Annual Review of Cases and New Development in Bankruptcy 2013

Bankruptcy Year In Review

San Diego County Bar Association

February 4, 2014



Bullock v BankChampaign, NA,

___ U.S. ___, 133 S.Ct. 754, 185 L.Ed.2d 922 (2013)

Defalcation while acting in a fiduciary capacity requires actual knowledge of wrongdoing or a conscious disregard of a substantial and unjustifiable risk to be nondischargeable under section 523(a)(4).



AhQuin v. County of Kaui Dept of Transportation

733 F.3d 267 (9th Cir 2013)

Debtor’s failure to schedule existing lawsuit did not support dismissal of suit under judicial estoppel where debtor reopened case and disclosed asset. Adopting minority view, held that judicial estoppel requires finding of subjective intent to deceive court.

Anwar v. Johnson

720 F3d 1183 (9th Cir. 2013)

Bankruptcy court does not have discretion to extend retroactively deadline to file 523 action despite ECF issues.

Carpenters Pension Trust Fund for NoCA v Moxley

734 F.3d 864 (9th Cir. 2013)

Withdrawal liability to pension trust fund was not incurred in a “fiduciary capacity”


In re Fitness Holdings, International

714 F.3d 1141 (9th Cir. 2013)

Bankruptcy court has the power to recharacterize loan from insider as an equity investment (applying CA law), and to avoid prepetition payment.

In re Flores

735 F.3d 855 (9th Cir. 2013)

An above-median income chapter 13 debtor must propose a 5 year plan even if there is no “projected disposable income.” (Overruling Kagenveama (2008)).

In re Garcia

709 F.3d 861 (9th Cir. 2013)

Debtor (real estate agent) may exempt Mercedes using CA wildcard exemption and could avoid non-purchase money lien on exempt property if a tool of debtor’s trade.

In re Griffin

719 F.3d 1126 (9th Cir. 2013)

Lender establishes standing to seek stay relief by providing a copy of the note and a declaration establishing its possession of the original.

Jones v. US Trustee

736 F.3d 897 (9th Cir. 2013)

False oaths by debtor in schedules that, if known, would be grounds for denying a discharge are grounds to revoke a discharge.

Hedlund v Educational Resources Institute (In re Hedlund)

718 F.3d 848 (9th Cir. 2013)

Reversing district court’s de novo review, bankruptcy court’s finding of good faith for partial discharge of a student loan by a 33 year old were not clearly erroneous.

In re Marciano

708 F.3d 1123 (9th Cir. 2013)

A creditor whose judgment is on appeal holds a bona fide claim for purpose of eligibility to file an involuntary petition.

In re Marshall

723 F.3d 1032 (9th Cir. 2013)

Affirming confirmation of Chapter 11 plan, the Court held that the “best interest of creditors” test does not apply to creditors who never filed a proof of claim, and rejected the notion that the bankruptcy code was unconstitutional because it permitted the filing of a voluntary petition without proof of insolvency.

In re Perle

725 F.3d 1023 (9th Cir. 2013)

Creditor’s lawyer’s knowledge of bankruptcy filing could not be imputed for purpose of timeliness of complaint challenge dischargeability of debt as to creditor where lawyer learned after completion of the representation of the creditor in relation to the debtor

In re Plant Insulation

734 F.3d 900 (9th Cir. 2013)

Settling insurer injunction in confirmed Chapter 11 plan did not satisfy the requirements of section 524(g) as to future asbestos claimants.

In re Welsh

711 F.3d 1120 (9th Cir. 2013)

Good faith does not require that a Chapter 13 plan consider social security income because that is excluded from the disposable income calculation nor does it require that the court consider payments to secured creditors.



Willms v Sanderson

723 F.3d 1094 (9th Cir. 2013)

Bankruptcy court may not sua sponte grant motion to extend time to file section 523(a) complaint where creditor moved only to extend the time to file a section 527 complaint.

In re Wilshire Courtyard

729 F3.d 1279 (9th Cir. 2013)

Bankruptcy court has “related to” jurisdiction post-confirmation to determine whether reorganization under plan could be recharacterized by CA FTB as a disguised sale.



In re Gasprom

500 B.R. 598 (9th Cir. BAP 2013)

Foreclosure sale after trustee of corporate Chapter 7 debtor abandoned property is void because stay remains as to property “of the debtor.”

In re Utnehmer

499 B.R. 705 (BAP 9th Cir. 2013)

A loan agreement that provides for converting the debt into equity and for profit sharing insufficient to make the borrower a fiduciary of the creditor as an implied partnership agreement.

In re Village at Lakeridge, LLC

Unpublished (BAP 9th Cir. 2013)

A “joint defense” or “common interest privilege” requires both: (a) a common interest; and (b) an oral or written agreement to pursue a joint legal strategy.




In re Kelly

499 B.R. 944 (S.D.Cal. 2013) (Curiel)

Affirming nondischarge judgment for fraud in loan modification, sufficient circumstantial evidence in the record to infer knowledge by spouse of fraud.



In re Gamboa

(Bankr. SD.Cal. 2013 (Latham)

Chapter 13 debtors may not confirm less than full payment plan where some of their income is used to pay for net loss on income producing property.

In re Vassau

499 B.R. 864 (Bankr. S.D.Cal. 2013) (Bowie)

Undersecured junior lender receives an avoidable preference by payment to senior lender made within 90 days of bankruptcy.



Bank of America NA v. Roberts

217 Cal. App. 4th 1386 (2013)

Amendment to short sale antideficiency statute did not apply retroactively.



Edwards v. Broadwater Casitas Care Center

221 Cal.App.4th 1300 (2013)

Chapter 13 debtor may appeal state court award of attorney’s fees and costs against debtor, notwithstanding confirmation of Chapter 13 plan and failure to object to proof of claim.

Siliga v. Mortgage Electronic Registration System, Inc.

219 Cal.App.4th 75 (2013)

Borrower lacked standing to complain about assignee’s alleged lack of authority to assign.

January 1, 2014  |  Categories: Business Insolvency & Creditors’ Rights
Subscribe to Legal Alerts