Source: https://www.salvatolawoffices.com/news-publications
Timestamp: 2019-04-20 16:20:32+00:00

Document:
In 2010, Debtor filed a Chapter 7 bankruptcy case and obtained a discharge, including a discharge of her personal liability on the debts secured against her residence. More than four years later, Debtor filed for Chapter 13 relief. On her Chapter 13 bankruptcy schedules, Debtor identified her residence and the debts secured by the residence, including the junior lien of the lender. Since the amount of the senior lien exceeded the value of the residence, Debtor indicated her intent to avoid the junior lien. On Schedule D of her bankruptcy petition, Debtor listed the junior lien as a secured debt of $0 and identified her intent to avoid the lien. On Schedule F, Debtor listed the junior lien as an unsecured debt.
The Ninth Circuit affirmed the Bankruptcy Appellate Panel and the Bankruptcy Court’s orders determining that the Debtor was eligible for Chapter 13 relief under Bankruptcy Code section 109(e). The junior lender’s lien was unsecured because the amount of the senior lien exceeded the value of the residence. This was readily ascertainable from the bankruptcy schedules, which were made in good faith. The lender’s resulting unsecured junior lien was unenforceable because the Debtor’s personal liability had been previously discharged in a Chapter 7 case. Therefore, the Bankruptcy Court correctly determined that the lender’s debt did not place Debtor over the debt limits for the purpose of section 109(e) eligibility because the lender held neither an allowed secured claim where its lien was avoidable under section 506(a), nor an allowed unsecured claim because the Debtor’s personal liability on the debt had been discharged by her previous Chapter 7 bankruptcy case.
The Ninth Circuit also affirmed the Bankruptcy Court’s determination that the Chapter 13 petition was filed in good faith because none of the relevant factors for evaluating bad faith were present. There was no evidence of misrepresentation, serial bankruptcy filings, filings to defeat state court litigation, or egregious behavior. Furthermore, the Ninth Circuit rejected the lender’s argument that the filing of a Chapter 13 petition after receiving a prior Chapter 7 discharge is bad faith per se because that conclusion is unsupported by the Bankruptcy Code and case law.
MCLE: 3.5 Hours Legal Ethics; 1 Hr. Substance Abuse; 1 Hr. Elimination of Bias. This activity has been approved for Minimum Continuing Legal Education Credit by the State Bar of California. The FBA certifies that this activity conforms to the standards of approved education activities prescribed by the rules and regulations of the State Bar of California governing minimum continuing legal education.
Salvato Law Offices successfully defended an appeal by the plaintiff attacking the nondischargeable judgment entered by the Bankruptcy Court.
The jury verdict also affirms that these questions were actually litigated and necessarily decided. An issue is “actually litigated” when both parties “presented evidence and witnesses in support of their positions, and . . . had the opportunity to present full cases.” Lucido, 795 P.2d at 1225. Here, both parties presented evidence and argued the merits of the fraud claim. To conclude that an issue was “necessarily decided,” California “courts have previously required only that the issue not have been ‘entirely unnecessary’” to the judgment in the initial proceeding. Id. at 1226. In reaching the verdict in this case, the question of fraud was not “entirely unnecessary” in the initial proceeding. No public policy factors weigh against application of the doctrine. Therefore, Tran has met the burden of establishing the threshold requirements of issue preclusion. The bankruptcy court and the BAP did not abuse their discretion in applying the doctrine. AFFIRMED."
LOS ANGELES — Lawsuits by artists and collectors, seeking the return of consigned works, demanding profits, or both, have never stopped Douglas Chrismas, the founder of Ace Gallery, from doing business. An early champion of trailblazers like Robert Irwin, Richard Serra and Michael Heizer, Mr. Chrismas has spent nearly 50 years helping to start or jump-start the careers of artists here, even as he was scrutinized for sometimes failing to pay when works sold.
But on April 6, Mr. Chrismas lost the keys to his gallery, after failing to make a $17.5 million court-ordered payment to settle his debts in a long-running Chapter 11 bankruptcy case. Sam Leslie, a bankruptcy trustee, took over as what he calls a “de facto C.E.O. of the reorganized business,” which includes a 30,000-square-foot mega-gallery in a historic Art Deco building in the mid-Wilshire district, and a space in Beverly Hills.
He is seeking the return of eight early, experimental sculptures, made in resin or acrylic, consigned to Ace in 2010 to 2012. The group includes a study for his monumental “Gray Column” sculpture once featured at the Getty Museum. His claim placed their value at around $1.45 million.
Salvato Law Offices successfully reversed a $3,200,000 default judgment entered more than seven years earlier that was affirmed by the California Court of Appeal in a published decision.
A recent California Court of Appeal decision re-affirmed the longstanding rule that damages in a default judgment cannot exceed the amount of damages claimed in the complaint, and that a later-filed statement of damages specifically identifying the damages sought is no substitute for an amended complaint, at least in an action not involving personal injury or wrongful death. Dhawan v. Biring, 241 Cal.App.4th 963 (Cal. App. 2d Dist., October 28, 2015).
In Dhawan, The Second District Court of Appeal held that a default judgment is void on its face and subject to attack at any time where the default judgment awards damages that exceed the relief demanded in the complaint, citing Code of Civil Procedure Section 580(a). A complaint seeking monetary damages must state the amount of damages sought. Code of Civil Procedure Section 425.10(a)(2). Any amount awarded in excess of the amount stated in the complaint is beyond a court’s jurisdiction to grant, and the resulting judgment is void. Section 580(a). Furthermore, service of a statement of damages under Code of Civil Procedure Section 425.11 or 425.115 only satisfies the requirements of Code of Civil Procedure Section 580 when the law prevents a plaintiff from stating an amount of damages in the body of the complaint; i.e., in personal injury or wrongful death cases, or where the plaintiff is seeking punitive damages. In all other cases, a statement of damages does not substitute for an amended complaint, as it does not provide formal notice of the actual damages sought in compliance with the requirements of Section 580(a).
The plaintiff in Dhawan filed a complaint that did not specify the amount of damages, seeking merely an award of damages “according to proof.” Defendants failedto answer the complaint. At the default hearing -- likely at the instigation of the trial judge – the plaintiff moved to vacate the default so that he could personally serve a statement of damages on the defendants. Plaintiff subsequently filed and served a statement of damages, identifying each category of damages and the amount sought. Defendants again did not respond, and a default judgment was entered.
Nearly seven years later, defendant Biring moved to vacate the default judgment, contending that a default judgment in excess of the amounts demanded in the complaint is void, and merely voidable, because the award was in excess of the trial court’s jurisdiction. (Code Civ. Proc. § 580(a)). That is, the trial court did not have the power to enter a default judgment that exceeded the relief sought in the complaint, and such an excess damage judgment could be set aside at any time. (Code Civ. Proc. § 473(d)). The trial court agreed and vacated the default judgment. On appeal, plaintiff argued that defendants had actual notice of the lawsuit and the precise amount of damages sought, as they did not contest receipt of the statement of damages. At most, plaintiff argued, the judgment was merely voidable, and not void. And, as the time period to challenge a voidable judgment had long since passed, the default judgment should not have been overturned.
The Court of Appeal rejected each of the plaintiff’s arguments and affirmed the court’s order setting aside the default judgment. Even though it contained the same information, a statement of damages was not a substitute for a properly amended complaint. And, where the plaintiff had sought only “damages according to proof,” the original trial court had exceeded its jurisdiction in awarding any damages at all.
Adversary Proceeding in Chapter 7 bankruptcy case. Successful on summary judgment in disallowing underlying note obligations, declaring "protective" liens on residence unforceable, and valuing liens at $0.
Article by Gregory Salvato and J. Scott Bovitz. Dated December 8, 2010.
This paper summarizes the removal procedure under 28 U.S.C. § 1452 and Federal Rule ofBankruptcy Procedure ("FRBP") 9027. We will answer these questions.
What claims can be removed under 28 U.S.C. § 1452?
Who may remove claims under 28 U.S.C. § 1452?
What are the limitations on removal jurisdiction?
What should the notice of removal contain?
Where does a party file a notice ofremoval?
What are the deadlines for removing a claim?
May a party remove fewer than all claims in the action?
When does removal take effect?
Where do removed cases "go"?
If a matter is removed before an answer is filed, when is the responsive pleading due?
When a state court action is removed, what is a party to do? a. Deadline for a motion to remand. b. Motion to remand under 28 U.S.C. § 1452(b). c. Motion to abstain.
Can and order ofremand or abstention be reviewed on appeal?
Can a court award sanctions for improper removal?
Why bother to remove claims from state court to bankruptcy court?

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