- Case Type:
- Case Status:
- BAP No. NC-20-1274-BSG (9th Circuit, Jun 03,2021) Not Published
- BAP for 9th Cir. affirmed bankruptcy court (ND Cal.) order converted debtors' chapter 13 case to chapter 7. Debtors' attempts to misrepresent interest in non-residential property, including prepetition fraudulent transfers, demonstrated bad faith and attempt to hinder and delay creditors in bankruptcy justifying conversion instead of dismissal.
- Procedural context:
- Husband in joint chapter 13 moved to be dismissed from chapter 13 case; other co-debtor moved to convert her case to chapter 7. Creditors opposed husband's individual dismissal and filed a cross motion to convert the entire case to chapter 7 under § 1307(c). Bankruptcy court (ND Cal.) granted creditors' motion and converted case. Wife appealed to BAP for 9th Circuit.
- Jack, a licensed contractor, and Alice, a retired food service worker, sold a home to appellees James Hwang and Debra Wu ("Creditors") in 2011. Creditors later discovered defects in the home which caused damages in excess of $100,000. In late 2016, Creditors sent a construction defect notice to Jack and a mediation demand to Jack and Alice. In February 2017, Creditors filed suit against Jack and Alice over the home defects. Creditors prevailed in binding arbitration and were awarded close to $177,000 for damages and attorney's fees. At a hearing on June 6, 2019, the state court orally granted Creditors' petition to confirm the arbitration award and ordered them to submit a written order and judgment. About 90 minutes later, Jack and Alice filed for bankruptcy. While in the midst of the state court litigation, in 2013, Alice purchased a four bedroom rental home in Patterson, California as her sole and separate property (the "Property"). In January 2017, Alice transferred a 50% interest in the Property to her daughter, Carol, for no consideration. In June 2018, Alice transferred her remaining 50% interest in the Property to Carol for no consideration. In April 2019, Carol transferred her 100% interest in the Property back to Alice for no consideration. In the bankruptcy case, Jack and Alice claimed a homestead exemption in the Property despite not living there. In the midst of the dispute over dismissal or conversion, Alice moved into one of the rooms of the Property and began sporadically paying half of the rent.
- Brand, Spraker, Gan
In re Zachary Allen ; Tiara Donegan
Summarizing by Lars Fuller
3267 in the system
3 Being Processed