In re: Paul Duncan Gillespie

FILED AUG 28 2014 1 SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL 2 OF THE NINTH CIRCUIT 3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. NC-13-1455-KuDJu ) 6 PAUL DUNCAN GILLESPIE, ) Bk. No. 09-55224 ) 7 Debtor. ) Adv. No. 09-05208 ______________________________) 8 ) RAYMOND A. BECHTOLD, ) 9 ) Appellant, ) 10 ) v. ) OPINION 11 ) PAUL DUNCAN GILLESPIE, ) 12 ) Appellee. ) 13 ______________________________) 14 15 Argued and Submitted on July 24, 2014 at San Francisco, California 16 Filed – August 28, 2014 17 ____________________ 18 Appeal from the United States Bankruptcy Court for the Northern District of California 19 Honorable Arthur S. Weissbrodt, Bankruptcy Judge, Presiding 20 21 22 Appearances: Marc L. Shea of Shea & McIntyre, A.P.C argued for appellant Raymond A. Bechtold; Wayne A. Silver 23 argued for appellee Paul Duncan Gillespie. 24 25 Before: KURTZ, DUNN and JURY, Bankruptcy Judges. 26 27 28 1 KURTZ, Bankruptcy Judge: 2 3 INTRODUCTION 4 For purposes of the discharge injunction, when does an 5 attorney’s fees claim arise? When the fees are incurred or when 6 the underlying claim arises? The bankruptcy court held that, 7 because the debtor’s participation in postpetition litigation was 8 “not entirely voluntary,” the creditor’s fees claim arose 9 prepetition and hence was subject to the debtor’s chapter 71 10 discharge. In so holding, the bankruptcy court distinguished 11 Boeing N. Am., Inc. v. Ybarra (In re Ybarra), 424 F.3d 1018, 12 1026-27 (9th Cir. 2005). 13 We disagree with the bankruptcy court. The bankruptcy court 14 misconstrued the meaning of voluntariness as used in Ybarra and 15 did not identify any meaningful distinction between Ybarra and 16 the instant case. Accordingly, we REVERSE AND REMAND. 17 FACTS 18 The debtor, Paul Duncan Gillespie, owned and controlled 19 several companies, including Dymatix, Inc. At the time of 20 Gillespie’s chapter 7 bankruptcy filing, Gillespie and his 21 companies were parties to a lawsuit commenced by Raymond Bechtold 22 in the Santa Clara County Superior Court (Case No. 08-CV-119735). 23 The state court lawsuit arose from Gillespie’s default on a loan, 24 which in turn led the lender, Giga-tronics, Inc., to sell all of 25 its interest in the collateral securing the loan to Bechtold. 26 27 1 Unless specified otherwise, all chapter and section 28 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532. 2 1 This collateral apparently consisted of much of Dymatix’s assets 2 including its general intangibles and its intellectual property. 3 Bechtold then attempted to enforce his right to possession of the 4 collateral, which right Gillespie and Dymatix disputed. Among 5 other things, Gillespie and Dymatix asserted that Giga-tronics’ 6 sale of the collateral to Bechtold constituted a wrongful 7 foreclosure because Giga-tronics failed to obtain possession of 8 the collateral before conducting the sale. In addition, 9 Gillespie and Dymatix filed a number of cross-claims against 10 Bechtold for breach of contract, conversion, breach of fiduciary 11 duty and tortious interference with contractual relations. 12 On June 22, 2009, several days before Gillespie’s bankruptcy 13 filing, the state court issued an order providing for Gillespie’s 14 incarceration based on the failure of Gillespie and Dymatix to 15 fully comply with the state court’s prior prejudgment writ of 16 possession, which had directed Gillespie and Dymatix to turn over 17 all of the collateral to Bechtold. Dymatix filed its chapter 7 18 bankruptcy at the same time as Gillespie (Bk. No. 09–55233). 19 The commencement of the bankruptcy cases on July 1, 2009, 20 did not result in the cessation of the litigation between the 21 parties. To the contrary, the litigation expanded into the 22 bankruptcy court forum. Among other things, Bechtold filed a 23 series of relief from stay motions seeking permission to pursue 24 his state law remedies in the state court. Bechtold also filed 25 adversary proceedings against Dymatix and Gillespie seeking a 26 bankruptcy court determination of his ownership of and 27 entitlement to the collateral. In addition, Bechtold’s adversary 28 complaint against Gillespie initially contained claims for relief 3 1 under §§ 523(a)(2) and (4), but Bechtold later abandoned his 2 exception to discharge claims by omitting them from his third 3 amended complaint filed in February 2010. 4 In response to the third amended complaint, Gillespie filed 5 in March 2010 an answer and roughly a dozen counterclaims against 6 Bechtold. The counterclaims largely mirrored the cross-claims 7 Gillespie had filed in the state court. Whereas Gillespie has 8 characterized his cross-claims and counterclaims as merely 9 defensive in nature, the pleadings themselves tell a different 10 story. Both his state court cross-claims and his bankruptcy 11 court counterclaims requested compensatory damages, punitive 12 damages, costs and attorney’s fees. 13 In May 2010, the bankruptcy court granted Bechtold limited 14 relief from the automatic stay to permit him to proceed with some 15 aspects of the state court litigation. The relief from stay 16 order explicitly prohibited Bechtold from enforcing any judgment 17 he might obtain in the state court against Gillespie or Dymatix, 18 or from seeking any damages for prepetition events. But the 19 order explicitly permitted Bechtold to proceed to trial on the 20 issue of his rights in the collateral. The order also stayed the 21 two adversary proceedings Bechtold had filed against Gillespie 22 and Dymatix, inasmuch as they sought essentially the same relief 23 as Bechtold was seeking from the state court. Eventually, after 24 Bechtold obtained the relief he was seeking from the state court, 25 the bankruptcy court dismissed his adversary proceedings. 26 In October 2010, the state court held trial and in March 27 2011 issued a final judgment in favor of Bechtold. Among other 28 things, the state court determined that, since July 2008, 4 1 Bechtold had been the owner of the collateral and was entitled to 2 possession of the collateral. Based on that determination, the 3 state court directed Dymatix and Gillespie to turn over any 4 collateral still in their possession. The judgment furthermore 5 enjoined Dymatix and Gillespie from any further use of the 6 collateral. Additionally, the judgment ruled against Dymatix and 7 Gillespie on all of their cross-claims. In a post-judgment 8 order, the state court awarded against both Dymatix and Gillespie 9 $134,573 in fees that Bechtold had incurred postpetition in 10 litigating the dispute both in the state court and in the 11 bankruptcy court. 12 Bechtold then filed two motions in the bankruptcy court 13 seeking, among other things, permission to enforce both the non- 14 monetary relief granted by the state court and its fee award. 15 Between May 2011 and September 2013, a period of well over two 16 years, Bechtold and Gillespie both filed numerous papers in the 17 bankruptcy court regarding whether Bechtold should be permitted 18 to enforce his right to possession and exclusive use of the 19 collateral as well as his fee award. 20 In fact, by September 2011, the bankruptcy court by oral 21 tentative ruling seemingly had resolved the fee issue. More 22 specifically, the bankruptcy court orally ruled at a hearing held 23 on September 23, 2011, that Ybarra applied to Bechtold’s 24 attorney’s fee claim. According to the bankruptcy court, the 25 fees incurred postpetition would be treated as a postpetition 26 claim for purposes of the discharge injunction because Gillespie 27 voluntarily returned to the fray and continued to litigate with 28 Bechtold in the state court after Gillespie commenced his 5 1 bankruptcy case and even after Bechtold had abandoned his 2 nondischargeability claims. After Bechtold abandoned his 3 nondischargeability claims, the bankruptcy court reasoned, 4 Gillespie could have exited the state court litigation without 5 any concern of continuing exposure for prepetition debts in light 6 of his bankruptcy discharge. 7 Instead of walking away from the state court litigation, the 8 bankruptcy court noted, Gillespie took affirmative steps to 9 resume that litigation. In particular, Gillespie objected to the 10 chapter 7 trustee’s proposed sale to Bechtold of the estate’s 11 interest in the state court lawsuit and in the collateral in 12 exchange for a cash payment of $14,000. Then, Gillespie 13 successfully overbid for the same property, agreeing to pay the 14 chapter 7 trustee $32,000 to purchase essentially the same assets 15 from the trustee. The court entered an order approving the sale 16 to Gillespie in February 2010, shortly after Bechtold abandoned 17 his nondischargeability claims against Gillespie. 18 In essence, the bankruptcy court determined that Gillespie 19 affirmatively and voluntarily acted postpetition by purchasing 20 the estate’s interest in his disputed claims against Bechtold and 21 the collateral and by voluntarily returning to the state court 22 litigation to press those claims. But after the state court 23 completely rejected all of Gillespie’s claims, the bankruptcy 24 court explained, Gillespie sought to characterize all of these 25 claims as purely defensive in nature. Under these circumstances, 26 the bankruptcy court concluded, Ybarra was apposite and its rule 27 regarding the discharge of attorney’s fees incurred postpetition 28 should be followed. 6 1 Even so, the bankruptcy court’s initial written order on the 2 subject matter of Bechtold’s motions, an order entered in October 3 2011, explicitly reserved all issues regarding the effect of the 4 discharge injunction on Bechtold’s entitlement to enforce the 5 state court judgment. 6 At the conclusion of the September 23, 2011 hearing, the 7 court indicated that there were two small lingering issues that 8 still needed deciding. One concerned whether the state court 9 properly included fees incurred by Bechtold in prosecuting his 10 nondischargeability claims (before Bechtold abandoned those 11 claims). The other concerned whether the bankruptcy court should 12 forbear from issuing its final order on the matter until after 13 Gillespie’s state court appeal had run its course. The court 14 continued the hearing so that it could ponder these issues. 15 In the ensuing months, the parties filed a seemingly endless 16 series of supplemental papers, and the bankruptcy court held a 17 number of continued hearings. Some of the papers and hearings 18 addressed issues that already had been addressed by the court 19 while others raised new issues. Nonetheless, on several 20 occasions, the court orally re-confirmed or “finalized” its prior 21 tentative ruling regarding the fee issue. For instance, in March 22 2012, the court stated as follows: 23 At the last hearing held December 8th, 2011, the Court finalized the previous tentative ruling from September 24 2011 that Defendant, quote: “. . . returned to the fray by purchasing the bankruptcy estate’s litigation rights 25 and pursuing those rights in the State Court litigation.” As a result the Chapter 7 discharge does 26 not discharge Defendant’s debt for post-petition attorney’s fees and costs awarded by the State Court. 27 28 Hr’g Tr. (March 6, 2012) at 3:25-4:9. The court once again 7 1 orally re-confirmed its fee ruling at a hearing held in November 2 2012. 3 Nonetheless, in its final written decision on the fee issue, 4 the court reversed itself and held that In re Ybarra did not 5 apply and that the postpetition fees had been discharged. In so 6 holding, the court primarily relied on the fact that Gillespie 7 was a defendant in the state court litigation, whereas the debtor 8 in Ybarra was the plaintiff. The bankruptcy court acknowledged 9 that Gillespie affirmatively pursued its cross-claims in the 10 state court litigation postpetition, but still concluded that 11 Gillespie had not “voluntarily borne the risk of incurring 12 attorneys’ fees in pursuing the litigation” postpetition because 13 Bechtold had initiated the litigation as plaintiff. 14 The bankruptcy court further reasoned that Gillespie’s 15 postpetition participation in the state court litigation “was not 16 entirely voluntary” because, if he had not purchased the estate’s 17 interest in the collateral and in the state court litigation and 18 had not thereafter pressed his claims in the state court, he 19 would have forfeited any interest he had in the collateral, in 20 his cross-claims and in his defenses against Bechtold’s claims. 21 On September 9, 2013, the bankuptcy court entered its final 22 memorandum decision and order, and Bechtold timely appealed. 23 JURISDICTION 24 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 25 §§ 1334 and 157(b)(2)(A) and (O). We have jurisdiction under 28 26 U.S.C. § 158. 27 ISSUE 28 Did the bankruptcy court correctly interpret In re Ybarra 8 1 when it concluded that Bechtold’s fee claim constituted a 2 prepetition claim and hence was covered by Gillespie’s chapter 7 3 discharge? 4 STANDARDS OF REVIEW 5 The scope of a chapter 7 discharge is a question of law that 6 requires use to construe the discharge provisions of the 7 Bankruptcy Code. Hassanally v. Republic Bank (In re Hassanally), 8 208 B.R. 46, 48 (9th Cir. BAP 1997). We review questions of law 9 de novo. Id. 10 DISCUSSION 11 The only question raised in this appeal is whether the 12 attorney’s fees the state court awarded against Gillespie 13 constitute a prepetition debt or a postpetition debt for purposes 14 of Gillespie’s chapter 7 discharge. 15 A chapter 7 discharge releases the debtor from personal 16 liability for debts arising “before the date of the order for 17 relief under this chapter” and enjoins creditors from enforcing 18 or collecting upon those debts. See § 727(b); see also 19 § 524(a)(2); Heilman v. Heilman (In re Heilman), 430 B.R. 213, 20 218 (9th Cir. BAP 2010). Under the Bankruptcy Code, the term 21 “debt” means liability on a claim. § 101(12). The existence of 22 such a claim ordinarily is determined by reference to 23 nonbankruptcy law – particularly state law. In re Hassanally, 24 208 B.R. at 49. 25 But federal law determines when a claim arises for 26 bankruptcy purposes. SNTL Corp. v. Ctr. Ins. Co. (In re SNTL 27 Corp.), 571 F.3d 826, 839 (9th Cir. 2009); Zilog, Inc. v. Corning 28 (In re Zilog, Inc.), 450 F.3d 996, 1000 (9th Cir. 2006). To 9 1 ascertain when a claim arises for purposes of the discharge 2 injunction, we must first consider the Bankruptcy Code’s broad 3 definition of the term “claim,” which means a: 4 (A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, 5 contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or [a] 6 (B) right to an equitable remedy for breach of 7 performance if such breach gives rise to a right to payment, whether or not such right to an equitable 8 remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or 9 unsecured. 10 § 101(5). 11 The Bankruptcy Code utilizes an exceptionally broad 12 definition of the term “claim” in order to ensure that “all legal 13 obligations of the debtor, no matter how remote or contingent, 14 will be able to be dealt with in the bankruptcy case.” In re 15 SNTL Corp., 571 F.3d at 838 (quoting Cal. Dep’t of Health Servs. 16 v. Jensen (In re Jensen), 995 F.2d 925, 929-30 (9th Cir. 1993)). 17 This broad definition “is critical in effectuating the bankruptcy 18 code’s policy of giving the debtor a ‘fresh start.’” In re 19 Jensen, 995 F.2d at 930. 20 To facilitate this broad definition and the fresh start 21 policy, the Ninth Circuit ordinarily employs the “fair 22 contemplation” test in determining when a claim arises. See, 23 e.g., In re SNTL Corp., 571 F.3d at 839; In re Zilog, 450 F.3d at 24 1000; In re Jensen, 995 F.2d at 930. This test dictates that a 25 claim arises when the claimant “can fairly or reasonably 26 contemplate the claim’s existence even if a cause of action has 27 not yet accrued under nonbankruptcy law.” In re SNTL Corp., 571 28 F.3d at 839 (citing Cool Fuel, Inc. v. Bd. of Equalization (In re 10 1 Cool Fuel, Inc.), 210 F.3d 999, 1007 (9th Cir. 2000)). 2 However, the Ninth Circuit has adopted a different standard 3 for determining for discharge purposes when an attorney’s fee 4 claim arises. Under that standard, even if the underlying claim 5 arose prepetition, the claim for fees incurred postpetition on 6 account of that underlying claim is deemed to have arisen 7 postpetition if the debtor “returned to the fray” postpetition by 8 voluntarily and affirmatively acting to commence or resume the 9 litigation with the creditor. In re Ybarra, 424 F.3d at 1026- 10 1027. The Ybarra court explained that, “[e]ven if a cause of 11 action arose pre-petition, the discharge shield cannot be used as 12 a sword that enables a debtor to undertake risk-free 13 [postpetition] litigation at others’ expense.” Id. at 1026. The 14 Ybarra court further explained that, while Congress intended the 15 discharge to relieve debtors from costs associated with their 16 prepetition acts even if such costs continue to accrue 17 postpetition, it did not intend to insulate debtors from costs 18 associated with postpetition acts. Id. at 1024 (citing In re 19 Hadden, 57 B.R. 187, 190 (Bankr. W.D. Wis. 1986)). 20 The Ybarra rule applies regardless of whether the litigation 21 begins prepetition or postpetition, regardless of the nature of 22 the underlying claim, and regardless of the forum in which the 23 postpetition litigation takes place. See, e.g., In re Ybarra, 24 424 F.3d at 1023-24; Siegel v. Fed. Home Loan Mortg. Corp., 143 25 F.3d 525, 533-34 (9th Cir. 1998); Shure v. Vermont (In re 26 Sure-Snap), 983 F.2d 1015, 1017-19 (11th Cir. 1993). 27 The bankruptcy court here acknowledged that Gillespie 28 affirmatively acted to resume his participation in the state 11 1 court litigation with Bechtold. Gillespie did so by purchasing 2 the estate’s interest in the collateral and in the state court 3 lawsuit and by litigating the state court action to its 4 conclusion. Nonetheless, the bankruptcy court still held that 5 Gillespie’s return to the state court litigation was not 6 voluntary within the meaning of Ybarra. The bankruptcy court 7 concluded that Gillespie’s postpetition litigation activity was 8 not entirely voluntary because Gillespie stood to lose any 9 interest he otherwise might have had in the collateral and in the 10 cross-claims and defenses he asserted in the state court lawsuit 11 unless he continued to actively assert those interests in the 12 lawsuit. 13 But this cannot be what Ybarra had in mind when it stated 14 that “Ybarra’s actions to revive the state suit were sufficiently 15 voluntary and affirmative to be considered ‘returning to the 16 fray.’” In re Ybarra, 424 F.3d at 1027. Any time debtors hold 17 disputed claims or property interests at the time of their 18 bankruptcy filing, those claims or interests are at risk of being 19 forfeited unless they or their estate take postpetition action to 20 preserve them. This was precisely the state of affairs each of 21 the debtors faced in Ybarra, Siegel and Sure-Snap. Thus, in 22 determining whether a debtor’s postpetition actions were 23 voluntary, Ybarra could not have meant that bankruptcy courts 24 should assess whether the debtors were compelled to act to 25 prevent the loss of their asserted interests and claims. 26 The bankruptcy court further ruled that Ybarra does not 27 apply when, as here, the debtor is the named defendant in the 28 postpetition litigation. According to the bankruptcy court, 12 1 Ybarra only should apply when the debtor is the named plaintiff. 2 The bankruptcy court offered no explanation for this limitation 3 of Ybarra, except to note that it had not found any cases in 4 which the Ybarra rule had been applied to a debtor who engaged in 5 postpetition litigation nominally as a defendant. 6 We disagree with the bankruptcy court’s attempt to limit 7 Ybarra in this manner. The focus of Ybarra’s inquiry does not 8 turn upon who is named as plaintiff and who is named as 9 defendant. Rather, the focus of the Ybarra inquiry is on the 10 debtor’s motivation for engaging in the postpetition litigation 11 and whether the debtor “returned to the fray” to press his 12 disputed claims and property interests or for some other purpose. 13 See id. at 1023-24; see also In re Sure-Snap Corp., 983 F.2d at 14 1018; In re Hadden, 57 B.R. at 190. 15 We acknowledge that these three decisions do not specify 16 where the line between voluntary and involuntary always should be 17 drawn. Nonetheless, these three decisions support the conclusion 18 that Gillespie is not entitled to a discharge of Bechtold’s 19 postpetition attorney’s fees given that Gillespie chose to resume 20 his participation in the state court action postpetition in order 21 to preserve his or her asserted interest in the collateral, in 22 his cross-claims, and in his defenses to Bechtold’s claims. 23 The bankruptcy court explicitly found here that Gillespie 24 continued to pursue the state court litigation postpetition for 25 these purposes. While the bankruptcy court later reversed itself 26 regarding the voluntariness of Gillespie’s postpetition actions, 27 the bankruptcy court never reversed its findings regarding the 28 underlying purposes of Gillespie’s postpetition litigation 13 1 activity, and neither party appealed the bankruptcy court’s 2 findings in this regard. Consequently, we accept those findings 3 as true. See Sachan v. Huh (In re Huh), 506 B.R. 257, 272 (9th 4 Cir. BAP 2014) (en banc). 5 Moreover, we agree with these findings. The state court 6 litigation was, at bottom, a dispute over ownership of the 7 collateral, with each side using the litigation as an opportunity 8 to assert their respective interests in the collateral and to 9 assert claims for damages to the extent their respective property 10 interests were interfered with.2 Simply put, whichever side was 11 nominally designated as the plaintiff and whichever was nominally 12 designated as the defendant did not, in this instance, change the 13 fundamental nature and purpose of the litigation. 14 The only other ground the bankruptcy court offered for 15 distinguishing Ybarra was that the debtor there was offered a 16 monetary settlement as an alternative to continued postpetition 17 litigation, whereas Gillespie here was not offered any money in 18 lieu of continuing to assert his interests in the collateral and 19 the state court lawsuit. However, as we already have explained 20 above, the focus of the Ybarra test is on the purpose of the 21 postpetition litigation. Thus, any distinction regarding what, 22 if anything, the debtor was offered to not pursue his or her 23 2 24 Of course, as a result of Gillespie’s bankruptcy discharge, by the time Gillespie resumed his participation in the 25 state court action, Gillespie no longer had any exposure on 26 account of Bechtold’s damages claims arising from Gillespie’s prepetition interference with Bechtold’s property interests in 27 the collateral. See generally In re Hassanally, 208 B.R. at 54- 55 (holding that construction defects claims arose prepetition 28 when the tortious conduct occurred and hence were discharged). 14 1 asserted interests and claims is immaterial, except to the extent 2 it tends to demonstrate the underlying purpose of the 3 postpetition litigation. 4 Aside from the bankruptcy court’s reasoning, Gillespie 5 similarly argues that he had no choice but to return to the fray, 6 so the bankruptcy court correctly determined that his return to 7 the fray was not voluntary. As Gillespie puts it, he “never had 8 the option of enjoying his fresh start, because Bechtold 9 contended that Gillespie was wrongfully in possession of [the 10 collateral], and that Gillespie’s continued wrongful possession 11 was actionable despite Gillespie’s [c]hapter 7 discharge.” Aple. 12 Resp. Brief (Jan 27, 2014) at p. 25. 13 Gillespie’s argument is fallacious. It improperly equates 14 Gillespie’s entitlement to a fresh start and his entitlement to 15 the benefit of his chapter 7 discharge with an entitlement to 16 indefinitely impede Bechtold’s right as owner to exclusive use 17 and possession of the collateral. In other words, Gillespie’s 18 chapter 7 discharge rights did not alter or entitle him to alter 19 Bechtold’s property interests. Bechtold’s property interests 20 passed through Gillespie’s bankruptcy proceedings unaffected. 21 See Dewsnup v. Timm, 502 U.S. 410, 418 (1992). “[A] bankruptcy 22 discharge extinguishes only one mode of enforcing a claim – 23 namely, an action against the debtor in personam – while leaving 24 intact another – namely, an action against the debtor in rem.” 25 Johnson v. Home State Bank, 501 U.S. 78, 84 (1991). 26 Moreover, Gillespie’s argument is inconsistent with Ybarra’s 27 teaching that, “[i]f the debtor chooses to enjoy his fresh start 28 by pursuing pre-petition claims . . ., he must do so at the risk 15 1 of incurring the post-petition costs involved in his acts.” In 2 re Ybarra, 424 F.3d at 1024 (quoting In re Hadden, 57 B.R. at 3 190). 4 In sum, the bankruptcy court committed reversible error 5 because it misconstrued Ybarra. In addition to reversing the 6 bankruptcy court’s ruling, we must remand this matter for further 7 findings. The record indicates that a portion of the attorney’s 8 fees Bechtold incurred postpetition were incurred while Gillespie 9 was still under the cloud of Bechtold’s nondischargeability 10 claims. The bankruptcy court must determine whether and to what 11 extent, before Bechtold abandoned his nondischargeability claims, 12 Gillespie engaged in his postpetition litigation activity for the 13 purpose of limiting or preventing his exposure on account of the 14 nondischargeability claims. To that extent, under Ybarra, 15 Bechtold’s postpetition fees should be considered discharged. We 16 express no opinion regarding how the bankruptcy court should 17 apportion Bechtold’s postpetition fees between those that are 18 discharged and those that are not discharged. Instead, we leave 19 it to the bankruptcy court to address that issue in the first 20 instance. 21 CONCLUSION 22 For the reasons set forth above, we REVERSE AND REMAND. 23 24 25 26 27 28 16