In its decision in In re Brandt, the court seems to draw a clear line: No post-petition add-ons for attorneys’ fees and costs when a secured claim arises from a judgment lien.
In the recent In re Brandt, No. 21-31744 (Sept. 12, 2025) decision, the U.S. Bankruptcy Court for the Eastern District of Tennessee ruled that an oversecured creditor did not have an allowed claim for post-judgment expenses, including attorneys’ fees, incurred after the bankruptcy petition was filed (i.e., the petition date). While on its face the ruling may seem to contradict commercial expectations and Section 506(b) of the Bankruptcy Code, the Brandt opinion follows established precedent, including the Supreme Court’s decision in United States v. Ron Pair Enterprises, Inc., 489 U.S. 235 (1989).
Background
Between 2007 and early 2009, First National Bank of Oneida made several loans to the debtor, Donald Brandt, secured by real property. In July 2009, Brandt filed his first bankruptcy—a Chapter 11 in the Middle District of Florida—which, for the bank, marked the beginning of a 15-year odyssey of exercising remedies, obtaining judgments and seeking repayment. In the first bankruptcy, the bank was a secured creditor and, under a confirmed plan of reorganization, was issued a promissory note secured by additional real property. When Brandt defaulted under the plan note, the bank obtained stay relief and proceeded to foreclose on the properties that were serving as collateral. After the foreclosures, the bank also received stay relief to sue for recovery of its deficiency claim and filed a civil suit in the U.S. District Court for the Middle District of Florida.
In March 2017, the court entered a judgment in favor of the bank for $180,000 for the unpaid note under the confirmed plan. In February 2020, the same court granted summary judgment in favor of the bank and entered judgments for a $1,227,712.95 deficiency claim and for $84,000 in pre-judgment legal fees and costs. The court also subsequently entered an unopposed judgment in favor of the bank for legal fees and costs relating to Brandt’s unsuccessful attempt to appeal the deficiency judgment. None of the judgments expressly authorized the bank to recover additional post-judgment expenses, including attorneys’ fees and costs, although the bank was entitled to such expenses under the terms of the loan documents. Because the debtor owned real property in numerous states, the bank recorded the judgments in various counties in Tennessee, Florida, Ohio and Arizona, obtaining involuntary judgment liens on the debtor’s properties in those locations.
Before the bank could foreclose on its judgment liens, the debtor filed his second bankruptcy—this time a Chapter 13. The bank then filed three secured proofs of claim in the case for the deficiency claim and legal fees and expenses. The claims were largely satisfied during the pendency of the case with the proceeds of property sales, but when the bank amended its secured claim to assert approximately $117,000 in post-judgment, pre- and post-petition legal fees and costs, the debtor objected, arguing the bank’s claim improperly included such amounts and that the same were not allowable under Section 506(b) of the Bankruptcy Code.
The Bankruptcy Court’s Analysis and Decision
Section 506(b) of the Bankruptcy Code governs the allowance of secured claims generally, including the question of whether a secured creditor is entitled to post-petition interest, fees, costs and charges. Specifically, Section 506(b) states that a secured creditor may recover “interest on such claim, and any reasonable fees, costs, or charges provided for under the agreement or State statute under which such claim arose” if the value of the collateral exceeds the amount of the claim. The U.S. Supreme Court in United States v. Ron Pair Enterprises, Inc., 489 U.S. 235 (1989) clarified that fees, costs and charges may only be added if they are both reasonable and provided for in the agreement under which the claim arose.
In In re Brandt, the court found that the bank’s secured claim for post-judgment, post-petition expenses, including attorneys’ fees, was not “provided for in the agreement under which the claim arose.” Consequently, the bank was not entitled to such expenses, including attorneys’ fees, under Section 506(b) of the Bankruptcy Code. While the bank’s claims ultimately arose under credit and security agreements entered into when the loans were made to Brandt—agreements that did provide for costs—the court found that the recent judgments, and not the credit and security documents, were the applicable “agreement[s] under which the claim arose.” The court noted that “[n]one of the Judgments expressly authorized additional post-judgment attorneys’ fees, costs or expenses.” Under the plain language of Section 506(b) and Supreme Court precedent (United States v. Ron Pair Enterprises, Inc.), the court held that the bank was not entitled to post-judgment, post-petition expenses.
Notably, the court did allow the bank’s claim for post-judgment, pre-petition costs. The court stated that in many cases, under the merger doctrine, a judgment will merge with and ultimately supersede credit and security documents. In the case of such a merger, a provision in the underlying loan documents obligating a borrower or guarantor to pay costs, including attorneys’ fees, will not be enforceable unless provided for in the judgment. Accordingly, since the bank’s judgments in this case failed to provide for additional post-judgment attorneys’ fees, costs or expenses, under the merger doctrine, the bank would not be entitled to assert a claim for post-judgment, pre-petition costs. The court, however, found an exception to the merger doctrine applied because the promissory note executed by Brandt in favor of the bank specifically included a promise by the borrower to pay costs of an attorney if the lender hired one to collect the note. The court relied upon the opinion in Weber v. D’Agostino, 251 So.3d 188 (Fla. Dist. Ct. App. 2018), which recognized an exception originally articulated in Caine & Weiner v. Barker, 713 P.2d 1133 (Wash. Ct. App. 1986). The Barker court found that “where the original obligation provides for special rights or exemptions, in some circumstances these may be preserved and recognized despite merger.” Barker, 713 P.2d at 1135. Based on the “special right” to recover attorneys’ fees set forth in the underlying note, the court found that the right to recover survived merger and overruled Brandt’s objection to the bank’s claim for post-judgment, pre-petition attorneys’ fees.
Impact and Key Takeaways
In its decision in In re Brandt, the court seems to draw a clear line: No post-petition add-ons for attorneys’ fees and costs when a secured claim arises from a judgment lien. Under this decision, a creditor whose secured status is based only on nonconsensual judgment liens may not be able to recover post-judgment, post-petition fees and expenses under Section 506(b), even if the underlying loan documents otherwise provide for costs and attorneys’ fees. However, it is worth noting that the Brandt holding hinges on the finding that “[n]one of the Judgments expressly authorized additional post-judgment attorneys’ fees, costs or expenses.” The opinion may encourage practitioners in some cases (where permissible) to seek to include language in judgments providing for post-judgment reasonable costs, including attorneys’ fees and charges, relating to execution and collection. It is also worth taking note of the language discussed in Brandt that was found to be an exception to the merger doctrine. Inclusion of such language in a note may in some cases preserve a judgment creditor’s right to collect post-judgement costs and attorneys’ fees notwithstanding a court’s application of the merger doctrine.
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