A debtor sought to recover attorney's fees from a creditor who unsuccessfully challenged the debtor's dischargeability. The creditor had alleged that the items listed on the debtor's statement of financial affairs were materially false, but was unable to convince the Bankruptcy Court. The Bankruptcy Court, however, denied the debtor's request for attorney's fees because there was not evidence that the creditor pursued the complaint frivolously or without substantial justification. The case was In Re: Louise Reynolds Freeman, decided by Judge Tice for the United States Bankruptcy Court, Eastern District of Virginia, at Alexandria.
The United States Bankruptcy Court for the Eastern District of Virginia also held that debtor's counsel are not entitled to recover attorney's fees from a creditor where the creditor loses a suit objecting to debtor's discharge unless it is proven that the suit was filed vexatiously, wantonly, in bad faith, or for oppressive reasons in the case of In Re Gecowetts. In Gecowetts the debtor's estranged wife filed an action objecting to the debtor's dischargeability of a debt. After a full trial on this issue, the Court allowed the debtor a discharge of all debts. Relying on the "American Rule," the Court found that although the creditor was unsuccessful in the dischargeability proceeding, the action was not filed vexatiously, wantonly, in bad faith, or for oppressive reasons. Therefore, no fees were awarded.
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