When the IRS violates the automatic stay

Email from Renay Rodriguez:

Taxpayers in bankruptcy cases who believe the IRS has violated the bankruptcy automatic stay or discharge injunction may file claims with the IRS for relief from the violations and for damages. The filing of a claim with the Service is a prerequisite for seeking damages and attorney fees under the Internal Revenue Code for violations of the automatic stay or discharge injunction. See 26 U.S.C. §§ 7430(a) and (b)(1), 7433(d)(1) and (e). Regulations provide that such claims should be sent in writing to the Chief, Local Insolvency Unit, for the judicial district in which the taxpayer filed the underlying bankruptcy case giving rise to the alleged violation. See 26 CFR § 301.7433-2(e). These bankruptcy related claims can be mailed to:

Internal Revenue Service
Chief, Local Insolvency Unit
Centralized Insolvency Operation
P.O. Box 7346
Philadelphia, PA 19101-7346

For further details regarding the procedures and requirements applicable to the filing of these types of bankruptcy related administrative claims for relief see 26 CFR § 301.7433-2 (Civil cause of action for violation of section 362 or 524 of the Bankruptcy Code), 26 CFR § 301.7430-1 (Exhaustion of administrative remedies), and 26 CFR § 301.7430–8 (Administrative costs incurred in damage actions for violations of section 362 or 524 of the Bankruptcy Code).

May the Light shine our way on.
R. Grace Rodriguez, Esq.

San Fernando Valley Bar Association, Bankruptcy Section Program, Friday September 13, 2019, 12 noon: Woodland Hills Tentative Opinions

Email from Steve Fox:

Dear All:

Welcome back to the SFVBA Bankruptcy Section programs!  We are starting this season (through June) with a perennial and a real popular program – Fascinating tentative opinions from the judges sitting at the Woodland Hills Bankruptcy Court.  There is a lot of good material this year and attending attorneys will learn a lot. The panel includes Yi Sun Kim and Jeremy Rothstein (both of Greenberg and Bass) and Andrew Goodman.  They are well experienced and will have a lot of good insights.

This is the one program to which we do not invite the Woodland Hills judges.  Sorry judges.  Law clerks may attend.

Here are the particulars for the program: Read more…

Update on In re Brace – pending at the California Supreme Court

This is the case where the California Supremes will decide whether property held by husband and wife as joint tenants is owned 50-50 by each or is owned as community property.   California law presumes both.  The BAP agreed with Judge Scott Yun and ruled that the ”record title presumption of Cal. Evid. Code § 662″ does not trump “the community property presumption of Cal. Fam. Code § 760″ citing Valli v. Valli (In re Marriage of Valli), 58 Cal. 4th 1396 (2014).

The 9th Circuit punted the issue over to the California Supreme Court.  They are still doing briefing so we are probably a ways from a result.  The Supremes must rule within 90 days after oral argument but there is no deadline re when oral argument must be set.

 IN RE CLIFFORD ALLEN BRACE, JR. 
Case Number S252473 (See docket below) Read more…

Bankruptcy filings in Central District – August 2019

2019 2018 2017 2016 2015 2014
Jan 2,745 2,741 2,839 2,872 3,364 4,704
Feb 2,754 2,708 2,795 3,299 3,829 4,574
March 3,481 3,363 3,782 3,923 4,496 5,430
April 3,631 3,277 3,209 3,584 4,486 5,364
May 3,347 3,226 3,384 3,484 3,971 5,500
June 2,967 2,981 3,252 3,545 3,966 4,386
July 3,270 3,057 2,953 3,239 3,731 4,701
Aug 3,274 3,337 3,387 3,543 3,544 4,540
Sept 2,772 3,071 3,168 3,493 4,317
Oct 3,259 3,170 3,235 3,751 4,554
Nov 2,821 3,004 3,025 3,531 3,642
Dec 2,419 2,416 2,902 2,718 3,733
Total 25,469 35,961 37,262 39,819 44,880 55,445

Filings by chapter so far this year.

Non-Comm’l Commercial Chapter 7 Chapter 13 Chapter 11
23,195 2,085 19,831 5,200 249
91% 8% 78% 20% 1%

Ransom – My ABA summary of the Supreme Court case

I forgot about this summary I wrote for the ABA on the Ransom case at the Supreme Court.  http://sblog.s3.amazonaws.com/wp-content/uploads/2010/10/ABA-Preview.Ransom.pdf

 

From Kathy Dockery Staff Atty Aki re Chapter 13 payments

*****IMPORTANT*****

Best Practice Advice

If your client is making a plan payment within 5 days of a confirmation hearing date, please have them purchase a cashier’s check or money order instead of making the payment electronically via TFS. The TFS payments take about 3-5 days to process and the delay is causing an increase in conditionally continued or confirmed matters and even causing dismissal of cases.

An alternate strategy for making sure your client’s plan payments are made timely is to set up your client in TFS with a plan payment due date that is 7 days prior to the legal due date. This way, the posting delay will not be an issue.

For electronic payment evidence to be sufficient with this office, the payment must be in the status row which is titled “Processing Transactions”. An electronic payment which is in the status row for “Upcoming Transactions” is not sufficient.

Thank you.

Nice quote on Chief Justice John Marshall

I finally finished reading Miracle at Philadelphia by Catherine Drinker Bowen.  It’s a great book that really puts into perspective how we wound up with our constitution.  And how close it came to never happening, and then to not being ratified.   It’s pretty amazing that neither John Adams nor Thomas Jefferson were there.  Both were in Europe that summer.  George Washington and Benjamin Franklin “laid their shoulders to the great points, knowing that the little ones would follow of themselves.”

Anyway, there is a great comment on John Marshall that I want to remember.  The scene is the convention in Virginia brought afterwards to consider adopting the new constitution.

John Marshall, now in his thirty-third year, was a great strength to the Constitutionalists.  Ruddy and handsome, with wild black hair, a piercing dark eye, as a concession to the occasion he had draped his tall frame in a new coat which however had cost but a pound and looked it.  The assembly knew Marshall, respected him for his soldierly record in the Revolution and loved him for his sociability – which says Grisby primly, at times verged on excess.

John Marshall was with Washington at Valley Forge.

I want to add a quote from a poem at the end of Ms. Bowen’s Preface to the book:

If all the tales are told, retell them, Brother,
If few attend, let those who listen feel.

Attorney’s fees for enforcing judgments

Can a judgment creditor get attorneys fees for its efforts in collecting the judgment?  No – unless the fees are “authorized” by contract, statute or law.”  If there is a “contract, statute or law,” can the creditor get fees for fighting with the debtor in bankruptcy court?  Probably yes if “the underlying judgment includes an award of attorneys’ fees.”

CCP 685.040.  The judgment creditor is entitled to the reasonable and necessary costs of enforcing a judgment. Attorney’s fees incurred in enforcing a judgment are not included in costs collectible under this title unless otherwise provided by law.  Attorney’s fees incurred in enforcing a judgment are included as costs collectible under this title if the underlying judgment includes an award of attorney’s fees to the judgment creditor pursuant to subparagraph (A) of paragraph (10) of subdivision (a) of Section 1033.5.

CCP 1033.5. (a) The following items are allowable as costs under Section 1032:

(10) Attorney’s fees, when authorized by any of the following:

(A) Contract.

(B) Statute.

(C) Law.

So opposing the discharge, opposing claimed exemptions, motions for relief?  See BAP decision in In re Gilman – here.

Join the 2019-2020 James T. King Southern California Bankruptcy Inn of Court

Email from Tamar Terzian

Your 2019-2020 Executive Board:

Tamar Terzian, President
Hon. Scott Clarkson, Program Moderator
Lucy Mavyan, President Elect
Nancy Zamora, Vice President
Stella Havkin, Secretary
Jeff Hagen, Treasurer

A message from our President: Read more…

California Court of Appeals rules that settlement agreement included an unenforceable penalty

Red & White Distribution v. Osteroid Enterprises, 2019 WL 3759458 (Aug 2019)

Issue:  Did the settlement agreement here include an unenforceable penalty for non-payment of the settlement amount?

Holding: Yes.

A lender, Osteriod, sued a borrower, R&W.  The borrower cross-complained.  “The parties then settled all claims for $2.1 million pursuant to a ‘Payment Agreement.’”  They also executed a “stipulation for entry of judgment” which provided “in the event of a default on the payment plan, R&W is ‘liable to pay $2,800,000 to the Osteroid Parties, plus interest… reduced by any payments [made].’”  R&W defaulted and Osteriod sought and obtained a default judgment for $3.6 million.

The court of appeals reversed as to the amount holding that the additional sum of $700,000 upon default was an unenforceable penalty under Civil Code section 1671 and the Supreme Court of California case of Ridgley v. Topa Thrift & Loan Assn. 17 Cal.4th 970 (1998).  “In this case, the stipulated judgment for $2.8 million bears no reasonable relationship to the range of actual damages the parties could have anticipated from a breach of the agreement to settle the dispute for $2.1 million.  “[D]amages for the withholding of money are easily determinable—i.e., interest at prevailing rates ….”  “The judgment, however, provided for interest at the legal rate from the date of the execution of the stipulated judgment, attorneys’ fees to enforce the judgment, plus $700,000 more than the parties agreed to in their settlement agreement. This additional $700,000 was an unenforceable penalty.” Read more…