Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Summitbridge National Investments III, LLC v. Faison

United States Court of Appeals, Fourth Circuit

February 8, 2019

SUMMITBRIDGE NATIONAL INVESTMENTS III, LLC, Creditor-Appellant,
v.
OLLIE WILLIAM FAISON, Debtor-Appellee.

          Argued: October 30, 2018

          Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh. Terrence W. Boyle, Chief District Judge. (5:17-cv-00384-BO)

         ARGUED:

          Christopher Paul Schueller, BUCHANAN INGERSOLL & ROONEY PC, Pittsburgh, Pennsylvania, for Appellant.

          John Arlington Northen, NORTHEN BLUE, LLP, Chapel Hill, North Carolina, for Appellee.

         ON BRIEF:

          Vicki L. Parrott, NORTHEN BLUE, LLP, Chapel Hill, North Carolina, for Appellee.

          Before FLOYD and HARRIS, Circuit Judges, and Donald C. COGGINS, Jr., United States District Judge for the District of South Carolina, sitting by designation.

          PAMELA HARRIS, CIRCUIT JUDGE.

         The question in this appeal is whether the Bankruptcy Code bars a creditor from asserting an unsecured claim for attorneys' fees, if those fees are incurred after the filing of a bankruptcy petition but guaranteed by a pre-petition contract. We join other federal courts of appeals in holding that the Code does not preclude such claims. Accordingly, we reverse the contrary determination of the district court and remand for further proceedings.

         I.

         From 2003 through 2012, Branch Banking and Trust Company ("BB&T") loaned $2.1 million to Ollie William Faison. To effectuate the loans, Faison signed three promissory notes secured by deeds of trust for farmland that Faison owned in North Carolina. Faison agreed that if the notes were placed with an attorney for collection, he would pay "all costs of collection, including but not limited to reasonable attorneys' fees." J.A. 73, 101, 129.

         On January 3, 2014, Faison filed a petition for relief under Chapter 11 of the Bankruptcy Code. During the ensuing bankruptcy proceedings, BB&T filed three proofs of claims - documents providing proof of a right to payment - for the outstanding principal and interest due on its promissory notes as of the date of Faison's petition. Those three claims were entitled to preferential treatment under the Code because the promissory notes underlying them were secured by collateral - namely, Faison's farmland in North Carolina. See Welzel v. Advocate Realty Invs., LLC (In re Welzel), 275 F.3d 1308, 1318 (11th Cir. 2001) (en banc) (describing the provisions of the Code that give preferential treatment to secured claims). That preferential treatment meant that BB&T's claims would be satisfied from the value of the farmland before any distributions were made to lower-priority unsecured claims. See Stubbs & Perdue v. Angell (In re Anderson), 811 F.3d 166, 168 (4th Cir. 2016).

         BB&T assigned its interest in the promissory notes - and in turn, the three bankruptcy claims based on those notes - to SummitBridge National Investments III, LLC ("SummitBridge") in January 2015. Now holder of the notes, SummitBridge began to defend the three claims in Faison's bankruptcy proceedings, incurring attorneys' fees in the process.

         Almost two years after BB&T assigned its claims to SummitBridge, Faison proposed a plan for repaying his creditors, ultimately approved by the bankruptcy court. The plan treated SummitBridge's three claims as one aggregate secured claim for $1, 715, 000, the value of the farmland securing the three notes. That amount was enough to cover the outstanding principal and pre-petition interest on the three notes, as well as a portion of SummitBridge's post-petition interest and attorneys' fees. To the extent that SummitBridge had incurred excess attorneys' fees not covered by the farmland's value, the plan made clear, SummitBridge could file an unsecured claim to recover those fees.

         SummitBridge did just that, filing the claim at issue here: an unsecured claim against Faison's estate for the remainder of the post-petition attorneys' fees it had incurred. Faison objected to SummitBridge's claim on two alternative grounds. First, Faison argued that SummitBridge's underlying contractual claim for attorneys' fees was unenforceable under North Carolina law because SummitBridge had failed to comply with state-law notice requirements. And second, Faison raised the federal-law issue we address today, arguing that "the Bankruptcy Code does not provide for allowance of an unsecured claim for post-petition attorneys' fees or costs." J.A. 265.

         The bankruptcy court addressed only Faison's federal-law argument, agreeing with him that the Code does not allow creditors like SummitBridge to assert unsecured claims for post-petition attorneys' fees. SummitBridge appealed the bankruptcy ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.