Email from Steve Fox:
Dear All:
The bankruptcy section is back for its 2018-2019 season. The first program up is a really unique program. It will exercise our brains and give us some good food for thought, and good stuff to use in our law practices. Daniel J. Bussell of Klee, Tuchin (and a law professor at UCLA), Whitman Holt (a partner at Klee Tuchin) and Judge Barash will speak on a small number of selected appellate cases. Read more…
I have been given the honor of moderating the Orange County Bar Assn’s 5th Annual Consumer Bankruptcy Law Update on Tuesday, October 23, 2018 from 5:30 p.m. – 7:30 p.m. at Chapman University School of Law. OCBA will be providing a summary of all published case law from the Bankruptcy Appellate Panel, District Court, 9th Circuit Court of Appeals, and US Supreme Court since April last year to now.
Judges Theodor C. Albert, Catherine A. Bauer, Mark D. Houle, Erithe A. Smith, and Mark S. Wallace and Michael J. Hauser of the Office of the US Trustee will be on the panel to discuss key cases.
In an unpublished BAP opinion of The Preserve LLC, Judge Bluebond awarded the Chapter 7 Trustee and his attorneys $400,000 for a stay violation. The BAP reversed saying the wrong procedure was used (adversary proceeding in lieu of motion) and that a trustee is ineligible to receive damages under section 362(k) because the trustee is not an “individual” within the meaning that section. Instead, a trustee can recover damages for a stay violation for a sanction for civil contempt, which is a different standard. I read Judge Bluebond’s original order and it was really well thought out with findings of facts and conclusions of law, I am surprised at the BAP’s reversal. The Taggart case is all over this.
The BAP opinion does a great job breaking down the difference between the standard for awarding damages for civil contempt versus the standard for awarding damages under § 362(k).
I was reading this law review article on the Butner case and it provided a different view on the case that I wanted to share. In essence, Professor Adler questions why Butner became so famous and a “guiding principle” when the underlying arguments and holdings are so obvious. Butner says that since the Bankruptcy Code does not establish or define property rights, the parties must turn to nonapplicable law (state law) to answer it. Well of course! Where else would you turn to!? That makes so much sense, why did we need nine Justices to clarify that?
This is akin to me telling you “in order to fix my plumbing problem, don’t look in the ‘House Operations Manual’ but instead look at the plumbing manual that will tell you how to fix my plumbing problem.” We need a Supreme Court to tell us that? The answer is so blatantly obvious let alone to become a “guiding principle!” Read more…
Section 525 deals with protection of debtors against discrimination. Section 525 is broken up into two main sections relating to two main standards: one for governmental employers and one for private employers. Let’s take a look…and note the big omission by Congress for private employers.
525(a) says a governmental unit may not:
525(b) says a private employer may not:
Government cannot deny your employment because you filed bk but a private employer can! This is also how rental companies can ask you “did you file bk in past” and deny your rental application.
In Moussighi v. Talasazan (In re Talasazan), 1:16-ap-01119-MT (Bkrcy June 2018, C.A. Cal Tighe J.), Judge Tighe said,
Fraud under California law and § 523(a)(2)(A) are identical for purposes of collateral estoppel. In re Younie, 211 B.R. 367, 373 (B.A.P. 9th Cir. 1997), aff’d, 163 F.3d 609 (9th Cir. 1998); In re Jung Sup Lee, 335 B.R. 130, 136 (B.A.P. 9th Cir. 2005).
This came up in an argument I had with someone recently re res judicata. I stated that a state court judgment that says ONLY “Plaintiff wins $1 million based on the fraud of defendant,” is res judicata in bankruptcy court whether entered by default or not. I was told I was mistaken in no uncertain terms because fraud under California law is not the same as fraud under 523(a)(2). Wrong!
By the way, the judgment example above IS res judicata as to the amount owed in any event – at least for claims purposes. The typical state court judgment says “Plaintiff wins $1 million” (nothing else). Collateral estoppel in that case as to fraud still MIGHT apply depending on whether it was actually litigated etc. Underlying documents, rulings etc are needed. But the judgment ITSELF is res judicata as to how much defendant/debtor owes the creditor. That statement does NOT mean that if there was fraud, the damages for fraud are $1 million. But it does mean debtor owes creditor $1 million (which is discharged unless 523(a) applies).
The Talasazan matter has an interesting twist. The debtor moved for summary judgment on the grounds that fraud was litigated in state court and the ruling was in the debtor’s favor and therefore could not be relitigated. The problem is that the state court judge did not say that. Judge Tighe wrote:
“[W]hile fraud was pled, argued, and briefed after trial, the Third Amended Judgment does not include fraud in the list of causes of action on which Plaintiffs prevailed.
It appears that the Superior Court ruled in Plaintiffs’ favor on the negligent misrepresentation cause of action rather than fraud.
For purposes of collateral estoppel, as detailed below, the Superior Court’s silence with respect to the fraud action, in the context of undisputed evidence from both sides that the issue was fully litigated, was a ruling in favor of the Debtor and not the Plaintiffs.”
Yes — in Wisconsin anyhow. In a Wisconsin case, debtor had a semi truck with a cab and he wanted to exempt it under that state’s homestead exemption. He sleeps in the cabin, has a bunk bend, refrigerator, radio, heater and a/c but no bathroom or kitchen. Read more…
Your client tells you “yes, I also have an IRA retirement account.” Don’t stop there — ask them “is this your IRA that you created or you inherited from another person (i.e. spouse or parent)?” If the latter — then be careful! Inherited IRA’s can be taken by the trustee. Why? Because Justice Sotomayor, on behalf of the entire bench, said so in Clark v. Rameker (2014). Read more…
Law students love unclean hands. The guy they like is the good guy which obviously gives the other guy unclean hands. The same with unjust enrichment. Judge Wallace explains very nicely In re John Olaf Halvorson that unclean hands can be a bar to the access to courts, at least when the court is sitting as a court of equity. He quotes the Supreme Court in Keystone Driller Co v. General Excavator Co., 290 U.S. 240, 244-45, 54 S. Ct. 146, 78 L.Ed. 293 (1933):
“It is one of the fundamental principles upon which equity jurisprudence is founded, that before a complainant can have a standing in court he must first show not only that he has a good and meritorious cause of action, but he must come into court with clean hands . . . The governing principle is ‘that Read more…
I was pretty surprised to find this case. As a mediator, this comes up all the time. Plaintiff will take a smaller amount in payments but wants a big penalty if the agreed upon amount is not paid. I wonder if it is different if approved by the bankruptcy court. A tip of the hat to attorney D. Brian Reider for sending me this case.
PURCELL v. SCHWEITZER, 224 Cal.App.4th 969 (2014)
Issue: Where a settlement agreement provides that in the event of a default, an additional amount is owed, can the additional amount be found to be an unenforceable penalty?
Holding: Yes. “The amount set as liquidated damages `must represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained.” Read more…
