All posts in Cases

Sham Guaranty? More Stuff I Didn’t Know

By | February 6, 2018 | Case Briefs, Cases | No comments

LSREF2 CLOVER PROPERTY 4, LLC v. FESTIVAL RETAIL FUND 1, LP, (2016) 3 Cal.App.5th 1067

Issue:  Is the guaranty of a loan by the parent entity here a “sham” guaranty?

Holding:  No, “[T]he overriding concern when deciding whether the sham guaranty defense applies is whether the guaranty is an attempt to circumvent the antideficiency laws.”

Festival Retail Fund 1, LP (the “Fund”) was formed to find real property to invest in.  From the outset, the Fund purchased properties only through newly formed “special purpose entities” (“SPE”).  Here the Fund entered into an agreement to buy a property.  The agreement provided that the property would be purchased by a SPE.  The SPE was also a limited partnership and was wholly owned by the Fund.  Bank then made a payday loans without direct deposit to the SPE to buy the property, .  The Fund guaranteed $1.5 million of the $25 million loan.  The Bank later filed a non-judicial foreclosure complaint and included the Fund alleging breach of the guaranty.  The Fund argued that it was the alter ego of the SPE under the “single business enterprise” theory and therefore it was “protected by antideficiency laws because it was, in reality, the primary obligor on the loan and the loan guaranty was effectively a sham.”  The court agreed and entered judgment for the Fund. Read more…

Must a Chapter 13 Plan be 3 or 5 years (or full pay) even if no one objects?

By | January 22, 2018 | Case Briefs, Cases, Chapter 13 | No comments

One of the more interesting cases we will discuss on Saturday is In re Escarcega.  The BAP really blasts the chapter 13 trustee up in San Jose.   The BAP ruled that a chapter 13 plan must be 3 or 5 years (or full pay), even if no one objects.

In re Escarcega, 573 B.R. 219 (9th Cir. BAP September 2017) 

Issue:   Where the chapter 13 trustee does not object to a plan, must the plan still be for “the applicable commitment period”?

Holding:   Yes.  Plus the chapter 13 trustee should be objecting to such plans.

Judges Elaine Hammond and Stephen Johnson, Northern District of California (San Jose Division) Read more…

California Statute of Limitations – Tolled When the Defendant is Out of State? Maybe Not.

By | January 17, 2018 | Cases | No comments

Someone commented at a program on the Supreme Court cases last year dealing with the Fair Debt Collection Practices Act (“FDCPA”) that the statute of limitations is tolled when the defendant is out of state.  “Hmm,” I thought, “another thing I didn’t know.”

Sure enough, Section 351 of the California Code of Civil Procedure states:

[i]f, when the cause of action accrues against a person, [the defendant] is out of the State, the action may be commenced with the term herein limited, after his return to the State, and if, after the cause of action accrues, he departs from the State, the time of his absence is no part of the time limited for the commencement of the action. Read more…

Supreme Court Rejects Petition in Sunnyslope

By | January 8, 2018 | Cases, Chapter 11, Supreme Court | No comments

This morning buried in the 45 page listing of Supreme Court Orders is the Order denying cert in the 9th Circuit en banc Sunnyslope case.  The Order List is here.  I thought they might take it.  It is not terribly complicated and the case discusses trying to reconcile the Supreme Court decision in Associates Commercial Corp. v. Rash with the facts in Sunnyslope.  My posting on Sunnyslope is here.   Prof. Dan Schechter says the 9th Circuit was “shockingly wrong.”  

Consignment Rules in Bankruptcy

By | January 2, 2018 | Cases | No comments

This can be filed under “more stuff I didn’t know.”  Is inventory the debtor accepted under a consignment agreement property of the estate?  I have had this come up a few times over the years.  A new BAP case has laid out the answer very nicely.   The answer by the way is probably YES, bankruptcy law can be complicated but that’s why we always suggest getting professional help.

IPC (USA), Inc. v. Ellis (In re Pettit Oil Company), — B.R. — (9th Cir. BAP October 2017)

Issue:   Are the trustee’s right to proceeds of the sale of consignment goods senior to the consignor?

Holding:   Yes.  Under U.C.C. § 9-319(a), the debtor “is deemed to hold rights and title to the [consigned] goods” as if it owned them outright.  The consignor must comply with “the rules for the creation and perfection of a security interest contained in Article 9.” Read more…

Nice Program with Judge Alex Kozinski – October 19, 2017

By | September 25, 2017 | Appeals, Programs, Supreme Court | No comments
Judging the Judge: A Candid Conversation Between Judge Kozinski and Professors Ronald Collins and David Skover on Appellate Judging and the Politics of Law. Judge Kozinski will engage the authors in a spirited dialogue about partisan politics and the art of appellate judging, primarily at the Supreme Court level.
In their latest book, The Judge: 26 Machiavellian Lessons (Oxford University Press, 2017), Professors Collins and Skover raise a provocative question: What flows from the proposition that law is politics, or that Supreme Court decision-making in controversial cases is greatly influenced by partisan beliefs? That is, ever more people believe that judicial power is a form of political power. If so, what then? The answer: the maximization of judicial power, which is where Machiavelli comes in by way of the 26 power-maxims urged by the authors. It is against this conceptual backdrop that Judge Kozinski will engage the authors in a spirited dialogue about partisan politics and the art of appellate judging, primarily at the Supreme Court level.

Panelists:
Honorable Alex Kozinski, Ninth Circuit Court of Appeal
Professor Ronald Collins, University of Washington School of Law
Professor David Skover , Seattle University School of Law Read more…

Prof. Dan Schechter Comments on Sunnyslope – Says Decision is “Shockingly Wrong!”

By | September 14, 2017 | Cases, Chapter 11 | No comments

Below are the comments of Prof. Dan Schechter (from my alma mater, Loyola Law) to the 9th Circuit’s en banc ruling in In re Sunnyslope Housing Ltd. Partnership, 818 F.3d 937 (9th Cir. 2017).  The due date for the petition for cert is now September 22, 2017.  The bank’s attorney is Craig Goldblatt from the Wilmer Hale firm in Washington DC.

My thoughts on why the 9th Circuit got Sunnyslope right are here, here and here.   The en banc decision is here.

Prof. Schechter commented on the Insolvency Law e-Bulletin:

AUTHOR’S COMMENT: This decision is shockingly wrong.  If the lender in this case seeks and obtains certiorari (a big “if”), I predict reversal by the Supreme Court. (As long as I am making rash predictions, I also predict a 6-3 decision, with Justice Breyer joining the majority.) Read more…

F. Lee Bailey Files Chapter 13 In Portland Maine – Chapter 13 Trustee Annoyed

By | August 17, 2017 | Cases, Chapter 13, Current Events | No comments

Think your chapter 13 trustee is tough?  This is what the trustee filed last week in F. Lee Bailey’s Chapter 13 case.

UNITED STATES BANKRUPTCY COURT District of Maine

In the matter of F. LEE BAILEY Chapter 13 Debtor Case # 17-20323

TRUSTEE’S COMMENTS ON CONFIRMATION OF DEBTOR’S PLAN

NOW COMES the standing Chapter 13 trustee Peter C. Fessenden and submits the following comments in connection with confirmation of the debtor’s plan. Read more…

Outside Reverse Veil Piercing now available for LLCs in California

By | August 13, 2017 | Case Briefs, Cases | No comments

This is a case brief regarding Curci Investments, LLC v. Baldwin, Cal. Ct. App. Case No. G052764 (Aug. 10, 2017), which is a case about “reverse veil piercing” which the Court found can be applied to LLCs. Corporations continue to be protected by reverse veil piercing.

Ordinarily a corporation is considered a separate legal entity, distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations.[1] The same is true of a limited liability company (LLC) and its members and managers.[2]

Read more…

Prof. Dan Schechter’s Comments on Sundquist

By | July 21, 2017 | Cases, Courts, Foreclosure Corner | No comments

My post on In re Sundquist is here.  As part of his summary of cases distributed by the California Insolvency Law Committee, Prof. Dan Schechter had the following observations on In re Sundquist:

AUTHOR’S COMMENT: Given the court’s careful discussion of the evidence, I predict that the liability phase of this decision will withstand review. I also predict affirmance of the award of compensatory damages. I am not so sure, however, about the award of punitive damages. The United States Supreme Court has sharply curtailed the allowable ratio of compensatory damages to punitive damages. See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (U.S. 2003): “The wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award.” Read more…

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