- Case Type:
- Case Status:
- BAP Nos. CC-19-1039-STaF and CC-19-1040-STaF (9th Circuit, Feb 11,2020) Published
- Appeal of order denying motion to dismiss the debtor's chapter 7 case pursuant to section 109(g)(2) filed several months after the order was entered was was dismissed for lack of appellate jurisdiction because the order was final and not interlocutory. Appeal of order avoiding an attachment lien as a preferential transfer was affirmed.
- Procedural context:
- The creditor filed a motion to dismiss the debtor's chapter 7 case pursuant to section 109(g)(2). The Bankruptcy Court denied the motion. Several months later, the chapter 7 trustee obtained a summary judgment avoiding the creditor's attachment lien as a preferential transfer. The creditor then appealed to the BAP both the order denying the dismissal motion and the order avoiding the attachment lien.
- The creditor filed a lawsuit against the debtor in 2015 and a related fraudulent transfer suit. The debtor filed a chapter 13 petition in 2017. After the court granted the creditor relief from stay to proceed with the lawsuit, the debtor dismissed the chapter 13 case. Promptly after the dismissal, the creditor and debtor stipulated to a money judgment, the creditor recorded a writ of attachment against the debtor's residence creating an attachment lien, and the creditor dismissed the fraudulent transfer suit. The debtor then filed a chapter 7 case 74 days after the dismissal of the chapter 13 case. The creditor moved to dismiss the case pursuant to section 109(g)(2), The Bankruptcy Court denied the motion, agreeing with the chapter 7 trustee and the United States Trustee that the debtor should be investigated and the chapter 7 trustee provided the opportunity to avoid the preferential attachment lien and administer the assets for all creditors. The creditor did not appeal and the trustee then commenced a preference action to avoid the attachment lien. The creditor asserted as a defense that the trustee should be estopped because the trustee opposed the motion to dismiss. The creditor also asserted that the attachment lien related back to before the 90-day preference period to either the lis pendens filed in the fraudulent transfer suit or the right to attach order. The Bankruptcy Court ruled in favor of the trustee and the creditor then appealed both the order denying dismissal and the preference judgment. Canvassing the case law regarding finality of bankruptcy orders, the BAP concluded that an order denying a motion to dismiss pursuant to section 109(g)(2) is a final order and, therefore, the appeal was untimely. Regarding the preference order, the BAP held that there are no equitable defenses beyond the statutory defenses and, even if possible, the creditor's equitable defense was an improper collateral attack on the dismissal order. The BAP then rejected the creditor's arguments that (1) the recordation of the writ of attachment related back to the recordation of the lis pendens in the fraudulent transfer suit, because no judgment was entered in the fraudulent transfer suit, and (2) that an attachment lien relates back to a right to attach order just like it relates back to a temporary protective order, because a right to attach order, unlike a temporary protective order, does not create a lien.
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