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Asphalt Professionals, Inc. v. Darin Davis (In re Darin Davis)

Case Type:
Case Status:
BAP No. CC-19-1116-TaLS; Bk. No. 1:10-bk-17214-VK (9th Circuit, Nov 05,2019) Not Published
Bankruptcy court's decision sustaining chapter 7 trustee's objection to two proofs of claim affirmed.
Procedural context:
Appeal from the bankruptcy court for the Central District of California; reviewed de novo (legal conclusions) and for clear error (findings of fact).
Asphalt sued the debtor on multiple grounds in state court; debtor filed a chapter 7 petition before the state court litigation went to trial. Bankruptcy court granted Asphalt stay relief to proceed with the state court litigation. State court trifurcated the action into three phases. Asphalt received a judgment for damages and attorneys' fees in Phase One of the litigation, and the state court resolved the Phase Two issues in favor of Asphalt. The parties then entered into a "final fee stipulation" that stipulated that debtor had paid Asphalt the amounts awarded by the state court. The stipulation provided that it had no bearing on Phase Three of the litigation. Asphalt later filed an acknowledgement of satisfaction of judgment. The bankruptcy court tried the fraud claims that were the subject of Phase Three of the litigation and found in debtor's favor. Asphalt filed a proof of claim based on the state court litigation and another proof of claim based on the Phase Three claims. On appeal, Asphalt argued that it retained a claim for unpaid fees connected with Phase Two of the litigation. Debtor placed the final fee stipulation and satisfaction of judgment before the bankruptcy court, asserting that the Phase Two fees had been paid in full. Ultimately, the bankruptcy court sustained the trustee's objections to the proofs of claim, based on the stipulation and satisfaction of judgment. Asphalt appealed, and the BAP affirmed the bankruptcy court.
Taylor, Lafferty, Spraker

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