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December 5, 2007

Consumer Bankruptcy Attorney Leon Bayer on the Radio

Re: Bankruptcy News: The Mortgage Meltdown and The New Bankruptcy Law

When:    Live radio program, Wednesday, December 12, 2007
Time:      7:30 - 8:30 PM
Where:   KALW FM Radio, 91.7, A Public Radio Station
Web:     Listen live on the Internet

Los Angeles Bankruptcy specialist Leon Bayer of Bayer, Wishman & Leotta will be interviewed live on the air at San Francisco's Public Radio Station KALW FM, 91.7 by Chuck Finney, the award winning host of "Your Legal Rights," a weekly radio program sponsored by the California Bar Association Committee on Legal Specialization. If you are outside the broadcast area you can listen live on the Internet at www.kalw.org

December 5, 2007 in Programs | Permalink | Comments (0) | TrackBack

December 3, 2007

Is the Supreme Court Overworked?

In an article in the Los Angeles Daily Journal, Erwin Chemerinsky points out that last year the Supreme Court decided 68 cases.  This year it will probably not decide that many as there are only 42 cases on the docket now.  In the 1980s, the court decided about 150 cases per year.  For much of the 20th century the Supreme Court decided about 200 cases per year. 

Chemerinsky discusses several theories about why the output is decreasing surmising that it is because the clerks are reviewing the requests for Writs of Certiorari as a group except for Judge Stevens whose clerks review every writ request.  I doubt that is the reason myself as, according the Rehnquist in his landmark book, The Supreme Court, only one judge needs to request discussion of a case in conference to get it discussed.  Therefore the cases that are not discussed are the ones that not one single judge found interesting enough to even discuss the possibility of issuing a writ.

Chemerinsky also muses that the opinions are getting longer and therefore tend to be more unwieldy.  The opinion in the recent Seattle school desegregation case was 184 pages not counting appendices.  See 127 S.Ct. 2738 (2007). 

What Chemerinsky does not point out is that the Supreme Court budget this year is about $76 million, more than $1 million per case.   

December 3, 2007 in Supreme Court | Permalink | Comments (0) | TrackBack

December 2, 2007

9th Circuit BAP rules on the "Community Property Discharge"

Rooz v. Kimmel (In re Kimmel)  ---- B.R. ----  (9th Cir. BAP  November, 2007)

Issue:  Can a creditor seize a person’s interest in his spouse’s wages in California after the spouse has filed a bankruptcy petition and received a discharge?               

Holding:  No. 

Judge Dennis Montali
Dunn, Markell, Klein
Opinion by Dunn

Creditor Rooz sued the debtor and his wife in 1991.  In 1993 wife filed chapter 7 and received a discharge.  In 1995, creditor obtained a state court judgment against the husband.  Immediately thereafter, husband and wife entered into an agreement making wife’s post-agreement wages her separate property.  In 2005, with creditor still trying to collect the judgment against husband, husband filed his own chapter 7.  Creditor filed a non-dischargeability complaint against debtor-husband.  The Bankruptcy Court found that the debt was discharged.  Creditor then tried to seize the husband’s interest in wife’s paycheck (note: this does not seem possible but that is what the opinion says).  Creditor also attacked the post-nuptial agreement as a fraudulent conveyance in state court.  Wife reopened her case and removed the new state court case to the Bankruptcy Court.  The Bankruptcy Court dismissed the case saying that the “community property discharge” prevented creditor from proceeding against the wages even if the post-nuptial agreement could be avoided as a fraudulent conveyance.

The BAP affirmed.  Section 524(a)(3) states:

A discharge in a case under this title – . . .
(3) operates as an injunction against [any] act, to collect or recover from, or offset against, [community] property of the debtor . . . acquired after the commencement of the case, on account of any allowable community claim, except a [non-dischargeable] community claim . . .

A “community claim” is defined in 101(7) as a claim:

that arose before the commencement of the case concerning the debtor for which [community] property . . . is liable, whether or not there is any such property at the time of the commencement of the case.

At the time of wife’s bankruptcy, the claim of creditor was a “community claim” because “it was enforceable against the property of the Kimmel community.”  It was a debt for which community property could have been seized by the creditor.  Under California Family Code Section 910(a), community property is liable for the debts of either spouse, even those existing at the time of the marriage (see Cal. Family Code Section 902).  Therefore whether the wages are separate property per the post-nuptial agreement or are community property of a spouse acquired after the bankruptcy, the property cannot be seized to collect a community debt which existed at the time of the wife’s bankruptcy.  The fact that husband and wife attempted a fraudulent conveyance (if it were found to be that) does not change the result because the code is clear. 

The rationalization of this of course is that community property is property of the estate and is subject to sale by the trustee in the bankruptcy case of either spouse.  If all existing community property is therefore applied to the debt, the discharge would lose some meaning if the creditor could continue to seize community property after the discharge, albeit, the non-filed spouse’s interest only.

The Bankruptcy Judge also ruled that the fraudulent conveyance action could not proceed because of the statute of limitations, i.e., the transfer was ten years earlier.

Note also that the case discusses the requirement that if the debtor believes that the claim against the non-filing spouse is non-dischargeable, a non-dischargeability complaint must be filed in the case of the filing spouse or the creditor cannot seize post-bankruptcy community property even to collect a non-dischargeable debt.

Final note, the BAP points out that if there is a subsequent divorce, the community property discharge will no longer protect property of a non-filing spouse.            

December 2, 2007 in 9th Circuit Briefs | Permalink | Comments (0) | TrackBack