Ben Reznik to be Honored by Jewish World Watch

Ben and I worked together a long time ago, very early in my career.  I’m happy to pass on the information on the program.

From the flyer,

Ben Reznik, with his wife, Janice Kamenir-Reznik, was a critical moving force in helping to establish Jewish World Watch nearly 15 years ago in response to the Darfuri genocide. He has been a leader for decades in the Los Angeles business and real estate communities as well as in the Jewish community.  Read more…

Judge Mark Wallace Dismisses Adversaries Based on Unclean Hands, Great Opinion

Law students love unclean hands.  The guy they like is the good guy which obviously gives the other guy unclean hands.  The same with unjust enrichment.  Judge Wallace explains very nicely In re John Olaf Halvorson that unclean hands can be a bar to the access to courts, at least when the court is sitting as a court of equity.  He quotes the Supreme Court in Keystone Driller Co v. General Excavator Co., 290 U.S. 240, 244-45, 54 S. Ct. 146, 78 L.Ed. 293 (1933):

“It is one of the fundamental principles upon which equity jurisprudence is founded, that before a complainant can have a standing in court he must first show not only that he has a good and meritorious cause of action, but he must come into court with clean hands . . . The governing principle is ‘that Read more…

Supreme Court to Hear Consumer Bankruptcy Issue on Dischargeability 523(a)(2) – What is a “Statement of Financial Condition”?

On Jan. 12 the Supreme Court granted certiorari and will review Lamar, Archer & Cofrin LLP v. Appling, 16-1215 (Sup. Ct.), to resolve a split of circuits and decide whether a false oral statement about one asset is a statement of “financial condition” that must be in writing to result in denial of discharge of a debt under Section 523(a)(2).  The briefs are here.    It has not been set for oral argument.

The 11th Circuit has a nice summary of the issue in the first paragraph.

This appeal presents a question that has divided the federal courts: Can a statement about a single asset be a “statement respecting the debtor’s . . . financial condition”? 11 U.S.C. § 523(a)(2).  Ordinarily, a debtor cannot discharge any debt incurred by fraud, id. § 523(a)(2)(A), but a debtor can discharge a debt incurred by a false statement respecting his financial condition unless that statement is in writing, id. § 523(a)(2)(B).

Below is my brief on the issue resolved by the 9th Cir BAP.  Read more…

Beware of Putting an Unenforceable Penalty into Your Settlement Agreement

I was pretty surprised to find this case.  As a mediator, this comes up all the time.  Plaintiff will take a smaller amount in payments but wants a big penalty if the agreed upon amount is not paid.  I wonder if it is different if approved by the bankruptcy court.   A tip of the hat to attorney D. Brian Reider for sending me this case.

PURCELL v. SCHWEITZER, 224 Cal.App.4th 969 (2014)

Issue:  Where a settlement agreement provides that in the event of a default, an additional amount is owed, can the additional amount be found to be an unenforceable penalty?

Holding:  Yes.  “The amount set as liquidated damages `must represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained.” Read more…

San Fernando Valley Bar Assn to Honor Judge Geraldine Mund

Email from Steve Fox,

Dear All:

The bankruptcy section is not conducting a meeting in February.  We will be back soon with some really good programs.

At the SFVBA’s annual judge’s night event on Thursday February 22, 2018 , Judge Mund is being honored.  The program will have a number of bankruptcy judges in attendance (along with state court judges) and it would be great to have a lot of bankruptcy attorneys in attendance for Judge Mund. Read more…

Sham Guaranty? More Stuff I Didn’t Know

LSREF2 CLOVER PROPERTY 4, LLC v. FESTIVAL RETAIL FUND 1, LP, (2016) 3 Cal.App.5th 1067

Issue:  Is the guaranty of a loan by the parent entity here a “sham” guaranty?

Holding:  No, “[T]he overriding concern when deciding whether the sham guaranty defense applies is whether the guaranty is an attempt to circumvent the antideficiency laws.”

Festival Retail Fund 1, LP (the “Fund”) was formed to find real property to invest in.  From the outset, the Fund purchased properties only through newly formed “special purpose entities” (“SPE”).  Here the Fund entered into an agreement to buy a property.  The agreement provided that the property would be purchased by a SPE.  The SPE was also a limited partnership and was wholly owned by the Fund.  Bank then made a loan to the SPE to buy the property.  The Fund guaranteed $1.5 million of the $25 million loan.  The Bank later filed a non-judicial foreclosure complaint and included the Fund alleging breach of the guaranty.  The Fund argued that it was the alter ego of the SPE under the “single business enterprise” theory and therefore it was “protected by antideficiency laws because it was, in reality, the primary obligor on the loan and the loan guaranty was effectively a sham.”  The court agreed and entered judgment for the Fund. Read more…

Nice LACBA Commercial and Bankruptcy Law Section Program – February 15, 2018

Thanks for the heads-up from Nina Javan.  You can register here.

 Insolvency and International Agreements:

Introduction and Alternatives

 Thursday, February 15, 2018

 Registration/Lunch: 11:30 a.m.
Program: 12:00 – 1:30 p.m.

Los Angeles County Bar Association
1055 W. 7th Street, 27th Floor
Los Angeles. CA 90017

1.5 hr. CLE credit

Notifying the State Court of the Automatic Stay

More stuff I didn’t know.  A person on the California Bankruptcy Specialists listserve complained that the Superior Court in Orange wanted him to pay a first appearance fee in order to file a Notice of Automatic Stay.  A tip of the hat to Frank X. Ruggier for his response, ”If you haven’t appeared, it is the other parties responsibility to file Notice of Stay.”

ATTORNEY’S RESPONSIBILITIES FOR GIVING OF REQUIRED NOTICE TO COURT
Rule 3.650(a) of the California Rules of Court requires the party who requested or caused a stay of the proceedings to notify the court of its existence, unless that party has not appeared or is not subject to the jurisdiction of the court, in which case the plaintiff in the pending action must immediately notify the court of the stay.  Therefore, if you or your assignee commenced a civil action to recover attorney’s fees and/or costs from the client, and the clients has not appeared in the action, it is the responsibility of you or your assignee to notify the court of the automatic stay.  Judicial Council Form CM-180 has been adopted for mandatory use in giving notice of a stay of proceedings, and a copy is attached for your use.

Bankruptcy Inn of the Court Meeting – February 13, 2018

Please join us for our 3rd installment of the James T. King Bankruptcy Inn of Court Meeting

Tuesday, February 13, 2018

reception at 6:00 p.m. &

dinner/presentation at 6:30 p.m.

located at Taix French Restaurant

Read more…

Must a Chapter 13 Plan be 3 or 5 years (or full pay) even if no one objects?

One of the more interesting cases we will discuss on Saturday is In re Escarcega.  The BAP really blasts the chapter 13 trustee up in San Jose.   The BAP ruled that a chapter 13 plan must be 3 or 5 years (or full pay), even if no one objects.

In re Escarcega, 573 B.R. 219 (9th Cir. BAP September 2017) 

Issue:   Where the chapter 13 trustee does not object to a plan, must the plan still be for “the applicable commitment period”?

Holding:   Yes.  Plus the chapter 13 trustee should be objecting to such plans.

Judges Elaine Hammond and Stephen Johnson, Northern District of California (San Jose Division) Read more…