All posts in Chapter 7

My Los Angeles Daily Journal article on the means test

My article, Congress, it’s time to get rid of that stupid means test, was published in the Los Angeles Daily Journal on April 30, 2020.  Let me know what you think.  You can access it here.

In re Brace oral argument – watch it here

The you tube oral argument at the California Supreme Court was released today.  The link posted by the Supreme Court is here.  

A YouTube video of Ed Hays arguing for the bankruptcy trustee is here.  

In re Brace – California Supreme Court hears oral argument about what constitutes community property

My previous post on In re Brace is here.

The trustee was represented by Ed Hays, Marshack Hays LLP.  This is his post on social media.

Today, I was fortunate to be able to appear (virtually) and present oral arguments in a case before the California Supreme Court.  It was a very cool experience.  It took me 28 years to get a case before the high court and then Covid-19 kept me from appearing in person.  Hopefully, it won’t take as long to get another chance where I can appear in person.

What was the case about? Read more…

Updated means test numbers

Email from Hale Antico this morning:

Good morning, CDCBAA community! A few updates as we start off the week:

1. The means test numbers are adjusting for cases filed after 4/1/2020. My summary:

    • 1-person household: $59,286, but after April 1, 2020 it’s $60,360
    • 2-person household: $77,860, but after April 1, $79,271
    • 3-person household: $86,665, and after April 1, $88,235
    • 4-person household: $99,512, and after April 1, $101,315
    • Each additional person: $9,000

Note that this is the first time in recent memory, if ever, that a 1-person household median in Calif is over $60,000, and a four-person household median is six figures, over $100,000.

2. With social distancing being encouraged to battle the coronavirus outbreak, you can offer Zoom consultations with potential clients, and for a small meeting Zoom is free. Caveat: the meeting may be limited to 40 minutes for that free number, but the next tier up is only $14.99/month.

Hale

Hale Andrew Antico

(888) 54-BKLAW
https://www.los-angeles-bankruptcy.net

President, Central Dist Consumer Bankruptcy Attorneys’ Assn.(CDCBAA)
Past President, James T. King Bankruptcy Inn of Court
Member, National Association of Consumer Bankruptcy Attorneys (NACBA)

Disclaimer of Inheritance: Not a Fraudulent Transfer Under Section 548, but….

Imagine 5 months before debtor files bankruptcy, she was notified that her late grandmother left her a mansion in Beverly Hills and $50,000 in life insurance proceeds.  Debtor, who was concerned that her creditors would snatch up the assets, instead decided to disclaim her interest in this inheritance — meaning she waived her right to receive the inheritance.  It is common sense that nobody can be forced to accept something if they do not choose to and the transfer of title to the property does not vest in the person until the recipient accepts it.

Under California’s Probate Code, a beneficiary to an inheritance may disclaim any property interest as long as they file the disclaimer in accordance with the Probate statute (i.e. sign it, identify who is seeking to transfer you the asset (grandma) and voluntarily disclaim the asset).  Debtor has now “transferred” her right to inheritance to another person before filing bankruptcy.   Is this a prepetition fraudulent transfer that is voidable by the trustee under Uniform Voidable Transaction Act?

No, it’s not.

Read more…

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…

Update on In re Brace – pending at the California Supreme Court

This is the case where the California Supremes will decide whether property held by husband and wife as joint tenants is owned 50-50 by each or is owned as community property.   California law presumes both.  The BAP agreed with Judge Scott Yun and ruled that the ”record title presumption of Cal. Evid. Code § 662″ does not trump “the community property presumption of Cal. Fam. Code § 760″ citing Valli v. Valli (In re Marriage of Valli), 58 Cal. 4th 1396 (2014).

The 9th Circuit punted the issue over to the California Supreme Court.  They are still doing briefing so we are probably a ways from a result.  The Supremes must rule within 90 days after oral argument but there is no deadline re when oral argument must be set.

 IN RE CLIFFORD ALLEN BRACE, JR. 
Case Number S252473 (See docket below) Read more…

Attorney’s fees for enforcing judgments

Can a judgment creditor get attorneys fees for its efforts in collecting the judgment?  No – unless the fees are “authorized” by contract, statute or law.”  If there is a “contract, statute or law,” can the creditor get fees for fighting with the debtor in bankruptcy court?  Probably yes if “the underlying judgment includes an award of attorneys’ fees.”

CCP 685.040.  The judgment creditor is entitled to the reasonable and necessary costs of enforcing a judgment. Attorney’s fees incurred in enforcing a judgment are not included in costs collectible under this title unless otherwise provided by law.  Attorney’s fees incurred in enforcing a judgment are included as costs collectible under this title if the underlying judgment includes an award of attorney’s fees to the judgment creditor pursuant to subparagraph (A) of paragraph (10) of subdivision (a) of Section 1033.5.

CCP 1033.5. (a) The following items are allowable as costs under Section 1032:

(10) Attorney’s fees, when authorized by any of the following:

(A) Contract.

(B) Statute.

(C) Law.

So opposing the discharge, opposing claimed exemptions, motions for relief?  See BAP decision in In re Gilman – here.

BAP affirms award of attorneys fees to debtor after defense of 523(a)(2) action

This is pretty interesting and very surprising.  It seems to me to make the whole “is this an action on a contract” issue go away, as long at there is some relevant contract with an attorney’s fees provision.

Asphalt Professionals, Inc. v. Davis (In re Davis), (unpublished) 1:10-bk-17214-VK (9th Cir. BAP  July, 2019)

Issue:    Did the bankruptcy court properly award attorneys fees to the debtor after ruling in debtor’s favor in a 523(a)(2) action?

Holding:   Yes.  Even though the 523 action was not “on the contract,” fees are still appropriate under CCP 1021 which “permits recovery of attorney’s fees by agreement, for tort as well as contract actions.”   Further, CCP 1032(b) gives the prevailing party “costs” which include “Attorney’s fees, when authorized by . . . Contract.” CCP 1033.5(a)(10).

Judge Victoria Kaufman, Central District of California

Faris, Lafferty, Kurtz

The creditor here sued the debtor and certain of his corporations for breach of contract, alter ego and fraud.  The state court gave the creditor judgment against the corporate entities for breach of contract and against the debtor based on alter ego.  It did not rule (apparently) on the fraud.  Judgment was $3 million for breach of contract which included $1.5 million for fees.  During these proceedings, the debtor filed chapter 7.  The creditor filed a non-dischargeability complaint alleging fraud and also sought denial of the discharge.  After trial, the bankruptcy court ruled for the debtor which was affirmed by the BAP.  The bankruptcy court then awarded attorneys fees to the debtor for approximately $100,000.  The court ruled that CA CCP 1717 did not apply because the action in bankruptcy court was not “on the contract.”  She found however that CA CCP 1021 “permits recovery of attorney’s fees by agreement, for tort as well as contract actions.”   Further, CCP 1032(b) provides “a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.”  Finally, “Costs” include “Attorney’s fees, when authorized by . . . Contract.” CCP 1033.5(a)(10).

The BAP affirmed.  Citing the California Supreme Court: Read more…