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

The Ninth Circuit previously reversed, in part, bankruptcy appellate panel decisions. The court subsequently denied the debtors’ applications, as prevailing parties, for attorney fees under the Equal Access to Justice Act, 28 U.S.C. 2412(d). The EAJA did not authorize attorney fees because a bankruptcy court does not fall within the EAJA’s definition of “United States,” and uncontested Chapter 13 bankruptcy cases are not “civil actions brought by or against the United States.” The EAJA is a limited waiver of the government’s sovereign immunity; it must be strictly construed in favor of maintaining immunity not specifically and clearly waived. View "In re: Sisk" on Justia Law

The Ninth Circuit affirmed the district court's judgment affirming the bankruptcy court's dismissal of a chapter 7 debtor's adversary proceeding seeking to exempt retirement funds from the bankruptcy estate. In dismissing the adversary complaint for failure to state a claim, the bankruptcy court held that debtor could not reclaim his retirement funds because he filed the bankruptcy petition after the execution lien had been satisfied.The panel held that debtor failed to state a claim under 11 U.S.C. 522(h), which allows a debtor to step into the role of the bankruptcy trustee and avoid certain transfers of exempt property made before the filing of the bankruptcy petition. The panel also held that, because the judicial lien was satisfied prior to the petition date, it was not voidable under section 522(f). Therefore, because it was not voidable, debtor could not succeed on his separate section 522(f) claim nor establish that the transfer of his IRA funds was a preferential transfer under section 547. Having failed to allege the elements of a section 547 preferential transfer, the panel held that the bankruptcy court correctly concluded that debtor failed to state a claim under section 522(h). View "Elliott v. Pacific Western Bank" on Justia Law

After debtor filed for Chapter 7 bankruptcy, she wanted to keep her leased Toyota vehicle. Debtor sent Toyota a signed assumption agreement and then received her bankruptcy discharge the next day. Debtor alleged that her obligations under the lease did not survive the bankruptcy discharge because the assumption agreement had not been reaffirmed under 11 U.S.C. 524(c).The Ninth Circuit affirmed the district court's judgment affirming the bankruptcy court's determination that lease assumptions survive discharge even if they are not reaffirmed under section 524(c). The panel also held that the parties' failure to comply with the procedures does not nullify debtor's agreement to assume the vehicle lease. Furthermore, debtor and Toyota mutually waived section 365(p)'s writing and timing requirements. View "Mather Bobka v. Toyota Motor Credit Corp." on Justia Law

The Bankruptcy Code does not prevent debtors from proposing and confirming plans with an estimated duration. After determining that it had jurisdiction over debtors' appeal, the Ninth Circuit held on the merits that the text and structure of the Code do not mandate a fixed term requirement for all Chapter 13 plans and that the panel should not add one without clear direction from the statute.The panel also held that none of the reasons given by the bankruptcy appellate panel justify the finding that debtors proposed their initial plans in bad faith. Finally, the panel held that the bankruptcy court did not fail to hold a confirmation hearing within the timeframe prescribed by the Code and properly exercised its discretion by deferring consideration of debtors’ estimated-duration provisions until it could adequately address them. Accordingly, the panel affirmed in part, reversed and vacated in part, and remanded for further consideration. View "In re Nanette Marie Sisk" on Justia Law

The Ninth Circuit affirmed, although on different grounds, the district court's dismissal of appellant's challenge to an exculpation clause approved by the bankruptcy court as part of a settlement and confirmation plan in Chapter 11 proceedings. As a preliminary matter, the panel declined to dismiss the appeal because of appellant's failure to reply to the show cause order. The panel remained bound by its earlier decision that appellant's challenge to the exculpation clause is not equitably moot. On the merits, the panel held that 11 U.S.C. 524(e) does not prohibit the exculpation clause at issue, because the clause covers only liabilities arising from the bankruptcy proceedings and not the discharged debt. View "Blixseth v. Credit Suisse" on Justia Law

After the State Bar of California suspended one of its members for misconduct, it conditioned her reinstatement of the payment of court-ordered discovery sanctions and costs associated with its disciplinary proceedings. The suspended attorney sought to discharge the payment in bankruptcy.The Ninth Circuit held that, while a debtor may not discharge the costs of the State Bar's attorney disciplinary proceedings imposed under California Business and Professions Code 6086.10, the discovery sanctions under California Procedure Code 2023.030 were dischargeable. Under the plain text of 11 U.S.C. 523(a)(7), they were not payable to and for the benefit of a governmental unit and were compensation for actual pecuniary losses. Finally, the panel rejected the attorney's claim that the State Bar violated 11 U.S.C. 525(a) by failing to reinstate her law license because of her nonpayment of dischargeable debts. Accordingly, the panel affirmed in part and reversed in part. View "Albert-Sheridan v. State Bar of California" on Justia Law

A bankruptcy court may not void a lien under 11 U.S.C. 506(d) when a claim relating to the lien is disallowed because the creditor who filed the proof of claim did not prove that it was the person entitled to enforce the debt the lien secures.The Ninth Circuit affirmed the bankruptcy appellate panel's opinion reversing the bankruptcy court's summary judgment for the Chapter 13 debtor in the debtor's adversary proceeding seeking a declaration that a lien securing a disallowed claim was void. Because debtor conceded that if the panel affirmed the BAP on this issue, then the order reversing the fee award should also be affirmed. Therefore, the panel affirmed the BAP's decision to reverse the fee award. View "Lane v. The Bank of New York Mellon" on Justia Law

The Ninth Circuit affirmed the district court's judgment affirming the bankruptcy court's order granting a Chapter 7 trustee's motion to exercise management rights over Dillon and authorizing the trustee's assumption of the operating agreement with Dillon. Dillon is a limited liability company created to hold title to foreclosed property securing investments by private investors in Point Center Financial, and appellants are the former principal of Point Center Financial, the debtor, and members of Dillon.The panel held that the Harkey parties have standing to pursue this appeal; the bankruptcy court had subject matter jurisdiction to confirm the vote establishing the trustee as manager of Dillon and to hear the assumption motion; the bankruptcy court properly authorized the trustee to exercise management rights over Dillon after the majority of Dillon's members voted for the trustee to manage Dillon; the bankruptcy court properly extended its own deadline for assumption of the operating agreement pursuant to Fed. R. Bankr. P. 9006(b)(1)(2); and the panel need not reach the question of equitable mootness because it affirmed the district court on other grounds. View "In re: Point Center Financial, Inc." on Justia Law

After debtor made unauthorized and fraudulent transfers of funds during the Chapter 13 proceeding, the bankruptcy court converted the proceedings to Chapter 7 in response, and then debtor argued that the transferred funds were no longer in the estate.The Ninth Circuit affirmed the Bankruptcy Court and the Bankruptcy Appellate Panel's determination that the transferred funds should remain property of the Chapter 7 estate, which would mean that the Chapter 7 trustee had authority to recover them. The panel held that debtor transferred the funds with the fraudulent purpose of avoiding payments to creditors and those funds remained within his constructive possession or control. Therefore, the funds should be considered property of the converted estate under 11 U.S.C. 348(f)(1)(A). View "Brown v. Barclay" on Justia Law

The Ninth Circuit dismissed Ocwen's appeal of the Bankruptcy Appellate Panel's (BAP) decision affirming the bankruptcy court's contempt orders, holding that the panel lacked appellate jurisdiction. The panel held that the BAP's decision remanding the matter to the bankruptcy court was not final and appealable. The panel considered the need to avoid piecemeal litigation, judicial efficiency, the systemic interest in preserving the bankruptcy court's role as the finder of fact, and whether delaying review would cause any party irreparable harm, and ultimately concluded that all factors compelled dismissal of Ocwen's appeal.However, the panel held that it had jurisdiction over debtors' appeal and affirmed the BAP's conclusion that they were not entitled to attorney's fees for their appeal to the BAP. Therefore, the panel rejected debtors' claims that they were entitled to attorney's fees under Federal Rule of Appellate Procedure 38, the attorney's fee provision in the deed of trust with Ocwen, and section 105(a) of the Bankruptcy Code. View "Ocwen Loan Servicing, LLC v. Marino" on Justia Law