2015 Ninth Circuit Bankruptcy Year in...

2015 Bankruptcy Year in Review Prepared by Louis M. Bubala III

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2015 Ninth Circuit Bankruptcy Year in Review

United States District Court for the District of Nevada

DISTRICT CONFERENCE

May 12, 2016

Case summaries prepared by

Louis M. Bubala III Kaempfer Crowell

Reno 775.852.3900 / Las Vegas 702.792.7000

*These summaries were prepared by Mr. Bubala and do not necessarily reflect the views of the judges participating in the conference. Any errors are the fault of the Mr. Bubala, not the judges.

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About the Author Lou Bubala represents creditors in all aspects of the debtorcreditor relationship, in matters before, during and after bankruptcy as part of workouts, litigation, receiverships, reorganization, and liquidation. He routinely advises lenders, landlords, vendors and other creditors on the recovery of debts and property owed to them by debtors in bankruptcy proceedings. He is active in the American Bankruptcy Institute, serving on the Southwestern Conference advisory board and previously cochairing the Western Consumer Bankruptcy Conference. He also serves on the planning committee for the National Conference of Bankruptcy Judge’s Next Generation program. He is past president of the Northern Nevada Bankruptcy Bar Association.

About the Summaries Below is a summary of bankruptcy decisions during calendar year 2015 from the following courts:

U.S. Supreme Court U.S. Court of Appeals, 9th Circuit U.S. Bankruptcy Appellate Panel, 9th Circuit U.S. District Court, District of Nevada U.S. Bankruptcy Court, District of Nevada Nevada Supreme Court

This summary attempts to include all published bankruptcy decisions from the U.S. Supreme Court, Ninth Circuit, Bankruptcy Appellate Panel, and Nevada Supreme Court; published and unpublished decisions from the District Court and Bankruptcy Court; and unpublished decisions from Bankruptcy Appellate Panel arising from Nevada or involving Nevada’s judges. **ADMINISTRATIVE EXPENSES** Baker Botts L.L.P. v. Asarco, LLC , 135 S. Ct. 2158 (2015), aff’g 751 F.3d 291 (5th Cir. 2014) Section 330(a)(1) does not permit a bankruptcy court to award attorney's fees for work performed in defending a fee application in court. Section 330’s “ ‘reasonable compensation for actual, necessary services rendered’ neither specifically nor explicitly authorizes courts to shift the costs of adversarial litigation from one side to the other—in this case, from the attorneys seeking fees to the administrator of the estate—as most statutes that displace the American Rule do. Instead, § 330(a)(1) provides compensation for all § 327(a) professionals—whether accountant, attorney, or auctioneer—for all manner of work done in service of the estate administrator.” “ A § 327(a) professional's preparation of a fee application is best understood as a ‘servic[e] rendered’ to the estate administrator under § 330(a)(1), whereas a professional's defense of that application is not. By way of analogy, it would be natural to describe a car mechanic's preparation of an itemized bill as part of his ‘services’ to the customer because it allows a customer to understand—and, if necessary, dispute—his expenses. But it would be less natural to describe a subsequent court battle over the bill as part of the ‘services rendered’ to the customer.”

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Dreyfuss v. Cory (In re Cloobeck) , 788 F.3d 1243 (9th Cir. 2015), rev’g Case No. 2:12cv1506LRHVCF (D. Nev. Feb. 12, 2013) Section 503 requires a Ch 7 trustee to provide notice to creditors, and obtain a hearing, before paying taxes incurred by the estate. “Section 503(b)(1) … defines administrative expenses, and enumerates six specific types of claims that qualify for first priority. … Section 503(b) provides that administrative expenses ‘shall be allowed,’ but only ‘[a]fter notice and a hearing....’ Section 503(b)'s plain language appears to establish conclusively that ‘notice and a hearing’ were required before the Trustee could pay” the administrative expense. Judge Wallace concurred to highlight that creditor waited more than two years to object after he learned of the tax debt and recommend the issues be examined on remand. Tamm v. UST (Hokulani Square, Inc.) , 776 F.3d 1083 (9th Cir. 2015), aff’g 460 B.R. 763 (BAP 9th Cir. 2011) “Section 326(a) does not permit a trustee to collect fees on a credit bid transaction in which the trustee disburses only property, not ‘moneys,’ to the creditor.” “In a credit bid transaction, the trustee turns property over to the creditor, and the creditor reduces the amount the estate owes him by the value of his bid. The only thing ‘disbursed or turned over’ by the trustee is the underlying property, in this case, a set of condominiums. However broadly we define ‘moneys,’ the term can't be expansive enough to encompass real estate, which is about as far from a ‘medium of exchange’ as one can get.” Decision based on plain language, with rational outcome. Consistent with two other circuits to address the issue, and not inconsistent with preCode practice. Fear v. U.S. Trustee (In re Ruiz) , 541 B.R. 892 (BAP 9th Cir. 2015) Bankruptcy Court erred in reducing Ch 7 trustee’s compensation. “The fact that the Trustee's requested compensation exceeded the proposed distribution to unsecured creditors was not sufficient, standing alone, to establish extraordinary circumstances [to reduce his compensation].” **APPEAL (and stay pending appeal)** Bullard v. Blue Hills Bank , 135 S. Ct. 1686 (2015), aff’g 752 F.3d 483 (1st. Cir. 2014), on appeal from 494 B.R. 92 (BAP 1st Cir. 2013), on appeal from 475 B.R. 304 (Bankr. D. Mass. 2012) An order denying Ch 13 confirmation is not "final" order that the debtor can immediately appeal. “Denial of confirmation with leave to amend, by contrast, changes little. The automatic stay persists. The parties' rights and obligations remain unsettled. The trustee continues to collect funds from the debtor in anticipation of a different plan's eventual confirmation. The possibility of discharge lives on. ‘Final’ does not describe this state of affairs. An order denying confirmation does rule out the specific arrangement of relief embodied in a particular plan. But that alone does not make the denial final ….”

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JPMCC 2007C1 Grasslawn Lodging, LLC v. Transwest Resort Props., Inc. (In re Transwest Resort Props., Inc.) , 801 F.3d 1161 (9th Cir. 2015), withdrawing 791 F.3d 1140 A lender, who made colorable objections to a plan of reorganization in bankruptcy court and then diligently sought a stay in order to litigate those objections, may obtain review of its objections on appeal even though the plan has been implemented. “Because it would be possible to devise an equitable remedy to at least partially address the lender's objections without unfairly impacting third parties or entirely unraveling the plan, we hold that the lender's objections are not equitably moot and should be considered on appeal.” “Lender seeks elimination of the exception to the dueonsale clause. Lender's argument in support is that allowing a sale of the hotels subject to the restructured loan frustrates the intended purpose of the § 1111(b) election.” “We have to ask whether there are any forms of even partial relief that could be provided without unravelling the plan. We can think of two examples of potential partial relief. First, the bankruptcy court could reduce the length of the window during which the dueonsale clause does not apply. Second, the court could decide that, if a sale occurred during the window, Lender would be entitled to some percentage of the difference between the remainder of the total loan amount and the loan's present value.” Sahagun v. Landmark Fence Co. , 801 F.3d 1099 (9th Cir. 2015), on appeal from Case No. CV 1100934 AHM, 2011 WL 6826253 (C.D. Cal. Dec. 9, 2011) " ‘Flexible’ approach to assessing the finality of appeals in bankruptcy cases… is stretched beyond its breaking point by this appeal from a district court order that includes a remand to the bankruptcy court with explicit instructions to engage in ‘further factfinding.’ We dismiss the appeal because this order is not final for purposes of appeal.” Ezra v. Seror (In re Ezra) , 537 B.R. 924 (BAP 9th Cir. 2015) Creditor “appeals from the bankruptcy court's judgment avoiding as fraudulent transfers two deeds of trust the [Debtors] executed in her favor. … As for the specific limitations defense she discusses in her opening appeal brief, it differs from the statute of repose issue she raised in the bankruptcy court. We decline to address the limitations defense on appeal because it was not sufficiently raised in the bankruptcy court for the bankruptcy court to decide it. As for her statute of repose issue, she did not raise it in her opening appeal brief; she only raised it in her appellate reply brief. This is improper, and we similarly decline to address it.” In re Gibson , Case No. 2:14cv2224 (D. Nev. Jan. 8, 2015) (Gordon, J.) Finding good cause to extend the time to designate the record on appeal from the bankruptcy court based on the volume of documents and counsel’s illness during holidays. FRAP 26(b). Oner v. FNMA , Case No. 2:14cv1604, 2015 U.S. Dist. Lexis 5039 (D. Nev. Jan. 14, 2015) (Mahan, J.) Denying motion for preliminary injunction for failure to establish why he failed to first seek relief from the bankruptcy court. Distrust of the bankruptcy court was insufficient reason. FRBP 8005.

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Oner v. CitiMortgage, Inc. (In re Oner) , Case No. 2:14cv1604, 2015 U.S. Dist. Lexis 31440 (D. Nev. March 12, 2015) (Mahan, J.), after denying motion to hold appeal in abeyance, (D. Nev. March 3, 2015). Dismissing appeal for failing to file opening brief after granting extensions. Carefree Willows, LLC v. AG/ICC Willows Loan Owner, LLC , Case No. 2:15cv581JAD (D. Nev. May 13, 2015) (Dorsey, J.) Granting motion to reassign bankruptcy appeal to judge presiding over four other appeals from the same bankruptcy case involving the same property and similar questions of law. L.R. 72.1. Eruchalu v. U.S. Bank, N.A. , Case No. 2:15cv946, 2015 U.S. Dist. Lexis 74464 (D. Nev. June 9, 2015) (Mahan, J.) Denying motion to stay foreclosure pending appeal of dismissal of adversary proceeding. Debtor did not substantiate his claims made below and cannot show a likelihood of success on the merits. Commonwealth Land Title Ins. Co. v. R&S St. Rose, LLC (In re R&S St. Rose, LLC) , Case No. 2:14cv1399, 2015 U.S. Dist. Lexis 82710 (D. Nev. June 24, 2015) (Mahan, J.) Denying motion to set aside dismissal order of bankruptcy appeal. Appellant failed to establish excusable neglect based on 10month delay in filing hearing transcripts, even with renewed notice of the absence of transcripts issued two months after appeal noticed. Court also noted appellant’s failure to notify court of address changes. Szanto v. JPMorgan Chase Bank, N.A. (In re Szanto) , Case No. 3:14cv355 (D. Nev. June 25, 2015) (Jones, J.) Dismissing appeal for lack of prosecution and denying third motion for extension to file opening brief. Debtor failed to establish any health problem that prevents him from filing his brief, and the issues on appeal are not overly complex (failure to recuse; dismissal of case for failure to timely file a disclosure statement or plan). Eruchalu v. U.S. Bank, N.A. , Case No. 2:15cv946, 2015 U.S. Dist. Lexis 151032 (D. Nev. Nov. 5, 2015) (Mahan, J.) Affirming dismissal of adversary proceeding duplicative of litigation pending in U.S. District Court. **AUTOMATIC STAY (and Section 105 stay)** America’s Serv’g Co. v. SchwartzTallard (In re SchwartzTallard) , 803 F.3d 1095 (9th Cir. 2015) (en banc) ( withdrawing & superseding 751 F.3d 966 (9th Cir. 2014)), aff’g 473 B.R. 340 (BAP 9th Cir. 2012) (rev’g Judge Riegle) Debtor can recover attorneys’ fees as damages under Section 362(k) for defending against a creditor appeal for a finding that the creditor violated the automatic stay. The decision overruled the prior circuit standard in Steinberg v. Johnson , and resolved issues in Judge Wallace’s dissent in the panel decision.

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Partida v. U.S. (In re Partida) , 531 B.R. 811 (BAP 9th Cir. 2015) (aff’g Davis, J.) “As a matter of law that the enforcement provision of the Mandatory Victims Restitution Act overrides the operation of the automatic stay under § 362(a) and in so doing, authorizes the enforcement of criminal restitution obligations against debtor and property of the bankruptcy estate.” Affirming order denying the Ch 13 debtor’s motion for contempt for violation of the automatic stay. Green Tree Serv’g v. William Won Holdings, LLC , Case No. 3:15cv197 (D. Nev. Nov. 18, 2015) (McKibben, J.) During homeowner’s bankruptcy, HOA recorded various foreclosure notices without stay relief and completed foreclosure after termination of bankruptcy case. Servicer for beneficiary of deed of trust/secured lender brought action alleging violations of automatic stay and failure to comply with foreclosure requirements. Ruling, however, involved nonbankruptcy thirdparty claims that HOA brought against its agent for the alleged deficiencies in the foreclosure proceeding. Green Tree Serv’g LLC v. Collegium Fund LLCSeries 31 , Case No. 2:15cv700 (D. Nev. June 9, 2015) (Navarro, C.J.) Granting stipulation to permit secured lender to file an amended complaint alleging that HOA foreclosed on property in violation of automatic stay. Tedesco v. GMAC Mortgage , Case No. 2:11cv633, 2015 U.S. Dist. Lexis 27231 (D. Nev. March 5, 2015) (Mahan, J.) Dismissing borrower action against defendant/debtor/lender, given that claims have been stayed for nearly four years without prosecution based on GMAC’s bankruptcy case. Fuleihan v. U.S. Bank (In re Fuleihan) , Case No. 2:14cv2061, 2015 U.S. Dist. Lexis 27998 (D. Nev. March 6, 2015) (Navarro, C.J.) Denying motion to stay foreclosure authorized by bankruptcy court’s stay relief, pending resolution of current appeal. The underlying stay relief was not an abuse of discretion given the lack of adequate protection. Debtor was in default since 2009, had not made any payments since 2009 when she began litigation over the debt, and the debt exceeded the property value by $328,000. Also affirmed order modifying the stay relief that removed requirement that lender rerecord its notice of default. Bankruptcy Court did not abuse its discretion in modification after consideration of a 2011 decision from Judge Hunt holding that it was an abuse of discretion to require a lender to rerecord its notice of default, as that altered the lender’s rights and defied the automatic stay’s preservation of the rights of all parties. Although Judge Hunt’s decision is not binding precedent on the bankruptcy court, the Court found it well reasoned and adopted its holding in this case. World Chess Museum, Inc. v. World Chess Federation, Inc. , Case No. 2:13cv345, 2015 U.S. Dist. Lexis 59961 (D. Nev. May 7, 2015) (Jones, J.) Overruling objection to magistrate judge’s order authorizing limited discovery that overlapped with issues in pending bankruptcy of individual defendants. Plaintiff sued Corporate Defendant and Individual Defendants alleging trademark infringement; Individual Defendants then transferred

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their mark to Corporate Defendant and they personally filed for bankruptcy. Parties initially stipulated to stay litigation based on trustee’s adversary alleging a fraudulent transfer. Magistrate judge later granted defendants’ motion to resume discovery. Plaintiffs’ objected, arguing the efforts could be rendered moot depending on the outcome in the adversary. Judge Jones held the magistrate judge equitably balanced matters by (1) limiting discovery to protect plaintiff from doing potentially unnecessary work, and (2) ensuring that the case does not remain stagnant any longer after two year delay from bankruptcy. Johnson v. Frontier Estates Homeowners Assn. , Case No. 2:14cv1893, 2015 U.S. Dist. Lexis 108806 (D. Nev. Aug. 17, 2015) (Navarro, C.J.) Affirming denial of motion for sanctions for violation of the automatic stay. HOA recorded notice of sale after hearing for stay relief, but before order was entered. However, bankruptcy court also noted that due to repeat case filings by debtors, the stay already had terminated on its own terms under Section 363(e)(2) by the time the hearing was held and the notice was recorded. de los Santos v. Nationstar, LLC (In re de los Santos) , Case No. 2:14cv1522, 2015 U.S. Dist. Lexis 136889 (D. Nev. Oct. 5, 2015) (Mahan, J.) Affirming Judge Nakagawa’s denial of a motion for a preliminary injunction. Lender already had obtained state court final judgment authorizing judicial foreclosure. Debtor sought to save investment property in her fifth bankruptcy case, and the bankruptcy court denied the motion to reinstate the stay. Debtor initiated an adversary without a complaint, but only filed a motion for preliminary injunction. Affirmed that state court judgment was res judicata as to the lender’s rights to proceed with foreclosure. Bankruptcy Court also had jurisdiction to enter final order in a core matter in an “action” brought by debtor concerning the lender’s claim against the estate. Yusico v. FNMA , Case No. 2:15cv1019, 2015 U.S. Dist. Lexis 91320 (D. Nev. July 14, 2015) (Mahan, J.) Plaintiffs’ bankruptcy did not trigger the automatic stay in their litigation against their lender. Jagen Invs. LLC v. Cannon Fin’l Inst., Inc. , Case No. 2:13868 (D. Nev. Jan. 7, 2015) (Koppe, J.) Staying of claims against defendant corporation, based on bankruptcy of corporation’s president and CEO. Allowing plaintiff to move to show it can proceed notwithstanding the bankruptcy. In re Hunyady , Case No. 1217610, 2015 Bankr. Lexis 4444 (Bankr. D. Nev. Nov. 12, 2015) (Spraker, J.) Secured creditor did not have standing to assert purported violation of the automatic stay with sale of collateral in another secured party’s foreclosure. In 2012, notice of sale was recorded by HOA three days before Chapter 7 was closed without relief from stay, and property sold at foreclosure months later. In 2015, buyer moved to reopen case to retroactively annul the stay based on unauthorized recording of notice of sale. Secured lender objected. Judge Spraker held lender could not use the stay as an offensive shield in related state court action over the property. Alternatively, court held that facts tipped heavily in buyer’s favor, based on (1) notice recorded

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days before case closed; (2) HOA foreclosure shortly thereafter; (3) lender had obtained stay relief but not taken action; and (4) neither debtor nor trustee objected (since property had no benefit to the estate or debtor). Montierth v. Deutsche Bank (In re Montierth) , 131 Nev. A.O. 55, 354, P.3d 648 (2015) (en banc) (Hardesty, C.J.) Dispute arose when MERS postpetition assigned its interest as beneficiary under deed of trust to bank. Bank filed secured proof of claim before assignment recorded, then moved for stay relief after recording. Debtors objected that bank lacked standing since it was not secured because it did not have a unified note and deed of trust on the petition date and the stay precluded the reunification. Supreme Court restated certified questions and answered: “ what occurs when the promissory note is held by a principal and the beneficiary under the deed of trust is the principal's agent at the time of foreclosure. We conclude that reunification of the note and the deed of trust is not required to foreclose because the beneficiary of the deed of trust is authorized to foreclose on behalf of the note holder as its agent. We also conclude that, as a matter of law, the recording of an assignment of a deed of trust is a ministerial act; however, we decline to determine the effect of that ministerial act on the application of the stay statute as this is a question involving federal law.” Alper v. Eighth Judicial Dist. Ct. , 131 Nev. A.O. 43, 352 P.3d 28 (2015) (en banc) (Hardesty, C.J.) Court vacated contempt order entered postpetition against bankruptcy debtor based on prepetition refusal to participate in examinations as judgment debtor. Although automatic stay does not stay “commencement or continuation of a criminal action or proceedings against the debtor, the district court’s subsequent order finding him in contempt allowed him to avoid incarceration by participating in the examination. A contempt order permitting debtor to purge incarceration is civil in nature and therefore still subject to the automatic stay. **CHAPTER 9** Franklin High Yield TaxFree Income Fund v. City of Stockton (In re City of Stockton) , 542 B.R. 261 (BAP 9th Cir. 2015), aff’g 526 B.R. 35 (Bankr. E.D. Cal.) Dismissing appeal as moot from Ch 9 confirmation and affirming treatment of claim. **CHAPTER 12** Davis v. U.S. Bank (In re Davis) , 778 F.3d 809 (9th Cir. 2015), aff’g Case No. CC111692MkDKi, 2012 WL 3205431 (BAP 9th Cir. Aug. 3, 2012) (unpublished; Markell, J., on panel) Affirming dismissal petition as her "aggregate debts" exceeded the statutory limitation for chapter 12 eligibility in effect at the time that she filed her petition and, thus, she was statutorily ineligible to be a chapter 12 debtor. Debtor had previously received Ch 7 discharge, then filed Ch 12 petition

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with real property valued at $1.6 million, subject to $4.1 million in secured debt. Prior cases have not yet addressed the precise question presented here: whether the term "aggregate debts" in § 101(18)(A) includes the unsecured portion of a creditor's claim from which the debtor has been discharged in an earlier chapter 7 bankruptcy proceeding. Circuit affirmed that "obligations enforceable against the debtor's property but for which the debtor has no personal liability are nonetheless `claims' and `debts' within the meaning of the Bankruptcy Code." **CHAPTER 13** Harris v. Viegelahn , 135 S. Ct. 1829 (2015), rev’g 757 F.3d 468 (5th Cir. 2014), rev’g 491 B.R. 866 (W.D. Tex. 2013) (Ezra, J.) “A debtor who converts to Chapter 7 is entitled to return of any postpetition wages not yet distributed by the Chapter 13 trustee.” Section “348(f)(1)(A) provides that in a case converted from Chapter 13, a debtor's postpetition earnings and acquisitions do not become part of the new Chapter 7 estate.” “By excluding postpetition wages from the converted Chapter 7 estate, § 348(f)(1)(A) removes those earnings from the pool of assets that may be liquidated and distributed to creditors. Allowing a terminated Chapter 13 trustee to disburse the very same earnings to the very same creditors is incompatible with that statutory design.” “Cited provisions [re Ch 13 distribution to creditors] had no force here, for they ceased to apply once the case was converted to Chapter 7.” HSBC Bank USA, N.A. v. Blendheim (In re Blendheim) , 803 F.3d 477 (9th Cir. 2015), rev’g in part Case No. 0910283MLB, 2011 WL 6779709 (Bankr. W.D. Wash. Dec. 27, 2011) Chapter 20 debtor discharge ineligibility does not prohibit debtors from using the lien avoidance tools available in a typical Chapter 13 proceeding. Lengthy legal discussion. Free v. Malaier (In re Free) , 542 B.R. 492 (BAP 9th Cir. 2015) Debtors were eligible for chapter 13 relief even though their unsecured debt, which included the two whollyunsecured junior liens from thenpending Ch 7 case, exceeded the statutory limit for eligibility. Prior discharge of in personam liability does not count towards the unsecured debt limit for eligibility under Section 109(e). Boukatch v. MidFirst Bank (In re Boukatch) , 533 B.R. 292 (BAP 9th Cir. 2015) Chapter 20 debtor is entitled to avoid a wholly unsecured junior lien under §§ 506(a) and 1322(b)(2) against the debtor's principal residence when no discharge will be entered in the pending chapter 13 case. See also In re Blendheim (9th Cir. 2015), which states that this outcome is supported by Caulkett (U.S. 2015). Bronitsky v. Bea (In re Bea) , 533 B.R. 283 (BAP 9th Cir. 2015) BAP affirmed confirmation order over trustee’s objection to fixed monthly payments to the Secured Creditors that did not begin “until month seven of the Plan, in order to allow the Debtor's $3,000 in outstanding attorneys fees to be paid first. None of the three Secured Creditors objected to the Plan. The Trustee objected to the Plan on the ground that it was contrary to

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requirements of the Bankruptcy Code in that the deferred payments to the Secured Creditors under the Plan did not provide them with adequate protection during the first six months of the Plan as required by § 1325(a)(5)(B)(iii)(II).” BAP affirmed ruling that § 1325(a)(5) was satisfied in that the Secured Creditors in effect accepted the Plan by not filing objections and under United Student Aid Funds (U.S. 2010). Schlegel v. Billingslea (In re Schlegel) , 526 B.R. 333 (BAP 9th Cir. 2015) Affirming that a confirmed chapter 13 plan may be dismissed for the debtors' failure to pay both the required plan payment and the approved percentage dividend to unsecured nonpriority creditors during the applicable commitment period In re Phillips , Case No. NV141359JuKuD (BAP 9th Cir. May 8, 2015) (aff’g Davis, J.) Affirming dismissal of Ch 13 case pending without a confirmed plan for more than two years. Debtor had 7 plans denied and had not refiled another plan in more than 30 days. Trustee waived consideration of conversion in her motion to dismiss. Neither did Debtor request that the bankruptcy court consider conversion as an option, and on appeal, Debtor did not argue that conversion to chapter 7 should have been considered, thereby waiving the issue. **CLAIMS** Bank of Am., N.A. v. Caulkett , 135 S. Ct. 1995 (2015), rev’g 566 Fed. Appx. 879 (11th Cir. 2014) and 556 Fed. Appx. 911 “Ch 7 debtor may not void a junior mortgage under § 506(d) when the debt owed on a senior mortgage exceeds the present value of the property.” “ Dewsnup defined the term ‘secured claim’ in § 506(d) to mean a claim supported by a security interest in property, regardless of whether the value of that property would be sufficient to cover the claim. Under this definition, § 506(d)'s function is reduced to "voiding a lien whenever a claim secured by the lien itself has not been allowed.” “ Dewsnup construed the term ‘secured claim’ in § 506(d) to include any claim ‘secured by a lien and . . . fully allowed pursuant to § 502.’ … Because the Bank's claims here are both secured by liens and allowed under § 502, they cannot be voided under the definition given to the term ‘allowed secured claim’ by Dewsnup. ” Debtors “contend that the term "secured claim" in § 506(d) could be redefined as any claim that is backed by collateral with some value. Embracing this reading of § 506(d), however, would give the term ‘allowed secured claim’ in § 506(d) a different meaning than its statutory definition in § 506(a). We refuse to adopt this artificial definition.” Pensco Trust v. Tristar Esperanza Props., LLC (In re Tristar Esperanza Props., LLC) , 782 F.3d 492 (9th Cir. 2015), aff’g 488 B.R. 394 (BAP 9th Cir. 2013) Affirming that claim based on a minority membership interest in the debtor is subject to mandatory subordination under § 510(b). Debtor failed to pay its minority member the amount an arbitrator awarded for the repurchase of her membership interest, and the member sought and received a money judgment for that amount in state court. But the claim was subordinated because it is "for damages arising from the purchase or sale" of "a security of the debtor."

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Jackson v. U.S. (In re Jackson) , 541 B.R. 887 (BAP 9th Cir. 2015) Affirming Ch 13 debtor’s objection to amended tax claim pursuant to § 502(b)(9) on the basis that it was untimely, asserting that § 1308 required the IRS to file its claim for the 2009 assessed tax liability within 60 days after the 2009 Return was filed. “The Initial Claim included (1) an estimate of the Jacksons' income tax liability for the 2009 tax year and (2) a reservation of the right to assess the true tax liability for the 2009 tax year once the Jacksons had filed their 2009 income tax return. Approximately six months after the 2009 Return was filed, the IRS amended the Initial Claim to assert priority status with respect to the 2009 assessed tax liability, which was approximately six times the amount estimated.” Carpenter v. Montana (In re Carpenter) , 540 B.R. 691 (BAP 9th Cir. 2015), aff’g 519 B.R. 811 (Bankr. D. Mont. 2014) BAP “rejected the debtors' argument that, by negative inference from language in § 507(a)(8)(C), the § 507(a)(8)(E) excise tax priority cannot apply to responsible officers. In their view, the tax debt would be a § 507(a)(8)(E) priority tax as to the corporate taxpayer but merely a nonpriority tax claim as to them as vicariouslyliable individuals. This theory would enable them to confirm a chapter 11 plan without paying the tax debt in full and to escape the incidental consequence of nondischargeable status under § 523(a)(1) for any unpaid portion. The debtors' negativeimplication argument, while plausible, runs counter to too much precedent.” Los Angeles County v. Mainline Equip., Inc. (In re Mainline Equip., Inc.) , 539 B.R. 165 (BAP 9th Cir. 2015) Ch 11 DIP avoided tax liens for unpaid property taxes sought be enforced against personal property based on tax lien recordings. Personal property liens were not perfected against a bona fide purchaser for value, and DIP was entitled to assert the rights of a trustee to set aside such liens under Section 545(2). California Revenue & Tax Code requires actual notice to perfect the lien against a third party who subsequently purchased debtor’s personal property in good faith for value. Good v. Daff (In re Swintek) , 543 B.R. 303 (BAP 9th Cir. 2015) Judgment creditor retained lien against personal property based on postjudgment discovery under California law even time provided for in statute “expired” postpetition , as time during case is extended by Section 108(c). Mastan v. Salamon (In re Salamon) , 528 B.R. 171 (BAP 9th Cir. 2015) Creditor/Appellant’s deficiency claim disallowed under California law. Debtor had agreed to foreclosure by senior secured lender, with proceeds partially paying creditor’s secured claim. On the unsecured deficiency, creditor asserted it was entitled to recovery under Section 1111(b) notwithstanding state law barring deficiency. But a “ condition precedent to the creditor's enjoyment of that special status is that it must hold ‘a claim secured by a lien on property of the estate.’ Here, the question is whether that condition was satisfied because [creditor] held such a lien on the date the [debtors’] petition was filed, even though the lien no longer existed when the

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allowance of [creditor’s] claim was challenged.” “Under California law, the liens securing [creditor’s] claim were extinguished as a necessary consequence of the nonjudicial foreclosure sale. Although [creditor’s] original proof of claim may have asserted a claim secured by liens on property of the estate, as recognized in the [amended proof of claim] filed, those liens were eliminated as a matter of law as a result of the foreclosure. As a result, when [debtors’] objection to the claim was considered by the bankruptcy court, [creditor] no longer held a lien on any property of the estate. Absent a lien on estate property, the bankruptcy court did not err in deciding that § 1111(b)(1)(A) did not apply to the [amended proof of claim], and under the antideficiency laws of California, the claim was unenforceable.” Bella Sera Homeowners’ Assn. v. Pack (In re Pack) , Case No. NV141375KuDJu (BAP 9th Cir. May 18, 2015) (after change in law, vac’g & rem’g to Davis, J.) Vacating orders stripping off HOA’s wholly unsecured lien and confirming Ch 11 Debtor’s Plan. Orders “were founded on an incorrect interpretation of Nevada law regarding the priority of liens arising from homeowners association assessments and charges under [NRS] 116.3116. After the bankruptcy court entered the orders on appeal, the Nevada Supreme Court issued a decision interpreting the priority of homeowners association liens under [NRS] 116.3116 that is inconsistent with the bankruptcy court’s interpretation. See SFR Invs. Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d 408 (2014).” “On remand, in accordance with SFR Invs. Pool 1 , the bankruptcy court will need to determine how much (if any) of Bella Sera’s lien qualifies for superpriority (wholly secured) status and how much qualifies for subpriority (wholly unsecured) status. The bankruptcy court also will need to determine whether Pack’s alternate proposed treatment of Bella Sera’s lien … satisfies all plan confirmation requirements applicable to the wholly secured portion of Bella Sera’s lien.” Fairway Restaurant Equip. Contracting, Inc. v. Makino , Case No. 2:13cv2155, 2015 U.S. Dist. Lexis 162313 (D.Nev. Dec. 2, 2015) (Mahan, J.), following 2015 U.S. Dist. Lexis 46538 (D.Nev. April 8, 2015) Granting motion to dismiss fraudulent transfer claims against insiders as precluded by confirmed Chapter 11 plan of reorganization of corporate defendant, as plan transferred all claims to creditor trust for benefit all creditors of corporation. Court also rejected other claims as duplicative of fraudulent transfer claims. Court previously denied motion to dismiss for failure to state a claim without regard to bankruptcy implications. Tennvada Holdings 1, LLC, v. Frey Irrevocable Trust , Case No. 2:14cv2090, 2015 U.S. Dist. Lexis 101075 (D. Nev. July 31, 2015) (Navarro, C.J.) Reversing rulings that appellees have secured or unsecured claims against debtor/appellant. Judge Navarro found that there was a mutual mistake between plaintiff and defendants in executing an agreement; that the mistake warrants rescission of the agreement; and the defendants’ loans were unperfected at the time of a subsequent foreclosure, which terminated the interests held by the defendants. Thus, defendants did not hold claims against debtor/plaintiff.

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Oaktree Capital Mgmt., LP v. Mudd (In re Shengdatech, Inc.) , Case No. 3:14cv279, 2015 U.S. Dist. Lexis 118525 (D. Nev. Sept. 3, 2015) (Jones, J.) Affirming Chapter 11 confirmed plan injunction that barred litigation against nondebtors. The plan contained three pages covering a broad release of claims connected to the bankruptcy and the plan injunction. The next paragraph carved out an exception to prosecute “the claim asserted, or or to be asserted, against any NonDebtor Defendants in the securities litigation entitled In re [Debtor] Securities Litigation. … or any nonDebtor.” Judge Jones held that the carve out only applied to the securities litigation claims against nondebtors. The additional clause “ ‘or any nonDebtor’ could plausibly have meant, and in fact much more reasonably means, that the plaintiffs in the class action were not barred from joining additional nondebtor defendants in that action.” Judge Jones rejected reading that the plan did not enjoin any claims against nonDebtors, particularly given one sentence after three prior pages of release language. Judge Jones further held that the release occurred when the plan was confirmed and not appealed in 2012, and the plan cannot be collaterally attacked. U.S. Bank N.A. v. TJ Plaza, LLC , Case No. 2:14cv2226, 2015 U.S. Dist. Lexis 131374 (D. Nev. Sept. 28, 2015) (Navarro, C.J.) In contested Chapter 11 confirmation with only two voting classes (secured lender and general unsecured), lender acquired claims and cast votesexcept that the votes on the acquired claims were struck. District Court affirmed orders (1) striking lender’s votes on acquired claims and (2) holding that one acquired claim was not a unsecured claim, but partially secured/priority based on municipal creditor’s proof of claim. Dispute arose because lender acquired claims after record date determining claimants eligible for voting. Judge Navarro noted that Rule 3018’s limitation on voting based on the record date only applies when the claim being voted is based on a security. However, the bankruptcy court entered its own order approving the disclosure statement, without regard to the limitation in Rule 3018. Therefore, the limitations was appropriate use of the court’s authority under Section 105, as it allowed debtors to know which claim holders are entitled to receive copies of the plan, disclosure statement, ballots, and notices of deadlines. Ruling resolved classification of municipal creditor’s claim. While Judge Navarro agreed that the transfer from a government entity eliminated the priority secured status under Section 507(a)(8), but the claim was still treated as the municipal creditor's claim based on the terms of the disclosure statement. In re Canyon Mgmt., LLC , Case No. 1141011, 2015 Bankr. Lexis 318 (Bankr. D. Idaho Feb. 2, 2015) (Pappas, J.) Following resolution of Nevada state court litigation against debtor, Debtor, Plaintiff/Creditor and Chapter 7 Trustee stipulated to a subordination of Plaintiff’s claim against estate cash held in escrow from the sale of a property. The original stipulation subordinated to other unsecured claims, and an amendment provided any excess from escrow would go to debtor’s principals. But when trustee unexpectedly received a $25,000 refund from Sierra Pacific, court determined that Plaintiff’s claim for those funds was still allowable and not subordinated under Section 502. Nevada v. Kawahara , 131 Nev. A.O. 42, 351 P.3d 746 (2015) (en banc) (Cherry, J.)

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Court addressed certified question on priority rights between a recorded state tax lien and a prior unrecorded deed of trust. The Court rejected the state’s argument that the tax lien constitutes a mortgage lien entitled to priority. “ Formality is part and parcel of recording statutes. The State Department of Taxation cannot now claim to have recorded a mortgage lien when it filed a tax lien certificate. We further conclude that a deed of trust, which attached in 2009 but was recorded in 2011, has priority over a tax lien levied under NRS 360.473, which was created and recorded in 2010. The Department’s tax lien is considered a judgment lien under NRS 360.473(2), and Nevada recording statutes do not protect judgment creditors against prior unrecorded conveyances. Thus, the common law rule of ‘first in time, first in right’ applies.” **CLAIM PRECLUSION** Giri v. HSBC Bank USA , Case No. 2:14cv901 (D. Nev. Jan. 20, 2015) (Jones, J.) Court gave plaintiff 28 days to reopen his bankruptcy case and schedule foreclosure claims brought in litigation, before evaluation of whether to apply judicial estoppel from omission. Morrison v. Wells Fargo Bank, N.A. , Case No. 3:09cv552, 2015 U.S. Dist. Lexis 23325 (D. Nev. Feb. 19, 2015) (Jones, J.) Court denied motion to vacate judgment entered after defendant filed Ch. 7 petition. Defendant asserted that the judgment violated the automatic stay. Court held that there was no stay because the discharge was entered and bankruptcy case closed when judgment entered. Defendant also noted that she scheduled the debt in the case. Court noted that debtor scheduled them as a judgment, when they were only pending claims. Court held that the bankruptcy did not discharge the judgment, as no judgment was in existence at time of discharge. Court also held that bankruptcy did not discharge the pending claims, since debtor had not scheduled the pending claim. Court held that because plaintiff had a pending nondischargeability action filed before the discharge, the bankruptcy court can address the discharge in that proceeding. Bolick v. Pasionek , Case No. 2:15cv177, 2015 U.S. Dist. Lexis 50263 (D. Nev. April 16, 2015) (Mahan, J.) Granting motion to dismiss on judicial estoppel. Plaintiff had engaged in prior prepetition litigation on same dispute. In bankruptcy, he did not schedule his litigation claims, although he scheduled defendants’ litigation counterclaims as a contingent liability. Prior litigation had been dismissed, and defendant had obtained discharge. Plaintiff refilled claims, prompting motion to dismiss. Court weighed variety of factors, declined to stay matter so plaintiff could reopen his bankruptcy case, and dismissed the proceeding. Barron v. BONY , Case No. 2:15cv242, (D. Nev. April 16, 2015) (Foley, M.J.). Granting motion to stay discovery pending ruling on motion to dismiss. Based on preliminary review of motion to dismiss, court convinced motion will be granted on judicial estoppel grounds for failure to schedule claims in prior bankruptcy (or on substantive grounds).

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Barron v. BONY , Case No. 2:15cv242, 2015 U.S. Dist. Lexis 62809 (D. Nev. May 13, 2015) (Gordon, J.). Granting motion to dismiss litigation over assignment of deed of trust that were not scheduled in plaintiffs’ bankruptcy schedules, even though the assignment was prior to the bankruptcy filing. Court found plaintiffs’ allegation unpersuasive that they were unaware of their claims at the time of their bankruptcies, as the assignment was filed as a public record months before their bankruptcy. The alleged defect in the assignee’s rights also was on file with the SEC since 2005. Hoffman v. Red Wing Brands of Am., Inc. , Case No. 3:13cv633, 2015 U.S. Dist. Lexis 82741 (D. Nev. June 24, 2015) (Hicks, J.) Denying defense motion to grant summary judgment against plaintiff/debtor on employment for failing to correctly identify name of former employer (Red Wing Shoes scheduled, employer actually Red Wing Brands) or IIED claims against coworkers. Good faith favored retention of claims against employer, but not against coworkers. But based on willingness to reopen bankruptcy case and stipulate with trustee to pay creditors from litigation proceeds, motion for summary judgment denied. BHH Mgmt. Group Inc. v. FNMA , CAse No. 2:15cv1182, 2015 U.S. Dist. Lexis 129459 (D. Nev. Sept. 17, 2015) (Hoffman, M.J.), case dismissed, 2016 U.S. Dist. Lexis 15638 (D. Nev. Feb. 9, 2016) (Navarro, C.J.) Denying motion to refer litigation to bankruptcy court. Plaintiff acquired property in bankruptcy sale subject to all liens. Plaintiff brought action against lender to obtain title free and clear of all liens based on alleged improprieties in FNMA’s conduct in a foreclosure sale two years after the bankruptcy property sale. Plaintiff was not the debtor, was not asserting bankruptcy claims, and the resolution had no effect on the estate. **COURT AUTHORITY/JURISDICTION** Wellness Int’l Ntwk., Ltd. v. Sharif , 575 U.S. ___, 135 S. Ct. 1932 (2015), rev’g 727 F.3d 751 (7th Cir. 2013) Article III allows bankruptcy judges to adjudicate certain claims for which litigants are constitutionally entitled to an Article III adjudication when the parties knowingly and voluntarily consent to adjudication by a bankruptcy judge. Jacobs v. Brain Power Am., Inc. (In re Jacobs) , 528 B.R. 435 (BAP 9th Cir. 2015) Overruling untimely election by appellee/crossappellant to have appeal heard in U.S. District Court. Judicial Code Section 158 requires the election to be made at the time of the appeal or, if any other party elects, within 30 days after service of the notice of appeal. Appellants filed a notice of appeal, then filed an election 10 days later. BAP held it was untimely, agreeing with BAP 6th Cir. that crossappellant must file election at time of crossappeal. (NOTE: A third order involving the same parties was later appealed with a timely election, and the BAP transferred the appeals to U.S. District Court for interests of justice and judicial economy under BAP L.R. 8001.)

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Richard & Sheila J. McKnight 2000 Family Trust v. Barkett , Case No. 2:10cv1617, 2015 U.S. Dist. Lexis 4444 (D. Nev. Jan. 5, 2015) (Jones, J.) Although the district court had bankruptcy jurisdiction over litigation related to a bankruptcy case, the local bankruptcy rules did not apply because the matter was a regular civil case, rather than an adversary proceeding. Szanto v. JPMorgan Chase Bank, N.A. (In re Szanto) , Case No. 3:14cv389, 2015 U.S. Dist. Lexis 37872 (D. Nev. March 25, 2015) (Jones, J.) Dismissing appeal for lack of jurisdiction. Appealed order set aside a prior 9019 settlement order. Although an order granting a 9019 motion is immediately appellable since it resolves a dispute, the same is not true of the set aside order (since it revives the dispute) Nordeen v. Taylor, Bea & Whitaker Mortgage Co. , Case No. 2:14cv1470, 2015 U.S. Dist. Lexis 44230 (D. Nev. April 3, 2015) (Mahan, J.) Affirming bankruptcy court’s summary judgment for lender in quiet title action over objections to bankruptcy court jurisdiction and evidentiary disputes. Bankruptcy court treated adversary as noncore and noted in its order for summary judgment that debtors contested entry of final judgment. Judge Mahan, however, found debtors had consented by implication through their conduct. The complaint was filed in bankruptcy court, and debtors did not object to entry of final judgment for almost two yearsafter the bankruptcy court had dismissed most of their claims, affirmed on appeal except to remand on the remaining quiet title claim. Court also affirmed rulings that admitted lender’s records and rejection of debtor’s expert declaration submitted for the first time after the summary judgment hearing. Weinstein v. 1531 LVBS, LLC (In re Ledstrom) , Case No. 2:14cv1176, 2015 U.S. Dist. Lexis 52862 (D. Nev. April 22, 2015) (Dorsey, J.), reconsideration denied , 2015 U.S. Dist. Lexis 109006 (Aug. 14, 2015). Denying defendants’ motion to withdraw the reference as bankruptcy court more familiar with longpending matter and has not yet determined whether the proceeding is core or noncore. Judge Dorsey noted that even in noncore matters, bankruptcy court may issue proposed findings of fact upon which the district court can base its final judgment. Bankruptcy court’s familiarity with complex issues favors retention at bankruptcy court to conserve judicial resources and minimize costs to parties. Bankruptcy court also may maintain adversary for pretrial purposes if jury trial demanded and not all parties consented to entry of final judgment. Judge Dorsey also noted there had not yet been a determination if the claims provided a right to a jury trial. On reconsideration, defendants’ pointed to the fact that bankruptcy court had ruled on its subject matter jurisdiction before Judge Dorsey’s prior ruling. Although defendants had filed an “additional designation” which Judge Dorsey noted before, it did not contain or seek judicial notice of the bankruptcy court’s ruling or the briefing below. She reiterated that withdrawal was premature and suggested continued challenges should be pursued through an interlocutory appeal.

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Krohn v. Stipp (In re Plise) , Case No. 2:14cv169, 2015 U.S. Dist. Lexis 111143 (D. Nev. Aug. 19, 2015) (Dorsey, J.) Denying renewed motion to withdraw the reference based on argument that all pretrial matters are complete before the bankruptcy court. Judge Dorsey noted dispute on those points between plaintiff and defendants. She also noted dispute as to whether a pending motion to substantively consolidate the underlying bankruptcy case with other matters would affect the litigation. Neither point had been presented to the bankruptcy court, so the motion was denied without prejudice. Eruchalu v. U.S. Bank, N.A. , Case No. 2:15cv946 (D. Nev. July 7, 2015) (Mahan, J.) Court held that appellant validly elected to appeal to U.S. District Court. Debtor filed a statement of election for the BAP, then filed his notice of appeal two days later in District Court, as well as all subsequent papers. Appellee moved to determine the validity of the election and asked to transfer the appeal to the BAP. Judge Mahan declined, based on the filings in district court and a later substitution of election for appeal to have the matter heard in District Court. Andreano v. J.P. Morgan Chase Bank, N.A. , Case No. 3:15cv47, 2015 U.S. Dist. Lexis 96156 (D. Nev. July 22, 2015) (Du, J.) Granting motion to dismiss appeal as untimely. Debtor filed an objection to lender’s proof of claim and later moved for summary judgment on its objection. Lender countermoved. The Bankruptcy Court granted lender’s motion and denied debtors’ motion. Lender was directed to submit orders granting its motion and denying the objection, while debtor was directed to submit an order denying its motion. The lender’s orders were entered on December 23, 2014; debtor filed a notice of appeal of those orders on January 22, 2015; and debtor’s order was entered January 29, 2015. The appeal of the December orders was untimely since it was more than 14 days after entry of those orders. Debtor asserted, though, that its notice was timely based on the subsequent entry of the January order as the final, appealable order denying debtor’s motion. Judge Du held that the only issue in dispute in bankruptcy court was whether lender had standing to enforce its proof of claim. That issue was resolved in its entirety with the December orders. Bankruptcy Court also evidence intent that its December orders were final orders. Krohn v. Equity Title, LLC , Case No. 21:14cv620, 2015 U.S. Dist. Lexis 101934 (D. Nev. Aug. 3, 2015) (Boulware, J.) Granting trustee leave to allege basis of bankruptcy subject matter jurisdiction to proceed in federal court in the absence of any federal claim that would warrant supplemental jurisdiction. Judge Boulware, in dicta, did not believe bankruptcy jurisdiction was appropriate for the trustee’s claims that debtor was involved in loan transactions that resulted in significant allegedly improper payments to defendants. However, he declined to decide the matter at that time. Invest Vegas, LLC v. 21st Mortgage Corp. , Case No. 2:15cv644, 2015 U.S. Dist. Lexis 139166 (D. Nev. Oct. 9, 2015) (Mahan, J.) Judge Mahan denied a motion to remand a state court quiet title action and referred the matter to bankruptcy court, as the matter implicated the rights arising from a prior case before the U.S. Bankruptcy Court for the Southern District of New York. Dispute involves Las Vegas real estate

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held by successor in interest after HOA foreclosure sale. Defendant claims at time of foreclosure, the S.D.N.Y. Debtor held a note secured by a first deed of trust against the property; Debtor’s position was sold under Section 363 to Defendant a week after the purported HOA foreclosure. Judge Mahan found removal proper because the litigation involved Title 11 federal questions. First, he determined it was more likely than not that Debtor’s debt and security interest was property of the estate. The litigation also implicated the question of whether the foreclosure that “extinguished and rendered valueless the debtor’s previously valuable propertya more junior lien on the subject property. In sum, it was unclear whether section 362(a)(4) prohibits the HOA sale.” Judge Mahan referred matter to the U.S. Bankruptcy Court for the District of Nevada. L.R. 1001. JeterWheaton v. EZPawn Nev., Inc. , Case No. 2:15cv913, 2015 U.S. Dist. Lexis 144966 (D. Nev. Oct. 23, 2015) (Navarro, C.J.) Denying motion to remand appeal to BAP based on defendant’s election to the district court. **DISCHARGE** Bos. v. Board of Trustees , 795 F.3d 1006 (9th Cir. 2015), rev’g Case No. 2:12cv02026MCE (E.D. Cal. March 11, 2013), aff’g Adv. No. 1102390D (Bankr. E.D. Cal. Jan. 12, 2012) The debtorprincipal of a company did not act as a fiduciary under Section 523(a)(4) for unpaid contributions owed under the company’s contractual requirement to contribute to an employee benefits trust fund. “A typical employer never has sufficient control over a plan asset to make it a fiduciary for purposes of § 523(a)(4).” Double Bogey, L.P. v. Enea , 794 F.3d 1047 (9th Cir. 2015), aff’g Case No. ADV 113017 DM, 2013 WL 1209479 (N.D.Cal. Mar. 25, 2013) California's alter ego doctrine alone cannot create a "fiduciary" relationship under Section 523(a)(4). Creditor had claims against corporation that managed its funds. When corporation’s principals filed for bankruptcy, creditor brought nondischargeability action. Although there had been state court finding that principals were alter egos of their company, and the principals admitted their debtor company owed a fiduciary duty to the creditor, the alter ego finding was insufficient on its own to impose fiduciary liability on the principal/debtors. “California's alter ego doctrine does not explicitly create a trust relationship, either by raising existing legal duties or otherwise. Nor does it come into operation prior to wrongdoing — rather it merely operates to hold an individual liable for his corporation's alreadyexisting debt.” Northbay Wellness Group v. Beyreis , 789 F.3d 956 (9th Cir. 2015), rev’g Case No. C 1106255 JSW, 2012 WL 4120409 (N.D. Cal. Sept. 18, 2012) Bankruptcy court abused its discretion in applying doctrine of unclean hands to deny creditor's nondischargeability claim that debtorattorney stole $25,000 from medical marijuana dispensary. Debtorattorney’s “ wrongdoing outweighs Northbay's, and … application of the unclean hands doctrine to absolve an attorney of responsibility for stealing from his client would be contrary to the public interest.” The Bankruptcy Court “held that the doctrine of unclean hands precluded any

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judgment for Northbay because Northbay created the trust fund using the proceeds of illegal marijuana sales. The court accordingly dismissed the adversary proceeding.” The Circuit held “The bankruptcy court failed to conduct the required balancing, instead concluding solely from the fact that Northbay had engaged in wrongful activity that the doctrine of unclean hands applied. In so doing, the bankruptcy court made an error of law, and thus abused its discretion. Had the bankruptcy court weighed the parties' respective wrongdoing, it necessarily would have concluded that Beyries's wrongdoing outweighed Northbay's, both as to harm caused to each other and as to harm caused to the public. Beyries was on Northbay's board of directors and partnered in Northbay's business, so he was as responsible as Northbay for its illegal marijuana sales. That illegal activity must be attributed to both parties in the weighing of wrongdoing, so it does not tip the balance in either direction.” “On top of the illegal activity shared with Northbay, Beyries is also responsible for much more. Beyries stole $25,000 from his client. A lawyer's ‘[m]isappropriation of a client's property is a gross violation of general morality likely to undermine public confidence in the legal profession and therefore merits severe punishment.’ ” U.S. v. Martin (In re Martin) , 542 B.R. 479 (BAP 9th Cir. 2015), rev’g 508 B.R. 717 (Bankr. E.D. Cal. 2014) Addressing nondischargeability of tax debts for untimely filed tax returns. Lakhany v. Khan (In re Lakhany) , 538 B.R. 555 (BAP 9th Cir. 2015) Debtor filed Ch 7 petition, did not schedule creditor and obtained discharge. Creditor “moved for relief from stay well over a year after [Debtor’s] discharge. As the stay had ‘automatically expire[d] upon the grant of [Debtor's] discharge,’ the bankruptcy court abused its discretion in granting relief from the stay. Rather, the appropriate inquiry would have been the applicability of the discharge injunction. While Khan's Motion included a request for relief from the discharge injunction, that issue was not addressed in briefing or argument, nor in the bankruptcy court's ruling or Order.” BAP “recast the Order for Relief from Stay as a declaratory judgment that the discharge injunction of § 524 does not enjoin Khan's attempt to establish Lakhany's liability for a nondischargeable debt in the State Action.” Plyam v. Precision Dev., LLC (In re Plyam) , 530 B.R. 456 (BAP 9th Cir. 2015) BAP held Bankruptcy Court erred in granting summary judgment based on issue preclusion and the state court judgment's award of actual and punitive damages for breach of fiduciary duty. “The state court judgment did not include a finding equivalent to willfulness as required for § 523(a)(6) nondischargeability, notwithstanding its award of punitive damages under California Civil Code § 3294. The state court judgment also failed to establish the existence of an express or technical trust as required for § 523(a)(4) nondischargeability.”

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Elliott v. Weil (In re Elliott) , 529 B.R. 747 (BAP 9th Cir. 2015), after remand on prior appeal on exemptions, 523 B.R. 188 (BAP 9th Cir. 2014) BAP sua sponte held that Bankruptcy Court lacked subject matter jurisdiction in revocation of discharge under Section 727(d) when adversary filed beyond the oneyear statutory period after discharge under Section 727(e). Distinguished case law on waivable rule requirements for filing of denial of discharge under Section 727(a). Heers v. Parsons (In re Heers) , 529 B.R. 734 (BAP 9th Cir. 2015) (aff’g Davis, J.) (dissent by Kurtz, J.) Affirming nondischargeability judgments for defalcation while acting in a fiduciary capacity under Section 523(a)(4). Debtor was an attorney without probate experience that agreed to administer an estate. Much discussion about revised defalcation standards after Bullock (U.S. 2013). BAP “ simply disagree[s] with Debtor that concluding that she committed a defalcation in breach of her fiduciary duties excepted from her discharge under § 523(a)(4) is imposing strict liability on her for missing an estate tax return deadline of which she was unaware. The records in these appeals reflect a pervasive and unjustified series of breaches of fiduciary duties by Debtor in administering the Estate. The records further reflect that she consciously and recklessly disregarded the substantial risks to the Estate of not filing the estate tax return and paying the estate tax owed timely, or at least as soon after the deadline passed as possible. Debtor was not merely negligent but was grossly negligent in performing her duties as administrator of the Estate. The materiality of the risks Debtor blindly disregarded is fully reflected in the $439,621.61 in interest and penalties ultimately assessed by the IRS for the late filing of the estate tax return and the late payment of the estate taxes owed. We conclude that the bankruptcy court did not err in granting summary judgments in favor of [Creditors] on their § 523(a)(4) adversary proceeding claims based on Debtor's multiple defalcations of her fiduciary duties to the Estate.” Mahakian v. William Maxwell Invs., LLC (In re Mahakian) , 529 B.R. 268 (BAP 9th Cir. 2015) (aff’g Nakagawa, C.J.) Affirming resolution of unscheduled creditor’s claim against Ch 7 debtor/guarantor for deficiency after postdischarge foreclosure on collateral property. Debtor amended schedules and filed adversary, seeking determination that creditor’s claim had been discharged and provide for allowance of proof of claim filed by debtor on behalf of creditor. “ The language contained in § 523(a)(3)(A) is clear and not ambiguous: a debt is excepted from discharge if the creditor was neither listed nor scheduled and did not otherwise know of the bankruptcy case in time to file a timely POC.” “Debtor maintains that he was authorized under § 501(c) to file a POC on behalf of [creditor] and although his filing of the POC was untimely, Rule 9006(b)(1) and the excusable neglect standards under Pioneer apply and are met in this case. [Debtor claims] his tardily filed POC under Rule 3004 is deemed to be ‘timely’ for discharge purposes so long as it was made at a time when the creditor would have been able to receive payment from the chapter 7 trustee under § 726(a)(2)(C).” “Debtor's conduct falls within the particular circumstances addressed in § 523(a)(3)(A) and not the other statutes relied upon.” “While excusable neglect might be relevant to determine whether a latefiled POC under Rule 3004 should be deemed timely filed, such a finding does not translate into a timely filed claim for purposes of § 523(a)(3)(A).”

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Institute of Imaginal Studies v. Christoff (In re Christoff) , 527 B.R. 624 (BAP 9th Cir. 2015), aff’g 510 B.R. 876 (Bankr. N.D. Cal. 2014) Affirming that student loan debt was dischargeable. Debtor signed notes in place of paying tuition and eventually defaulted. The college “simply agreed to be paid the tuition later . . . [i]t did not receive any funds, such as from a third party financing source," so the debt did not qualify for nondischargeability for “fund received” under the applicable statute, § 523(a)(8)(A)(ii). While § 523(a)(8)(A)(i) and (B) indeed make "loans" nondischargeable, § 523(a)(8)(A)(ii) applies to a different type of debt: a debtor's "obligation to repay funds received as an educational benefit, scholarship, or stipend." Because Congress did not refer to "loans" in this subsection of the Code, the statute was intended to apply to a distinctly different type of debt, an obligation to repay the creditor for "funds received." Therefore, it is inappropriate to borrow from the logic of the cases construing the "loan" language used in the other student debt exceptions to construe the meaning of "funds received" in § 523(a)(8)(A)(ii). Betancourt v. Ballmer (In re Betancourt) , Case No. CC141010KiKuDa (BAP 9th Cir. June 3, 2015) (Davis, J., on panel) Vacating and remanding for failure to make sufficient findings that Debtor willfully and maliciously injured creditor or his property under § 523(a)(6) by transferring certain real property to prevent creditor and assignee from collecting on his prepetition judgment lien. “The bankruptcy court does not make findings as to the Debtor’s state of mind. … We are unable to determine whether it applied a subjective or an objective standard in finding a willful injury.” BAP also held “bankruptcy court needs to make findings of a proper debt resulting from injury to creditor or the property of creditor.” “The transfers were made before [creditor’s] claim was reduced to judgment. [Creditor] had no lien against the parcels at issue at the time the transfers were made. The facts only reveal that at the time Debtor transferred the property ..., depleting the assets available to satisfy a potential adverse judgment, [Creditor] was merely an unsecured creditor holding only an interest in the possibility of obtaining a judgment and placing a judgment lien in his favor sometime in the future.” Hillsman v. Escoto (In re Escoto) , Case No. NV141358KuDJu (BAP 9th Cir. May 15, 2015) (vac’g & rem’g to Nakawaga, J.) “The bankruptcy court did not consider whether all of the elements for nondischargeability under § 523(a)(2)(A) existed at the time [Debtor's] debt to [Creditor/Appellant] first became due. At that time, [Debtor] effectively may have obtained an extension of credit by failing to disclose a material fact.” Vacated & remanded for additional or amended findings as of that time. Debtor obtained loan to finance construction defect litigation. Debtor settled claims for more than sufficient amount to pay lender, but failed to tell lender and later negotiated extension. Debtor’s settlement triggered right to immediate repayment of debt. Debtor’s concealment deprived Creditor of the ability to exercise that right, and Debtor thereby effectively procured a forbearance. The fact that Debtor obtained the forbearance without Creditor’s knowledge serves to further illustrate the surreptitious nature of the fraud. Debtor should not be permitted to benefit from an overly narrow definition of the term “extension” that is disconnected from the statute that informs its meaning.

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Plise v. Krohn , Case No. 2:14cv186, 2015 U.S. Dist. Lexis 35047 (D. Nev. March 19, 2015) (Navarro, C.J.) Affirming summary judgment in denial of discharge based on debtor’s failure to identify his interest in LLC (only disclosed eight months after case filing). Bankruptcy Court did not err in ruling that Debtor knowingly and fraudulently made a false oath or account by failing to disclose his interest in Schedule B or his SOFA. Debtor did not dispute that there was a false omission that was material, but asserted there was a genuine issue of material fact that he did not knowingly and fraudulently make this omission. Judge Navarro affirmed that the proffered reasons for the omission are either illogical or utterly implausible, thus making summary judgment appropriate. Court rejected debtor’s rationales for nondisclosure on Sch B/SOFA that he had already sold interest, that his name was not associated with the LLC in filings with the Secretary of State, and the company had no value since its bank account was just used to transfer funds and cash checks. Debtor’s right to control the company and its bank account were material since he used it to pay his personal expenses. Court also rejected argument that there was no intent when he relied on advice of counsel from his original debtor’s counsel in not disclosing the interest. Court noted that debtor’s second counsel was advised by debtor’s agent not to disclose the interest, that debtor made other amendments before disclosing his interest, and had a third counsel who could have earlier corrected the initial nondisclosure. Schaller v. Paulsen (In re Paulsen) , Adv. No. 1280166, 2015 Bankr. Lexis 780 (Bankr. W.D. Mich. Feb. 20, 2015) (Dales, J.) Following Nevada Supreme Court partial reversal and remand of default judgment, defendant’s bankruptcy court granted relief from nondischargeability judgment obtained based on default judgment. However, Nevada Supreme Court remanded to allow defendant/debtor to participate in proveup hearing of damages. Rather than litigating the damages in the bankruptcy court in Michigan, the bankruptcy court stayed the nondischargeability adversary pending the Nevada state court’s determination of damages. Court noted debtor/defendant had obtained stay relief and prosecuted his appeal in Nevada, evidencing his ongoing ability to litigate in Nevada. **EXEMPTIONS** In re Caldwell , 545 B.R. 605 (BAP 9th 2016), rev’g decision below discussed in Victoria L. Nelson & Jacob L. Houmand, A Cautionary Tale , Am. Bankr. Inst. J. (May 2015) Debtor not subject to Section 522(p) cap on exemption amount even if property owned by debtor’s corporate entity during the 1,215 days prior to bankruptcy, as debtor maintained the necessary interest in the property. Whatley v. StijakovichSantilli (In re StijakovichSantilli) , 542 B.R. 245 (BAP 9th Cir. 2015) “Bankruptcy court erred as a matter of law by ruling that (1) the Trustee was not entitled to the extended objection period [under Rule 4003(b)(2)] because he could have discovered the Debtor's misstatements earlier; and (2) evidence of the Debtor's subsequent false statements about her exemption claim could not support a finding that she fraudulently claimed the exemption in the first place.” The Trustee “need not show that he could not have discovered the fraud;

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rather, he must only show that he justifiably relied on the [debtor’s] false representations. Nothing in Rule 4003(b)(2) suggests that the drafters intended to impose a duty on objectors to investigate promptly.” Todd v. Rothschild (In re Todd) , Case No. 14cv1255JuKuD (BAP 9th Cir. April 7, 2015) (vac’g judgment from Riegle, J., and dismissing appeal as moot) Dispute arose on debtor’s exemption rights in funds from resolution of claims from a car accident. While Bankruptcy Court found certain amount entitled to exemption, BAP vacated on grounds that trustee’s prior 9019 settlement with creditor transferred all rights to account with proceeds from car accident claims with no carveout for debtor’s exemption rights. Becker v. Becker (In re Becker) , 131 Nev. Adv. Op. 85, 362 P.3d 641 (2015) (en banc) (Gibbons, J.) Economic interest may be subject to a charging order, which provides the creditor with the rights of an assignee without rights of foreclosure or management. Quiroz v. Dickerson , 2015 WL 321401 (D. Nev. 2015), debtor’s objection overruled, Case No. 3:10cv00657 (D. Nev. July 8, 2015) (slip op.) Attorney/judgment debtor may exempt 75 percent of contingency fees as disposable income before judicial assignment of nonexempt 25 percent. FDIC v. Lewis , Case No. 2:10cv439 (D. Nev. Sept. 10, 2015) (slip op.) Debtor may not claim a homestead in property not personally owned. Case differs from Caldwell in that debtor claimed he did not know who owned the building or paid its expenses. FDIC v. Lewis , Case No. 2:10cv439 (D. Nev. July 29, 2015) (slip op.) Exempt retirement account may be subject to postjudgment injunction that limits liquidation. District Court denied motion to modify injunction. **FEES & SANCTIONS** Penrod v. AmeriCredit Fin’l Servs., Inc. (In re Penrod) , 802 F.3d 1084 (9th Cir. 2015), rev’g 493 B.R. 140 (N.D. Cal. 2013), after remand on substantive appeal , 611 F.3d 1158 (9th Cir. 2010) (rehearing en banc denied, 636 F.3d 1175 (2011) (Bea, J., dissenting)), aff’g 392 B.R. 835 (BAP 9th Cir. 2008) (Markell, J.) Debtor who prevails in a contract dispute on the basis of federal bankruptcy law may recover reasonable attorney's fees under California Civil Code § 1717 (prevailing party entitled to fees if contract provides unilateral attorney’s fees clause). Debtor prevailed in dispute over secured vehicle loan bifurcated under Ch 13 plan, but incurred $245,000 in attorney’s fees. Circuit held that consistent with Travelers v. PGE (US 2007), attorney's fees may be awarded for dispute over bankruptcy legal issues on underlying contract.

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Blixseth v. Yellowstone Mountain Club, LLC , 796 F.3d 1004 (9th Cir. 2015), following substantive ruling , 742 F.3d 1215 (9th Cir. 2014), aff’g Case No. 086157011, 2011 WL 766979 (Bankr. D. Mont. Feb. 25, 2011) Sanctioning appellant’s counsel in appeal held to be "a transparent attempt to wriggle out of an unfavorable decision by smearing the reputation of the judge who made it." Pham v. Golden (In re Pham) , 536 B.R. 424 (BAP 9th Cir. 2015) The Bankruptcy Court could not rely on its local rules to sanction debtors and their counsel for the Ch 7 trustee’s expenses incurred for bring a motion to compel Debtors to appear for depositions and to produce certain documents. Appeal arose in Ch 7 trustee’s adversary against two alleged recipients of fraudulent transfers. The Bankruptcy Court “stated repeatedly that Debtors were ‘being sued.’ In this adversary proceeding, the Trustee did not sue the Debtors; they were nonparty witnesses. Also, the Trustee was not operating under Rule 2004 to obtain their examination or the production of documents. In these circumstances, Debtors were entitled to the protections provided them as nonparty witnesses under the Federal Rules of Civil Procedure and the Bankruptcy Rules, particularly Civil Rule 45 and Rule 9016 (incorporating Civil Rule 45), which were cited in the issued subpoenas. Further, we fail to see how Nguyen, an attorney for a nonparty, would be subject to complying with a ‘meeting of counsel,’ a ‘joint discovery stipulation’ or any other aspect of discovery by the Trustee under Civil Rule 26 or LBR 70261(c).” In re Ngoan T.G. Holdings, LLC , Case No. 1416447, 2015 Bankr. Lexis 1303 (Bankr. D. Nev. Feb. 9, 2015) (Nakagawa, J.) Entering sanctions against Debtor LLC’s member for filing Chapter 7 petition in bad faith. Debtor’s member attested that he sought bankruptcy to save the property from foreclosure through payments to secured creditors. LLC debtor could not do so in Chapter 7. LLC debtor also unlikely to be able to do so in Chapter 11 since it had no income in the previous two years, no payments to creditors, and no business activity that would serve as a basis to reorganize. Debtor’s principal sanctioned $450 payable to Chapter 7 trustee and $300 payable to Legal Aid Center of Southern Nevada. Mustapha Assi Revocable Living Trust v. Integrated Fin’l Assocs., Inc. (In re Integrated Fin’l Assocs., Inc.) , Case No. 2:15cv276, 2015 U.S. Dist. Lexis 104118 (D. Nev. Aug. 7, 2015) (Mahan, J.) Affirming award of attorney’s fees on debtor’s contract claims following prior remand in dispute over creditor claims and compromised between committee and insiders adopted in plan. District Court vacated fees for insider claims, but awarded costs. Another case that will require a closer reading to parse the details and distinctions that generally arise under state law.

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**PREFERENCES & FRAUDULENT TRANSFERS** Stahl v. Simon (In re Adamson Apparel, Inc.) , 785 F.3d 1285 (9th Cir. 2015), aff’g Case No. CV 1101204VAP (C.D. Cal. Aug. 15, 2012) “Corporate insider who personally guaranteed his corporation's loan is absolved of any preference liability to which he might otherwise have been subjected, where he had previously waived his indemnification rights against the corporation, he had a bona fide basis for doing so, and he took no subsequent actions to negate the economic impact of that waiver.” Debtor’s CEO (Simon) guaranteed debt obligations of his company. Guarantee included waiver of his indemnification right. Company then sold goods; CEO directed payment to creditor with CEO’s guarantee; CEO paid balance on guarantee; and company filed Ch 11. Unsecured Creditors Committee sued, claiming CEO was an insider who received preference with sale payment that reduced his guarantee obligation. Bankruptcy Court held that since CEO waived indemnification, he was not a creditor, did not receive a benefit from sale payment, and was not liable for preference. District Court affirmed after initial remand for bench trial. Although there was ambiguity in documents, Circuit Court held that Bankruptcy Court did not commit clear error in finding waiver. Judge Graber dissenting, following other decisions that insider guarantors are creditors because the nominal waiver creates a sham transaction designed to avoid preferences. Rund v. Bank of Am. Corp. (In re EPD Inv. Co.) , 523 B.R. 680 (BAP 9th Cir. 2015) Section 546(a) preempts a statelaw statute of repose such as CAL. CIV.CODE § 3439.09(c). Thus, BAP reversed orders dismissing fraudulent transfers claims. The transfers occurred up to 7 years prior to the debtors' petition date. Trustee filed his complaints within the 2 years prescribed in § 546(a)(1)(A). The Bankruptcy Court erred as matter law in finding that the California fraudulent transfer statute is a statute of repose and ruling that Trustee could reach back only to those transfers occurring up to seven years prior to the filing of his complaint, not the petition date. In other words, the bankruptcy court determined that § 546(a) has no effect on the sevenyear limitations period set forth in CAL. CIV.CODE § 3439.09(c); it runs concurrently with the two year statute of limitations set forth in § 546(a). BAP held that the filing of a bankruptcy petition tolls the California statute and gives a trustee an additional two years to investigate and file an avoidance action, regardless of whether CAL. CIV.CODE § 3439.09(c) is a statute of repose. Cadle Co. v. Woods & Erickson, LLP , 131 Nev. A.O. 15, 345 P.3d 1049 (2015) (en banc) (Cherry, J.) “[U]nder Nevada's fraudulent transfer law, a nontransferee law firm may [not] be held liable for its client’s fraudulent transfers under the accessory liability theories of conspiracy, aiding and abetting, or concert of action. We hold that Nevada, like most other jurisdictions, does not recognize accessory liability for fraudulent transfers.” **PROPERTY OF ESTATE** MacKenzie v. Neidorf (In re Neidorf) , 534 B.R. 369 (BAP 9th Cir. 2015)

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Affirming that payment received by Ch 7 debtor in settlement of class action over foreclosure practices was not property of the estate, as foreclosure on the house occurred postpetition and did not involve an estate interest even though house was property of the estate. Goldstein v. Stahl (In re Goldstein) , 526 B.R. 13 (BAP 9th Cir. 2015) Holding that debtor’s claims concerning its home lender’s trial period plan accrued prepetition and were property of the estate, such that they could be settled by the trustee. Debtor argued that although facts accrued prepetition, there was a postpetition change in case law that allowed them to pursue the claims. The Trustee countered, the Bankruptcy Court agreed, and the BAP affirmed, that change in case law may have strengthened the claims, but it did not create them. **REOPEN** Dymon Invs., Inc. v. Welch (In re Welch) , Case No. NV141079HiPaJu (BAP 9th Cir. Jan. 5, 2015) (aff’g Riegle, J.) Affirming order denying motion to reopen the closed Ch 7 case for creditors to conduct an examination of Debtors under Rule 2004. “Creditors were well aware of Debtors’ bankruptcy, as they had notice of the May 27, 2011, petition date, and actively participated in, at least, Debtors’ § 341(a) meeting on August 22, 2011. Nonetheless, Creditors did not seek permission to conduct a Rule 2004 examination until more than two months after the Debtors’ case closed on January 18, 2012, or more than ten months after the case was filed. More importantly, Creditors thereafter did not file the Motion until August 28, 2012, five months after seeking the Rule 2004 examination and more than eight months after the case closed, and then inexplicably did not set the Motion for hearing until eight months later on April 24, 2013. Because Creditors initially failed to serve Debtors with notice of the Motion, the April 24, 2013 hearing then had to be continued, and Creditors delayed again in waiting until November 1, 2013, to give notice of the continued hearing date on November 27, 2013.” Also, “there is nothing in the record to establish prima facie proof the case was not fully administered … there was no showing to support a finding that there was a chance of substantial recovery for creditors.” Finally, “reopening the case to allow Creditors to conduct a Rule 2004 examination would subject Debtors to examination and additional litigation fees more than two years after they had received their discharge.” **SALES** H&N Props. v. Quality Loan Serv. Corp. , Case No. 2:15cv25, 2015 U.S. Dist. Lexis 64093 (D. Nev. May 14, 2015) (Mahan, J.) Plaintiff acquired property subject to debt under terms of Chapter 7 Trustee’s 363 sale. Sale order required buyer to record quitclaim deed and bankruptcy order within 14 days of delivery of the order, and failure to do so shall automatically void the sale. Buyer did not record the documents until more than a month after the order date. Plaintiff’s quiet title action failed because it did not have an interest in property based on failure to timely record the court order and deed.

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BB&T v. Rad , Case No. 2:14cv1947, 2015 U.S. Dist. Lexis 129459 (D. Nev. Sept. 24, 2015) (Gordon, J.) Court rejected guarantor’s arguments that claims were barred as not brought within six months of foreclosure under NRS 40.455, as a 363 sale is not a foreclosure sale that triggers the deadline. BB&T v. Iny , No. 2:11cv1777, 2015 U.S. Dist. Lexis 141090 (D. Nev. Oct. 16, 2016) (Du, J.) In guarantor deficiency litigation, defendants not entitled to assert equitable defenses under NRS 40.495(3) when property sold as part of debtor/borrower’s bankruptcy case on motion to approve debtor’s settlement with lender. Lender’s participation in bankruptcy was defensive. Court also rejected guarantor’s arguments that claims were barred as not brought within six months of foreclosure under NRS 40.455, as a 363 sale is not a foreclosure that triggers the deadline. **SETTLEMENT** Plise v. Krohn (In re Plise) , No. NV141474DJuKu (BAP April 6, 2015) (aff’g Riegle, J.) Ch 7 Trustee filed an adversary proceeding against Appellant, alleging her prepetition divorce from Ch 7 debtor was a sham, such that transfers of property to her pursuant to the dissolution proceedings constituted fraudulent transfers. Trustee and Appellant settled by the payment of $425,000 to the estate. Appellant later filed a proof of claim, asserting that as a result of the Settlement she was owed a $425,000 prepetition domestic support obligation, later amended to $715,000, which was entitled to priority status. “Although we have been hampered in our review by the absence of any detailed findings of facts and conclusions of law by the bankruptcy court, we nevertheless AFFIRM the bankruptcy court's order sustaining the trustee's objection to Ms. Plise's claim, because the record on appeal supports the imposition of the doctrine of judicial estoppel against Ms. Plise to preclude her from asserting her claim in the bankruptcy case.” By her affirmative and unreserved adoption of the Settlement Approval Motion, Ms. Plise can be said to have “succeeded in persuading [the bankruptcy] court to accept [her] earlier position,” i.e. that she was giving up property which she asserted was acquired in satisfaction of a domestic support obligation in order to settle the Trustee’s claims against her. Had the bankruptcy court allowed the Priority Claim as she had requested, it would have “create[d] the perception” that the bankruptcy court had been misled in the proceedings relating to the Settlement or in the claim proceedings. **SMALL BUSINESS CASE** Szanto v. U.S. Trustee (In re Szanto) , Case No. 3:14cv355, 2015 U.S. Dist. Lexis 151780 (D. Nev. Nov. 9, 2015) (Jones, J.) Judge Jones affirmed Judge Beesley’s orders setting aside a prior 9019 settlement order, dismissing debtor’s case, and denying recusal. Settlement order based on debtor’s assertion of a settlement, although lender’s letter was not signed. The lender moved to set aside, saying lender had not approved the compromise and the motion had not been served on it. Judge Jones affirmed set aside under those circumstances. Dismissal of case was affirmed for failure to confirm a small business plan within 45 days of the plan being filed or obtain an extension to do so within that time. Excusable neglect was not available to later extend the deadlines for the plan

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confirmation under 1129 or incorporated under the 1112 for dismissal. Court finally affirmed that Judge Beesley’s frustration with debtor’s counsel did not constitute bias in light of nonmeritorious arguments. The threat to remove debtor “if he did not sit down and stop arguing after the Bankruptcy Judge had ruled was within his authority to manage the decor of his courtroom.” **STANDING** Hughes v. Tower Park Props., LLC (In re Tower Park Props., LLC) , 803 F.3d 450 (9th Cir. 2015) A beneficiary of a trust who disagrees with the way trust was administered by former trustees is not a "party in interest" under Section 1109(a) with standing to object to bankruptcy court's approval of a settlement agreement among debtor, creditor entities held by the trust, and former trusteesat least where his interests are adequately represented by a partyininterest trustee. Andrus v. U.S. Trustee (In re World Botanical Gardens, Inc.) , Case No. NV141246DJuKu (BAP 9th Cir. April 7, 2015) (aff’g Beesley, J.) Affirming conversion from Ch 11 to Ch 7, “given that most of WBGI’s shareholders did not receive notice of the Conversion Hearing as required under Rule 2002(d)(4) and Local Rule 2002(a)(1).” Appellants “acknowledge that they obtained notice of the Conversion Hearing … [and] could not make any representations on behalf of other, absent shareholders. Neither [appellant is a] licensed attorneys, employed by other shareholders to represent them in WBGI’s bankruptcy case. Nor have either of them demonstrated before the bankruptcy court or before this Panel that they have any authorization from any other shareholders to act on their behalf. Therefore, [appellants] cannot raise arguments that otherwise might have been available to other shareholders based on an alleged lack of notice as they lack prudential standing to do so.” **STATE LAW CLAIMS** Off Dock USA, Inc. v. Beach Business Bank (In re Off Dock USA, Inc.) , Case No. CC141037DaKiKu (BAP June 24, 2015) (Davis, J., on panel; Kurtz, J., diss’g in part) Affirming dismissal of Debtor’s claims against lenders. “The implied covenant is a supplement to an existing contract, it does not require parties to negotiate in good faith prior to entering into any agreement. For that reason, any allegations that a defendant violated the implied covenant during the negotiation of a loan fail to state a claim.” “The amended complaint wholly fails to identify any express provision of either loan agreement that is disturbed by the alleged breaches of the implied covenant.“ “Further, a cause of action for breach of the implied covenant fails when the contract authorizes defendant’s action”and lender was contractually entitled to cease further advances for debtor’s failure to satisfy certain requirements. The fiduciary claims failed because in California, the relationship between a lending institution and its borrowerclient is not fiduciary in nature. Finally, as to Intentional Interference with Prospective Economic Relations, Debtor failed to allege conduct that “was wrongful by some legal measure other than the fact of interference itself.” Lender could take steps to obtain debt payment, even if debtor would default on other obligations.

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