no money generally and the intent of congress was to give them a very clear protection from being sued were pursued in state court where otherwise i would claim that is in fact  discharged the bankruptcy appellate decision in this case is unprecedented and unheralded and it completely undercuts the importance of the discharge injunction when someone goes to state court for instance as in this case on a claim which in was in fact discharged that violates the discharge injunction and it does not matter whether the creditor has any basis for doing it or no basis for doing it or believes that he they can do it or believes that they can't do it it makes no difference because the are you suggesting that it's like strict liability yes absolutely where  does it where where do you get that notion in which case law on your own decisions two of them and eleven circuit also when here's the reason once you know and this is your own quotes once you know that there is an injunction the burden shifts to the defendant to show that there was a reason why they could not obey the injunction and the early defense that has ever been allowed by any court including this court is if they did not know that there was in fact an injunction and that's been the situation that's not quite so have you because it didn't have an adequate notice consequence is whether your client had return to the free and issue which went both ways both in state and and bankruptcy court and so the court so under those potentially applies if you read all of the equal of the quotes this court actually said was not aware of its potential application to it and that's an actual statement  if i might to explain why this is true and why what we have is if you do it we will litigate whether the discharge injunction applies or not if it turns out you're wrong then you must reaffirmation and the bankruptcy court in this court held at least this court held that it was not in fact a reaffirmation and therefore it was a borrowed claim and therefore the creditor was a liable for sanctions creditor was there was a chapter thirteen chapter thirteen plan determined that the claim was a student loan claim was discharged but the order sent back to the bankruptcy court whether or not that was a clerical error that should be changed it went back to the bankruptcy court which determined it was a clerical error and in fact the a plan itself a control over the statute that said that you have to happen adversary proceeding as now this is a situation where the creditor was actually had an order that  the student debt was accepted and then the that was changed then in addition the creditor contended in the bankruptcy court that it was not proper to allow a student debt to be discharged by a planned you must do it the other way and there's actually statutory authority for that in other jurisdictions but this court ruled that the plan is is the controlling document then send it back for a concert consideration of sanctions in that situation the creditor had to legitimate arguments as to why they didn't know that it applied to their debt first you had an order that said it was accepted and then you had an argument that the statute protected the debt at the creditor because you couldn't do it through a plan you had to do it through an adversary proceeding and in spite of that this court sent it back for sanctions or temptation of sanctions  footnote this court said two things one it confirmed renwick versus bennett and said agreed with it and it also affirmed harding it said we agree with r d this court has said protect someone even if the person who is engaged in contempt is mistaken if you under the your bat decision you don't really have much protection as  a discharge debt or because a creditor may have a reason why they think that their debt isn't just discharged and if it's based on subjectivity or on will and they can say well we were mistaken but i thought it was and there's some reason for it the debtor has no protection and the debtors don't have any money and if the if the courts are not going to allow the debtors attorney to get paid by the creditor it which is  standard sanction then and the attorney can afford to take it and you've basically left the credit at the debtors high and dry any time there's a dispute the reality is and what has happened in every other case but this one is that you litigate whether or not it is in fact a violation of discharge injunction if it is it's one way prevailing party fee and damages well there any other way in reality the only jurisdiction that could grant contempt attorneys fees protection is this court is a bankruptcy court in the federal courts and they have no but i'm asking did you have to use the vehicle of contempt you have to yes and when you use when you use the vehicle of conte damages right two thousand dollars car you've got you've got you got a judgment in this continuing thing that you say was remedial and normally we look upon conte as if it's punitive now this case you label this as civil contempt as opposed to so called criminal contempt and yet everything is done in the name of punishment not in the name of contracts will write to attorneys fees or anything else it's all in the form of punishment and it isn't coupled with an order that says if the defendant will do certain things he will extricate himself from the contempt it's up it's an after the fact punishment for contempt is it not not exactly ok let me tell you why two things first of all it's to make the debtor whole yeah and so you're entitled to emotional distress and attorney's fees now you come to the question of the two thousand dollars for punitive damages which is in the area of what you're talking about and this court has held that because it's a civil remedial contempt you cannot have a substantial amount of punitive damages but you can have a minor amount of damages and this court has held that that's true in this contempt setting all right and sewed now all we have before us is is the review of whether or not that bankruptcy appellate panel was correct in saying there is this additional element to being in contempt and that being does not only not only do we have the discharge but i know it applies to me yes let's talk about applies to me because this is a verbalization this court has said on several occasions that they agree with the eleventh circuit the eleventh circuit's verbiage is a little different but you have said in numerous occasions without diff making any differentiation that you agree with the eleventh circuit which says has a slightly different verbiage but in all those cases including the cases from this court you have said the standard is is there an order that specific indefinite and then if there is the burden shifts to the other it to the  the contempt or to show why they could not could not obey the order and that's the test then you said you have these two very two it two standards and you did say but you said in har i just want to pursue this other remedy and what in an ideal world would that creditor have done say ok you got a discharge in bankruptcy therefore you get to continue to be by partner and i can't kick you out here for all of the things you i accuse you of doing including conversion of money ok ok yes and the quid let that occur the question is when mr taggart didn't participate at all in that he wanted nothing to do with it and didn't feel like he had any interest at all how could they come back in asking for attorney's fees and the answer is they couldn't in the court of appeals or the court of appeals is so ruled and so is judge dunn and in fact that ruling is final i think well but he didn't he didn't ask for attorney's fees it wasn't clear that everybody said we're not seeking wasn't didn't want nothing to do with it and after that litigation they then went back to state court and said we want to forty some thousand dollars in attorney's fees for mr taggart for litigating with the other folks after he filed bankruptcy so that it's the post petition attorney species for which he had no interest and wanted nothing to do with it and they forced him to be an unwilling participant in the trial or in the case and then they asked for please the court counsel janet strayer here on behalf of the executor of the estate of stupor around you are going to share some time with i'm sharing time with co counsel he's going to take about five minutes i'm going to take about fifteen minutes and i'm also here with minds who is not going to argue this case has gone on for a really long time the events at issue in the underlying lawsuit took place in two thousand and four the lawsuit was filed in two thousand nine mr taggart filed bankruptcy on the first day of trial in two thousand and ten the cases bounced up and down back and forth through the various courts for many years stoop around is now deceased the attorney who log supplied a test the talked only about actual knowledge of the potential applicability of the discharge to the debt in question let's turn to the holding of judge kozinski is opinion and his opinion says henri mann the bankruptcy court shall determine whether the women were aware of the discharge injunction and its applicability to their claims not its potential applicability but the holding of judge consents in this i logged case specifically state the applicability of the claim and this i logged tace case test as enunciated there has been reiterated the same way by this court over and over again including in esp substantial difference between the fact of receiving notice and the subject of measurement of whether taggart return to the free i think they're they're both fact dependent inquiries that need to be examined and in this case the order or the discharge order such as it were was in big list because it wasn't clear whether or not the fees were discharged because that in turn was dependent upon the bare out based analysis as to whether the debtor returned to the fray as the baps stated the only way that creditors can determine whether the debtor returned to the fray is to have a court ruling on that and so mr brown to answer the question judge levy your confusion about whether we asked for fees or not in the trial court we asked for fees after the trial was over but in conjunction with that and before that at the same time but i mean logically before that we asked the trial court to determine whether mr taggart had returned to the fray to make a ruling about the scope of the discharge or the applicability of the discharge to the state law fee claim in order to determine whether we could ask the court for a fee ruling that necessarily had to happen in state court because that's the court that would determine whether there was even an entitlement to a fees to intern determine whether there was anything to determine was or was not within the scope of the discharge so attorney brown big because the psylocke test states that the first part of the test involved the requires that the person knew the discharge injunction was applicable that's the first thing mr brown did go to court and whether asked whether the discharge injunction was applicable to fees and when the court found it was not then the fifth court awarded fees now mr taggett went into bankruptcy court and said well that's contempt you can't do that he didn't return to the fray well the bankruptcy court examined the state court decision and on its review of what the state court did said i agree with what the state court found on the return to the fray and furthermore judge dunn did a did that federal determination has precedence over the state court determination as to whether return to the group that's correct and that is the subject that ruling is the subject of my colleagues across appeal on the return to the fray but it doesn't matter what the actual answer to that is the question is did mr brown and his clients know the stay was applicable to the fees when they approached the court and asked for a determination whether he did or well i think that's what xilai has a two part test that has been again repeated in s but i think that the situation word had been given now whether  the the test is willfulness so the test for contempt and we're ultimately here talking about contempt the test for contempt is willfulness and so under the cylon test the willfulness analysis starts with did the creditor kno that discharge injunction was applicable and the xylo case even goes on to say whether that belief even was could have been even unreasonable and that's necessarily a fact based inquiry it is not to be presumed it says  g it's not going to be imputed it's a factual based inquiry that in this circumstance turns upon did the creditor come in with a good faith belief and how could it be other than a good faith belief that the debtor returned to the fray if the first two judges who looked at the question agreed with them he returned to the fray and i guess what you're back in the once you're in the world of contempt it is it is a willful in the standards and there where it is you just said and that's that's what judge kozinski was trying to point the judge kozinski was trying to drive right and it's too hard analysis the first part whether you knew that just discharge was applicable and then the second part is more along the lines of the strict liability test it's easier to meet that that the creditor intended the actions which violated the injunction in cylon and we're not talking about the second part of the test you don't get past the first part of the us in a while since i've read the baps opinion but didn't the talk about subjective and objective knowledge he did it did talk about subjective intent in the sense it's a fact based inquiry in determining whether the creditor knew that the discharge injunction in turn was not it's not presidential authority well there cited all the time who were and were in a different world the bam does not set the law of the ninth circuit we do and  practical approach in the context particularly of the facts of this case so how does a creditor who wishes to determine whether or not a debtor return to the fray or whatever the equivalent of that test may case and inside logon espinosa there after has adopted a different test than hardy it says it was looking to hardy in the eleventh circuit test but in each and every instance this court has cited the the first part of the test involves whether the creditor knew that the discharge was applicable to the debt whereas in the one nine eleven circuit is whether it was invoked there is no ninth circuit case that has adopted the hardy test or use the word invoked i guess we could make it clear in anything we did that the baps opinion is is is limited to these circumstances where the party went back and saw i'm just looking at the conclusion that espinosa case was remanded the bankruptcy court for reinstatement of the order and forcing the discharge injunction and for a determination whether the creditor acted willfully in violating the injunction under the standard we announced which is the test that includes the applicability the knowledge about the applicability as opposed to knowledge of whether the discharge was invoked and it really is a difference between strict liability and not strict liability and this i log test was adopted or the barrett test was adopted and it makes sense in this context you're balancing two things you're a balancing the debtors wish to be free of his debts and to have a fresh start but on the other hand the creditors  asserted in this court that the state court had no jurisdiction subject matter jurisdiction to decide the question about whether the state law whether the discharge included the state law fees  and that adds he says to the contempt charge and i turn to you to his that's that's first of all not the case that's not the case the law of this circuit but his own brief on reply acknowledges that the state court had subject matter jurisdiction to hear that issue and on page nine for instance if the debt not been discharged then the state law has subject matter jurisdiction well that's exactly what the court found and the fact that later other things reversed that up the line doesn't mean he didn't have jurisdiction at that time but perhaps even more telling is what the the debtor or the debtor told the trial court at that time so he's now claiming the second whole part of his brief says that the trial court had no subject matter jurisdiction attorney brown and your clients were bad for even asking the state court to make a ruling but yet mr berman told the state court on excerpt of record seven fifty one my obligation is to be candid with the court you can decide it now now that there's no right to fees under the bankruptcy code or you can defer and wait to hear what the bankruptcy judge says he's already filed a contempt action but he expressed we told the trial court that the decide it now and that he can look at that issue but yet he's coming to this court and saying there was no jurisdiction he shouldn't looked at it he also said that in his pleading he pointed out there was a bankruptcy ruling and a bankruptcy matter pending but he said the court can still hear this ok let's hear from your co counsel the appeal from the district court thank you i would ask you to affirm what the bankruptcy court  decision of judge mosman the district court judge to reversed in two thousand and twelve the decision of judge done to the effect that mr taggart in fact voluntarily returned to the chapter eleven debtor and in that chapter eleven case the creditor and the debtor came to an agreement as part of a reorganization plan that litigation that had begun before  the bankruptcy filing would be determined as part of the reorganization plan there was no discharge of the debtor and castling of the us that's a very significant difference from what we have here here we have a chapter seven debtor who the discharge the thing that complicates the issue is in obtaining the discharge the debt or mr taggart was awarded as part of the discharge the counter claim that he had filed in the state court action and so he still had an affirmative claim that was active in the state court litigation so the issue that's posed here is whether or not in fairness mr taggart can be allowed to use the bankruptcy process to strip my client's ability to recover any monetary damages or its attorney fee is pursuing an action against mr taggart and yet at the same time allow mr taggart to come back into the litigation with his right to recover attorney fees if he wins in effect what he's done is he's used to chapter seven process as both a sword and a shield if he is allowed to do that i don't know it but was only goes back to the state court to defend himself right well by defending himself he is affirmatively working toward the claim for attorney fees well but that he should be ousted certainly not on a totally aside from the merits he wants to defend that then he goes bankrupt he goes back again to the state court are only to defend himself he doesn't abandoning the case and he tried to have the claims against him dismissed while at the same time keeping his claim to attorney fees well after the bankruptcy the day before the trial was to commence for the second time now mr berman submitted a motion to dismiss the claims now and yes i have another problem with this you file across appeal appeal as an interim decision and i don't know how we get to reverse the district court on an appeal from the from the ba except in so far as maybe the district court ruling becomes part of the law of the case for the purpose of what the bapi is doing and theoretically maybe procedure and how we try to articulate any affirming or reversing of the district court when it has to come through to us through the through the bat well your honor and that's something that  puzzled me as well my first involvement in this case was in two thousand and twelve when the case was then pending before the ninth circuit challenging the district court's ruling and as you know and have just stated when it was the first time the second time with the interim appeal through the bankruptcy appellate panel the bankruptcy appellate panel of course does not have the power or the authority to examine what judge mosman did and so in my notice of cross appeal that was filed initial not notice of cross appeal and the notice of appeal the notice of appeal that was file from the bankruptcy courts finding of contempt and damages we specifically raise the issue of judge mosman this opinion but because it had to sort of go through the bankruptcy appellate panel the first time but it couldn't review it as the only way i can see it would get to this court co counsel filed a direct or they filed a separate notice of law and fact the question of whether or not mr taggart had voluntarily returned to the fray and my understanding of the review under those circumstances where you have review you can ignore what findings were made by the district court and completely reanalyze this issue as it was initially presented to the bankruptcy court where you have a mix question of law in fact memory put it this way in order for us to reach the issue of whether or not the district court judge of mosman was correct we would have to decide whether or not the bankruptcy of public panel was correct or wrong in following would we i don't think so your honor and the reason i don't think so is because after judge  the whole case back down to the dissenter backbones the bankruptcy court then the bankruptcy court made its own findings and entered its order of contempt following what judge dunn did and the only way to get to the question of whether the judge mosman was correct is for you to look directly at judge mossman is ruling and not to look through am i getting tear yeah what i hear them to do a few years ago but well this case is was it as far as i'm concerned has taken so many twists and turns that it's difficult even conceptually to follow the thing now if i get the picture correctly the that state court decided that is the trial court decided that he had returned to the fray correct the bankruptcy court decides the same thing a career in the district court says no he did and in the meantime the case in the state court is on appeal and the appellate court says well we deferred to the district court and they reversed in the trial court and so now we wind up with i guess an even number of courts ruling one way in an even number ruling the other way on say yes what's particularly interesting your honor and i think you'll probably appreciate those given your background is that those courts that actually have the opportunity to see mr taggart and mr berman and to evaluate their conduct and their arguments in person found that there had been a voluntary return to the fray and you will see in the bankruptcy courts opinion right at the very beginning of the opinion judge dunn says unfortunately the proceedings in this court culminating in the hearing represent no more than one pitched battle in the longstanding disputes among the parties and their counsel it is neither the beginning nor i fear the end i will refer to the underlying grievances among them only as necessary to set the the the three returned to the through is somewhat literary what actions you claim taggart took in returning to the  well there are a number of actions that he took that are set forth both in judge dunn's opinion and to a more limited degree in judge mosman zippin un they include contesting being deposed for a second time  family had not returned for a correct yes but there was that's a second that's a separate issue what i'm talking about your honor is in returning to the fray he was contesting whether or not he should expelled from the l l c and whether or not to transfer to bt was legal he appealed the merits of that judgment against him that's definitely a return to the fray and the oregon court of appeals looked at that situation and they said no mr taggart you lose that's i can't imagine a more active returning to the fray than to appeal the merits of a judgment against you then when we were trying to  after the fact i mean he he was just only you know i don't see how that amounts to returning to the frame just because he filed a notice of appeal on the m done is never go to the state court because under the discharge injunction you cannot go to the state court and make a claim that is in fact barred that is contempt you can't do it and the state court does not have the capacity you can't do its contempt and in fact a lot is and it statutory if you go to the state court and you even get the state court to enter the judgment and it's wrong it's  and you can always go back to the bankruptcy court and have it declared void but you can't make a debtor go to state court and litigate a claim that is in fact been destroyed if they wanted to expel him from they wanted to expel him from the partnership but levy initially i'm talking about but no they wanted to expel him from the partnership and after the discharge will he was still part of the partnership i grok how were they going to get rid of him if they had if they couldn't go back to the district court should they have gone to the bankruptcy court and asked the bankruptcy to expel him from the partners maybe i wasn't clear i'm talking about going back and asking for a money judgment i'm just talking about the money judgment we're here maybe he  went back to state court to get him out of the partnership yes and he didn't participate but they won but that's not what we're here for for contempt the contempt were talking about his later asking mr taggart to pay the attorney's fees for the trial with regard to which he didn't want to be there and he wasn't there we're talking about attorneys fees for the actual trial that occurred without mr taggart and without mr taggart taking a position the attorneys fees or all the attorneys fees for the trial that he wasn't here's the problem he had tranda and he transferred his interest to an l l c and the l o c s interest had been transferred to a third party so it really had no no stay in it and he just said it doesn't involve me he thought he had no interest very short time number one they should have gone to the bankruptcy court to ask a bankruptcy court decided to stay court can't decide it with regard to whether he returned to the fray it's contempt to go to the state court that's what the discharge is all about number one number two this court has never the question of whether the women and their counsel were in fact unaware of the discharge injunction and its potential applicability to their claims it's the potential applicability that this court said is relevant in  log there's nothing in any decision in this court that suggests any subjectivity or any good faith bad faith believe don't believe has anything to do with it remedial contemp says if you do it and knowing of the order you make somebody whole and a state court jurisdiction if you raise the discharge and it's an affirmative defense in oregon law if you sue somebody and bang it in state court and they say i've been d bankruptcy it's an affirmative defense also but it doesn't mean just because it's an affirmative defense it isn't contempt to try if you're wrong ok and i think you've clarified the issue you've clarified the issue i hope so and i would also point out it's over one hundred thousand dollars in legal fees and if you if somebody can avoid it how is how is your discharge injunction ever going to be enforced ok thank you thank you thank you counsel the matter is