Case Summary:
Three Debtors-Defendants each filed a voluntary Chapter 7 petition. Two Plaintiffs filed adversary proceedings against Debtors seeking a determination that debts owed by Debtors were nondischargeable under 11 U.S.C. § 523(a)(2). The adversaries were consolidated for hearing. The Court rendered its judgment for Plaintiffs against two of the Debtors and dismissed the complaint against the third. Plaintiffs’ attorney subsequently filed a Petition for Attorney’s Fees. Debtors objected to the Petition. The Court first found that to be entitled to attorney’s fees under 11 U.S.C. § 523(a)(2), attorney’s fees must be supported by a state statute governing the nature of the section 523 claim. Here, the supporting state statutes that governed the nature of the claim were Wis. Stats. §§ 943.20(1)(d) and 895.446(1) and (3)(b). Because these statutes allowed a prevailing party to recover attorney’s fees, Plaintiffs were entitled to attorney’s fees. Further, the Court disagreed with Debtors’ contention that there should be a one-third overall reduction in attorney’s fees because the complaint was dismissed against one of the three Debtors, stating that Debtors failed to consider that many tasks would have been performed even if the third Debtor had never been a defendant. Finally, the Court declined to exercise its discretion in awarding exemplary damages due to the fact that the Debtors were of modest means and there was no evidence that the improper conduct of either Debtor created a seriousness of the hazard to the public.

Statute/Rule References:
11 U.S.C. § 523(a)(2) -- Nondischargeability
Wis. Stat. § 895.446 -- Property damage or loss caused by crime
Wis. Stats. § 943.20(1)(d) -- Theft

Key Terms:
Attorney Fees
Exemplary Damages