Brian D. Lerner Immigration Attorney & Deportation Lawyer Blog

Another Bankruptcy case on punitive damages: Where entities filed involuntary bankruptcy petitions against two alleged debtors that were ultimately dismissed, and the alleged debtors filed motions against the petitioning creditors for costs, attorney’s fees and punitive damages under 11 U.S.C. Sec. 303(i), the bankruptcy court properly concluded that the statute permits an award of attorney’s fees for a Sec. 303 action as a whole, including fees incurred to litigate claims for fees and damages under Sec. 303(i)(1) and (2); court also properly concluded that Sec. 303(i) permits an award of punitive damages under Sec. 303(i)(2)(B) in the absence of an award of actual damages under Sec. 303(i)(2)(A). Bankruptcy court properly held two individuals who exercised control over the petitioning creditors jointly and severally liable for the costs and attorney’s fees the debtors incurred in obtaining dismissal of the involuntary petitions, but erred in holding the individuals liable for the debtors’ costs and fees incurred on the Sec. 303(i) motions themselves.
In re Southern California Sunbelt Developers, Inc. – filed June 9, 2010

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