In re: JAMES W. KEENAN,
- Summarized by Michael Myers , Ballard Spahr LLP
- 2 years 11 months ago
- Case Type:
- Business
- Case Status:
- Affirmed
- Citation:
- BAP No. SC-21-1021-LSF (9th Circuit, Feb 08,2022) Not Published
- Tag(s):
-
- Ruling:
- The Ninth Circuit Bankruptcy Appellate Panel affirmed the bankruptcy court's denial of the debtor's motion to enforce the discharge injunction based on the holding that the interest at issue was a property issue rather than a claim.
- Procedural context:
- Individual debtor filed a chapter 11 bankruptcy in 1996. A few months later, a trustee was appointed. The bankruptcy court confirmed a plan proposed by the trustee and creditor's committee in 1998. The bankruptcy was closed in August 2010 and a final decree was entered in March 2011. After the case was closed, a business partner of the debtor sued the debtor and debtor's wife in state court asserting claims for: (1) imposition of constructive trust; (2) reformation of deed; (3) quiet title; (4) anticipatory breach of contract; (5) injunctive relief; and (6) partnership dissolution, accounting, and liquidation of assets. The state court dismissed the anticipatory breach of contract claim leaving only equitable claims. After a bench trial, the state court ruled in favor of the partner and entered a judgment for constructive trust on the real property owned by the partnership and a reformation of the deed. Debtor then filed a motion in the bankruptcy court to enforce the plan discharge based on the argument that the judgment was based on a pre-petition breach of contract claim that had been discharged. The bankruptcy court denied the motion, finding that the partner's equitable claims were not "claims" as defined under the Bankruptcy Code and were instead related to property interests that were not discharged.
- Facts:
- Pre-petition, Debtor owned real property with two partners. The partners did not have a formal partnership agreement. Initially, Debtor owned a 85.007% interest, partner Paul A. Rule owned a 6% interest, and partner Thomas L. Curtin owned an 8.993% interest. Curtin and Debtor later orally agreed to a modified ownership allocation, with Curtin’s ownership share being increased to 37.328% and Debtor's ownership share being reduced to 55%. During the bankruptcy, Debtor repeatedly described the Property as owned by the partnership in the adjusted percentage amounts, including under oath. After the confirmation of the plan, Debtor changed his position on the ownership interests in the partnership and claimed a 83.335% interest.
- Judge(s):
- LAFFERTY, SPRAKER, and FARIS
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