Case Updates

Summary: On January 16, 2019, the California Supreme Court granted the request of the U.S. Court of Appeals for the Ninth Circuit to decide questions of California law relevant to the Ninth Circuit’s determination of Brace v. Speier (In re Brace), No. 17-60032 (9th Cir.). The question presented by the Ninth Circuit is whether the “form of title” presumption in California Evidence Code section 662 overcomes the presumption in California Family Code section 760 that all property acquired by a married person during marriage is community property. Read more

Summary: In Klein v. ODS Technologies, LP (In re J & J Chemical, Inc.), Adv. No. 18-08029-JDP (Bankr. D. Idaho Jan. 11, 2019), a U.S. Bankruptcy Court for the District of Idaho (the “Court”) held that the court in which a bankruptcy case is pending is a proper venue for a fraudulent transfer action brought under sections 544(b) or 548 of the Bankruptcy Code, regardless of the amount at issue or the residence of the defendant. The Court also held that even if 28 U.S.C. § 1409(b) applies to such an action, the court is a proper venue if the value of the property to be recovered is at least $1,300, and the higher $12,850 threshold for actions against a non-insider to recover “a debt” does not apply. If the Court’s analysis is correct, either (a) there is no monetary threshold for filing preference actions in the plaintiff’s home court against non-resident defendants, or (b) the monetary threshold is only $1,300. Read more

Summary: In re: Larissa Anatolia Kenney, Case No. 1:10-bk-11635-GM (Bankr. C.D. Cal. November 16, 2018), the United States Bankruptcy Court for the Central District of California denied a debtor’s motion to avoid a creditor’s lien under 11 U.S.C. § 522(f) because, among other reasons, there was no valid lien to avoid where a lien did not attach to property the debtor acquired after discharge of her debt in a Chapter 7 bankruptcy case. Read more

Summary: In Badea v. Schwartzer (In re Badea),No. NV-18-1038-BTaL, 2018 WL 4441731 (9th Cir. BAP Sept. 17, 2018), the U.S. Bankruptcy Appellate Panel of the Ninth Circuit ("BAP") vacated the order of a bankruptcy court holding the debtor in contempt and expunging a mechanics' lien recorded post-petition by the debtor after the chapter 7 trustee avoided the debtor's transfer of that property and remanded the matter with instructions to the parties and the court to consider the effect of 11 U.S.C. section 546(b). Read more

Summary: In In re Jeffrey Mark Freeman 2018 WL 4216653 (Bankr. C.D. Cal, 2018), the United States Bankruptcy Court for the Central District of California, Los Angeles Division held that the debtor had not met his burden to show any knowing violation of the discharge injunction. A copy of the decision can be reviewed here. Read more

Summary: The California Supreme Court has held that a foreclosure purchaser cannot serve a three-day notice to quit on a commercial tenant until the foreclosure trustee’s deed is recorded, despite a statute providing that the sale is “deemed perfected” on the sale date if the deed is recorded within 15 days. The decision may inadvertently imperil foreclosure sales followed by bankruptcy petitions filed in the gap between the sale date and the recording date. [Dr. Leevil, LLC, vs. Westlake Health Care Center, 2018 Westlaw 6597341 (Cal.).] Read more

Summary: The Ninth Circuit has held that a borrower's claims for rescission under TILA and for damages under state law are governed by the analogous state statute applicable to actions for breach of contract, rather than by TILA itself. [Hoang vs. Bank of America, N.A., 2018 Westlaw 6367268 (9th Cir.).] Read more

Summary: A California appellate court has held that a post-judgment examination of a non-debtor third-party is restricted to matters involving the judgment debtor's property held by that third party or debts owed to the judgment debtor. [Finance Holding Co., LLC vs. American Inst. of Certified Tax Coaches, Inc., 2018 Westlaw 6257480 (Cal.App.).] Read more

Summary: A California appellate court has held that a lender could not recover its attorney’s fees against a sublessor for breach of the settlement agreement because the lender failed to introduce its invoices or to authenticate them under the "business records" exception to the hearsay rule. [Copenbarger vs. Morris Cerullo World Evangelism, Inc., 2018 Westlaw 5921229 (Cal.App.).] Read more

The following is a case update prepared by Professor Dan Schechter, Loyola Law School, Los Angeles, analyzing a recent decision of interest: SUMMARY: A district court in California has held that when a software developer intentionally covered up the shortcomings in its custom software project, its client could invoke California's Unfair Competition Law to recover the payments it made to the developer for the worthless work product. [Copart, Inc., vs. Sparta Consulting, Inc., 2018 Westlaw 4293023 (E.D. Cal.).] FACTS: A… Read more