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

The State of Nevada filed a parens patriae lawsuit against Bank of America in Clark County District Court, alleging that the Bank misled Nevada consumers about the terms and operation of its home mortgage modification and foreclosure processes, in violation of the Nevada Deceptive Trade Practices Act, Nev. Rev. Stat. 598.0903-.0999. Nevada also alleged that the Bank violated an existing consent judgment in a prior case between Nevada and several of the Bank's subsidiaries, entered in Clark County District Court. The Bank removed the action to federal district court, asserting federal subject matter jurisdiction as either a "class action" or "mass action" under the Class Action Fairness Act (CAFA), 28 U.S.C. 1332(d), and as arising under federal law, 28 U.S.C. 1331. Denying Nevada's motion to remand, the federal district court concluded that it had jurisdiction over the action as a CAFA "class action," but not as a "mass action," and that it also had federal question jurisdiction because resolving the state claims would require an interpretation of federal law. The court concluded that because parens patriae actions were not removable under CAFA, and the action did not otherwise satisfy CAFA's "mass action" requirements, the district court lacked jurisdiction under CAFA. The court also exercised its interlocutory appellate jurisdiction under 28 U.S.C. 1453(c) to review the district court's determination that it had federal question jurisdiction because the complaint referenced the federal Home Affordable Mortgage Program and the Fair Debt Collection Practices Act (FDCP), 15 U.S.C. 1692 et seq. The court concluded that the district court lacked federal question jurisdiction. Because there was no basis for federal subject matter jurisdiction, the case was remanded to Nevada state court.

A trustee in Chapter 11 bankruptcy proceedings took possession of Appellant SK Foods, LP's documents, which it had deposited at the its office. Appellants claimed the trustee acted illegally; that the documents should be returned; and that the trustee and his counsel should be removed. The bankruptcy court denied such relief, and the district court affirmed. This appeal raised the issue whether such orders of the bankruptcy court, affirmed by the district court, are final appealable orders under 28 U.S.C. 158(d)(1). Upon review, the Ninth Circuit held that they are not. Accordingly, the Court dismissed the case for lack of jurisdiction.

This appeal involved Continental's pursuit of a breach of contract claim against Thorpe in Thorpe's Chapter 11 bankruptcy proceeding. The district court affirmed the bankruptcy court's order denying Continental's motion to compel arbitration and disallowing its claim. The court held that the bankruptcy court had discretion not to enforce the arbitration clause at issue and that the bankruptcy court did not abuse its discretion in denying Continental's motion to compel arbitration. The court also held that the bankruptcy court did not abuse its discretion in declining to give Continental further opportunity for discovery and Thorpe could not contract away its right to avail itself of the protections of 524(g) of the Bankruptcy Code. Accordingly, the lower courts correctly disallowed Continental's claim.

Chapter 11 debtor, one of more than 50 subsidiaries of MMPI, filed a motion seeking a determination that it and other subsidiaries were not subject to the single asset real estate provisions of the Bankruptcy Code, 11 U.S.C. 101(51B) and 362(d)(3). Creditor filed a cross motion seeking to apply the single asset real estate provisions to debtor. The district court held that debtor should be treated as a single asset real estate debtor because there was no "whole enterprise exception" to the single asset real estate provisions in the plain language of the statute. The court held that there was no error in the district court's approach and no error in the district court's application of section 101(51B). Accordingly, the judgment was affirmed.

The district court affirmed a bankruptcy court's confirmation of a Chapter 11 plan of reorganization under 11 U.S.C. 524(g), a special provision for the reorganization of companies facing substantial asbestos-related liability. Appellants were several insurance companies that did not reach settlements with Thorpe and Pacific, together with Debtors in bankruptcy court, and who were denied standing to challenge the reorganization plan. The court affirmed the district court's conclusion that the plan preempted appellants' state law contract rights; disagreed with the position of Debtors that the appeal was equitably moot; and in reaching the merits, reversed the district court's conclusion that appellants lacked standing. The court remanded to the district court with instructions that it return the case to the bankruptcy court to give appellants the opportunity to present their proof and argument.

Vegas Diamond and Johnson Investments appealed from the district court's order granting the Ex Parte Motion to Dissolve Temporary Restraining Order filed by the FDIC as receiver for La Jolla Bank. The district court determined that 12 U.S.C. 1821(j), the anti-injunction provision of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 precluded a court from enjoining the FDIC from conducting a trustee's sale of the real properties. The court held that the appeal was moot because the real properties were sold during the pendency of the appeal.

This case was related to certain documents produced in discovery and filed in the bankruptcy court, containing allegations that Father M and D, two priests who were not parties to the Portland Archdiocese's bankruptcy case, had sexually abused children. The bankruptcy court held that the discovery documents at issue could be disclosed to the public, because the public's interest in disclosure of these discovery documents outweighed the priests' privacy interest under Rule 26(c) and that the documents filed in court could be disclosed because they did not contain "scandalous" allegations for purposes of 11 U.S.C. 107(b). The court affirmed the bankruptcy court's ruling as to the release of discovery documents disclosing Father M's name under Rule 26(c), because the public's serious safety concerns could not be addressed if Father M's name was redacted. But because the record did not reflect the existence of any similar significant public interest that required the disclosure of Father D's name, the court held that Father D's name must be redacted from any discovery documents that were released. Finally, because of the mandatory duty to keep scandalous material confidential at the request of a party under section 107(b), the court reversed the decision to release the punitive damages memorandum and attached documents.

This case arose when the SEC instituted an enforcement action against several companies, which, among other things, led to the court appointment of a receiver. Debtor was an attorney who represented some of the defendants in this enforcement action. At issue was whether the exception to discharge in 11 U.S.C. 523(a)(19) applied when the debtor himself was not culpable for the securities violation that caused the debt. The bankruptcy court held that the debt was subject to discharge; the district court disagreed and held that the debt was excepted from discharge in bankruptcy. The court held that section 523(a)(19) prevented the discharge of debts for securities-related wrongdoings only in cases where the debtor was responsible for that wrongdoing and debtors who could have received funds derived from a securities violation remained entitled to a complete discharge of any resulting disgorgement order. Therefore, the court reversed the judgment of the district court.

This case stemmed from credit agreements Lehman entities entered into with Palmdale Hills, LLC entities. Palmdale filed for chapter 11 bankruptcy in November 2008 and Lehman subsequently filed eight motions for relief from Palmdale's stay to foreclose on the collateral securing the loans that were in default. The court held that the Bankruptcy Appellate Panel (BAP) correctly held that Lehman had standing to appeal the bankruptcy court's finding that the automatic stay did not prevent equitably subordinating Lehman's claims. The court also held that the BAP correctly determined that the appeal was not moot. The court further held that the BAP correctly determined that Lehman's automatic stay prevented Lehman's claims from being subordinated. Accordingly the court affirmed the BAP's judgment.

Appellants appealed the district court's order affirming the bankruptcy court's decision that they were not entitled to subrogation pursuant to the provisions of 11 U.S.C. 509. With one clarification regarding appellants' predecessor in interest and one exception regarding the creditor, the court adopted the bankruptcy court's discussion and determination denying appellants' assertion that they were entitled to subrogation pursuant to section 509.