LABF Program – Annual State of the Court Presentation – October 15, 2018

LOS ANGELES BANKRUPTCY FORUM
EDUCATIONAL PROGRAM

October 15, 2018

ANNUAL STATE OF THE COURT PRESENTATION

Join us for a special presentation by the Honorable Sheri Bluebond on the state of the U.S. Bankruptcy Court for the Central District of California, and what we can expect in the next year.

The Aftermath of Jevic and the Survival of Structured Dismissals and Settlements

After Chief Judge Bluebond’s presentation, our panel will discuss the aftermath of the United States Supreme Court’s ruling in Czyzewski v. Jevic Holding Corp., and whether class-skipping settlements and structured dismissals have survived. The panel will focus on opinions from courts around the country that have addressed these issues since the United States Supreme Court ruling. Read more…

Judge Scott Clarkson to Give Lecture on Dutch Artist Rembrandt van Rijn

On October 25, 2018 at 12 noon to 1 pm Judge Scott Clarkson will give a lecture on the life and 1656 bankruptcy of the Dutch artist Rembrandt van Rijn.  It is a lecture and powerpoint presentation that will be held in the Ronald Reagan Federal Building and Courthouse, 411 West Fourth Street, Santa Ana, Room 4078, Located in the USBC Intake Department, which is found by taking the escalator up to the 2nd floor.

This is a preview of the lecture he is giving at the Denver Art Museum on November 30.  Rembrandt Lecture Flier

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In an unpublished BAP opinion of The Preserve LLC, Judge Bluebond awarded the Chapter 7 Trustee and his attorneys $400,000 for a stay violation.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…

Joint Tenancy – Special California Exception

Remember Property 101?  There are four unities re: joint tenancy:  unity of possession, interest, time and title.  As a rule, if any of these 4 unities is missing then the joint tenancy becomes a tenancy in common.  So, if A and B own property at JT’s and B transfers to C then A and C own the property as 50% TIC.

But — California has a statutory exception when someone who owns property by themselves wants to create a JT with others.

For example, Amy owns Blackacre.  When her kids became adults, Amy wanted to create a joint tenancy with them.  She is allowed to deed the property to them and name herself as joint tenants.  It will look like this — “Amy, as sole owner, hereby grants Blackacre to Amy (herself), Mary and Joe as joint tenants.”  Under California’s statutory exception — this new deed satisfies the unity of time and title even though Amy acquired the property many years ago through a different deed.   Read more…

Student Loan Guru Austin Smith Writes on Private Student Loans

Austin Smith is a force nationwide championing issues for student loan debtors.  You can get his excellent article, Why So Many Get It So Wrong That a Private Student Loan is Uniquely Protected in Bankruptcy, here. 

The common belief that all student loans are protected from discharge in bankruptcy is based on a misunderstanding of 11 U.S.C. § 523(a)(8).  Since 1990, bankruptcy courts have been misreading the statute to prevent any student debt that could be construed as providing educational benefits or advantages from discharge.  The flawed logic in student bankruptcy cases has thus become (1) all debts that confer educational benefits are protected from discharge; (2) the debt in question facilitated the debtor’s education and as such, conferred educational benefits; and (3) the debt is not dischargeable.

First, subsection (A)(i) only protects federally insured or nonprofit student loans.  Second, subsection (A) (ii) only protects debts resulting from noncompliance in contractual service scholarships and grants.  Third, subsection (B) only protects private student loans that meet narrow Internal Revenue Code qualifications.  A sizeable portion of private student loan debt falls outside all three of these categories, and must be treated as non-qualified private student loans that have no protection from discharge.

cdcbaa Program Saturday September 29, 2018 Individual Chapter 11s

Saturday, September 29, 2018

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

 Individual Chapter 11 Cases

SPEAKERS:

  • Hon. Neil W. Bason – Central District of California
  • Steven Fox – Law Offices of Steven B. Fox
  • Stella Havkin – Havkin & Shrago
  • Peter M. Lively – Law Office of Peter M. Lively
  • Dennis McGoldrick – Law Office of Dennis McGoldrick

 Topics include Pre-Bankruptcy Planning; “First Day” Motions; Between First Day Motions and Plan Issues; Confirmation and Beyond.

Murder and Joint Tenancy

Holding property as joint tenants means there is a right to survivorship.  This means that when one joint tenant dies then the interest of that joint tenant passes automatically to the other joint tenant.  So if Amy and Fred own property as joint tenants then each has 50% joint tenant interest.  Also, the parties can also record a “mutual consent agreement” which says that the joint tenants have agreed among themselves that their JT can only be severed if everyone agrees.   This prevents Fred from transferring his interest without Amy’s consent.

Now let’s add a Halloween twist — what if Amy (knowing these rules) wants all of the 100% interest in the 200 acre property and at night murders Fred!?   That would be Amy would get all of Fred’s interest automatically.  Right?  Not so fast…..

Read more…

New Barash Ch. 13 Confirmation Hearing Procedures

I am advised that Judge Martin Barash has some updated local rules on getting your chapter 13 plan confirmed in his courtroom.  You can find the rules here.   Judge Barash states:

“These procedures are intended to increase the efficiency of chapter 13 plan confirmation hearings, reduce the amount of court time attorneys spend at these hearings, and discourage counsel from filing chapter 13 plans and delivering documents requested by the chapter 13 trustee shortly before the confirmation hearing.”

A summary is as follows:

1.  Attorneys who don’t check in by 9:55 am will be put on second call.

2.  Matters will be called in order of check in and once the attorney is at the podium, all of his or her matters will be heard together.

3.  Where a plan has been filed within 7 days of the confirmation hearing, or documents provided to the trustee within 14 days (i.e., late), the case will be “dropped to the bottom of the calendar” which does not mean that it is okay to file things late.

4.  Attorneys will not be allowed to give the trustee plan payments or documents during the hearing (meaning from the podium).

More Taggart Fallout

Bruce v. Fazilat (In re Bruce), —- B.R. —-,   8:15-ap-01028 (Bkrtcy, C. D. Cal. July, 2018, J. Wallace)

Issue:   Did the creditor here violate the automatic stay and/or the discharge injunction and if so, what are the appropriate damages?

Holding:   Yes as to both violation of the automatic stay and violation of the discharge injunction.  Actual damages of $15,000 for violation of the stay but no damages as to violation of the discharge injunction.

Judge Mark Wallace

The creditor here was the debtor’s landlord and was trying to evict him from the rental property where he lived.  The creditor, with knowledge of the bankruptcy petition, “turned off the electricity and then placed a new padlock on the electrical box,” and later sent someone to the property who “began banging on the door in an attempt to breach the door and enter the Property’s interior.”  That person told the debtor he owed them money.  The creditor contacted the debtor’s employer for the purpose of getting him fired – which worked.  Before the discharge was entered, the creditor filed a motion for relief seeking permission to proceed with the unlawful detainer.  That motion was granted but the “portion of the Lift Stay Motion requesting that the state court be permitted to award ‘[a]ll postpetition rents, attorney’s fees, and costs’” to creditor was specifically denied.  Nevertheless, the creditor sought and obtained a judgment for money against the debtor, after the discharge was entered.  At trial, the creditor’s attorney argued that the lease had terminated prepetition and that he had the right to holdover damages.

Judge Wallace ruled that the creditor violated the stay (obviously).  The state court judgment is void.  As to damages, the debtor’s “evidence of damages is somewhat thin.”  Judge Wallace ruled:

The Court concludes that Plaintiff is entitled to actual damages of $12,500.00 plus punitive damages of $2,500.00 (for a total of $15,000.00) in respect of the stay violations described above. Additionally, attorney’s fees and costs are awarded to Plaintiff.

With respect to monetary sanctions for a discharge injunction violation, the Court notes that the United States Court of Appeals for the Ninth Circuit has recently held that in the context of a discharge injunction violation, monetary sanctions can be imposed only if the movant shows that the creditor “knew the discharge injunction was applicable.” Lorenzen v. Taggart (In re Taggert), 888 F.3d 438, 443 (9th Cir. 2018). Additionally, “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.”

Here, there is no doubt that Mr. Sproul (Defendant’s attorney) had a good faith belief that he was properly bringing an action in state court for holdover damages and attorney’s fees.  The Court therefore declines to impose monetary sanctions for the discharge injunction violation that occurred. 11 U.S.C. § 524(a)(2).  However, this in no way disturbs the Court’s determination that the 2017 Judgment is void and of no effect pursuant to the plain language and meaning of 11 U.S.C. § 524(a)(1).