All posts in Cases

F. Lee Bailey Files Chapter 13 In Portland Maine – Chapter 13 Trustee Annoyed

Think your chapter 13 trustee is tough?  This is what the trustee filed last week in F. Lee Bailey’s Chapter 13 case.

UNITED STATES BANKRUPTCY COURT District of Maine

In the matter of F. LEE BAILEY Chapter 13 Debtor Case # 17-20323

TRUSTEE’S COMMENTS ON CONFIRMATION OF DEBTOR’S PLAN

NOW COMES the standing Chapter 13 trustee Peter C. Fessenden and submits the following comments in connection with confirmation of the debtor’s plan. Read more…

Outside Reverse Veil Piercing now available for LLCs in California

This is a case brief regarding Curci Investments, LLC v. Baldwin, Cal. Ct. App. Case No. G052764 (Aug. 10, 2017), which is a case about “reverse veil piercing” which the Court found can be applied to LLCs. Corporations continue to be protected by reverse veil piercing.

Ordinarily a corporation is considered a separate legal entity, distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations.[1] The same is true of a limited liability company (LLC) and its members and managers.[2]

Read more…

Prof. Dan Schechter’s Comments on Sundquist

My post on In re Sundquist is here.  As part of his summary of cases distributed by the California Insolvency Law Committee, Prof. Dan Schechter had the following observations on In re Sundquist:

AUTHOR’S COMMENT: Given the court’s careful discussion of the evidence, I predict that the liability phase of this decision will withstand review. I also predict affirmance of the award of compensatory damages. I am not so sure, however, about the award of punitive damages. The United States Supreme Court has sharply curtailed the allowable ratio of compensatory damages to punitive damages. See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (U.S. 2003): “The wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award.” Read more…

Nice Explanation from the BAP of the Mechanics of Property Tax Sales in California

Judge Jury lays out the process very nicely in County of Imperial Treasurer Tax Collector v. Stadtmueller (In re RW Meridian LLC), — B.R. — (9th Cir. BAP February 2017)

California’s statutory scheme for tax sales Taxes on real property are secured by and serve as a lien on the real property for which they are assessed. Secured property taxes that remain unpaid at the close of the fiscal year (June 30) are deemed to be in default. Tax Code § 3436.  Properties which have been tax defaulted for a minimum of five years are subject to the county tax collector’s power to sell them to satisfy the outstanding defaulted taxes. Tax Code § 3691. [per FN 5, For nonresidential commercial property, the period is three years. Tax Code § 3691]  Sale is to the highest bidder at a public auction.  Public auction includes the internet. Tax Code § 3693.  Various notices and publication are required prior to the tax sale. Tax Code §§ 3351, 3361, 3371, 3701, 3704.7. Read more…

Nice Definition of “Clear Error” from the BAP

Sitting here on Saturday morning reading unpublished BAP decisions.  Great quote on what does clear error mean.

“To be clearly erroneous, a decision must strike us as more than just maybe or probably wrong; it must . . . strike us as wrong with the force of a five-week-old, unrefrigerated dead fish.” Papio Keno Club, Inc. v. City of Papillion (In re Papio Keno Club, Inc.), 262 F.3d 725, 729 (8th Cir. 2001) (quoting Parts & Elec. Motors, Inc. v. Sterling Elec., Inc., 866 F.2d 228, 233 (7th Cir. 1988)); see Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985) (A factual finding is clearly erroneous if, after examining the evidence, the reviewing court “is left with the definite and firm conviction that a mistake has been committed.”).  The bankruptcy court’s choice among multiple plausible views of the evidence cannot be clear error. United States v. Elliott, 322 F.3d 710, 714 (9th Cir. 2003).  (my emphasis added)

Diamond v. Mesisca Riley & Kretenberg, LLP (In re Castle Trading, Inc.)(unpublished) CC-16-1322-FTaKu, 2:13-bk-15021-BB (BAP May 31, 2017)

In re Sundquist – $45 million in Punis Sounds About Right to Me

I hereby nominate Judge Christopher Klein for Super Judge.  This is my brief of the 109 page Memorandum.

Sundquist v. Bank of America (In re Sundquist) 566 B.R. 563, 14-02278 CN (Bkrtcy, E. D. Cal. May, 2017) Klein, J.

Issue:   Given that Bank of America violated the automatic stay, what is the proper amount of damages under section 362(k)?

Holding:   Actual damages of $1,074,000 plus $5 million of punitive damages, further punitive damages awarded of $40 million payable to two consumer organizations and five law schools.

Judge Christopher Klein

The debtors here had attempted unsuccessfully prepetition to do loan mods with Bank of America.  They finally filed chapter 13 to stop the foreclosure sale.  Notwithstanding that it had notice, the bank conducted the foreclosure sale the next day anyway.  “Bank of America committed at least six further automatic stay violations by the end of August 2010 as it bulled forward.”  This included bringing an unlawful detainer.  About the same time, a different department of the bank recognized the error and notified the foreclosure company.  But upon receiving the three day notice, the debtors panicked and immediately moved.  “Although Bank of America knew on August 20, 2010, and beyond cavil by September 7, 2010, that the foreclosure would be rescinded, it did not withdraw the unlawful detainer action or tell the Sundquists the action would be dismissed.”  Six months later, the bank finally rescinded the foreclosure sale but did not tell the debtors nor their counsel.  The debtors learned about the rescission a month or two later and asked for the keys back.  The bank gave them the keys.  When they moved back into the property, the tress were dead, appliances gone, the place was ransacked, and the HOA had assessed a $20,000 penalty for not taking care of the place.  The bank not only refused to pay for the damages but demanded that the debtors pay the mortgage for the time when it owned the property.  Read more…

9th Cir En Banc Gets It Right in Sunnyslope

The 9th Circuit en banc panel has reversed the three judge panel in Sunnyslope thankfully.  The issue was how to value a building that had restrictive covenants that reduced the value of the property to the debtor.  The en banc panel said that the words in section 506(a) that the value is “determined in light of the purpose of the valuation and of the proposed disposition or use of such property,” have meaning.  The previous panel and the dissent to the en banc ruling tried to squeeze the Supreme Court ruling on valuation of a truck in Rash into the valuation of a building with affordable care covenants.

It took me a while to understand the Rash argument.  I had a hard time getting past what seemed to be the obvious and straight forward language of the code.   Read more…

Annual Report 2015 for the Central District of California

This report is really nice.  You can get it here.  Congratulations to Kathy Campbell and her gang.

Big Win in the Ninth Circuit for Public Law Center

Hello All,

I wanted to share with you that just yesterday, the Ninth Circuit Court of Appeals overturned the Bankruptcy Appellate Panel and held that a debt owed by a parent to the Orange County Probation Department as the result of the involuntary incarceration of the parent’s minor child is not in the nature of support, and therefore is a dischargeable debt.

The BAP had previously held that the debt was “in the nature of support” and therefore was a Domestic Support Obligation that was nondischargeable under 101(14A) and 523(a)(5). The Ninth Circuit reversed, saying, amont other things, that BAPCPA changed who could be creditors, not what type of debts were covered by 523(a)(5), and this debt does not fit within the state’s family support infrastructure. This is an incredible win for our client, but also a win for other debtors in Orange County who were being pursued by Probation for similar debts.

Read more…

Kozinski “fed up with verbose lawyers and their bloated briefs”

Nice article about Judge Alex Kozinski.  9th Circuit Appellate opening briefs are limited to 14,000 words.  I can’t imagine preparing a brief that is longer than that, and filing it the day it’s due along with a motion for permission to exceed the limits.  Apparently it happens a lot.  This is a nice little article in the LA Times today.  Kozinski says he won’t read the additional 14 pages.