Zindel v. Fox Searchlight. Watch oral argument here. December 9, 2019. No result as of Feb 7, 2020.
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Judicial notice of declarations – by the debtor at least
A footnote in some case I was reading.
2 The Court takes judicial notice of its files and records under Rule 201 of the Federal Rules of Evidence. See In re Clark, 525 B.R. 442, 449 (Bankr. D. Idaho 2015), aff’d, 2016 WL 1377807 (B.A.P. 9th Cir. March 29, 2016) (taking judicial notice of papers filed on its docket and noting, “Papers filed in a bankruptcy case by a debtor under penalty of perjury also have evidentiary significance under Fed. R. Evid. 801(d)”).
In re Brace – finally some action (a little) at the California Supreme Court
On the Supreme Court (Cal) docket. Apparently there might be oral argument “within the next few months.” The Supreme Court is required to rule within 90 days of oral argument but there is no rule about when oral argument must take place.
| 12/31/2019 | Oral argument letter sent | Dear counsel: Please be advised that the court could set this case for argument within the next few months. Schedules showing the court’s oral argument dates and locations for the next twelve months can be found at http://www.courts.ca.gov/ |
Are BAP rulings binding on bankruptcy judges?
Another thing I want to remember. Where does it say that BAP cases aren’t binding on bankruptcy judges? This is footnote in the new BAP case of Leavitt v. Black (In re Black), — B.R. — (9th Cir. BAP Dec, 2019).
Mr. Black argues that Burgie is binding on all bankruptcy courts in the circuit and that the bankruptcy court erred by failing to follow it. The Ninth Circuit has never held that our decisions are binding (under stare decisis principles) on any court. See, e.g., Bank of Maui v. Estate Analysis, Inc., 904 F.2d 470, 472 (9th Cir. 1990). We view ourselves as bound by our prior published decisions. Salomon N. Am. v. Knupfer (In re Wind N’ Wave), 328 B.R. 176, 181 (9th Cir. BAP 2005) (“[W]e regard ourselves as bound by our prior decisions, and ‘will not overrule our prior rulings unless a Ninth Circuit Court of Appeals decision, Supreme Court decision or subsequent legislation has undermined those rulings.’” (citations omitted)); 9th Cir. BAP R. 8024-1(c)(1) (also acknowledging ability of Panel to modify or reverse itself sitting en banc). We will follow Burgie, and we need not decide whether stare decisis also obliged the bankruptcy court to do so.
Appeal divests the trial court of jurisdiction – mostly anyway
This blog is a great way to save stuff I might need at a later time. I knew that an appeal divests the trial court of most jurisdiction but was not sure where it says that. I happened to run into the law in a Judge Kaufman tentative I was reading today.
“The filing of a notice of appeal is an event of jurisdictional significance—it confers jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal.” Griggs v. Provident Consumer Disc. Co., 459 U.S. 56, 58 (1982). “The timely filing of a notice of appeal to either a district court or bankruptcy appellate panel will typically divest a bankruptcy court of jurisdiction ‘over those aspects of the case involved in the appeal.’” In re Sherman, 491 F.3d 948, 967 (9th Cir. 2007) (quoting In re Padilla, 222 F.3d 1184, 1190 (9th Cir. 2000)). “The bankruptcy court retains jurisdiction over all other matters that it must undertake ‘to implement or enforce the judgment or order,’ although it ‘may not alter or expand upon the judgment.’” Id. (quoting Padilla, 222 F.3d at 1190).
Human Error: Bank Submits Wrong Escrow Demand in Debtor’s Post-Discharge Sale and Seeks Unjust Enrichment Claim Against Debtor. Was This Postpetition Unjust Enrichment Claim Discharged? Eh, not really said the BAP.
Debtor owned a home encumbered by 3 liens and filed Chapter 7 bankruptcy and gets a discharge. We know liens survive (“ride through”) a bankruptcy. Eight years passed and debtor markets and sells her home. The Bank makes a demand into escrow to get paid on its claim but due to human clerical error, the Bank submits a demand for $3,000 when it should have been $230,000. Whoops!! Escrow relied on the demand, pays the Bank $3,000 and closes. Debtor got $230,000 from sale proceeds that should have gone to the Bank but for that clerical error. Windfall! Under California law, once escrow closes — then the Bank’s rights and interests under the deed of trusts were instantly and automatically extinguished. So, the Bank’s only Hail Marry pass is to argue the catchall – unjust enrichment!
Bank files a motion to reopen debtor’s case after 8 years to file a complaint to allege a claim for “unjust enrichment” in order to argue that it would be simply wrong (“inequitable” as lawyers say) for debtor to get to keep the all that sale proceeds. Question is — was that “unjust enrichment” cause of action also discharged in debtor’s bankruptcy 8 years ago? [cue suspense music]
Prenups are Voidable Transfers says California Law
Premarital agreements between soon-to-be spouses can be an avoidable “transfer” under UFTA (now the UVTA).
In Sturm v. Moyer, defendant procured a $600,000 non-dischargeable judgment per Section 523(a). During several rounds of debtor’s examination, the debtor said in essence, “I have nothing and will not work either, so you cannot collect against me.” During one of the debtor’s examinations, it was discovered that the debtor got married a few years ago. The debtor, knowing he had this judgment looming over him, entered into a prenuptial agreement with his then-wife to keep her assets and earnings separate so this judgment creditor does not try to collect on it as community property.
The judgment creditor found out about the prenup and filed a state court lawsuit to assert that the prenup was a fraudulent transfer per UFTA/UVTA. The lower court disagreed and dismissed the case. Judgment creditor appealed and the California appellate court, in this certified for publication case, said the prenup was a transfer based on legislative history and policy as per the expert criminal defense attorney firm.
San Fernando Valley Bar Assn program this Friday on 9th Circuit BAP opinions.
Email from Steve Fox:
Dear All:
The bankruptcy program we present on Friday will look at recent, relevant and riveting Ninth Circuit BAP opinions. Our panelists are the Honorable Deborah Saltzman, Jessica Bagdanov and Roksana Moradi-Brovia. The materials are good, really gook, 26 pages of detailed briefs, case by case. So what are the topics? Read more…
California Court of Appeals rules that settlement agreement included an unenforceable penalty
Red & White Distribution v. Osteroid Enterprises, 2019 WL 3759458 (Aug 2019)
Issue: Did the settlement agreement here include an unenforceable penalty for non-payment of the settlement amount?
Holding: Yes.
A lender, Osteriod, sued a borrower, R&W. The borrower cross-complained. “The parties then settled all claims for $2.1 million pursuant to a ‘Payment Agreement.’” They also executed a “stipulation for entry of judgment” which provided “in the event of a default on the payment plan, R&W is ‘liable to pay $2,800,000 to the Osteroid Parties, plus interest… reduced by any payments [made].’” R&W defaulted and Osteriod sought and obtained a default judgment for $3.6 million.
The court of appeals reversed as to the amount holding that the additional sum of $700,000 upon default was an unenforceable penalty under Civil Code section 1671 and the Supreme Court of California case of Ridgley v. Topa Thrift & Loan Assn. 17 Cal.4th 970 (1998). “In this case, the stipulated judgment for $2.8 million bears no reasonable relationship to the range of actual damages the parties could have anticipated from a breach of the agreement to settle the dispute for $2.1 million. “[D]amages for the withholding of money are easily determinable—i.e., interest at prevailing rates ….” “The judgment, however, provided for interest at the legal rate from the date of the execution of the stipulated judgment, attorneys’ fees to enforce the judgment, plus $700,000 more than the parties agreed to in their settlement agreement. This additional $700,000 was an unenforceable penalty.” Read more…
Bankruptcy Appeals – BAP or District Court?
The Ninth Circuit 2018 Annual Report tells us that last year there were 277 appeals from bankruptcy courts in the Central District of California. Total appeals in the 9th Cir were 623 so we are almost half. Of the 277 in the Central District, 131 were to the BAP and 146 to the district courts.
Every appeals program I have been to since forever spends a healthy amount of time discussing which court is “better” for the appeal – the BAP or the district court.
Here is my take on how to decide which court to appeal in:
- If the issue is truly a commercial bankruptcy issue, it is rarely better to appeal to the district court. Plans and confirmation, the automatic stay and preferences befuddle most district court judges and their clerks. One district court judge told me that he is mystified that anyone would want him to resolve a bankruptcy issue.
- If there is BAP precedence against you, the BAP is bound by its prior rulings so you might as well go to the district court which is not bound by BAP rulings in other cases.
- If you suspect that the matter is going to go to the 9th Circuit irrespective of the result at the first level of appeal, go to the BAP. It will recognize the issue and explain it to the 9th Circuit for you.
- The BAP is ruling pretty quickly these days. You can expect a resolution within 3-4-5 months. The district court in my experience takes a lot longer.
- The BAP will almost always allow oral argument. The district court rarely does (in my experience).
- If the matter is really heavy duty state court -non-bankruptcy court – litigation, the district court might be better. For example, claims objections based on state law. The district court is likely more familiar and comfortable with non-bankruptcy litigation issues.
The idea that one court or the other will “rubber stamp” the bankruptcy court is ridiculous and insulting to the judges.
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