- Case Type:
- Case Status:
- Reversed and Remanded
- No. 14-60061 (9th Circuit, Apr 05,2017) Published
- 9th Circuit reversed BAP's reversal of N.D. Cal. bankruptcy court's ruling that a creditor's claim was timely. Notwithstanding California forum for bankruptcy, under bankruptcy common law, federal choice of law principles applied. While choice of law provision in promissory note did not expressly include statute of limitations, under exceptional circumstances test of forfeiture for creditor, who did not select forum and was compelled to assert claim in debtor's chosen forum, Ohio statute of limitations would apply to render creditor's claim timely.
- Procedural context:
- Debtor objected to creditor's proof of claim; bankruptcy court overruled objection. Debtors appealed to BAP; BAP reversed. Creditor appealed to 9th Circuit.
- In 2007, the Sterbases bought a condo in California. They took out two loans secured by liens against the property, of which National City Bank held the junior one. The Sterbas's promissory note to National City provided that the note would be governed by and construed in accordance with the laws of Ohio without regard to conflict of law principles. Less than a year after the loans were made, the Sterbas defaulted, the senior lender foreclosed, leaving National City with a deficiency claim of $42,000. The Sterbases filed for bankruptcy in the N.D. of California in 2013. National City's successor in interest, PNC Bank, filed a proof of claim based on the 2007 note. The Sterbases objected that the claim was barred by California's four year statute of limitations for enforcement of a note. PNC argued that Ohio's six year statute of limitations applied, and the claim was timely.
- Tashima, Smith, Korman
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