There’s Reciprocal Fee-Shifting in California When a Contract Has Unilateral Fee-Shifting

June 26, 2025

There’s Reciprocal Fee-Shifting in California When a Contract Has Unilateral Fee-Shifting

In California, bringing litigation with a marginal possibility of success could be a bad bet whenever a contract permits one side to recover attorneys’ fees.

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Opinion Link

View Opinion

https://abi-opinions.s3.us-east-1.amazonaws.com/Babas+de+Guzman.pdf

Case Details

Case Citation

Sibayan v. De Guzman (In re De Guzman), 24-02029 (Bankr. E.D. Cal. June 9, 2025)

Case Name

Sibayan v. De Guzman (In re De Guzman)

Case Type

Consumer

Court

9th Circuit

California

California Eastern District

Bankruptcy Tags

Ethics

Practice and Procedure

Professional Compensation/Fees

Consumer Bankruptcy

Comments

Submitted by John Tedford on June 26, 2025

"What if a debtor litigates and loses a claim objection involving a contract calling for fee-shifting? Is the award of fees against the debtor an administrative claim or a prepetition unsecured claim?" -- At least in the Ninth Circuit, a claim for fees incurred by the creditor postpetition is part of the creditor's prepetition claim. In re SNTL Corp., 571 F.3d 826 (9th Cir. 2009) (prepetition agreement containing attorneys' fees provision gives rise to a contingent, unliquidated attorney-fee claim allowable under section 502); see also In re Castellino Villas, A. K. F. LLC, 836 F.3d 1028, 1034 (9th Cir. 2016).