Higgins

Wes Higgins (“Higgins”), his wife Arlene, and Arlene’s parents Bert and Leora Vincent (collectively “the appellants”) appeal the bankruptcy court’s summary judgment award against them of attorney’s fees and costs under 11 U.S.C. § 303 (i)(l). The bankruptcy court awarded both trial and appellate attorney’s fees after the dismissal of the appellants’ failed Petition for Involuntary Chapter 7 bankruptcy against Vortex was affirmed on appeal by the Ninth Circuit. Liberty Tool, & Mfg. v. Vortex Fishing Sys., Inc. (In re Vortex Fishing Sys., Inc.), 277 F.3d 1057 (9th Cir.2002) Under the totality of the circumstances, the court properly awarded fees and costs related to the initial litigation, but awarding fees associated with the subsequent appeals was an abuse of discretion.

BACKGROUND

Higgins invented a beeping fishing lure, which became the basis for his business, Vortex Lures, L.P. In 1990, Higgins agreed to a deal with an investor named Ray Scott (“Scott”), whereby Vortex Fishing Systems, Inc. (“Vortex”) was formed. Scott agreed to loan the new corporation $50,000 in exchange for the right to purchase 45% of the shares, and the right to vote Higgins’s remaining 55% of the shares…