Ogle v. Fidelity & Deposit Co. of Maryland, 586 F.3d 143 (2d Cir. 2009)

Ogle v. Fidelity & Deposit Co. of Maryland, 586 F.3d 143 (2d Cir. 2009)

 
In this Emerging Issues Analysis, James Lawniczak considers the Second Circuit's holding that an unsecured creditor has a valid claim under a prepetition indemnity agreement for the expenditure of postpetition attorneys' fees related to the litigation of issues under the underlying contract. The decision is consistent with the SNTL decision of the Ninth Circuit and correctly applies the rationale of the Supreme Court Travelers case.
 
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In Ogle v. Fidelity & Deposit Co. of Maryland, 586 F.3d 143, 145 (2d Cir. 2009), the U.S. Court of Appeals for the Second Circuit considered an issue as to which “[c]ourts are closely divided.” The court held that an unsecured creditor has a valid claim under a prepetition indemnity agreement for the expenditure of postpetition attorneys' fees related to the litigation of issues under the underlying contract.
 
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The key statutory provision in the court's decision was 11 U.S.C. § 502, which deals with the allowance of claims against a debtor. Section 502(b) provides that, once an objection to a claim is filed, the court “shall determine the amount of such claim in lawful currency of the United States as of the date of the filing of the petition.” There are then nine subsections of section 502(b), which list various types of claims against debtors that should not be allowed, e.g., subsection (2), which disallows claims for “unmatured interest,” or that should only be allowed in part.

The term “claim” is very broadly defined in section 101(5)(A) of the Bankruptcy Code as any “right to payment,” including rights that are unliquidated, contingent, unmatured or disputed. A “contingent” claim is one where the obligations may become due on the happening of a future event that was within the contemplation of the parties when the original relationship was created. Olin Corp. v. Riverwood Int'l Corp. (In re Manville Forest Prods. Corp.), 209 F.3d 125, 128-29 (2d Cir. 2000).


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