Articles Posted in U.S. 9th Circuit Court of Appeals

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Debtor sought attorneys' fees incurred in defense of ASC's appeal of the bankruptcy court's determination that ASC had violated the automatic stay. The court concluded that, because debtor was not pursuing a damages award, but rather defending ASC's appeal of a previous finding of stay violation and thereby "remedying the stay violation," Sternberg v. Johnson did not prohibit the awarding of attorneys' fees at issue here. Accordingly, the court affirmed the bankruptcy appellate panel's reversal and remand of the bankruptcy court's decision denying debtor's request for an award of attorneys' fees. View "In re: Schwartz-Tallard" on Justia Law

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Defendant appealed the district court's order denying the parties' joint request to seal the entire record of bankruptcy proceedings before the district court. The parties sought to seal the record of proceedings on an interlocutory appeal taken from the bankruptcy court, which the district court dismissed for lack of jurisdiction. The district court rejected the parties' argument that the "good cause" standard applied and held that the "compelling reasons" standard governed the decision to seal the record of the proceedings. The court agreed, concluding that the rationale for the "good cause" standard did not apply in this case and that the district court properly invoked the "compelling reasons" standard in considering the sealing request. In this case, the only reasons provided for sealing the records - to avoid embarrassment or annoyance to defendant and to prevent an undue burden on his professional endeavors - were not "compelling," particularly because the proceedings had been a matter of public record since at least 2004. Defendant has not pointed to any compelling reasons that overcome the strong presumption in favor of maintaining public access to court records. Accordingly, the court affirmed the judgment of the district court. View "Oliner v. Kontrabecki" on Justia Law

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Plaintiff claimed that the judge who presided over the administration of the Yellowstone Mountain Club ski resort's bankruptcy was biased against him and should have recused himself. The bankruptcy judge denied the recusal motion and the district court affirmed. The court rejected plaintiff's claim that the judge made ex part communications; the rulings made by the judge purportedly denied plaintiff due process; and the judge made supposed biased statements during various proceedings. Plaintiff's claims were a transparent attempt to wriggle out of an unfavorable decision by smearing the reputation of the judge who made it. Accordingly, the court affirmed the denial of the recusal motion. View "Blixseth v. Yellowstone Mountain Club, LLC, et al." on Justia Law

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After debtor filed a Chapter 7 bankruptcy petition, the trustee filed a motion for turnover under section 542(a) of the Bankruptcy Code against debtor to recover $6,155.19 of her petition-date account balance. The bankruptcy court denied the motion because debtor did not have possession or control of the funds at the time the trustee filed the motion for turnover. The district court affirmed. The court concluded that the plain language of section 542(a), pre-Code practice, and the context of other Code provisions indicated that the trustee's turnover power was not restricted to property of the estate at the time the motion is filed. Accordingly, the court reversed and remanded for further proceedings. View "Shapiro v. Henson" on Justia Law

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Plaintiff filed suit against her employer, the Secretary of the Army, alleging that certain adverse employment actions resulted from discrimination. Plaintiff had filed for Chapter 7 bankruptcy protection but failed to list the action as an asset on her bankruptcy schedule. The district court held that no evidence suggested that plaintiff's original omission had been inadvertent or mistaken and that, weighing factors set forth in New Hampshire v. Maine, judicial estoppel barred the action. Plaintiff appealed. The court affirmed, concluding that this case was distinguishable from the court's holding in Ah Quin v. County of Kauai Department of Transportation, where plaintiff here filed false bankruptcy schedules and did not amend those schedules until defendant filed a motion to dismiss, suggesting that her omission had not been inadvertent. The court concluded that the district court did not abuse its discretion in its analysis under the New Hampshire factors. Accordingly, the court affirmed the judgment. View "Dzakula v. McHugh" on Justia Law

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Appellant filed a chapter 7 bankruptcy petition and subsequent to the entry of the discharge order of appellant's debts, the trustee learned that appellant had misrepresented the value or existence of a number of assets in the schedules he had filed and in the testimony he gave during the creditors meeting. Finding that the misrepresentations amounted to a violation of 11 U.S.C. 727(a)(4)(A), the bankruptcy court granted the trustee's motion to revoke appellant's discharge under section 727(d)(1). Appellant appealed. The court adopted the reasoning of the Bankruptcy Appellate Panel and its sister circuits in holding that a material fraud, which would have resulted in the denial of a Chapter 7 discharge had it been known at the time of such discharge, could justify revocation of that discharge under section 727(d)(1). Accordingly, the court affirmed the judgment of the district court affirming the bankruptcy court's decision. View "Jones v. US Trustee" on Justia Law

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Plant, a California corporation that sold Fiberboard-manufactured asbestos-based insulation, filed for Chapter 11 bankruptcy. At issue on appeal was whether Plant's bankruptcy plan, which allegedly left a group of insurers paying more than their fair share on a large number of asbestos personal injury claims, complied with the Bankruptcy Code. The court concluded that the bankruptcy court erred in confirming the plan where the Trust, in connection with which the plan's injunctions were to be implemented, failed to satisfy the requirements of section 524(g). Accordingly, the court vacated the order of the bankruptcy court affirming Plant's Restated Second Amended Plan of Reorganization and remanded for further proceedings. View "In re: Plant Insulation Co." on Justia Law

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This case concerned the California Franchise Tax Board's wish to assess $13 million in unpaid income taxes on the individual partners of a general partnership that owned the property at issue, the Wilshire Courtyard. At issue on appeal was whether the bankruptcy court had jurisdiction to reopen the bankruptcy proceeding where the partnership was reorganized into a limited liability company. The court concluded that the bankruptcy court had neither "arising under" nor "arising in" subject matter jurisdiction over the present dispute; the bankruptcy court did, however, have "related to" jurisdiction over the present dispute; and bankruptcy court jurisdiction did not violate the Tax Injunction Act, 28 U.S.C. 1341. Accordingly, the court reversed the bankruptcy appellate panel's judgment and remanded for further proceedings. View "In re: Wilshire Courtyard" on Justia Law

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Debtor was required to make contributions to the Carpenters Pension Trust Fund pursuant to a multiemployer bargaining agreement (the Agreement). When the Agreement expired, debtor no longer was a signatory to a collective bargaining agreement and stopped making payments. The Fund subsequently filed suit because debtor was still doing work covered by the Agreement and was subject to withdrawal liability under 29 U.S.C. 1381. Debtor then filed for bankruptcy and sought a discharge of his debt to the Fund. The Fund filed a complaint under 11 U.S.C. 523(c) to prevent discharge, seeking to establish that the debt qualified as one created via defalcation by a fiduciary under section 523(a)(4). The court concluded that the Bankruptcy Court had jurisdiction to adjudicate the dischargeability of the Fund's claim against debtor; debtor was not a fiduciary of the Fund because the unpaid withdrawal liability was not an asset of the Fund; and debtor's failure to challenge the withdrawal liability amount in arbitration did not act as a waiver of his right to discharge the debt. Accordingly, the court affirmed the judgment. View "Carpenters Pension Trust Fund v. Moxley" on Justia Law

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Debtor filed for chapter 7 bankruptcy but did not list, as one of his outstanding debts, a $350,000 arbitration award to Fiero Brothers (creditor). At issue on appeal was whether the creditor's lawyer's knowledge of the bankruptcy constituted notice to the creditor. In this instance, the lawyer learned of debtor's bankruptcy during his representation of another client and, although the lawyer continued to represent the creditor on other matters, he no longer represented the creditor in relation to the debt at issue. Under these facts, the court declined to impute the notice or actual knowledge of debtor's bankruptcy filing that the lawyer had to creditor. Accordingly, the court affirmed the BAP's ruling that the arbitration debt was nondischargeable under sections 523(a)(3) and 523(a)(6) of the Bankruptcy Code. View "In re: Cery Perle" on Justia Law