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

Debtor appealed the bankruptcy appellate panel's (BAP) denial of his petition for a writ of mandamus. The court overruled In re Salter and held that the BAP is not a court established by Act of Congress under subsection (a) of the All Writs Act, 28 U.S.C. 1651(a), so it does not have jurisdiction to entertain a mandamus petition. Accordingly, the court vacated the decision of the BAP and remanded with instructions to dismiss the petition for lack of jurisdiction. View "Ozenne v. Chase Manhattan Bank" on Justia Law

Lakeridge has one member, MBP. MBP is managed by a board of five members, one of whom is Kathie Bartlett. Bartlett shares a close business and personal relationship with Dr. Robert Rabkin. Lakeridge filed for bankruptcy and US Bank held a fully secured claim worth about $10 million and MBP held an unsecured claim worth $2.76 million. After MBP's board decided to sell its unsecured claim, Rabkin purchased the claim for $5000. US Bank subsequently moved to designate Rabkin's claim and disallow it for plan voting purposes. The bankruptcy court held Rabkin was not a non-statutory insider and that Rabkin did not purchase MBP's claim in bad faith. However, the bankruptcy court designated Rabkin’s claim and disallowed it for plan voting, because it determined Rabkin had become a statutory insider by acquiring a claim from MBP. Lakeridge and Rabkin both appealed, and US Bank cross-appealed. The BAP reversed the finding that Rabkin had become a statutory insider as a matter of law by acquiring MBP’s claim and affirmed the findings that Rabkin was not a non-statutory insider and that the claim assignment was not made in bad faith. The BAP held that insider status cannot be assigned and must be determined for each individual “on a case-by-case basis, after the consideration of various factors.” Finally, the BAP held Rabkin could vote to accept the Lakeridge plan under 11 U.S.C. 1129(a)(10), because he was an impaired creditor who was not an insider. The court affirmed the BAP's decision. View "US Bank v. The Village at Lakeridge, LLC" on Justia Law

Debtors filed a joint voluntary individual chapter 11 petition and debtors' operative plan of reorganization placed their largest unsecured creditor, California Bank, into its own class of unsecured creditors and proposed to pay it $5,000 on its claim of nearly $2,000,000. California Bank objected because its claim was thus “impaired under the plan.” The court overruled In re Friedman and joined its sister circuits in adopting the "narrow view", holding that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), 11 U.S.C. 541(a)(, (a)(1), 1115(a), 1129(b)(2)(B)(ii), amendments merely have the effect of allowing individual Chapter 11 debtors to retain property and earnings acquired after the commencement of the case that would otherwise be excluded under section 541(a)(6) & (7). The court further concluded that, under this view, an individual debtor may not cram down a plan that would permit the debtor to retain prepetition property that is not excluded from the estate by section 541, but may cram down a plan that permits the debtor to retain only postpetition property. Accordingly, the court affirmed the bankruptcy court's order. View "Zachary v. California Bank & Trust" on Justia Law

Eden Place appealed the BAP's decision affirming the bankruptcy court’s determination that Eden Place violated the automatic stay provisions of the Bankruptcy Code by evicting debtor from a residential property. After considering the court's applicable precedent, SS Farms, LLC v. Sharp, and the clear language of the statute, the court held that the bankruptcy court’s order that Eden Place violated the automatic stay was final and appealable. On the merits, the court concluded that the unlawful detainer judgment and writ of possession entered pursuant to California Code Civil Procedure 415.46 bestowed legal title and all rights of possession upon Eden Place. Accordingly, the court concluded that the bankruptcy court erred when it ruled that Eden Place violated the automatic stay provisions of the Bankruptcy Code and reversed the bankruptcy court order. In this case, debtor had no legal or equitable interest remaining in the property after issuance of the unlawful detainer judgment and writ of possession in state court. View "Eden Place v. Perl" on Justia Law

The purchaser of viatical settlements paid approximately $507,000 for life settlements with the debtor and received $9,000,000 in death benefits when he died shortly thereafter. The bankruptcy trustee filed an adversary proceeding to recover the market value of the life settlements. The court held that debtor's interests in the term life insurance policies, including the secondary market value of the policies and resulting life settlements, constitute a recoverable “interest of the debtor in property” pursuant to 11 U.S.C. 548(a)(1). In this case, debtor had a legal and equitable interest in the property at issue within the meaning of section 541(a), the property was not excluded from the estate under section 541(b), and the property was not the subject of a proper exemption in this case. The court further concluded that the district court properly held that the trustee's avoidance action was not time-barred because debtor's fraudulent concealment equitably tolled the statute of limitations from commencing. Finally, the district court correctly concluded that the bankruptcy court should have granted the trustee leave to amend her avoidance action. View "Gladstone v. U.S. Bancorp" on Justia Law

Debtor filed a motion in the bankruptcy court seeking to recover from AmeriCredit all of the attorney’s fees she incurred in opposing AmeriCredit’s objection to confirmation of her Chapter 13 plan. The court noted that a claim secured by property worth less than the amount of the claim is “bifurcated” into two claims: a secured claim equal to the value of the property and an unsecured claim for the balance. The hanging paragraph creates a special rule for auto lenders by prohibiting bifurcation of claims that are secured by a “purchase money security interest” in a motor vehicle recently acquired for the debtor’s personal use. The bankruptcy court ruled that the purchase money security interest protected by the hanging paragraph does not include amounts attributable to the negative equity from a trade-in vehicle. The bankruptcy court denied debtor’s motion for attorney’s fees on the ground that she did not prevail “on the contract” because her success in the litigation with AmeriCredit turned on a question of federal bankruptcy law. The district court affirmed. California Civil Code 1717 makes reciprocal an otherwise unilateral contractual obligation to pay attorney’s fees. The court held that the hanging-paragraph litigation was an “action on a contract” in which debtor prevailed. The court concluded that, as the “party prevailing on the contract,” debtor is entitled to recover reasonable attorney’s fees under section 1717. Accordingly, the court reversed and remanded. View "Penrod v. AmeriCredit Fin. Serv." on Justia Law

Debtors are "Chapter 20 debtors" who filed for Chapter 7 and then Chapter 13 relief. The court concluded that the bankruptcy court properly voided HSBC’s lien under section 506(d) of the Bankruptcy Code, confirmed debtors' Chapter 13 plan offering permanent voidance of HSBC’s lien upon successful plan completion, and found no due process violation or bad faith purpose in filing the Chapter 13 petition. Therefore, the court affirmed the bankruptcy court’s lien-voidance order, plan confirmation order, and plan implementation order. In regards to debtors' cross-appeal for attorneys' fees, the court concluded that the district court lacked jurisdiction to determine whether debtors were entitled to attorneys’ fees because this issue was not addressed, in the first instance, by the bankruptcy court. Therefore, the court vacated the district court's denial o fees and instructed the district court to remand to the bankruptcy court for a determination of debtors' entitlement to attorneys’ fees in the first instance. View "HSBC Bank v. Blendheim" on Justia Law

Plaintiff appealed the bankruptcy court's order approving a settlement agreement in the Chapter 11 bankruptcy of debtor. At issue was whether a beneficiary of a trust who disagrees with the way the trust was administered by former trustees is a “party in interest” with standing to object to the bankruptcy court’s approval of a settlement agreement between a debtor, creditor entities held by the trust, and the former trustees. The court held that the trust beneficiary does not have party-in-interest standing under 8 U.S.C. 1109(a) to object to the settlement, at least where his interests are adequately represented by a party-in-interest trustee. Accordingly, the court affirmed the district court's dismissal for lack of standing. View "Hughes v. Tower Park Props." on Justia Law

Sahagun filed a class action suit against Landmark, alleging that Landmark had failed to pay a variety of wages required by California law. The district court affirmed the bankruptcy court’s ruling that Sahagun was entitled to the prevailing wage for time spent fabricating components for public works contracts. The district court held, however, that the bankruptcy court applied an incorrect legal standard for assessing whether Landmark was required to pay prevailing wages for the time class members spent traveling to and from public worksites. The district court thus remanded for “additional fact finding.” Both parties appealed. The court weighed four factors to assess jurisdiction, concluding that the risk of piecemeal litigation in this instance is significant; judicial efficiency would not be enhanced by exercising jurisidiction; systemic interest in preserving the bankruptcy court's role as the finder of fact tips in favor of declining jurisdiction; and delaying review would not cause irreparable harm to either party. The court held that the district court's order was not a final order and, therefore, the court lacked jurisdiction over the appeal. Accordingly, the court dismissed the appeal for lack of jurisdiction. View "Sahagun v. Landmark Fence Co." on Justia Law

After Gregory Bos and his spouse filed a joint petition for Chapter 7 bankruptcy, the Board filed a complaint against Bos and his spouse contesting the dischargeability of a $504,282.59 debt. An arbitrator had awarded the Board the $504,282.59 against Bos, individually and as doing business as BEI, and BEI to recover the outstanding amounts owed to trust funds governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. The bankruptcy court entered judgment, concluding that Bos had committed defalcation while acting as a fiduciary of the Funds and that the $504,282.59 debt to the Funds was therefore nondischargeable. The district court affirmed. At issue on appeal was whether an employer’s contractual requirement to contribute to an employee benefits trust fund makes it a fiduciary of unpaid contributions. The court joined the Sixth and Tenth Circuits, holding that Bos was not a fiduciary under section 523(a)(4). Consistent with the court's general rule that unpaid contributions to employee benefit funds are not plan assets, Bos did not engage in defalcation for purposes of section 523(a)(4). Therefore, the court reversed the district court's judgment because Bos did not act as a fiduciary under 11 U.S.C. 523(a)(4), and because the bankruptcy court and district court expressly found that Bos’s debt did not fall under any of the other nondischargeability exceptions put forth by the Board. The court remanded to the bankruptcy court with instructions to discharge the debt. View "Bos v. Board of Trustees" on Justia Law