Court Opinion

ID: 4151626
Source: CourtListenerOpinion
Date Created: 2017-03-09 21:00:55.865238+00
Date Added: 2024-06-11T14:23:11.687258
License: Public Domain

FILED
                            NOT FOR PUBLICATION
                                                                              MAR 09 2017
                     UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                           U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

In re: EDRA D. BLIXSETH,                         No.   14-35741

               Debtor,                           D.C. No. 2:13-cv-00025-DLC
------------------------------
 RICHARD J. SAMSON, Chapter 7
Trustee for the Estate of Edra D. Blixseth,      MEMORANDUM*

               Plaintiff-Appellee,

          v.

WESTERN CAPITAL PARTNERS, LLC,

               Defendant-Appellant.

                    Appeal from the United States District Court
                            for the District of Montana
                    Dana L. Christensen, Chief Judge, Presiding

                       Argued and Submitted February 7, 2017
                                Seattle, Washington

Before: FISHER, PAEZ and CALLAHAN, Circuit Judges.

      Western Capital Partners, LLC, appeals the district court’s order affirming

the bankruptcy court’s judgment in favor of the bankruptcy trustee, Richard

      *
       This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Samson, on the trustee’s claims of constructively fraudulent transfer and usury.

We have jurisdiction under 28 U.S.C. § 158(d), and we reverse in part, affirm in

part and remand.

      1. Before the bankruptcy court, Samson sought to avoid debtor Edra

Blixseth’s guaranty of a $13 million loan Western Capital issued to Blixseth’s son.

A constructively fraudulent transfer claim requires proof (1) the challenged

transfer occurred within two years of the bankruptcy; (2) the debtor received less

than reasonably equivalent value for the transfer; and (3) the debtor was insolvent

at the time of the transfer. See In re Fitness Holdings Int’l, Inc., 714 F.3d 1141,

1145 (9th Cir. 2013); 11 U.S.C. § 548(a)(1)(B). The bankruptcy court concluded

Blixseth was insolvent at the time of the transfer after it excluded Blixseth’s

interest in the undivided portion of her marital community, which was worth over

$400 million at the time of the loan. This was error. Because Blixseth’s creditors

could have reached her share of the community property through legal process, the

property should have been included in the solvency analysis. See In re Marriage

of Schenk, 279 Cal. Rptr. 651, 654 n.2 (Ct. App. 1991) (creditors may collect post-

separation debts from the debtor spouse’s share of community property); see also

2-101 Collier on Bankruptcy § 101.32 (16th ed. 2016) (“[I]t is obvious that

interests which are subject to creditors’ remedies must necessarily be

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considered.”). Including these assets in the solvency analysis, Blixseth was solvent

under all of the relevant tests. See 11 U.S.C. § 548(a)(1)(B)(ii). Samson’s

fraudulent transfer claim therefore fails.

      2. The district court held Western Capital waived its argument that res

judicata precluded Samson’s usury claim. Although Western Capital reasserts its

res judicata argument in conclusory fashion before this court, it has not identified

any error in the district court’s conclusion this argument was waived. We affirm

the entry of judgment for Samson on the usury claim.

      REVERSED IN PART, AFFIRMED IN PART AND REMANDED.

EACH PARTY SHALL BEAR ITS OWN COSTS ON APPEAL.

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