Important new exemption for debtor’s “deposit account.”

These new exemptions became effective January 1, 2020.

CCP 704.220. (a) Money in the judgment debtor’s deposit account in an amount equal to or less than the minimum basic standard of adequate care for a family of four for Region 1, established by Section 11452 of the Welfare and Institutions Code and as annually adjusted by the State Department of Social Services pursuant to Section 11453 of the Welfare and Institutions Code, is exempt without making a claim.

Well that’s a hand full.  Translation, money in the debtor’s bank account is automatically exempt up to a “basic standard amount.”  I should say automatically as long as the debtor does not use the 703 exemptions.  It appears that right now that the basic amount is $1,724.  It also appears that that amount is fixed whether the debtor is single or has a family of four.  I am looking into that now.

But the big one is, is 704.225 which says:

§ 704.225.  Money in a judgment debtor’s deposit account that is not otherwise exempt under this chapter is exempt to the extent necessary for the support of the judgment debtor and the spouse and dependents of the judgment debtor.

I haven’t found anything helpful in figuring out what is “necessary for the support,” in the new legislation at least  If the debtor has $25,000 in a savings account, it is exempt if that amount is necessary for the debtor’s support.  I guess if the debtor has a job and can support himself from his current income, no amount would be necessary. Read more…

August filings flat again in the Central District of California

For August, I could almost repost my July report of the filings in the Central District of California.  Total filings in August, 2355 compared to 2415 in July.  That was 28% fewer than August last year.  July was 26% fewer than last year.

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 2,257 2,967 2,981 3,252 3,545 3,966 4,386
July 2,415 3,270 3,057 2,953 3,239 3,731 4,701
Aug 2,355 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 19,121 37,117 35,961 37,262 39,819 44,880 55,445

Filings by chapter so far this year, cacb:

Non-Comm’l Commercial Chapter 7 Chapter 13 Chapter 11
17,424 1,701 16,090 2,817 215
91% 9% 84% 15% 1%

 

Ps and As to use in a Motion to Withdraw

Some nice language from a Judge Kaufman tentative re withdrawing as counsel for the debtor.

Pursuant to California Rule of Professional Conduct (“CRPC”) 3-700(C)(1), an attorney may request permission to withdraw as counsel if the client:

(d) by other conduct renders it unreasonably difficult for the member to carry out the employment effectively;

Pursuant to CRPC 3–700(A)(2):

A member shall not withdraw from employment until the member has taken reasonable steps to avoid reasonably foreseeable prejudice to the rights of the client, including giving due notice to the client, allowing time for employment of other counsel, complying with rule 3-700(D), and complying with applicable laws and rules.

“[T]he court has discretion to deny an attorney’s request to withdraw where such withdrawal would work an injustice or cause undue delay in the proceeding.” Mandell v. Superior Court, 67 Cal. App. 3d 1, 4 (Ct. App. 1977); see also Estate of Falco, 188 Cal. App. 3d 1004, 1014 (Ct. App. 1987) (“To protect the best interests of the client, a trial court should have broad discretion in allowing attorneys to withdraw.”). Read more…

Successor liability for wages expanded a little based on new California law

A tip of the hat to Keith Paul Bishop and his blog, California corporate & securities law.   California just passed AB 3075 which provides that Labor Code Section 200.3 now reads:

Labor Code Section 200.3 :
(a) A successor to a judgment debtor shall be liable for any wages, damages, and penalties owed to any of the judgment debtor’s former workforce pursuant to a final judgment, after the time to appeal therefrom has expired and for which no appeal therefrom is pending.  Successorship is established upon meeting any of the following criteria:
(1) Uses substantially the same facilities or substantially the same workforce to offer substantially the same services as the judgment debtor.  This factor does not apply to employers who maintain the same workforce pursuant to Chapter 4.5 (commencing with Section 1060) of Part 3.
(2) Has substantially the same owners or managers that control the labor relations as the judgment debtor.
(3) Employs as a managing agent any person who directly controlled the wages, hours, or working conditions of the affected workforce of the judgment debtor. The term managing agent has the same meaning as in subdivision (b) of Section 3294 of the Civil Code.
(4) Operates a business in the same industry and the business has an owner, partner, officer, or director who is an immediate family member of any owner, partner, officer, or director of the judgment debtor.
(b) This section shall not be construed to limit other means of establishing successor liability for wages, damages, and penalties.

So the employee has to first get a judgment against his employer.  Then he can execute the judgment against a successor entity if the above is met.

Keith Bishop’s comment was aimed at part (4) above, saying that an entity with a lot of shareholders could be liable for back wages if any shareholder of the entity is a family member of any “owner, partner, officer, or director of the judgment debtor.”

Judge Zurzolo appearance instructions

Email from Keith Higginbotham

Dear Colleagues!

Judge Zurzolo has asked that attorneys appearing on his upcoming Ch13 Cf hrgs for MONDAY, September 14th register their appearances AS SOON AS POSSIBLE (now) due to the number of matters on that calendar.  Instructions for registration can be found on the calendar page for the tentatives for 9/14 (pages 1 & 2) and also on Judge Zurzolo’s webpage under “Telephonic Instructions”.

As you may be aware, Judge Zurzolo was the first Judge to create a tollfree appearance line so that we do not need to use CourtCall.  As a trade-off, we are REQUIRED to register your appearance(s) with his chambers beforehand using a new specific email address.

The Ch13 calendar for Monday, September 9/14 is now posted.  Instructions for making a telephonic appearance are also posted — including allowing you to register for more than 1 hearing in one email for ALL appearances for that day for that attorney.

The Court is prepared to accept registrations beginning TODAY and strongly encourages it.  The Court asks that attorneys begin registering now (at least for 9:00 and 10:30 hearings), and definitely no later than Wed 9/9.   That will help chambers be prepared and not deluged at the last minute.

As a reminder, Judge Zurzolo’s 9:00 a.m. and 10:15 a.m. hearings are listed on VZ webpage under “Chapter 13”.

The 10:30 a.m. hearings are posted under tentative rulings, and by Tues 9/8 the tentatives will be updated to identify hearings for which appearances are waived.

cdcbaa member

Keith Higginbotham

Everything Preclusion: cdcbaa Program on Claim and Issue Preclusion, September 12, 2020

To help mitigate the spread of COVID-19, this CLE Program will ONLY be available as a WEBINAR via Zoom.

Please join us on September 12th, 2020 as the cdcbaa presents:

SEVENTH ANNUAL JAMES T. KING BANKRUPTCY SYMPOSIUM: ISSUE AND CLAIM PRECLUSION

PANELISTS:
Hon. Meredith Jury (ret.) | U.S. Bankruptcy Court – Central District of California, Riverside Division
Hon. Laura Taylor | U.S. Bankruptcy Court – Southern District of California
Prof. M. Jonathan Hayes | Resnik Hayes Moradi LLP

Program: 11:00am - 1:00pm

2 Hours of MCLE Credit Provided
Haven’t renewed yet for 2020? Now is the perfect time! Our membership dues for the balance of the year are reduced and a tremendous bargain at only $150. Your 2020 membership includes up to 2 remaining seminars of 2 MCLE credits each for four (4) MCLE hours total, one ticket to the annual Calvin Ashland Awards Dinner in November (subject to state and local restrictions on large gatherings), remote webinar participation in MCLE programs (when available), and access to the listserve, on which you can discuss the latest bankruptcy issues with knowledgeable and experienced members. That’s like receiving up to four hours of MCLE credits in subject-matter that’s relevant to you at $38 per unit, and getting a fancy ballroom dinner and message board access for free! Read more…

All things In Twyne’s Case

I have seen this case cited here and there, supposedly the genesis of the now familiar concept that a transfer of property with actual intent to delay, hinder or defraud creditors may be avoided.  But yesterday I stumbled on Prof. Bob Lawless’s post on Credit Slips about this fascinating new law review article by Northwestern Law Professor Emily Kadens, entitled New Light on Twyne’s CaseThe article is here.  She writes, “Twyne’s Case today stands for the point that even transfers made for good consideration can be fraudulent if they were made with the intent to defraud other creditors. ”

The facts are surprisingly familiar.  In 1600, the undersheriff of Hampshire, Brian Chamberlain, is instructed by a creditor to execute a writ and seize property of one John Pearce.   When he gets to Pearce’s farm, he is told the sheep, the cattle, grains, “leases,” and everything else is owned by John Twyne, not John Pearce.  Twyne was a cousin of Pearce and a man of some stature and wealth.  There is a confrontation over the next two-three days (called a “riot” in the legal papers of the time) but when the dust settles, nothing is removed from the farm.  It seems that months earlier, Twyne  agreed in writing to pay certain of Pearce’s debts in exchange for a transfer of Pearce’s property to Twyne.  Possession of the property remained with Pearce, apparently not unusual since it wasn’t that easy to move sheep, cattle and grain and the arrangement provided that if Pearce came up with the money, he would get his property back.   The paperwork of course was confusing, contradictory in places, incomplete and the “deeds” may have been back-dated.  But the court later agreed that “Twyne gave greater consideration than the total worth of Pearce’s property.” Read more…

Brace Yourself! Nice program coming up on the new California Supreme Court analysis of community property

“BRACE YOURSELF”
THE SHOCKWAVE CAUSED BY THE CALIFORNIA SUPREME COURT’S DECISION IN BRACE, THE EXTENT OF ITS IMPACT ON BANKRUPTCY CASES, OTHER COMMUNITY PROPERTY ISSUES, AND AN UPDATE ON RECENT HOMESTEAD CASES

Panelists:
Hon. Margaret M. Mann, United States Bankruptcy Judge, Southern District of California
D. Edward Hays, Marshack Hays LLP
Roksana D. Moradi-Brovia, Resnik Hayes Moradi LLP

Moderator:
Richard Marshack, Marshack Hays LLP

Topics to Include:
• What will be estate property when filing for just one spouse?
• How can a transmutation avoid the result in Brace?
• Are transmutations avoidable as fraudulent transfers?
• Is bankruptcy advisable when a divorce is pending?
• What claims will community property pay?
• The type of interest in property required to support a homestead under In re Nolan, __ B.R. __ (Bankr. C.D.Cal. July 21, 2020, J. Clarkson)

Thursday, September 10, 2020

Hosted by the Inland Empire Bankruptcy Forum – the flyer is here.  Brace Flyer_IEBF_9-10-209(b)

Secretary of State UCC-1 and Judgment Lien new search engine

This new search engine is amazing.  Find UCC-1s and tax liens in seconds.  Download a copy in seconds – no charge.
It even shows if the entity has a UCC-1 or judgment lien in its favor.

Wherein my 1111(b) article is cited by a Judge!

A thanks and tip of the hat to Bankruptcy Judge Eric Frank, Eastern District of Pennsylvania, for citing my article  The Section 1111(b) Election: A Primer, 31 Cal. Bankr. J. 755 (2011), written with Roksana Moradi-Brovia.   You can access the case here, In re Body Transit, Inc.  Pretty fun to be called a “commentator.”  Judge Frank writes, “One commentator explained it concisely as follows:” and goes on to quote two paragraphs from the article.

The issue to Judge Frank was whether the the bank’s “interest on account [of its claim] in [property of the estate] is of inconsequential value,” because if so, the bank cannot make the 1111(b) election.  The court said it was “inconsequential” under the facts of the case and pitched out the election.  Apparently here the value of the property was around $80,000 and the debt was $917,000 so the property was 8.2% of the debt.  Judge Frank rules that that is inconsequential, although comments that it is a close call.  I do not see it as a close call.  To force the debtor to pay the bank $917,000, certainly money taken away from other unsecured creditors, because its collateral is worth $80,000 is not a close call to me.

Judge Frank states astutely:

“[W]hile ‘the numbers’ provide an important starting point in deciding how much value is ‘inconsequential,’ the court also must consider other relevant circumstances presented in the case and make a holistic determination that takes into account the purpose and policy of the statutory provisions that govern the reorganization case.”

Here the bank was simply trying to scuttle the plan, in a subchapter V case by the way.  Judge Frank is absolutely correct here.