9th Circuit Case Updates

On July 7, 2006, the United States Bankruptcy Appellate Panel for the Ninth Circuit, in Johnson v. TRE Holdings LLC (In re Johnson), BAP No. CC-05-1268 (9th Cir. B.A.P. 2006), held that bankruptcy courts do not have authority under section 105(a) of the Bankruptcy Code to preclude the application of the automatic stay in subsequent cases via an "in rem" order.
Continue Reading A Bankruptcy Court’s Inherent Authority Is Limited To The Authority Appropriate And Necessary To Carry Out The Provisions Of The Bankruptcy Code

On June 12, 2006, the United States Bankruptcy Appellate Panel of the Ninth Circuit, in Berman v. Maney, (In re Berman), BAP No. AZ-06-1133, held that the direct appeal provision of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) and the Interim Rules adopted to effectuate it do not apply to appeals arising from bankruptcy cases filed before October 17, 2005. 
Continue Reading Ninth Circuit BAP Holds That Direct Appeal Provision Only Applies To Bankruptcy Cases Commenced On Or After October 17, 2005

On May 31, 2006, the California Court of Appeal for the Second Appellate District, in Haberbush v. Charles and Dorothy Cummins Family Ltd. Partnership, Case No. B175947, disagreed with the Ninth Circuit’s majority opinion in Sherwood Partners v. Lycos, 394 F.3d 1198 (9th Cir. 2005) and held that California Code of Civil Procedure section 1800 is not preempted by the federal Bankruptcy Code.

Continue Reading California Court of Appeals Disagrees With Sherwood Partners and Holds That California Preference Laws Are Not Preempted by the Bankruptcy Code

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.

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 (9th 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”

Ninth Circuit Court of Appeals recently issued its decision in 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), holding that the provisions of an unstayed order approving a postpetition financing agreement could not be undone on appeal.
Continue Reading Ninth Circuit Holds that Bankruptcy Section 364(e) Broadly Protects the Validity of Post-Petition Loans, Including Clauses Restricting the Use of Loan Proceeds