Federal Cases - January 1, 2000 to Date
LISTED WITH MOST RECENT CASES FIRST

In re: Point Center Financial (Harkey v. Grobstein)
9th Circuit  5/29/18

BANKRUPTCY: The court held that a person has standing to appeal a bankruptcy court order even where that person did not attend the hearing on the order and object, as long as the person was aggrieved by the order. Accordingly, it reversed the district court’s dismissal for lack of standing of an appeal from a bankruptcy court order that authorized a Chapter 7 trustee to assume the operating agreement of a limited liability company whose interests were implicated in the bankruptcy proceedings.

Upper Skagit Indian Tribe v. Lundgren
U.S. Supreme Court  5/21/18

INDIANS: The Upper Skagit Indian Tribe purchased a 40-acre plot of land, and then commissioned a boundary survey. The survey showed that an acre of its land lay on the other side of a boundary fence between its land and land owned by the Lundgrens. The Lundgrens filed a quiet title action in Washington state court, invoking the doctrines of adverse possession and mutual acquiescence. The Tribe asserted sovereign immunity. On eventual appeal to the U.S. Supreme Court the Lundgrens raised a new issue that had not been addressed by the lower courts: that the Tribe cannot assert sovereign immunity because this suit relates to immovable property located in Washington State, purchased by the Tribe in the same manner as a private individual. Because this alternative argument did not emerge until late in this case, the court remanded to the Washington Supreme Court to address the issue in the first instance.

In re: Gilman (Phillips v. Gilman)
9th Circuit  4/13/18

HOMESTEADS: The court vacated an order establishing the debtor's homestead exemption and remanded to the bankruptcy court. Under C.C.P. Section 704.710(c), a homestead is "the principal dwelling 1) in which the judgment debtor or the judgment debtor's spouse resided on the date the judgment creditor's lien attached to the dwelling, and 2) in which the judgment debtor or the judgment debtor's spouse resided continuously thereafter until the date of the court determination that the dwelling is a homestead. Plaintiff argued that at the time bankruptcy was filed, the debtor lacked a sufficient ownership interest to support a homestead exemption because the property was in escrow to be sold. The court rejected this argument on the basis that continuous residency, rather than continuous ownership, controls the analysis. However, the determination of residency requires both physical occupancy and the intent to continue to live in the property. The case was remanded because the bankruptcy court made no determination as to whether the debtor intended to continue to reside in the property.

Barahona and Wells v. Union Pacific Railroad Company
9th Circuit  2/6/18

RAILROADS: This is a dispute over whether Union Pacific's grants from the Federal Government to operate a railroad include the right to lease an oil pipeline. The court held that the limited fee conveyed pursuant to pre-1871 Railroad Acts do not limit Union Pacific's use of the land to "railroad purposes", so the pipeline is permissible under those acts. The 1875 Act conferred only an easement in the right of way for railroad purposes. However, Union Pacific plausibly alleged that the pipeline serves such a purpose. The court therefore reversed the district court's order granting a motion to dismiss Union Pacific's counterclaims and remanded with instructions to grant leave to amend. NOTE: This case reaches the opposite conclusion from the California appellate court in Union Pacific Railroad Company v. Santa Fe Pacific Pipelines, Inc., 231 Cal.App.4th 134.

In re: DBSI (Zazzali v. U.S.)
9th Circuit  8/31/17

BANKRUPTCY: The court held that the abrogation of sovereign immunity in 11 U.S.C. 106(a)(1) "with respect to" Section 544(b)(1) extended to Idaho's Uniform Fraudulent Transfer Act, and no additional waiver of sovereign immunity was necessary, even though there was no actual unsecured creditor who could bring such a claim. Accordingly, the government could not rely on sovereign immunity to prevent the avoidance of the tax payments. The court acknowledged that its opinion conflicts with the 7th Circuit's opinion in In re: Equipment Acquisition Resources, Inc. 742 F.3d 743 (7th Cir. 2014).

Berezovsky v. Moniz and Bank of America
9th Circuit  8/25/17

TRUSTEE'S SALES: When the Federal Housing Finance Agency ("FHFA") placed Fannie Mae and Freddie Mac into conservatorships, 12 U.S.C 4617(j)(3) applies, which provides that mortgages it holds are not subject to "levy, attachment, garnishment, foreclosure or sale" without its consent. This is known as the "Federal Foreclosure Bar". The court upheld a summary judgment in favor of Freddie Mac, holding:
1. The Federal Foreclosure Bar preempts the Nevada statute, NRS 116.3116, which gives "super-priority" to a portion of a homeowners association lien. Accordingly, the HOA's foreclosure of its assessment lien did not affect Freddie Mac's deed of trust because Freddie Mac did not consent.
2. Freddie Mac and FHFA did not implicitly consent to the foreclosure when they took no action to stop it because the Federal Foreclosure Bar does not require the agencies to actively resist foreclosure.
3. Where the recorded assignment of the deed of trust names a beneficiary (here Bank of America) that is different than the holder of the note (here Freddie Mac), the note holder retains its security interest because it can direct the recorded beneficiary to foreclose on its behalf, so the note holder's interest is valid and enforceable under Nevada law.

In re: Turner (Turner v. Wells Fargo Bank)
9th Circuit  6/15/17

BANKRUPTCY / TRUSTEE'S SALES: In an action for wrongful foreclosure, the court held:
A home loan borrower has standing to claim a nonjudicial foreclosure was wrongful if an assignment by which the foreclosing party purportedly took a beneficial interest in the deed of trust was not merely voidable but void. However, the fact that the assignments of the deed of trust were made well after the ninety-day timeframe required by a Pooling and Servicing Agreement between the lender and assignee merely rendered the transfer voidable, not void. Accordingly the debtors lacked standing to claim wrongful foreclosure.
The lender did not breach the terms of the deed of trust where it did not execute the Notice of Default (“NOD”), and where the trustee recorded the NOD three months before the trustee was substituted as trustee. The deed of trust did not require the lender to execute the NOD, but rather, it could cause the Trustee to execute it. Also, even though the substitution of trustee was recorded after the NOD, the substitution established that the trustee had the authority to issue the NOD.

In re: Salamon (Mastan v. Salamon)
9th Circuit  4/20/17

BANKRUPTCY / ANTIDEFICIENCY: Under 11 U.S.C. 1111(b), those who hold non-recourse liens on real property are granted recourse against the bankruptcy estate upon the filing of the bankruptcy petition. Those protected are creditors who have "a claim secured by a lien on property of the estate." The court held that a creditor does not continue to have a right of recourse after there has been a non-judicial foreclosure, so that the property is no longer part of the estate and the liens have been extinguished.

Dowers v. Nationstar Mortgage
9th Circuit  3/31/17

FAIR DEBT COLLECTION PRACTICES ACT: The court held that Fair Debt Collection Practices Act claims under 15 U.S.C. Section 1692f(6), governed defendants' alleged conduct because that section expressly applies to the enforcement of security interests such as a deed of trust. The court also held that the district court properly dismissed plaintiffs' claim of a violation of the Nevada Deceptive Trade Practices Act, agreeing with the district court's prediction that the Supreme Court of Nevada would hold that real estate loans do not fall within the Act.

In re: Miller (First Community Bank v. Gaughan)
9th Circuit  3/31/17

BANKRUPTCY / COMMUNITY PROPERTY: A creditor's judgment, obtained in Arizona and registered in the U.S. District Court for the Northern District of California, arose from a guaranty signed by the debtor but not by his wife. The couple were Arizona domiciles. Because the judgment arose from a guaranty signed only by the husband, it would not be binding on the couple's community property under Arizona law. Applying California's choice-of-law rules, the court held that California law, rather than Arizona law, governed. The real property subject to the judgment lien, a San Francisco co-op apartment owned by both spouses, was not community property under California law, it was a tenancy-in-common, and the interests of a co-tenant-in-common are subject to the enforcement of a judgment lien.

In re: RW Meridian (County of Imperial v. Stadtmueller)
BAP - 9th Circuit  2/3/17

BANKRUPTCY: The court found that although Debtor's right to redeem the property from a tax sale had expired prepetition, Debtor still held valuable rights in the property at the time of its bankruptcy filing, including title, possession, and contingent redemption rights. Accordingly, the court held that the property was property of Debtor's estate under Bankruptcy Code Section 541. As a result, the court concluded that the County's postpetition completion of the tax sale violated Section 362(a)(3), (4), and (6) and thus was void.

Lightfoot v. Cendant Mortgage Corp.
United States Supreme Court  1/18/17

FANNIE MAE: The corporate charter of the Federal National Mortgage Association, known as Fannie Mae, authorizes Fannie Mae "to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal." 12 U.S.C. Section 1723a(a). This case presented the question whether this sue-and-be-sued clause grants federal district courts jurisdiction over cases involving Fannie Mae. The court held that it does not. In authorizing Fannie Mae to sue and be sued "in any court of competent jurisdiction, State or Federal," it permits suit in any state or federal court already endowed with subject-matter jurisdiction over the suit.

In re: Ozenne (En Banc)
9th Circuit  11/9/16

BANKRUPTCY: The debtor mandamus filed a mandamus petition challenging the bankruptcy court's refusal to consider the debtor's motion for sanctions for violations of 11 U.S.C. 362(a). The en banc court held that mandamus was not available to the debtor because he filed the mandamus petition as a substitute for filing the timely appeal required by the Federal Rules of Bankruptcy Procedure. The debtor's failure to file a timely appeal from the bankruptcy court's order jurisdictionally barred the Bankruptcy Appellate Panel from considering the mandamus petition.

In re: New Investments (Pacifica L51 LLC v. New Investments)
9th Circuit  11/4/16

BANKRUPTCY: Great W. Bank & Tr. V. Entz-White Lumber & Supply (In re Entz-White Lumber & Supply), 850 F.2d 1338 (9th Cir. 1988), held that a debtor that cures a default is entitled to avoid all consequences of the default, including higher post-default interest rates. The court held that this rule of Entz-White, allowing a curing debtor to avoid a contractual post-default interest rate in a loan agreement, is no longer good law in light of later-enacted 11 U.S.C. 1123(d), which provides that, if a plan proposes to cure a default, "the amount necessary to cure the default shall be determined in accordance with the underlying agreement and applicable nonbankruptcy law." Accordingly, the creditor was entitled to receive payment of the loan at the post-default interest rate.

Ho v. ReconTrust Company
9th Circuit  10/19.16

TRUSTEE'S SALES: The court held that the trustee conducting a trustee's sale under a deed of trust was not a "debt collector" subject to damages under the Fair Debt Collection Practices Act because the trustee was not attempting to collect money from the plaintiff.

In re: Tracht Gut (Tracht Gut v. Los Angeles County Treasurer)
9th Circuit  9/8/16

BANKRUPTCY: A transfer by an insolvent or inadequately capitalized debtor is constructively fraudulent under Bankruptcy Code Section 548(a)(1)(B) if made for "less than a reasonably equivalent value" and within two years of bankruptcy. Because the debtor was apparently insolvent, the central question was whether the proceeds of the tax sale constituted "reasonably equivalent value" under Section 548(a). The court held that due to procedural safeguards in place for California tax sales, the price received at a California tax sale conducted in accordance with state law conclusively establishes "reasonably equivalent value" for purposes of Section 548(a). Accordingly, the sales of the debtor’s properties were not voidable.

In re: GACN, Inc. (Certain Underwriters at Lloyds Syndicates v. GACN, Inc.)
BAP - 9th Circuit  8/25/16

BANKRUPTCY: The court held that an adversary proceeding seeking declaratory relief determining the parties' rights and liabilities under state law arising from an insurance contract the insurer and debtor entered into prepetition is not a core bankruptcy proceeding that can be heard by a bankruptcy court absent the consent of the parties.

In re: Berkeley Delaware Court (Adeli v. Barclay)
9th Circuit  8/23/16

BANKRUPTCY: Agreeing with other circuits and with the 9th Circuit Bankruptcy Appellate Panel, the panel held that a bankruptcy court has discretion to apply the procedures of Bankruptcy Code Section 363(m) to a sale of claims pursuant to a settlement approved under Bankruptcy Rule 9019. In addition, the bankruptcy court did not clearly err in determining that the creditor was a good faith purchaser of the debtor's claims. Under Section 363(m), therefore, the sale could not be modified or set aside on appeal unless it was stayed pending appeal.

Bourne Valley Court Trust v. Wells Fargo Bank
9th Circuit  8/12/16

TRUSTEE'S SALES (NEVADA): The court held that the previous version of NRS 116.3116, which provided for an "opt-in" notice scheme requiring a Homeowners Association to alert a mortgage lender that it intended to foreclose only if the lender had affirmatively requested notice, facially violated the lender's constitutional due process rights under the Fourteenth Amendment to the Federal Constitution.

In re: Pass (Salven v. Galli)
BAP - 9th Circuit  8/1/16

BANKRUPTCY/HOMESTEADS: When a married couple initially filed their joint chapter 13 petition, they asserted an entitlement to an automatic homestead exemption in the their residence. After the filing of the petition, they got divorced, and the husband's bankruptcy case was dismissed. The court held that 1) the husband, as a non-debtor, may nevertheless assert any exemption in property of the former wife's bankruptcy estate, and 2) the husband is entitled to an automatic homestead exemption under California law. (Ed. Note: The case contains a very thorough explanation of the difference between California's declared and automatic homestead exemptions.)

In re: Kabiling (Desert Pine Villas Homeowners Association v. Kabiling)
BAP - 9th Circuit  6/14/16

BANKRUPTCY: Debtors filed a Statement of Intention to abandon their condominium, along with a Chapter 7 petition. The debtors received a discharge and the HOA subsequently foreclosed on the condominium. The HOA then brought a quiet title action against debtors and other parties, and the debtors filed this action in bankruptcy court for compensatory damages for the HOA's violation of the discharge injunction. The court held that the HOA violated the discharge injunction because the complaint failed to make explicit that debtors were named only as putative parties from whom no sums were sought and, instead, sought attorney's fees from all parties, including attorney's fees that were related to the discharged claim.

In re: Castaic Partners (Castaic Partners v. DACA-Castaic)
9th Circuit  5/23/16

BANKRUPTCY: The bankruptcy court granted a party's motion for relief from the automatic bankruptcy stay so that it could proceed with foreclosure sales. Debtors appealed to the district court, but did not seek a stay of the bankruptcy court's order pending appeal. The foreclosures went forward. Thereafter, with debtors' consent, the bankruptcy cases were dismissed. The panel held that debtors' appeals were constitutionally moot because there no longer was any case or controversy.

In re: EPD Investment Company (Kirkland v. Rund)
9th Circuit  5/9/16

BANKRUPTCY: The court affirmed the district court's decision affirming the bankruptcy court's denial of a motion to compel arbitration in a bankruptcy trustee's adversary proceeding seeking avoidance of fraudulent transfers. The court agreed with the bankruptcy court that the Trustee's fraudulent conveyance, subordination, and disallowance causes of action were core proceedings, thereby giving the bankruptcy court discretion to weigh the competing bankruptcy and arbitration interests at stake. Stern v. Marshall, 564 U.S. 462 (2011), does not affect the statutory designation of matters as core for the purpose of determining whether the bankruptcy court has discretion to deny arbitration because that decision is not itself a final judgment.

In re: Beltway One Development Group
BAP - 9th Circuit  3/31/16

BANKRUPTCY: Where a Chapter 11 Plan does not cure the prebankruptcy default on an oversecured creditor's loan, the creditor may recover "pendency interest", which is additional interest due to debtor's default occurring post-petition and pre-confirmation of the Chapter 11 plan. Such interest may accrue at a higher rate to account for default penalties as long as the higher interest rate is not unenforceable under nonbankruptcy law.

The court distinguished the case of Great Western Bank & Trust v. Entz-White Lumber and Supply, Inc. (In re Entz-White Lumber and Supply, Inc.), 850 F.2d 1338 (9th Cir. 1988), which authorized a Plan that cures the prebankruptcy default to nullify all consequences of default, including avoidance of default penalties such as higher interest. Here, the Plan did not cure the prebankruptcy default.

In re: Ozenne
9th Circuit  3/25/16     En Banc decision 11/9/16

BANKRUPTCY: Vacating the bankruptcy appellate panel's (BAP) denial of a petition for a writ of mandamus, the court held that the BAP did not have jurisdiction to consider the mandamus petition. The court held that the BAP lacked jurisdiction under the All Writs Act (28 U.S.C. Section1651(a)) because the BAP, which is established by the circuit judicial council pursuant to 28 U.S.C. Section 158(b)(1), is not one of the "courts established by Act of Congress."

In re: Diaz
BAP - 9th Circuit  3/11/16

BANKRUPTCY/HOMESTEAD: The BAP reversed and remanded the Bankruptcy Court's denial of the debtor's homestead exemption under California law. The California automatic homestead exemption protects a debtor from a forced sale and requires that the debtor reside in the homestead property at the time of a "forced sale", which term includes the filing of a bankruptcy petition. The relevant factors for determining if a debtor resides in a property are 1) the physical fact of the occupancy of the property and 2) the debtor's intention to live there. Here, the record was not sufficiently developed on the issue of the debtor's intent to make the subject property his residence. Because the declaration evidence focused on the debtor's ability to physically occupy the property without assistance, the record should be reopened to permit evidence of his intent on the filing date.

In re: Caldwell
BAP - 9th Circuit  2/24/16

BANKRUPTCY: Bankruptcy Code Section 522(p)(1), limiting a homestead exemption to a statutory cap when the debtor's interest in a homestead is acquired within 1215 days of filing bankruptcy, does not apply where the debtor acquired title in 1994, subsequently conveyed title back and forth to a family trust and limited liability company wholly owned by the debtor, then conveyed title back to debtor as an individual within the 1215 day period. The court did not believe that Congress envisioned limiting a debtor's homestead exemption where as here (1) debtor purchased the property well before the start of the 1215-day period, (2) continuously possessed and occupied the property as his homestead, and (3) accumulated the equity in the property by making regular mortgage payments throughout his occupancy.

In re: Chagolla
BAP - 9th Circuit  2/9/16

LIEN SPLITTING: The court held that a motion to value and avoid the lien of an underwater junior lienholder under Bankruptcy Code Section 506(a) may be brought after discharge if a confirmed Chapter 13 plan called for its avoidance and treated it as unsecured and if no prejudice to the junior lienholder will occur. Here the plan called for avoidance of an underwater second deed of trust, and provided that the debtors would file an adversary proceeding to "strip off" the lien, which the debtors failed to do. Nevertheless, the court allowed the bankruptcy case to be re-opened a year after it was closed and six years after the plan was confirmed, and ordered that the wholly underwater deed of trust be stripped off.

DM Residential Fund II v. First Tennessee Bank
9th Circuit  12/30/15

CONTRACTS: In order to be entitled to the equitable remedy of rescission, a party seeking rescission must do so "promptly upon discovering the facts which entitle him to rescind." The court held that plaintiff, instead of investigating and pursuing its claims, took actions inconsistent with unwinding the contract, and by taking those actions and waiting two years before suing defendant, plaintiff affirmed the transaction and lost its right to rescind.

In re: Free
BAP - 9th Circuit  12/17/15

BANKRUPTCY: In this "Chapter 20" case, the debtors received a discharge of personal liability in a Chapter 7 case as to debts secured by two junior deeds of trust that were "under water". Before the Chapter 7 case was closed, debtors filed a Chapter 13 and sought to strip off the wholly-unsecured junior liens. The trustee moved to dismiss the case, arguing that the unsecured debt, including the wholly-unsecured junior lienholders' debt totaling $535,186.69, exceeded the unsecured debt limit of $383,175 for chapter 13 eligibility under Bankruptcy Code Section 109(e). The court reversed the Bankruptcy Court's dismissal of the case, holding that wholly unsecured liens are not "unsecured debts" for eligibility purposes in a so-called chapter 20 case because debtors did not "owe" the unsecured debt for the purpose of establishing chapter 13 eligibility under Section 109(e) as a result of any unsecured debts debtors owed to their creditors being discharged.

In re: Ezra
BAP - 9th Circuit  9/11/15

BANKRUPTCY: The court held that 1) two deeds of trust recorded in 2004 and 2009 were fraudulent conveyances, 2) the one-year statute of limitations under Civil Code Section 3439.09(a) does not begin to run until the plaintiff has reason to discover the fraudulent nature of the transfer, and 3) the seven-year statute of limitations under CC 3439.09(c) does not bar a claim as long as the claim arose within seven years before the debtor's bankruptcy filing.

Edwards v. The First American Corporation
9th Circuit  8/24/15

RESPA: Plaintiff sought to certify as a class customers who purchased title insurance from title agencies in which First American purchased an ownership interest and entered into exclusive agency agreements with them. The court denied class certification as to agencies that were newly-formed with a third party investor because they represent a different set of facts from the nationwide scheme alleged in the complaint. But the court granted class certification as to agencies in which First American purchased an interest, holding:
1. The safe harbor in 12 U.S.C 2607(c)(2), which exempts a payment from RESPA violation if the payment was "for goods or facilities actually furnished or for services actually performed", does not apply because First American purchased ownership interests, not goods, services, or facilities.
2. An individual inquiry of each transaction is not required to determine whether the purchase prices of the ownership interests exceeded their fair market value because plaintiff does not have to pinpoint how much money First American paid for the referral agreement as opposed to the equity interest. Rather, plaintiff only has to show that one of the items First American purchased was the title agency's agreement to refer future title insurance business.

In re: Boukatch
BAP - 9th Circuit  7/9/15

BANKRUPTCY: The court held that a "chapter 20" debtor is entitled to avoid a wholly unsecured junior lien under Bankruptcy Code Sections 506(a) and 1322(b) against the debtor's principal residence even thought no discharge will be entered in the pending chapter 13 case. Nothing in the Bankruptcy Code prevents chapter 20 debtors from stripping such liens off their principal residence under Sections 506(a)(1) and 1322(b)(2). Plan completion is the appropriate end to a debtor's chapter 20 case. Unlike a typical chapter 13 case, the lien avoidance will become permanent not upon a discharge, but rather upon completion of all payments as required under the plan.

Robinson v. Jewell
9th Circuit  6/22/15

INDIANS: The court held that the plaintiff Tribe had no ownership interest in the Tejon Ranch and that no Indian reservation had been established.

Bank of America v. Caulkett
U.S. Supreme Court  6/1/15

BANKRUPTCY: A debtor in a Chapter 7 bankruptcy proceeding may not "strip off" a junior mortgage under Bankruptcy Code Section 506(d) when the debt owed on a senior mortgage exceeds the present value of the property.

Wellness International Network v. Sharif
U.S. Supreme Court  5/26/15

BANKRUPTCY: In Stern v. Marshall, the U.S. Supreme Court held that Article III of the Constitution prevents bankruptcy courts from entering final judgment on claims that seek only to augment the bankruptcy estate and would otherwise exist without regard to any bankruptcy proceeding. Here the court held that the parties may consent to the Bankruptcy Court's jurisdiction. Furthermore, consent to adjudication by a bankruptcy court need not be express, but must be knowing and voluntary.

Jesinoski v. Countrywide Home Loans
U.S. Supreme Court  1/13/15

TRUTH IN LENDING: A borrower exercising his right to rescind under the Truth in Lending Act need only provide written notice to his lender within the 3-year period, not file suit within that period.

In re: Ellis
BAP - 9th Circuit  11/19/14

BANKRUPTCY: The court held 1) an appeal from an order terminating the automatic stay was moot where the debtor obtained a discharge after filing the appeal because under Bankruptcy Code Section 362(c)(2)(C), the automatic stay terminated when debtor obtained a discharge, and 2) the bankruptcy court abused its discretion in granting in rem relief under Section 362(d)(4) (i.e. ordering that relief from the automatic stay applied to future bankruptcy filings) because the person requesting the relief was an owner of property trying to evict the debtor and not a creditor whose claim was secured by an interest in the subject property.

Chemehuevi Indian Tribe v. Jewell
9th Circuit  9/17/14

INDIANS: An Indian Tribe issued to some of its members land assignment deeds to Reservation land, which purported to convey exclusive rights of use and possession. The court held that the deeds were conveyances that that require Congressional approval under 25 U.S.C. Section 177 (the "Indian Nonintercourse Act"). Certain agreements can be approved by the Bureau of Indian Affairs under 25 U.S.C. Section 81, but that statute does not override the requirement for Congressional approval under 25 U.S.C. Section 177.

In re: Cruz (Cruz v. Stein Strauss Trust #1361)
BAP - 9th Circuit  8/29/14

RELIEF FROM STAY: The BAP upheld an order granting retroactive relief from the automatic stay. A trustee's sale was held under a deed of trust encumbering property acquired by the debtor after filing bankruptcy. The court held that, while the property was not property of the estate because it was acquired after the petition in bankruptcy was filed, the automatic stay nevertheless applied because it was property of the debtor. However, the court found that this was a proper case for retroactively validating the trustee's sale due to the debtor's unreasonable and inequitable conduct involving numerous bankruptcy filings as part of a scheme to delay, hinder and defraud creditors. Pages 16 - 17 of the opinion contains a list of 12 factors to be considered in weighing the equities of the case in order to determine whether retroactive relief should be granted.

Lacano Investments v. Balash
9th Circuit  8/28/14

NAVIGABLE WATERWAYS / SOVEREIGN IMMUNITY: Plaintiff brought this action challenging the State of Alaska's assertion of title to a navigable streambed on the basis that the streambed had been patented by the federal government before Alaska became a state. The court held that state sovereign immunity barred this action because the Eleventh Amendment bars actions, such as this, which are close to the "functional equivalent" of a quiet title action, and because the lands at issue were submerged lands beneath navigable waters, which have a "unique status in the law" insofar as state ownership of them has been considered an essential attribute of sovereignty.

Mastro v. Rigby
9th Circuit  8/22/14

BANKRUPTCY: A non-Article III bankruptcy judge lacks constitutional authority to enter a final judgment in a fraudulent conveyance action against a nonclaimant to the bankruptcy estate, even though Congress designated such claims as core bankruptcy proceedings. However, the right to a hearing in an Article III court is waivable, and here the nonclaimant specifically consented to the bankruptcy judge's adjudication of the fraudulent conveyance claim.

Compton v. Countrywide Financial Corp.
9th Circuit  8/4/14

PREDATORY LENDING: The panel held that when a district court evaluates whether a borrower's complaint states a claim under Hawaii's Unfair or Deceptive Acts or Practices law (H.R.S. Section 480-2 and 480-13) against a lender, the district court need only address whether the complaint adequately alleged that the lender used unfair or deceptive acts in its relationship with the borrower, without looking to negligence law to determine whether the lender breached a common law duty of care. The panel held that the district court erred in dismissing the borrower's claim solely on the ground that the borrower failed to allege that the lender exceeded its role as a lender and owed an independent duty of care to the borrower. The panel held that the complaint adequately alleged under Hawaii law unfair and deceptive acts by Bank of America, and injury resulting in damage to the borrower, to withstand a motion to dismiss.

Merritt v. Countrywide Financial Corporation
9th Circuit  7/16/14

RESPA: although the RESPA statutory limitations period ordinarily runs from the date of the alleged RESPA violation, the doctrine of equitable tolling may, in appropriate circumstances, suspend the limitations period until the borrower discovered or had reasonable opportunity to discover the violation. The panel declined to address two issues of first impression: (1) whether, while straight overcharges are not actionable under RESPA Section 8(b), markups for services provided by a third party are actionable; and (2) whether an inflated appraisal qualifies as a "thing of value" under RESPA Section 8(a).

Executive Benefits Insurance Agency v. Arkison
U.S. Supreme Court  6/9/14

BANKRUPTCY: The court held that when the Constitution does not permit a bankruptcy court, because the judge is not an Article III judge, to enter final judgment on a bankruptcy related claim, the bankruptcy court may issue proposed findings of fact and conclusions of law to be reviewed de novo by the District Court. Since the District Court had conducted such a de novo review in the context of an appeal from the bankruptcy court, the judgment satisfied that requirement because petitioner received the same review from the District Court that it would have received if the Bankruptcy Court had treated the fraudulent conveyance claims as non-core proceedings. The court stated that "we assume without deciding, that the fraudulent conveyance claims in this case are "Stern" claims [i.e., claims designated for final adjudication in the bankruptcy court as a statutory matter, but prohibited from proceeding in that way as a constitutional matter because the bankruptcy judge is not an Article III judge].

In a footnote the court noted that because it concludes that petitioner received the de novo review and entry of judgment to which it claims constitutional entitlement, this case did not require it to address whether petitioner in fact consented to the Bankruptcy Court's adjudication of a Stern claim and whether Article III permits a bankruptcy court, with the consent of the parties, to enter final judgment on a Stern claim.

In re: Mortgage Electronic Registration Systems (Robinson v. American Home Mortgage Servicing)
9th Circuit  6/12/14

MERS / ROBOSIGNING: In the significant portions of the opinion, the court:
1. Reversed the district court's dismissal of the count seeking relief based on violations of Arizona's false documents statute (A.R.S. Section 33-420) alleging that defendants filed false notices of trustee sale, notices of substitution of trustee, and assignments of deed of trust because these documents were allegedly notarized in blank and "robosigned" with forged signatures. The court followed Stauffer v. US Bank in holding that this was a viable cause of action because these documents asserted an "interest in, or a lien or encumbrance against" real property within the meaning of A.R.S. Section 33-420.
2. Affirmed the dismissal of the count alleging that the defendants committed the tort of wrongful foreclosure, in violation of Arizona, California, and Nevada law, because the MERS System impermissibly "splits" ownership of the note from ownership of the deed of trust, thereby making the promissory note unsecured and unenforceable in any foreclosure proceeding. The court held that these claims failed because none of the plaintiffs alleged lack of default, tender to cure the default, or an excuse from tendering.
3. Affirmed the dismissal of the count alleging that nonjudicial foreclosures conducted under N.R.S. Section 107.080 were improper. The court followed the Nevada Supreme Court's decision in Edelstein v. Bank of New York Mellon, which held that MERS has the authority, for purposes of Section 107.080, to make valid assignments of the deed of trust to a successor beneficiary in order to reunify the deed of trust (executed in favor of MERS) and the note (executed in favor of the lender).

Biery v. United States
Court of Appeals for the Federal Circuit  6/4/14

RAILROADS: Applying Kansas law, the court held that deeds to a railroad that refer to a "right of way" conveyed only an easement. Deeds without such limiting language conveyed a fee, and those property owners were entitled to compensation when the land was converted to use for trails under the National Trail Systems Act.

In re: Perl
BAP - 9th Circuit  5/30/14

BANKRUPTCY: Eden Place, LLC purchased property at a trustee's sale and obtained an unlawful detainer judgment and writ of possession against the former owner who failed to vacate the property. The former owner then filed bankruptcy, and the Sheriff subsequently evicted him in spite of the bankruptcy filing. The court held that Eden Place violated the automatic stay by proceeding with the eviction after the bankruptcy was filed because physical occupation of a residence confers a possessory interest under California law that is protected by the automatic stay.

Michigan v. Bay Mills Indian Community
U.S. Supreme Court  5/27/14

INDIANS: The court upheld its decision in Kiowa Tribe of Okla. v. Manufacturing Technologies, 523 U. S. 751, holding that an Indian tribe's sovereign immunity precludes an action being brought against the tribe for activities arising from a tribe's commercial activities off Indian lands. Accordingly, Michigan cannot bring a suit against a tribe in connection with the operation of a casino on land purchased by the tribe and which is neither on the Indian reservation nor land held in trust for the tribe by the United States. The court pointed out that a state has other tools to enforce its law on state land that it does not possess in Indian territory, including, for example, bringing a civil or criminal action against tribal officials rather than the tribe itself for conducting illegal gaming.

In re: Frates
BAP - 9th Circuit  3/13/14

BANKRUPTCY: The Bankruptcy Court denied debtor's request for an order by default under Bankruptcy Code Section 522(f), which provides for avoiding a lien that impairs an exemption. The Bankruptcy Appellate Panel reversed, holding that:
1. Service of the notice of motion under Section 522(f) is properly made on the creditor pursuant to Bankruptcy Rule 7004(h). It is not necessary to comply with C.C.P. Section 684.010, which requires service on the judgment creditor's attorney named in the abstract of judgment.
2. Identification of the real property was sufficient, even though not described in the notice of motion, because the property was identified in the motion itself.

Brandt v. U.S.
U.S. Supreme Court  3/10/14

RAILROADS: A grant of a railroad right of way pursuant to the General Railroad Right-of-Way Act of 1875 conveyed to the railroad company an easement only. Accordingly, when the railroad company subsequently abandoned the right of way, the easement was extinguished and the underlying landowner owned the land without the burden of the easement.

In re: Hudson
BAP - 9th Circuit  1/14/14

BANKRUPTCY: The purchaser at a trustee's sale was not entitled to retroactive annulment of the automatic stay on the basis that the trustee's sale was held several minutes before the bankruptcy petition was filed where the only evidence that the sale was held before, and not after, the petition was filed were affidavits that relied on a "Sale Report", which was prepared by the trustee that conducted the sale and was, therefore, hearsay. The Sale Report did not fall within the business records exception to the hearsay rule because neither affiant stated that the Sales Report was kept in the regular course of either affiant's employer's or the trustee's business, or that either affiant's employer or the trustee relied on the report.

In re: Tracht Gut
BAP - 9th Circuit  1/3/14     AFFIRMED by 9th Circuit Court of Appeals

BANKRUPTCY: 1. A duly conducted tax sale under California law presumptively provides for reasonably equivalent value, and thus the essential condition for avoidance of a tax sale as a fraudulent transfer under Bankruptcy Code Section 548 for less than reasonably equivalent value, could not be established.
2. The debtor's right of redemption as to property subject to a tax sale expired the day before the sale occurred and before the debtor's bankruptcy petition was filed, so the County's recording of a tax deed after debtor's bankruptcy petition was filed was a ministerial act that did not violate the automatic stay.

Evans v. Shoshone-Bannock Land Use Policy Commission
9th Circuit  12/5/13

INDIANS: Because the plaintiff was an owner of non-Indian fee land within a reservation, the Tribes' efforts to impose land use regulations were presumptively invalid under Montana v. United States, 450 U.S. 544 (1981), and an exception for the regulation of nonmember activity that directly affects a tribe's political integrity, economic security, health, or welfare did not apply.

In re: Gonzalez
U.S. District Court, C.D. California  6/14/12

TRUSTEE'S SALES: California Civil Code Section 2924h provides that a trustee's sale is deemed perfected as of 8:00 a.m. on the actual date of a trustee's sale if the trustee's deed is recorded within 15 calendar days of the sale. There was some factual dispute as to whether the trustee's sale was conducted earlier in the day prior to the filing of the property owner's bankruptcy petition. The trustee's deed was recorded post-petition and within 15 days of the sale. The court held that the post-petition recording of the Trustee's Deed did not violate the automatic stay because it related back to 8:00 a.m. on the date of the trustee's sale pursuant to Civil Code Section 2924h and Bankruptcy Code Section 547(e)(2)(A), which provides that a transfer takes effect at the time the transfer is made if it is perfected at, or within 30 days after, such time.

Carter v. Welles-Bowen Realty
6th Circuit  11/27/13

RESPA: Plaintiffs asserted that a title company owned by a real estate broker and a Chicago Title Insurance Company was a sham affiliated business arrangement set up for the purpose of funneling referral fees between the Chicago and the broker. The title company contracted "some" of the title work out to Chicago, but plaintiffs conceded that the title company does provide settlement services. The court held in favor of Chicago on the basis that the arrangement satisfied the provisions of 12 U.S.C. 2607(c), which provides a safe harbor if the arrangement meets three conditions: (1) The person making the referral must disclose the arrangement to the client; (2) the client must remain free to reject the referral; and (3) the person making the referral cannot receive any "thing of value from the arrangement" other than "a return on the ownership interest or franchise relationship." The court also held that HUD's Statement of Policy 96-2, which added a fourth requirement that the affiliated business be a "bona fide provider of settlement services", was invalid because HUD does not have the regulatory authority to add requirements outside of the statutory requirements.

In re: Montano
BAP - 9th Circuit  11/1/13

DEFICIENCY JUDGMENTS: A sold-out junior deed of trust holder is not entitled to a deficiency judgment under C.C.P Section 580b where the loan was given to secure the part of the purchase price of the borrower's dwelling. But C.C.P. Section 726(f) provides an exception where the action is based on the borrower's fraud that induced the lender to make the loan. The borrower did engage in loan fraud by grossly overstating his income in the loan application. However the court upheld the sustaining of borrower's motion for summary judgment based on C.C.P. Section 726(g), which provides that Section 726(f) is inapplicable to loans of $150,000 or less, and denied the lender's request for an exception to the debtor's discharge which would normally be granted where the borrower engaged in fraud.

In re: Gasprom
BAP - 9th Circuit  10/28/13

BANKRUPTCY:
1. Abandoned property continues to be protected by the automatic stay to the extent it has reverted back to the debtor, unless and until the case is closed or dismissed, or a discharge is granted or denied.
2. In deciding whether to annul the automatic stay, a bankruptcy court should examine the circumstances of the specific case and balance the equities of the parties' respective positions. The court lists numerous factors that should be considered in assessing the equities.

In re: Alakozai
BAP - 9th Circuit  10/2/13

AUTOMATIC STAY: An "in rem order" entered under Bankruptcy Code Section 362(d)(4), which precludes the automatic stay from applying in future bankruptcy cases to real property specified in the order, binds any party asserting an interest in the affected property, including every non-debtor, co-owner, and subsequent owner of the property. Accordingly, the debtor wife is bound by the order issued in a previous bankruptcy case filed only by her husband.

In re: Nordeen
BAP - 9th Circuit  8/9/13

TRUSTEE'S SALES: The court rejected debtors' "securitization theory", which was that the securitization of the note and sale to a trust constituted a "true sale" of the note that vitiated its effectiveness as to them and rendered the deed of trust unenforceable. The court also held that neither the loan servicer nor the trustee under the deed of trust is subject to the federal Fair Debt Collection Practices Act.

Corvello v. Wells Fargo Bank
9th Circuit  8/8/13

LOAN MODIFICATIONS: Under the Home Affordable Modification Program defendant was contractually required to offer plaintiffs a permanent mortgage modification after they complied with the requirements of a trial period plan ("TPP"). The court held that the district court should not have dismissed the plaintiffs' complaints when the record showed that defendant had accepted and retained the payments required by the TPP, but neither offered a permanent modification, nor notified plaintiffs they were not entitled to one, as required by the terms of the TPP.

Confederated Tribes of the Chehalis Reservation v. Thurston County Board of Equalization
9th Circuit  7/30/13

INDIANS: The court held that state and local governments lack the power to tax permanent improvements built on non-reservation land owned by the United States and held in trust for an Indian tribe. The fact that the improvements were owned by a limited liability company (in which the Tribe had a 51% interest), rather than by the tribe itself, was irrelevant, as was the question whether the improvements constituted personal property under state law.

Logan v. U.S. Bank National Association
9th Circuit  7/16/13

FORECLOSURE:
This action was for injunctive relief alleging that defendant's failure to provide a 90-day notice prior to evicting plaintiff/tenant was a violation of the federal Protecting Tenants at Foreclosure Act of 2009. The court held:
1. Even though plaintiff was the defendant in a state court unlawful detainer action, the District Court should not have abstained from hearing this action because the state court action did not implicate "important state interests".
2. There is no private right of action under the Act because it does not evince a congressional intent to create a private right of action and, therefore, the court affirmed the District Court's dismissal of the complaint.

In re: Pringle
BAP - 9th Circuit  7/2/13

BANKRUPTCY: Debtor transferred his residence to a friend about a year and a half before filing bankruptcy. One reason debtor gave for doing this was because was being sued and did not want to keep the house in his name. At another time, the reason he gave was that the transferee had taken care of him and promised to continue to take care of him and to pay household expenses. The trustee sought to have the transfer set aside under Bankruptcy Code Section 548 as a fraudulent conveyance. The court held:
1. By extensively participating in litigation at the bankruptcy court and on appeal without raising any challenge to the bankruptcy court's constitutional authority to decide a fraudulent conveyance case, the transferee impliedly consented to the authority of the bankruptcy court to hear the case and enter a judgment.
2. The transferee did not give reasonably equivalent value because Section 548(d)(2) specifically excludes from the definition of reasonably equivalent value an unperformed promise to provide support to the debtor.
3. Even though the property could have been claimed as exempt, Section 522(g) prohibits a debtor from claiming an exemption in property recovered by the trustee to the extent the debtor voluntarily transferred away that property.

Schlegel v. Wells Fargo Bank
9th Circuit  (7/13/13)

DEBT COLLECTION:
1. Plaintiffs could not properly state a claim alleging that Wells Fargo is a "debt collector" subject to the Fair Debt Collection Practices Act because they could not satisfy either of the two alternative criteria for the definition of "debt collector": A) debt collection is not the principal purpose of Wells Fargo's business and B) Wells Fargo does not regularly collect debts owed to another.
2. Sending several mistaken default notices constituted on their face a "revocation of credit" under the Equal Credit Opportunity Act, requiring a statement of reasons for the creditor's action. The complaint's allegations that Wells Fargo took an adverse action without complying with ECOA’s notice requirements are enough for the ECOA claim to survive a motion to dismiss.

Zadrozny v. Bank of New York Mellon
9th Circuit  (6/28/13)

TRUSTEE'S SALES: The court held that 1) Arizona courts have held that non-judicial foreclosures do not require production of the promissory note prior to a sale, 2) Arizona law permits successor trustees to initiate foreclosure proceedings, 3) Arizona precedent foreclosed plaintiffs' contention that non-judicial foreclosure sales must comport with the Uniform Commercial Code, under which plaintiff contended would require the trustee to take possession of the note, and 4) plaintiffs did not provide any legal authority for their claim that A.R.S. Section 33-811(B), which authorizes non-judicial foreclosures, is unconstitutional.

In re: Griffin
9th Circuit  (6/26/13)

BANKRUPTCY: By providing a copy of a copy of a note and a declaration certifying its possession of the original note, a lender established prudential standing to file a motion for relief from the automatic stay.

Hollingsworth v. Perry
U.S. Supreme court  (6/26/13)

SAME SEX MARRIAGE: Proposition 8 amended the California State Constitution to provide that "[o]nly marriage between a man and a woman is valid or recognized in California". The 9th Circuit upheld the District Court's decision holding that Proposition 8 is unconstitutional because it violates the Equal Protection Clause of the U.S. Constitution. The Supreme Court vacated the judgment of the 9th Circuit on the basis that petitioners, who were the official proponents of Proposition 8, do not have standing to appeal. This leaves in place the District Court's decision because the plaintiffs in that case were actual aggrieved parties.

Fourth Investment LP v. U.S.
9th Circuit  (6/13/13)

FEDERAL TAX LIENS: Tax liens naming taxpayers, and their wholly owned entities as "nominees" for taxpayers, were valid liens against properties held in the name of the nominees. The court held that California law recognizes the existence of nominee ownership and it predicted that the California Supreme Court would evaluate nominee status in light of six criteria set forth in relevant federal cases. The court pointed out that if appellants were adjudged to be independent third-party purchasers who paid "adequate and full consideration" for the properties, then the federal tax liens would not attach to the properties.

In re: Fadel
BAP - 9th Circuit  (5/31/13)

BANKRUPTCY / DEEDS / COMMUNITY PROPERTY A wife's bankruptcy did not stay the foreclosure of property held in her husband’s name where the wife had recorded a grant deed conveying the property to her husband as his sole and separate property, as that issue is relevant only between spouses upon dissolution and not relevant as to third parties. The court rejected the wife's argument that she had acquired a "pro tanto" community property interest in the Property due to community funds being used to reduce the debt on the property and fund improvements to it. The only way the wife could overcome the presumption that record title controls was to show undue influence by the debtor, which she was unable to show and, even if she could have shown undue influence, the deed would merely be voidable, not void, so a bona fide purchaser or encumbrancer would prevail.

City of Glendale v. United States
9th Circuit  (5/20/13) (Amended Opinion 7/9/13)

INDIANS: The City of Glendale objected to the U.S. buying property in trust for an Indian tribe for use as a resort and casino. The land is in an unincorporated area of the County of Maricopa, but is in a county "island" entirely surrounded by city land. The Gila Bend Indian Reservation Lands Replacement Act prohibits acquiring land into trust when the land is "within the corporate limits" of a city. The court held that the Act is ambiguous as to whether it applies to an island of county land within an incorporated city. Since the Bureau of Indian Affairs incorrectly assumed the Act was unambiguous, the court held that the agency's determination was not entitled to Chevron deference and remanded in order for the agency to consider the question in light of the ambiguity.

Grand Canyon Skywalk Development v. "Sa" Nyu Wa Incorporated
9th Circuit  (4/26/13)

INDIANS: Plaintiff is required to exhaust its remedies in tribal court prior to proceeding with an action in federal court on its claims challenging the defendant Tribe's authority to condemn plaintiff's intangible property rights in a revenue-sharing contract between plaintiff and the Tribe. The bad faith exception to the exhaustion requirement did not apply because where a tribal court has asserted jurisdiction and is entertaining a suit, the tribal court must have acted in bad faith for exhaustion to be excused; bad faith by a litigant instituting the tribal court action will not suffice. Also, the evidence did not meet the narrow futility exception, which applies where exhaustion would be futile because of the lack of adequate opportunity to challenge the tribal court's jurisdiction.

County of Sonoma v. Federal Housing Finance Agency
9th Circuit  (3/19/13)

FREDDIE MAC / FANNIE MAE: The Federal Housing Finance Agency's issuance of a directive that prevented Freddie Mac and Fannie Mae from buying mortgages on properties encumbered by liens made under property-assessed clean energy programs was a lawful exercise of its statutory authority as conservator of Freddie Mac and Fannie Mae.

In re: Kuiken (McCoy v. Kuiken)
BAP - 9th Circuit  (1/4/13)

BANKRUPTCY: The court held that where a debtor owned real property at the time a judicial lien attached, subsequently transferred it to a limited liability company of which he was a member, and then reacquired the property shortly before filing bankruptcy, the lien could not be avoided under Bankruptcy Code Section 522(f)(1). Section 522(f)(1) only applies to liens that attach to property already owned by the debtor and cannot be used to avoid a lien on an interest acquired after the lien was recorded. The court reasoned that the debtor acquired a different interest - one to which a lien had already affixed - when he later reacquired the property, so 522(f)(1) is not applicable.

In re: Bellingham Insurance Agency (Executive Benefits Insurance Agency v. Arkison)
9th Circuit  (12/4/12)     AFFIRMED by U.S. Supreme Court     Sup.Ct. Docket

BANKRUPTCY: 1. A non-Article III bankruptcy judge lacks constitutional authority to enter a final judgment in a fraudulent conveyance action against a nonclaimant to the bankruptcy estate, even though Congress designated such claims as core bankruptcy proceedings.
2. The right to a hearing in an Article III court is waivable, and here the nonclaimant consented to the bankruptcy judge's adjudication of the fraudulent conveyance claim by failing to object until the case reached the court of appeals.
3. 11 U.S.C. 157(b)(1) provides bankruptcy courts the power to hear a fraudulent conveyance case and to submit reports and recommendations to the district court, which can then render a judgment.

In re: Leafty
BAP 9th Circuit  (10/10/12)

BANKRUPTCY: The court held that filing a petition in bankruptcy did not operate to stay a trustee's sale where on the morning of the sale the debtor dismissed a previous case, in which a lender had obtained relief from the automatic stay, and simultaneously filed the current case. Under Bankruptcy Code Section 362(b)(21)(A) there is no automatic stay precluding a trustee's sale where a debtor is ineligible to file under Section 109(g)(2). The latter section provides that a person is not eligible to file a petition if in the preceding 180 days the debtor voluntarily dismissed a previous case in which a request for relief from the automatic stay was filed.

In re: Mortgages, Ltd.
Bankruptcy Court - District of Arizona  (9/27/12)

MECHANICS LIENS: Even though a mechanics lien claimant worked under a separate and subsequent contract, the project was a single renovation project that started in 2005 with demolition and asbestos abatement, and the lien related back to the time that initial work was performed. A.R.S. 33-992(E) provides that "site work" is a separate work of improvement if performed under a separate contract, but the lender did not argue that the asbestos abatement work performed here was such site preparation, so the court did not address the application of the statute. The court refused to apply the "separate contracts doctrine" on the basis that it does not apply to vertical construction contracts. Finally, the court held that the construction lender was not entitled to equitable subrogation for funds that paid off a loan that pre-dated commencement of the work because 1) the lender knew construction had commenced when the loan was made and did not notify contractors that it was asserting priority and 2) it engaged in inequitable conduct in "borrowing" funds from the construction account and failing to pay them back.

City of Glendale v. United States
9th Circuit  (9/11/12) OPINION WITHDRAWN

INDIANS: The court held that the Secretary of the Interior properly accepted land in trust for an Indian tribe because the Secretary reasonably applied the Gila Bend Indian Reservation Lands Replacement Act, and further held that the Act did not violate the Indian Commerce Clause or the Tenth Amendment.

Bates v. Mortgage Electronic Registration System
9th Circuit  9/17/12

MERS: The court upheld the dismissal of plaintiffs' qui tam action under the California False Claims Act ("CFCA") asserting that defendants made false representations in naming MERS as a beneficiary in recorded mortgage documents in order to avoid paying recording fees. The court applied the "public disclosure" exception of the CFCA on the basis that plaintiffs' allegations were substantially similar to information already in the public domain.

Home Federal Savings Bank v. Ticor Title Insurance Co.
7th Circuit  9/6/12

TITLE INSURANCE: Note that this case dealt with a mechanics lien endorsement that pre-dated the current ALTA 32 series and 33 endorsements. The court held:
1. The endorsement provided coverage as to a counterclaim brought by a mechanics lien claimant because it covered the enforcement or attempted enforcement of mechanics liens arising from work commenced prior to or subsequent to the effective date of the endorsement.
2. The policy exclusion for matters created or suffered by the insured did not apply even though the lender purposefully withheld funds that would have been sufficient to pay the mechanics lien because the lender's actions did not constitute "misconduct". The court distinguished Brown v. St. Paul Title Ins. Co. and Bankers Trust Co. v. Transamerica Title Ins. Co. because in those cases the banks entered into disbursement agreements with the title companies by which the banks agreed to provide funds to the title companies, which then made construction disbursements. Accordingly, those cases are distinguishable because the banks had specifically agreed to make sufficient funds available. Here, there was no such agreement.

Equity Income Partners v. Chicago Title Insurance Co.
U.S. District Court, District of Arizona  9/6/12

TITLE INSURANCE: The court held that damages under a loan policy are determined by the value of the property at the time the loan is made, even though the amount of loss cannot be calculated until the insured lender forecloses. The court distinguished cases holding that the amount of loss is based on the value of the property at the time the title defect is discovered on the basis that those cases involved owner's policies and do not apply to loan policies.

Nationwide Life Insurance Co. v. Commonwealth Land Title Ins. Co.
3rd Circuit 7/24/12

TITLE INSURANCE: This is the second time this case has been on appeal. The issue pertained to coverage under an ALTA 9 Endorsement, among other things, insures in paragraph 1(b)(2) against loss from "a right of first refusal or the prior approval of a future purchaser or occupant" unless "expressly excepted" from coverage by the title policy. The court previously held that insurers may not except rights of refusal or other title restrictions from ALTA 9 Endorsement coverage simply by listing as exceptions the instruments in which they are embedded. Instead, the title insurer must find and expressly except the specific provisions.

At issue was whether a policy provides coverage for a loss caused by use restrictions, which are not the subject of paragraph 1(b)(2), in light of the fact that the Declaration of Restrictions are shown as an exception in Schedule B of the policy. Specifically, the court considered the following question certified by the District Court: "Whether the American Land Title Association 9 Endorsement provides title insurance coverage for whole instruments listed in Schedule B or whether the scope of coverage is limited to particular types of encumbrances." The court answered yes, holding that the endorsement provides coverage for losses arising from entire instruments that fit within its plain language, not just the paragraph 1(b)(2) restrictions within those instruments that have not been expressly excepted.

Gale v. First Franklin Loan Services
9th Circuit - 7/12/12

FORECLOSURE: The Truth in Lending Act's requirement that a loan servicer provide the borrower, upon written request, with information regarding the lender applies only when the loan servicer is also the assignee of the obligation, and not in this case where the loan servicer is the original lender. The court points out that the Dodd-Frank Wall Street Reform and Consumer Protection Act has subsequently amended RESPA to require all servicers to respond to requests for information. The district court had also dismissed plaintiff’s wrongful foreclosure and related breach of fiduciary duty claims, which had been poorly asserted by plaintiff who was apparently acting in pro per. With the benefit of appointed counsel, these claims were refined on appeal. Since the district court did not have the opportunity to consider Nevada case law and statutory provisions plaintiff now uses to bolster his claims, the 9th Circuit remanded the case to consider them.

In re: Allen
BAP 9th Circuit - 6/8/12

BANKRUPTCY / FORECLOSURE: The court held that (1) a Lost Note Affidavit constituted adequate proof of the terms of the Note under Washington's version of the Uniform Commercial Code and (2) an assignee of a lost promissory note can enforce the note based on the Lost Note Affidavit. The court rejected the debtor's argument that the deed of trust was never assigned to the current holder because (1) the note contained an endorsement in blank, which turned it into a bearer note enforceable by the holder, and (2) under Washington law (which is similar to the law in many other states) the security follows the debt, so a separate assignment of the deed of trust is not necessary.

U.S. v. California State Lands Commission
9th Circuit - 6/14/12

EMINENT DOMAIN: The United States had leased 32.42 acres of land from a city since 1949, and filed this action in eminent domain to acquire fee title. The land was originally underwater, but a large portion of it had been filled during the lease. At issue was the effect on California's public trust rights in navigable waters and what will happen if  the United States transfers ownership of the property to a private party in the future. The court held that the United States' condemnation extinguished California's public trust on the entire parcel. The 27.54 acres that had been filled can be conveyed to a private party free of the public trust, but the 4.88 acres that remained tidelands at the time of the taking are now subject to a federal public trust. The Lands Commission argued that the equal-footing doctrine, which gives a state title to its submerged lands upon attaining statehood, precludes this eminent domain action. The court rejected this argument, holding that once title has vested, the force of that doctrine was spent and does not preclude a subsequent eminent domain action.

RadLAX Gateway Hotel v. Amalgamated Bank
U.S. Supreme Court - 5/29/12

BANKRUPTCY: In a sale free and clear of a creditor's lien, the creditor must be permitted to "credit bid" at the sale. Accordingly, the court rejected the debtor's cramdown plan that would not permit the creditor to credit bid.

Freeman v. Quicken Loans
U.S. Supreme Court - 5/24/12

RESPA: In order to establish a violation of 12 U.S.C. 2607(b), prohibiting the splitting of a settlement service fee, a plaintiff must demonstrate that a charge for settlement services was divided between two or more persons. Accordingly, RESPA does not apply to a fee for which no service is allegedly performed where the provider receives 100% of the fee.

In re: TOUSA, Inc.
11th Circuit - 5/15/12

BANKRUPTCY: The Eleventh Circuit affirmed the Bankruptcy Court's ruling, which had avoided as fraudulent transfers mortgages executed by TOUSA's debtor subsidiaries to secure $500 million of "rescue financing" incurred by TOUSA. The proceeds of the loans were used to repay TOUSA's original lenders. Not only did the Bankruptcy Court avoid the transfer of the new liens in favor of the new lenders, but it also ordered the original lenders to disgorge the proceeds of the refinancing on the basis that they were bad faith recipients of the proceeds of a fraudulent transfer. The Eleventh Circuit concluded that the factual record supported the conclusions that: (a) the subsidiaries did not receive reasonably equivalent value and (b) the original lenders were entities for whose benefit the fraudulent transfers had been made.

In re: First Yorkshire Holdings
BAP 9th Circuit - 5/10/12

BANKRUPTCY: A senior deed of trust holder is not entitled to relief from the automatic stay in a junior deed of trust holder's bankruptcy where the value of the property is greater than the amount owed to the senior lienholder so that the debtor's secured lien has value.

In re: Deitz
BAP 9th Circuit - 4/23/12

BANKRUPTCY: A bankruptcy court has the authority to determine whether a debt is dischargeable because that is clearly a core matter. Additionally, the bankruptcy court has the authority to adjudicate the underlying nonbankruptcy claim itself, and to enter an enforceable money judgment. The court considered the Supreme Court case of Stern v. Marshall, which held that as an Article I court, a bankruptcy court lacks the constitutional authority to enter a final judgment on a state law counterclaim, but the BAP found that a bankruptcy court has the authority to adjudicate the underlying nonbankruptcy claim because it is necessary to determine the amount of the debt in order to determine the debt that is dischargeable.

In re: Cedano
BAP 9th Circuit - 4/9/12

BANKRUPTCY / FORECLOSURE: Debtor filed an adversary proceeding seeking to set aside a trustee's sale in California. The Bankruptcy Appellate Panel upheld the Bankruptcy Court's dismissal for failure to state a claim upon which relief could be granted, holding:

1. Normally, a debtor challenging a foreclosure sale must tender payment of the debt. But there are exceptions, one of which is where a borrower alleges that the foreclosure is substantially defective and, therefore, void. This exception applied here because debtor alleged [wrongly] that MERS had no authority to initiate the foreclosure after assigning the note.
2. MERS had the authority to initiate the foreclosure because a) the party initiating the foreclosure does not have to have a beneficial or economic interest in the note in order to foreclose (instead, a trustee, mortgagee, or beneficiary, or any of their authorized agents may commence the nonjudicial foreclosure process) and b) the deed of trust expressly gave MERS the right to foreclose on behalf of the lender.
3. The Substitution of Trustee was not recorded until after the trustee filed the Notice of Default, but there is no requirement that the Substitution of Trustee be recorded, only that it be executed.
4. Debtor is not entitled to relief for lender's alleged failure to comply with California Civil Code Section 2923.5, requiring pre-foreclosure contact with the borrower to explore alternatives to foreclosure, because the remedy for a failure to comply Section 2923.5 is limited to postponement of an impending foreclosure. It does not provide for damages or for setting aside a foreclosure sale.

In re: Jacobson
9th Circuit - 4/23/12

BANKRUPTCY: The bankruptcy court lifted the automatic stay to allow a judgment creditor to proceed with a sheriff's sale of debtor's homestead. The debtor was given part of the proceeds in the amount of California's homestead exemption. The court held that the trustee was entitled to have those proceeds turned over to the bankruptcy estate after they lost their exempt status under C.C.P. Section 704.720(b) when the debtor failed to reinvest the proceeds within six months. The court also held that the bankruptcy estate did not include real property in the name of debtor's husband that had been purchased with money inherited by the husband.

In re: Kekauoha-Alisa
9th Circuit - 3/26/12

FORECLOSURE: The court held that a foreclosure sale was void where the lender's agent failed to make a public announcement of a postponement, which violated Hawaii's nonjudicial foreclosure statute (HRS §667-5), and that this defect was a "deceptive practice" under HRS §480-2. However, the bankruptcy court improperly awarded damages based on the debtor's loss of equity in the property. The court pointed out that there was no question that the debtor was in default, so the debtor's losses appeared to arise from the debtor's default, rather from the lender's failure to shout out the postponement of the foreclosure. The court stated that on remand the bankruptcy court must determine the difference, if any, between Debtor's situation had the lender properly postponed the foreclosure sale and debtor's actual situation, given that the sale was improperly postponed.

PPL Montana, LLC v. Montana
U.S. Supreme Court  2/22/12

NAVIGABILITY: The State of Montana began charging rent for plaintiff's use of certain portions of river beds for plaintiff's hydroelectric facilities on the basis that the rivers are navigable and, therefore, under the equal footing doctrine the beds of the rivers belong to the state. The Montana Supreme Court held that even though the particular portions of the river where the facilities were located may not be navigable, it declared "the river stretches in question to be short interruptions of navigability that were insufficient as a matter of law to find nonnavigability". The court also held that present-day recreational use of one of the rivers was evidence of navigability. The U.S. Supreme Court reversed and remanded. It held that 1) navigability of a river is determined segment by segment so that some portions of a river can be navigable while other portions may not be and 2) navigability must be assessed as of the time of statehood, so present-day use is irrelevant except to the extent that it may serve as evidence of whether the river was susceptible of use for commerce at the time of statehood.

Perry v. Brown
9th Circuit  2/7/12

SAME SEX MARRIAGE: Proposition 8 amended the California State Constitution to provide that "[o]nly marriage between a man and a woman is valid or recognized in California". The court held that Proposition 8 is unconstitutional because it violates the Equal Protection Clause of the U.S. Constitution. The court pointed out that its decision is narrowly based on the fact that "California had already extended to committed same-sex couples both the incidents of marriage and the official designation of 'marriage', and Proposition 8's only effect was to take away that important and legally significant designation, while leaving in place all of its incidents." The court specifically left open the question of whether under the Constitution same-sex couples may ever be denied the right to marry.

U.S. Bank National Association v. RFC CDO 2006-1, Ltd.
US Dist. Court, Dist. of Arizona  12/6/11

MEZZANINE LOANS: The court granted a preliminary injunction prohibiting a mezzanine lender from proceeding with a UCC sale of the ownership interest in the mezzanine borrower. It interpreted an intercreditor agreement as requiring that a default under a senior loan must be cured as a condition to the mezzanine lender proceeding with the UCC sale.

Oneida Indian Nation of New York v. Madison County and Oneida County
2nd Circuit  10/20/11

INDIANS: The Oneida Indian Nation of New York (OIN) brought suit against two Counties to enjoin them from assessing property tax on OIN-owned property, acquired on the open market in the 1990s, and from enforcing those taxes through tax sale or foreclosure. The district court entered judgment in favor of the OIN on four separate grounds: (1) tribal sovereign immunity from suit; (2) the Nonintercourse Act, 25 U.S.C. Section 177; (3) constitutional due process; and (4) property-tax exemptions under New York state law.

The U.S. Supreme Court granted the Counties' petition for a writ of certiorari, after which the OIN declared that it had waived its tribal sovereign immunity from suit. The Supreme Court then vacated our prior decision and remanded for further proceedings.

On remand, the Second Circuit Court of Appeals:
1. Vacated the district court's judgments to the extent that they granted summary judgment to the OIN on its now-abandoned claims related to: (1) the doctrine of tribal sovereign immunity from suit and (2) the Nonintercourse Act. The amended judgments shall reflect this Court's understanding that the OIN's waiver of its tribal sovereign immunity from suit is "irrevocable."
2. Reversed the district court's judgments to the extent they held that the Counties' redemption notices failed to comport with federal or state due-process requirements. The OIN was not able to show it was prejudiced by the timing of the notice, especially in light of the fact that it received had actual knowledge of its redemption rights.
3. Vacated the district court's judgments to the extent they held that the OIN is entitled under state law to exemptions from state and local property taxes. The law only exempts from taxation land owned by an Indian tribe in an Indian reservation.
4. Affirmed, but solely as to property taxes and related assessments accruing prior to March 29, 2005, the district court's ruling that the OIN is not liable for payment of penalties or interest.

In re: Abdelgadir
BAP 9th Circuit  8/16/11

LIEN STRIPPING: The debtors resided in the subject real property when the bankruptcy petition was filed, but had moved out and resided elsewhere at the time of plan confirmation. The court held that the Chapter 11 plan could not modify a deed of trust secured by the property because the appropriate time for determining whether property is a debtor's principal residence is the petition date. Accordingly, Bankruptcy Code Section 1123(b)(5) applied, which prohibits modifying the rights of a holder of a security interest in the debtor's principal residence.

In re: Gonzalez
BAP 9th Circuit  8/1/11     REVERSED BY DISTRICT COURT

TRUSTEE'S SALES: California Civil Code Section 2924h provides that a trustee's sale is deemed perfected as of 8:00 a.m. on the actual date of a trustee's sale if the trustee's deed is recorded within 15 calendar days of the sale. There was some factual dispute as to whether the trustee's sale was conducted earlier in the day prior to the filing of the property owner's bankruptcy petition. The trustee's deed was recorded post-petition and within 15 days of the sale. The court held that the trustee's sale was void even if the sale was conducted pre-petition because the post-petition execution of a trustee's deed is a violation of the automatic stay and CC 2924h does not validate it.

The court rejected the creditor's argument that Bankruptcy Code Section 549(c) applies, which prohibits prohibits the avoidance of a transfer of an interest in real property to a "good faith purchaser without knowledge of the commencement of the case and for present fair equivalent value...." The court pointed out that "present fair equivalent value" is a more stringent standard than "reasonably equivalent value", and the creditor did not present any evidence concerning the property's fair market value or its present fair equivalent value.

Cervantes v. Countrywide Home Loans
9th Circuit  9/7/11

FORECLOSURE / MERS: The court sustained the district court's dismissal of plaintiffs' complaint alleging a conspiracy among MERS members to commit fraud by using MERS as a sham beneficiary, promoting and facilitating predatory lending practices through the use of MERS, and making it impossible for borrowers or regulators to track the changes in lenders. The court held that plaintiffs failed to identify any representations made to them about the MERS system that were false and material, that misinformed them about MERS's role as a beneficiary, or the possibility that their loans would be resold and tracked through the MERS system. Similarly, plaintiffs failed to show that the designation of MERS as a beneficiary caused them any injury by, for example, affecting the terms of their loans, their ability to repay the loans, or their obligations as borrowers.

The court also rejected plaintiffs' claim of wrongful foreclosure based on allegations that all transfers of the interests in the home loans within the MERS system are invalid because the designation of MERS as a beneficiary is a sham and the system splits the deed from the note, and, thus, no party is in a position to foreclose. Arizona has not recognized a cause of action for wrongful foreclosure, but even if it did, the allegations did not raise any inference that the trustee lacked the authority to act on behalf of the lenders.

[Ed. note: The case contains a good discussion of how the MERS system operates.]

In re: Edwards
BAP 9th Circuit  7/12/11

FORECLOSURE / RELIEF FROM STAY:  A lender foreclosed and obtained a state court order of eviction in an unlawful detainer action before the debtor filed bankruptcy. The court held that the lender is entitled to relief from the automatic stay in order to enforce the eviction order, even though the debtor had filed an adversary proceeding challenging the validity of the trustee's sale. Because the state court rendered judgment in favor of the lender in the unlawful detainer action, the debtor was precluded from continuing to assert that the trustee's sale was improper in her bankruptcy case.

In re: California Title Insurance Antitrust Litigation
U.S. Dist. Court, Northern Dist. of California  6/27/11

ARBITRATION: Plaintiffs who purchased title insurance from various defendant title companies brought a class action asserting antitrust and unjust enrichment claims against the defendants. The title insurance policies purchased by the plaintiffs contained arbitration provisions. California consumer law had previously barred the application of arbitration agreements to class action lawsuits. However, the defendants filed a motion to compel arbitration based on the recent U.S. Supreme Court ruling, AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011). The District Court explained that Concepcion held that the California consumer law was preempted by a federal law that mandated the enforcement of the arbitration agreement even in class action lawsuits. The plaintiffs claimed the defendants waived their right to arbitration because they failed to assert the right early in the case. The court disagreed and held in favor of defendants because, prior to Concepcion, defendants would have no basis to make their argument as California law would have been determinative. In addition, the plaintiffs did not show any prejudice from delay in raising the arbitration issue.

Stern v. Marshall
U.S. Supreme Court  6/23/11

BANKRUPTCY: The court held that as an Article I court, a bankruptcy court lacks the constitutional authority to enter a final judgment on a state law counterclaim. An Article I court can adjudicate a claim that is closely intertwined with a federal regulatory program, but only an Article III court can enter a judgment associated with contract and tort claims unless the parties consent. [Ed. Note: While this case involved only a state law counterclaim, lower courts are somewhat in disarray trying to decide if Bankruptcy Courts are precluded from issuing final judgments in fraudulent conveyance actions, preference actions, actions to determine the validity of liens, state law claims that are asserted defensively against a creditor's proof of claim, and orders for sales free of a cotenant's interests or free and clear of liens.]

Water Wheel Camp Recreational Area v. LaRance
9th Circuit  6/10/11

INDIANS: A tribal court has jurisdiction over a non-Indian lessee of Indian land and its non-Indian owner in an unlawful detainer action where there are no sufficient competing state interests at play, and where the lessee entered into the lease in a consensual relationship with the tribe.

In re: Veal
BAP 9th Circuit  6/10/11

FORECLOSURE: The court pointed out that the maker of a note should be indifferent as to who owns or has an interest in the note so long as it does not affect the maker's ability to make payments on the note. However, the foreclosing lender had received an assignment of the deed of trust that did not contain language assigning the note, and there was no evidence presented showing that the note had been endorsed in favor of either the lender or loan servicer. Therefore, neither the lender nor the loan servicer could show that they were either a holder of the note or a "person entitled to enforce" the note. The court set aside the bankruptcy court's rulings granting the lender's relief from the automatic stay and denying the debtor's objection to the proof of claim filed by the loan servicer, and remanded for further proceedings. NOTE: The case contains a good explanation of the law relating to negotiable instruments under the Uniform Commercial Code.

Franzen v. U.S.
9th Circuit  3/24/11

FEDERAL TAX LIENS: The case involves claims to surplus proceeds after a trustee's sale, and the priority between 8 federal tax liens and a state judgment lien. The federal tax liens all recorded prior to the judgment lien, but the judgment lien creditor challenged the U.S.'s right to surplus proceeds based on mostly procedural grounds. The court held:
1. Civil Code Section 2924j sets forth the procedure for a trustee to deposit disputed surplus funds into court, but does not describe the proceeding as an "interpleader". However, it is the functional equivalent of an interpleader. Therefore the case properly remained in Federal court under federal law that provides for removal to Federal court of interpleader actions involving the U.S.
2. The time for the U.S. to make a motion to remove the action to Federal court (it was initially filed in State court) runs from "service" on the U.S. The trustee's mailing of the notice pursuant to CC 2924j did not satisfy the requirement of "service" under federal law, so the time never began to run.
3. CC 2924j requires a claimant to file a claim to surplus proceeds within 30 days. However, this is preempted by 28 U.S.C. 2410(b), which allows 60 days for the U.S. to file a claim in interpleader action.
4. The U.S. was not given notice of the trustee's sale as required by 26 U.S.C 7425(c)(1) (notice of sale must be given at least 25 days before sale if the IRS lien recorded more than 30 days before the sale), and the court pointed out that this results in a tax lien not being disturbed. But then the court held that the result is that the U.S. is entitled to priority as to the surplus funds over the judgment lien. [Ed. note: It seems that IRS liens would either remain as senior liens on the property OR the U.S. would share in the surplus proceeds as a junior lienholder. The court seems to allow the U.S. to choose which remedy it wants.]

Wapato Heritage, LLC v. U.S.
9th Circuit  3/22/11

INDIANS: The United States held title in trust for several Indian landowners, who authorized the U.S. to lease the property. The lease contained an option, the exercise of which required that within a specified time notice was to "be given by the Lessee to the Lessor and the Secretary [of the Interior]". The lessee gave notice only to the Secretary, but not to the landowners. The court held that the option was not properly exercised because the Secretary acted only on behalf of the landowners and was not itself the landowner. Accordingly, the notice was defective because it should have also been given directly to the landowners.

Paiute-Shoshone Indians v. City of Los Angeles
9th Circuit  3/14/11

INDIANS: In 1941, pursuant to authority granted by the Act of April 20, 1937, the United States exchanged land which it held in trust for an Indian tribe for land owned by the City of Los Angeles. The Tribe brought this action to set aside the conveyance, alleging that the United States violated certain conditions of the Act. The court affirmed the District Court's dismissal of the action because:

1. The United States is an indispensible party because if the Tribe is successful, title would go back to the United States in trust, not to the Tribe.
2. In 1946 Congress waived its sovereign immunity pursuant to the Indian Claims Commission Act, but the Act required claims to be brought within 5 years. So the waiver of sovereign immunity has expired and the United States cannot now be named as a defendant.
3. Federal Rule of Civil Procedure 19(b) provides an exception to the joinder rules if in equity and good conscience" the case may proceed in the absence of a party. The court held that this exception did not apply because the City cannot reasonably be expected to defend the actions of the United States over which it had no control.
4. This action does not fall within an exception to Rule 19(b) that allows a Tribe to protect its own interests because here the lawfulness of the United States' actions are a central issue.

County of Oneida v. Oneida Indian Nation of New York
U.S. Supreme Court

INDIANS: See appellate case reported below. The U.S. Supreme Court granted certiorari on the questions of "whether tribal sovereign immunity from suit, to the extent it should continue to be recognized, bars taxing authorities from foreclosing to collect lawfully imposed property taxes" and "whether the ancient Oneida reservation in New York was disestablished or diminished." However, subsequent to the appellate court decision, the Tribe passed a tribal declaration and ordinance waiving "its sovereign immunity to enforcement of real property taxation through foreclosure by state, county and local governments within and throughout the United States." Accordingly, the Supreme Court vacated the judgment and remanded the case to the 2nd Circuit in order to revisit its ruling in light of this development.

Lyon v. Gila River Indian Community
9th Circuit  11/24/10

INDIANS: An Indian tribe filed a claim in a bankruptcy estate disputing the property owner's rights of access to and occupation of a parcel of land completely surrounded by an Indian reservation. In response, the Trustee initiated an adversary proceeding seeking a declaratory judgment that the debtor's estate had legal title and access to the land. The court held as follows:
1. The United States could not be joined as a defendant due to sovereign immunity, and it would have been a necessary party if the Trustee had sought to quiet title. But the court held that it was not a necessary party in this case because it was the Tribe that filed the claim in bankruptcy court and effectively initiated the litigation.
2. The land involved is Section 16, which the United States conveyed to Arizona in 1877 for school purposes prior to the adjoining land becoming part of the Indian reservation. Normally, implied easements do not pass with federal land grants. But the court held that an implied easement for access existed here because in granting lands to a state for the purpose of funding schools, the federal government must have intended some right of access to the land or the purpose of the land grants would fail.
3. While the Trustee established an implied easement, the subject access roads are not "Indian Reservation Roads" ("IRR") , which would be open to the public, because the Bureau Indian Affairs previously removed them from the IRR system.
4. The court also explained that "aboriginal title" is a permissive right of occupancy granted by the federal government to the aboriginal possessors of the land. Whether a tribe has aboriginal title to occupy land is an inquiry entirely separate from the question of who holds fee title to land. Indeed, it is possible for a party to take title to land subject to an aboriginal right of occupancy.

In re: Foster
BAP 9th Circuit  7/19/10

BANKRUPTCY: A debtor's personal liability for Homeowner Association dues continues postpetition as long as he maintains his legal, equitable or possessory interest in the property and is unaffected by his discharge.

In re: Gebhardt
9th Circuit  9/14/10

BANKRUPTCY: A debtor's homestead exemption does not remove the entire property from the bankruptcy estate. Rather, what is removed is an "interest" in the property equal to the value of the exemption claimed at filing. The estate is entitled to post-petition appreciation until the case is closed, and the trustee may force a sale of the property if it appreciates in value above the debtor's homestead exemption.

Oneida Indian Nation of New York v. County of Oneida
2nd Circuit  8/9/10

INDIANS: In an action by the Oneida Indian Nation claiming that the State of New York wrongfully appropriated its lands, the court held that 1) plaintiffs' possessory claims were barred by equitable defenses (laches, acquiescence and impossibility), 2) the non-possessory claim for damages was barred, both by New York's sovereign immunity and by the same equitable defenses and 3) the alternative non-possessory claim based on the Nonintercourse Act was also barred by the same equitable defenses.

Perry v. Schwarzenegger
U.S. District Court for the Northern District of California  8/4/10

SAME SEX MARRIAGE: Proposition 8, which amended the California State Constitution to provide that "[o]nly marriage between a man and a woman is valid or recognized in California", is unconstitutional because it violates the Due Process and Equal Protection Clauses of the Fourteenth Amendment to the U.S. Constitution.

Edwards v. The First American Corporation     Supreme Court Docket
9th Circuit  6/21/10     Certiorari DENIED by U.S. Supreme Court 6/28/12

RESPA: Plaintiff alleged that First American violated RESPA by purchasing a minority interest in title agencies and entering into an exclusive agency agreement with them. The court held that plaintiff had standing to sue under RESPA even though the policy premium paid by plaintiff was no more than plaintiff would have paid in the absence of the exclusive agency agreement. A person who is charged for a settlement service involved in a violation of RESPA is entitled to three times the amount of any charge paid regardless of whether the person was overcharged.

Iowa Tribe of Kansas and Nebraska v. Salazar
10th Circuit  6/7/10

INDIANS: A lawsuit challenging an decision to take land into trust must be brought under the Quiet Title Act. Here a preliminary injunction enjoining the purchase of property in trust was dissolved during the course of litigation, and the land was then taken into trust for the tribe. At that point the Tribe's sovereign immunity prohibits continuation of the action, so the action must be dismissed. The court acknowledges that this allows the government to manipulate pending cases in a manner prohibited in private litigation.

Oneida Indian Nation of New York v. Madison County
2nd Circuit  4/27/10

INDIANS: A state or municipality can impose taxes on an Indian tribe, but tribal sovereign immunity precludes the municipality from bringing a suit to foreclose on tribal land for nonpayment of taxes. The court points out that a governmental entity must either enter into an agreement with a tribe or seek legislation from Congress.

United Student Aid Funds v. Espinosa
U.S. Supreme Court  3/23/10

BANKRUPTCY: In order to discharge a student loan debt, the bankruptcy court must make a finding of undue hardship in an adversary proceeding and not in a Chapter 13 Plan. However, although the Bankruptcy Court's failure to find undue hardship was a legal error, the confirmation order is enforceable and binding on the lender because it had actual notice of the error and failed to object or timely appeal.

Martinez v. Wells Fargo Home Mortgage
9th Circuit  3/9/10

RESPA: This is an "overcharge" case. Plaintiffs alleged that Wells Fargo violated RESPA and California's Unfair Competition Law ("UCL") by charging an "underwriting fee" of $800 because the fee was not reasonably related to the actual costs of performing the underwriting. The court held that Section 8(b) of RESPA prohibits only the practice of giving or accepting money where no service whatsoever is performed in exchange for that money, and that it does not prohibit charging fees, excessive or otherwise, when those fees are for services that were actually performed. It also held that Wells Fargo did not violate the UCL because 1) the claims of unfair and fraudulent conduct are preempted by an OCC regulation providing that the amount of fees is a business decision to be made by each bank and 2) the claim of unlawful practices because there was no violation of RESPA, so therefore plaintiffs failed to allege an underlying unlawful act.

In Re: Deuel
9th Circuit  1/28/10

BANKRUPTCY: A trustee in bankruptcy, in its status as a "hypothetical bona fide purchaser" under 11 U.S.C. 544(a)(3), takes real property free of a deed of trust that the lender failed to record. The court refused to apply equitable subrogation to loan proceeds used to pay off a prior deed of trust because equitable subrogation does not apply against a bona fide purchaser for value. [Ed. Note: Equitable subrogation might have been available if the paid-off deed of trust had not been reconveyed because the record would have shown that the property was encumbered by a deed of trust.]

Memphis Biofuels v. Chickasaw Nation Industries
6th Circuit  (11/4/09)

INDIANS: Sovereign immunity precludes Federal court jurisdiction in a contract dispute case where a tribal corporation's charter requires the Board of Directors to approve a waiver of sovereign immunity, but the Board did not approve the contractual waiver. The court also held that incorporating under the Indian Reorganization Act does not automatically waive sovereign immunity, and that equitable doctrines do not apply because unauthorized acts of tribal officials are insufficient to waive sovereign immunity.

Robinson v. U.S.
9th Circuit  11/2/09

QUIET TITLE ACT: A lawsuit that challenges the federal government's title, however denominated, falls within the scope of the Quiet Title Act "QTA" regardless of the remedy sought. On the other hand, a suit that does not challenge title but instead concerns the use of land as to which title is not disputed can sound in tort or contract and not come within the scope of the QTA. Here, plaintiff asserted disruption of lateral and subjacent support, negligence, and nuisance, but there was no dispute that the government's property (held in trust for an Indian tribe) was subject to plaintiff's sixty-foot easement. The court remanded to the district court to determine whether jurisdiction over the claim lies under the Federal Tort Claims Act.

US v. Milner, Nicholson
9th Circuit  10/9/09

WATER RIGHTS: 
1. Normally States own tidelands up to the mean high water ("MHW") line, but in this case the tidelands (below the MHW line) had been granted to the Lummi Indian tribe.
2. Waterfront homeowners, whose boundary is the MHW line, erected various shore defense structures, consisting of rip rap and bulkheads, to limit erosion and storm damage to their properties. Subsequently, the shore eroded so dramatically that the property owners' shore defense structures ended up being seaward of the MHW line. The court held that the landowners were guilty of trespass and were responsible for removing the structures even though they were not trespassing when originally built and that the trespass was caused by the erosion of the shore.
3. The case is complicated by the fact that the landowners leased the tidelands from the tribe and the lease subsequently expired. But the case makes the point that a trespass can occur where structures were originally built legitimately, but subsequently encroach on tidelands as the result of erosion.
4. In the words of one commentator: "The mean high water line is not where it is, but where it would be if seawalls and levees had never been built."

In re: Greene
9th Circuit  10/2/09

BANKRUPTCY: 1. Bankruptcy Code Section 522(p)(1) caps the homestead exemption to $125,000 for property acquired within 1215 days window prior to filing a petition in bankruptcy. The Court held that the cap does not apply to property purchased outside the window period, even though the debtor did not reside on the property and perfect his homestead exemption until a date that was within the window period.
2. In connection with a court-approved sale of the property, the bankruptcy estate is entitled to post-petition appreciation.

Nationwide Life Insurance Co. v. Commonwealth Land Title Ins. Co.
3rd Circuit  8/31/09

TITLE INSURANCE: An ALTA 9 Endorsement, among other things, insures against loss from "a right of first refusal or the prior approval of a future purchaser or occupant" unless "expressly excepted" from coverage by the title policy. The court held that insurers may not except rights of refusal or other title restrictions from ALTA 9 Endorsement coverage simply by listing as exceptions the instruments in which they are embedded. Instead, the title insurer must find and expressly except the specific provisions.

In re: Crystal Cascades Civil, LLC
BAP 9th Circuit  6/18/09

RECORDING / FEDERAL TAX LIENS: Two Notices of Federal Tax Lien identified the taxpayer as "Crystal Cascades, LLC, a corporation" instead of by its correct name, "Crystal Cascades Civil, LLC". The court held that under Nevada law, a reasonable search must use the exact name, so the notices were outside the chain of title. The court pointed out that in striking a balance between requiring subsequent purchasers to consider various name variations and requiring the lienholder to use the correct name of the debtor, the balance must tip in favor of subsequent purchasers whom the recording statutes were designed to protect.

Hoffman v. Lloyd
9th Circuit  7/20/09

HOME EQUITY SALES:
1. A seller may rescind a deed given while there is outstanding notice of default against his residence and where the purchaser failed to provide the seller with a notice of his rights under the Home Equity Sales Contract Act ("HESCA") (Civil Codes Section 1695 et seq.).
2. The buyer occupied the property pursuant to a sale and leaseback arrangement, and in an unlawful detainer action brought by the seller after the buyer defaulted in lease payments, the parties entered into a settlement agreement containing the usual waiver of Civil Code Section 1542, by which buyer released all claims, known or unknown. The court held that such a release is invalid unless the buyer is given the statutory notice of his HESCA rights.

Carter v. Welles-Bowen Realty
6th Circuit  1/23/09

RESPA: 1. A consumer has standing to bring an action alleging a kickback scheme in violation of Section 8 of the Real Estate Settlement Procedures Act of 1974 ("RESPA"), 12 U.S.C. 2607, even if the consumer does not allege an overcharge.
2. The penalty in 12 U.S.C. 2607(d)(2) of "three times the amount of any charge paid for such settlement service" refers to the entire charge paid for the settlement service, not just the amount of overcharges.

In re: Cutter
BAP 9th Circuit  12/3/08

TRUSTS: The debtor was the settlor and trustee of an irrevocable trust, but the trust permitted him in his sole discretion to make distributions in order to provide for his health, education, support and maintenance. The Court held that the trust property became property of the bankruptcy estate because debtor had such dominion and control over the trust corpus as of the petition date that he could have invaded it in its entirety for his support and maintenance.

Avista Corp. v. Wolfe
9th Circuit  12/11/08

RAILROADS: Under the Abandoned Railroad Right of Way Act, public lands granted to a railroad as a right of way revert to the person who has been granted title by the United States upon 1) abandonment and 2) a Court order decreeing such abandonment, except as to lands embraced by a public highway established within one year after the court order. The court held that the one year runs from the date of the decree and that a court cannot make its decree retroactively effective to the date of abandonment.

McFarland v. Kempthorne
9th Circuit  10/2/08

EASEMENTS: 1. The doctrine of easement by necessity applies, generally, against the United States. Plaintiff has year-round access to his property over a public highway, although in the winter, this access is limited to nonmotorized means. Even subject to the seasonal limitations imposed by the Park Service, and in spite of the associated inconvenience, the court concluded that plaintiff enjoys sufficient access to his property to defeat a finding of easement by necessity.
2. Plaintiff's claim of an express easement fails because the language in the patent conveying the property "with the appurtenances thereof" is insufficient to create an easement.
3. Plaintiff's claim of an implied easement under the Homestead Act fails because the Act's language recognizing a right "to enter" public lands to establish a homestead is insufficient to create an implied easement.
4. The National Park Service's denial of a permit to allow motorized access over a public highway during the winter was a reasonable exercise of its authority.

In re: Tippett (Burkart v. Coleman)
9th Circuit  9/4/08

BANKRUPTCY: The automatic stay does not apply to sales or transfers of property initiated by the debtor and 11 U.S.C. 549(c) protects bona fide purchasers unless a copy of the petition is recorded. The court rejected the bankruptcy trustee's argument that the debtors' sale of their residence was void because it was property of the estate and the debtor had nothing to sell. The court held that California recording law applies. The transfer of the debtor's property to the bankruptcy estate amounted to an unrecorded conveyance that is void as to subsequent bona fide purchasers who record their title first.

In re: PW, LLC (Clear Channel Outdoor v. Knupfer)
BAP 9th Circuit 7/18/08

SALE FREE OF LIENS: The Bankruptcy Court approved a sale to the lender whose loan was secured by a 1st mortgage free and clear of the 2nd mortgage. The BAP confirmed the sale, but reversed the portion of the order that provided the sale was free of the 2nd mortgage. The court pointed out that the purchaser was the holder of a mortgage and not a third party purchaser so, presumably, a third party purchaser would not suffer a similar fate. Bankruptcy Code Section 363(f)(3) does not authorize the sale free and clear of a lienholder's interest if the sales price is equal to or less than the aggregate amount of all claims held by creditors who hold a lien or security interest in the property being sold. Section 363(f)(5) only applies where the holder of an interest in property could be compelled to accept less than the value of the claim secured by the interest, which is not the case with loans secured by mortgages. A different interpretation of subparagraph (5) would mean that subparagraph (3) would never need to be used.

Guidiville Band of Pomo Indians v. NGV Gaming
9th Circuit  6/26/08

INDIANS: The court states: "The word 'is' really means 'is,' at least as that word is employed in 25 U.S.C. Section 81." Section 81 requires approval by the Secretary as to only those contracts that implicate lands already held in trust by the United States for an Indian tribe. Because the contract between the Tribe and NGV involved lands that the parties expected to become Indian Lands in the future, but were not currently Indian Lands, the contract was valid without such approval.

Reusser v. Wachovia Bank
9th Circuit  5/8/08

BANKRUPTCY:
1. Under the Rooker-Feldman doctrine, the federal district court lacked jurisdiction to consider causes of action already decided by a state court because such claims constituted a de facto appeal from the state courts' refusal to vacate its default judgment.

2. A final order lifting the automatic stay is binding as to the property or interest in question--the res--and its scope is not limited to the particular parties before the court. Therefore the order obtained by a loan servicer in its own name also applied to the lender who was not a party.

In Re: Hedrick
11th Circuit  4/15/08

BANKRUPTCY: 1. Loan made prior to 90-day preference period: The trustee could not set aside a mortgage that was recorded more than 10 days after the loan was made because the loan paid off a prior mortgage that was not released until after the new mortgage recorded. The trustee's hypothetical BFP status did not help because any purchaser who acquired an interest in the property during the period between the time the new loan paid off the earlier mortgage and the time the new mortgage recorded could not be a bona fide purchaser because the earlier mortgage remained on the record books and appeared to be in effect at all times during that period. A purchaser of an interest in property is on inquiry notice, and thus cannot be a bona fide purchaser, if he acquires his interest before earlier creditors' liens are cancelled. (NOTE: The 10-day period in 11 U.S.C. 547(e)(2)(A) is now 30 days.)

2. Loan made within 90-day preference period: The trustee could not set aside a mortgage that was recorded more than 10 days after the loan was made because the loan and mortgage were a "substantially contemporaneous exchange" under Section 547(c)(1). This section is not limited to the 10-day (now 30-day) time period of Section 547(e)(2)(A).

First American v. U.S.A.
9th Circuit  3/27/08

ESTATE TAX LIENS: Three title companies did not pick up the fact that the chains of title for three houses included an estate that had not paid all of its estate taxes. The companies paid the taxes under protest and brought this action challenging the valuation of a business that was part of the estate. The court held that the companies could not challenge the valuation of the property of the estate because 26 U.S.C. 7426, which allows lawsuits by third parties, contains a conclusive presumption that the amount of the assessment is valid.

Friedman v. Market Street Mortgage Corporation
11th Circuit 3/20/08

RESPA: As with the Second, Third, Fourth, Seventh, and Eighth Circuits, the court held that subsection 8(b) of RESPA (12 U.S.C. 2607(b)) does not govern excessive fees because it is not a price control provision

Silvas v. E-Trade Mortgage Corporation
9th Circuit 1/30/08

PREEMPTION: Plaintiff brought a class action lawsuit under California's Unfair Competition and Unfair Advertising laws alleging that defendant (a federal thrift subject to the Home Owners' Loan Act ("HOLA") failed to refund lock-in fees in violation of the Truth In Lending Act. The court dismissed the lawsuit on the basis that HOLA preempts state law.

In Re: Fridley
BAP 9th Circuit 12/18/07

BANKRUPTCY: Paying off a Chapter 13 plan early (such as by refinancing a loan secured by a deed of trust on a residence) requires a court order under 11 U.S.C. 1329(a) confirming a modification of the Chapter 13 plan.

Matsuda v. Honolulu
9th Circuit (1/14/08)

EMINENT DOMAIN: In 2005 the City and County of Honolulu repealed its 1991 ordinance that had created a mechanism allowing owners of leasehold interests in condominium units to convert their leasehold interests into fee interests by using the City's power of eminent domain. Plaintiffs entered into contracts with the City that required each party to use its best efforts to effectuate the condemnation and transfer of fee interests, but the City refused to honor the contracts after passage of the new ordinance. The District Court granted a summary judgment in favor of the City, holding that the contracts were void under the "reserved powers doctrine" because they purported to limit the City's discretion over the use of its eminent domain power. The 9th Circuit reversed and remanded to allow the District Court to consider whether the City's conduct satisfied the very high level of scrutiny necessary to overcome a challenge under the Contracts Clause of the United States Constitution. 

In re: Frazer BAP
9th Circuit 9/27/07

BANKRUPTCY: In a Chapter 13 case, the more specific cure provisions of Bankruptcy Code Section 1322 apply to curing defaults rather than the more general provision of Section 108(b). Thus debtor's Plan could properly provide for curing the default and maintaining future payments under a land sale contract, and debtor was not bound by Section 108(b)'s requirement that defaults be cured within 60 days of the filing of the petition.

Fidelity Exploration and Production Co. v. U.S.
9th Circuit 11/6/07

QUIET TITLE ACT: An action under the Quiet Title Act, 28 U.S. C. 2409, is time barred 12 years after the plaintiff or plaintiff's predecessor in interest knew or should have known of the claim of the United States. This limitation applies even where the predecessor in interest was a State, which is exempt from the 12-year statute of limitations. In this case, the State that conveyed title to plaintiff knew or should have known of the claim of the U.S. to the disputed portion of a riverbed when Congress passed the Northern Cheyenne Allotment Act of 1926.

In re: Ahern Enterprises
5th Circuit 11/6/07

BANKRUPTCY: Under Bankruptcy Code section 1141(c), the confirmation of a Chapter 11 plan voids liens on property dealt with by the plan unless they are specifically preserved, if the lien holder participates in the reorganization. Four conditions must therefore be met for a lien to be voided under section 1141(c): (1) the plan must be confirmed; (2) the property that is subject to the lien must be dealt with by the plan; (3) the lien holder must participate in the reorganization; and (4) the plan must not preserve the lien.

Cohen v. JP Morgan Chase & Co.
2nd Circuit 8/6/07

RESPA: HUD's Statement of Policy 2001-1 reasonably interprets RESPA Section 8(b) (12 U.S.C. § 2607(b)) to prohibit unearned fees, whether reflected in a charge divided among multiple parties or an undivided charge from a single lender. The court held that Kruse v. Wells Fargo Home Mortgage, Inc., 383 F.3d 49 (2d Cir. 2004), does not apply. That case held that RESPA prohibits "markups", but does not apply to "overcharges", neither of which applies to a charge for services that were not performed at all.

In re: Meyer
BAP 9th Circuit 7/13/07

BANKRUPTCY - LIEN AVOIDANCE: 1) The court did not avoid a senior judicial lien when the lienholder did not appear in contest of a lien avoidance motion under Bankruptcy Code Section 522(f)(1). Granting a default judgment after a default is a matter of discretion, and it is an abuse of discretion to grant a default judgment where the defaulting creditor's lien clearly attaches to some equity above the exemption amount. 2) Section 522(f)(2) requires that liens against the entire fee be subtracted from the full value of the property before computing the value of the debtor's interest in co-owned property.

In re: Chappell
BAP 9th Circuit 7/11/07

BANKRUPTCY - HOMESTEAD EXEMPTION: Postpetition appreciation in value of a residence in excess of the maximum amount permitted by the applicable exemption statute inures to the benefit of the estate. This rule applies whether the debtor chooses the state or federal exemption.

In re: Brown
9th Circuit 4/26/07

BANKRUPTCY: A minute entry granting a motion for summary judgment is not a final, appealable order, and the 10-day appeal time does not begin to run until actual entry of the order or judgment.

In re: Harbin
9th Circuit 4/25/07

BANKRUPTCY:  Provided that the following criteria are met, the bankruptcy court may, but need not, grant an application for nunc pro tunc authorization of a post-petition refinancing of property of the estate:.(1) the financing transaction benefits the bankruptcy estate; (2) the creditor has adequately explained its failure to seek prior authorization or otherwise established that it acted in good faith when it failed to seek prior authorization; (3) there is full compliance with the requirements of section 364(c)(2); and (4) the circumstances of the case present one of those rare situations in which retroactive authorization is appropriate.

Watters v. Wachovia Bank
U.S. Supreme Court 4/17/07

BANK REGULATION: A national bank's mortgage business, whether conducted by the bank itself or through the bank's operating subsidiary, is subject to OCC's (Office of the Comptroller of the Currency) superintendence, and not to the licensing, reporting, and visitorial regimes of the States in which the subsidiary operates. Therefore a national bank's mortgage lending subsidiary does not need a state license. (NOTE: This case is not directly related to the title insurance business, but it has a bearing on state laws with which we are concerned, such as California statutes prohibiting lenders from charging in excess of one day's interest prior to recordation of the deed of trust.)

In re: Summerville
BAP 9th Circuit 2/7/07

CHAPTER 13 PLANS: 1) A bankruptcy court has authority to clarify a relief from stay order, even where it could not modify the order because it had relinquished jurisdiction over the property. 2) Confirmation of a Chapter 13 plan does not preclude a state court from deciding a controversy over the obligation secured by a deed of trust where the bankruptcy court has granted relief from the automatic stay and where the plan does not purport to resolve the controversy.

Arakaki v. Lingle
9th Circuit 2/9/07

HAWAIIAN HOME COMMISSIONS ACT: The court held that plaintiffs lack standing to challenge state programs that preferentially treat persons of Hawaiian ancestry. NOTE: This case is included on this site because it contains a good historical discussion of the Hawaiian Homes Commission Act and a good explanation of how land was ceded by the U.S. to Hawaii in the Hawaii Admissions Act.

Hale v. Norton
9th Circuit 2/5/07

ACCESS OVER FEDERAL LANDS: The Court held that even if plaintiff had a valid right of access over Nation Park land (which was not decided), the access is subject to reasonable regulation by the Nation Park Service. Consequently, plaintiffs were required to apply for a permit to bring a bulldozer over an access road and the Park Service was justified in refusing to issue the permit until winter when the ground would be frozen and  the least amount of damage would be done to the ground.

In re: Wilding
1st Circuit 1/30/07

BANKRUPTCY: A judgment lien could have been, but was not, avoided under Bankruptcy Code Section 522(f). Two years after the case was closed the debtor reopened the case and brought a 522(f) motion. But before the motion could be heard, the debtor refinanced and paid off the lien. The Court held that the lien can be avoided because impairment of the debtor's exemption is determined as of the date of filing the petition. However it is within the Bankruptcy Court's discretion to refuse to do so on equitable grounds. The Court cited with approval In re: Chiu (Culver LLC v. Chiu) 304 F.3d 905 (9th Cir. 2002) in which a debtor proceeded more intelligently by not paying off the lien and instead placed the proceeds in an escrow account pending the outcome of the 522(f) motion.

In re: Murphy
4th Circuit 1/18/07

BANKRUPTCY: 1) REFINANCE: The Court refused to modify a Chapter 13 plan where the debtors refinanced with a "cash-out" loan that provided them with $64,000 cash because the reason for refinancing was the debtors' reduction in income, and because the proceeds were counter-balanced by a new, larger loan that did not improve the debtors' financial condition. 2) SALE: The Court modified a Chapter 13 plan to require payment of a portion of sales proceeds to creditors where the appreciation in the value of the property was unexpectedly high.

In re: Lynch
BAP 9th Circuit 1/11/07

BANKRUPTCY/HOMESTEADS: When a Chapter 13 case is converted to a Chapter 7, the relevant valuation date of the debtor's residence, absent bad faith, is the date of filing the Chapter 13 petition. However, the valuation in the debtor's schedules does not control. At the time of a proposed sale during the Chapter 7 case, the court must determine what the property was worth when the Chapter 13 case was filed.

In re: Lazarus
1st Circuit 1/9/07

BANKRUPTCY/PREFERENCES/ANTECEDENT DEBT: In a typical refinance transaction, the Court avoided a mortgage that was recorded more than 10 days after the loan was made. Bankruptcy Code Section 547(e)(2)(A) provides that a mortgage is a contemporaneous transfer and not a preference if it is perfected within 10 days (now extended to 30 days by  the BAPCPA). Here, the lender's mortgage recorded 14 days after the loan was made, so it was a preference under Section 547. The Court refused to apply the "earmarking doctrine" which would allow the lender to treat the transaction as a transfer of the mortgage that was paid off.

In re: Deuel
BAP 9th Circuit 12/28/06     AFFIRMED by 9th Circuit

BANKRUPTCY: A lender failed to record a deed of trust that was executed by the debtor to secure a loan, but listed the loan as a secured debt in the bankruptcy schedules and Statement of Financial Affairs ("SFA"). 1) A bankruptcy trustee is a hypothetical BFP, and is not charged with knowledge of matters listed in the schedules and SFA. The court acknowledged that the trustee is charged with notice of matters described in the petition, but held that the schedules and SFA are legally filed subsequent to the petition, even when they are actually filed simultaneously in the same electronic file. 2) For the same reason, the doctrine of equitable subrogation does not defeat the trustee's BFP status where the deed of trust securing the loan that was paid off was reconveyed. (This is different than the situation where the previous deed of trust was not reconveyed.)

In re: Rabin
BAP 9th Circuit 12/8/06 (Amended Opinion Filed 1/24/07)

BANKRUPTCY/HOMESTEADS: Under California law, the homestead exemption rights of registered domestic partners are identical to those of people who are married. Therefore, domestic partners are limited to a single combined exemption, in the same manner as people who are married. In the absence of a domestic partnership or marriage, each cotenant is entitled to the full homestead exemption.

In re: Konnoff
BAP 9th Circuit 11/14/06

BANKRUPTCY: Debtors sold their home, deposited the net proceeds into two bank accounts, and subsequently filed bankruptcy. Once the 18-month time limit under A.R.S. § 33-1101(C) passed without reinvestment of the sale proceeds in a new homestead property, those proceeds lost their exempt character, and the trustee could claim them for distribution to creditors.

In re: Smith (Smith v. Lachter) 
BAP 9th Circuit 9/26/06

JUDGMENTS / BANKRUPTCY: The time for filing an affidavit to renew a judgment is not extended when the debtor's bankruptcy is pending during that time. The automatic stay applies to actions to create, perfect or enforce liens or judgments, and not to the ministerial act of filing an affidavit of renewal. The phrase "suspension of such period" referenced in Section 108(c)(1) refers to either state or federal nonbankruptcy law. It clearly does not operate in itself to stop the running of a statute of limitations; rather, this language merely incorporates suspensions of deadlines that are expressly provided in other federal or state statutes.

Fitzgerald v. U.S.
9th Circuit 8/30/06

EASEMENTS / LICENSES: Plaintiff's right of access over National Forest land is a license, not an easement, so the Federal Government may impose reasonable restrictions on plaintiff's use of a forest road for access to its property, including the imposition of a $114 annual fee.

Kenney v. U.S.
9th Circuit 8/17/06

EQUITABLE SUBROGATION / FEDERAL TAX LIENS: The court applied equitable subrogation to credit a husband with payments he made on his ex-wife's share of notes secured by deeds of trust that were senior to IRS tax liens against the wife. The case spends a lot of time on the math, which I will not discuss here. Also, the Court held that it was not an abuse of discretion for the trial court to deny the husband interest on such payments on the grounds that the husband already received a benefit from the appreciation of the house value.

In re: Johnson
BAP 9th Circuit 7/7/06

BANKRUPTCY: This case was decided under the law that existed before October 17, 2005, when the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 became effective. Amendments to the Bankruptcy Code under that Act allow a Court to issue an in rem order precluding the effectiveness of the automatic stay in future bankruptcy cases. Here, the Court held that under the prior law, bankruptcy courts did not have the authority to issue such in rem orders affecting future bankruptcy actions.

The court makes the following interesting statements: A sale in violation of the automatic stay is void ab initio. This is true even if the case is later dismissed as a bad faith filing. After the case is dismissed, the court may annul the automatic stay, thereby retroactively ratifying an act otherwise violative of the stay.

In re: Sewell
BAP 9th Circuit 5/26/06 (Amended and Pub. Order 6/21/06)

BANKRUPTCY: A trustee's sale was held after the Bankruptcy Court issued an order reinstating a previously dismissed bankruptcy case, and before it was entered in the docket. The Court denied debtor's motion to set aside the sale, ruling that the order became effective when it was entered. The BAP affirmed, holding that the Bankruptcy Court has discretion to determine when the reinstatement of a case is effective. It can reinstate a case and reimpose the automatic stay as of the time it signs a reinstatement order, subject to review for abuse of discretion, but is not required to do so. The BAP pointed out that if reinstatement orders were to retroactively impose the automatic stay there would be no way to protect against the sale being rendered retroactively void at some future date.

Quicken Loans v. Wood
9th Circuit 5/22/06

LOANS: California's per diem interest statutes (Civil Code Section 2948.5 and Financial Code Section 50204(o)), which prohibit lenders from charging interest for a period in excess of one day prior to recordation (now amended to apply to disbursement) are NOT preempted by the Alternative Mortgage Transaction Parity Act (Parity Act), 12 U.S.C. §§ 3801-06,

In re: Smith
BAP 9th Circuit 4/7/06

BANKRUPTCY / HOMESTEAD EXEMPTION: Where state law provides that a debtor's homestead exemption attaches to sales proceeds for a period of time, and the debtor files bankruptcy before that time period expires, the bankruptcy estate holds a contingent, reversionary interest in the sale proceeds. When debtor fails to reinvest the proceeds within the requisite time period, the proceeds became nonexempt, and therefore, property of the estate.

Jones v. Flowers
U.S. Supreme Court 4/26/06

TAX SALES: When a mailed notice of a tax sale is returned unclaimed, the State must take additional reasonable steps to attempt to provide notice to the property owner before selling his property, if it is practicable to do so. The State learned that the notices sent to the property owner were not received because the certified letters were returned unopened by the post office marked "unclaimed". Examples of additional reasonable steps are 1) resending the notice by regular mail, 2) post the notice on the front door or 3) address the mail to "occupant". The Court stated that it is not necessary to search for the owner's possible new address in the phonebook or other government records.

In re: Emerald Outdoor Advertising
9th Circuit 4/13/06

INDIANS: A deed of trust on Indian trust land, which was recorded in the County Recorder's Office, but not with the Bureau of Indian Affairs (BIA), had priority over a subsequent lease which was recorded with the BIA, but not in the County Recorder's Office. State law applied to determine priorities because 25 U.S.C. 483a provides that state law applies in the absence of a tribal foreclosure law.

In re: Tippett
BAP 9th Circuit 1/31/06     AFFIRMED BY 9TH CIRCUIT 9/4/08

BANKRUPTCY: Bankruptcy Code Section 549(c) prevents a trustee from setting aside a sale by debtor to a bona fide purchaser and his lenders. The Court rejected the trustee's argument that a sale by a debtor violates the automatic stay and is therefore void ab initio.

In re: Concannon
BAP 9th Circuit 2/7/06

BANKRUPTCY: In a Chapter 7 case, the prohibition against lien stripping (Dewsnup v. Timm, 502 U.S. 410 (1992)) applies to both "stripping down" and "stripping off", and to both non-consensual, as well as consensual liens.

Central Virginia Community College v. Katz
U.S. Supreme Court 1/23/06

BANKRUPTCY / SOVEREIGN IMMUNITY: A bankruptcy trustee's proceeding to set aside preferential transfers by the debtor to state agencies is not barred by sovereign immunity. Congress' authority to enact bankruptcy laws intruding on states' sovereign immunity arises from the Bankruptcy Clause of Article I of the Constitution, so the enactment of 11 U. S. C. Section 106(a) was not necessary to authorize the Bankruptcy Courts' jurisdiction over States.

Glenbrook Homeowners Assn. v. Tahoe Regional Planning Agency
9th Circuit 9/21/05

EASEMENTS:
1. Under the doctrine of merger, when a single owner acquires present possessory fee simple title to both the servient and dominant tenements, the easement merges into the fee and is terminated.
2. The Court almost deals with an interesting issue, but since it was not one of the holdings that is the subject of the appeal, it is left unanswered. The District Court held that a deed conveying a community pier conveyed only the pier itself, which is personal property. This particular issue was not appealed, so the 9th Circuit adopted the un-appealed holding that the rights in the pier were personal property, and reached the conclusion that since the rights were personal property, a subsequent grantee of the underlying land did not acquire them because they did not run with the land.

In re: Conceicao
BAP 9th Circuit 8/23/05

JUDGMENT LIENS: A judgment creditor recorded a judgment which did not contain the debtor's social security number. C.C.P. Section 674 requires that, if the creditor knows the debtor's SSN, it is one of the items of information that must be included in the abstract of judgment in order to create a judgment lien. The Court followed Keele v. Reich, which held that failure to comply with C.C.P. 674 invalidates the lien. It acknowledged that times have changed since the statute was enacted and that identity theft and privacy of social security numbers are now of paramount importance, but the statute and the Keele case are very clear. Also, even if the Court were to agree with Commonwealth Land Title Co. v. Kornbluth, which allowed in some cases an amendment of an abstract of judgment, the debt was discharged in bankruptcy, so the creditor is an unsecured creditor with a discharged debt and can no longer create a lien.

Wells Fargo Bank v. Boutris
9th Circuit 8/12/05

LOANS: California's per diem interest statutes (Civil Code Section 2948.5 and Financial Code Section 50204(o)), which prohibit lenders from charging interest for a period in excess of one day prior to recordation (now amended to apply to disbursement) are preempted by the National Bank Act, 12 U.S.C. Sections 21 et seq., but are NOT preempted by the Depository Institutions Deregulation and Monetary Control Act of 1980, 12 U.S.C. Sections 1735f-7a.

Kelo v. City of New London
U.S. Supreme Court 6/23/05

EMINENT DOMAIN: The term "public use" in the 5th amendment includes economic benefit. [Ed. note: In other words, the Court defines the term "public use" so broadly that private property can now be taken by eminent domain and sold  to a private party simply because the condemning authority thinks the new owner will use it to produce more tax revenue and economic activity.]

In re: Brawders (Brawders v. County of Ventura)
BAP 9th Circuit 5/10/05

BANKRUPTCY: There is no legal basis for reducing the lien of real property taxes, although a Chapter 13 plan can provide for making payments over time of the delinquent amount. This case involved the res judicata effect of a County failing to object to a Plan that, so debtors argued, eliminated (improperly) the tax lien itself. The Court held that the Plan did not purport to do that. The Court points out that liens ordinarily pass through bankruptcy unaffected so that secured creditors, unlike unsecured creditors, may ignore the bankruptcy proceedings and look to the lien for satisfaction of the debt.

In re: Brinley (Brinley v. LPP Mortgage)
6th Circuit 3/22/05

BANKRUPTCY: A debtor can avoid a judgment lien under Bankruptcy Code Section 522(f) to the extent it impairs the homestead exemption, even if the judgment lien is senior to a consensual lien and even though there would be too much equity to avoid the lien in the absence of the consensual lien. 

Hendricks v. Bank of America
9th Circuit 2/25/05

LETTERS OF CREDIT: The case discusses California Commercial Code Section 5109(b) which allows a court to enjoin a bank from honoring a letter of credit if the plaintiff claims that honor would facilitate a material fraud and certain requirements are satisfied.

In re: Charnock
BAP 9th Circuit 1/3/05

BANKRUPTCY: A debtor can avoid a judgment lien under Bankruptcy Code Section 522(f) even if the lien is senior to a consensual lien and even though there would be too much equity to avoid the lien in the absence of the consensual lien. 

In re: Villar (Beneficial California v. Villar) 
BAP 9th Circuit 10/20/04

BANKRUPTCY: A notice of a 522(f) motion may be served by mail under Bankruptcy Rule 7003(b)(3), but it must be addressed to the attention of an officer or agent. The court set aside the order because it was addressed to the company without specifying an officer, but pointed out that the debtor can achieve her desired result by simply re-noticing the motion and serving it properly.

In re: Nielsen (White v. Nielsen) 
9th Circuit 9/7/04

BANKRUPTCY: In a no-asset, no bar bankruptcy case, a discharge applies to unscheduled dischargeable debts. Under Bankruptcy Code section 523(a)(3)(A) a discharge does not apply to an unscheduled debt if the failure to schedule prevents the creditor from filing a timely claim. However, in a no-asset case, the concept of filing a "timely claim" does not apply because the court never sets a "bar" date, so creditors are never deprived of a right to file a claim. Creditors are not harmed because they receive no assets whether or not their debts are scheduled.

In re: Enewally
9th Circuit 5/27/04

BANKRUPTCY ("Lien Stripping"): In a Chapter 13 case, 11 U.S.C. §506(d) does not apply to allow a creditor with an undersecured lien on real property, which was not the debtors' residence, to separate the secured loan into a secured claim equal to the value of the security and a dischargeable unsecured claim for the balance. The reason is that 11 U.S.C. §1322(b)(2) prohibits the modified secured debt from being paid over a period of time longer than the plan term (3 - 5 years). [So, apparently, this would have been possible in the unlikely situation of  the secured debt being paid within that time period.] The case contains a good discussion of "lien stripping" and the difference between "stripping down" and "stripping off"

Tennessee Student Assistance Corp. v. Hood
U.S. Supreme Court 5/17/04

BANKRUPTCY: A proceeding initiated by a debtor to determine the dischargeability of a student loan does not violate the Eleventh Amendment's protection of State sovereign immunity because it is not a "suit" against the State. The federal court's jurisdiction over the dischargeability of debt derives from in rem jurisdiction over the debtor, and a determination of dischargeability does not seek affirmative relief from the State. The Court specifically did not decide whether the Constitution's Bankruptcy Clause, Art. I, sec. 8, gives Congress the power to abrogate states' sovereign immunity, which Congress has attempted to do in 11 U.S.C. 106(a)

Bunyard v. U.S. 
301 F.Supp. 2d 1052 (US Dist. Court of Arizona, 2/9/04) 

PRESCRIPTIVE EASEMENTS: (1) In order to establish a prescriptive easement over property owned by the United States, it is necessary to demonstrate that the necessary elements for a prescriptive easement occurred prior to the United States' ownership. The Court held that plaintiff was entitled to a prescriptive easement. The case contains an excellent discussion of the elements necessary to establish a prescriptive easement under Arizona law. (2) Under the Alaska National Interest Lands Conservation Act ("ANILCA"), the U.S. must provide access to land "within the boundaries" of the National Forest System. This applies only to landlocked property and not to plaintiff's property, which is surrounded on only three sides by National Forest land.

Krystal Energy Company v. Navajo Nation
9th Circuit 2/10/04 (Amended 4/6/04)

BANKRUPTCY/INDIANS: Indian tribes are subject to Bankruptcy Court jurisdiction because 11 U.S.C. 106(a) abrogates their sovereign immunity. (Note that the 11th Amendment protects States against abrogation of sovereign immunity.)

In re: Goswami
BAP 9th Circuit 1/27/04

BANKRUPTCY: A debtor may reopen a closed bankruptcy case in order to amend the exemption schedule to assert a homestead exemption, and to make a motion to set aside a judgment lien under Bankruptcy Code Section 522(f).

US v. Ritchie (Horner)
9th Circuit 8/26/03

FORFEITURE: In a forfeiture action, when initial personal notice letters are returned undelivered, the government must make reasonable additional efforts to provide personal notice. This case involved personal property, but the notice rules are very similar for real property.

In re: Benson
Arizona Bankruptcy Court 5/21/03

BANKRUPTCY: Under Arizona law (A.R.S. Section 33-810(A)), a trustee's sale is not complete until payment of the bid price. Therefore, the automatic stay prevented completion of a trustee's sale where a bankruptcy was filed after the bid was made, but before payment of the bid price.

In re: El Dorado Improvement Corp. (Sundt Corp. v. Dynamic Finance Corp.)
9th Circuit 7/3/03

MECHANIC'S LIENS: A lien claimant filed a mechanic's lien against a redevelopment project after the normal time for filing liens had expired. However, it claimed that its lien was timely under the last paragraph of California Civil Code Section 3086, which postpones "completion" to the date of acceptance by a public entity. The court held that such acceptance by a public entity was not required in this case. "Acceptance" under the statute is not to be equated with inspection and approval or the issuance of certificates of occupancy; it refers only to the acceptance of an improvement that is civic in nature. (Such as streets, sidewalks or sewers that will be used by the public.)

In re: Summers
9th Circuit 6/20/03

COMMUNITY PROPERTY: The California transmutation statute (Family Code Section 852), requiring a writing signed by the spouse whose interest is adversely affected, does not apply to a deed from a third party transferring title to spouses as joint tenants. Therefore, the deed created a valid joint tenancy between the spouses even though they apparently did not join in the execution of the deed.

In re: Harleston
9th Circuit 6/5/03

BANKRUPTCY: When a state agency waives sovereign immunity by filing a proof of claim, the waiver extends to adversary proceedings, including dischargeability proceedings. The reason is that when a state waives immunity as to one action, its waiver extends to ancillary suits to enforce orders entered in that action.

40235 Washington Street v. Lusardi
9th Circuit 5/23/03

BANKRUPTCY: The Court held that a tax sale was void and the successful bidder, who was a bona fide purchaser, is NOT protected where the tax sale was held in violation of the automatic stay. (The same reasoning applies to trustee's sales.) Bankruptcy Code Section 549(c) protects BFP's when the debtor initiates an unauthorized postpetition transfer, but not when the transfer is already void because it violated the automatic stay.

Also, the Bankruptcy Code preempts California law which requires a taxpayer to tender the purchase price to the tax sale purchaser in order to set aside the tax sale.

In re: Fjeldsted
BAP 9th Circuit 5/20/03

BANKRUPTCY: A trustee's sale was held in violation of the automatic stay without the knowledge of the successful bidder. The Court held that in determining whether to grant retroactive relief from the automatic stay and validate the sale, 1) the court must apply a balancing-of-the-equities test, 2) the BFP status of the purchaser is a factor to be considered and 3) Bankruptcy Code Section 549(c) protects BFP's only from the debtor's voluntary sales of estate property, not from acts which are void as a result of a violation of the automatic stay, so the purchaser's BFP status cannot be the sole determining factor.

Wells Fargo Bank v. Boutris
US Dist. Court, Eastern Dist. of California 5/9/03 PARTIALLY OVERRULED BY 9TH CIRCUIT

LOANS: The National Bank Act and the Depository Institutions Deregulation and Monetary Control Act of 1980 preempt California Civil Code Section 2948.5 and Financial Code Section 50204(o), which prohibit lenders from charging interest for a period in excess of one day prior to recordation of a deed of trust.

State Farm Mutual Automobile Ins. Co. v. Campbell
United States Supreme Court 4/7/03

PUNITIVE DAMAGES: Punitive damages violate the 14th amendment if they are not reasonable in light of three guideposts: 1) the degree of reprehensibility of the defendant's conduct, 2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award, and 3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.

Here, punitive damages of 145 times compensatory damages are invalid. The Court did not specify an acceptable ratio of punitive to compensatory damages, but stated that "single digit multipliers are more likely to comport with due process". Also, the Court stated that the wealth of the defendant cannot justify an otherwise unconstitutional punitive damages award.

Apao v. The Bank of New York
9th Circuit 4/4/03

FORECLOSURE: Non-judicial foreclosure under HRS Section 667-5 is constitutional. The statute does not violate the due process clause of the 14th Amendment because no state action is involved.

Lane v. Residential Funding Corporation
9th Circuit 3/13/03

RESPA: Chicago Title Insurance Company provided title and escrow services at a discount in transactions where Residential Funding Corporation sold property it had acquired by foreclosing on deeds of trust securing its loans. RESPA was not violated because the discounts were based on Chicago's lower costs when dealing with the customer, and were not given for referring buyers.

In re: Hood
6th Circuit 2/3/03

BANKRUPTCY: (Note: this 6th Circuit case directly conflicts with the 9th Circuit opinion in In re: Mitchell.) Bankruptcy Code Section 106(a), which purports to abrogate state sovereign immunity against proceedings to determine tax liability and dischargeability of debts, is constitutional because Article I gives Congress the power to make uniform laws over bankruptcy.

In re: Litas International
8th Circuit 1/3/03 

BANKRUPTCY: (NOTE: Usually I include only 9th Circuit cases, but this one is interesting.) The 10-day statutory time to appeal never began because the Bankruptcy Court failed to enter a final judgment in the underlying matter, so the time to appeal cannot be said to have passed.

In re: Thomas
BAP 9th Circuit 12/19/02 (Mod. 1/2/03)

BANKRUPTCY: An appeal of an order for a sale of property is moot under 11 U.S.C. §363(m) if the property is sold pursuant to the order and the purchaser acts "in good faith". When the issue of good faith is raised for the first time on appeal, the proper procedure is to use the device of a limited remand from the appellate court to the trial court for the purpose of determining the factual question of good faith.

In re: Cady (Palm v. Cady)
9th Circuit 1/3/03

BANKRUPTCY: The Court affirmed the judgment of the Bankruptcy Appellate Panel for the reasons stated in its opinion and reprinted that opinion as an appendix to the 9th Circuit opinion. The BAP opinion is set forth below.

In re: Cady
BAP (266 B.R. 172) 8/7/01

BANKRUPTCY: A creditor may record an abstract of judgment during the pendency of a bankruptcy without violating the automatic stay where 1) the judgment is a nondischargeability judgment based on a pre-petition debt or 2) the judgment is based on a post-petition debt. The judgment lien does not attach to property of the estate, but does attach to any property subsequently acquired by the debtor, whether by purchase, abandonment by the bankruptcy trustee, non-administered property which re-vests in the debtor after the bankruptcy case is closed, or by some other means.

Leisnoi v. U.S.
9th Circuit 12/19/02

QUIET TITLE ACT: The District Court is deprived of jurisdiction under the Quiet Title Act once the U.S. files a disclaimer.

Gobin v. Snohomish County
9th Circuit 9/18/02

INDIANS: Land on an Indian reservation which has been allotted to individual Indians and which is freely alienable, is nevertheless not subject to a County's land use regulations.

In re: Chiu (Culver v. Chiu)
9th Circuit 9/18/02 (304 F.3d 905)

BANKRUPTCY: Debtors filed a Chapter 7 petition and claimed their residence as a homestead. They did not take any action to avoid a judgment lien. They obtained a discharge and the case closed in 1995. In 1999 the debtors sold their residence and sufficient proceeds were retained in escrow to cover the judgment lien. The debtors then filed motions to reopen their bankruptcy case and to avoid the lien under Bankruptcy Code Section 522(f).

The Court affirmed the Bankruptcy Court's order reopening the case and setting aside the lien. The Court held that as long as the debtor owned the property at the time the judgment lien attached, Section 522(f) allows the avoidance of a judicial lien after the debtor has sold the exempt property. (The Court did not discuss whether the valuation date is the date of the petition or the date of sale.)

In re: Stanton (Beeler v. Jewell)
9th Circuit 4/9/02 (Modified 9/13/02)

BANKRUPTCY: Where a debt is secured by a loan to a party who is not in bankruptcy and the debtor's guaranty is secured by a deed of trust on debtor's property, the automatic stay does not apply to optional advances made to the non-bankrupt debtor. Post-petition optional advances are secured by the lien on the guarantor/debtor's property, but the trustee has priority over advances made after the filing of the guarantor's bankruptcy.

Wolfson v. Watts
9th Circuit 8/6/02

HOMESTEADS (Recorded Homesteads): Under California law, a judgment creditor is entitled to surplus equity that accrues after the abstract of judgment recorded, even if there was no surplus equity when the A/J recorded. The Court rejected the earlier 9th Circuit case of Jones v. Heskett (In re: Jones), 106 F.3d 923 (9th Cir. 1997) because of two intervening California appellate cases that disagreed with the Jones case: Smith v. Merrill (1998) 64 Cal.App.4th 94, 75 Cal.Rptr.2d 108 (1998) and Teaman v. Wilkinson (1997) 59 Cal.App.4th 1259 , 69 Cal.Rptr.2d 705.

The concurring opinion contains an interesting discussion regarding the inability of one three-judge panel of the 9th Circuit to overrule the opinion of another three-judge panel.

American Vantage Companies v. Table Mountain Rancheria
9th Circuit 7/29/02

INDIANS: Since an Indian tribe is not a citizen of any State, diversity jurisdiction does not exist. Therefore, the District Court properly dismissed the action against the tribe for want of subject matter jurisdiction, even though the subject contract stated that the tribe waived sovereign immunity and that either party may seek appropriate relief in a U.S. District Court.

In re: Bliemeister
9th Circuit 7/19/02

BANKRUPTCY / SOVEREIGN IMMUNITY: A state cannot assert sovereign immunity in a bankruptcy case after answering a complaint and filing a motion for summary judgment. Such conduct is incompatible with an intent to preserve immunity.

In re: Mitchell, T.
BAP 9th Circuit 6/17/02

BANKRUPTCY:
1. Bankruptcy Code Section 549(c) protects BFP's from unauthorized transfers of estate property by the debtor, but does not protect BFP's who purchase property at trustee's sales violating the automatic stay.

2. The trustee's deed recorded within 15 days of the sale, so under Cal. Civil Code Section 2924h(c) the transfer was perfected as of the date of the sale. However, since the foreclosure sale itself was void, later perfection could not validate it.

In re: Farr
BAP 9th Circuit 5/21/02

BANKRUPTCY: Under Bankruptcy Code Section 522(c)(2), a debtor's exempt property may be liable for a prepetition debt secured by a lien that is not avoided in bankruptcy. The homestead exemption applies to the debtor's residence, so the judgment lien attaches to the equity in the residence in excess of the homestead exemption..

In re: McGhan
9th Circuit 5/7/02

BANKRUPTCY: (1) State courts do not have jurisdiction to determine whether a listed and scheduled creditor received adequate notice of discharge proceedings, (2) state courts do not have authority to modify a bankruptcy court's discharge order and (3) a bankruptcy court is required to reopen the proceedings to protect its exclusive jurisdiction over the enforcement of its orders.

However, state courts do have jurisdiction to: (1) Construe or determine the applicability of a discharge order when discharge in bankruptcy is raised as an affirmative defense in a state court action and (2) determine whether a discharge applies to a debt which was not listed in the bankruptcy because the creditor had actual notice of the bankruptcy in time to file a nondischargeability complaint.

In re: Kehaulani
BAP 9th Circuit 3/29/02 (Mod. 4/18/02)

BANKRUPTCY: A bankruptcy court has the power to grant retroactive relief from the automatic stay to cure a previous violation of the stay. Cause to annul the stay may exist where the stay harms the creditor and lifting the stay will not unjustly harm the debtor or other creditors.

In this case, a lender, who was not aware that the debtor had filed bankruptcy, proceeded with a foreclosure action in violation of the automatic stay. The debtor then dismissed the bankruptcy and the lender proceeded to obtain a writ of possession. The lender then learned of the bankruptcy and obtained the order for retroactive relief from the automatic stay.

U.S. v. Craft
United States Supreme Court 4/17/02

FEDERAL TAX LIENS: A federal tax lien against one spouse attaches to the taxpayers interest in property held as tenants by the entirety. This is dramatically different than a state judgment lien, which in most states does not attach to tenants by the entirety property if the judgment is against only one spouse.

The case also contains a useful discussion even in states that do not recognize tenants by the entirety. The court, citing other cases, explained that the federal tax lien statute itself creates no property rights but merely attaches consequences, federally defined, to rights created under state law. Accordingly, we look initially to state law to determine what rights the taxpayer has in the property the Government seeks to reach, then to federal law to determine whether the taxpayer's state-delineated rights qualify as "property" or "rights to property" within the compass of the federal tax lien legislation.

Leatherman Tool Group v. Cooper Industries
9th Circuit 4/5/02

PUNITIVE DAMAGES: The Court reduced a punitive damages award from $4.5 million to $500,000 based on the criteria set forth in BMW of North America v. Gore, 517 U.S. 559, 116 S.Ct. 1589 (1996). Those criteria are (1) the degree of reprehensibility of the defendant's conduct, (2) the disparity between the harm (or potential harm) suffered by the plaintiff and the punitive damages award, and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.

In re: Harleston
BAP 9th Circuit 4/8/02   AFFIRMED see 9th Circuit case filed 6/5/03

BANKRUPTCY: When a state agency waives sovereign immunity by filing a proof of claim, the waiver extends to adversary proceedings, including dischargeability proceedings. The reason is that when a state waives immunity as to one action, its waiver extends to ancillary suits to enforce orders entered in that action.

U.S. v. Real Property at 2659 Roundhill Drive
9th Circuit 3/18/02

FORFEITURE: A foreclosure of a deed of trust wipes out the government's interest in the subject property asserted in a forfeiture action where the government's lis pendens was recorded subsequent to the deed of trust. The government's continuation of the forfeiture action against the purchasers at the trustee's sale was so unreasonable that the court awarded attorney's fees against the government based on a statute providing for such fees where the government's position is not "substantially justified".

U.S. v. Byrne
9th Circuit 1/28/02 (Amended Opinion 5/29/02)

WATER: In a quiet title action for land created by avulsion, the court's analysis should begin on the date the federal government patented the land to the State under the Swamp and Overflowed Lands Act, and it should not consider pre-patent avulsive river movements.

Dusenbery v. United States
United States Supreme Court 1/8/02

FORFEITURE: This was a 5 to 4 decision. The court held that in a forfeiture action, service on a defendant who was incarcerated in a federal prison was sufficient where service was mailed to the prison, even though there was no showing that the mail actually reached the prisoner. Note that at the time of the court hearing, the prison had changed its practices so that prisoners were required to sign a log book acknowledging receipt or, if a prisoner refuses to sign, a prison officer documents the refusal.

Linneen v. Gila River Indian Community
9th Circuit 1/7/02

INDIANS: An Indian Community's corporate charter provided that it had the power "to sue and be sued in courts of competent jurisdiction within the United States". This is sufficient to waive immunity with respect to a tribe's corporate activities, but not to its governmental activities. This case fell within the latter type of activity because it involved a tort action against the Community and against individual tribal police officers acting in their official capacity.

In re: Murphy
5th Circuit 11/14/01

BANKRUPTCY: A State agency has 11th Amendment immunity from Chapter 7 adversary proceeding to determine the dischargeability of a debt owed to the agency because an adversary proceeding to determine the dischargeability of a debt is a "suit" under the Eleventh Amendment. The Court explains that the 11th Amendment only precludes an adversary proceeding to enforce or clarify the discharge, but does not preclude the discharge, itself.

Shannon-Vail Five v. Bunch
9th Circuit 11/2/01

PROMISSORY NOTES: Even though the real properties securing promissory notes were located in California, Nevada law regarding usury applied to the notes where they did not contain a choice of law provision and where they provided for payment in Nevada. Also, since the lenders were Nevada residents, providing for payment in Nevada was not an impermissible scheme to avoid California law.

In re: Chiu
BAP 9th Circuit 8/23/01

AFFIRMED. See In re: Chiu (Culver v. Chiu) 9th Circuit 9/18/02.

US v. Real Property at 22 Santa Barbara Drive
9th Circuit 9/5/01

BANKRUPTCY: This was an action for damages for wrongful seizure of property pursuant to 21 U.S.C. Section 881(a)(6), which subjects to forfeiture property purchased with proceeds traceable to drug transactions. The property was sold pursuant to a stipulation between the claimants and the government, so only damages and not the validity of the sale were at issue.

Of interest are the following statements and holdings by the Court:
1) The Due Process Clause requires notice and a meaningful opportunity to be heard before seizing real property subject to civil forfeiture.
2) Forfeiture does not constitute an excessive fine in violation of the Eighth Amendment because it simply parts the owner with the fruits of criminal activity.

In re: Clark
BAP 9th Circuit 8/6/01

BANKRUPTCY
1. The usual rule is that a trustee's failure to timely object to a claim of exemption precludes him from challenging its validity, regardless of whether or not there is a valid basis for the exemption. However, the rule does not apply where the description in Schedule C of the property being claimed as exempt is so inadequate that potential objectors are not put on notice of what property is being claimed as exempt.
2. Bankruptcy Code Section 363(f)(4), which allows a sale free and clear of liens where an interest in property is in bona fide dispute, does not apply to a dispute about whether property is exempt.

In re: Salanoa
Bankruptcy Court, S.D. California 5/16/01

BANKRUPTCY: The debtors reopened their bankruptcy case 5 years after it was closed in order to set aside a judicial lien pursuant to Bankruptcy Code Section 522(f). The Court held that the date of valuation for determining whether a lien can be avoided under Section 522(f) is the petition date, unless the creditor can show it detrimentally relied on the debtor's inaction in avoiding the lien. The Court points out that there are no cases on point in the 9th Circuit and that there is a split of authority in other jurisdictions as to whether the date of valuation is the petition date or the date of the hearing.

In re: Ellett
9th Circuit 7/16/01 (Amended 8/27/01)

BANKRUPTCY: A bankruptcy discharge cannot be enforced against a State in an adversary proceeding where the State does not consent to a bankruptcy court's jurisdiction by filing a proof of claim or otherwise participating in the bankruptcy proceeding. This was the holding in In re: Mitchell, 209 F.3d 1111 (9th Cir. 2000), based upon 11th Amendment immunity. HOWEVER, the discharge order is binding upon a State and, while the State is immune from suit in Federal Court, a State official is subject to suit in an adversary proceeding seeking to enjoin the official from violating the discharge order.

Adams v. United States
9th Circuit 6/25/01

FOREST LANDS: 1) A landowner whose only access is over National Forest land must apply for a permit for access if his use of the access goes beyond uses made by the general public, 2) The landowner must comply with reasonable Forest Service regulations with regard to road maintenance and improvement, 3) Under the Alaska National Interest Lands Conservation Act, a landowner must provide the U.S. a right of way where it is necessary for the management of adjacent Federal land and is entitled to receive compensation for doing so.

Idaho v. United States
U. S. Supreme Court 6/18/01

WATER/INDIANS: In any equal footing case, the court begins with a strong presumption against defeat of the state's title. But the question of title to submerged land is ultimately a matter of federal intent. Here, Congress intended to include submerged lands within the Coeur D'Alene Tribe of Idaho Indian reservation. (Affirmed 9th Circuit opinion at 210 F.3d 1067.)

Cabazon Band of Mission Indians v. Smith
9th Circuit 5/17/01

INDIANS: A state's laws apply to an Indian tribe off a reservation. However, the Court distinguishes Kiowa Tribe of Oklahoma v. Manufacturing, 523 U.S. 751 (1998) in which the Supreme Court held that a tribe's sovereign immunity barred a civil suit in state court, where the activity giving rise to the suit occurred off the reservation. The distinction is that while a state's laws apply to a tribe off the reservation, the state's courts are not available to enforce those laws.

Stein v. Cadle Company
9th Circuit 5/10/01

TAX LIENS: The requirement of recording a tax lien (26 U.S.C. 6323(a)) does not apply to a judgment against a debtor based on the debtor's failure to comply with a levy. (A taxpayer owed taxes and the federal government levied on funds of the taxpayer held by the debtor.) Such a judgment is governed by 31 U.S.C 3713 because it is an ordinary judgment and not a tax lien.

C & L Enterprises, Inc. v. Citizen Band Potawatomi Indian Tribe of Oklahoma
121 S.Ct. 1589     U. S. Supreme Court 4/30/01

INDIANS: Where an arbitration clause in the contract proposed by the Indian Tribe specifies the enforcement of arbitral awards "in any court having jurisdiction thereof", the Indian Tribe has waived its immunity to suit in state court.

Redding Rancheria v. Superior Court       Docket
88 Cal.App.4th 384     Cal. App. 3rd Dist. 4/6/01     Review by Supreme Court Denied 6/13/01

INDIANS: Indian tribes and tribal corporations are immune from tort actions in state court, even where the alleged acts were committed outside of Indian country.

San Xavier Development Authority v. Charles
237 F.3d 1149     9th Cir. 1/29/01

INDIANS:
1. The Nonintercourse Act (25 U.S.C. §177) applies only to tribal land, not to allotted land.
2. Only Indian Tribes may bring §177 actions.
3. A corporation chartered by a tribe is not a tribe.
4. Congress has enacted a comprehensive regulatory regime governing conveyances of property from both tribal and allottee landowners, but it has not provided comparable remedies for these landowner's lessees.

U.S. v. Hooper
229 F.3d 818     9th Circuit 10/12/00

FORFEITURE: Spouse's community property interest in property acquired with proceeds of an illegal activity is subject to forfeiture, along with the interest of the spouse who committed the crime.

In re: Mitchell
209 F.3d 1111     9th Circuit 4/21/00

BANKRUPTCY: Bankruptcy Code Section 106(a), which purports to abrogate state sovereign immunity against proceedings to determine tax liability and dischargeability of debts, is unconstitutional.