### NOT FOR PU BLICA TION

U NIT E D ST A T E S BA NK RU PT CYA PPE L L A T E PA N E L

OF T HE NINT H CIRCU IT In re: C A RO L Y N L. B U R K E ,

Deb to r. U M P Q U A B A N K, A p pellant,

v. C A RO L Y N L. B U R K E ,

A p pellee. BA P N o . N C -18-1260-STaB Bk. N o . 1:09-b k-12469 A dv. N o . 1:17-ap-1035

M E M O RA ND U M *

A rgued and Sub m itted o n June 20, 2019 at Sac ram ento , C alifo rnia Filed – N o vemb er 25, 2019 A ppeal fro m the U nited States Bankruptcy C o urt fo r the N o rthern Distric t o f C alifo rnia 

# FIL ED
NOV 25 2019 SUSAN M . SPRAUL, CLERK U. S. BKCY

. APP. PANEL O F T HE NI NT H CI RCUI T

* Thi s di sposi ti on i s not appr opr i ate for publi cati on. Although i t may be ci ted for whatev er per suasiv e v alue i t may hav e, see Fed. R. App. P. 32.1, i t has no pr ecedenti al v alue. See 9th Ci r . BAP Rule 8024-1.Ho no rab le R o ger L. Efrem sky, Bankruptcy Judge, Presiding

A ppearanc es: Geo rge C . Lazar o f Fo x Jo hns Lazar Pekin &W exler A PC

argued fo r A ppellant. * *

Befo r e: S P R A K E R, T A Y L O R, and B R AN D , Bankruptcy Judges. Mem o randum b y Judge Taylo r Dissent b y Judge Spraker INT ROD U CT I ON In 2009, C aro lyn L. Burke rec eived a chapter 7 1 discharge and left b ankruptc y unenc umb ered b y perso nal liab ility under a guaranty payab le to U m pqua Bank. But Um p qua’s guaranty-c laimwas secured b y a lien against her ho m e, this lien survived discharge, and U m pqua had the right to rec o ver paym ent o n the guaranty fro mthe po s t-petitio n sale o f its
c o llateral. So , Ms. Burke em erged fro mb ankruptc y in a new relatio nship with U m pqua, the ho using c r isis that c o nfro nted Ms. Burke and som a ny o thers in 2009 ab ated, C a lifo rnia real estate generally rec o vered value, and we ho pe that Ms. Burke b enefitted appro priately fro mthe fresh start pro m ised

* * Appellee Bur ke di d not acti v ely par ti c i pate i n thi s appeal.

1 Unless speci fi ed other wi se, all chapterand secti on r efer ences ar e to the Bankr uptcy Code, 11 U.S
. C. §§ 101–1532, all “Rule” r efer ences ar e to the Feder al Rules of Bankr uptcy Pr ocedur e, and all “Ci v i l Rule” r efer ences ar e to the Feder al Rules of Ci v i l Pr ocedur e. 2b y b a nkruptc y discharge.

Eight years passed. In 2017, Ms. Burke so ld her ho m e. But, as a result o f erro r, U m pqua sub m itted a dem and into esc ro w that was appro xim ately $250,000 to o lo w. Thus, when the sale c lo sed, U m pqua go t a sm all paym ent, and Ms. Burke
rec eived a sub stantially enhanc ed paym ent— at U m p qua’s expense. Bec ause the dem and b o und U m pqua as a m atter o f C alifo rnia law, U m pqua’s trust deed was reco nveyed. A nd b ec ause o f her b ankruptc y discharge, it c anno t sue Ms. Burke on the guaranty. U m pqua is left with a singular and m erely po tential rem edy: an unjust enrichm ent c laimunder C alifo rnia law. W e are no t required to determ ine the ultim ate questio n o f whether unjust enrichm ent exists under these fac ts; the o nly questio n we
m ust answer is whether Ms. Burke’s 2009 b ankruptc y discharge b ars U m pqua fro m b ringing an unjust enric hm ent ac t io n. The b a nkruptc y c o urt
c o nc luded that the discharge c reates such a b ar; o n de no vo review we
c o nc lude that it do es no t. A c c o rdingly, we R EVER SE. FA CT S The fac ts relevant to this appeal are few and undisputed. In 2007, U m pqua lo aned $194,000.00 toA W S, LLC . Ms. Burke guaranteed repaym ent and secured her ob ligatio ns under the guaranty thro ugh a deed
o f trust against her residenc e in So no m a, C alifo r nia (the “Ho m e”).

3In 2009, Ms. Burke filed a c hapter 7 b ankruptc y petitio n. Her b ankruptc y schedules reflec ted that the Ho m e was o ver enc umb ered and that U m pqua held a third prio rity lien. She rec eived her discharge in late 2009. In 2017, Ms. Burke so ld the Ho m e. A fter paym ent o f senio rliens, appro xim a tely $351,000 rem ained availab le to pay U m pqua’s appro xim a tely $231,000 c laim . But U m pqua, thro ugh alleged c leric al erro r, sub m itted a dem and into esc ro w o f o nly $3,061.23. Befo re it disc o vered o r was ab le to c o rrec t the dem and, esc ro w relied o n it, c o m pleted the transac tio n, and rec o nveyed U m pqua’s trust deed. Ms. Burke, thus,
rec eived $348,874.80 in sale pro c eeds. U m pqua pro m p tly o b t ained an o rder reo pening Ms. Burke’s b ankruptc y c ase and filed an adversary c o m plaint seeking a dec larato ry judgm ent that the filing o f an unjust enrichm ent ac t io n in state c o urt wo uld
no t vio late Ms. Burke’s chapter 7 discharge. It then m o ved fo r sum m ary judgm ent; Ms. Burke did no t ac tively o ppo se o rappear fo r either o f the
sum m ary judgm ent hearings. A t the first hearing, the b ankruptc y c o urt o rally denied the m o tio n, stated an intent to sua spo nte grant sum m ary judgm ent in Ms. Burke’s favo r, b ut allo wed U m p qua to file supplem ental b riefing. A t the sec o nd hearing, the b ankruptc y c o urt relied o n the undisputed fac t s and
c o nc luded that U m pqua’s prepetitio n c laim“enc o m p assed” b o th its

4sec ured c laimagainst the Ho m e as well as any c o ntingent unjust

enric hm ent c laim . It, therefo re, c o nc luded that Ms. Burke’s disc harge pro hib ited U m p qua fro mseeking to c o llec tperso nally against her o n an unjust enrichm ent theo ry. The b ankruptc y c o urt entered judgm ent in Ms. Burke’s favo r, and U m pqua tim ely appealed. JU RISD ICT ION The b ankruptc y c o urt had jurisdic tio n under 28 U .S.C . §§ 1334 and 157(b )(2)(I). W e have jurisdic tio n under 28 U .S.C . § 158. ISSU E Did the b ankruptc y c o urt err when it determ ined that the discharge prevented U m pqua fro m filing a state c o urt unjust enrichm ent ac tio n against Ms. Burke? ST A ND A RD OF RE V I E W W e review the b a nkruptc y c o urt’s grant o r denial o f sum m ary judgm ent de no vo . F resno M o to rs, LLC v. Mercedes Benz

U S A, LLC

, 771 F.3d 1119, 1125 (9th C ir. 2014). W e also review the interpretatio n o f state and federal law de no vo . C m ty. Ba nk o f Ariz . v. G.V

.M . Tr. , 366 F.3d 982, 984 (9th C ir. 2004); Co llect Access LLC v. H erna ndez (In re H

erna ndez ) , 483 B.R
. 713, 719 (9th C ir. BA P 2012). Under de no vo review, “we c o nsider a m atter anew, as if no dec isio n had b een m ade previo usly.” F ra ncis v. W a lla ce (In re F ra ncis) , 505 B.R
. 914, 917 (9th C ir. BA P 2014).

5D ISCU SSION

Sum m ary judgm ent is appro priate when “there is no genuine dispute as to any m aterial fac t and the m o vant is entitled to judgm ent as a m atter o f law.” Fed. R . C iv. P. 56(a) (applied in adversary pro c eedings b y Rule 7056). Here there are no fac tual disputes, and we, thus, apply the law tothese undisputed fac ts. O n de no vo review, we m ust determ ine the existenc e and nature o f U m pqua’s unjust enric hm ent c laim ; we do so under no nb ankruptc y law. S ee Butner v. U

nited S ta tes , 440 U .S. 48, 54–55 (1979); Bechto ld v. Gillespie (In re Gillespie), 516 B.R . 586, 591 (9th C ir. BA P 2014). Then, we must determ ine when the c laimaro se and whether it was discharged in 2009. Bankruptcy law answers these questions. A . T he Bankruptcy Code broadly defines“c laim ” and m ay allow for dis c harg e of litig ation c laim s ev en if not yet ripe for adjudic ation. Bankruptcy pro c eedings are intended to give deb to r s a “fresh start.” Go udelo ck v. S ixty-01 Ass'n o f Apa rtm ent O wners , 895 F.3d 633, 637 (9th Cir. 2018) (c iting Groga n v. Ga rner , 498 U
. S. 279, 286 (1991)); D ept. o f H ea lth S ervs. v. Jensen (In re Jensen) , 995 F.2d 925, 928 (9th Cir. 1993). And this is princ ipally achieved b y the b ankruptc y discharge, whic h frees an individual deb to r fro mperso nal liab ility fo rm o st c laim s arising prepetitio n. S ee11 U .S.C . § 727(b ); see a lso Jo hnso n v. H o m e S ta te Ba nk

, 501 U .S. 78, 83 (1991) (citing 11 U .S.C . § 524(a)(1)). It also enjo ins c redito rs fro m 6c o m m enc ing o r c o ntinuing an ac t io n to c o llec t o n a discharged deb t as a

perso nal liab ility o f the deb to r. 11 U .S.C . § 524(a)(2). The C o d e defines a deb t as “liab ility o n a c laim
. ” 11 U
. S.C
. § 101(12). The definitio n o f c laiminc ludes a: “right to paym ent, whether o r no t such right is reduc ed to judgm ent, liquidated, unliquidated, fixed, c o ntingent,
m atured, unm a tured, disputed, undisputed, legal, equitab le, sec u red, o r unsec ured.” 11 U .S.C . § 101(5)(A ). The termalso b ro adly inc ludes a “right to an equitab le rem edy fo r b reach o f perfo rm anc e.” 11 U .S.C . § 101(5)(B). This definitio n, thus, enc o m passes a deb to r’s prepetitio n ob ligatio ns no m atter ho w rem o t e o r c o ntingent. Go udelo ck , 895 F.3d at 638 (citing S N T L Co rp. v. C tr. Ins. Co . (In re S N TL Co rp. ), 571 F.3d 826, 838 (9th Cir. 2009)). Indeed, a c laimm ay exist fo r b ankruptc y and discharge purpo ses lo ng b efo re a c ause o f ac t io n ac c rues under no nb ankruptc y law. In re S N TL Co rp. , 571 F.3d at 839 (citing Co o l F uel, Inc. v. Bd. o f Equa l iz a tio n (In re Co o l F uel, Inc.) , 210 F.3d 999, 1007 (9th Cir. 2000)). It is only nec essary that the
c redito r b e ab le to fairly o r reaso nab ly c o ntem plate the c laim ’s existenc e as o f the petitio n date. In re S N TL Co rp. , 571 F.3d at 839. B. U m pqua’sg u aranty c laim was dis c harg ed, it retained an in re m c laimthat s u rv iv ed dis c harg e and allowed rec ov ery from proc eeds of the Hom e, but its erroneousdem and into es c row exting uis h ed its ability to obtain rec ov ery on ac c ount of its in re m rig hts . Ms. Burke’s disc

harge freed her fro many perso nal liab ility arising

7under the guaranty. S e e Jo hnso n , 501 U .S. at 82–83 (citing 11 U .S.C
.

§ 524(a)(1)). But U m pqua retained an in rem c laimb ased o n the deed o f trust, and its right topursue c o llec tio n against the Ho m e passed thro ugh the b ankruptc y unaffec t ed b y the discharge. Id. at 83. Many years po stdischarge, when Ms. Burke so ld the Ho m e, U m pqua had the o ppo r tunity (and right) to c o llec t o n its in rem c laim . C alifo rnia C ivil C o de § 2943 go verned the pro c ess, and U m pqua, thus, responded to the esc ro w c o m pany’s written request fo r a payo ff dem and. C al. C iv. C o de § 2943(c ); Ca thay Ba nk v. F idelity N a t. Title Ins. Co ., 46 C al. A p p. 4th 266, 270 (1996). But its dem and erro neo usly said it was only o w ed $3,061.23, and, under C alifo rnia law, the esc ro w c o m pany was entitled to rely o n it. C al. C iv. C o de § 2943(d)(1). A s such, the erro neo u s payo ff dem and statem ent estab lished “the am o unt nec essary to pay the ob ligatio n in full.” Id. ; see a lso Ca l. N a t. Ba nk v. H a vis , 120 C al. A pp. 4th 1122, 1134 (2004). Upo n paym ent
o f this am o unt and the c lo se o f esc ro w, U m pqua’s rights and interests under the deed o f trust were auto m a tic ally extinguished as a m a tter o f law. S ee C al. C iv. C o de § 2943(d)(1). C alifo rnia law pro vides a c redito rwith a statuto ry rem edy fo ran erro r in a b enefic iary’s dem a nd. Under C alifo rnia C ivil C o de § 2943(d)(3), the b enefic iary m ay rec o ver deb t no t inc luded in its b enefic iary’s dem and “as an unsecured ob ligatio n o f the o b ligo r pursuant tothe term s o f the”

8do c um ent c reating the deb t. C al. C iv. C o de § 2943(d)(3). Fo rthe dissent,

this is c o nc lusive. It reads U m pqua’s c ause o f ac t io n as o ne o n the guaranty and go verned b y C alifo rnia C ivil C o de § 2943(d)(3). U m pqua, ho wever, ac kno wledges that it c anno t pursue Ms. Burke under either the guaranty, its trust deed, o r C a lifo rnia C ivil C o d e § 2943(d)(3); it do es no t seek to file a
c o llec tio n ac tio n. A t o ral argum ent it c o nfirm ed that it will rely exc lusively
o n a c o m m o n law unjust enrichm ent theo ry. C. A California unjus t enric hm ent c laimdoes not aris e under a c ontrac t; it is a c om m on law c aus e of ac tion. Under c urrent C alifo rnia law, the unjust enrichm ent c laimthat U m pqua seeks to assert is a standalone c ause o f ac tio n untethered fro mits
c o ntrac tual relatio nship with Ms. Burke. In Ghira rdo v. Anto nio li, 14 C al. 4th 39 (1996), the C alifo rnia Suprem e C o urt c o nsidered fac ts rem arkab ly sim ilar to tho se in this appeal: the seller o f real pro perty, thro ugh a m istake
o f fac t, understated the am o unt nec essary to payo ff a purchase m o ney deed
o f trust and sub sequently sued the purchaser to rec o ver the rem aining
am o u nt. Id. at 43. The c o urt determ ined that the seller was b arred fro m ob taining a defic ienc y under its no te and trust deed b y C alifo rnia’s antidefic ienc y statute and that C a lifo rnia C ivil C o de § 2943(d)(3) was no t applic ab le to this c laim
. Id. at 47. But it allo wed rec o very under a theo ry o f unjust enrichm ent. Id. at 43–44. Mo re rec ently, in H a rtfo rd Ca sua lty Insura nce Co m pa ny v. J.R . Ma rketing, L.L.C
. , 61 C al. 4th 988 (2015), it again

9allo w ed an independent c laimfo r unjust enrichm ent to pro c eed. Id. at

996–97. The N inth C irc uit expressly no ted that H a rtfo rd c larified C a lifo rnia law and estab lished that an unjust enrichm ent c laimc an b e sustained as a standalo ne c ause o f ac tio n. Bruto n v. Gerber Pro d. Co . , 703 F. A pp’x 468, 470 (9th C ir. 2017). The C alifo rnia Suprem e C o urt in H a rtfo rd desc rib ed unjust enric hm ent as fo llo ws: “An individual who has b een unjustly enriched at the expense o f ano ther m ay b e required to m ake restitutio n. Where the do c trine applies, the law im plies a restitutio nary ob ligatio n, even if no
c o ntrac t b etween the parties itself expresses o r im plies such a duty.” H a r tfo rd Ca s. Ins. Co . , 61 C al. 4th at 326 (c itatio ns o m itted). It c o ntinued: “R estitutio n is no t m andated m erely b ec ause o ne perso n has realized a gain at ano ther’s expense. R ather, the ob ligatio n arises when the enric hm ent o b tained lac ks any adequate legal b asis and thus c anno t
c o nsc ientio usly b e retained.” Id. (c itatio ns and internal quo tatio n m a rks
o m itted). A nd in Ghira rdo, the C a lifo rnia Suprem e C o urt discussed unjust enric hm ent thro ugh the lens o f the equitab le rem edy o f restitutio n: Under the law o f restitutio n, an individual m ay b e required to m ake restitutio n if he is unjustly enriched at the expense o f ano ther. (R est., Restitutio n, § 1, p. 12.) Aperso n is enric hed if he rec eives a b enefit at ano ther’s expense. ( Id. , c o m . a, p. 12.) The term“b enefit” “deno tes any fo r mo f advantage.” ( Id. , c o m . b , p. 12.) Thus, a b enefit is c o nferred no t o nly when o ne adds to the pro perty o f ano ther, b u t also when o ne saves the o ther fro m
10expense o rlo ss. Even when a perso n has rec eived a b enefit

fro mano ther, he is required to m ake restitutio n “o nly if the c irc um stanc es o f its rec eipt o r retentio n are such that, as b etween the two perso ns, it is unjust fo r himto retain it.” ( Id. , c o mc, p. 13.) Ghira r do , 14 C al. 4th at 51. So , an unjust enrichm ent c a use o f ac tio n is no t b a sed o n, no r do es it require, a c o ntrac tual relatio nship o r a written c o ntrac t. Fed. D epo sit Ins. Co rp. v. D intino , 167 C al. A pp. 4th 333, 346 (2008). In H a rtfo rd, the C alifo rnia Suprem e C o urt em p hasized this po int: “Tho ugh this restitutio nary ob ligatio n is o ften desc r ib ed as quasi-c o ntrac tual, a privity o f relatio nship b etween the parties is no tnec essarily required.” H a r tfo rd Ca s. Ins. Co . , 61 C al. 4th at 326. Instead, “unjust enric hm ent is a c o m m o n law ob ligatio n im plied b y law b ased o n the equities o f a particu lar c ase and no t o n any c o ntrac tual ob ligatio n.” Fed. D epo sit Ins. Co rp. v. D intino , 167 C al. A pp. 4th at 346. C o nsistent with the view that unjust enrichm ent is no t an ac t io n o n a c o ntrac t o r in quasi-c o ntrac t is the fac t that C alifo rnia rec o gnizes a three year statute o f lim itatio ns fo r unjust enrichm ent c laim s rather than the fo ur year statute applic ab le to c laim s fo r b reach o f c o ntrac t
. S ee id. This is where we part ways with the dissent. On its view, U m pqua’s
c laimfo r unjust enrichm ent is m erely an equitab le rem edy b ased o n o r a c ause o f ac tio n arising fro mthe guaranty. W e disagree. A s a result o f the guaranty and the trust deed, Ms. Burke was in a financial relatio nship with

11U m pqua. A fter discharge, this relatio nship was m o d ified such that her

liab ility was lim ited to equity availab le fro mpro c eeds o f the Ho m e. But the
ob ligatio n that U m pqua seeks tovindic ate is o ne arising fro mthe c o m m o n law: a party must deal fairly with ano ther and m ay have liab ility where it unjustly rec o vers an ec o no m icb enefit to the detrim ent o f ano ther. In vindic ating this right, the guaranty and trust deed are relevant to the
c alc ulatio n o f dam ages, in particular, b ut the c laimdo es no t arise thereunder. In sho rt, C alifo rnia law expressly pro vides fo ran unjust enric hm ent c ause o f ac tio n fo r m istaken distrib utio n o f pro c eeds and untethers it fro many related c o ntrac t
. 2 D . U m pqua’sunjus t enric hm ent c laimaros e pos tpetition bec aus e it was not fairly c ontem plated on a prepetition bas is . While state law go verns the existenc e and nature o f U m pqua’s c laim, Butner , 440 U .S. at 54–55, federal b ankruptc y law go verns when that c laim
aro se fo r discharge purpo ses. Go udelo ck , 895 F.3d at 638. The N inth C irc uit applies the “fair c o ntem platio n test” to answer that questio n. Id. Under this

2 The di ssent assumes that the enactment of Cali for ni a Ci v i lCode § 2943(d)(3) di splaced the common law’s unj ust enr i chment cause of acti on. But i t ci tes no Cali for ni a author i ty for thi s pr oposi ti on—nei ther Ghirardo nor Cathay Bank so state. Nor does i t engage the analysi s r equi r ed, underCali for n i a law, to make thi s deter minati on. See I.E. Assocs. v. Safeco Title Ins. Co. , 39 Cal. 3d 281, 285 (1985) (“The gener a l r ule i s that statutes do not supplant the common law unless it appear s that the Legi s l atur e i ntended to cov er the enti r e subj ect or, in other wor ds, to ‘occupy the fi eld.’ ”). As alr eady noted, Umpqua expr essly di sclai med r eli ance on Cali for n i a Ci v i l Code § 2943(d)(3). We see no r eason to engage thi s br oader questi on of Cali for ni alaw. 12test, “ ‘a c laimarises when a c laim ant c an fairly o r reaso nab ly c o ntem plate

the c laim 's existenc e even if a c ause o f ac tio n has no t yet ac c rued under
no nb a nkruptc y law.’ ” Id. (quo ting In re S N TL Co r p. , 571 F.3d at 839). W e c o nc lude that U m pqua’s unjust enric hm ent aro se in 2017; as a result, it is no t a prepetitio n c laim affec ted b y the discharge. The N inth C irc uit has a well-develo ped c o m p lem ent o f c ases discussing the fair c o ntem p latio n test. Mo st invo lve situatio ns where a
c redito r knew prepetitio n ab o ut spec ificfac ts that reaso nab ly suggested a
c laim
. S e e Go udelo ck

, 895 F.3d 633 (a deb to r’s in perso na m ob ligatio n to pay
m o nthly c o ndo m iniumassessm ents aro s e at prepetitio n purchase, and, thus, the c o ndo m iniumasso c iatio n c o uld have fairly c o ntem plated that
m o nthly assessm ents wo uld c o ntinue to ac c rue b ased o n deb to r ’s
c o ntinued o wnership); P icerne Co nstr. Co rp. v. Ca stellinoV illa s, A.K .F . LLC (In re Ca stiellinoV

illa s, A.K .F . LLC) , 836 F.3d 1028 (9th C ir. 2016) (plaintiff in
an ac t io n under a prepetitio n c o ntrac t with an atto rneys’ fees pro visio n c o u ld, given a prec o nfirm a tio n settlem ent agreem ent that required
resum ptio n and c o m pletio n o f the lawsuit, fairly c o ntem plate that it wo uld thereafter inc u ratto rneys’ fees ob ligatio ns); In re S N TL Co rp. , 571 F.3d 826 (the parties fairly c o ntem plated the existenc e o f a po t ential c laimb ec ause they pro vided fo r it in a prepetitio n c o ntrac t); In re Co o l F uel, Inc. , 210 F.3d 999 (where the C alifo rnia taxing autho r ity investigated the deb to r and issued a defic ienc y determ inatio n prepetitio n, its b ankruptc y pro o f o f c laim

13was ripe as an allo wab le c o ntingent c laim and was fairly c o ntem plated

even tho ugh a final dec isio n had no t issued o n deb t o r’s prepetitio n request fo r redeterm inatio n); In re Jensen , 995 F.2d 925 (where state inspect o r disc o vered an enviro nm ental hazard o n the deb t o r’s pro perty prepetitio n, the state’s c laim was discharged even tho ugh a C ER C LAc ause o f ac tio n requiring c lean up had no t yet ac c rued). Z iLO G Mo d III, Inc. v. Co rning (In re Z i log, Inc.) , 450 F.3d 996 (9th C ir. 2006), invo lved applic a tio n o f the fair c o ntem platio n test fro ma slightly different angle. In that c ase, the N inth C irc u it, am o ng o ther things, reversed a sum m ary judgm ent determ ining that em plo yee disc rim inatio n c laim s were discharged. Id. at 1010. The disc rim inato ry ac ts o c curred b o th pre and po stpetitio n. Id. at 997–98. But the emplo yees asserting the c laim alleged that they did no t learn ab o ut the disc rim inatio n until after the petitio n and b ar dates. Id. The N inth C irc uit c o nc luded that sum m ary judgm ent was im pro per b ec ause there was a fac tual dispute ab o ut whether the em plo yees’ c laim s were in their fair c o ntem p latio n b efo re chapter 11 plan c o nfirm atio n. Id. at 1001–02. A s a c o r o llary to the fair c o ntem platio n test c ases, the N inth C ircuit also allo ws a c redito r to rec o ver c o ntrac tual atto rneys’ fees under a prepetitio n c o ntrac t when the deb to r “returns to the fray”. In S iegel v. Federa l H o m e Lo a n M o rtgage Co rpo ra tio n (In re S iegel) , 143 F.3d 525 (9th C ir. 1998), the deb to r defaulted prepetitio n o n two real estate lo ans, filed a

14chapter 7 petitio n, and ob t a ined a discharge. Id. at 527–28. Unwisely, he

then c o ntinued to litigate c laim s against the lender; the N inth C irc uit affirm ed the lo wer c o urt’s award o f atto r neys’ fees fo llo wing the lender’s vic to ry. Id. at 534. A s the N inth C irc uit reaso ned, when the deb to r vo luntarily underto o k a new c o urse o f litigatio n and “returned to the fray,” any new liab ility fo r atto rneys’ fees was a c o llec tib le po st-discharge c o st. Id. at 533. Sim ilarly, in B o eing N

o rth Am erica n, Inc. v. Y

ba rra(In re Y

ba rra ) , 434 F.3d 1018 (9th C ir. 2005), the deb to r sued her em plo yer in state c o urt and then filed b ankruptc y. Id. at 1020. A fter the c hapter 7 trustee settled the lawsuit and rec eived b ankruptc y c o urt appro val o f the settlem ent o ver the deb to r ’ s objec tio n, the state c o u rt dism issed the suit. Id. The deb to rthen
am ended her schedules to exem pt the lawsuit and, o n appeal, the N inth C irc uit allo wed the am endm ent. Id. So, the b ankruptc y c o urt eventually allo w ed the deb to r to either ac c ept a settlem ent paym ent o r to m aintain the suit; the deb to rcho se to litigate. Id. She then c o nvinc ed the state c o urt to set aside the dism issal, b u t her em plo yer thereafter o b tained sum m ary judgm ent and an award o f its atto rneys’ fees. Id. at 1020–21. The b ankruptc y c o urt sub sequently determ ined that the po stpetitio n atto rneys’ fees were no t discharged. Id. at 1021. On appeal, the N inth C irc uit affirm ed and again em phasized that a c laimfo r po stpetitio n atto rney’s fees and
c o s ts was no t discharged when the deb to r vo luntarily initiates litigatio n o r
15returns to the fray. Id. at 1026.

W e ac kno wledge that the return to the fray do c trine is no t direc tly applic ab le here; this c ase do es no t invo lve litigatio n c laim s. W e no te these
c ases, ho wever, b ec ause in Picerne , the N inth C irc uit said that the return to the frayanalysis falls within the fa ir co ntem pla tio n test. Put sim ply, b ec ause we expec t deb to rs to use the discharge as a shield and no tas a swo rd, a
c redito r do es no tfairly c o ntem plate that a deb to r will return to the fray. The return to the fray c ases, thus, simply pro vide additio nal exam p les o f areas where a po stpetitio n c laimis no t in a c redito r ’s fair c o ntem platio n and, therefo re, is no t discharged. The present fac ts are m o st analo go us to Z i LO G . U m pqua had no kno wledge o f Ms. Burke’s alleged unjust enrichm ent prepetitio n o reven pre-discharge. The ac ts that gave rise to a po tential c laimfo r unjust enric hm ent aro se 8 years thereafter. A nd, thus, U m pqua had noab ility to pro tec t itself in Ms. Burke’s b ankruptc y c ase. In Z iLO G, the em plo yees were unab le to file pro tec tive pro o fs o f c laim . A nalo go usly, U m p qua was unab le to file the no ndischargeab ility ac t io n that m ight well have b een availab le under § 523(a)(6) i f the unjust enrichm ent c laimaro s e prepetitio n. Under Z iLO G, U m pqua’s unjust enric hm ent c laimis no t discharged. A nd unlike the o ther fair c o ntem platio n c ases, no thing kno wn to U m pqua put it
o n no t ic e o f its 2017 c laimfo r unjust enrichm ent; it was no t reaso nab ly
c o ntem plated prepetitio n. It did no t have kno wledge o f a fac t, such as the

16enviro nm ental hazard in Jensen o r the tax defic ienc y determ inatio n in Co o l

F uel, Inc. A nd it did no t enter into a c o ntrac t that pro vided fo rrec o very in the c irc u m stanc e it no wenc o unters as was the c ase inS N TL Co r po ra tio n , Picerne , and Go udelo ck
. 3 A s fo r the “return to the fray” c a ses, to the extent they fit within the b ro ader “fair c o ntem platio n” test, they stand fo r the pro po sitio n that where a deb to rc reates a right to rec o very thro u gh new po stpetitio n c o nduc t, she
c anno t hide b ehind the disc harge. This is a c o m m o n sense pro po sitio n. To b e c lear, we agree that it is within the realm o f p o ssibility that a deb to r w ill ac t unjustly in c o nnec tio n with c o llateral pro c eeds po stpetitio n and po st-discharge. Indeed, the fac ts o f this c ase are theo retic ally po ssib le in every real estate sec ured transac tio n. But the m ere po ssib ility that a deb to r c o uld ac t nefario usly do es no t b ring all ac ts o f ac tual m isc o nduc t within the realm o f f

a ir co ntem pla tio n under the N inth C irc uit standard. N o o ne c o uld have reaso nab ly antic ipated that Ms. Burke wo uld rec eive
c o llateral pro c eeds to which U m pqua was entitled po s t-discharge and then, allegedly, unjustly retain them . C redito rs like U m p qua need no t and sho uld no t b e deem ed to c o ntem plate all future b ad ac ts espec ially where

3 The di ssent r easons that Goudelock i s the most analogous case. If we accepted the di ssent’s under lyi ng pr emi se—that Umpqua’s alleged unj ust enr i chment cause of acti on i s actually a remedyfor enfor cement of a p repetition c ontr actual clai m—we would agr ee. Instead, we v i ew the cause of acti on as untether ed fr om the pr epeti ti on contr act and as ar i sing out of postpeti ti on acts. 17they have no ab ility to pro t ec t them selves thro u gh a no ndischargeab ility

ac tio n o r o therwise. The N inth C irc uit has never so expanded the fair
c o ntem platio n test. 4 CONCL U SION Eight years po stdischarge Ms. Burke rec eived and kept c o llateral pro c eeds; U m pqua alleges that she did sounjustly. W e determ ine that U m pqua’s unjust enric hm ent c ause o f ac tio n aro se at that tim e and was no t fairly c o ntem p lated either prepetitio n o rpredischarge. W e ac kno wledge that it is tem p ting to leave a well-heeled financ ial institutio n to the
c o nsequenc es o f its erro r. But the result suggested b y the dissent wo uld sim ilarly apply in a situatio n where the deb to r is the well-heeled and
so phistic ated party and the unpaid c redito r is elderly, im po verished, and left a c ritic al zero o ff her dem and due to b ad eyesight. The b ankruptc y discharge do es no t c o nvert a deb to r’s future into o ne where the deb to r is insulated fro mthe c o nsequenc es o f entirely po stpetitio n c o nduc t that the

4 And how farcan one take the di ssent’s r easoning? Di d the bankr uptcy di schar ge i nsulate Ms. Bur ke fr om a clai m of conv er si on or fr aud i f she stole sale pr oceeds, falsi fi ed a r econv eyance, or engaged i nother types of postpeti ti on fr a udulent acti v i ty? Di d i t shi eld her i f she lai d waste to the Home and substanti ally decr eased i ts v alue to Umpqua’s detr i ment? The answeri s no. No one would suggest that such tor ti ous acti v i ty was fai r ly contemplated befor e the di schar ge. No one can say that her allegedly unj ust r etenti on of escr ow pr oceeds was wi thi n Umpqua’s fai r contemplati on ei ther . And whi le the bankr uptcy system assumes a fr esh star t (the di schar ge as a shi eld), the di schar ge should not be used as a swor d that clear s a pathway to nefar i ous conduct. 18state o f C alifo rnia (and the c o m m o n law universally) c atego rizes as unjust.

In sum, we dec line to take any po sitio n o n the m erits o f the dispute; we determ ine o nly that Ms. Burke’s 2009 disc harge did no t b a r U m pqua fro mpursuing a c laimthat is b ased o n 2017 fac ts and aro se at that tim e. A c c o rdingly, we R EVER SE the b ankruptc y c o urt’s summ ary judgm ent in favo r o f Burke and R EMA N D fo rentry o f sum m ary judgm ent in U m pqua’s favo r.

Dissent b egins o n next page.

19SPRA K ER

, Bankruptcy Judge, dissenting. U m pqua Bank seeks leave tosue a discharged deb to r to rec o ver
m o nies b ased upo n a prepetitio n lo an guaranty. There is no dispute that Burke’s perso nal liab ility under the guaranty was discharged as a result o f her b a nkruptc y. U m p qua held a deed o f trust against Burke’s real pro perty that passed thro u gh her b ankruptc y. But U m pqua ac kno wledges that under C alifo rnia law its deed o f trust term inated upo n paym ent o f the
am o u nt U m pqua stated was due on the sale o f the pro perty. U nfo r tunately, U m pqua signific antly understated the b a lanc e o wed. C o gnizant o f Burke’s discharge, U m pqua asked the b ankruptc y c o urt fo r leave to sue her perso nally fo r unjust enrichm ent to rec o ver the rem a ining b alanc e o wed under the guaranty. The b ankruptc y c o urt held that an ac t io n to c o llec t the
rem aining b alanc e was b arred b y the discharge injunc tio n. The m ajo rity no w ho lds that this was erro r, relying o n the po stpetitio n ac c rual o f the unjust enrichm ent c ause o f ac t io n. The m ajo rity also c o nc ludes that U m pqua’s m isstatem ent o f its b alanc e and Burke’s resulting retentio n o f the sale pro c eeds was no twithin U m pqua’s fair
c o ntem platio n prepetitio n. I dissent b ec ause I agree with the b ankruptc y c o u rt that U m pqua sim ply seeks to use a new c ause o f ac tio n to rec o ver a prepetitio n liab ility perso nally fro ma discharged deb t o r. A . T he D is c harg e and U m pqua’sClaim . Burke rec eived a windfall when U m p qua understated the b alanc e
1o wed and the esc r o w agent paid to Burke ro ughly $250,000 m o re than she

wo uld have rec eived if U m pqua had c o rrec tly stated the am o unt it was
o wed. That said, there is nowindfall exc eptio n to a deb to r’s discharge. If U m pqua seeks to c o llec t fro mBurke perso nally o n a dischargeab le deb t that aro se prepetitio n, it is enjo ined fro mdo ing so under §§ 727(b ) and 524(a)(1). The C o de b ro adly defines a deb t as a c laim, and a c laiminc ludes “all o f a deb to r’s ob ligatio ns ‘nom atter ho w rem o te o r c o ntingent.’” Go udelo ck v. S ixty-01 Ass'n o f Apa rtm ent O wners , 895 F.3d 633, 638 (9th Cir. 2018) (quo ting S N TL Co rp. v. C tr. Ins. Co . (In re S N T L Co rp.) , 571 F.3d 826, 838 (9th C ir. 2009)). Ac laim, therefo re, inc ludes any “right to paym ent, whether o r no t such right is reduc ed to judgm ent, liquidated, unliquidated, fixed, c o ntingent, m a tured, unm atured, disputed, undisputed, legal, equitab le, sec ured, o runsecured.” § 101(5)(A ). Signific antly, a c laimalso inc ludes any equitab le rem edy giving rise to paym ent, regardless o f whether that rem edy is c o ntingent o rm atured as well. § 101(5)(B). This is
exac tly what U m pqua’s c laimfo r unjust enrichm ent is in this instanc e - an equitab le rem edy designed to enab le it to c o llec t the b alanc e o f its lo an fro mthe deb to r perso nally as it no lo nger ho lds any c o llateral. A s the N inth C irc uit has ob served, “[t]he b readth o f the definitio n o f ‘c laim ’ is c ritic al in effec tuating the b ankruptc y c o de’s po licy o f giving the deb to r a‘fresh start.’” Picerne Co nstr. Co rp. v. Ca stellinoV illa s, A. K . F
. LLC (In re Ca stellinoV

i lla s, A.K .F . LLC), 836 F.2d 1028, 1033 (9th Cir. 2016);

2Bechto ld v. Gillespie (In re Gillespie) , 516 B.R
. 586, 591 (9th C ir. BA P 2014). The im po rtanc e o f the deb to r’s fresh start in interpreting the Bankruptcy C o de c anno t b e gainsaid. The N inth C irc uit has ac kno wledged the im po rtanc e o f the fresh start in the pro c ess o f pro tec ting the sc o pe o f the discharge. S ee, e.g. , S cheer v. S ta te Ba r (In re S cheer) , 819 F.3d 1206, 1209 (9th C ir. 2016); S no ke v. R iso (In re R iso ) , 978 F.2d 1151, 1154 (9th Cir.1992); see a lso S a cha n v. Huh (In re Huh) , 506 B.R . 257, 263 (9th C ir. BA P 2014) (en b anc ). Henc e, c lear applic a tio n o f the discharge is a param o unt c o nc ern. Burke has rec eived her b ankruptc y discharge. A s a result, she is discharged fro mher perso nal liab ility o n the prepetitio n lo an guaranty to U m pqua. It is equally clear that her b ankruptc y did no t affec t U m pqua’s deed o f trust against her pro perty sec uring the guaranty. H S B C Ba nk U S A v. Blendheim (In re Blendheim ) , 803 F.3d 477, 490 (9th Cir. 2015) (“C o ngress c o d ified the princ iple that liens m ay pass thro ugh b ankruptc y in § 506(d)(2).”). Ho wever, C a lifo rnia law term inated U m pqua’s deed o f trust when the esc ro w agent paid U m pqua’s understated lo an b alanc e. C al. C iv. C o de § 2943(d)(1) estab lishes that a c lo sing agent fo r the sale
o f real pro perty is entitled to rely o n the c redito r’s payo ff dem and statem ent “fo r the purpo se o f estab lishing the am o unt nec essary to pay the
ob ligatio n in full.” Sub sec tio n (d)(3) antic ipates that additio nal m o nies b eyo nd the quo ted payo ff statem ent m ay c o m e due prio r to paym ent. R egardless o f the reaso n fo r any such defic ienc y, the statute pro vides that

3“any sum s that were due and fo r any reaso n no t inc luded in the statem ent

o r am ended statem ent shall c o ntinue to b e rec o verab le b y the b enefic iary
as an u ns e c ured oblig ation of the oblig or purs uant to the term s of the note and existing pro visio ns o f law.” C al. C iv. C o de § 2943(d)(3) (em phasis added). Paym ent o f the payo ff dem and, therefo re, auto m atic ally and fo rever extinguished U m pqua’s rights in the c o llateral. Ca thay Ba nk v. F i d. N a t. Title Ins. Co . , 46 C al. A p p . 4th 266, 271 (1996). A s stated in Ca thay Ba nk , the plain language o f the statute m akes c lear that any rem aining deb t no lo nger was sec ured: The m eaning and effec t o f these presc riptio ns is that, upo n c lo se o f esc ro wand Fidelity’s paym ent o f the b ank’s payo ff dem and, To ng rem ained pers onally liable for the balanc e of his loan whic h the b ank had understated, b ut the rem aining deb t [was] no lo nger sec ured ac c o r ding to the term s o f the o riginal no te regardless o f the c irc um stanc es. Ca thay Ba nk

, 46 C al. A p p . 4th at 271 (c itatio ns and internal quo tatio n m arks
o m itted and em phasis added). Ca thay Ba nk further explained that this interpretatio n o f the statute was c o nsistent with its legislative purpo se, whic h was to “‘shift the respo nsib ility fo r c alc ulating the am o unt to satisfy the lo an fro mthe b o rro wers . . . to[the] c redito r.’” Id. (c iting F reedo m F in. Thrift & Lo a n v. Go lden Pa c. Ba nk , 20 C al. A pp. 4th 1305, 1315 n.3 (1993)). A s a c o nsequenc e, U m pqua retained no interest in the real pro perty
so ld, o rthe sale pro c eeds, o nc e it was paid the understated b a lanc e. This is
4c ritic al to understanding the nature o f any resulting unjust enrichm ent

c laim ; U m pqua c anno t argue that Burke rec eived its c o llateral b ec ause U m pqua had nosecurity interest in the sale pro c eeds o nc e it was paid what it said it was o w ed. B. California Rec og nizes ACaus e of A c tion For U njus t E n r ic hm ent For T he M is taken U nderpaym ent Of ASec ured D ebt. A ltho ugh C al. C iv. C o de § 2943(d)(3) extinguished U m pqua’s
sec urity interest in the real pro perty and the pro c eeds o f the sale, the statute did no t extinguish the underlying perso nal liab ility fo r the preexisting o b ligatio n. Tothe c o ntrary, the statute spec ific ally pro vides that any o utstanding b alanc e rem ained “rec o verab le b y the b enefic iary as an
unsec ured ob ligatio n o f the o b ligo r pursuant tothe term s o f the no t e and existing pro visio ns o f law.” C al. C iv. C o de § 2943(d)(3). This sub sec tio n c o d ified the lo ngstanding rule fro mthe c o m m o n law o f restitutio n pro viding equitab le relief fo r c ertain preexisting c o ntrac tual ob ligatio ns that o therwise b ec am e unc o llec tib le. The R estatem ent (Third) o f R estitutio n and Unjust Enrichm ent (2011) (“Restatem ent”) even has a sec tio n devo ted to this type o f lo ss entitled: “Mistaken Discharge o f Ob ligatio n o r Lien.” R estatem ent § 8. The traditio nal fo rmo f relief in this c o ntext was “a c laimin restitutio n b y reinstatem ent o f the rights m istakenly surrendered.” Id. A s the R estatem ent elab o rated:

5Mistaken discharge o f an ob ligatio n o r a security interest is

m o st sim ply rem edied b y treating the disc harge as ineffec tive. The rem edy is o c c asio nally desc rib ed b y saying that the ac to f discharge is c a nc elled; o r that the c laim ant is sub ro gated to the ob ligatio n o r security that has b een m istakenly discharged. The signific anc e o f such language is essentially that res titution rev iv es the form er oblig ation ins tead of c r eatinga new one . R estatem ent § 8, c m t. b (em p hasis added). Thus, the c o m m o n law restitutio nary right o f a secured lender who m istakenly releases c o llateral
nec essarily is tied to the deb to r’s no npaym ent o f preexisting deb t
. C alifo rnia fo llo wed the traditio nal c o m m o n law rule identified in the restatem ent: “‘in the event a b enefic iary was entitled to rec o ver despite a
m istake in the payo ff transac tio n, the m o rtgage o r deed o f trust c o uld b e reinstated and the deb t rem ain secured.’” Ghira rdo v. Anto nio l i, 14 C al. 4th 39, 51 (1996) (quo ting F reedo m F in. Thrift & Lo a n , 20 C al. A pp.4th at 1314). 1 Enac tm ent o f C al. C iv. C o de § 2943(d) altered the c o m m o n law restitutio nary rem edy. C o nsidering the statute sho rtly after it was enac ted, the Suprem e C o u r t o f C alifo rnia ob served that “[p]rinc iples o f unjust enric hm ent, m o re rec ently c o dified in C ivil C o de sec tio n 2943, perm it a seller to seek rec o very o f sum s o m itted fro ma payo ff statem ent as an
unsec ured ob ligatio n.” G hira rdo, 14 C al.4th at 43. In Ghira r do , the C o u rt

1 Ghirardo par ti a lly di sappr ov ed Freedom Financial Thrift & Loan on other gr ounds. See Ghirardo , 14 Cal. 4th at 53 n.5. But Ghirardo heav i l y r eli ed on Freedom Financial Thrift & Loan for the hi stor y, natur e, and scope of a secur ed lender ’s common law r i ghts upon the mi staken r elease of i ts collater al pr i or to the enactment of Cal. Ci v . Code § 2943. 6c o nsidered the purchaser’s argum ent that C al. C iv. Pro c . C o d e § 580b , part

o f C alifo rnia’s antidefic ienc y laws, prec luded any further ac t io n to rec o ver the unpaid b alanc e. It rejec ted this argum ent, c o nc luding that “[n]either the
wo rding no r the underlying purpo se o f C o d e o f C ivil Pro c edure sec tio n 580b dic tates such a drac o nian result in the c ase o f a m istake o f fac t in a payo ff dem and.” Id . at 52. Ghira rdo explained: “[A ]llo w ing rec o very fo r unjust enrichm ent wo uld no t c o ntradic t the po lic y o f requiring the c redito r to rely upo n the pro perty to sec ure the deb t. This is b ec ause any unjust enric hm ent rec o very c o uld no t exc eed the pro perty value. Thus, if the pro perty value had dec r eased, and was less than the deb t, a plaintiff's unjust enrichm ent rec o very wo uld b e lim ited b y the value o f the pro p erty.” Ghira r do , 14 C al.4th at 53 (quo ting F irst N a tio nwide S a vings v. Perry , 11 C al. A pp. 4th 1657, 1664-65 (1992)). In sum, C alifo rnia has c o nc luded as a m atter o f pub licpo lic y that its antidefic ienc y statutes dono t b ar a lender fro mrec o vering the o utstanding b alanc e o wed o n a lo an where the lender m isstates the payo ff am o unt. N o netheless, C alifo rnia rec o gnizes that this liab ility is b ased o n the underlying deb t and is lim ited b y the value o f c o llateral b eing dispo sed. A c c o rdingly, Ghira rdo further explained that C al. C iv. C o de § 2943 sub sum ed “‘the c o m m o n law c o nc epts o f unjust enrichm ent, m istake and esto ppel and pro vide[d] a deb to r m ay no t rec eive a windfall and es c ape the oblig ation of s atis fyinga loan in full when a m o rtgage o r deed o f

7trust is retired in erro r.’” Id. at 51 (quo t ing F reedo m F ina ncia l Thrift & Lo a n, 20 C al. A pp. 4th at 1315) (em phasis added); see a lso Ca l. N a t. Ba nk v. H a vis , 120 C al. A pp. 4th 1122, 1134 (2004) (“The statute perm its the b o rro wer to rely o n that payo ff dem and statem ent . . . , and that if the am o unt in the payo ff dem and statem ent is understated, fo r whatever reaso n, the b enefic iary’s rec o urse is torec o ver any s um s s till owingfrom the borrower as an unsecured deb t
. ”) (Em phasis added)). U m pqua no whas a po stpetitio n c ause o f ac tio n fo r unjust enrichm ent under C alifo rnia law. The m ajo r ity views this c ause o f ac tio n as untethered to the prepetitio n lo an guaranty. This c a nno t b e c o rrec t. U m p qua ho lds no
c laimwhatso ever against Burke fo r rec o very o f the sale pro c eeds as its
c o llateral b ec ause C alifo rnia law granted it no security interest in the sale pro c eeds. W itho ut the underlying lo an guaranty, there is no b a sis to explain why Burke’s retentio n o f the pro c eeds fro mthe sale o f her pro perty was unjust. C. Fair Contem plation A nd Return T o T he Fray. 1. Fair Contem plation. Bec ause U m pqua’s c ause o f ac tio n fo r unjust enrichm ent is m erely an equitab le rem edy to c o llec t the b alanc e o f a prepetitio n lo a n guaranty, no further analysis sho uld b e nec essary in light o f the deb to r’s discharge. Traditio nally, ho wever, po stpetitio n c auses o f ac tio n are sc rutinized fo r discharge purpo ses under the “fair c o ntem platio n test.” S N TL Co rp. v.
8Centre Ins. Co . (In re S N TL Co rp.) , 571 F.3d 826, 839 (9th Cir. 2009). Put

differently, when the po stpetitio n c ause o f ac tio n ac c rues do es no t auto m atic ally c o ntro l. The c o urt instead must asc ertain when the c laim ant
c o u ld “fairly o r r easo nab ly c o ntem plate the c laim ’ s existenc e even if a
c ause o f ac tio n has no t yet ac c rued under no nb ankruptc y law. ” In re S N TL Co rp. , 571 F.3d at 839 (citing Co o l F uel, Inc. v. Bd. o f Equa l iz a tio n (In re Co o l F uel, Inc.) , 210 F.3d 999, 1007 (9th Cir. 2000)). The b ro a d nature o f the fair
c o ntem platio n test is c o nsistent with the C o de’s expansive definitio n o f a
c laimto inc lude c o ntingent and unm atured deb ts. In re S N T L Co rp. , 571 F.3d at 838-39
. Thus a c laimarises prepetitio n, and is b arred b y the discharge, when the c laim ant c o uld fairly o r reaso nab ly c o ntem p late the c laim ’s existenc e prepetitio n. When the underlying rights giving rise to the c laimare set fo rth in a c o ntrac t o r o ther writing, the fair c o ntem platio n analysis typic ally fo c uses o n the nature and c o ntent o f that writing. When the c laim ant fairly
o r reaso nab ly c o uld c o ntem plate the existenc e o f the c o ntingent c laimfro m that writing, that c laimis a dischargeab le prepetitio n c laim
. S ee, e.g. , Go udelo ck

, 895 F.3d at 638; In re Ca stellinoV i lla s, A.K .F . LLC

, 836 F.2d at 1036; In re S N TL Co rp. , 571 F.3d at 839. O n the o ther hand, when the liab ility arises fro m a vio latio n o f law (such as em plo ym ent disc rim inatio n o r enviro nm ental law), the inquiry typic ally fo c uses o n when the c laim ant knew o r sho uld have kno wn o f the po tential, c o ntingent c ause o f ac tio n.
9S ee, e.g. , Z iLO G, Inc. v. Co rning (In re Z iLO G, Inc.) , 450 F.3d 996, 1001-02

(9th C ir. 2006); Co o l F uel, Inc. , 210 F.3d at 1007; Ca l. D ept. o f H ea lth S ervs. v. Jensen (In re Jensen) , 995 F.2d 925, 930 (9th Cir. 1993). The m ajo rity diligently details a numb er o f these N inth C irc uit c ases applying the fair c o ntem platio n test. In so do ing, they reaso n that In re Z iLO G , Inc. , 450 F.3d at 1001-02, is mo st analo go us. Z iLO G, ho wever, invo lved a questio n o f when the c laim ants’ to rt c laimfo r disc rim inato ry treatm ent in the paym ent o f retentio n b o nuses ac c rued. The N inth C irc uit reversed and rem anded the grant o f sum m ary judgm ent where the
c laim ants o ffered evidenc e that their c laim s ac c rued po stpetitio n. 2 Id. at 1001-02 (no ting “sub stantial po ssib ility” that c laim s “were no t within the
wo m en’s fair c o ntem platio n until after the A pril 30 c o nfirm atio n o rder, and thus were o u t side the b a nkruptc y pro c ess.”); s ee a lso id. at 1007 (if the
c laim s ac c rued po stc o nfirm atio n, there was no fair c o ntem platio n o f any kind, and it rec o gnized that “the wo m en m ay pursue tho se c laim s o utside
o f the b ankruptc y pro c eedings.”) Z iLO G, and the o ther c ases o n whic h the m ajo rity relies, stand fo r the pro po sitio n that the po s tpetitio n ac c rual o f a c ause o f ac tio n is suffic ient in
c ertain c irc um s tanc es to prevent discharge o f the underlying deb t. This

2 The Ninth Ci r cu i t also held that the debtor ’s acti ons depr i v ed the clai mants of noti ce that they wer e r equi r ed to ti mely fi le pr oofs of clai ms, and pr ov i ded that they be allowed to fi le pr oofs of clai m. Id. at 1003-07. 10do es no t, ho wever, m ean that the po stpetitio n ac c rual o f a c ause o f ac tio n

nec essarily renders a c laimb eyo nd the sc o p e o f the discharge. In In re Go udelo ck

, the N inth C irc uit rec o gnized that the deb to r’s ob ligatio n to pay
m o nthly po stpetitio n c o ndo m inium assessm ents aro se prepetitio n and was fairly c o ntem p lated at the tim e the deb to r purchased the pro perty. 895 F.3d at 638. In reaching this dec isio n, the N inth C irc uit em phasized that “Go udelo c k’s perso nal ob ligatio n to pay [the] assessm ents was no t the result o f a separate, po st-petitio n transac tio n b ut was c reated when she to o k title to the c o ndo m iniumunit.” Id . Fo r this reaso n, the unm atured,
c o ntingent o b ligatio n to pay po stpetitio n assessm ents qualified as prepetitio n deb t subjec t to discharge. Id
. In this instanc e, Burke’s situatio n falls m u ch c lo ser to the deb to r in Go udelo ck than Z iLO G. In Z iLO Gthe c laim a nts were asserting a new po stpetitio n to r t ac tio n that aro se fro mthe denial o f their retentio n b o nuses. But here, as in Go udelo ck , there is no new po stpetitio n transac tio n. R ather, Burke b ec am e perso nally liab le fo r U m pqua’s lo an when she
exec u ted the guaranty prepetitio n. She also pledged her real pro p erty to
sec ure that perso nal ob ligatio n. Having discharged its c o llateral, U m pqua is left o nly with a c laimto c o llec t the o utstanding b alanc e perso nally against Burke. This is far afield fro mthe to rt c laim s fo r disc rim inatio n that the c laim ants in Z iLO Galleged that they disc o vered po stpetitio n. Even
m o re so than the po stpetitio n assessm ents in Go udelo ck , U m pqua seeks to

11c o llec t fro mBurke the exac t sam e prepetitio n deb t , and as such her perso nal liab ility was “no t the result o f a separate, po s t-petitio n transac tio n.” Bec a use U m pqua seeks touse a c ause o f ac t io n that ac c rued po stpetitio n to c o llec t the b alanc e o f its prepetitio n c laim, that ac t io n rem ains sub

jec t to Burke’s discharge. 2. Return T o T he Fray. The m ajo rity sees Burke’s retentio n o f the sale pro c eeds as the new, po stpetitio n ac t that subj ec ts her to po s tpetitio n perso nal liab ility. This view fo c uses o n Burke’s failure toreturn to U m pqua the pro c eeds fro mthe sale o f her ho use as the b asis fo r the unjust enrichm ent c laim . Tho ugh
rec o gnizing that the “un justness” o f Burke’s enrichm ent has no t b een litigated, the m ajo rity no netheless o ffers that the retentio n o f the sale pro c eeds was equivalent toa “return to the fray,” that wo uld render a discharged deb to r liab le fo r po stpetitio n atto rney’s fees o n a prepetitio n deb t. S ee Bo eing N
. Am ., Inc. v. Y ba rra(In re Y

ba rra ) , 424 F.3d 1018, 1026-27 (2005). Y et, there is a pro verb ial c art and ho rse prob lemhere. First, there is
no evidenc e that U m pqua ever m ade dem and fo r paym ent. Sec o nd, and
m o re im po r tantly, b ec ause U m pqua has nosecured interest in the sale pro c eeds Burke had no legally c o gnizab le duty to return anything to U m pqua. N o r did Burke engage in any c o nduc t c ausing U m pqua to inc ur atto rney’s fees akin to the vo luntary, unilateral initiatio n o r resum ptio n o f a who le new c o urse o f litigatio n po stpetitio n as wo uld warrant a finding o f

12new liab ility fo r returning to the fray. S ee, e.g. , In re Y ba rra, 424 F.3d at 1026 (“Perso nal liab ility fo r fees inc urred thro ugh the vo luntary pursuit o f litigatio n initiated po st-petitio n is m o re c o nsistent with the purpo se o f discharge”); S iegel v. F

ed. H o m e Lo a n M o rtg. Co rp. , 143 F.3d 525, 534 (9th Cir. 1998) (“Siegel’s dec isio n to pursue a who le new c o urse o f litigatio n m ade himsubjec t to the stric tures o f the atto rney’s fee pro visio n”); co ntra, In re M ighell, 564 B.R . 34, 45–46 (Bankr. C .D. C al. 2017) (ho lding that atto rneys’ fees “wo uld have b een in the fair c o ntem platio n o f the parties at the tim e o f
c o nversio n sinc e this o ral c o ntrac t was allegedly fo rm ed appro xim a tely nine m o nths b efo r e c o nversio n, and ‘a who le new c o urse’ o f litigatio n was no t b egun.”). D . E quity, Fairnes s , A nd PublicPolic y. While it is U m pqua’s m istake that lead to this situatio n, ab s ent the b ankruptc y discharge it wo uld b e entitled to pursue c o llec tio n o f its lo an b alanc e fro mBurke. That Burke’s disc harge m ay enab le her to rec eive a windfall runs c o ntrary to lo ng-standing equitab le princ iples. This leads the
m ajo rity, tho ugh c areful to say that it is no tprejudging whether Burkes’s
c o nduc t was unjust, tosuggest that Burke has ac ted nefario usly and that her c o nduc t was tantam o unt to waste o r fraud – and likely wo uld suffic e to give rise to no ndischargeab ility under § 523(a). 3 It alsoo p ines that Burke

3 Agai n, the concepts of waste or fr aud i mply that Umpqua had an in ter est i n the (continued...) 13has used her discharge as a swo rd rather than a shield, stro ngly suggesting

that she is no tthe ho nest b ut unfo rtunate deb to r the Bankruptc y C o de is designed to pro tec t. I rec o gnize that Burke has rec eived a windfall. But I dono t view this windfall as unjust, nefario u s, o r no ndischargeab le. N o r do I see it as func tio nally o r legally any different than the “windfall” disc harged deb to rs realize whenever the C o de grants thema fresh start and perm its themto leave b ehind their perso nal liab ility fo r preexisting deb ts. U m pqua must first estab lish its right to rec o very b efo re we judge this deb to r. Bluntly put,
so lely as a result o f its o wn c o nduc t and the o peratio n o f C alifo rnia law, U m pqua lo st its secured status and was reduced to the status o f a c redito r ho lding an unsec ured c laimagainst a discharged deb to r. While C alifo rnia ho lds that a perso nal c laimfo r unjust enrichm ent exists despite its antidefic ienc y statute, b ankruptc y im po ses a statuto ry b ar as a pillar o f the deb to r ’ s fresh start. In sho rt, I disagree that U m pqua’s m istaken discharge
o f its secured interest enab les it to sidestep the b ankruptc y discharge o f the deb to r ’ s prepetitio n guaranty. 4 S ee genera lly La w v. S iegel, 571 U .S. 415, 421-

3 (...continued) sale pr oceeds that Bur ke r ecei v ed. By oper ati on of Cal. Ci v . Code 2943(d)(3), i t di d not.

4 To the extent thi s r esult i s unacceptable, i t calls fora legi s l ati v e r esponse. Thi s si tuati on may be r edr essed by amending Cal. Ci v . Code § 2943 to pr ov i de secur ed cr edi tor s wi th an inter est in the sale pr oceeds when the cr edi tor under states the balance i t i s owed. Only then – when the cr edi tor actually has a legally cogni zable in ter est i n the (continued...) 1422 (2014) (no equitab le b asis tosurcharge deb to r’s statuto ry right to

exem ptio n). Fo r the reaso ns, set fo rth ab o ve, I respec tfully dissent.

4 (...continued) sale pr oceeds – should the cr edi tor be hear d to complai n that the di schar ged debtor ’s r efusal to r epay the cr edi tor i ts shar e of the sale pr oceeds i s legally wr ongful. 15