Now Updating
In re- 450 S. WESTERN AVE., LLC,

Summarizing by Bradley Pearce

Mastro v. Rigby

Mastro v. Rigby, Case No. 13-35209 (9th Cir. Aug. 22, 2014)
REVERSED and REMANDED district court's dismissal of appeal under fugitive disentitlement doctrine with instructions to consider merits of appeal from bankruptcy court's judgment of fraudulent transfer.
Procedural context:
Appeal from a B.A.P. panel (a) finding jurisdiction was proper under 28 U.S.C. § 157(b) and (b) reversing district court decision to dismiss appeal of fraudulent transfer judgment from bankruptcy court, based on fugitive disentitlement doctrine.
Trustee for the bankruptcy estate of the husband brought an adversary proceeding in the bankruptcy court alleging that the wife fraudulently transferred estate assets in violation of 11 U.S.C. §§ 544 and 548 and the related state law claim (under Washington state law). After trial the bankruptcy court held the nonclaimant wife liable for the fraudulent transfers and ordered turnover of specified items of personal property. The wife subsequently fled to France. On appeal, the district court refused to entertain the merits of the wife’s appeal and dismissed the appeal under the fugitive disentitlement doctrine. On appeal of the district court's dismissal, the B.A.P. panel held that the bankruptcy court had the jurisdiction to enter a final judgment on the fraudulent transfers based on the parties’ consent, concluding that after Exec. Benefits Ins. Agency v. Arkison, 134 S. Ct. 2165 (2014), the Ninth Circuit’s holding in Exec. Benefits Ins. Agency v. Arkison (In re Bellingham Ins. Agency, Inc.), 702 F.3d 553, 557 (9th Cir. 2012)—i.e., that parties’ consent gives bankruptcy court jurisdiction over Stern claims—remained good law. The B.A.P. panel nonetheless held that the district court abused its discretion in dismissing the appeal under the fugitive disentitlement doctrine because no necessity justified invoking the rule of disentitlement. On further appeal, the Ninth Circuit held with respect to jurisdiction, that (1) the underlying claims were Stern claims, (2) the proper course to issue findings of fact and conclusions of law was not followed, (3) nevertheless, under Bellingham (which remains good law under Arkison), the bankruptcy court did not exceed its jurisdiction because jurisdiction to enter a final order was proper under 28 U.S.C. § 157(c)(2). Further the Ninth Circuit held that the district court abused its discretion when it invoked the fugitive disentitlement doctrine to dismiss the wife’s appeal.
Arthur L. Alarcon, A. Wallace Tashmina, and Mary H. Murguia. Opinion by Judge Tashmina.

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