Ybarra

After filing for bankruptcy protection, Nancy Elaine Ybarra (“Ybarra”) persuaded a state court to vacate the dismissal of an action she had filed against her former employer Rockwell International Corporation (“Rockwell”) prior to filing for bankruptcy. Rockwell prevailed and was awarded attorney fees and costs by the state court. The bankruptcy court held that despite Ybarra’s discharge in bankruptcy, Rockwell could collect the portion of the fees and costs incurred after Ybarra filed for bankruptcy. In a divided opinion, the Bankruptcy Appellate Panel of the Ninth Circuit (“BAP”) reversed. The BAP majority held that the entire award was encompassed in the discharge. Boeing North American, Inc., as successor to Rockwell, appealed. We hold that the fees and costs incurred post-petition were not discharged, and therefore reverse.

I. Statement of Facts and Procedural History

In 1988, Ybarra sued Rockwell in Orange County Superior Court. Ybarra’s Fifth Amended Complaint, filed in April of 1991, asserted two causes of action: 1) employment discrimination in violation of California Government Code section 12940; and 2) violation of the covenant of good faith and fair dealing.

On…