You can access the new 9th Circuit Annual Report for the fiscal year 2011 here. The 92 page report for the year ended Sept, 2011 has lots of pictures and statistics. For example, there were 826 requests during the year for en banc review of which 13 were granted. Every district in the 9th Circuit had fewer bankruptcy filings than the year before except the Central District of California. There were 1,011 appeals from bankruptcy court decisions, up 29% from the previous year. Of the total appeals, the BAP got 59% of them and the disctrict courts 41%. How’s this for an interesting fact: 11% of the appeals to the BAP resulted in reversal! It doesn’t say what the reversal rate was to the district courts. Of the BAP and district court appellate decisions, 178 were further appealed to the 9th Circuit.
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District Court Rules for WFB in Mwangi – Violation of Automatic Stay Case
The District Court has sided with WFB in the class action brought against Wells Fargo Bank in the Mwangi case. Mwangi is the case where the 9th Circuit BAP ruled that WFB violated the automatic stay by freezing the funds automatically in every bankruptcy case. The BAP sent it back to Judge Markell for a ruling on damages and Judge Markell ruled after an evidentiary hearing that there were none. The debtor and their very energetic attorney filed a class action suit against WFB but now the district court has affirmed the bankruptcy court’s dismissal of the case. A copy of the opinion is here – Mwangi. My understanding is that WFB continues to freeze the account in every bankruptcy filing. If that is not the case, I would love to know. I still warn every client to get their money out of WFB before filing lest it be frozen. I have to say however that the few times I have had to go to trustees to get the funds unfrozen, it has been handled pretty quickly.
Update Chapter 20 Lam Motions
Judge Catherine Bauer ruled today that a discharge is required for a successful Lam Motion.
NACBA filed an amicus brief on this issue for an appeal in the 7th Circuit District Court. See attached.
Appeal of Section 522(f) Issue Pending Before the 9th Circuit
From attorney Anerio V. Altman:
I have an appeal before the 9th Circuit court of Appeals with OCCU in regards to:
1. Can a Debtor utilize the Wildcard Exemption for the purpose of avoiding a non-possessory non-purchase money security interest in collateral they claim as a tool of the trade under 11 U.S.C. 522(f)?; and
2. Can a Debtor utilize 11 U.S.C. 522(f) for the purpose of avoiding a Non-PMSI lien in a vehicle they claim as a tool of the trade?
Debtor in this case is a realtor who claims that her vehicle is a tool of the trade. The vehicle is worth less than $6000 by all accounts. Debtor filed her own motion pro se, OCCU responded and we filed a chunky reply.
Judge Albert said you can’t do it. The District court said that we could. And now we’re before the ninth.
The case is IN RE: ANGIE GARCIA. 9th Appellate case number 11-56076 or District Court 10-00985.
We don’t have a hearing date yet but all papers have been filed.
Anerio V. Altman, Esq. #228445
Lake Forest Bankruptcy
What goes in the 109(e) bucket? Santos v. Dockery goes to the 9th Circuit Court of Appeals
When I explain Chapter 13 to clients, I usually describe the amount of general unsecured claims as being the size of the clients' “bucket” and I explain that their plan payments might fill 0% to 100% of the “bucket” during the plan, before the “b
ucket” is tossed out (discharged), with certain exceptions such as student loans, for example.
Section 109(e) provides a limit on the maximum size of the “bucket” for individuals and spouses. To be eligible for Chapter 13, debtor(s) must owe “on the date of the filing of the petition, noncontingent, liquidated, unsecured debts of less than $360,475…” This amount was set as of April 1, 2010 and is adjusted every three years. It applies uniformly accross the country, despite the significant variations in real estate values and amounts of home loans.
In depressed (or recessed) real estate markets, like now, it is common for debtors to use Chapter 13 to avoid junior undersecured home loans pursuant to 11 U.S.C. Sections 506(a) and (d). In states with relatively high real estate values, like California, junior home loans can be hundreds of thousands of dollars. If the avoided junior home loan increases the debtors' “bucket” size, then they often become ineligible for Chapter 13. As a practical matter, middle class consumer debtors are excluded from the more complicated and expensive Chapter 11 and must therefore surrender their homes.
Persuasive statutory and public policy arguments favor not counting undersecured junior home loans subject to 11 U.S.C. Section 506, in the 109(e) unsecured debt limit. Santos v. Dockery (In re Santos), Case Number 12-55145, is now pending before the 9th Circuit Court of Appeals seeking a ruling on this important consumer debtor issue.
On January 20, 2012 Santos appealed a District Court order affirming the Bankruptcy Court's order dismissing their case upon a finding that they were inelgible to be Chapter 13 debtors due to their unsecured debts being above the 109(e) unsecured debt limit. The Debtors had secured claims against their primary residence that were subject to 522(f) and 506 which were determined to put them over the limit. The Bankruptcy Court followed Smith v. Rojas, 435 B.R. 637, 649-650 (9th Cir. BAP 2010). The District Court read 109(e) as “noncontingent, liquidated and unsecured debts” rather than “noncontingent, liquidated, unsecured debts”, a subtle and significant difference from the plain language.
BAP to hear Argument on Absolute Priority Rule in Individual Chapter 11
From Aki Koyama re: Chapter 13 Commitment Period
From Aki Koyama from Ms. Dockery’s office –
It appears that SCOTUS has denied cert for In re Baud which would have presented the fundamental issue of whether or not the Applicable Commitment Period is purely an independent, temporal measurement squarely before the Justices. This breathes new life into the appeals set to be heard before the 9th Circuit to reexamine this issue in light of their prior holding in Kagenveama.
Currently, three appeals regarding the Applicable Commitment Period are pending before the 9th Circuit and one new appeal, Reed out of Oregon, is before the 9th Circuit BAP. Hopefully, we will have an answer to this issue in 2012. The three cases are In re Henderson (the Idaho case and the appeal filed by the chapter 13 Trustee); In re Henderson (the same Idaho case but the appeal was filed by a creditor); In re Flores (this is the appeal with Borowitz & Clark and Rod Danielson).
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