This educational guide is based on the linked primary sources. It is not a Court publication, is not affiliated with the Court, and is not legal advice.
In brief
Overview
According to Justice Kennedy, the case concerns whether attorney fees incurred in connection with filing a bankruptcy claim are recoverable as part of the claim.
According to Travelers Casualty and Surety Company, travelers argues that the Ninth Circuit's Fobian rule creates an unwarranted federal common‑law rule that exists outside the structure of the Bankruptcy Code.
According to Travelers Casualty and Surety Company, travelers contends that any right to payment, when the debtor files for bankruptcy, becomes a claim.
According to Travelers Casualty and Surety Company, travelers points out that when a bankruptcy plan says nothing, the default rule under Section 1141(d) extinguishes the rights.
Travelers cites 28 U.S.C. § 502(b)(4) to argue that a claim for attorney services may be disallowed if it exceeds the reasonable value of those services.
The Respondent argues that the Fobian rule is wrong, especially regarding the distinction it draws between state law and federal litigation.
The Court notes that many cases allow attorneys’ fees as unsecured claims.
The Court warns of an enormous amount of affirmative harm that could result if it overturns the Ninth Circuit’s disallowance, and reserves an open question on the meaning of §§ 502(b) and 506(b).
- [1] 3a0f2a2f2e35358f6625-r1-8da5c9934ad25410.pdf, p. 4
- [2] 3a0f2a2f2e35358f6625-r1-8da5c9934ad25410.pdf, p. 3
- [3] 3a0f2a2f2e35358f6625-r1-8da5c9934ad25410.pdf, p. 5
- [4] 3a0f2a2f2e35358f6625-r1-8da5c9934ad25410.pdf, p. 12
- [5] 3a0f2a2f2e35358f6625-r1-8da5c9934ad25410.pdf, pp. 38–39
- [6] 3a0f2a2f2e35358f6625-r1-8da5c9934ad25410.pdf, p. 28
- [7] 3a0f2a2f2e35358f6625-r1-8da5c9934ad25410.pdf, p. 20
- [8] 3a0f2a2f2e35358f6625-r1-8da5c9934ad25410.pdf, p. 29
Background and question before the Court
The oral argument before the Supreme Court began at 11:01 a.m.
Justice Kennedy asked whether the attorney’s fees for filing a bankruptcy claim are recoverable as part of the claim.
What each side argues
Travelers Casualty and Surety Company (Petitioner)
According to Travelers Casualty and Surety Company, the Ninth Circuit's Fobian rule creates an unwarranted federal common‑law rule that exists outside the Bankruptcy Code.
According to Travelers Casualty and Surety Company, any right to payment becomes a claim when the debtor files for bankruptcy.
According to Travelers Casualty and Surety Company, when a bankruptcy plan says nothing, the default rule in bankruptcy extinguishes the rights under Section 1141(d).
According to Travelers, section 502(b)(4) allows a claim for attorney services only to the extent that the fees do not exceed the reasonable value of those services.
According to Mr. Brunstad, attorney fees have been allowed as unsecured claims for a century without causing disaster, indicating congressional acceptance of the practice.
Pacific Gas and Electric Company (Respondent)
According to Respondent, the Fobian rule is wrong, especially regarding the distinction it draws between state law and federal litigation.
What happened at oral argument
The oral argument before the Supreme Court began at 11:01 a.m.
The Court noted that many cases allow attorneys’ fees as unsecured claims.
The Court warned of an enormous amount of affirmative harm that could result if it overturns the Ninth Circuit’s disallowance, and reserved an open question on the meaning of §§ 502(b) and 506(b).
What the Court decided
Why it matters
The resolution will determine whether attorneys can recover fees as unsecured claims in bankruptcy, affecting creditors’ ability to obtain compensation for legal services.
Terms to know
No glossary terms are available for this guide.
Primary sources
Read the source materials on the official site or open the immutable repository copy used for this guide.
- 3a0f2a2f2e35358f6625-r1-8da5c9934ad25410.pdforal argument transcript
Guide generated September 21, 2026. Automated validation accepted this version.