Cedano v. Aurora Loan Services, LLC (In re Cedano), — B.R. — (9th Cir. BAP April, 2012)
“[T]he transfer of the Note as part of a securitization process did not affect MERS’s right as a nominee under the DOT.”
“see also, Gomes v. Countrywide Home Loans, Inc., 192 Cal. App. 4th 1149, 1151 (Cal. Ct. App. 2011) (further explaining the MERS system) and Morgera v. Countrywide Home Loans, Inc., 2010 WL 160348, at *8 (E.D. Cal. Jan. 11, 2010) (collecting cases).”
“[The requirement of a speedy bankruptcy case] is a wise policy, and if those who administer the law could be induced to act upon its spirit, would do much to make the statute more acceptable than it is. But instead of this the inferior courts are filled with suits by or against [trustees], each of whom as soon as appointed retains an attorney, if property enough comes to his hands to pay one, and then instead of speedy sales, reasonable compromises, and efforts to adjust differences, the estate is wasted in profitless litigation, and the fees of the officers who execute the law.”
Bailey v. Glover, 88 U.S. 342 (1874)
An odd couple you say? The skit put on at the Inns of Court meeting last week made me want to have another beer, then retire. There were three would-be clients who had three issues that I thought I knew (one I actually did). The poor lawyer, 40 years experience he kept saying, gave the wrong advice three times, started tipping the bottle and received advice from the state bar – very well done.
Client one had just sold their home. They had $65,000 proceeds in the bank. “That money’s safe if I file chapter 7 now – right?” “No doubt about it, I’ve been doing this for 40 years.” Wrong. That exemption applies only if the debtor has actually filed a Declaration of Homestead prepetition. Gulp.
Client two had just sold their home. They had $65,000 proceeds in the bank. “That money’s safe if I file chapter 7 now – right?” “No doubt about it, I’ve been doing this for 40 years.” Wrong. That exemption applies only if the debtor actually reinvests the proceeds in a new home within six months from the sale of the first. The trustee can hold up the estate closing and wait for the reinvestment. No reinvestment, the proceeds magically become not exempt at the end of the six months. (I knew that one).
Client three still owned the home. They wanted to file chapter 7, sell the home and use the $175,000 proceeds for retirement. “We can do that – right?” “No doubt about it, I’ve been doing this for 40 years.” Wrong – sort of. A secured creditor got relief from stay during the case and foreclosed. The debtors got the $175,000 from the sale. They did not reinvest it. At the end of the six months, the trustee was there with his hand out. The exemption applies again only if the debtor reinvests within six months. This is actually a new 9th Circuit case, In re Jacobson.
BANKRUPTCY UPDATE: FLC’s annual review of recent developments in bankruptcy law including discussion of significant judicial opinions from around the country.
This meeting is jointly sponsored by The Financial Lawyers Conference
and The Los Angeles County Bar Association Commercial Law and Bankruptcy Section, Bankruptcy Committee
Speakers:
Jeffrey H. Davidson, Stutman, Treister & Glatt, P.C.
K. John Shaffer, Stutman, Treister & Glatt, P.C.
Location:
The City Club
333 S. Grand Ave., 54th Floor
Los Angeles, California
Time: Thursday, June 7, 2012
6:00 pm – 7:00 pm – Registration and Cocktail
Reception with Appetizers & Buffet
7:00 pm – 8:00 pm – Program
I was chatting with an attorney at the recent Inn of the Court Meeting and heard a new horror story on discharging taxes. Seems this debtor met the three year rule, the two year rule etc. etc. Post closing, the IRS sends a letter saying “You still owe.” The attorney tracks down the right guy at the IRS who promises to investigate. Some time later he calls back and advises the attorney that the debtor was a resident of some county in Texas some time ago when the IRS unilaterally gave everyone an eight (or ten or whatever) month extension on filing their tax returns because of a disaster that had hit the area. Therefore the due date of the tax return was not what they thought it was and was not more than three years before the filing. Pay up!
I was at a meeting last week of the Commission I sit on for the State Bar which administers the bankruptcy specialist program. A couple of the attorneys from the San Diego area were commenting that a trustee in San Diego is insisting that chapter 7 debtors give him their Facebook password. That generated discussion about whether that demand needed to be complied with. One of the attorneys, a very talented guy, commented “Well, clearly Facebook is propertry of the estate.” I have been thinking about that since.
Property, of course, is about as expansive a concept as there is. If it’s a right the debtor has, the right is probably property of the estate. And “clearly” (I hate that word), if the Facebook page could be sold or otherwise has value, that value has to go to creditors. But some rights that have “value,” cannot be sold – my law license, my rights to see my grandkids. Since the Facebook page cannot be sold, does not have value other than to me, there is a place to argue that it is not property of the estate.
If the trustee can demand the password, where does that stop? The trustee says “there MIGHT be information on FB that leads him to assets.” Well, I’ll give him that but there are also rights to privacy (Scalia don’t listen to this part). How about access to a private community bulletin board? The consumer bankruptcy attorneys in the central district have a Yahoo group with access limited to members. I guess I MIGHT be posting on that listserve stuff that MIGHT help the trustee.
I’m just bringing this up to counteract the knee-jerk comment that FB is clearly property of the estate. These things have to be thought through.
More importantly for me at least, is it has added to my awareness of asking clients about websites, blogs, commuinity bulletin boards etc., to make sure we have covered all the bases when completing the schedules.
Central District Consumer Bankruptcy Attorneys Association
How to Get a Chapter 13 Case Confirmed and Post Confirmation Issues
May 19, 2012
Speakers:
Omid Moezzi, Staff Attorney to Chapter 13 Trustee Nancy Curry
Angela Gill, Staff Attorney to Chapter 13 Trustee Kathy Dockery
Where: Southwestern Law School
Dietz v. Ford (In re Deitz), — B.R. — (9th Cir. BAP April, 2012)
Issue: May the bankruptcy court enter a final judgment for money in a non-dischargeability action given Stern v. Marshall? Did the bankruptcy court properly find fraud on these facts?
Holding: Yes on both Judge Richard Ford, Eastern District of CA
Pappas, Dunn, Markell
Opinion by Pappas, concurring opinion by Markell
The debtor, a contractor, agreed to do work on Fords’ home. His license was suspended at the time and, in any event, he collected 25% more than the contract price and ultimately did only about 65% of the work. At trial, the bankruptcy court found fraud under 523(a)(2) as well as under 523(a)(4) and willful and malicious injury under 523(a)(6). He entered judgment against the debtor for $368,000. On appeal, the debtor argues that under Stern v. Marshall, the bankruptcy court cannot enter a final judgment either as to the dischargeability of the debt or the amount of the debt.
The BAP affirmed. As to the court’s power to enter final judgment, the BAP said that non-dischargeability “claims arose under the Bankruptcy Code, subject matter jurisdiction existed in the district court, and by its referral, in the bankruptcy court, as well. Moreover, “determinations as to the dischargeability of particular debts . . .” are expressly included in the statutory list of core proceedings. 28 U.S.C. § 157(b)(2)(I). As a result, Congress has provided that the bankruptcy court may enter a final judgment on exception to discharge claims, subject only to appellate review. 28 U.S.C. § 157(b)(2)(I). Indeed, since 1970, the bankruptcy court, via the reference from the district court, has had the exclusive authority to determine the dischargeability of debts under § 523(a)(2), (4) and (6). See § 523(c)”
As to entry of a monetary judgment, the BAP said, “The Ninth Circuit has also expressly held, pre-Stern, that a bankruptcy court may enter a monetary judgment on a disputed state law fraud claim in the course of determining that the debt is nondischargeable. Cowen v. Kennedy (In re Kennedy), 108 F.3d 1015 (9th Cir. 1997).” It comments that it must follow the 9th circuit unless the Supreme Court unless it is “clearly irreconcilable.” As to the finding of fraud, the BAP said the court’s findings were not clearly erroneous.
Does the applicable commitment period and 1325(b) still apply when you modify a plan?
For a no, see In re Mattson, No. 11-1478 (B.A.P. 9th Cir. April 5, 2012) which followed the holding in In re: Sunahara on this issue. The Mattson court suggested that possible justifications for a shortened plan period might be retirement, leaving the employment market, changing jobs, or anticipated health issues justifying a shorter plan.
Aki Koyama
Staff Attorney for Kathy Dockery, Chapter 13 Trustee
Congratulations to our Staff Attorney Angela Gill who has passed the bankruptcy specialist exam with the California State Bar.
Aki Koyama
