In Estate of Spirtos v. Estate of Spirtos, No. 03-56405 (9th Cir. April 12, 2006), the Ninth Circuit joins the 2nd, 4th, 5th, 6th, 8th, and 11th circuits by holding that 11 U.S.C. § 323 vests the bankruptcy trustee with the exclusive right to assert legal claims on behalf of the bankruptcy case. In Spirtos, family member creditors of the deceased debtor filed RICO claims against nearly everyone in the bankruptcy, including the chapter 7 and U.S. trustees, alleging a joint conspiracy to conceal assets belonging to the bankruptcy estate. The district court dismissed the creditors’ action for lack of standing.

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Continue Reading Bankruptcy Trustee Has The Exclusive Right To Assert Legal Claims On Behalf Of The Bankruptcy Estate

The Ninth Circuit Court of Appeals held in Muegler v. Bening, 413 F.3d 980 (9th Cir. 2005) that collateral estoppel can be used to prevent a debtor from re-litigating the issue of fraud in a nondischargeability action in bankruptcy court. In Muegler, a federal district court found the debtor guilty of intentional fraud under Missouri law and awarded the creditor compensatory and punitive damages. After the debtor filed bankruptcy, the judgment creditor filed a complaint in the bankruptcy court asserting that its debt was nondischargeable under 11 U.S.C. § 523(a)(2)(A) because it was procured by the debtor’s fraud. The creditor further argued that the debtor was collaterally estopped from re-litigating the issue of fraud in the bankruptcy court. After applying Missouri collateral estoppel law, the Ninth Circuit agreed.
Continue Reading Ninth Circuit Rules That Collateral Estoppel Prevents Re-Litigation of Fraud Claim In Nondischargeability Action

In In re Crown Vantage, Inc., 421 F. 3d 963 (9^th Cir. 2005), the Ninth Circuit Court of Appeals joined the First, Second, Sixth, Seventh, and Eleventh Courts of…

Continue Reading Crown Vantage: Leave Must Be Sought from Bankruptcy Court Before Initiating an Action Against a Bankruptcy Trustee in Another Forum.

The Ninth Circuit Court of Appeals reversed the District Court and held that complaints filed by various state entitles against PG&E under Cal. Business & Professions Code Section 17200 were exempt from removal to Bankruptcy Court under 28 USC Section 1452(a).
Continue Reading Ninth Circuit Holds that State Restitution Actions v. PG&E Constitute Police Power Exempt from Removal to Bankruptcy Court

In “Boeing North American, Inc. v. Ybarra (In re Ybarra)”, 424 F. 3d 1018 (9th Cir. 2005), the Ninth Circuit Court of Appeals has held that an award of attorney’s fees and costs incurred post-petition in defending a cause of action commenced pre-petition is not discharged.
Continue Reading In re Ybarra: Ninth Circuit Holds That Claims Arising from the Debtor’s Postpetition Pursuit of Litigation Commenced Prepetition Are Non-Dischargeable

On December 7, 2005, Ninth Circuit Court of Appeals issued an amended decision in Weinstein, Eisen & Weiss, LLP v. David A. Gill, Chapter 11 Trustee (In re Cooper Commons), 2005 U.S. App. LEXIS 26642 (9th Cir. December 7, 2005). In the original opinion, the court had held, inter alia, that based on its earlier opinion in In re Adam’s Apple, Inc., 829 F. 2d 1484, it must begin with a presumption of the post-bankruptcy creditor’s good faith and that it could not find facts to overcome the presumption in this case. Weinstein, Eisen & Weiss, LLP v. David A. Gill, Chapter 11 Trustee (In re Cooper Commons), 2005 U.S. App. LEXIS 19708 (9th Cir. September 13, 2005). In the amended opinion the discussion of the issue of good faith is much shorter and leaves out any analysis of precedent. Instead, the amended opinion reviews the bankruptcy court’s finding of good faith for clear error and, finding none, accepts it.
Continue Reading Amended Opinion Issued in “In re Cooper Commons”