Travelers Casualty & Surety Co. of America v. Pacific Gas & Electric Co.

We are asked to consider whether federal bankruptcy law precludes an unsecured creditor from recovering attorney’s fees authorized by a prepetition contract and incurred in postpetition litigation. The Court of Appeals for the Ninth Circuit held, based on a rule previously adopted by that court, that such fees are categorically prohibited — even where the contractual allocation of attorney’s fees would be enforceable under applicable nonbankruptey law — to the extent the litigation involves issues of federal bankruptcy law. Because that rule finds no support in the Bankruptcy Code, we vacate…