United States District Court, D. Delaware
In re TRIBUNE MEDIA COMPANY, et al, Reorganized Debtors.
TRIBUNE MEDIA COMPANY, et al. Appellees. WILMINGTON TRUST COMPANY Appellant,
before the Court is an appeal by Wilmington Trust Company
seeking reversal of the Bankruptcy Court's Order
Sustaining the Reorganized Debtors' Objection to the
Class IF Other Parent Claim Asserted by Wilmington Trust
Company and from the Memorandum Opinion related to that
Order, both dated November 19, 2015. (D.I. 1, 1-2, 1-3). This
Court has jurisdiction over this appeal pursuant to 28 U.S.C.
§ 158(a)(1). Briefing is complete. (D.I. 19, 23, 25). I
heard oral argument on November 16, 2018. For the reasons
that follow, the order of the Bankruptcy Court is
REVERSED, and the case is
REMANDED for further consideration
consistent with this order.
issue on appeal is whether, considering Travelers Cas.
& Sur. Co. of Am. v. Pac. Gas & Elec. Co., 549
U.S. 443 (2007), Appellant Wilmington Trust Company is
entitled to an allowed, unsecured claim for post-petition
attorneys' fees under an otherwise valid prepetition
contract. The answer to that question hinges on the
interpretation of two provisions of the Bankruptcy Code:
Section 502 and Section 506(b).
Code Section 502(a) provides, "A claim or interest... is
deemed allowed, unless a party in interest. .. objects."
11 U.S.C. § 502(a). When an interested party objects,
Section 502(b) instructs the bankruptcy court to
"determine the amount of such claim ... and ... allow
such claim in such amount" subject to certain enumerated
exceptions. The exception most relevant to this appeal is
Section 502(b)(1) which disallows claims that are
"unenforceable against the debtor and property of the
debtor, under any agreement or applicable law for a reason
other than because such claim is contingent or
unmatured." The "applicable law" includes the
Bankruptcy Code itself. See Travelers, 549 U.S. at
506 addresses which allowed claims are secured claims. It
provides that, when there is a lien on property, claims are
secured to the extent of the value of the interest in the
property and unsecured "to the extent that the value of
such creditor's interest or the amount so subject to
setoff is less than the amount of such allowed claim."
§ 506(a). When a claim is oversecured (i.e., the value
of the collateral exceeds the amount of the underlying
claim), Section 506(b) allows a'secured claim for
"any reasonable fees, costs, or charges provided for
under the agreement or State statute under which such claim
argue, and the Bankruptcy Court concluded, that Section
506(b) is properly read as implicitly limiting claims
allowable under Section 502. In reaching this conclusion,
Appellees apply some variation of the expressio unius est
exclusio alterius (express mention of one thing excludes
all others) canon of statutory construction. (D.I. 23 at
6-11). Specifically, Appellees argue that because the statute
expressly allows a claim for secured reasonable
attorneys' fees in Section 506(b), Congress must
otherwise have meant for such claims to be disallowed.
courts of appeals that have considered this issue
post-Travelers have unanimously rejected
Appellees' position and have allowed unsecured claims for
contractual attorneys' fees that accrued post-filing of
the bankruptcy petition. See Busson-Sokolik v. Milwaukee
Sch. of Eng'g (In re Sokolik), 635 F.3d 261, 267
(7th Cir. 2011) ("Finding no applicable exception in the
Bankruptcy Code ... we affirm the award of costs and
attorney's fees . .. ."); Ogle v. Fid. &
Deposit Co. of Md, 586 F.3d 143, 148 (2d Cir. 2009)
("[W]e hold that section 506(b) does not implicate
unsecured claims for post-petition attorneys' fees, and
it therefore interposes no bar to recovery."); SNTL
Corp. v. Ctr. Ins. Co. (In re SNTL Corp.), 571 F.3d 826,
843 (9th Cir. 2009) ("[C]laims for postpetition
attorneys' fees cannot be disallowed simply because the
claim of the creditor is unsecured."). They joined the
two courts of appeals that had found such claims allowable
prior to Travelers. See UPS Capital Bus. Credit v.
Gencarelli (In re Gencarelli), 501 F.3d 1, 6 (1st Cir.
2007) ("[D]isallowing claims in their entirety based on
section 506(b) defies common sense."); Welzel v.
Advocate Realty Invs., LLC (In re Welzel), 275 F.3d 1308
(11th Cir. 2001). Despite these decisions, there continue to
be reasoned decisions by bankruptcy and district court judges
going the other way. (See D.I. 29 (citing six such
decisions in 2016 and 2017)).
not have anything new to add to this debate. I merely note
that I cannot conclude that Section 506(b)
"expressly" disallows the claims at issue here.
Thus, I agree with the position adopted by every court of
appeals faced with this question; Section 506(b) does not
limit the allowability of unsecured claims for contractual
post-petition attorneys' fees under Section 502. The
order of the Bankruptcy Court is REVERSED,
and the case is REMANDED for further
consideration consistent with this order.
 The Third Circuit has not decided the
issue and there has never been a nationwide consensus on the
allowability of bankruptcy claims for contractual
postpetition fees. A recent Supreme Court opinion, however,
reaffirmed a requirement that claims that are within the
scope of Section 502 are allowed unless they are expressly
disallowed in the Bankruptcy Code. See Travelers Cas.
& Sur. Co. of Am. v. Pac. Gas & Elec. Co., 549
U.S. 443, 452-54 (2007) ("[C]laims enforceable under