When the Court Has a Duty to Raise Issues Independently

By | November 30, 2015 | Courts | No comments

I have been fooling around with my materials for my bankruptcy class coming up next semester.  I was rereading In re Carnduff, a student loan case that confirms that bankruptcy courts can grant a partial discharge of student loans.  The case has a lesson for courts and practitioners on the scope of the court’s right to use its own independent knowledge to reach a conclusion.

Suppose the court says at trial “I know you can your property taxes online contrary to the evidence you presented.”   Shouldn’t the court then give the party a chance to rebut this “evidence”?   Read more…

Two Peas in Pod: Foreclosure + Fraudulent Sale

By | November 29, 2015 | Foreclosure Corner | No comments

Think about this — a month before a debtor files bankruptcy, you buy his rental property at a foreclosure sale at a significant deal – 70% of the market value. Great deal!     Debtor then files bankruptcy and seeks to avoid the sale and take back his property from you because the debtor did not receive reasonably equivalent value in return, and thus a hidden “constructive fraudulent transfer.”

Under §548, a trustee (or debtor) may avoid a transfer made prepetition if the transfer was based upon actual fraud or if the transfer of the property resulted in the debtor receiving “less than reasonably equivalent value” in exchange (called constructive fraud).

So – how do we tell whether the Debtor received ‘reasonably equivalent value‘ in his prepetition foreclosure sale?

Read more…

Can Private Employers Discriminate Against Debtors? Ninth Circuit: Yep.

By | November 29, 2015 | Cases | No comments

Mr. Jones, a former debtor, applies  and is accepted to work at a private company.   Before his first day, Mr. Jones informs his employer that he needs to file chapter 7 to get rid of some pesky creditors and to make the phone calls stop.   The employer immediately says “sorry, you are no longer hired because our company policy does not allow for employees who have filed bankruptcy.”    Mr. Jones is mad and screams “Discrimination! You can’t do that!”   Can a private employer do that?

Ninth Circuit – yep.  The Code doesn’t preclude such discrimination.   In re Majewski, 310 F.3d 653 (9th Cir.2002).

Read more…

Judge R. Posner Writing Entertains Again

By | November 29, 2015 | Abuse - Sec 707, Chapter 7, Courts, Judges Corner | No comments

I’ve always been a fan of Justice Robert Jackson’s writing.  Judge Posner, of the Seventh Circuit, reminds me of such entertaining writing.  I hope he accepts the next invitation to join the supreme bench.

In response to debtor’s argument that 707(a)’s grounds for dismissal are exclusive, Judge Posner rebuts by saying:

The fact that the three grounds in §707(a) are introduced by “including” tugs against the argument that they are exclusive, or that they exhaust the statute.   If you tell your maid to iron your clothes, including your Bond Street tuxedo and its cummerbund, there is no implication that she is not to iron your other clothes.

Read more…

Word: Obstreperous

By | November 27, 2015 | Uncategorized | No comments

I was reading Justice Scalia’s Timbers case re: adequate protection and relief from stay.  In the opinion, Justice Scalia strongly disagreed with the Bank’s continual misinterpretation of 362(d)(2).  He writes…..

“[The Bank] offers no reason why Congress would want to provide relief for such an obstreperous and thoroughly unharmed creditor.” 

Obstreperous means noisy and difficult to control.

With one word, he calls the Bank a tantrum-throwing four year old.  I’ll be sure to use this word in my future oppositions.

Video Overview of New Forms

By | November 25, 2015 | Court Clerk Information | No comments

The Bankruptcy Court for the Central District of California has prepared a video overview of the new forms that are effective December 1, 2015 and it is available on our court’s website under the News and Announcements section.

Thank you,

CANB HELP DESK
U.S. Bankruptcy Court, NDC
Information Technology Division

Eligibility of Trusts to File Bankruptcy

By | November 23, 2015 | Chapter 11, Chapter 13, Chapter 7, Judges Corner | No comments

Judge Tighe did a great analysis on eligibility of trusts to file bankruptcy.  Her tentative is below In re: The Shahla Dowlati 2005 Living Trust. 

UST moves to dismiss this chapter 11 case because the Shahla Doowlati 2005 Living Trust (the “Trust“) was created for estate planning purposes, and thus is ineligible to be a debtor. Section 109(a) establishes that “only a person that resides or has a domicile, a place of business, or property in the United States, or a municipality, may be a debtor under this title.” Section 101(41) defines “person” to include any “individual, partnership, and corporation.” It does not include governmental units or trusts. See 11 U.S.C. § 101(41).

Read more…

Random Thoughts for the Week

By | November 23, 2015 | Community | No comments

The bar exam results came out on Friday.  The headlines say that the success rate is the lowest ever.  One article is here.  My students’ view is “They’re making it harder and harder.”  They don’t believe me when I say I don’t think that is true.  Success is a function of effort.   You can’t learn law with one eye on your cell phone.  We had a study session Saturday at the law school.  I volunteered to meet with students and answer questions.  Out of 62 students, 6-7 showed up. Read more…

Word: Tautological

By | November 22, 2015 | Community | No comments

As I read BAP cases, I have to look up some interesting word choices.  I will try to put one up a week.

Word is: TAUTOLOGICAL.

Judge Markell, said “Although it is tautological that liens securing payment obligations can be satisfied by paying the money owed, it does not necessarily follow that such liens can be satisfied by paying any sum, however large or small.”   In re PW, LLC (Clear Channel Outdoor).

Tautological, in rhetoric, is a method of argument where the person simply repeats the same arguments using different phrases or words while trying to cover up the lack of evidence or valid reasoning supporting the conclusion. Read more…

One Action Rule

By | November 22, 2015 | Chapter 11, Chapter 13, Chapter 7, Foreclosure Corner | No comments

Be careful Banks – in California you get one bite at the apple in collecting a deficiency judgment against a homeowner (or possible debtor in bankruptcy).

For creditor attorneys – make sure you’ve complied with the ‘one action rule,’ or you waive your client’s right in a deficiency judgment against the former homeowner.

For debtor attorneys –  if the creditor has violated the ‘one action rule,’ and are seeking to recoup against your debtor-client now, make sure to object to their proof of claim under §502(b)(1), such that the claim is unenforceable against the debtor under state law. Read more…

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