Bankruptcy: Statutory Prospective Rent Damages Cap Applies To Creditor Work In Litigating Future Rent Issues, But Does Not Apply To Work On Past Rent Or Debtor Counterclaim Ordinary Breach Of Lease Issues

 

 

Cap Only Applies To Claims Directly Resulting From Lease Termination, Not Collateral Issues.

 

    The Ninth Circuit in In re Kupfer, No. 14-16697 (9^th Cir. Dec. 29, 2016) (published) considered the extent to which attorney's fees for certain work were or were not subject to the statutory cap for prospective rent aiding a defaulting, bankrupt tenant, which cap is contained in 11 U.S.C. § 522(b)(6). The panel concluded that the cap applies to fee work for claims that result directly from lease termination, but did not apply to collateral claims. In this instance, the cap did apply to fees attributable to litigating creditors' claims for future rent, but did not apply to fees attributable to litigating claims for past rent or attributable to litigating against debtors' ordinary breach of lease counterclaims.