{"id":1795,"date":"2022-03-06T20:45:26","date_gmt":"2022-03-06T20:45:26","guid":{"rendered":"http:\/\/www.westcoastbk.com\/blog\/?p=1795"},"modified":"2022-03-18T19:27:25","modified_gmt":"2022-03-18T19:27:25","slug":"ninth-circuit-bankruptcy-appellate-panel-decisions-march-2022","status":"publish","type":"post","link":"https:\/\/www.westcoastbk.com\/blog\/2022\/03\/ninth-circuit-bankruptcy-appellate-panel-decisions-march-2022\/","title":{"rendered":"Ninth Circuit Bankruptcy Appellate Panel Opinions – March 2022"},"content":{"rendered":"\n

By Ryan C. Wood<\/a>G<\/strong><\/p>\n\n\n\n

1. Gutierrez v. Oregon State Department of Corrections \u00a0– 523(a)(17), 11 USC 28. 1915(b)(2) <\/strong><\/p>\n\n\n\n

2. Ebuehi v. United States Trustee, Los Angeles – 727(a)(3), (a)(4), (a)(6)<\/strong><\/p>\n\n\n\n

_____________________________________________________________________________________________________<\/p>\n\n\n\n

1.   GUTIERREZ; BAP No.\nID-21-1156-SGB; March 2, 2022<\/p>\n\n\n\n

Bankruptcy court does not have \u201crelated to\u201d subject matter\njurisdiction over claims\/allegations that arise after a Chapter 7 bankruptcy\ncase is fully administered.  The claim\/allegation\ncannot therefore affect or change a debtor\u2019s rights, liabilities, options, or\nfreedom of action which impacts the administration of the original bankruptcy\ncase; it is done; See Section 523(a)(17) of the bankruptcy code and 28 U.S.C.\nSection 1915(b)(2)   <\/p>\n\n\n\n

Mr. Gutierrez appealed a couple of issues from his Chapter 7 bankruptcy case.  Yes, humans may file for bankruptcy relief when incarcerated.  Most bankruptcy attorneys<\/a> will never file a case for an incarcerated human.  It is far more likely that a human files their own Chapter 7 bankruptcy case rather than hire a bankruptcy lawyer<\/a> to assist them.<\/p>\n\n\n\n

Mr. Gutierrez received his discharge of debt, the case was\nclosed, then Mr. Gutierrez reopened the Chapter 7 case to file two adversary\nlawsuits alleging various allegations.  One\nof which was against the Oregon State Department of Corrections.  Mr. Gutierrez owed a debt based upon federal\ncourt fees incurred under 28 U.S.C. Section 1915(b).  <\/p>\n\n\n\n

While Mr. Gutierrez admitted that the nature of the fees are\ngoverned by Section 523(a)(17); barring dischargeability of such fees, he\nargued that  <\/p>\n\n\n\n

Bankruptcy Code Section 523(a)(17) provides: <\/p>\n\n\n\n

(a)A discharge under section 727, 1141, 1192\u202f[1] 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt\u2014<\/p>\n\n\n\n

(17) for a fee imposed on a prisoner by any court for the filing of a case, motion, complaint, or appeal, or for other costs and expenses assessed with respect to such filing, regardless of an assertion of poverty by the debtor under subsection (b) or (f)(2) of section 1915 of title 28 (or a similar non-Federal law), or the debtor\u2019s status as a prisoner, as defined in section 1915(h) of title 28 (or a similar non-Federal law)<\/p>\n\n\n\n

The not dischargeable federal fees are collected from the\ninmate\u2019s prisoner trust account by the applicable correctional institution. See\n28 U.S.C. \u00a7 1915(b)(2). Thus, Mr. Gutierrez\u2019s issue is with the Oregon\nDepartment of Corrections. <\/p>\n\n\n\n

FIRST, Mr. Gutierrez argues the federal court fees, while covered\nby Section 523(a)(17), they should be dischargeable given none of his appeals\nwere frivolous.  SECOND, Mr. Gutierrez\nchallenged how the federal court fees were collecting the allegedly not\ndischargeable federal court fees.  28\nU.S.C. Section 1915(b)(2) limits the amount that can be collected to 20% of the\nprior months credited income to their prisoner account without consideration of\nthe number of cases the prisoner owes federal court fees. Mr. Gutierrez\u2019s issue\nis notification of how the not dischargeable court fees were to be collected:\n20% of his income PER lawsuit filed and not 20% of total without consideration\nof number of cases.<\/p>\n\n\n\n

The lower bankruptcy court dismissed the Section 523(a)(17) allegation\nand held it did not have jurisdiction over the allegation of wrongful collection\nmethod of the federal court fees and 28 U.S.C. Section 1915(b).  <\/p>\n\n\n\n

Standards of This Appeal<\/strong><\/p>\n\n\n\n

De novo review = appellate court reviews case as if\nthe case is being heard for the first time; subject matter jurisdiction\nrequires de novo review upon appeal  <\/strong><\/p>\n\n\n\n

Abuse of discretion = concerning retention of\njurisdiction after case dismissal<\/strong><\/p>\n\n\n\n

Abuse of discretion occurs when the lower bankruptcy\ncourt applies an incorrect legal rule or when its factual findings are\nillogical, implausible, or without support in the record. TrafficSchool.com,\nInc. v. Edriver Inc., 653 F.3d 820, 832 (9th Cir. 2011).<\/strong><\/p>\n\n\n\n

Mr. Gutierrez focuses his argument on \u201crelated to\u201d the bankruptcy case for the lower bankruptcy court to have jurisdiction. A bankruptcy court may have \u201crelated to\u201d jurisdiction if the result could change a debtor\u2019s rights, liabilities, options, or freedom of action which impacts the administration of the original bankruptcy case.   <\/a><\/p>\n\n\n\n

HOLDING: The collection of the not dischargeable federal court\nfees is not part of the bankruptcy court\u2019s jurisdiction.  At the time Mr. Gutierrez filed the adversary\nproceeding lawsuit his Chapter 7 bankruptcy case was fully administered.  Only then did the Oregon Department of\nCorrections begin collecting the fees. \nJurisdiction for \u201crelated to\u201d is the date the adversary lawsuit is filed;\nnot before. <\/p>\n\n\n\n

In re Casamont Invs., Ltd., 196 B.R. at 521 (citing In re Fietz,\n852 F.2d at 457 at n.2); measure of time is as when adversary proceeding\nfiled\/commenced<\/p>\n\n\n\n

Montana v. Goldin (In re Pegasus Gold Corp.), 394 F.3d 1189,\n1193 (9th Cir. 2005)<\/p>\n\n\n\n

Fietz v. Great W. Sav. (In re Fietz), 852 F.2d 455, 457 (9th Cir. 1988) (cleaned up) (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984))<\/p>\n\n\n\n

_____________________________________________________________________________________________________<\/p>\n\n\n\n

2.  Ebuehi, BAP No.\nCC-21-1199-FLT, March 8, 2022<\/p>\n\n\n\n

The Ninth Cir. BAP\nheld the bankruptcy court did not error in denying the Ebuehi\u2019s their discharge\npursuant to Sections 727(a)(3), 727(a)(4), and 727(a)(6).  <\/p>\n\n\n\n

The Ebuehi\u2019s originally filed a Chapter 11 reorganization case\nand confirmed, obtained approval, of the Chapter 11 Plan of\nReorganization.  After approval creditors\naccused the Ebuehi\u2019s of not making payments to them properly and misappropriating\n$5,000.00 a month in rental income.  The\nCourt issued an order to show cause why the case should not be converted to\nChapter 7 liquidation.  No real fight was\nmounted, and the case was converted to Chapter 7.<\/p>\n\n\n\n

The Chapter 7 Trustee assigned to the case naturally sought to\nliquidate the Ebuehi\u2019s assets including a piece of real property the Ebuehi\u2019s\nresided at.  The Ebuehi\u2019s eventually vacated\nthe property.  The Chapter 7 Trustee then\ndecided to file an adversary proceeding to take aware the Ebuehi\u2019s discharge\nfor alleged wronging doing pursuant to Section 727(a)(3), (a)(4) and\n(a)(6).  <\/p>\n\n\n\n

Section 727(a)- the court shall grant a discharge unless <\/p>\n\n\n\n

(3) the debtor concealed, destroyed, mutilated, falsified, or\nfailed to keep or preserve any recorded information<\/p>\n\n\n\n

(4) the debtor knowingly and fraudulently, in or in connection\nwith the case (A) made a false oath or account<\/p>\n\n\n\n

(5) the debtor has failed to explain satisfactorily, before\ndetermination of denial of discharge under this paragraph, any loss of assets\nor deficiency of assets to meet the debtor\u2019s liabilities<\/p>\n\n\n\n

So the Court held denial of discharge was warranted under \u00a7\n727(a)(6) given the Ebuehi\u2019s had failed to comply with the Court order regarding\nconversion to Chapter 7 and turnover of the real property to the Chapter 7 Trustee.\n<\/p>\n\n\n\n

In order to establish that the debtors \u201crefused\u201d to comply with\nan order, the party seeking to deny discharge \u201cmust show that Debtors (1) were\naware of the order and (2) willfully or intentionally refused to obey the order\n(i.e., something more than a mere failure to obey the order through\ninadvertence, mistake or inability to comply).\u201d Vaughan v. Weinstein (In re\nVaughan), BAP No. NV-15-1254-JuKiD, 2016 WL 878308, at *7 (9th Cir. BAP Feb.\n29, 2016).<\/p>\n\n\n\n

Under \u00a7 727(a)(4) the debtors allegedly made a false oath\nregarding the number of missed mortgage payments.  The Ebuehi\u2019s has 11 missed mortgage payments versus\nlisting only 4.  Okay, so did they intentionally\ndoes this for some reason and does it really matter?  Apparently yes, yes it did.<\/p>\n\n\n\n

The fundamental purpose of \u00a7 727(a)(4)(A) is to insure that the chapter\n7 trustee and creditors have accurate information without having to conduct\ncostly investigations.\u201d Fogal Legware of Switz., Inc. v. Wills (In re Wills),\n243 B.R. 58, 63 (9th Cir. BAP 1999).<\/p>\n\n\n\n

Under \u00a7 727(a)(3) because the Ebuehi\u2019s allegedly failed to\nmaintain records regarding the rental payments or turn over their\nrecord-keeping notebook, making it impossible to ascertain their financial\ncondition.<\/p>\n\n\n\n

Debtors are required to \u201cpresent sufficient written evidence\nwhich will enable his creditors reasonably to ascertain his present financial\ncondition and to follow his business transactions for a reasonable period in\nthe past.\u201d Id. (quoting Rhoades v. Wikle, 453 F.2d 51, 53 (9th Cir. 1971)).<\/p>\n\n\n\n

The Ninth Cir. BAP found no error in the bankruptcy courts denial\nof the Ebuehi\u2019s discharge.<\/p>\n\n\n\n

<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

By Ryan C. WoodG 1. Gutierrez v. Oregon State Department of Corrections \u00a0– 523(a)(17), 11 USC 28. 1915(b)(2) 2. Ebuehi v. United States Trustee, Los Angeles – 727(a)(3), (a)(4), (a)(6) _____________________________________________________________________________________________________ 1.   GUTIERREZ; BAP No. ID-21-1156-SGB; March 2, 2022 Bankruptcy court does not have \u201crelated to\u201d subject matter jurisdiction over claims\/allegations that arise after a […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[399],"tags":[404,403,398,402,157,400,401],"_links":{"self":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts\/1795"}],"collection":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/comments?post=1795"}],"version-history":[{"count":3,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts\/1795\/revisions"}],"predecessor-version":[{"id":1798,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts\/1795\/revisions\/1798"}],"wp:attachment":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/media?parent=1795"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/categories?post=1795"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/tags?post=1795"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}