News and Announcements
Debtor-Creditor Virtual Saturday Session and CLE
March 12, 2021
Our annual Saturday Session event traditionally serves as a vehicle for the Oregon bankruptcy community to share ideas and feedback about Oregon bankruptcy courts, rules, and practice. In light of the continuing severity of the COVID-19 pandemic and the success of holding the Annual Meeting virtually this past October, this year’s Saturday Session will be a virtual event held on the morning of Friday, March 12, 2021. The last date to register for the program is March 11, 2021 by noon. The cost of the event is free! Register Here for the event: Click here to register. The program is free and attendance is not limited, but registration is required. Participants must register by noon on Thursday, March 11, 2021 in order to receive the meeting link. The meeting link will be emailed to registrants on March 11, 2021. For questions about the “Saturday” Session, please contact Elayna Matthews, [email protected], or Loren Scott, [email protected], co-chairs of the Saturday Session Committee.
Debtor-Creditor Virtual Annual Meeting and CLE
October 23, 2020
The Debtor-Creditor Annual Meeting and CLE is a celebrated tradition that our members look forward to each year to learn from one another, socialize, and strengthen our state-wide network of professional connections. The ability to maintain our normal traditions is being continuously challenged by the COVID-19 pandemic, and as such, the Debtor-Creditor Annual Meeting and CLE Planning Committee made the difficult decision to deliver the 2020 Annual Meeting in a virtual format on October 23, 2020. Our recent poll results, and the feeling of the Committee, is that this is the safest option for the health and wellness of the membership, Oregon State Bar staff, and the communities around us.
Nominations for 2021-22 Executive Committee
DEADLINE: September 10, 2020
The OSB Debtor-Creditor Section Nomination Committee is accepting nominations from Section members for service on the Section’s Executive Committee for the 2021-22 Term. (The Award of Merit will not be presented this year due to the virtual format of the Debtor-Creditor Annual Meeting.)
If you are interested in becoming an OSB Debtor-Creditor Section Executive Committee member or if you wish to nominate someone, please contact Britta Warren at [email protected] by September 10, 2020. Please feel free to contact Britta with any questions you may have about this leadership opportunity.
We look forward to your input!
Judicial Vacancy Announcements:
Interested in becoming a judge? Following are current announcements for the recruitments of one Bankruptcy Judge for the District of Oregon – Portland Division, and two Bankruptcy Judges for the Central District of California – Riverside and Santa Barbara Divisions.
Links to the postings are below.
District of Oregon: https://judgeship.ce9.uscourts.gov/node/943
Central District of California: https://judgeship.ce9.uscourts.gov/node/954
Webinar: Avoiding Bankruptcy in the Aftermath of COVID: Panel Discussion about SBA Loans and Other Support Programs Now Available for Businesses (FBA Presentation 4/23/20)
Moderated by United States Bankruptcy Judge Peter McKittrick, a panel of experts from various levels of government and from Oregon’s largest bank will explain how local businesses can tap into publicly supported programs administered through the City of Portland, the State of Oregon, and the federal government’s massive SBA loan program. Links are provided to various programs within the webinar.
Idaho Trustee Job Announcement
The United States Trustee seeks resumes from persons wishing to be considered for appointment to the panel of trustees who administer cases filed under chapter 7 of the bankruptcy code. The appointment is for cases filed in the United States Bankruptcy Court for the District of Idaho, primarily from counties near Boise and Twin Falls. The minimum qualifications for appointment are set forth in 28 C.F.R. § 58.3. To be eligible for appointment, an applicant must possess strong administrative, financial and interpersonal skills. Fiduciary and bankruptcy experience is desirable but not mandatory. Forward resumes, by email only, to [email protected]. All resumes should be received on or before midnight PDT April 24, 2020.
U.S. Trustee Program Issues Notice on Continuance of Section 341 Meetings
The U.S. Trustee has announced that all Section 341 meetings of creditors in chapter 7, 12, and 13 cases originally scheduled to be held on March 17 through April 10 will be rescheduled to an alternate date to permit them to be held by telephone. As the new dates become known, they will be posted to the Court Operations During Coronavirus (COVID-19) Outbreak page of the court website. Notices of the rescheduled meeting dates will also be sent.
Saturday Session 2/2020
For those of you who missed a great presentation, attached is the Saturday Session Bench/Bar Power Point Presentation of William T. Rule, Ph.D., Senior Economist for the Administrative Office of the United States Courts.
Job Announcement for Trial Attorney Position with US Trustee’s Office Boise, ID
1. A Job Opportunity Announcement to fill the position of Trial Attorney, Region 18, Boise, ID has been posted and is open through 11:59 p.m. on 5 March 2020.
2. Interested personnel can view the announcement and application procedures by clicking on https://www.justice.gov/legal-careers/job/trial-attorney-417. If your browser does not support clicking on the hyperlink, simply copy the hyperlink and past into your browser.
3. If you are aware of personnel who may be interested in this position, please feel free to forward this email, share the hyperlink, or even add the hyperlink to your LinkedIn account.
4. To view all current U.S. Trustee Program attorney vacancies:
- Go to www.justice.gov
- Click on the “Careers” tab
- Click on “Legal Careers” (or click on “Attorney” further down on the page)
- Locate the “Search Attorney Vacancies & Volunteer Legal Internships” box on the right side of the page
- Under “Hiring Organization,” select “United States Trustee Program”
Save the date!
The Oregon State Bar Debtor-Creditor Section Saturday Session serves as a vehicle for the Oregon bankruptcy community to exchange ideas in an open and collaborative environment. Saturday Session will be held on the morning of February 22, 2020 at the Salem Convention Center. Topics will include, among others, a presentation from the United States Trustee’s Office and group discussion regarding the new Subchapter V of Chapter 11. Registration materials will go out before the end of the year.
Roadways to the Federal Bench: Who, me? A Bankruptcy Judge?
October 24, 2019 at 1:00 p.m.
U.S. Courthouse, 700 Stewart Street, Seattle
REGISTRATION OPENS SEPTEMBER 17, 2019 at 9:00 a.m.
Click here for more information.
Trial Attorney Position with the United States Trustee Program
The United States Trustee Program is accepting applications for the position of Trial Attorney in the Portland, Oregon office.
The application deadline is Monday, May 13, 2019. You may view the job announcement and application procedures by clicking on the following link: https://www.justice.gov/legal-careers/job/attorney-93
Oregon Employment Department Bankruptcy Notice Address
- It’s the debtor’s obligation to use current addresses when filling out schedules. Over nine years ago, the payment addresses for the Employment Department changed, but the notice addresses did not.
- The payment addresses should not be used for notice purposes. The payment addresses are to lockboxes which are owned by a bank; they are not actual Employment Department addresses. Documents sent there may eventually make their way to the appropriate offices, but that is not a certainty.
- Documents sent to the old payment addresses, though, are definitely not being forwarded to Employment.
Current notice addresses, which should be used in bankruptcy schedules, are:
Unemployment TAXES owed by employers:
Oregon Employment Department
875 Union Street NE
Salem, OR 97311
Overpayment Recovery (fraud in claiming benefits):
Oregon Employment Department
875 Union Street NE
Salem, OR 97311
Current payment addresses, which should only be used for PAYMENTS, are:
Unemployment TAXES owed by employers:
Oregon Employment Department
P O Box 4395
Portland, OR 97208-4395
Overpayment Recovery (fraud in claiming benefits):
P O Box 4395
Portland, OR 97208-4395
Please check your bankruptcy software to be sure that you are not inadvertently using an incorrect address in your schedules.
The court will be closed Wednesday, December 5, for the national day of mourning for former President George H. W. Bush. All court hearings set for December 5 are cancelled and will be rescheduled. In addition, all chapter 7 §341 meetings of creditors set for Wednesday before trustee Ken Eiler in Portland will be reset to Friday, December 7. Chapter 13 §341 meetings of creditors before trustee Naliko Markel in Klamath Falls will proceed as scheduled. The court will resume normal business operations on Thursday, December 6.
Change of Address for Portland
Effective December 1, the address of the Portland office is changed to 1050 SW 6th Avenue #700, Portland, OR 97204.
The SW Sixth and Main building in which the court is located is undergoing construction; until construction is completed, the only entrance to the building is at SW Fifth and Salmon. When construction is complete (currently estimated as February 17, 2019), the only public entrance to the building will be on Sixth Avenue.
Updated Local Forms
A number of local bankruptcy forms have been updated to change the address of the Portland office of the court and make stylistic and substantive changes. Follow the links on the home page under News & Announcements to see a list of recently updated forms.
Local Rule and Form Changes Effective 12/1/18
Local rule and form changes are effective 12/1/18. The new forms may be used immediately and must be used starting December 1. Click on the links under News & Announcements on the home page for new local rules (complete and summary of changes) and forms with notes on changes.
In addition, the mailing address for the Portland office of the court will officially change to 1050 SW 6th Avenue #700, Portland OR 97204 on December 1. A number of local forms will be updated with the new address and posted later in November. An announcement will follow when they are available.
Local Rule and Form Changes – Comments Due by 10/21/18
Proposed changes to the Local Bankruptcy Rules (LBRs) and Local Bankruptcy Forms (LBFs) have been posted for review. If adopted, these rule and form changes will be effective December 1, 2018. Comments on the proposed changes are invited and must be submitted by October 21, 2018.Proposed changes to the Local Bankruptcy Rules (LBRs) and Local Bankruptcy Forms (LBFs) Click here to submit comments.
Job Opening – Assistant US Trustee, Seattle
The Office of the United States Trustee has re-posted the job announcement for the Assistant U.S. Trustee position in Seattle, WA. Applications will be accepted until Monday, October 1, 2018. Details are available at https://www.usajobs.gov/GetJob/ViewDetails/510946400
Proposed Federal Rule Amendments, Public Comment by 2/15/2019
The Judicial Conference Advisory Committees on Appellate, Bankruptcy, Civil, and Evidence Rules published proposed amendments to their respective rules for public comment by February 15, 2019.
The proposed amendments, rules committee reports explaining the proposed changes, and instructions on how to submit comments are posted on www.uscourts.gov.
Job Opening – Director of Information Technology
The court seeks a Director of Information Technology, someone with leadership and management skills, to supervise an IT staff of six. Complete information is available on the Employment section of the home page. The position is open until filled. Submit your application by 08/26/2018 to ensure consideration.
Changes to CM/ECF Judge/Trustee Assignment
Version 1.2 of NextGen CM/ECF includes a new version of the Judge/Trustee Assignment (JTA) program. When a debtor’s attorney runs JTA, the debtor’s attorney will receive a confirmation screen displaying the judge, trustee, 341(a) meeting date, and chapter 13 confirmation hearing date (if applicable). The new program will not create a docket entry or notice of case filing until the court has completed its review of the case filing and a batch job is run. Complete information is available via the E-Filing (CM/ECF) link on the home page.
Self-Calendaring for LBF 1366, Notice of Hearing on Ch. 13 Trustee’s Motion to Dismiss/Convert
Debtors can obtain hearing dates for LBF 1366, Notice of Hearing on Ch. 13 Trustee’s Motion to Dismiss/Convert Case or 10 Day Notice of Default, from the court’s website. Available hearing dates for all judges, as well as instructions on use and a link to new procedures, can be found on the Hearings drop-down menu under Ch. 13 Trustee’s Motion to Dismiss (LBF 1366 Only).
Email Subscriptions for Court Announcements, Opinions, and Contact Information
There is now an Email Subscription option on the lower right side of the home page. Subscribers may receive emails regarding court news and announcements, opinions, and changes to case number assignments and court personnel in Portland and Eugene. Subscribers may also sign up for updates from the U.S. Courts website.
Availability of Online Payments
Installment payments for chapter 7, 11, and 13 filing fees may now be made online with a credit card, debit card, or via ACH by using the Online Payment Form. This form cannot be used for Chapter 13 plan payments to the trustee. You can also use the form to pay fees associated with copies of documents; call the clerk’s office at 503-326-1500 or 541-431-4000 to verify the fee amount. More information about obtaining document copies is available by following the link on the home page under News & Announcements.
Electronic Filing of Request for Audio Recording of Court Proceeding
You can now electronically file a request for an audio recording. The new ECF event can be found under Miscellaneous, Request for Audio Recording of Court Proceedings. ECF filers do not need to complete an order form but must enter the date and time of the court proceeding when prompted. The filing instructions page can be found on the website under Hearings, Order an Audio Recording of a Court Proceeding. Once the court receives your request and payment, it will send the audio recording in the format you request in a link via Microsoft OneDrive and emailed to the primary email address associated with your ECF account. The court will continue to provide CDs to non-ECF filers who have filed their request on LBF 335 and do not have an email account. LBF 335 has been updated to reflect the new procedure.
Electronic Filing of Official Form 121
The court has decided that Official Form 121, Your Statement About Your Social Security Numbers, must be filed with the court pursuant to FRBP 1007(f), as recommended by the Local Rules Committee. The local rules will be amended effective December 1, 2017, to require this filing.
Beginning May 1, debtors’ attorneys are encouraged to voluntarily comply with FRBP 1007(f) by filing the SSN statement with the Voluntary Petition. The form must be a separate entry on the docket to maintain restricted access. The form may be submitted using Case Upload or Miscellaneous – Statement of Social Security Number. Petition software vendors were notified in early April of the availability of these new events in the Test database and were urged to test and modify their software. They will be available in the Live database on May 1.
The court has also updated LBF 5005, Electronic Filing Declaration, to add the Statement of Social Security Numbers to the checklist of documents which debtors’ attorneys may electronically maintain with the debtor’s authorization. Attorneys must electronically file the scanned declaration and retain the signed original declaration.
Hull v. Klamath County, Adv No. 17-6089-tmr, Case No. 7-63283-tmr13
2018 WL 4214231
September 4, 2018
11 USC §§101(54), 547(b), and 547(e); ORS 18.165 and 312.090-214
Debtors brought this adversary proceeding to avoid as a preference under §547(b) the transfer of their real property to Klamath County, which had occurred upon entry of a judgment of foreclosure of tax liens by the Klamath County Circuit Court more than two years before debtors filed their bankruptcy case.
The court ruled against debtors. Under ORS Chapter 312, a judgment of foreclosure of tax liens unambiguously divests property owners of their ownership rights, leaving only the right to redeem the property and to possess it during the redemption period. After expiration of the redemption period, debtors held no “property or interest in property.” Finally, consistent with ORS 18.165, Klamath County’s interest in the property was perfected upon entry of the certified copy of the judgment into the court registry. Because both transfer and perfection occurred more than two years before the case was filed, the transfer fell outside the 90-day window of § 547(b) and could not be avoided.
Szanto v. Bank of America, Adv. No. 16-3118, Case No. 16-33185
April 30, 2018
Summary judgment, statute of frauds, modification of HELOC, part performance, full performance, estoppel
The debtor sued for specific performance of an alleged modification of his home equity line of credit. The bank moved for summary judgment and the court granted the motion: debtor did not provide evidence that the alleged loan modification was in writing as required by the California statute of frauds.
In re Ameriflex Engineering LLC, Case No. 17-6024-tmr
March 12, 2018
11 USC §§108(b), (c) and 510 (b); ORS 36.700, 63.225, 63.229 and 63.625
In an arbitration following the expelling of one of its original members, Ameriflex was directed to buy back the member’s shares, pursuant to the LLC Operating Agreement, for $1.5 million. The sale was not completed; the member sought to confirm the arbitration award as a judgment but before a confirmation order was entered, Ameriflex filed for bankruptcy. In an adversary proceeding, Ameriflex argued that the member’s claim based on his award should be subordinated to all creditors and equity holders. On cross motions for summary judgment, the court held that the claim should be subordinated to the claims of creditors but should remain ahead of claims of equity holders because the member no longer held an equity interest.
In re Evans, No. 17-62302-tmr13
March 8, 2017
11 USC §1326(c), 28 USC 586(e), LBR 3015-1(b)(7)
The trustee objected to confirmation of debtors’ chapter 13 plan, which proposed to pay in full two judgment lien creditors and the Linn County Tax Assessor upon the sale or refinance of their real property in three years. The trustee argued he was entitled to his statutory fee on the funds paid to those creditors through escrow pursuant to LBR 3015-1(b)(7). The court agreed and denied confirmation, based on its conclusion that the affected creditors’ claims were “impaired” within the meaning of §1326(c) and related case law: the proposed three-year delay in payment to the creditors impaired their right to foreclose on their liens. Thus the claims fell within §1326(c) and the trustee, not the escrow agent, would disburse payments to the creditors.
In re Kees, Case No. 16-62669-tmr7
March 8, 2018
11 USC §522(d)(12); 26 USC §§219(b)(1)(A), 408(b) and 408(d)
In debtor’s pre-bankruptcy divorce case, she was awarded portions of her husband’s two retirement accounts, specified as not taxable under 26 USC §408(d) in the dissolution judgment. After the divorce, debtor transferred her interest in the accounts into 401(k) and 403(b) accounts and then rolled those accounts into a traditional IRA. In her chapter 7 case, she claimed an exemption in the entire $84,000 value of the IRA. The trustee objected. The court ruled in debtor’s favor, rejecting the trustee’s arguments that (1) a portion of the IRA was forfeitable, (2) the IRA was assignable or transferrable, and (3) the initial premium of $84,915.15 exceeded the $6,000 limitation of 26 USC §219(b)(1)(A).
Eiler v. Hartner, Adv. No. 17-3112-tmb, Case No. 16-31394-tmb7
January 23, 2018
Marital settlement agreement, property division judgment, ORS 18.180
In 1992, wife entered into a marital settlement agreement incorporated in a judgment of dissolution. The agreement provided the wife could obtain a supplemental judgment equal to half the value of debtor’s interest in two closely-held corporations. Wife did not obtain a supplemental judgment but, when debtor filed his chapter 7 petition in 2016, she sought half the proceeds of sale of property held by the corporations. The court rejected all her arguments. The property division judgment had expired, so wife’s only basis for a claim was under contract, and that claim was time-barred and was therefore disallowed.
Kunda v. Shaul, Case No. 16-31314, Adv. No. 16-3091
December 13, 2017
Plaintiff obtained a judgment against debtor in Washington state court for over $150,000 in a suit arising from a construction contract. She then filed a complaint in bankruptcy court seeking a judgment that the debt was not dischargeable under §523(a)(2)(A). The bankruptcy court did not take live testimony but, based on transcripts and exhibits from the state court trial, ruled the plaintiff had not established the elements of §523(a)(1)(A).
In re Peak Web LLC, Case No. 16-32311
November 8, 2017
11 USC §502(b)(9), relation back, FRCP 15(c)(1)(B)
The creditor filed an amended claim after the bar date and argued that the claim related back to its original (timely filed) claim. The court compared the claims in the amended complaint, on which the amended claim was based, to the claims in the original complaint. It concluded that claims in the amended complaint that were new (i.e., not simply the original claims alleged with greater particularity) were barred as untimely under §502(b)(9).
Ticor Title Ins Co. v. Brandenfels, Adv. No. 13-3159, Appellate No. 15-60075
July 5, 2017
11 USC §727(a)(3)
The Ninth Circuit affirmed the BAP, which had affirmed the bankruptcy court’s denial of discharge under §727(a)(3). The debtor failed to keep adequate records, making it impossible to determine her financial condition, and the debtor could not justify the inadequacy of the records.
Szanto v. IRS, Case No. 16-33185-pcm11, Adv. No. 16-3141-pcm
June 13, 2017
FRCP 12(b)(1) and (6); 11 USC §§ 105, 106 and 505; 26 USC §§7121, 7122 and 7433; Federal Tort Claims Act; Anti-Injunction Act
Debtor’s adversary proceeding against the IRS was based on the IRS’s proof of claim, and alleged numerous claims. The court first substituted the United States as a party rather than the IRS and dismissed claims against IRS employees. In a lengthy memorandum opinion it then dismissed with prejudice debtor’s breach of contract claim, claim for a refund, and claim for injunctive relief. It dismissed debtor’s tort claims (for fraud and malicious prosecution) with leave to replead.
In re Berjac of Oregon, Case No. 12-63884-tmr7
June 14, 2017
11 USC §§101(14)(C), 327(a) and 330(a); FRBP 2014(a); ORPC 1.7(a)(2) and 1.10(a); adverse interest; disclosure violations; disinterestedness; party in interest; settlement
A law firm that had represented the trustee during the chapter 11 phase and part of the chapter 7 phase of the case applied for approval of its fees and via a mediated settlement agreed to a 25% discount. The US Trustee and various creditors objected. The court approved the settlement, applying the four factors of In re A & C Properties, 784 F2d 1277 (9th Cir 1986), and other factors. The court found that although it was likely the firm had violated the disclosure requirements of FRBP 2014(a), the violation was not intentional and the discount compensated for any probable sanction.
Szanto v. JPMorgan Chase, Case No. 16-33185, Adv. No. 16-3118
June 13, 2017
FRCP 12(b)(6), 8(a) and 9(b); Truth in Lending Act; Federal Debt Collection Practices Act
In a lengthy memorandum opinion the court analyzed numerous fraud, statutory violation and breach of contract claims against Chase and Bank of America. It granted motions to dismiss all the claims, with prejudice because this was debtor’s third attempt to plead them. The only claim remaining, which was not the subject of the motions, was one for breach of contract against Bank of America.
In re Peak Web LLC, Case No. 16-32311, Adv. No. 16-3083, Appellate No. 3:16-cv-01832-SI
February 7, 2017
28 USC §1452(b)
The district court reviewed the bankruptcy court’s order granting equitable remand to state court and affirmed. The standard of review was abuse of discretion, and although the district court concluded that the bankruptcy court had erred in applying one factor, that error was harmless.
In re Parmenter, BAP No. OR-15-1170-TaKuJu, 2016 WL 7189829
December 5, 2016
11 USC §1144, FRBP 9006(b)(2) and 9024, issues on appeal, revocation of confirmation
The debtor filed chapter 11, a trustee was appointed, and the trustee’s plan was confirmed. The debtor unsuccessfully appealed the order confirming the plan. Three years later the debtor moved to reopen the case and requested an order of discharge but did not appear at the hearing. After filing a certificate of completion of a financial management course, debtor was granted discharge under §1141(d). She appealed the discharge order. The BAP affirmed, holding debtor had waived the right to contest the discharge order because she had requested it.
Baczkowski v. Bank of New York Mellon, Dist. Ct. No. 6:16-cv-00150-MC
October 21, 2016
2016 WL 6208270
28 USC §§157(c) and 1334, LBR 7008-1, implied consent, jurisdiction
The district court upheld the bankruptcy court’s dismissal of debtor’s adversary proceeding. After filing the adversary proceeding, the debtor had moved to dismiss her chapter 13 case. The bankruptcy court advised debtor that her adversary would be dismissed if her main case was dismissed, and gave her a chance to withdraw her motion to dismiss the main case. She argued on appeal that she had not consented to entry of a final dismissal order in the adversary proceeding, that she was denied due process and that the dismissal was inequitable. The district court rejected all these arguments. As of March 22, 2017, the district court’s ruling is on appeal to the Ninth Circuit.
Hunsaker v. United States, Dist Ct. No. 6:16-cv-00386-MC
October 20, 2016
2016 WL 6134530, rev’g 2016 WL 409311
11 USC §§106(a)(1) and (3), 362(k); actual damages; automatic stay, emotional distress damages, sovereign immunity
Chapter 13 debtors sought emotional distress damages against the IRS under §362(k) for post-petition collection attempts. The bankruptcy court rejected the government’s sovereign immunity defense and awarded $4000 in damages to debtors. The district court reversed, holding that sovereign immunity can only be waived by unequivocal statutory language; that a clear waiver of immunity cannot be found in §362(k); and that the “money recovery” against the government permitted by §106(a)(3) does not include emotional distress damages. As of March 22, 2017, the district court’s ruling is on appeal to the Ninth Circuit.
Krein v. Szewc (In re Szewc/Updegraff), Adv. No. 14-6086-tmr
March 6, 2016
11 USC §1328(a)(4), claim preclusion, issue preclusion, malicious injury, personal injury, postpetition debt, public nuisance, willful injury
In a state court action for damages based on the tort of public nuisance (a number of large dogs that barked almost incessantly), plaintiffs received an award of $238,942. Plaintiffs sought to have these damages excepted from discharge. The bankruptcy court divided the damages into those caused in three different periods. Those accruing in the years before debtors were found in violation of Jackson County Code provisions prohibiting dogs from causing unreasonable noise disturbances (over $69,000) were dischargeable as resulting only from negligence. The damages occurring in the two years between the Jackson County Code violation and the debtors’ chapter 13 filing (over $138,000) were the result of willful or malicious injury and thus excepted from discharge. Postpetition damages (over $34,000) were also excluded from discharge as postpetition debt.
Huffman v. Gollersrud (In re Westby), Adv. No. 16-6018-fra
February 13, 2017
11 USC §544(a)(1); ORS 71.2010(2)(c), 71.3030(2); ORS 79.0102(1), (tt)(A), (yy)(C), (LLL), and (2); ORS 79.0109(1)(a), (2), and (4)(k); ORS 79.0203(1) and (2)(a)-(c); ORS 79.0312(1), 79.0313(1), and 79.0317(1)(b)(A); constitutional authority; course of dealing; deed in lieu of foreclosure; equitable lien; lien creditor; merger; note; perfection; security agreement; security interest; trust deed
Debtor defaulted on his obligation to lender, then filed chapter 7. The lender’s proof of claim asserted a perfected security interest in real property pursuant to a recorded assignment of a third party note and trust deed. The trustee sued to avoid the lender’s lien, and the court ruled for trustee. Lender had failed to perfect his security interest in the note and trust deed by either filing a financing statement or taking possession of the note; therefore his security interest was subordinate to the trustee’s lien-creditor rights under the UCC and §544(a)(1) of the Bankruptcy Code. The court also rejected lender’s argument that he was entitled to an equitable lien.
In re Gilbert, Case No. 16-30040
September 15, 2016
Sanctions; 11 USC §§362(k), 362(c)(3), and 1301; co-debtor stay
The court denied debtor’s motion for sanctions and for a declaration that debtor’s landlord’s actions violated the automatic stay and the co-debtor stay, on the following facts. (1) Landlord sought to evict debtor from her apartment; (2) debtor filed her 2015 chapter 13 petition on the second day of the eviction trial; (3) the court granted relief from stay to allow the trial to continue and held that any claim against debtor for costs and attorney fees would be a claim in the bankruptcy case. (4) Debtor voluntarily dismissed her 2015 chapter 13 case and filed a 2016 chapter 13 case. (5) The state court held landlord was entitled to $23,000 in fees and costs against debtor and her attorney. (6) Debtor sought sanctions
Ruling against the debtor, the court held that the landlord’s actions did not violate the stay in the 2015 case (relief from stay had been granted, and the stay terminated when the case was dismissed), and the stay in the 2016 case had expired 30 days after the filing. There was no violation of the co-debtor stay because debtor’s attorney was not listed as a co-debtor in either the 2015 case or the 2016 case and there was no evidence he was a co-debtor on the petition date.
In re Wait, Case No. 15-33254-rld7
August 24, 2016
BR 9019, compromise, settlement
Applying the factors set forth in In re A & C Properties, 784 F.2d 1377 (9th Cir. 1986), the bankruptcy court approved the chapter 7 trustee’s settlement of debtor’s prepetition discrimination claim against her landlord.
In re Peak Web LLC, Case No. 16-32311-pcm11, Adv. No. 16-3083
August 24, 2016
Remand, permissive abstention, 28 USC §§ 1334(c) and 1452(b)
Creditor removed this consolidated action from California state court and debtor moved for permissive abstention or equitable remand. The court held abstention does not apply to cases removed from state court to federal court. It held that equitable remand to state court was warranted, however. Several factors favored remand: all the claims were state law claims, completion of the litigation was not a prerequisite to debtor’s ability to reorganize, debtor wanted to litigate in state court, the bankruptcy court could not conduct the jury trial both parties demanded because the parties did not consent, and the state court was poised to try the case promptly.
In re Hanlon, Case No. 15-64121-tmr7, Adv. No. 16-6040-tmr
August 15, 2016
11 USC §523(a)(15), ORS 106.300 et seq., FRCP 5.1 and LBR 9005-1.1, FRCP 12(b)(6), equal protection clause (US Constitution), privileges and immunities clause (Oregon Constitution), registered domestic partnership, spouse
Plaintiff and defendant were an unmarried opposite-sex couple in a long-term relationship. Their domestic partnership was dissolved via a state court proceeding in which plaintiff was awarded an attorney-fee judgment of over $41,000. Defendant subsequently filed a chapter 7 petition, and plaintiff brought an adversary proceeding to except her state court judgment from discharge under §523(a)(15). The court rejected plaintiff’s arguments that she was covered by the provision either by virtue of the type of proceeding in which her judgment arose or as the equivalent of a spouse. Plaintiff also argued she was similarly situated to one in a same-sex registered domestic partnership (RDP), and because the RDP scheme does not provide for opposite-sex couples it unconstitutionally discriminates. The court deferred ruling on constitutional issues until plaintiff complied with rules to enable the Oregon Attorney General to intervene.
In re Miller, Case No. 14-62036-fra7; Keating v. Deutsche Bank, Adv. No. 16-6023-fra&
May 27, 2016
Motion to Dismiss, Sale of Estate Property
The debtor’s bankruptcy schedules disclosed that a piece of real property was encumbered by a senior lien held by Deutsche Bank’s predecessor and a junior lien held by Bank of America. When Keating purchased the property, the trustee paid only the junior lien from the proceeds. Deutsche Bank sought to foreclose and Keating filed an adversary proceeding against Deutsche Bank and the trustee, both of which moved to dismiss.
The court denied the motions with respect to plaintiff’s claims for marshaling and estoppel, although noting that the claims needed to be repleaded to better state the claims. It granted, with leave to amend, claims against the trustee for negligence (failure to allege duty to plaintiff) and against Deutsche Bank for waiver (failure to allege notice of the sale).
Beard v. Ocwen Loan Servicing, LLP, Dist Ct Case No. 6:15-cv-01858-AA, In re Beard, Bankr Case No. 12-61206-tmr7
May 13, 2016
ORS 86.797(3) and 88.010(1) (2013), 11 USC §524, discharge injunction, judicial foreclosure
The bankruptcy court denied the debtor’s motion to find a foreclosing creditor and its law firm in contempt for violating the discharge injunction; the US district court affirmed. The creditor had obtained relief from stay post-chapter 7 discharge to judicially foreclose trust deeds. The judgments the creditor received included a money judgment against the debtor as then required by ORS 88.010(1). Both courts held that the money judgment did not establish personal liability of the debtor but rather established the amount the creditor could credit bid and the amount of sale proceeds due the creditor. ORS 88.010(1) was amended effective June 8, 2015 to clear up any perceived ambiguity in the effect of a money judgment in judicial foreclosures.
In an opinion not (yet?) posted on the Bankruptcy Court Website, the district court vacated a bankruptcy court judgment discharging accrued interest on a nondischargeable debt. In re Egbo, No. 3:15-cv-01580HZ. The listserve won’t let me attach the opinion, so here’s a link to a summary of the case: http://www.abi.org/newsroom/daily-wire/dischargeability-judgment-must-not-lower-interest-on-a-creditor%E2%80%99s-judgment
In re Todor, Case No. 11-64859-fra13, Adv. No. 14-6195, Appellate No. 6:15-cv-01120-AA
March 29, 2016
Fair Debt Collection Practices Act
The district court (Aiken) affirmed Judge Alley’s opinion holding that the Credit Bureau of Josephine County’s omission of “Inc.” from its name in its notices to Todor did not violate 15 USC §1692(e), in that the “least sophisticated debtor” would not conclude from the omission that the debt collector was a government agency.
In re Meeko, Case No. 14-35434-tmb13, USDC Case No. 3:15-cv-01200-AA
March 17, 2016
11 USC §1330, FRCP 60(b)
The US District Court affirmed the bankruptcy court’s denial of a secured creditor’s motion to vacate the chapter 13 confirmation order. After confirmation, the US District Court held in Bank of N.Y. Mellon v. Watt, 2015 WL 1879680 (April 22, 2015), that an involuntary vesting provision in a chapter 13 made that plan not confirmable, and the creditor relied in part on that decision. In affirming the bankruptcy court, the district court held that relief from a confirmed chapter 13 plan is available only in cases of fraud, court mistake of fact or clerical error.
In re Kent, Case No. 09-35124-tmb13
January 22, 2016
Discharge injunction; chapter 13; mortgage default; 11 USC §§524, 1322(b)(5), 1322(b)(2) and 1328
After debtors completed their plan and obtained a discharge, their mortgage creditor took collection actions. Debtors claimed these actions violated the discharge injunction and reopened their case to bring this contempt motion against the creditor. The bankruptcy court agreed with debtors that their personal liability had been discharged, but noted that they still needed to prove that the injunction had been violated and establish damages.
In re Bond, Adv. No. 15-6038-tmr
March 7, 2016
11 USC §§523(a)(2)(A) and (a)(4); ORS 67.155(2)(a), 68.340(1) (former), and 174.010(1)(a); fraud; fiduciary; fiduciary duty; issue preclusion; legislative history; partner; partnership; Revised Uniform Partnership Act; trust (technical or statutory); trustee; Uniform Partnership Act
In this adversary proceeding a former partner of debtor sought to have prepetition money awards excepted from discharge under §523. On plaintiff’s motion for summary judgment, the court held that it was bound by the issue-preclusive effect of the state court judgment and thus the elements of §523(a)(2)(A) had been met. Based on case law, ORS 67.155(2)(a) and legislative history, the court held that the Oregon legislature did not intend partners to act as trustees; thus defendant was not a fiduciary within the scope of §523(a)(4). The court granted summary judgment with respect to §523(a)(2)(A) and denied it with respect to §523(a)(4).
In re Banks, Case No. 14-35264-rld13
February 26, 2016
Arbitration, automatic stay, 9 USC §§2 – 4, 11 USC §§105 and 362
The issue in this case was enforcement of an arbitration provision in a payday loan agreement entered into prepetition by a chapter 13 debtor whose plan had been confirmed but whose case was still open. The court consulted the recent decision in Campos v. Bluestem Brands, Inc., 2016 WL 297429 (D Or Jan 22, 2016), and In re Thorpe Insulation Co., 671 F3d 1011 (9th Cir 2012), and concluded that compelling arbitration would not unfairly prejudice the debtor.
In re Hunsaker, Adv. No. 14-6218, Case No. 12-64782-fra13
January 13, 2016
Violation of automatic stay, emotional distress damages
Debtors notified the IRS of their bankruptcy filing but the IRS continued collection efforts, even after debtors’ lawyer wrote and advised the IRS of the bankruptcy and the automatic stay. In this adversary proceeding brought by the debtors, the court awarded them $4000 in emotional distress damages under §362(k) and In re Dawson, 390 F.3d 1139, 1148 (9th Cir. 2004), plus reasonable attorney fees.
In re D’Agnese, Case No. 15-61167-fra13
December 15, 2015
Plan not proposed in good faith, 11 USC §1325(a)(3)
The court held that debtor’s chapter 13 plan was not proposed in good faith and denied confirmation. Debtor had sold his business in 2011 but had not used the proceeds of the sale (as required by judgment of dissolution) to pay anything to his former wife, whose claims constituted 98% of total claims against him. His plan would have paid about 1% of unsecured claims, including that of his former wife. The court noted that confirmation would have discharged the bulk of the debt debtor had chosen not to pay by his inequitable conduct. The debtor converted to chapter 7
In re Howland, Case No. 14-31498-rld7
December 3, 2015
11 USC §510(a) and (c), statute of limitations, subordination of claims
The debtor’s father had given loans to debtor totaling $580,000, and the father filed a proof of claim in that amount. Bank of the Cascades objected. The court determined that a loan agreement did exist, but the California limitations period had expired for all but $205,000 of the loans. The claim in this amount would be allowed but subordinated, pursuant to §510(a), to the allowed claims of debtor’s other creditors. The court concluded that §510(c) did not apply, as the debtor had not engaged in inequitable conduct.
In re Sanger-Morales, Case No. 14-31997-rld7
October 21, 2015
Discharge, vacate, dismissal for cause, voluntary dismissal, §707(a)
After receiving a chapter 7 discharge and after her case was closed, the debtor reopened the case, seeking to obtain a discharge of certain tax obligations that had not been discharged initially. She then moved to dismiss under §707(a). The court denied the motion and reclosed the case, concluding that the debtor had not established cause under §707(a) and that equity did not justify granting her motion.
In re Jacobson, Case No. 11-63542-tmr7
September 28, 2015
11 USC §§541(a)(1) and 558, ORES 18,395(1), homestead exemption, settlement, specific performance
After debtors’ chapter 7 case had closed, their home lender brought a foreclosure suit in state court. Debtors counterclaimed for specific performance of an alleged prepetition breach of a mortgage modification. The court reopened the bankruptcy case to allow a trustee to administer the counterclaim. The trustee settled all prepetition claims for a payment of $10,000; debtors objected and sought to claim their counterclaim as exempt under Oregon’s homestead exemption. Trustee and lender objected to the exemption claim and the court sustained the exemption. It also approved the settlement over debtors’ objection.
In re Cronk, Adv. No. 14-6220-tmr
September 25, 2015
11 USC §§101(54), 522(d)(5), 522(h), 547(b)(5), 547(c)(8): ORS 18.300, 18.385, 18.700(1) and (2), 18.725; check; federal wildcard exemption; garnishment; preference; transfer
The debtor sought to recover prepetition wage garnishments under §522(h). Two garnishments had been completed prepetition; they totaled less than $600 so the creditor prevailed under §547(c)(8). A third garnishment was pending on the petition date; that is, the check had been issued but the creditor had not cashed it. The court held the debtor could assert her federal wildcard exemption with respect to that check, and it ordered the garnishee to issue a replacement check to debtor.
In re Holman, Case No. 14-35381-rld7, Adv. No. 14-3285
September 8, 2015
Justifiable reliance, financial statement, reckless indifference, §523(a)(2)(A) and (B)
Creditors sued debtor husband and wife seeking a determination that a debt was nondischargeable based on fraud. Following summary judgment proceedings and a trial, the creditors prevailed only on their §523(a)(2)(B) claim against the husband, based on his reckless indifference to the accuracy of the allegedly fraudulent financial statement.
In re Freeland, Case No. 14-61439-fra7, Adv. No. 14-6102-fra
September 2, 2015
Student loan discharge, §523(a)(8), Brunner, minimal standard of living
Applying the Brunner test, the court held that the debtors were not eligible for a hardship discharge of student loan debt. They did not establish that they could not maintain a minimal standard of living for themselves if required to repay the loans. Bankruptcy courts should take into account the availability of income-based repayment plans when determining dischargeability of student loan debt under §523(a)(8).
In re Christianson, Case No. 15-60288-fra13
August 12, 2014
Chapter 13 confirmation, tax refunds, vehicle ownership expense, projected disposable income
The court denied confirmation of a chapter 13 plan with leave to file an amended plan. It ruled that a 2014 tax refund was, as debtors argued, a prepetition asset (January 2015 filing), but that to avoid shortchanging the estate, debtors would be required to turn over to the trustee their 2019 tax refund; no discharge until the trustee either receives the refund or determines no refund was due. On a second issue, the court ruled that the debtors could use as their car expense on Form 22C-2 the amount prescribed in the National and Local Standards rather than their actual (significantly lower) car payment.
In re Brown, Dist. Ct. Case No. 3:15-cv-00205-BR; Case No. 12-32313-tmb7; Adv. Nos. 14-3104-tmb, 12-3167-tmb, 12-3169-tmb
June 18, 2015
Settlement, statute of frauds, ORS 41.580(1), mutual mistake, indefiniteness
As trial on two nondischargeability proceedings approached, debtor Brown and his nondebtor spouse negotiated a global settlement agreement and counsel reported to the bankruptcy court that the matters had settled. Later the Browns refused to sign a formal settlement agreement, arguing that the value of certain real property was a material fact underlying the settlement and the parties’ belief about that value was mistaken. The bankruptcy court issued a lengthy letter ruling rejecting the Browns’ arguments and holding a settlement had been reached. The district court affirmed.
In re Ohlsson, Dist. Ct. Case No. 6:14-cv-01686-AA
June 17, 2015
11 USC §§101(14A) and 523(a)(5), domestic support obligation, nature of support
In a prepetition dispute between debtor and her ex-spouse over a parenting plan, the state court ordered debtor to pay ex-spouse’s attorney fees. In debtor’s chapter 7 case, ex-spouse sought to have the attorney fee award excepted from discharge as in the nature of a support obligation. The bankruptcy court ruled in debtor’s favor and the district court affirmed. A significant factor in this outcome was the state court’s finding that the attorney fee award would deter others from pursuing meritless claims; thus the debt’s basis was not support of the child but punishment of the debtor.
In re Todor, Adv. No. 14-6195-fra, Case No. 11-64859-fra13
April 16, 2015
Violation of automatic stay; Fair Debt Collection Practices Act
Credit Bureau of Josephine County was assigned a claim against Todor after Todor’s chapter 13 plan had been confirmed. Credit Bureau contacted Todor about the claim and continued to do so even after being informed of the bankruptcy; eventually it filed a small claims proceeding. The proceeding was removed to bankruptcy court, where Credit Bureau conceded it had violated the automatic stay and the FDCPA. The court awarded Todor $500 and reasonable attorney fees for the violations. The court also ruled that Credit Bureau’s omission of “Inc.” from its name in its notices to Todor did not violate 15 USC §1692(e), in that the “least sophisticated debtor” would not conclude from the omission that the debt collector was a government agency.
In re C & K Market, Inc., Adv. No. 14-6119-fra, Case No. 13-64561-fra11
April 16, 2015
Subordination agreement, payment under plan on subordinated claim
This opinion addresses cross motions for summary judgment in an adversary proceeding seeking to enforce subordination agreements. The court ruled (in favor of plaintiffs) that the subordination agreements had not been terminated by payment of underlying debts, nor were they terminated by the terms of the chapter 11 plan. Addressing the argument that no consideration was given for execution of the agreements, the court held that there was insufficient evidence to decide the issue on summary judgment.
In re Watt, Case No. 14-31295, USDC Case No. 3:14-cv-02051-AA
April 29, 2015
11 USC §§1325(a)(5)(C) and 1322(b)(9)
The US District Court reversed the bankruptcy court’s confirmation of a chapter 13 plan that vested title to certain real property in the lienholder. Although §1322(b)(9) allows vesting in a third party, under §1325(a)(5) the third party must consent. The lienholder here did not consent.
In re Endresen, Case No. 11-35396-rld7, Adv. No. 14-3131-rld
April 15, 2015
11 USC §552(a) and (b)(1), property of the estate, attachment and perfection
This case involves the status of settlement proceeds from a construction defect case. Debtors had purchased several pieces of real property in 2004 with loans secured by trust deed liens on the properties. Debtors filed for chapter 7 in June 2011 and received a discharge in October 2011. Beginning in 2013 the debtors were parties to a state court action in which they alleged construction defects in the properties, allegedly discovered in 2012. The bankruptcy court reopened the chapter 7 case in 2014, and approved a settlement of the construction defect claims. The trustee brought an adversary proceeding against debtors and lenders seeking a determination that the settlement proceeds were property of the estate and that the lenders had no enforceable security interest in the proceeds. The court ruled, on cross-motions for summary judgment, that the proceeds were part of the bankruptcy estate and that the lenders’ security interests were enforceable against the estate.
In re Herbert, Case No. 14-33702-tmb13, Adv. No. 14-03211-tmb
April 3, 2015
11 USC §362(b)(1), automatic stay, In re Gruntz
Debtor was convicted of stealing from Bender, her former employer, and ordered to pay restitution. She filed for bankruptcy without having satisfied this obligation. Bender asked the state court to take action to collect the debt, and then filed an adversary proceeding seeking a nondischargeability determination. Debtor counterclaimed for violation of the automatic stay. On cross-motions for summary judgment, the court ruled that §362(b)(1), which excludes criminal proceedings from the scope of the automatic stay, does not apply to private creditors that enlist state courts in collection efforts.
Nunez v. Key Education Resources/GLESI, Adv. No. 14-3177-rld, Case No. 14-32528-rld7
March 13, 2015
11 USC §523(a)(8), dischargeability, educational benefit, qualified education loan
The debtor’s debt to Wings of the Cascades, a flight school, could be discharged. The court granted debtor’s motion for summary judgment, holding that §523(a)(8)(A)(i) and (ii) did not cover the loans because those provisions excepted from discharge only obligations to governmental or nonprofit institutions. The debt at issue was owed to a for-profit entity. Further, the loans were not excepted from discharge under §523(a)(8)(B): they were not “qualified education loans” as defined by 26 USC §221(d) because Wings of the Cascades was not an “eligible educational institution” under 26 USC §25A(f)(2).
In re Pacific Cargo Services, Case No. 13-30439-tmb7, Adv. No. 13-3212-tmb, Appellate No. OR-14-1036
February 19, 2015
Preferential transfer, property of the estate
Debtor entered into a settlement agreement in a class action case brought by several of its employees. As part of the settlement, debtor assigned any legal malpractice claims it may have had against its former counsel. Three weeks later debtor filed a chapter 11 petition, later converted to chapter 7. The trustee brought an adversary proceeding against the class-action plaintiff-employees, seeking to recover the assignment of claims as a preferential transfer. Employees argued that the malpractice claims had not “accrued” as of the petition date and thus there had not been a transfer of property of the estate. The bankruptcy court ruled in favor of the trustee and the BAP affirmed, holding that the claims were property of the estate on the petition date.
In re Sugg, Case No. 14-60916-fra1 3
July 22, 22, 2014
11 USC §109(e), chapter 13 eligibility, liquidated claim
The chapter 13 trustee moved to dismiss the case on the ground that unsecured debts exceeded the limit allowed in §109(e). The court denied the motion, holding that the claim the trustee argued put the debt over the limit was unliquidated and therefore not included in the §109(e) computation.
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