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En Banc Oral Argument set in Schwartz-Tallard

By | January 5, 2015 | Appeals, Cases | No comments
The oral argument before the en banc panel will be March 16, 2015 in San Francisco.  One of the attys has asked to have the argument moved since he will be out of town but I assume it will not be moved now that it is on the calendar.  Doesn’t say who the nine judges will be.
2015-03-16  9:00 am  Courtroom 1, 3rd Floor, San Francisco California – En Banc

Case No. Title Nature Origin Time / Side
12-55396
12-56117		 US ex rel. Steven Hartpence v. Kinetic Concepts, Inc. – Relators Steven Hartpence and Geraldine Goedcecke appeal the district court’s dismissal of their qui tam claims under the False Claims Act against Kinetic Concepts, Inc., and KCI-USA, Inc. [2:08-cv-01885-GHK-AGR] Civil C. CA 30 min
12-60052 America’s Servicing Co. v. Irene Schwartz-Tallard – America’s Servicing Co.appeals from the Bankruptcy Appellate Panel’s decision that a debtor was not precluded from recovering attorneys’ fees for defending against a creditor’s appeal of a finding that the creditor violated the automatic stay. [11-1429] Bankruptcy NV 30 min
10-99011
96-99025
96-99026		 Robert Smith v. Charles Ryan – Arizona state prisoner Robert Douglas Smith appeals the district court’s denial of his 28 U.S.C. § 2254 habeas corpus petition challenging his jury conviction and capital sentence for murder, kidnapping, and sexual assault. [4:87-cv-00234-JMR] DP HC AZ 30 min

Schwartz-Tallard to be Reviewed En Banc by 9th Circuit

By | December 19, 2014 | Appeals, Cases | No comments

The 9th Circuit has decided to review the Schwartz-Tallard case en banc.  The issue in Schwartz-Tallard is the right of a debtor to get attorneys fees for a contempt/violation of the automatic stay.  Sternberg v. Johnson says the right to attorney’s fees ends when the contempt ends.  After that the “American rule” applies, i.e., no attorneys fees.  Schwartz-Tallard said that the debtor can get attorneys fees defending an appeal of an Order for Contempt even though the contempt has ended.  The Order granting en banc vacates the 9th Circuit ruling.  I suspect the oral argument will be some time in March.

B.A.P. Holds Judge Does Not Have Authority To Prevent Debtor From Adding An Exemption to the Schedules (In re Gray et al., 9th Cir. B.A.P. 2014)

By | December 16, 2014 | Appeals, Cases, Chapter 13, Chapter 7, Uncategorized | No comments

The 9th Circuit B.A.P. recently held that a bankruptcy judge does not have the authority to prevent a debtor from adding an exemption to his or her court papers based solely on the judge’s finding they had acted in bad faith.  The Panel intricately cites U.S. Supreme Court’s decision in Law v. Siegel in reaching its conclusion.

Summary holding:  Bankruptcy courts have no discretion under federal law to deny debtors leave to amend their exemptions absent express statutory authority.  The panel reversed a ruling to disallow an amended exemption.   In re Gray et al.; Gray et al. v. Warfield, No. 13-1502, 2014 WL 6972522 (B.A.P. 9th Cir. Dec. 9, 2014).

Tentative Ruling Gives Nice Lesson on Annulment of the Stay

By | December 9, 2014 | Cases, Judges Corner | No comments

More excellent work from Judge Scott Clarkson:

United States Bankruptcy Court
Central District of California
Judge Scott Clarkson, Presiding

Tuesday, December 09, 2014 Hearing Room 126
10:00 AM

6:14-22665 James Joseph Panzarello and Hilyam Panzarello Chapter 7

Motion for Relief from Stay

RE ACTION IN NON-BANKRUPTCY FORUM

Tentative for 12/9/2014 is to GRANT pursuant to 11 U.S.C. §362(d)(1) with 4001(a)(3) waiver.  The request for an annulment is GRANTED.

This matter was continued from 11/25/2014 where debtor appeared, but filed no written opposition. It is the Debtor’s burden, even on annulment, to file a timely opposition.

Section 362(d) provides authorization to annul the automatic stay, which, in effect, retroactively ratifies or validates acts that otherwise violated the stay. Lone Star Sec. & Video, Inc. v. Gurrola (In re Gurrola), 328 B.R. 158, 172 (9th Cir. BAP 2005). Determining whether cause exists to annul the stay retroactively a case-by-case inquiry based on a balance of the equities. Nat’l Envtl. Waste Corp. v. City of Riverside (In re Nat’l Envtl. Waste Corp.), 129 F.3d 1052, 1055 (9th Cir. 1997). In making this determination, the bankruptcy court considers 12 factors, including:
1. Number of filings;
2. Whether, in a repeat filing case, the circumstances indicate an intention to delay and hinder creditors;
3. A weighing of the extent of prejudice to creditors or third parties if the stay relief is not made retroactive, including whether harm exists to a bona fide purchaser;
4. The Debtor’s overall good faith (totality of circumstances test):
5. Whether creditors knew of stay but nonetheless took action, thus compounding the problem;
6. Whether the debtor has complied, and is otherwise complying, with the Bankruptcy Code and Rules;
7. The relative ease of restoring parties to the status quo ante;
8. The costs of annulment to debtors and creditors;
9. How quickly creditors moved for annulment, or how quickly debtors moved to set aside the sale or violative conduct;
10.Whether, after learning of the bankruptcy, creditors proceeded to take steps in continued violation of the stay, or whether they moved expeditiously to gain relief;
11.Whether annulment of the stay will cause irreparable injury to the debtor;
12.Whether stay relief will promote judicial economy or other efficiencies. In re Fjeldsted, 293 B.R. 12, 25 (B.A.P. 9th Cir. 2003).

Read more…

Tentative Ruling on Contempt for Violation of the Discharge Injunction

By | December 8, 2014 | Cases, Chapter 7, Judges Corner | No comments

Judge Ted Albert’s usual excellent work.

United States Bankruptcy Court
Central District of California
Judge Theodor Albert, Presiding
Courtroom 5B Calendar
Santa Ana
Tuesday, December 09, 2014 Hearing Room 5B
11:00 AM

8:10-23458 Carlos Antonio Bernal Chapter 7
#14.00 Order To Show Cause RE: Contempt Against *************

This is a hearing on the OSC re contempt issued by the court 10/29/14 at the request of the debtor.  There is proof of service upon attorney Silverstein but not as to the other alleged contemnor, Grand Commerce Center, LLC.  Only attorney Silverstein has responded.  First, the discharge injunction is effective as to all discharged debts.  While Attorney Silverstein alleges that he was not listed in the petition and schedules, the certificate of notice dated 9/26/10 suggests that his client was.  Moreover, in no-asset cases all debts are discharged whether listed or not.  In re Heilman, 430 B.R. 213, 218 (9th Cir. BAP 2010).  Therefore, every aspect of the garnishment obtained on a judgment issued after the 1/13/2011 is potentially a contempt.  But unlike stay violations which make all violations automatically void, violation of the discharge injunction is treated as contempt, so damages and penalties resulting must be considered in terms of the willfulness of the violation.  Attorney Silverstein tries to make an issue of the corporate vs individual status under §362(k), but this is misplaced since clearly the debtor (which is the only status that matters) is an individual, and discharge injunction violations are judged on a different standard anyway.  Attorney Silverstein submits a declaration indicating he knew nothing about the bankruptcy and stopped immediately the garnishment once he learned of it. He also mentions the monies garnished were refunded or never obtained (it is unclear which).  But the exact timing of all of this is left vague.  The court notes that several wage statements are attached as exhibits showing that garnishments continued for several pay periods including as late as 9/26, although Mr. Spector’s letter to attorney Silverstein is dated August 8, 2014.  So, absent another explanation, it would seem at the very least that Attorney Silverstein was slow in responding. Also conspicuously absent in Attorney Silverstein’s papers is any recognition that ongoing garnishment imposes a real hardship on a debtor struggling to obtain his fresh start. Lastly, the court expects attorneys, particularly ones involved in debt collection practice who must know of these principles, will adhere to higher standards. Different considerations (and potentially higher consequences) may apply as to Grand Commerce, if service can be effected.

Damages equal to attorney’s fees and reopening fee incurred post discharge.

Valuable Bible Exempt in Illinois says District Court Judge Overruling Bankruptcy Judge

By | December 2, 2014 | Cases, Chapter 7 | No comments

Illinois exemption statute says:”The necessary wearing apparel, bible, school books, and family pictures of the debtor and the debtor’s dependents.”  This bible however was a 1830 relic worth at least $10,000 with some people saying it could be five to ten times that value.  And, says the trustee, the debtor had other bibles and did not use this one.   Her total debt was in the range of $30,000.  The bankruptcy judge ruled that it was not exempt and the district court reversed.  The district court decision is here.

This is really straight statutory construction.  There are lots of dollar limitations among the various exemptions but none on bibles.  The district court writes,

The Court believes a reading of the plain language indicates the Bible is exempt without regard to its value.  First, it is the most reasonable interpretation that “necessary” only modifies “wearing apparel” and does not modify the remaining items in the list.  Wearing apparel is a necessity for basic living.  However, one does not need a bible, school books or family pictures to survive.  As such, the Court finds that the statute, as written, does not require the Court to undertake a “necessary” analysis.

The article at Credit Slips is here.  The Wall Street Journal article is here.

The biggest problems law students have is that they learn a bunch of rules which they can spew back to you nicely but then they jump to a “reasonable” type argument.   Congress makes the laws.  Obviously the Illinois legislature could have exempted bibles “irrespective of the value.”  There would be no debate.  But is that what it did here?  It depends on what the code says.  The district court judge’s analysis here is supported by the plain language of the code.  The trustee’s arguments on the other hand are completely “reasonable.”

Home Loan As Compensation is Not Consumer Debt For Purposes of Dismissal (In re Cherrett)

By | November 24, 2014 | Cases, Chapter 7 | No comments

A home loan that an employee accepted as part of a compensation package was not a “consumer debt” for purposes of determining whether his Chapter 7 bankruptcy case was subject to a statutory dismissal provision, said the 9th Circuit BAP in their published opinion on Nov. 7, 2014.

Debtor-husband’s former employer moved to dismiss debtors’ Chapter 7 case as abuse of provisions of that chapter,  butt Judge Scott C. Clarkson denied the motion on ground that the debt  was not “consumer debt,”  as required by the Code.

When Appealing, First Seek a Stay (In re Mortgages)

By | November 19, 2014 | Appeals, Chapter 11, Chapter 13, Chapter 7 | No comments

When appealing an order, remember to put on your checklist to first seek a stay of the challenged order.  If not, the appellate court will regrettably inform you “there is nothing we can do for you now”.   That is what happened in In re Mortgages Ltd., — F.3d — (9th Cir. 2014).

In a recently published Ninth Circuit Opinion, the Court held that an appeal by a group of creditors was equitably moot because they never sought a stay of the order that they were appealing from.  The debtor had already acted, and other third parties would be unfairly harmed if the panel were to side with the creditor-appellants.  The Court said, “clawing back money from those investors who already paid their full allocation would be either impossible or inequitable.”

As such, the panel dismissed the appeal citing In re Thorpe, which held that appeals can be dismissed based on mootness when a “comprehensive change of circumstances” has occurred that makes it inequitable for a court to consider the appeal’s merits.  In re Thorpe Insulation Co., 677 F.3d 869 (9th Cir. 2012).

Full Opinion Here: http://cdn.ca9.uscourts.gov/datastore/opinions/2014/11/12/12-15234.pdf

Supreme Court To Revisit In Re Dewsnup To Decide On “Strip Off’s” (Bank of America v. Caulkett and Bank of America v. Toledo-Cardona)

By | November 18, 2014 | Cases, Chapter 11, Chapter 13, Chapter 7 | No comments

The Supreme Court will hear two consolidated cases to determine whether a Chapter 7 debtor may “strip off” an underwater mortgage.

From SCOTUSblog:

The Supreme Court, taking on a bankruptcy issue that grew out of the collapse of the U.S. housing market, agreed on Monday to sort out when a mortgage debt on a home that has lost its value can be completely wiped out.  At issue in a pair of cases is the so-called “strip off” in bankruptcy of a mortgage that is ranked lower than another loan when the mortgaged property is worth so little that it could not cover either debt.

The Court, in the consolidated cases of Bank of America v. Caulkett and Bank of America v. Toledo-Cardona, will be deciding whether a “strip off” of a mortgage is to be barred in the same way that a “strip down” already is, under a 1992 Supreme Court ruling (Dewsnup v. Timm).

Read more…

Cert. Asks Supreme Court to Resolve Where Funds from Ch. 13 Should Go After Case Is Converted (Harris v. Vieglahn, No. 14-400)

By | November 8, 2014 | Appeals, Chapter 13, Chapter 7, Courts, Supreme Court | No comments

The appellant argues, “…of 320,000 Chapter 13 cases filed each year, 60,000 are later converted to Chapter 7″. But where should the funds held by the Chapter 13 Trustee go when Debtor converts the case: back to the debtor or to the creditors?  Harris v. Viegelahn, No. 14-400, petition for cert. filed (U.S. Oct. 6, 2014).

Because of a circuit split, the appellant has asked the Supreme Court to resolve this issue.  The appellant reminds us that our 9th Circuit B.A.P. requires the return post-Chapter 7, undistributed funds to the debtor.

Please find the full article below from Westlaw Journal Bankruptcy at Debtor Wants Supreme Court to Resolve Where Post-Petition Funds Go After Conversion, 11 Westlaw Journal Bankruptcy 2 (2014).

Read more…

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