TALON DIVERSIFIED HOLDINGS INC., ET AL. V FORSYTHE
- Summarized by Michael Myers , Ballard Spahr LLP
- 1 week 1 hour ago
- Case Type:
- Business
- Case Status:
- Affirmed
- Citation:
- 24-6638 (9th Circuit, Mar 03,2026) Published
- Tag(s):
-
- Ruling:
- Joining the Second and Third Circuits, the Ninth Circuit held that if an individual files a voluntary chapter 11 bankruptcy petition purportedly on behalf of an entity but lacks the requisite authority to do so, the bankruptcy court is not deprived of subject-matter jurisdiction over the bankruptcy case.
- Procedural context:
- The bankruptcy was dismissed by stipulation that included a waiver of claims against two law firms. The plaintiffs subsequently named the law firms among defendants in a state court lawsuit, and the law firms reopened the bankruptcy and removed the state court lawsuit to the bankruptcy court where the court granted motions to dismiss and motions to strike. The bankruptcy court and district court held that the bankruptcy court held subject matter to do so, and the plaintiffs appealed.
- Facts:
- The debtor entity bankruptcy was filed by David Klein, the son of the Parkses who had been in a dispute with his parents. The Parkses moved to dismiss the bankruptcy filing based on their allegation that they owned 97% of the entity and that Klein did not have authority to file bankruptcy for the entity. The Parkses and Klein stipulated to dismiss the bankruptcy with the Parkses waiving claims against the law firm representing debtor retained by the son. The Parkses subsequently filed a lawsuit in California state court against the law firms and Klein. The Parkses' attorney argued that the bankruptcy court never had subject matter jurisdiction because Klein lacked the authority to file the bankruptcy petition.
- Judge(s):
- John B. Owens, Lawrence VanDyke, and Holly A. Thomas
ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!
