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

This case concerned the California Franchise Tax Board's wish to assess $13 million in unpaid income taxes on the individual partners of a general partnership that owned the property at issue, the Wilshire Courtyard. At issue on appeal was whether the bankruptcy court had jurisdiction to reopen the bankruptcy proceeding where the partnership was reorganized into a limited liability company. The court concluded that the bankruptcy court had neither "arising under" nor "arising in" subject matter jurisdiction over the present dispute; the bankruptcy court did, however, have "related to" jurisdiction over the present dispute; and bankruptcy court jurisdiction did not violate the Tax Injunction Act, 28 U.S.C. 1341. Accordingly, the court reversed the bankruptcy appellate panel's judgment and remanded for further proceedings. View "In re: Wilshire Courtyard" on Justia Law

Debtor was required to make contributions to the Carpenters Pension Trust Fund pursuant to a multiemployer bargaining agreement (the Agreement). When the Agreement expired, debtor no longer was a signatory to a collective bargaining agreement and stopped making payments. The Fund subsequently filed suit because debtor was still doing work covered by the Agreement and was subject to withdrawal liability under 29 U.S.C. 1381. Debtor then filed for bankruptcy and sought a discharge of his debt to the Fund. The Fund filed a complaint under 11 U.S.C. 523(c) to prevent discharge, seeking to establish that the debt qualified as one created via defalcation by a fiduciary under section 523(a)(4). The court concluded that the Bankruptcy Court had jurisdiction to adjudicate the dischargeability of the Fund's claim against debtor; debtor was not a fiduciary of the Fund because the unpaid withdrawal liability was not an asset of the Fund; and debtor's failure to challenge the withdrawal liability amount in arbitration did not act as a waiver of his right to discharge the debt. Accordingly, the court affirmed the judgment. View "Carpenters Pension Trust Fund v. Moxley" on Justia Law

Debtor filed for chapter 7 bankruptcy but did not list, as one of his outstanding debts, a $350,000 arbitration award to Fiero Brothers (creditor). At issue on appeal was whether the creditor's lawyer's knowledge of the bankruptcy constituted notice to the creditor. In this instance, the lawyer learned of debtor's bankruptcy during his representation of another client and, although the lawyer continued to represent the creditor on other matters, he no longer represented the creditor in relation to the debt at issue. Under these facts, the court declined to impute the notice or actual knowledge of debtor's bankruptcy filing that the lawyer had to creditor. Accordingly, the court affirmed the BAP's ruling that the arbitration debt was nondischargeable under sections 523(a)(3) and 523(a)(6) of the Bankruptcy Code. View "In re: Cery Perle" on Justia Law

This dispute arose when plaintiffs sought payment from defendant for a loan plaintiffs provided to defendant's company. On appeal, defendant challenged the district court's judgment affirming the bankruptcy court's order granting plaintiffs' motion for an extension of time to file a nondischargeability complaint. Under existing case law, the court concluded that the bankruptcy court erred by sua sponte extending the time for plaintiffs to file a nondischargeability complaint after the deadline had already passed and by doing so without either a showing or a finding of cause. Accordingly, the court reversed and remanded with instructions. View "Willms v. Sanderson" on Justia Law

Plaintiff filed suit alleging that her employer discriminated against her based upon her sex. While pursuing the discrimination action, plaintiff filed for Chapter 7 bankruptcy, failing to list the bankruptcy action in her bankruptcy schedules. The employer subsequently filed a motion for summary judgment in the discrimination action on the ground that judicial estoppel prohibited plaintiff from proceeding. The district court agreed and granted summary judgment in favor of the employer. However, the court vacated the judgment and remanded for further proceedings, holding that the district court applied the wrong legal standard in determining whether plaintiff's bankruptcy omission was "mistaken" or "inadvertent." View "Quin v. County of Kauai Dep't of Transp." on Justia Law

The Bank filed a motion for relief from an automatic stay and submitted a copy of the promissory note, which was a second-generation copy, as well as a declaration certifying that the original note was in the Bank's files. The trustee argued that a duplicate of a duplicate of the original was insufficient to establish prudential standing. The court concluded that a duplicate of a duplicate was a duplicate for purposes of Federal Rule of Evidence 1003 and concluded that the Bank established prudential standing to file the motion for relief from the stay. View "In re: Toni Griffin" on Justia Law

After filing for bankruptcy, plaintiff sought a discharge of his law student loans under 11 U.S.C. 523(a)(8). The bankruptcy court granted a partial discharge, but, on appeal, the district court reinstated the student loan debt in full as non-dischargeable. The district court ruled that plaintiff had not acted in good faith, which was one of the prerequisites for relief under section 523(a)(8). The court concluded that a good faith finding should be reviewed for clear error. The court also concluded that the district court's finding was not clearly erroneous where it relied on substantial evidence in the record and its factual inferences were permissible. Accordingly, the court reversed and remanded with directions. View "Hedlund v. The Educational Resources Inst." on Justia Law

Fitness Holdings, the debtor in this bankruptcy case, was a home fitness corporation. At issue was whether debtor's pre-bankruptcy transfer of funds to its sole shareholder, in repayment of a purported loan, could be a constructively fraudulent transfer under 11 U.S.C. 548(a)(1)(B). The court held that a court has the authority to determine whether a transaction created a debt if it created a right to payment under state law. Because the district court concluded that it lacked authority to make this determination, the court vacated the decision and remanded for further proceedings. View "In re: Fitness Holdings Int'l" on Justia Law

Debtors filed a Chapter 13 petition and the Trustee objected to debtors proposed bankruptcy plan on the ground that it was not proposed in good faith because of the "miniscule" payments to unsecured claims while debtors were living in a $400,000 home, making payments on various luxury and unnecessary items, and failing to commit one hundred percent of their disposable income to the plan. The bankruptcy court overruled the objection and the bankruptcy appellate panel (BAP) affirmed. The court concluded that Congress's adoption of the Bankruptcy Abuse Prevention and Consumer Protection Act, 11 U.S.C. 1325(a), foreclosed a court's consideration of a debtor's Social Security income or a debtor's payments to secured creditors as part of the inquiry into good faith under section 1325(a). Accordingly, the court affirmed the judgment of the BAP. View "In re: David Welsh, et al" on Justia Law

Debtor filed for Chapter 7 bankruptcy and claimed that her Mercedes was exempt from her bankruptcy estate under California Civil Procedure Code 703.140(b)(5) (the "wildcard" or "grubstake" exemption). The court held that a motor vehicle could fall within the wildcard exemption and that if an exempt vehicle was a tool of the debtor's trade and was secured by a nonpossessory, nonpurchase-money lien, the debtor could avoid the lien pursuant to 11 U.S.C. 522(f)(1)(B). The court affirmed the district court's ruling and remand of the case to the bankruptcy court to determine whether the Mercedes was in fact a tool of debtor's trade as a real estate agent. View "In re: Angie M. Garcia" on Justia Law