All posts in Cases

Supreme Court Grants Cert in Taggart!

Last Friday, the Supreme Court granted cert in the Taggart case.  That is the discharge violation case that says

“the creditor’s good faith belief that the discharge injunction does not apply to the creditor’s claim precludes a finding of contempt, even if the creditor’s belief is unreasonable.” [emphasis added] 888 F.3d at 444

Lorenzen v. Taggart (In re Taggart), 888 F.3d 438, (9th Cir. April, 2018)

cdcbaa 9th Circuit Review Coming Up January 12, 2019

Saturday, January 12, 2019

11:00 a.m. to 1:00 p.m.

13th Annual Review of 9th Circuit Decisions on Bankruptcy in 2018

SPEAKERS:

Hon. Neil Bason, U.S. Bankruptcy Court – Central District of California
Hon. Christopher M. Klein, U.S. Bankruptcy Court – Eastern District of California
M. Jonathan Hayes, Resnik Hayes Moradi, LLP

This program fills up a large classroom each year. This year we are privileged that Judge Neil Bason of the Central District of California and Judge Christopher Klein of the Eastern District of California will join us for the presentation. The materials will include a case summary of every published 9th Circuit and 9th Circuit BAP case in 2018 and of course the Supreme Court cases that are of interest to bankruptcy practitioners.

Program Location - Southwestern Law School

3050 Wilshire Blvd,
Los Angeles, CA 90010

Cost of ALL Programs: Free to current cdcbaa Members

Become a member by signing up at our website at www.bklawyers.org.  You may also mail your registration form and check to the address listed below or come to the program and pay then.

We are now accepting payments for 2019 membership. Dues remain the same, just $250.  Membership includes up to 8 MCLE seminars at two hours each per calendar year (including the Sixth Annual James T. King Symposium). Those potential sixteen MCLE hours works out to under $20 per unit for MCLE in an area that is practical to your specialty.  Moreover, you’ll get one ticket to the annual Calvin Ashland Awards Dinner, remote webinar participation for MCLE programs (when available) and access to the listserv on which you can discuss the latest bankruptcy issues with knowledgeable and experienced members. Read more…

Can the Court Avoid a Judgment Lien under 522(f) When the Debtor Owns no Real Property?

I have seen this issue come up on numerous listserves.  Judge Mund explains why the answer is no.

In re Kenney,  1:10-bk-11635-GM (Bkrtcy, C. D. Cal. Nov, 2018)

Issue:   Is a 522(f) appropriate to avoid a prepetition judgment lien when the debtor owned no real property on the petition date?

Holding:   No.  There is no lien to avoid.

Judge Mund

The debtors filed chapter 7 and got their discharge in 2010.  At the time a creditor had a judgment against them and had recorded an abstract of judgment.  They had no real property at the time.  In 2018, they are trying to buy a house.  They reopened their case and filed a Motion to Avoid Judgment Lien under 522(f).

Judge Mund denied the motion on the basis that there is/was no lien to avoid.

Because there is no valid lien to be avoided, Debtor is not entitled to the protections of 522(f).  The Court recognizes that Debtor is trying to ensure that no encumbrance results from a pre-petition recorded abstract of judgment; such a result would have the absurd consequence of creating an unenforceable lien on property acquired post-petition, but only in the specific counties which the creditor recorded the abstract of judgment.

Subtle Difference Between “Deemed Exempt” versus “Claimed Exempt” — Just Because Schedule C Lists the $100 in Bank Account Does Not Mean Debtor Can Immediately Use It

I tried to make the title as concise as possible — Ockham’s Razor failed.

Client comes to see you and they have $5,000 in their checking account.  You list it on Schedule B then exempt it on Schedule C and file the case.  The 341(a) is in 30 days.  Client goes to the bank the next day and withdraws all of the funds to pay rent and spend it on gambling.  You don’t think it is a problem because the funds have been fully exempt.

But is it?

In Section 70a of the former Bankruptcy Act, there was an automatic exclusion of exempt property such that by simply listing the asset on Schedule C — then that asset was automatically and immediately exempt.  That is not how it works under the current Code — it is not automatic.  I was reading the Mwangi case from the Ninth Circuit that clarifies a subtle distinction between an asset that has been “claimed exempt” versus one that is actually “deemed exempt.“   In the hypo above, it is a “no harm, no foul” situation but it’s still worth thinking about.

Read more…

Receivership and Bankruptcy

Imagine this, prepetition, Debtor owns and operates 50-unit Apartment upon which Wells Fargo holds a note and deed of trust.  Debtor defaults on the note and WF commences foreclosure.  The state court appoints you Receiver to take possession of and operate the Apartments.  The Apartment is mismanaged and you begin improving the Apartments and collect $100,000 in new rent and the bank, WF, gives you additional funds also in your capacity as Receiver.   As you are running the Apartments and holding onto a substantial amount of funds — debtor files Chapter 11 bankruptcy and orders you, as the Receiver, to turnover the funds to him since it is property of the estate now.

Will the court grant Debtor’s Motion for Turnover such that the funds you hold as Receiver have to be turned over to the scumbag Debtor who will likely dissipate the funds?  

Read more…

San Fernando Valley Bar Association Bankruptcy Section Meeting, Friday, November 9, 2018 at lunch

Email from Steve Fox

Dear All:

It is really nice when I can announce a program that will appeal to wide variety of bankruptcy attorneys.  This is one of those programs.  Jeff Hagen will be leading a discussion about several Ninth Circuit, Ninth Circuit BAP and Central District cases which address consumer debtor cases.  One opinion by the 9th Circuit, the Goudelock case, runs 100% counter to the position I advocated in a CDCBAA article some 10 years ago.  In another case, the Ninth Circuit considered whether the IRS could shield itself from liability from an alleged 362 violation.  The outcome may surprise you.  Jeff’s cases examine issues of importance to both creditors and debtors.

Judge Kaufman has picked a number of litigation cases for our consideration.  She will lead that discussion.  One case, Lamar, is problematic for all of us attorneys.  The judge will also lead a discussion about the Taggert case which, depending on one’s perspective as a creditor or as a debtor, has either evened the playing field or is a ruling rife with injustice.

Finally Andy Goodman also has some fun cases.  In one case, the secured creditor purchased unsecured claims to block plan confirmation in a chapter 11 case.  Can that creditor do this?  Come and find out.  In another case, the chairman had a salary of just under $800,000 annually.  He filed a claim for about $250,000 for unpaid monies during the case.  The optics look bad.  The result for the chairman?  Come and find out.

So the program is good.  Not only that, the materials are relatively hefty.  Here are the particulars: Read more…

SFVBA Program This Friday October 12, 2018

Email from Steve Fox:

Dear All:

The bankruptcy section is back for its 2018-2019 season.  The first program up is a really unique program.  It will exercise our brains and give us some good food for thought, and good stuff to use in our law practices.  Daniel J. Bussell of Klee, Tuchin (and a law professor at UCLA), Whitman Holt (a partner at Klee Tuchin) and Judge Barash will speak on a small number of selected appellate cases. Read more…

OCBA’s 5th Annual Consumer Bankruptcy Law Update – October 23, 2018

I have been given the honor of moderating the Orange County Bar Assn’s 5th Annual Consumer Bankruptcy Law Update on Tuesday, October 23, 2018 from 5:30 p.m. – 7:30 p.m. at Chapman University School of Law.   OCBA will be providing a summary of all published case law from the Bankruptcy Appellate Panel, District Court, 9th Circuit Court of Appeals, and US Supreme Court since April last year to now.

Judges Theodor C. Albert, Catherine A. Bauer, Mark D. Houle, Erithe A. Smith, and Mark S. Wallace and Michael J. Hauser of the Office of the US Trustee will be on the panel to discuss key cases.

BAP Reverses Judge Bluebond’s $400,000 Stay Violation Award — Taggart All Over!

In an unpublished BAP opinion of The Preserve LLC, Judge Bluebond awarded the Chapter 7 Trustee and his attorneys $400,000 for a stay violation.  The BAP reversed saying the wrong procedure was used (adversary proceeding in lieu of motion) and that a trustee is ineligible to receive damages under section 362(k) because the trustee is not an “individual” within the meaning that section.  Instead, a trustee can recover damages for a stay violation for a sanction for civil contempt, which is a different standard.   I read Judge Bluebond’s original order and it was really well thought out with findings of facts and conclusions of law, I am surprised at the BAP’s reversal.   The Taggart case is all over this.

The BAP opinion does a great job breaking down the difference between the standard for awarding damages for civil contempt versus the standard for awarding damages under § 362(k).

Read more…

Butner Principle From a Different Perspective – Simon Says May I?

I was reading this law review article on the Butner case and it provided a different view on the case that I wanted to share.  In essence,  Professor Adler questions why Butner  became so famous and a “guiding principle” when the underlying arguments and holdings are so obvious.   Butner says that since the Bankruptcy Code does not establish or define property rights, the parties must turn to nonapplicable law (state law) to answer it.  Well of course! Where else would you turn to!? That makes so much sense, why did we need nine Justices to clarify that?

This is akin to me telling you “in order to fix my plumbing problem, don’t look in the ‘House Operations Manual’ but instead look at the plumbing manual that will tell you how to fix my plumbing problem.“  We need a Supreme Court to tell us that?  The answer is so blatantly obvious let alone to become a “guiding principle!” Read more…