Aspen Skiing Co., v. Cherrett (In re Cherrett)
Dissenter contends that the majority misread the circuit’s own precedent.
- Rochelle Quick Take
View Rochelle Summary- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- 14-60079 (9th Circuit, Oct 16,2017) Published
- Tag(s):
- Ruling:
- A bankruptcy court’s order denying a motion to dismiss under 11 U.S.C. § 707(b) constitutes a final, appealable order. Further, debts used to purchase homes are not consumer debts as defined in section 101(8) as a matter of law; rather, courts should consider all circumstances relating to the debtor's primary purpose in incurring a loan to determine if a particular debt is a consumer debt. The Ninth Circuit agreed with the BAP that the bankruptcy court did not clearly err in finding that the debtor-husband incurred the loan at issue for a non-consume purpose. Judge Nguyen dissented.
- Procedural context:
- The Ninth Circuit Court of Appeals affirmed the BAP’s decision affirming the bankruptcy court's order denying a motion to dismiss under section 707(b) filed by the debtor-husband's former employer.
- Facts:
- The debtor-husband worked in the hospitality industry for twenty-five years. While living and working in Jackson Hole, the debtor-husband learned about a managerial position in the hospitality division of Aspen Ski Company in Aspen, CO. The employer offered the debtor-husband an annual salary and a $500,000 housing loan. The debtor-husband accepted the offer and used the housing loan to purchase a condominium in Aspen; though he relocated for the new role, his family remained in Jackson Hole. Four years after accepting the job, the debtor-husband resigned. Two years later, the debtors filed chapter 7 bankruptcy. The employer filed a motion to dismiss for abuse under section § 707(b)(1), arguing that the housing loan it offered to the debtor as a key part of his compensation package was a consumer debt and that, accordingly, the debtors were not entitled to chapter 7 relief in light of their ability to pay creditors through a chapter 13 plan. The bankruptcy court held an evidentiary hearing after which it found that the employer offered the housing loan to the debtor-husband to entice him to leave a secured position and that the debtor-husband purchased the condominium to make more money and work at a prestigious resort. The bankruptcy court determined that the housing loan was incurred for a business purpose and denied the motion to dismiss. The employer appealed to the Bankruptcy Appellate Panel, which found that the order denying the motion to dismiss was final and appealable and that the bankruptcy court did not err in concluding that the debtor-husband incurred the housing loan for a business purpose. The employer appealed to the Ninth Circuit Court of Appeals.
- Judge(s):
- Marsha S. Berzon, Morgan Christen, and Jacqueline H. Nguyen