that the foreclosure sale had extinguished
Hoopai’s interest in the property, and that the property was
therefore not part of the bankruptcy estate. Hoopai opposed
the motion, and filed a motion for court approval to sell the
property to White. Countrywide opposed both Hoopai’s
motion to sell and confirmation of her Chapter 13 plan.

The bankruptcy court determined that the house was prop-
erty of the bankruptcy estate. The court thus denied Country-
wide’s motion for relief from the automatic stay, and granted
Hoopai’s motion for approval of the sale to White. On Febru-
ary 23, 2005, the bankruptcy court confirmed Hoopai’s Chap-
ter 13 plan.

C. Post-Confirmation Period

Maluhia appealed the bankruptcy court’s orders to the
United States District Court for the District of Hawaii, and
sought a stay of the order granting Hoopai’s motion for
approval to sell the property pending appeal. The court
granted a stay pending appeal, but required Maluhia to post
a supersedeas bond in the amount of $335,000. Although
13328 COUNTRYWIDE HOME LOANS v. HOOPAI
Countrywide did not join the appeal, it “monitored” the pro-
ceeding, conferred with Hoopai’s counsel, and participated in
some settlement discussions. The district court ultimately
affirmed the bankruptcy court’s two orders, entering final
judgment for Hoopai on November 25, 2005.

Hoopai then sought Countrywide’s consent to sale of the
property free of the liens so that she could close the sale to
White. A dispute over the amount due to Countrywide arose,
with Countrywide claiming entitlement to $236,317.65 after
accounting for interest, costs, and attorneys’ fees, and Hoopai
asserting that this claim was inflated. Countrywide refused
Hoopai’s offer to release an “undisputed amount” of approxi-
mately $158,000 at closing and to hold the disputed amount
in escrow in exchange for Countrywide’s release of its liens
on the property. Returning to the bankruptcy court, Hoopai
moved to sell the house free and clear of the liens, with sale
proceeds held in escrow and attached by liens if necessary.
Countrywide opposed the motion, and asked the court to order
Hoopai to release the full amount sought, or, if the court were
unwilling to do that, to attach liens to the balance of the sale
proceeds. The court granted Hoopai’s motion, but ordered that
$176,927.72 be released to Countrywide at closing and that
the liens attach to the remainder of the proceeds of the sale.

On January 31, 2006, Hoopai and White closed the sale,
and Hoopai paid Countrywide $176,927.72, with the remain-
der of the proceeds held in escrow, in accordance with the
court’s order.

D. The Present Attorneys’ Fees Dispute

1. Proceedings Before the Bankruptcy Court

On March 2, 2006, Hoopai filed a motion asking the bank-
ruptcy court to (1) determine Countrywide’s entitlement to
attorneys’ fees; (2) determine Hoopai’s entitlement to attor-
neys’ fees; (3) allow Hoopai to execute on the Maluhia super-
 COUNTRYWIDE HOME LOANS v. HOOPAI 13329
sedeas bond; and (4) determine disposition of a rent trust fund
in which White’s rent payments were held. Only the attor-
neys’ fees disputes, items (1) and (2), are at issue here.

Hoopai argued that Countrywide was not entitled to the full
amount of attorneys’ fees that it claimed because a significant
portion of the fees incurred were outside the scope of the fee
provisions in the mortgage agreements, were not for legal ser-
vices necessary to protect its interests, and were not reason-
able under § 506(b) of the Bankruptcy Code. Countrywide
responded that it was entitled to the fees under the mortgage
agreements, under the court order approving the sale of the
property, and under § 506(b); that the fees it demanded were
within the scope of the mortgage agreements; and that the fees
were all reasonable under § 506(b). After the bankruptcy
court announced its tentative ruling that Countrywide was
entitled to the full amount sought, Hoopai filed a motion for
partial reconsideration in which it argued that Countrywide
was not entitled to recover any post-confirmation fees pursu-
ant to § 506(b), and that Countrywide was not entitled to post-
confirmation fees under Hawaii law because it was not the
prevailing party.

Hoopai also argued that she was entitled to recover from
Countrywide and/or Maluhia the fees she had incurred in liti-
gating whether her property was part of the bankruptcy estate,
asserting that the dispute was governed by state law, and that,
as the prevailing party, she was entitled to attorneys’ fees
under Hawaii law. After the court announced its tentative rul-
ing that Hoopai was not entitled to recover her attorneys’ fees,
Hoopai filed a motion for reconsideration asserting that she
was entitled to post-confirmation fees from Countrywide as
the prevailing party under Hawaii law.

On August 30, 2006, the bankruptcy court issued a memo-
randum order finding that Countrywide was the prevailing
party in its dispute with Hoopai, and was therefore entitled to
recover its fees from Hoopai under Hawaii law. It also found
13330 COUNTRYWIDE HOME LOANS v. HOOPAI
that nearly all of the requested fees were “reasonable,” as
required by Hawaii law, and awarded Countrywide
$83,542.87 in fees. The court further determined that Hoopai
was not entitled to any fees from Maluhia because there was
no contract between Maluhia and Hoopai.1

Hoopai timely appealed to the Bankruptcy Appellate Panel
(“BAP”).

2. Proceedings Before the BAP

On appeal to the BAP, Hoopai argued that the bankruptcy
court erred in awarding Countrywide fees incurred post-
confirmation, in finding Countrywide’s fees “reasonable,” and
in concluding that Hoopai was not the prevailing party and
therefore not entitled to attorneys’ fees.

The BAP vacated the bankruptcy court’s decision in a pub-
lished opinion. In re Hoopai, 369 B.R. 506 (B.A.P. 9th Cir.
2007). The opinion, focusing on Hawaii law, reasoned that
“§ 506(b) does not operate to create a right of attorneys’ fees
that does not already exist . . . .” Id. at 509. The BAP held that
the bankruptcy court had erred in determining that Country-
wide was the prevailing party under Hawaii law, and reasoned
that this determination “so materially changes the overall
equation that it is not necessary, and [is] perhaps counterpro-
ductive, to determine the other fact-specific issues that have
been presented by the appellant.” Id. at 511. The BAP thus
stated that, on remand, the bankruptcy court would need to
revisit Hoopai’s request for attorneys’ fees. Id. at 511-12.

Countrywide timely appealed, arguing that it is entitled to
1
The court did not address Hoopai’s claim to fees from Countrywide.
That claim, however, depended on the success of Hoopai’s argument that
she was the prevailing party and Countrywide the losing party on the
“main disputed issue” between the parties, an argument which the court
rejected in finding that Countrywide was the prevailing party.
 COUNTRYWIDE HOME LOANS v. HOOPAI 13331
fees pursuant to 11 U.S.C. § 506(b) regardless of state law, or,
in the alternative, as the prevailing party under Hawaii law.

II. Standard of Review

In an appeal from the BAP, “we independently review the
bankruptcy court’s decision—reviewing any conclusions of
law de novo, while reviewing findings of fact for clear error.”
In re Reynoso, 477 F.3d 1117, 1120 (9th Cir. 2007). “We will
not disturb a bankruptcy court’s award of attorneys’ fees
unless the bankruptcy court abused its discretion or errone-
ously applied the law.” In re Kord Enters. II, 139 F.3d 684,
686 (9th Cir. 1998); see also In re Hercules Enters., Inc., 387
F.3d 1024, 1027 (9th Cir. 2004).

III. Jurisdiction

[1] We have jurisdiction over appeals from final orders of
the BAP pursuant to 28 U.S.C. § 158(d)(1). We reject Hoo-
pai’s contention that the BAP’s order is not final because it
remanded the case for further fact-finding. Although an order
remanding to the bankruptcy court for fact-finding is not con-
sidered final when the findings sought are “related to a central
issue raised on appeal,” an order is final within the meaning
of § 158(d) “[i]f the matters on remand concern primarily fac-
tual issues about which there is no dispute, and the appeal
concerns a question of law.” In re Dawson, 390 F.3d 1139,
1145 (9th Cir. 2004) (quoting In re Bankr. Estate of MarkAir,
Inc., 308 F.3d 1057, 1060 (9th Cir. 2002)) (citations and inter-
nal quotation marks omitted). In such case, “the policies of
judicial efficiency and finality are best served by our resolv-
ing the question now.” Dawson, 390 F.3d at 1145 (quoting
MarkAir, 308 F.3d at 1060) (citations and internal quotation
marks omitted).

[2] The central issues raised in this appeal are (1) whether
federal bankruptcy law, rather than Hawaii law, governs
Countrywide’s claim to attorneys’ fees and (2) which party is
13332 COUNTRYWIDE HOME LOANS v. HOOPAI
the prevailing party under Hawaii law. These issues are pri-
marily legal, and concern undisputed facts. Moreover, the
fact-finding directed on remand would not address these
issues, as the BAP already decided them by determining that
Hawaii law applied and that Hoopai was the prevailing party
under state law. Any further fact-finding would focus on
whether Hoopai incurred reasonable attorneys’ fees for which
she is entitled to reimbursement—an inquiry which would be
rendered superfluous were we to determine that she was not
the prevailing party. The BAP’s order is therefore final for the
purpose of this appeal, and jurisdiction lies with this court.

IV. Governing Law

Both the BAP and the bankruptcy court applied Hawaii law
in evaluating Countrywide’s claim for attorneys’ fees. On
appeal, Countrywide does not defend those decisions, but
instead argues that its fee claim is governed by § 506(b) of the
Bankruptcy Code, and that this provision preempts state law.
We agree in part, and hold that § 506(b) governs Country-
wide’s claim for attorneys’ fees incurred prior to confirmation
of Hoopai’s Chapter 13 plan, and that Hawaii law governs its
claim for fees incurred post-confirmation.

A. Waiver and Estoppel

As a preliminary matter, we decline to treat Countrywide’s
argument that § 506(b) governs its claim for fees as waived
or barred by the doctrine of judicial estoppel.

[3] Although issues not raised before the BAP are generally
considered waived, we have established an exception to this
rule “when the issue is one of law and either does not depend
on the factual record, or the record has been fully developed.”
In re Eliapo, 468 F.3d 592, 603 (9th Cir. 2006) (quoting In
re Am. W. Airlines, Inc., 217 F.3d 1161, 1165 (9th Cir.
2000)); see also In re Enewally, 368 F.3d 1165, 1173 (9th
Cir. 2004) (noting that an exception to the waiver rule applies
 COUNTRYWIDE HOME LOANS v. HOOPAI 13333
when “the issue presented is purely one of law and the oppos-
ing party will suffer no prejudice as a result of the failure to
raise the issue below”). The issues raised by Countrywide fit
within this exception: whether § 506(b) preempts state law
and creates a right to attorneys’ fees that is not dependent on
state law are questions of law that do not depend on the fac-
tual record. Further, because Hoopai herself argued that
§ 506(b) governed Countrywide’s claim to pre-confirmation
fees before the BAP, Hoopai cannot be said to have suffered
prejudice as a result of Countrywide’s failure to do so.2 Coun-
trywide’s argument is therefore not waived.

“Judicial estoppel, sometimes also known as the doctrine of
preclusion of inconsistent positions, precludes a party from
gaining an advantage by taking one position, and then seeking
a second advantage by taking an incompatible position.”
2
The odd procedural history of this issue, in which the parties have
seemingly flipped sides, further counsels against treating the issue as
waived. Before the bankruptcy court, both Countrywide and Hoopai
assumed that § 506(b) governed Countrywide’s entitlement to attorneys’
fees, at least for some portion of the fees. After the bankruptcy court held
that Countrywide was entitled to attorneys’ fees under Hawaii law, Hoo-
pai argued in her appeal to the BAP that the pre-confirmation fees Coun-
trywide sought should have been evaluated instead under § 506(b), and
that the statute preempts state law. Countrywide defended the bankruptcy
court’s favorable decision, noting that it “ruled, correctly, that § 506(b)
does not operate to create a right of attorneys’ fees that does not already
exist, and, accordingly, focused on the underlying agreements that are
governed by Hawaii law.” Cf. In re El Toro Materials Co., Inc., 504 F.3d
978, 982 (9th Cir. 2007) (finding that appellant did not waive an argument
by failing to raise it in its cross-appeal from the bankruptcy court to the
BAP because “the ruling of the bankruptcy court on this issue was entirely
favorable to [appellant]” and appellant “had no reason to challenge a
favorable decision”). Now that the BAP has determined that Countrywide
is not entitled to attorneys’ fees under Hawaii law, the parties switch sides,
with Countrywide arguing that § 506(b) applies and preempts state law,
and Hoopai offering reasons why § 506(b) should not apply. The impor-
tant point, however, is that the issue was argued before both the bank-
ruptcy court and the BAP, though the parties’ positions on the question
have varied as their interests have alternately waxed and waned.
13334 COUNTRYWIDE HOME LOANS v. HOOPAI
Whaley v. Belleque, 520 F.3d 997, 1002 (9th Cir. 2008) (quot-
ing Rissetto v. Plumbers & Steamfitters Local 343, 94 F.3d
597, 600 (9th Cir.1996)). It is “an equitable doctrine invoked
by a court at its discretion,” New Hampshire v. Maine, 532
U.S. 742, 750 (2001) (quoting Russell v. Rolfs, 893 F.2d
1033, 1037 (9th Cir. 1990)), and “is intended to protect the
integrity of the judicial process by preventing a litigant from
playing fast and loose with the courts.” Whaley, 520 F.3d at
1002 (quoting Wagner v. Prof’l Eng’rs in Cal. Gov’t, 354
F.3d 1036, 1044 (9th Cir. 2004)). “In determining whether to
apply the doctrine, we typically consider (1) whether a party’s
later position is ‘clearly inconsistent’ with its original posi-
tion; (2) whether the party has successfully persuaded the
court of the earlier position, and (3) whether allowing the
inconsistent position would allow the party to ‘derive an
unfair advantage or impose an unfair detriment on the oppos-
ing party.’ ” United States v. Ibrahim, 522 F.3d 1003, 1009
(9th Cir. 2008) (quoting New Hampshire v. Maine, 532 U.S.
at 750-51).

[4] We decline to apply the judicial estoppel doctrine here,
despite Countrywide’s adoption of inconsistent positions
before the BAP and this court regarding whether § 506(b) or
state law governs its claim to fees, because doing so would
not serve the purpose of the doctrine. As noted above, the
doctrine is intended in large part to “preclude[ ] a party from
gaining an advantage by taking one position, and then seeking
a second advantage by taking an incompatible position.”
Whaley, 520 F.3d at 1002 (quoting Rissetto, 94 F.3d at 600).
Hence, one of the three factors typically considered by courts
is “whether allowing the inconsistent position would allow the
party to ‘derive an unfair advantage or impose an unfair detri-
ment on the opposing party.’ ” Ibrahim, 522 F.3d at 1009
(quoting New Hampshire v. Maine, 532 U.S. at 750-751).
Here, Countrywide does not seek a “second benefit” or “un-
fair advantage” by reasserting its original argument that
§ 506(b) governs its claim to attorneys’ fees. Countrywide
cannot gain a “second benefit,” because it did not benefit in
 COUNTRYWIDE HOME LOANS v. HOOPAI 13335
the first instance by defending the bankruptcy court’s decision
that its fee claim was governed by Hawaii law: the BAP
determined that Countrywide was not entitled to any fees
under Hawaii law. More importantly, because Hoopai herself
argued before the BAP that § 506(b) preempts state law,
allowing Countrywide to make this argument here can hardly
be said to “impose an unfair detriment” on her. Ibrahim, 522
F.3d at 1009.

We therefore proceed to consider the merits of Country-
wide’s argument that § 506(b) preempts state law and governs
its claim to attorneys’ fees.

B. The Relationship Between § 506(b) and State Attorneys’
Fees Law

1. Preemption

Both the bankruptcy court and BAP proceeded from the
premise that § 506(b) does not create a right of attorneys’ fees
that does not already exist pursuant to state law, and thus
focused on whether Countrywide had a right to attorneys’ fees
under state law. This was error; our case law has firmly estab-
lished that § 506(b) entitles oversecured creditors to enforce
contractual attorneys’ fees provisions and preempts state law
on attorneys’ fees.

Section 506(b) of the Bankruptcy Code provides:

To the extent that an allowed secured claim is
secured by property the value of which, after any
recovery under subsection (c) of this section, is
greater than the amount of such claim, there shall be
allowed to the holder of such claim, interest on such
claim, and any reasonable fees, costs, or charges
provided for under the agreement under which such
claim arose.
13336 COUNTRYWIDE HOME LOANS v. HOOPAI
11 U.S.C. § 506(b) (2000) (amended 2005) (emphasis added).3

[5] The statute, by its terms, states that an oversecured
creditor, such as Countrywide, “shall be allowed . . . any rea-
sonable fees, costs, or charges provided for under the agree-
ment.” Id. Thus a “creditor is entitled to attorneys’ fees if (1)
the claim is an allowed secured claim; (2) the creditor is over-
secured; (3) the fees are reasonable; and (4) the fees are pro-
vided for under the agreement.” In re Kord Enters. II, 139
F.3d 684, 687 (9th Cir. 1998). Hoopai does not dispute that
Countrywide’s claim is an “allowed, secured claim” for which
Countrywide is oversecured. Because the mortgage agree-
ments between Countrywide and Hoopai included broad attor-
neys’ fee provisions, and Hoopai has not appealed the
bankruptcy court’s finding that “Countrywide’s fees are
within the scope of the fee provisions,” § 506(b) entitles
Countrywide to an award of reasonable fees as part of its
secured claim.

[6] Countrywide’s entitlement to attorneys’ fees under
§ 506(b) is not limited by state law. In In re Kord Enterprises
II, we squarely rejected the argument endorsed by the BAP
here that because § 506(b) only authorizes the payment of
fees provided for under a loan agreement, and loan agree-
ments are interpreted under state law, state law must therefore
govern any award of attorneys’ fees. 139 F.3d at 688. Reason-
ing that (1) “§ 506(b) does not reference state law,” (2) “the
legislative history of § 506(b) suggests that Congress consid-
ered and rejected the idea that fees should be subject to state
law,”4 and (3) precedent interpreting § 506(b) as preempting
3
In 2005, § 506(b) was amended to include the words “or State statute”
following “agreement.” 11 U.S.C. § 506(b) (2006) (as amended by the
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
(“BAPCPA”), Pub. L. No. 109-8, 119 Stat. 23 (2005)). However, this
amendment does not apply to cases commenced before October 17, 2005,
and thus does not apply to this case, which was commenced in 2004.
BAPCPA § 1501, 119 Stat. 216.
4
In Kord, we observed that while the House’s version of the statute
allowed fees “to the extent collectible under applicable law,” H.R. 8200,
 COUNTRYWIDE HOME LOANS v. HOOPAI 13337
state law remained good law, Kord held that Ҥ 506(b) pre-
empts state law.” Id. at 688-89 (citing In re 628 Ltd., 789 F.2d
674, 675 (9th Cir. 1986)). Because Kord remains good law,
at least with respect to the version of § 506(b) in effect prior
to the Bankruptcy Abuse Prevention and Consumer Protection
Act of 2005,5 the bankruptcy court erred in concluding that
Countrywide’s claim to attorneys’ fees under § 506(b) was
limited by state law.6

2. Temporal Scope

Finally, we must address the temporal scope of § 506(b),
specifically, the date at which § 506(b) ceases to govern the
fees incurred by an oversecured creditor. Hoopai argues that
§ 506(b) applies, at most, to the fees Countrywide incurred
prior to confirmation of her Chapter 13 plan, and does not

95th Cong. (1977), the enacted version dropped this language. 139 F.3d
at 689. The floor managers of the bill reported that this language had been
rejected by the committee, and that under the enacted version “[i]f the
security agreement between the parties provides for attorneys’ fees, it will
be enforceable under title 11, notwithstanding contrary law . . . .” Id.
(quoting 124 Cong. Rec. 32,350, 32,398, 33,989, 33,997 (1978)).
5
Whether Kord’s holding is applicable to the current version of
§ 506(b), as amended by the BAPCPA, is not before us.
6
Hoopai argues for the first time on appeal that even if the bankruptcy
court and the BAP erred in concluding that § 506(b) always requires
courts to apply state law to determine whether an oversecured creditor is
entitled to attorneys’ fees, the courts nonetheless reached the right result
because 11 U.S.C. § 1322(e) supersedes application of § 506(b) in this
case and directs the court to look to state law. Section 1322(e) provides
that “[n]otwithstanding . . . section[ ] 506(b) . . . , the amount necessary
to cure the default, shall be determined in accordance with the underlying
agreement and applicable nonbankruptcy law.” Hoopai asserts that she
provided for a cure of the arrearages with Countrywide in her bankruptcy
plan, and argues that § 1322(e)’s limitation on the amount needed to cure
default “extends to attorney fees and other costs as well” quoting In re
Tudor, 342 B.R. 540, 567-68 (Bankr. S.D. Ohio 2005). Because Hoopai
had ample opportunity to raise this argument before the bankruptcy court
and the BAP and failed to do so, we conclude that it is waived.
13338 COUNTRYWIDE HOME LOANS v. HOOPAI
govern the significant post-confirmation fees Countrywide
seeks. Countrywide contends that § 506(b) governs the fees
incurred at least until the “effective date” of the Chapter 13
plan, which it asserts was the date on which the sale of the
property occurred—nearly a year after the plan was con-
firmed.

[7] The temporal scope of § 506(b) is an issue of first
impression for this circuit. However, the Supreme Court has
remarked on the scope, albeit in dicta, and every circuit that
has addressed the issue has followed the Court’s statement
that § 506(b) governs fees only “until the confirmation or
effective date of the plan.” Rake v. Wade, 508 U.S. 464, 471
(1993), superseded on other grounds by 11 U.S.C. § 1322(e);
see also Rake, 508 U.S. at 468; Telfair v. First Union Mort-
gage Corp., 216 F.3d 1333, 1338-39 (11th Cir. 2000); In re
Milham, 141 F.3d 420, 425 (2d Cir. 1998); In re T-H New
Orleans Ltd. P’ship, 116 F.3d 790, 797 (5th Cir. 1997); Land-
mark Fin. Servs. v. Hall, 918 F.2d 1150, 1155 (4th Cir. 1990);
see also In re Joubert, 411 F.3d 452, 454 (3d Cir. 2005) (not-
ing in dicta that “[s]ection 506(b) allows oversecured credi-
tors to add reasonable post-petition, pre-confirmation attorney
fees, interest, and costs to the amount of their secured claim”).
The BAP has also held that § 506(b)’s application ends at
confirmation. See generally In re Laguna, 114 B.R. 214, 215
(B.A.P. 9th Cir. 1990). We agree.

In addition to the force of the Supreme Court’s statement,
two lines of reasoning support the conclusion that the applica-
bility of § 506(b) ends at a plan’s confirmation or “effective
date” despite the lack of an explicit temporal limitation in the
statute. First, because § 506(b) establishes an oversecured
creditor’s entitlement to receive certain post-petition interest
and fees, and because a confirmed plan establishes the scope
of all claims against the debtor, courts that have addressed
this issue have concluded that new fees, incurred after confir-
mation, fall outside the scope of § 506(b). See Rake, 508 U.S.
at 468 (“Respondent concedes . . . that because § 506(b) has
 COUNTRYWIDE HOME LOANS v. HOOPAI 13339
the effect of allowing a claim to the creditor, . . . the rights
granted under § 506(b) are relevant only until confirmation of
the plan.” (citations and internal quotation marks omitted)); In
re Milham, 141 F.3d at 423 (noting that “[a]n oversecured
creditor . . . is entitled to receive postpetition interest as part
of its claim at the time of confirmation of a plan” (quoting In
re Delta Res., Inc., 54 F.3d 722, 729 (11th Cir. 1995)), and
concluding that “[s]ection 506(b) thus defines the allowed
claim of an oversecured creditor”); Telfair, 216 F.3d at 1339
(“[A] contrary result would be inconsistent with the purpose
of section 506(b), which allows oversecured creditors to
include post-petition interest and certain fees as part of the
secured claim they will receive upon confirmation of the
plan.”).

Second, because § 1325(a) provides secured creditors with
a different right to interest from the “effective date of the
plan” through payment,7 § 506(b) would seem to conflict with
§ 1325(a) if both were to apply during the same time period.8
Thus, in In re Milham, the Second Circuit reasoned “we pre-
fer an interpretation of section 506(b) that accommodates sec-
tion 1325, and we believe one is readily available,” holding
that “[s]ection 506(b) . . . defines the allowed claim of an
oversecured creditor; treatment of that claim after confirma-
7
See In re Milham, 141 F.3d at 424 (“We have previously determined
that interest under § 1325(a)(5)(B)(ii) ‘should be fixed at the rate on a
United States Treasury instrument with a maturity equivalent to the repay-
ment schedule under the debtor’s reorganization plan . . . [but] should also
include a premium to reflect the risk to the creditor in receiving deferred
payments under the reorganization plan.’ ” (quoting In re Valenti, 105
F.3d 55, 64 (2d Cir. 1997) (internal citations and quotation marks omit-
ted))).
8
Although § 1325(a)(5)(B)(ii) “does not mention the term ‘discount
rate’ or the word ‘interest,’ ” the statutory requirement that payments over
the life of the plan have a “ ‘value, as of the effective date of the plan,’
that equals or exceeds the value of the creditor’s allowed secure claim”
creates a right to interest. Till v. SCS Credit Corp., 541 U.S. 465, 473-74
(2004) (plurality opinion).
13340 COUNTRYWIDE HOME LOANS v. HOOPAI
tion is governed by Section 1325 . . . .” 141 F.3d at 423
(emphasis added).

In arguing that § 506(b) governs its entitlement to post-
confirmation fees, Countrywide does not address these argu-
ments, or provide persuasive reasons to break with the many
decisions holding that § 506(b) governs only those fees
incurred prior to confirmation.9 Rather, Countrywide attempts
to reconcile its position with Rake and its progeny by assert-
ing that Hoopai’s plan did not become “effective” until the
sale of the property to White occurred, and that the temporal
scope of § 506(b) is limited by the “effective” date rather than
the date of confirmation.10

We reject this argument. Even assuming § 506(b) governs
until the “effective date,” rather than the confirmation date,
Countrywide has not provided any reason to conclude that the
two dates differ here. Although the Bankruptcy Code does not
define the phrase “effective date of the plan,” the “most logi-
cal interpretation,” and that endorsed by the courts and com-
mentators that have addressed the issue, is that the effective
date is the date the plan becomes binding on the parties. See
In re Pak, 378 B.R. 257, 265 (B.A.P. 9th Cir. 2007) (“[T]he
most logical interpretation of the ‘effective date of the plan’
is the date of plan confirmation, as a chapter 13 plan is not
binding on the debtor and other interested parties until it is
confirmed.”), abrogated on other grounds by In re Kagen-
veama, 541 F.3d 868, 874-75 (9th Cir. 2008); In re Lanning,
545 F.3d 1269, 1279 (10th Cir. 2008) (same); In re Wilson,
9
Countrywide cites to a single case that supports its view that a creditor
is entitled to fees incurred post-confirmation under § 506(b): In re Calza-
retta, 35 B.R. 92, 94 (Bankr. N.D. Ill. 1983). However, that case was
decided prior to Rake, and only considered whether post-confirmation fees
are per se “unreasonable” under § 506(b). Whether or not such fees are
reasonable is not at issue here; rather, the question is whether § 506(b)
applies at all following confirmation of a Chapter 13 plan.
10
Notably, all of the fees at issue in this case were incurred before the
sale to White was completed.
 COUNTRYWIDE HOME LOANS v. HOOPAI 13341
397 B.R. 299, 313 (Bankr. M.D. N.C. 2008) (same); In re
Fleishman, 372 B.R. 64, 70-74 (Bankr. D. Or. 2007) (review-
ing the statutory context, legislative history, dictionary defini-
tion of “effect,” and case law, and concluding that “it is most
logical to interpret the term ‘effective date of the plan’ . . . to
mean the date that the plan is confirmed”). This may be a date
specifically provided for in a Chapter 13 plan, but when no
such date is selected, the effective date is the date on which
the plan becomes final and binding due to a court order con-
firming the plan.11 See In re Pak, 378 B.R. at 265; In re Fle-
ishman, 372 B.R. at 70-74; 8 Collier on Bankruptcy
¶ 1325.06[3][b][i] (Alan N. Resnick & Henry J. Sommer eds.,
15th ed. rev. 2009); Kenneth N. Klee, Adjusting Chapter 11:
Fine Tuning the Plan Process, 69 Am. Bankr. L.J. 551, 560
(1995) (noting that the Bankruptcy Code does not define the
term “effective date,” and recommending the enactment of a
provision defining the term “to be the date on which the pro-
visions of a plan . . . become effective and binding on the par-
ties,” which may be the date of confirmation or some other
date established by the parties).

[8] Countrywide does not contend that Hoopai’s Chapter 13
plan specifically provided for an effective date, and no such
provision is apparent from the record. We therefore conclude
that the effective date of Hoopai’s plan was the date of confir-
mation: February 23, 2005. Section 506(b) thus governs
Countrywide’s claim to fees incurred prior to that date; on
remand, the bankruptcy court should award Countrywide
“reasonable” pre-confirmation fees pursuant to § 506(b). We
note that in applying the “reasonableness” limitation of
§ 506(b), the court must apply federal standards.12 See In re
11
This interpretation draws support from § 1327 of the Bankruptcy
Code, entitled “Effect of Confirmation,” which provides that “[t]he provi-
sions of a confirmed plan bind the debtor and each creditor . . . .” 11
U.S.C. § 1327(a). The provision thus makes clear that the effect of confir-
mation is to make the plan binding on the debtor and creditors.
12
In light of our determination that § 506(b) governs Countrywide’s
claim to pre-confirmation fees, we do not address Hoopai’s argument that
the bankruptcy court abused its discretion in determining that the fees
sought by Countrywide were “reasonable” under Hawaii Revised Statutes
section 607-14.
13342 COUNTRYWIDE HOME LOANS v. HOOPAI
268 Ltd., 789 F.2d 647, 677-78 (9th Cir. 1986); see also 4
Collier on Bankruptcy ¶ 506.04[3][a][ii] (noting that in apply-
ing § 506(b), “reasonableness is to be determined in accor-
dance with federal standards”).

But while § 506(b) governs Countrywide’s claim to pre-
confirmation fees, Hawaii law governs its claim to fees
incurred following confirmation. We therefore must review
the bankruptcy court’s determination that Countrywide was
entitled to fees as the “prevailing party” under Hawaii law.

V. Prevailing Party Analysis

[9] Under Hawaii law, a “prevailing party” is entitled to
collect reasonable attorneys’ fees pursuant to a contractual
attorneys’ fee provision. Haw. Rev. Stat. § 607-14.13 In deter-
mining which party is the prevailing party in complex litiga-
tion, Hawaiian courts focus on which party prevailed on the
“disputed main issue.” Food Pantry, Ltd. v. Waikiki Bus.
Plaza, Inc., 575 P.2d 869, 879 (Haw. 1978). The “disputed
main issue,” in turn, is identified by looking to “the principal
issues raised by the pleadings and proof in a particular case
. . . .” Fought & Co., Inc. v. Steel Eng’g & Erection, Inc., 951
P.2d 487, 503 (Haw. 1998) (quoting MFD Partners v. Mur-
13
Section 607-14 provides, in relevant part:
[I]n all actions on a promissory note or other contract in writing
that provides for an attorney’s fee, there shall be taxed as attor-
neys’ fees, to be paid by the losing party and to be included in
the sum for which execution may issue, a fee that the court deter-
mines to be reasonable; provided that the attorney representing
the prevailing party shall submit to the court an affidavit stating
the amount of time the attorney spent on the action and the
amount of time the attorney is likely to spend to obtain a final
written judgment, or, if the fee is not based on an hourly rate, the
amount of the agreed upon fee. The court shall then tax attorneys’
fees, which the court determines to be reasonable, to be paid by
the losing party . . . .
Haw. Rev. Stat. § 607-14 (emphasis added).
 COUNTRYWIDE HOME LOANS v. HOOPAI 13343
phy, 850 P.2d 713, 716 (Haw. Ct. App. 1992)). Thus, the
“prevailing party” is the party that succeeds on the issue or
issues that are (1) the “principal” issues raised in the litigation
and (2) disputed by the parties.

Here, the bankruptcy court and BAP disagreed regarding
what constituted the “disputed main issue,” and subsequently,
which party prevailed. The bankruptcy court determined that
the “disputed main issue” between Countrywide and Hoopai
“was enforcement of Countrywide’s liens and payment of
Countrywide’s secured claim.” Because the liens were
enforced and the claim paid, the bankruptcy court concluded
that Countrywide was the prevailing party, and thus entitled
to attorneys’ fees. On appeal, the BAP held that this determi-
nation was “clearly erroneous,” concluding that the disputed
main issue “was whether Hoopai would be allowed to com-
plete her $300,000 sale” and that because Hoopai was allowed
to do so, “[s]he plainly was the prevailing party.” We con-
clude that the BAP was correct, and find that the bankruptcy
court clearly erred in determining that Countrywide was the
prevailing party.

While ensuring payment may have been the motivation
behind Countrywide’s legal efforts, Countrywide’s entitle-
ment to payment was never an issue in dispute in the proceed-
ings between the parties. Hoopai never denied that she had
defaulted on her loans and that Countrywide was entitled to
repayment in full as an oversecured creditor. Countrywide
conceded as much before the bankruptcy court, writing in a
statement of “undisputed facts” that “Hoopai does not dispute
the default of Hoopai’s loan” but “disputes that [the] foreclo-
sure auction and sale divests the Property of her bankruptcy
estate.”

[10] Rather, the overarching disagreement between the par-
ties concerned how payment would be made, with Country-
wide pushing for recognition of its foreclosure sale to
Maluhia, and Hoopai seeking to sell the property to White and
13344 COUNTRYWIDE HOME LOANS v. HOOPAI
to pay Countrywide from the proceeds. The principal dispute
that emerged from the pleadings and motions was whether the
foreclosure sale extinguished Hoopai’s interest in the prop-
erty, such that the property was no longer part of the bank-
ruptcy estate and could not be sold to White. Countrywide
argued that the foreclosure sale had extinguished Hoopai’s
interest, and on this basis: (1) moved for relief from the auto-
matic stay so that the foreclosure sale could be completed; (2)
opposed confirmation of Hoopai’s Chapter 13 plan; and (3)
opposed Hoopai’s motion for approval to sell the property to
White. Hoopai vigorously disputed this argument. We agree
with Hoopai and the BAP that the “principle issues raised by
the pleadings and proof” were whether Hoopai retained her
interest in the property following the foreclosure auction, and
whether she should be allowed to sell the house to White.

[11] Hoopai was the prevailing party on these main dis-
puted issues. The bankruptcy court agreed with Hoopai that
her interest in the property had not been extinguished by the
foreclosure auction, and the court therefore denied Country-
wide’s motion for relief from the stay, granted Hoopai’s
motion for approval of the sale to White, and confirmed Hoo-
pai’s Chapter 13 plan. Because Hoopai prevailed on these
issues, she was the “prevailing party” under section 607-14.

Countrywide also suggests briefly that if § 506(b) governs
its claim to pre-confirmation fees, then Hoopai is the prevail-
ing party for purposes of fees under section 607-14 only if she
prevailed in the principal post-confirmation dispute between
her and Countrywide. Countrywide, however, cites no author-
ity that supports the proposition that a case can or should be
sliced into temporal segments in applying Hawaii’s prevailing
party analysis, and doing so would conflict with the edict to
consider only the “principal issues” in a case “and then deter-
mine, on balance, which party prevailed on th[ose] issues.”
Village Park Cmty. Ass’n v. Nishimura, 122 P.3d 267, 283
(Haw. Ct. App. 2005) (quoting MFD Partners, 850 P.2d at
715-16); see also In re Anderson, 49 B.R. 725, 730 (Bankr.
 COUNTRYWIDE HOME LOANS v. HOOPAI 13345
D. Haw. 1985) (noting that the Hawaii “prevailing party rule
requires that litigation be viewed in its entirety for the purpose
of determining entitlement to attorney’s fees” and that Hawaii
courts do “not bifurcate or apportion attorney’s fees on the
basis of individual motions or issues”).

Moreover, even assuming that Hawaii law permits us to
focus only on subsidiary post-confirmation issues, rather than
the principle issue regarding the effect of foreclosure, our
conclusion would remain the same, as Hoopai prevailed, on
balance, in the post-confirmation disputes. Two disputes
occupied the parties post-confirmation: Maluhia’s appeal of
the bankruptcy court’s determination regarding the effect of
the foreclosure sale, and Hoopai’s attempt to have Country-
wide’s liens released from the property so that she could com-
plete the sale to White. With regard to the first dispute,
Hoopai prevailed over Maluhia; Countrywide was not a party
to the litigation, though it incurred legal fees “monitoring” the
appeal. The second dispute centered on how much money
Hoopai would have to release to Countrywide for the creditor
to release its liens on the property: Hoopai offered to release
approximately $158,000, with the disputed amount in escrow
and potentially attached by the liens; while Countrywide
demanded $236,317.65 to release the liens. The bankruptcy
court granted Hoopai’s motion to sell the house free of the
liens, but ordered escrow to release approximately $177,000
and ordered that the liens attach to the proceeds of the sale.
Thus the court did not fully satisfy either party, but on bal-
ance, its order more closely aligned with the resolution sought
by Hoopai, as she was permitted to sell the house free of the
liens and to leave the majority of the disputed amount in
escrow.

[12] In sum, the bankruptcy court clearly erred in determin-
ing that Countrywide was the “prevailing party” under Hawaii
law. Because we conclude that Hoopai was the prevailing
party, Countrywide is not entitled to post-confirmation fees.
13346 COUNTRYWIDE HOME LOANS v. HOOPAI
Further, on remand, the bankruptcy court should reconsider
Hoopai’s request for attorneys’ fees under section 607-14.

VI. Conclusion

Section 506(b) governs an oversecured creditor’s entitle-
ment to attorneys’ fees incurred prior to confirmation of a
Chapter 13 plan and preempts state law; both the bankruptcy
court and the BAP therefore erred in analyzing Countrywide’s
claim to pre-confirmation fees under Hawaii’s attorneys’ fee
statute. We further conclude that the BAP correctly deter-
mined that Hoopai was the prevailing party under Hawaii
Revised Statutes section 607-14, and that the bankruptcy
court clearly erred in determining that Countrywide was the
prevailing party. We therefore reverse the BAP opinion in
part, affirm it in part, and vacate the bankruptcy court’s order.
We remand for the award of attorneys’ fees to Countrywide
pursuant to § 506(b) up to the date of plan confirmation, and
for reconsideration of Hoopai’s request for post-confirmation
fees.

VACATED and REMANDED.