All posts in Cases

Can a Trucker Use “Homestead” To Exempt His 18-Wheeler with a Sleeping Compartment?

Yes — in Wisconsin anyhow.  In a Wisconsin case, debtor had a semi truck with a cab and he wanted to exempt it under that state’s homestead exemption.   He sleeps in the cabin, has a bunk bend, refrigerator, radio, heater and a/c but no bathroom or kitchen.   Read more…

Debtor’s Inherited IRA Not protected

Your client tells you “yes, I also have an IRA retirement account.”   Don’t stop there — ask them “is this your IRA that you created or you inherited from another person (i.e. spouse or parent)?”   If the latter — then be careful!  Inherited IRA’s can be taken by the trustee.  Why?  Because Justice Sotomayor, on behalf of the entire bench, said so in Clark v. Rameker (2014). 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…

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…

Sham Guaranty? More Stuff I Didn’t Know


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…

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…

California Statute of Limitations – Tolled When the Defendant is Out of State? Maybe Not.

Someone commented at a program on the Supreme Court cases last year dealing with the Fair Debt Collection Practices Act (“FDCPA”) that the statute of limitations is tolled when the defendant is out of state.  “Hmm,” I thought, “another thing I didn’t know.”

Sure enough, Section 351 of the California Code of Civil Procedure states:

[i]f, when the cause of action accrues against a person, [the defendant] is out of the State, the action may be commenced with the term herein limited, after his return to the State, and if, after the cause of action accrues, he departs from the State, the time of his absence is no part of the time limited for the commencement of the action. Read more…

Supreme Court Rejects Petition in Sunnyslope

This morning buried in the 45 page listing of Supreme Court Orders is the Order denying cert in the 9th Circuit en banc Sunnyslope case.  The Order List is here.  I thought they might take it.  It is not terribly complicated and the case discusses trying to reconcile the Supreme Court decision in Associates Commercial Corp. v. Rash with the facts in Sunnyslope.  My posting on Sunnyslope is here.   Prof. Dan Schechter says the 9th Circuit was “shockingly wrong.”  

Consignment Rules in Bankruptcy

This can be filed under “more stuff I didn’t know.”  Is inventory the debtor accepted under a consignment agreement property of the estate?  I have had this come up a few times over the years.  A new BAP case has laid out the answer very nicely.   The answer by the way is probably YES!

IPC (USA), Inc. v. Ellis (In re Pettit Oil Company), — B.R. — (9th Cir. BAP October 2017)

Issue:   Are the trustee’s right to proceeds of the sale of consignment goods senior to the consignor?

Holding:   Yes.  Under U.C.C. § 9-319(a), the debtor “is deemed to hold rights and title to the [consigned] goods” as if it owned them outright.  The consignor must comply with “the rules for the creation and perfection of a security interest contained in Article 9.” Read more…

Nice Program with Judge Alex Kozinski – October 19, 2017

Judging the Judge: A Candid Conversation Between Judge Kozinski and Professors Ronald Collins and David Skover on Appellate Judging and the Politics of Law. Judge Kozinski will engage the authors in a spirited dialogue about partisan politics and the art of appellate judging, primarily at the Supreme Court level.
In their latest book, The Judge: 26 Machiavellian Lessons (Oxford University Press, 2017), Professors Collins and Skover raise a provocative question: What flows from the proposition that law is politics, or that Supreme Court decision-making in controversial cases is greatly influenced by partisan beliefs? That is, ever more people believe that judicial power is a form of political power. If so, what then? The answer: the maximization of judicial power, which is where Machiavelli comes in by way of the 26 power-maxims urged by the authors. It is against this conceptual backdrop that Judge Kozinski will engage the authors in a spirited dialogue about partisan politics and the art of appellate judging, primarily at the Supreme Court level.

Honorable Alex Kozinski, Ninth Circuit Court of Appeal
Professor Ronald Collins, University of Washington School of Law
Professor David Skover , Seattle University School of Law Read more…