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Category Archives: Appellate Decisions

523(a)(2), 9011, 9th Circuit, Appellate Decisions, Non-Dischargeable Debts

Case Report: Weinstein, Pinson & Riley v. Nelson 14-56103

A strike against abusive debt collectors in Bankruptcy Court.

Authority:  9th Circuit Court of Appeals.

Why relevant:  A 9011 motion may be well taken where even one of the causes of action is without merit.

Relevant Code Section:  523(a)(2)

Note: Not Published

In this matter, Weinstein, Pinson & Riley (formally Weinstein & Riley) sued another Debtor yet again with insufficient evidence to back up their claim and were sanctioned under F.R.B.P. 9011 for meritless litigation.  Weinstein is a national law firm, renowned for filing claims against Debtors under 11 U.S.C. 523(a)(2) without a sufficient basis for alleging fraud.  Their goals are to scare the Debtors into some form of settlement by taking advantage of individual Debtors who have insufficient resources to defend themselves.  In this matter which comes out of the 9th Circuit court of appeals, the appellate court upheld a lower court ruling finding Weinstein to have filed their complaint without a sufficient legal basis even though at least one of their causes of action did have merit.

11 U.S.C. 523(a)(2) concerns debts incurred through fraud. Weinstein often sues for debts to be determined as non-dischargeable under 11 U.S.C. 523(a)(2)(c)(1) on the basis that debts incurred within the 90 days pre-petition that are incurred for the purchase of luxury goods or services with knowledge of the Debtor’s intent to discharge the debts prior to Bankruptcy should likewise be considered non-dischargeable.

In our experience, Weinstein can be scared off by an aggressive defense.  As a defending party, if the Debtor can cause Weinstein sufficient grief such that they do not want to continue litigation, they often dismiss the matter.  Further, our recommendation is to always proceed to trial.  Most Bankruptcy Judges are unfriendly to Weinstein’s tactics and the majority of Debtors will find themselves in a receptive court if they put forward a good, honest and solid defense regarding the nature of the claimed non-dischargeable debts.

Appellate Decisions, Bankruptcy Lawsuits

Victory in front of the Bankruptcy Appellate Panel!

By Anerio Altman

This week, after a three year slough, Lake Forest Bankruptcy received a verdict in favor of its client.

At the heart of the case is a Creditor who committed an egregious violation of the discharge injunction and argued that he was above the law.

The facts of the case are that a creditor chose to continue trying to collect upon a discharged pre-petition debt because that creditor did not believe that the Discharge Injunction applied to him. His belief was based upon a “No-Discharge” clause inserted into a loan agreement which stated that his loan could not be discharged in the Bankruptcy Court. Such agreements are void as a matter of public policy. Bank of China v. Huang (In re Huang), 275 F.3d 1173. multiple attempts to collect a debt, and multiple warnings to stop, he was sued in the Bankruptcy Court.

The Court found in case called In Re Zilog 450 F. 3d 996 sanctions cannot be issued. Per Zilog, a creditor cannot be the subject of sanctions unless they knew that the injunction in question applied to him and and they intended the act that violated the injunction. While there was no question the Creditor intended the act, the Court found that the creditor held the subjective belief that the law did not apply to him and thus sanctions were inappropriate.

After approximately three years, the Bankruptcy Appellate Panel found in our client’s favor that while Zilog still remained the law of the land, the ruling could not be read so expansively that a Creditor could simply choose not to believe in the injunction and be ameliorated from any further liability. The Creditor was subject to sanctions.

The case has been reversed and remanded back to the Trial Court for a further determination of damages.

522(f), Appellate Decisions

Victory for Debtors in the Ninth Circuit!

By Anerio Altman

Tuesday March 5th, 2013, Lake Forest Bankruptcy won a major victory on behalf of one of its clients in front of the Ninth Circuit Court of Appeals.

The individual Debtor is a Real Estate Broker and had filed a Chapter 7 Bankruptcy Case. In that case, she thought to claim her Mercedes as a tool of the trade that she used for the purpose of avoiding a non-possessory non-purchase money loan (title loan) on her vehicle. She has this right pursuant to 11 U.S.C. 522(f) to acquire her “fresh start” and continue to operate her business. She would be unable to do so if she could not retain her vehicle, which she could not so long as the Creditor maintained a Title Loan on the vehicle.

She had filed by herself but needed assistance on the motion and retained Lake Forest Bankruptcy for the litigation. We filed claiming that the vehicle was a tool of the trade of a real estate broker. The lender objected.

The Honorable Theodor Albert ruled for the secured lender in that the language under 11 U.S.C. 522(f) did not expressly authorize a vehicle for this purpose and that the Debtor could not utilize the “wildcard” exemption for this purpose.

We appealed to the Bankruptcy Appellate Panel and the Creditor exercised its power to push the decision to the District Court instead. Although we were not initially hopeful about a result from the traditionally conservative district courts, the Honorable Josephine S. Tucker ruled for our client.

The Secured Creditor then appealed the matter to the Ninth Circuit Court of appeals.

The court agreed with the District Court and affirmed the honorable Tucker’s opinion.

The ultimate result of this ruling is that an individual who claims that their vehicle is a tool of the trade and avoid Title Loans that they may have taken against their livelihood.

Decision attached:

2013MAR5 OPINION