Category Archives: Bankruptcy

The Business Judgment Rule in the Central District of California

Reno Fernandez, MacDonald | Fernandez A pair of recent decisions by the United States District Court for the Central District of California challenge the strength of the business judgment rule….

Social Security Cannot Be Attached to Reimburse Insurer

In Bilyeu v. Morgan Stanley, 683 F.3d 1083 (9th Cir. 2012), the United States Court of Appeals for the Ninth Circuit rules that an insurer cannot impose a lien upon the proceeds of Social Security benefits in the possession of the insured in order to recover overpayment of long-term disability benefits.

Partnership That Never Existed Cannot Create Nondischargeable Debt

In Utnehmer v. Crull (In re Utnehmer), 2013 Bankr. LEXIS 4482, NC-12-1362-PaDJu (9th Cir. BAP Oct. 10, 2013), the Bankruptcy Appellate Panel of the United States Court of Appeals for the Ninth Circuit (“BAP”) ruled that Bankrupcty Code Section 523(a)(4) did not apply to render a debt nondischargeable in relation to a partnership that was never formed. Specifically, an agreement to re-characterize debt as profit-sharing equity was conditional upon events that did not occur.

Junior Mortgage Discharged Notwithstanding Fraud Allegations

Reno F.R. Fernandez III This article was first published on the California Bankruptcy Blog at http://calbk.blogspot.com/2013/12/ninth-circuit-bap-rules-california-law.html In Heritage Pacific Financial, LLC v. Montano (In re Montano), 13 C.D.O.S. 12820, NC-12-1579-PaDJu (9th…

Under Washington Law, Marriage Establishes No Express or Technical Trust With Respect to the Exception from Discharge Provided in Bankruptcy Code Section 523(a)(4)

In In re Mele, 13 C.D.O.S. 12737, No. WW-13-1173-DTaKu (November 25, 2013), the Bankruptcy Appellate Panel (BAP) of the United States Court of Appeals for the Ninth Circuit held that a property allocation judgment arising from marital dissolution proceedings in Washington is dischargeable in a chapter 13 case notwithstanding Bankruptcy Code Section 523(a)(4), which excepts from discharge debts “for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny….”