Dear Colleagues!
Please see the attached documents illustrating a response by a Real Estate firm in an opposition to a motion for sanctions filed by the US Trustee. It is very enlightening as to what real estate firms are doing to delay foreclosures and in practicing law in our field.
KEITH ALAN HIGGINBOTHAM
THE LAW OFFICES OF KEITH ALAN HIGGINBOTHAM
255 S. Grand Avenue, Suite #2109
Los Angeles, CA 90012-3045
In Malley v. Agin, — F.3d —(1st Cir. Aug. 2012), the debtor hid property from the trustee, here cash proceeds from the sale of the home. By the time the trustee figured it out, the funds were gone. The bankruptcy court permitted a surcharge under section 105 against the debtor’s exempt truck. The debtor argued “the ostensible inviolability of exempt property under the terms of 11 U.S.C. § 522(c), in its provision that ‘[u]nless the case is dismissed, property exempted under this section is not liable during or after the case for any debt of the debtor that arose before [its] commencement.’” “But we think [the debtor’s] point begs the question. Should [the debtor]’s interest in the truck be recognized as ‘exempted under this section’ when its exemption would consummate a fraud on creditors by giving the debtor a greater exemption in fact than the code entitles him to claim in law?”
“Accordingly, we endorse the Ninth Circuit’s conclusion in Latman v. Burdette, 366 F.3d 774 (9th Cir.2004), that a debtor’s fraudulent concealment of non-exempt assets is an exceptional circumstance in which an offsetting surcharge against otherwise exempt property interests is reasonably necessary ‘both to protect the integrity of the bankruptcy process and to ensure that a debtor exempts an amount no greater than the Bankruptcy Code [permits].’”
In re Ng may be accessed here. The Debtor’s income increased after he filed. The BAP says that the bankruptcy court may condsider that as part of the totality of the circumstances when deciding whether to dismiss a chapter 7 under section 707(b)(3). By the way, the lower court also ruled that a debtor may deduct mortgage payments on the means test, even if he intends to surrender or abandon the home. Since that ruling was irrelevant, the BAP did not discuss it.
From the LA County Bar Assn Ebriefs
-Civil Procedure-
Arbitration clause in used car purchase agreement was procedurally unconscionable where, according to purchaser’s unrefuted declaration, the dealer did not give purchaser the opportunity to negotiate or call his attention to the clause, which appeared on the back side of a preprinted page contract and was nowhere near the signatures. Clause was substantively unconscionable where its provisions–allowing either side to appeal an award exceeding $100,000, or any award of equitable relief; requiring party appealing an award to advance all costs of appeal proceeding; and barring arbitration in event dealer resorted to repossession or other self-help remedies–unilaterally and oppressively favored dealer. Trial court did not abuse its discretion in ruling that unconscionable provisions so permeated agreement that severance should be denied.
Goodridge v. KDF Automotive Group, Inc. – filed August 24, 2012, publication ordered September 13, 2012, Fourth District, Div. One
Cite as D060269
Full text http://www.metnews.com/sos.cgi?0912//D060269
The Sham Affidavit – Lessons in Patience
For years while in private practice I was fascinated with witnesses at depositions who claimed, question after question, that they just “couldn’t recall.” Lawyers present at those deposition grew frustrated at either the witness for such recalcitrance, or else at me for continuing to ask dozens of straight-forward questions while never seeming to obtain “results.” But, au contraire, Pierre. I learned about the Sham Affidavit Doctrine early in my career. That’s when a defensive affidavit (or declaration) is presented in opposition to a Motion for Summary Judgment that suddenly has all of the “disputed facts” miraculously appear by the earlier forgetful deponent. That declaration is destined to be struck by the Court.
Yesterday, we were reminded of this Rule. In the Ninth Circuit’s Yeager v. Bowlin (yes, the Speed of Sound General Chuck Yeager) (9th Cir. Sept. 10, 2012), a three-judge panel on Monday ruled an affidavit General Yeager filed with the district court was a ‘sham’ because it included extensive details he claimed not to recall during a deposition three months earlier….” Sham Affidavit Rule. Just like taking the 5th in civil matters, “I don’t recall” has significant consequences as well. This is a case that should be reviewed by all litigators, and passed along to their clients.
Hon. Scott C. Clarkson
United States Bankruptcy Judge
Danielson v. Flores (In re Flores), — F. 3d — 2012 WL ————(9th Cir. August, 2012)
Issue: May “a debtor with no ‘projected disposable income’ confirm a plan that is shorter in duration than the ‘applicable commitment period’ found in §1325(b)”?
Holding: Yes, the 9th Circuit ruling in Kagenveama is still binding as to the applicable commitment period.
Appeal from Bankruptcy Court – direct appeal
Bankruptcy Judge Meredith Jury
Attorney for Defendants, Nancy Clark
Judge Chen for the majority and Judge Susan Graber dissenting.
These are above-median chapter 13 debtors whose “monthly ‘disposable income,’ as that term is defined in the Bankruptcy Code, is negative.” The debtors proposed to pay $148 per month for 36 months. The trustee objected that the applicable commitment period was 60 months. The court agreed and confirmed the plan for 60 months.
Nice opinion from Louisiana:
“On April 13, 2007, the Court entered an Opinion and Partial Judgment awarding [the debtor] $24,441.65, plus legal interest for amounts overcharged by Wells Fargo. In addition, [the bankruptcy court] found Wells Fargo to be in violation of the automatic stay because it applied postpetition payments made by [the debtor] and his trustee to undisclosed postpetition fees and costs not authorized by the Court, noticed to Debtor or his trustee, and in contravention of Debtor’s confirmed plan of reorganization and the Confirmation Order. Wells Fargo’s conduct was found to be willful and egregious.”
Later the court awarded $67,000 in attorney’s fees as “compensatory sanctions.” The court did not award punitive damages. On appeal, the district court increased the judgment to $170,000. The Fifth Circuit remanded (ultimately) with an order to reconsider the punitive damages. On remand, the bankruptcy court increased the compensatory award to $292,000 for the additional fees involved in the appeal and said,
“After considering the compensatory damages of $24,441.65 awarded in this case, along with the litigation costs of $292,673.84; awards against Wells Fargo in other cases for the same behavior which did not deter its conduct; and the previous judgments in this case none of which deterred its actions; the Court finds that a punitive damage award of $3,171,154.00 is warranted to deter Wells Fargo from similar conduct in the future.”
The opinion is here. WFB Hammered Thanks to Marc Stern in Seattle for the FYI on this.
Here is a nice brief from attorney Marc Stern in Seattle. It seems he served Wells Fargo Bank by handing a copy of the complaint to the manager of some particular branch in Seattle. I am guessing that the bankruptcy judge did not believe that was sufficient since Marc is now appealing. The brief lays out very nicely the federal rules on service of process. Brief re Service on WFB
Note: I asked Marc how goes the appeal? He said,
Wells Fargo hired counsel and stipulated to the relief that I wanted in the first place. Also, we dismissed the appeal.
MSS
Read the Public Notice here.
On August 1, 2012, the City of San Bernardino, California filed a petition for an Order of Relief under Chapter 9 of Title 11, United States Code. The case number is 6:12-bk-28006. Chief Circuit Judge Alex Kozinski has ordered that pursuant to 11 U.S.C. 921(b), Bankruptcy Judge Meredith A. Jury is designated to conduct the case.
The Court has established a webpage to provide information about this case and post select documents of interest. This webpage can be accessed by clicking on Case of Interest: City of San Bernardino on the home page of the Court’s website at www.cacb.uscourts.gov.
Bankruptcy Court
Court’s Webpage for this Case (shortcut): http://go.usa.gov/GKB
Inquiries for this Case
Phone number: (951) 774-1090
City of San Bernardino
Website: www.ci.san-bernardino.ca.us
Legal Inquiries
James F. Penman, City Attorney
Phone number: 909-384-5355
Administrative and Financial Inquiries
Andrea Travis-Miller, Interim City Manager
Phone number: 909-384-5122
RadLAX Gateway Hotel, LLC v. Amalgamated Bank, — U.S. —, — S.Ct. — (May, 2012)
Issue: Where a debtor proposes to sell property of the estate as part of a chapter 11 plan, must the secured creditors be entitled to credit bid?
Holding: Yes.
Justice Antonin Scalia for 8-0 court, Kennedy did not take part
This chapter 11 debtor owned a hotel valued at roughly $50 million. Amalgamated Bank was the first priority lienholder and was owed approximately $120 million. The debtor submitted a chapter 11 which proposed to sell the hotel for $55 million, subject to overbids. The sale was to be free and clear of liens. The plan provided that the bank would not be permitted to “credit bid” at the sale. The debtor filed a Motion to Approve Sale at the same time. The bank objected to both on the basis that it had the right to credit bid pursuant to section 1129(b)(2)(A)(ii). The debtor argued that if the bank had no right to credit bid, it was more likely that there would actually be bidders which was good for everyone. The debtor argued that it was required by section 1129(b)(2)(A)(iii) only to give the bank the indubitable equivalent of its claim and since the bank was to receive all of the net proceeds of the sale, that was the indubitable equivalent of its secured claim. The bankruptcy court denied the motion. The Seventh Circuit Court of Appeals affirmed.
