Hagler v. Budsberg (In re Roth)

Summarized by Janel Glynn , The Burgess Law Group
14 years 10 months ago

Citation:

U.S. Court of Appeals for the Ninth Circuit, Case No. 09-60027, Memorandum, Dated May 2, 2011 (Not Reported)

Tag(s):

9th Circuit

Ruling:

Ninth Circuit ruled a complaint filed against a bankruptcy trustee for failure to secure assets for the estate pursuant to 11 U.S.C. Sec. 322(b) was untimely and barred by the three year statute of limitations under Washington state law.

Procedural context:

Appeal of the Bankruptcy Appellate Panel's ("BAP") decision affirming the Bankruptcy Court's grant of summary judgment in the Sec. 322(b) action against the trustee for failing to secure estate assets.

Facts:

Hagler filed a complaint against the trustee of the debtor's bankruptcy estate for his failure to secure estate assets pursuant to Bankruptcy Code Sec. 322(b). The Ninth Circuit determined that because Sec. 322(b) does not have its own statute of limitations period, the court must look to the most analogous state cause of action under Washington law. The court found Wash.Rev.Code Sec. 4.16.080 to be the most analogous cause of action which provides for a three year statute of limitations. The court found that the complaint was untimely and thus barred under Washington law because the complaint was filed nine months after the expiration of the statute of limitations. The statute of limitations period began when the bankruptcy court denied the trustee's motion to reopen the bankruptcy case. The court further found the discovery doctrine, which tolls the statute of limitations when a plaintiff could not have reasonably known about the facts giving rise to the cause of action, did not apply because Hagler failed to establish that he exercised due diligence. And as a result, Hagler's complaint was untimely and therefore barred by the statute of limitations.

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