Sunday, September 29, 2013

Las Vegas Bankruptcy Judge - Holds Creditor and Law Firm in Contempt

In an unpublished decision (In re Grihalva 2013 WL 5311227), Chief Bankruptcy Judge Mike K. Nakagawa held parties in contempt for violating the discharge injunction.  The creditors filed a judicial foreclosure action but in its prayer sought judgment only against the Debtor for over $584,000, costs and fees. However, within the complaint the Creditor indicated that no deficiency judgment will be sought against the Debtor. 

The Court found that the creditor and its counsel placed the debtor in an untenable position by engaging in conduct inconsistent with the discharge.  Since the creditor never amended the complaint after being put on notice, the violation of the discharge injunction was continuing. 

The Court found both counsel and the creditor jointly and severally liable for $5919.90 and a fine of $10,000.00. 

Friday, September 27, 2013 - Week 3 Completed - Credit, Credit Reports and Interest

Once again the 4th graders did excellent.  They learned about credit reports, credit and interest.  More importantly, they learned that credit cards should not be used if they can't afford to repay the debt.

A short video of some credit questions were asked and answered.  Check out the video on the link.

Credit Questions

Thursday, September 26, 2013

Be careful what you could be wrong.... be civil....

There are good reasons not to call an opponent’s argument “ridiculous,” which is what State Farm calls Barbara Bennett’s principal argument here.  The reasons include civility; the near-certainty that overstatement will only push the reader away (especially when, as here, the hyperbole begins on page one of the brief); and that, even where the record supports an extreme modifier, “the better practice is usually to lay out the facts and let the court reach its own conclusions.”  Big Dipper Entm’t, L.L.C. v. City of Warren, 641 F.3d 715, 719 (6th Cir. 2011).  But here the biggest reason is more simple:  the argument that State Farm derides as ridiculous is instead correct.

6th Cir. State Farm v. Bennett

Tuesday, September 24, 2013

No Exemption if there is No Equity - 8th Cir.

The 8th Circuit recently ruled that a Debtor could not claim property exempt if the Debtor has no equity.  Moreover 522(f)(1) would not avoid a lien on a vehicle.

A short but accurate decision.

In re Goben - 8th Cir. 9-23-13

Monday, September 23, 2013

F-E-E-S.Com - Week 2 completed - Savings, Investments and Scams

I am very proud of the 4th grade class that I am teaching under the Financial Education for Elementary Students program (  The Kids are doing great!

They learned about savings, investments and scams.  Some of the kids were asked how they save and their answers were enjoyable.  Check out the video on the link...enjoy!

Video - How do you Save?

9-23-13 - 9th Cir BAP - Lack of Jurisdiction After a Sale -

In an unpublished decision, the 9th Circuit BAP remanded a case back with instructions to dismiss the adversary proceeding for lack of subject matter jurisdiction. 

In 2009, the Debtors retained an attorney to file a Chapter 11 case.  The case floundered and it was converted to a Chapter 11.  The Debtors filed suit against counsel for malpractice.  Once the Trustee became aware, the Trustee claimed ownership of the claim.  The Trustee agreed to sell such interest back to the Debtor but the attorney made a counter-offer.  A court auction took place and the attorney was the successful bidder (the sale was without warranty as to whether the claims are property of the estate). 

Counsel filed an adversary case for declaratory relief  that such claims were property of the estate.  The Debtors moved to dismiss based upon lack of subject matter jurisdiction because the estate no longer had an interest.  The Court denied the dismissal motion and found that the property was property of the estate. 

The Court cited to several Circuit court decisions for the proposition that jurisdiction over an asset terminates once the estate relinquishes all rights and interest.  Here, the Estate sold any and all rights without warranty.  Accordingly, the Court reversed the Bankruptcy Court and remanded the case with instructions that the adversary case be dismissed.

In re Stokes - 9th Cir BAP - 9-23-13

Tuesday, September 10, 2013

9th Cir. Unpublished - In re FRB - Corporate Suspension = appeals dismissed

In an unpublished decision, the 9th Cir. affirmed the BAP in dismissing the appeals because of the corporate suspension and denied such parties motion for reconsideration. 

Traub Co. v. Coffee Break Serv., Inc., 425 P.2d 790, 792 (1967) (Under California

law, “a suspended corporation not shown to have been reinstated lacks the right or

capacity to defend an action or to appeal from an adverse decision.”).

Of important note, the Court found that equitable principles precluded a creditor at a late stage and after active participation to contest the filing of the petition as unauthorized.

In re FRB

9-10-13 - 9th Cir. Published - In re Wilshire Courtyard - reopening a confirmed chapter 11 case and the court had post-confirmation jurisdiction

Reversing the judgment of the Bankruptcy Appellate Panel, the panel held that the bankruptcy court had jurisdiction to reopen a bankruptcy proceeding to consider the tax consequences of the reorganization, pursuant to a chapter 11 plan, of the debtor, a general partnership that owned two commercial buildings in Los Angeles, into a limited liability company with a 1% ownership interest in the property.
The panel reaffirmed that a "close nexus" exists between a post-confirmation matter and a closed bankruptcy proceeding sufficient to support jurisdiction when that matter affects the "interpretation, implementation, consummation, execution, or administration of the confirmed plan."

In re Wishire Courtyard

Friday, September 6, 2013

How to get paid in a dismissed Chapter 13 case - NY Decision - utilize 503(b) - In re Garris - 9-5-13 - Published

A Debtor, in a dismissed case, sent a letter to the Court demanding that their attorney return funds that the Chapter 13 Trustee gave them, brought up the issue on how does a Chapter 13 attorney get paid in a dismissed case.  Counsel apparently had an assignment of such funds which was troubling for the Court.  The Court, in a published decision, analyzed 1326(a)(2) and found that it applies.  Having found that section 1326(a)(2) applies, the Court determined that it cannot compel payment of the funds to Debtor's counsel through operation of the assignment signed by the Debtor.  The Court noted that Counsel could have filed a fee application and obtained a 503(b) claim but that did not occur.  As a result, the Trustee was obligated to pay the money to the Debtor.    However, the Court determined that it continues to have jurisdiction over fee requests despite the dismissal and could exercise its ancillary jurisdiction.  Therefore, the Court ruled that Counsel needs to file the fee application, give notice and permit the Debtor to contest the reasonableness of the fees.

The moral of the story is... file your fee application because not all judges will be so nice!

In re Garris

F-E-E-S- Financial Education for Elementary Students


Thursday, September 5, 2013

Las Vegas Attorney Randy Goldberg - Sanctions and Fees Award Affirmed - In re Goodman 9-5-13 - 9th Cir BAP

In an unpublished decision, the 9th Cir BAP affirmed Chief Bankruptcy Judge Mike Nakagawa on his imposition of sanctions and subsequent award of attorney fees.  As a fellow attorney, I am disappointed in what occurred and this should be a good learning experience for both new and old attorneys on what you should not do.

In re Goodman

For Purposes of 11 USC 503(b)(9) - a utility is NOT a good its a service - 9-4-13

The Bankruptcy Court in Puerto Rico denied as a pre-petition administrative expense a claim by a utility service.  The Court found that the utility is a service not a good.  Therefore, the utility would only have an unsecured claim (which they never timely filed). 

The Court gave a nice breakdown on case law and analyzed such cases.  The Court even disagreed with a fellow judge in the same district which found that a utility service.

Not that this issues comes up often, but it certainly was a nice analysis of case law.

In re PMC Marketing Corp
--- B.R. ----, 2013 WL 4735736
Bkrtcy.D.Puerto Rico,2013.
September 04, 2013 (Approx. 4 pages)
(currently unpublished)

Wednesday, September 4, 2013

9th BAP - In re Weinstein - Conversion to 7 - Chapter 13 Trustee, in Las Vegas, still required to pay the Secured Creditor with Funds on Hand? Yes, especially when you don't object!

The 9th Cir BAP in an unpublished decision sustained local bankruptcy Judge Mike Nakagawa in his decision to require the Chapter 13 Trustee to disburse funds to the secured creditor. 

In a nutshell, Debtors file bankruptcy in order to stop a potential foreclose.  The Debtor's plan gets confirmed which requires adequate protection payments to be distributed by the Trustee to the Creditor while the Debtors attempt to modify their loan.  For some unknown reason as it is not stated in the motion but I am curious why... the Trustee does not distribute to the secured creditor and the Debtor does not make post-petition payments.  A motion for relief is filed with a request that the Court order the Trustee to distribute the funds.  The initial motion for relief gets continued and then taken off calendar as the parties enter into an agreed order.  On the same day as the agreed order, the Debtor converts to a Chapter 7.  Two days later the second motion for relief is filed which also  requests the Court to order the Trustee to turnover  the funds to the creditor.  No opposition is filed but the Debtor's counsel appears and apologizes for not filing an opposition and argues.  The Court grants the motion for relief but continues the request for disbursement.  At the continued hearing, the Debtor still failed to file an opposition but argues the motion.  The Court grants the motion noting that no one filed an opposition.  The Debtor files a motion to reconsider.  The BAP affirms both orders....

I point out that you should always file an opposition if your going to oppose!

In re Weinstein

Vandevort bankruptcy conviction upheld by 9th Circuit 8-29-13

Vandevort, from Bel Air, was convicted of bankruptcy fraud for concealing assets and threatening a private investigator with a golf club who was trying to serve his wife with a subpoena. After the assault, Vandervort called the police and reported a home invasion.

Vandevort “withdrew the equity in his residence, hid it in an escrow company’s bank account, purchased the Wyoming property with the equity money in his mother-in-law’s name, opened bank accounts in the name of Always There Nursing Care Associated LLC and diverted the revenue from ATNC to these accounts, used straw persons as signatories to the bank accounts and the officers of his business entities, transferred this interest in ATNC to [his wife], and filed his bankruptcy petition in Wyoming,” prosecutors said in summarizing Vandevort’s bankruptcy fraud scheme in a sentencing memo to the court.

Vandevort decision

FBI Press Release from 2011