Justia U.S. 9th Circuit Court of Appeals Opinion Summaries

Articles Posted in Trusts & Estates

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Plaintiffs filed suit against USB and Recon challenging the complete foreclosure sale of their residential property. Plaintiffs sought a declaratory judgment that the trustee’s sale was invalid under the Oregon Trust Deed Act (OTDA), ORS 86.770(1), because several assignments of the Trust Deed that took place prior to the 2010 assignment to USB were never recorded. The district court granted defendants' motion to dismiss the Amended Complaint, holding that ORS 86.770(1) barred plaintiffs' claims. In this case, the only defect the foreclosure process identified by plaintiffs has to do with the content of the notice. The defect is the incorrect listing of the beneficiary in the notice they received. However, plaintiffs do not dispute that: (1) they were in default; (2) they were served in the manner required by ORS 86.740 (requiring, at a minimum, service by certified mail 120 days before the sale) and ORS 86.750 (requiring personal service on grantors who occupy the property 120 days before the sale); (3) they had no financial ability to cure the default and redeem the property; (4) they took no action to challenge the sale prior to it becoming final; and (5) they only challenged the foreclosure sale many months after the foreclosure sale was completed. Therefore, plaintiffs' post-sale claims are barred as their property interests have been terminated and foreclosed pursuant to ORS 86.770(1). Accordingly, the court affirmed the judgment. View "Woods v. U.S. Bank" on Justia Law

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At issue in this case was the extent to which a bankruptcy estate may reach a beneficiary’s interest in a spendthrift trust that consists entirely of payments from principal under the Probate Code of the state of California. The beneficiary claimed that Cal. Prob. Code 15306.5 caps the bankruptcy estate’s access at twenty-five percent of his trust interest. The bankruptcy trustee sought to reach more than twenty-five percent of the beneficiary’s interest under Cal. Prob. Code 15301(b) and 15307, which it argued was not subject to the section 15306.5 cap. The bankruptcy court ruled in favor of the beneficiary, concluding that section 15306.5 establishes an “absolute maximum cap on what is recoverable by a judgment creditor at 25 percent.” The Ninth Circuit Bankruptcy Appellate Panel (BAP) affirmed. To resolve the issue as to whether a bankruptcy estate may access more than twenty-five percent of a beneficiary’s interest in a spendthrift trust such as the one in this case under other sections of the Probate Code, the Ninth Circuit requested that the California Supreme Court exercise its discretion to accept a certified question addressing the issue. View "Frealy v. Reynolds" on Justia Law

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Petitioners challenged the Commissioner's disallowance of a $30 million deduction on the Estate's tax return for a lawsuit pending at the time of Gertrude Saunders' death (the Stonehill Claim). The court concluded that the Stonehill Claim was disputed at the date of the decedent's death, and its estimated value as of that date was not ascertainable with reasonable certainty. Therefore, the tax court properly disallowed the Estate's deduction, but correctly allowed a deduction in the amount paid to settle the Stonehill Claim after the decedent's death. Accordingly, the court affirmed the judgment of the district court. View "Estate of Saunders v. CIR" on Justia Law

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This appeal stemmed from the sale of the Chronicle Publishing Company. After the Martin Family Trusts formed a tiered partnership structure, the Martin heirs commenced a series of transactions designed to create losses that would offset the taxable gain realized from the Chronicle Publishing sale. On appeal, taxpayers argued that the 2000-A Final Partnership Administrative Adjustment (FPAA) was time-barred by the restrictive language in the extension agreements. The court agreed with the district court that the extension agreements between the IRS and First Step encompassed adjustments made in the 2000-A FPAA that were directly attributable to partnership flow-through items of First Ship; the FPAA to 2000-A extended the limitations period for assessing tax beyond the extension agreements and through the present litigation; however, the agreements did not extend to adjustments in the 2000-A FPAA that were not directly attributable to First Ship; and because the district court held more broadly that "the extension agreements encompass the adjustments made by the IRS in the FPAA issued to 2000-A," the court remanded to the district court to make a determination of which adjustments in the 2000-A FPAA were directly attributable to partnership flow-through items of First Ship. The court affirmed in part and reversed in part. View "Candyce Martin 1999 Irrevocable Trust v. United States" on Justia Law

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Bill Graham, a successful promoter of rock and roll concerts, died testate and his will created individual trusts for his sons, Alexander and David. Nicholas Clainos was the trustee of the trusts and the executor of the estate and Richard Greene, through his firm, provided Clainos legal counsel. On appeal, Alexander and David challenged the district court's disposition of a motion to dismiss, a special motion to strike under California's anti-SLAPP statute, Cal. Proc. Code 425.16(b)(1), and related attorney's fees awards. The court affirmed the disposition of the motion to strike in part and reversed in part. The court concluded that striking plaintiffs' conversion and unjust enrichment claims against Clainos was erroneous. The court also concluded that striking plaintiffs' breach of fiduciary duty claim against Clainos was erroneous. The court further concluded that plaintiffs sufficiently alleged claims for conversion, copyright infringement, and declaratory relief against the BGA Defendants and that dismissal of those claims was erroneous. In regards to attorney's fees, the court vacated the post-motion-to-strike fee award to Clainos, as well as the post-motion-to-dismiss fee award to the BGA Defendants. The court affirmed in all other respects. View "Graham-Sult v. Clainos" on Justia Law

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The Tribe and CTGW brought suit against the County for imposing property taxes on the Great Wolf Lodge located on the Grand Mound Property, which was tribal land held in trust by the government. At issue was whether state and local governments have the power to tax permanent improvements built on non-reservation land owned by the United States and held in trust for an Indian tribe. The court concluded that Mescalero Apache Tribe v. Jones made it clear that where the United States owns land covered by 21 U.S.C. 465, and holds it in trust for the use of a tribe, section 465 exempts permanent improvements on that land from state and local taxation. Accordingly, under Mescalero, the County was barred from taxing the Great Wolf Lodge during the time in which the Grand Mound Property was owned by the United States and held in trust under section 465. Therefore, the district court erred in granting summary judgment to the County. View "Chehalis Tribes v. Thurston Cnty." on Justia Law

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This case stemmed from disputes over the estate of the late Texas oil magnate and billionaire J. Howard Marshall. J. Howard died in 1995, leaving nearly all his assets to his son, Pierce, but excluding his wife, Anna Nicole Smith (Vickie), and his other son, Howard, from receiving any part of his fortune. Howard and his Wife eventually filed for Chapter 11 bankruptcy and their case was assigned to Judge Bufford, who had previously presided over Vickie's Chapter 11 bankruptcy case. Judge Bufford published three separate opinions: (1) denying Pierce's motion for reassignment or recusal; (2) confirming the Plan and denying Pierce's motion to dismiss with respect to his constitutional arguments; and (3) confirming the Plan and denying Pierce's motion to dismiss with respect to his statutory arguments. Elaine, Pierce's widow, now appeals the district court's decision, contending that the district court erred in affirming the bankruptcy court's orders. The court addressed the various issues on appeal related to the motion for recusal or reassignment, constitutional issues, and non-constitutional issues, and ultimately affirmed the district court's decision. View "In the Matter of: Marshall" on Justia Law

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Defendant appealed the district court's denial of his 28 U.S.C. 2255 federal habeas corpus petition based upon the Supreme Court's decision in Skilling v. United States, which narrowed the scope of the honest services fraud theory. Defendant,a former attorney and trustee of private trusts, pleaded guilty to honest services fraud. The government conceded that defendant was actually innocent of honest services fraud in light of Skilling, which confined the reach of the offense to cases of bribes and kickbacks. The court vacated the district court's dismissal of defendant's honest services fraud claim where no evidence suggested that defendant either engaged in bribery or received kickbacks. View "United States v. Avery" on Justia Law

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Acting on the bad advice of his accountant, plaintiff, the executor of an estate, filed the estate-tax return several months late. Consequently, the IRS assessed significant penalties against the estate. Plaintiff initiated this action seeking a refund of the penalty. The court concluded that it was plaintiff's duty to ascertain the correct extended filing deadline. By relying on his accountant's advice about that nonsubstantive matter, he failed to exercise ordinary business care and prudence, and he could not show reasonable cause to excuse the penalty. Therefore, the court affirmed the judgment of the district court. View "Knappe v. United States" on Justia Law

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Plaintiffs filed a putative class action against Facebook and others complaining that Facebook's program, Beacon, was causing publication of otherwise private information about their outside web activities to their personal profiles without their knowledge or approval. Beacon operated by updating a member's personal profile to reflect certain actions the member had taken on websites belonging to companies that had contracted with Facebook to participate in the Beacon program. At issue on appeal was whether the district court abused its discretion in approving the parties' $9.5 million settlement agreement as "fair, reasonable, and adequate," either because a Facebook employee sat on the board of the organization distributing cy pres funds (DTF) or because the settlement amount was too low. The court concluded that objectors' contention that the settling parties were prohibited from creating DTF to disburse cy pres funds was without merit, and the district court did not abuse its discretion in so concluding. The court also concluded that the settlement was fundamentally fair; the notice in this case adequately apprised class members of all material elements of the settlement agreement and therefore complied with the requirements of Rule 23(e); and the district court properly limited its substantive review of the agreement as necessary to determine that it was "fair, adequate, and free from collusion." View "Lane, et al v. Facebook, Inc., et al" on Justia Law