All posts in Cases

Standing to appeal?

Another case I want to remember.  Seems to come up all the time.

Palmdale Hills Prop., LLC v. Lehman Commer. Paper, Inc., 654 F.3d 868, 874 (9th Cir. 2011) (“those persons who are directly and adversely affected pecuniarily by an order of the bankruptcy court . . . have standing to appeal that order”).

Do you have to add three days to the notice period when serving by mail – or not?

I noticed the following tentative ruling continuing a motion for relief hearing recently:

The Motion [for relief] was . . . served on Debtor by mail, and set for hearing exactly 21 days later.   While LBR 9013-1(d)(2) specifies that notice must be filed and served not later than 21 days before the hearing date, FRBP 9006(f) requires that an additional 3 days be provided for motions served by mail.

I recalled several years ago being told by a judge that the three day rule doesn’t apply to MFR.  Yikes.  Have I been neglecting a defense since it seems to be more common these days that these motions are served on exactly 21 days notice?

No – FRBP 9006(f) applies only to certain motions.  FRBP 9006(f) states:

When there is a right or requirement to act or undertake some proceedings within a prescribed period after being served and that service is by mail . . . three days are added after the prescribed period would otherwise expire under Rule 9006(a).

Meaning?  When the motion tells the debtor he must do something within a certain am0unt of time after being served, he gets three more days if served by mail.  Most of our motions require a response within 14 days of the hearing, not within some amount of time after being served.  So the additional three days doesn’t apply to most motions.

On a side note:  a year or so ago I was served with a MFR on a very large piece of property, we thought worth $25 million.  The big-firm creditor lawyers gave us exactly 21 days notice – giving me 7 days to prepare the opposition.  When I complained (a little) to the judge at the hearing he scowled at me and I immediately dropped the comment.  The scowl told me – “why didn’t you file a motion for continuance?”  “You can’t just show up at the hearing and complain about the short time.”  I’m pretty sure he would have granted the request for a continuance.

Attorney’s fee orders in bankruptcy are judgments

A thanks to Alan Wenokur in Seattle for this post on another list serve:

In In re Lawson, 156 B.R. 43 (9th Cir. BAP 1993), the BAP addressed a nearly identical fact pattern.  The debtor’s counsel, Mr. Tilem and Mr. Schwartz, withdrew from a bankruptcy case and then applied for compensation.  They were awarded final attorney’s fees. The bankruptcy case was then dismissed.  Former counsel petitioned the bankruptcy court to grant them formal judgments based on their fee awards. The bankruptcy court did so. The BAP, per Judge Volinn, affirmed. The court held that orders related to final fee awards are part of the bankruptcy court’s ancillary jurisdiction that is unaffected by the dismissal of the case:

Actions are said to be ancillary to the original suit when brought in aid of an execution or to effectuate a judgment entered in the prior suit. Jones v. Nat’l Bank of Commerce, 157 F.2d 214, 215 (8th Cir. 1946). Such an action is dependent upon a judgment or a decree in the original suit which is complete and determines the rights of the parties. Id. (citations omitted.) In the present case, the fee awards granted Tilem and Schwartz are final, and the present action therefore is ancillary in nature.  In re Lawson, supra, 156 B.R. at 46.

Critically, the BAP noted that final fee awards are judgments under the Bankruptcy Rules: “Both the Tilem and Schwartz fee awards are final judgments as defined in Bankruptcy Rules 9001(7) (‘Judgment’ means any appealable order) and 9002(5) (‘Judgment’ includes any order appealable to an appellate court).” Id.  See, also, In re Yermakov, 718 F.2d 1465, 1469 (9th Cir. 1983) (fee award under § 330 constitutes a final judgment, order or decree.) Read more…

Judge Alex Kozinski argues before the 9th Circuit

Zindel v. Fox SearchlightWatch oral argument here.  December 9, 2019.  No result as of Feb 7, 2020.

Judicial notice of declarations – by the debtor at least

A footnote in some case I was reading.

2 The Court takes judicial notice of its files and records under Rule 201 of the Federal Rules of Evidence. See In re Clark, 525 B.R. 442, 449 (Bankr. D. Idaho 2015), aff’d, 2016 WL 1377807 (B.A.P. 9th Cir. March 29, 2016) (taking judicial notice of papers filed on its docket and noting, “Papers filed in a bankruptcy case by a debtor under penalty of perjury also have evidentiary significance under Fed. R. Evid. 801(d)”).

In re Brace – finally some action (a little) at the California Supreme Court

On the Supreme Court (Cal) docket.  Apparently there might be oral argument “within the next few months.”  The Supreme Court is required to rule within 90 days of oral argument but there is no rule about when oral argument must take place.
12/31/2019 Oral argument letter sent Dear counsel: Please be advised that the court could set this case for argument within the next few months. Schedules showing the court’s oral argument dates and locations for the next twelve months can be found at http://www.courts.ca.gov/supremecourt.htm by clicking on “calendars, ” and then accessing the “Oral Argument Calendar Dates” documents. Any counsel who believes good cause exists to avoid scheduling oral argument for a particular date (including counsel who, before receiving this letter, have previously asked to avoid certain dates) should inform the court within 7 calendar days from the date of this letter with a detailed explanation for such cause. Thereafter, counsel must immediately update the court on an ongoing basis as additional conflicts constituting good cause may arise. Examples of conflicts previously found to constitute good cause to avoid scheduling argument on any particular date include significant health-related issues; prepaid and nonrefundable travel arrangements booked in advance of the court’s notification regarding oral argument; and significant family events such as weddings. Examples of conflicts previously found not to constitute good cause include scheduled trial and hearing dates in lower courts; conflicting professional seminars, meetings, or conventions; and planned significant family events that do not conflict with the actual dates on which argument might be held. Once the court files an order setting this case for oral argument, that date will not be changed absent exceptional cause, such as a medical emergency. Immediately upon filing of the calendar setting this case for argument, the court will send counsel an email communication with (1) a copy of that document; (2) an appearance sheet, upon which counsel must provide the names of the attorney or attorneys who will present argument, along with further instructions governing any request to divide argument time; and (3) a general notice regarding appearance for oral argument before the court. If a party wishes to bring to the court’s attention new authorities, new legislation, or other matters that were not available in time to be included in the party’s brief on the merits, the party must comply with California Rules of Court, rules 8.630(d) and 8.520(d). Sincerely, JORGE E. NAVARRETE Clerk and Executive Officer of the Supreme Court

Are BAP rulings binding on bankruptcy judges?

Another thing I want to remember.  Where does it say that BAP cases aren’t binding on bankruptcy judges?  This is footnote in the new BAP case of Leavitt v. Black  (In re Black), — B.R. —  (9th Cir. BAP  Dec, 2019).

Mr. Black argues that Burgie is binding on all bankruptcy courts in the circuit and that the bankruptcy court erred by failing to follow it.  The Ninth Circuit has never held that our decisions are binding (under stare decisis principles) on any court. See, e.g., Bank of Maui v. Estate Analysis, Inc., 904 F.2d 470, 472 (9th Cir. 1990).  We view ourselves as bound by our prior published decisions. Salomon N. Am. v. Knupfer (In re Wind N’ Wave), 328 B.R. 176, 181 (9th Cir. BAP 2005) (“[W]e regard ourselves as bound by our prior decisions, and ‘will not overrule our prior rulings unless a Ninth Circuit Court of Appeals decision, Supreme Court decision or subsequent legislation has undermined those rulings.’” (citations omitted)); 9th Cir. BAP R. 8024-1(c)(1) (also acknowledging ability of Panel to modify or reverse itself sitting en banc). We will follow Burgie, and we need not decide whether stare decisis also obliged the bankruptcy court to do so.

Appeal divests the trial court of jurisdiction – mostly anyway

This blog is a great way to save stuff I might need at a later time.  I knew that an appeal divests the trial court of most jurisdiction but was not sure where it says that.  I happened to run into the law in a Judge Kaufman tentative I was reading today.

“The filing of a notice of appeal is an event of jurisdictional significance—it confers jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal.” Griggs v. Provident Consumer Disc. Co., 459 U.S. 56, 58 (1982). “The timely filing  of a notice of appeal to either a district court or bankruptcy appellate panel will typically divest a bankruptcy court of jurisdiction ‘over those aspects of the case involved in the appeal.’” In re Sherman, 491 F.3d 948, 967 (9th Cir. 2007) (quoting In re Padilla, 222 F.3d 1184, 1190 (9th Cir. 2000)). “The bankruptcy court retains jurisdiction over all other matters that it must undertake ‘to implement or enforce the judgment or order,’ although it ‘may not alter or expand upon the judgment.’” Id. (quoting Padilla, 222 F.3d at 1190).

 

Human Error: Bank Submits Wrong Escrow Demand in Debtor’s Post-Discharge Sale and Seeks Unjust Enrichment Claim Against Debtor. Was This Postpetition Unjust Enrichment Claim Discharged? Eh, not really said the BAP.

Debtor owned a home encumbered by 3 liens and filed Chapter 7 bankruptcy and gets a discharge.  We know liens survive (“ride through”) a bankruptcy.  Eight years passed and debtor markets and sells her home.  The Bank makes a demand into escrow to get paid on its claim but due to human clerical error, the Bank submits a demand for  $3,000 when it should have been $230,000Whoops!!  Escrow relied on the demand, pays the Bank $3,000 and closes.  Debtor got $230,000 from sale proceeds that should have gone to the Bank but for that clerical error.  Windfall!  Under California law, once escrow closes — then the Bank’s rights and interests under the deed of trusts were instantly and automatically extinguished.  So, the Bank’s only Hail Marry pass is to argue the catchall – unjust enrichment!

Bank files a motion to reopen debtor’s case after 8 years to file a complaint to allege a claim for “unjust enrichment” in order to argue that it would be simply wrong (“inequitable” as lawyers say) for debtor to get to keep the all that sale proceeds.  Question is — was that “unjust enrichment” cause of action also discharged in debtor’s bankruptcy 8 years ago?  [cue suspense music]

Read more…

Prenups are Voidable Transfers says California Law

Premarital agreements between soon-to-be spouses can be an avoidable “transfer” under UFTA (now the UVTA).

In Sturm v. Moyer, defendant procured a $600,000 non-dischargeable judgment per Section 523(a).  During several rounds of debtor’s examination, the debtor said in essence, “I have nothing and will not work either, so you cannot collect against me.”  During one of the debtor’s examinations, it was discovered that the debtor got married a few years ago.  The debtor, knowing he had this judgment looming over him, entered into a prenuptial agreement with his then-wife to keep her assets and earnings separate so this judgment creditor does not try to collect on it as community property.

The judgment creditor found out about the prenup and filed a state court lawsuit to assert that the prenup was a fraudulent transfer per UFTA/UVTA.  The lower court disagreed and dismissed the case.  Judgment creditor appealed and the California appellate court, in this certified for publication case, said the prenup was a transfer based on legislative history and policy as per the expert criminal defense attorney firm.

Read more…