Tentative from Judge Kaufman re exemption for Covid-19 stimulus checks

June 25, 2020  2:00 PM
1:11-11603  Chapter 7
#3.00 Judgment Creditors Motion Assignment Order and Restraining Order

Docket 735
I. BACKGROUND
At the last hearing, the Court requested that Tammy Phillips and Tammy Phillips, a Prof. Law Corp. (“Creditors”), file a supplemental brief regarding whether Kevan Harry Gilman (“Debtor”) waived his right to claim an exemption in any “Covid-19 economic stimulus checks/payments from the federal government to Debtor,”including the stimulus check that Debtor may qualify for under the Coronavirus Aid, Relief, and Economic Security Act (the “Stimulus Check”) .

On May 28, 2020, Creditors filed a supplemental brief (the “Brief”) [doc. 746].  In the Brief, Creditors assert that Debtor waived his right to an exemption by failing to claim one within three days of the hearing on their motion pursuant to California Code of Civil Procedure (“CCP”) § 708.550.  Creditors also argue that Debtor has waived his right to claim an exemption in any future Covid-19 related federal stimulus payments.  Finally, if Debtor is provided with a Stimulus Check, Creditors expressed opposition to the Court’s proposed procedure for Creditors to receive the Stimulus Check. [FN1].  Debtor did not file a response to the Brief. Read more…

Watch 9th Circuit oral argument in the Taggart case

You might have thought Taggart was resolved by the Supreme Court, eh?  No “it goes on Judah,” from my favorite movie Ben Hur.

The Supreme Court reversed the prior ruling of the 9th Circuit in Taggart and sent it back to the 9th Circuit.  The 9th Circuit required new briefs, basically starting the appeal over.  They are back to reviewing the ruling by the BAP that the creditor here did not violate the discharge injunction when it asked for postpetition attorneys fees in state court litigation that had begun prepetition.  The BAP had ruled that the creditor had a reasonable belief that he was not violating the discharge injunction.  The 9th Circuit had affirmed saying it’s purely subjective, even if the subjective belief is unreasonable.  The Supreme Court reversed saying it is not purely subjective – the test is whether there is a fair ground of doubt.

Dan Geyser argues for the debtor.  You may recall he came to Los Angeles from his home in Texas last summer to do a program with Prof Dan Bussell and me for the Central District Consumer Bankruptcy Attorney’s Assn (cdcbaa).   He had just finished arguing four cases that term at the Supreme Court.  You can watch the oral argument here.  https://www.ca9.uscourts.gov/media/view_video.php?pk_vid=0000017600

Watch out for Ford and reaff’s

This is from our consumer bankruptcy listserve, bankruptcy attys only, names have been withheld to protect the innocent.

Question (from consumer bk atty):  I filed a Chapter 7 for client.  Ford sent their letter saying to sign a reaffirmation agreement or they will repo the car.  Has anyone had Ford actually repo cars with no reaffirmation agreement?

Answer No. 1:  Yes…especially if they’re represented by Cooksey Toolen in Costa Mesa.

Answer No. 2:   Definitely. Watch out for Ford!

Comment from Hale Antico, President of our group:

I think the conventional wisdom is only Ford/Cooksey will go after a failure to reaffirm, but it’s still best practice to reaffirm, coupled with the next sentence. If the court disapproves it, we’re back to pre-BAPCPA ride-through. I know of no example of a repo after a court disapproval where debtor remained current.

Credit Unions won a reaff carve-out at 524(m)(2).

Cathy Moran Oral History (and Happy Birthday Cathy)

It will always be one of the highlights of my business life that when I asked Cathy Moran if she would let me do her oral history, she said yes.  We met for two hours, two days in a row, at her office near San Jose, discussing her life and of course her views of the bankruptcy world and consumer bankruptcy practices.  She has a lot to say and every consumer bankruptcy attorney should listen to her.  We talked about her early days growing up on a farm in central California, helping her farm animal veterinarian father in his business, even helping him with surgeries here and there.  She went to Stanford undergrad and later Hastings Law school.  But it’s her comments on the practice of bankruptcy, 40 years worth, especially chapter 13, that people should listen to.  The audio of the oral history can be accessed here from the website of the Biddle Law Library of the University of Pennsylvania Law School.  Scroll down to find hers.  Listen to it on one of your walks.  The Biddle Law Library has had it transcribed but has not uploaded that yet.   Let me know what you think.

Her blogs, if you haven’t checked them out, are here and here.

By the way, Happy Birthday Cathy.  Keep yourself well.

San Fernando Valley Bar Association – Bankruptcy Section and Business Section Joint Program on Landlord Tenant Lease Issues in the Age of Covid 19

Email from Steve Fox

Dear All:

We have a very timely program for all of you.  Attorney David Campbell Smith will be speaking about various lease issues including evictions in the Age of Covid.  For bankruptcy attorneys this problem will be hitting us over and over in bankruptcy cases where tenants file bankruptcy cases to try to save their leases or to stave off eviction.  Under California law, what arguments will be more effective?  Mr. Smith’s presentation will be a nuts and bolts look at the terrain.  The presentation is timely because now businesses are starting to reopen, landlords are getting their legs under them and the fireworks are about to begin.  The program is free to members. Read more…

Bankruptcy filings down again in May 2020 – Central District of California

Another huge drop in the number of filings in May compared to a year ago.  The filings were down 38% compared to last May although about 24% higher than April.  The drop from a year ago for May is less than the 54% drop from April to year ago April.

2020 2019 2018 2017 2016 2015 2014
Jan 2,828 2,745 2,741 2,839 2,872 3,364 4,704
Feb 2,781 2,754 2,708 2,795 3,299 3,829 4,574
March 2,736 3,481 3,363 3,782 3,923 4,496 5,430
April 1,669 3,631 3,277 3,209 3,584 4,486 5,364
May 2,080 3,347 3,226 3,384 3,484 3,971 5,500
June 2,967 2,981 3,252 3,545 3,966 4,386
July 3,270 3,057 2,953 3,239 3,731 4,701
Aug 3,274 3,337 3,387 3,543 3,544 4,540
Sept 2,934 2,772 3,071 3,168 3,493 4,317
Oct 3,355 3,259 3,170 3,235 3,751 4,554
Nov 2,636 2,821 3,004 3,025 3,531 3,642
Dec 2,723 2,419 2,416 2,902 2,718 3,733
Total 12,094 37,117 35,961 37,262 39,819 44,880 55,445

The total filings by category for this year is:

Non-Comm’l Commercial Chapter 7 Chapter 13 Chapter 11
11,026 1,071 9,894 2,077 124
91% 9% 82% 17% 1%

 

There is a difference between dischargeable taxes and priority taxes

We bankruptcy attorneys focus strongly on whether taxes are dischargeable: if you file a case too early, the debtor may go through bankruptcy and still owe taxes on the other end of the process. It’s usually a pretty easy malpractice case if an attorney misses this.

There are three mathematical tests for dischargeability of income tax: the tax return must have been due at least three years prior to the bankruptcy petition, the tax return must have been actually filed at least two years prior to the bankruptcy petition, and the tax must have been assessed at least 240 days prior to the bankruptcy petition. In addition, the tax assessment can’t be for a fraudulent tax return, and the debtor can’t have tried to evade the payment of the tax. Read more…

Consequences of leaving something out of the record on appeal

I have wondered what the consequences are of failing to include something in the record on appeal.  Here is a footnote from a recent BAP case.  I have read a lot of opinions and memorandums and have never seen this.  The BAP here just looked up what was missing and sort of snidely told the appellant that he’s lucky they are good guys.  I assume with the ease of looking things up these days, the result will likely be the same in future cases, meaning, no harm, no foul.

Zuckerman v. Crigler (In re Zuckerman), — B.R. —  (9th Cir. BAP  Mar, 2020)

Mr. Zuckerman omitted from his excerpts of the record the bankruptcy court’s prior ruling (“Ruling”) that included its reasoning for entering the Order on appeal and key evidentiary rulings.  As the omitted Ruling is a necessary portion of the record, we are entitled to presume that its contents are harmful to his position and to affirm or dismiss his appeal summarily.  See Rule 8018(b)(1); Cmty. Commerce Bank v. O’Brien (In re O’Brien), 312 F.3d 1135, 1137 (9th Cir. 2002); Gionis v. Wayne (In re Gionis), 170 B.R. 675, 680–81 (9th Cir. BAP 1994).  Nonetheless, we obtained a copy of the Ruling and will take judicial notice of it and other documents filed in the bankruptcy court’s dockets, as appropriate.  See Atwood v. Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).

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.

What is a “contingent” debt for chapter 13 eligibility purposes

I love this definition from a recent BAP case, Fountain v. Deutsche Bank National Trust Company (In re Fountain), — B.R. —  (9th Cir. BAP  Mar, 2020)

A debt is contingent when “the debtor will be called upon to pay [it] only upon the occurrence or happening of an extrinsic event which will trigger the liability of the debtor to the alleged creditor.” Fostvedt v. Dow (In re Fostvedt), 823 F.2d 305, 306 (9th Cir. 1987). If “all events giving rise to liability occurred prior to the filing of the bankruptcy petition,” the claim is not contingent. In re Nicholes, 184 B.R. at 88. A dispute over liability for a claim does not make the debt contingent. Id. at 89 (citing In re Dill, 30 B.R. 546, 549 (9th Cir. BAP 1983))

In my world, this comes up most often when an individual has guaranteed his business loans, i.e., corporate debts.  Is his personal obligation to the bank contingent?  Of course says I.  And the above quote supports that position.  The individual is called on to pay the debt only when the corporate entity has failed to pay it.  But in fairness, you have to read the words of the “guaranty.”  In commercial corporate guarantees, the ones I have read at least, the individual typically waives any rights he may have to require that the bank go after the corp first.  The guaranty is likely to say that the bank can ignore the actual borrower entirely and go after the individual if that’s what it chooses to do.   That may not be a contingent debt.