First Community Bank v. Gaughan (In re Miller)

Case Type:
Case Status:
Reversed and Remanded
No. 14-16854 (9th Circuit, Mar 31,2017) Published
9th Circuit reversed ruling of district court (D. Ariz.), after district court reversed bankruptcy court's summary judgment in favor of judgment lien creditor, who brought adversary against chapter 7 trustee, seeking declaration that lien creditor had priority in sale proceeds. Panel applied California law to Arizona debtor to conclude that creditor's lien attached to debtor's co-tenancy, notwithstanding co-ownership with non-debtor wife. In rem nature of dispute, plus debtor's consent, compelled application of California law to California real property in choice-of-law analysis.
Procedural context:
Judgment lien creditor sued chapter 7 trustee in declaratory relief adversary, asserting priority in sale proceeds. Bankruptcy court granted summary judgment in favor of creditor; trustee appealed to district court. District court reversed. Creditor appealed to 9th Circuit.
Arizona debtor signed a guaranty; his wife did not. Debtor defaulted; creditor obtained judgment against debtor in Arizona, and sought to enforce judgment lien against debtor's property in California. San Francisco co-op apartment owned by both husband and wife was tenancy-in-common, not community property under California law. Under California law, interest of co-tenant was subject to judgment lien. Under Arizona law, co-op would be treated as community property, and creditor's judgment lien would not attach to debtor's interest in community property.
Tashima, Smith, Korman

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