Field v. Trust Estate of Rose Kepoikai (In Re Maui Industrial Loan & Finance Co.)
454 B.R. 133
Bankr. D. Haw.2011Background
- Trustee Field seeks to avoid transfers by the debtor under 11 U.S.C. §548 and Hawaii's UFTA, against Kepoikai Trust, Starr, Kost, and DeCoite, in adversary proceedings before the U.S. Bankruptcy Court for the District of Hawai'i.
- Cases span Kepoikai (10-90126), Starr (10-90130), Kost (10-90131), and DeCoite (10-90137); bankruptcy number is 10-00235.
- The matter began with motions to dismiss and counter-motions for summary judgment focused on timeliness of the avoidance claims; a supplemental briefing on one issue followed an April 1, 2011 hearing.
- The court indicated it would address only timeliness in this decision and reserved consideration of the Slatkin plea agreement issue for a separate hearing.
- The court dismissed Count 1 under §548 for transfers more than two years before petition; counts 2–4 were denied as to timeliness given disputed discovery-related timing under §651C.
- The court also denied motions as to Count 5 on timeliness, and held that the in pari delicto and Rooker-Feldman arguments do not defeat standing or applicability of §544/§548 claims, reserving a separate ruling on the plea agreement's preclusive effect.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of §548 avoidance claims | Field contends timely as to transfers within two years; seeks to avoid older transfers. | Defendants argue transfers older than two years are time-barred or not within the look-back. | Counts for transfers older than two years are dismissed. |
| Discovery-based tolling under §651C | Discovery rule tolls one-year period; trustee argues discovery of fraudulent nature extends timeliness. | Defendants argue the one-year period is fixed, and discovery timing is not applicable or determinable here. | Genuine issues of material fact preclude dismissal on timeliness; Counts 2–4 denied as to timeliness. |
| Rooker-Feldman doctrine in bankruptcy context | Trustee seeks avoidance; doctrine does not preclude relief under bankruptcy statutes. | Kepoikai defendants rely on state-court judgments to bar relief. | Rooker-Feldman does not apply in this bankruptcy avoidance context. |
| In pari delicto standing | Trustee may bring §544/§548 actions for the benefit of creditors despite third-party injuries. | In pari delicto defense applies to some claims, potentially barring the trustee. | In pari delicto defense inapplicable to trustee under §544/§548. |
| Section 548 two-year look-back as substantive element | Two-year period is a tollable, flexible timeframe under equity principles. | Two-year look-back is a fixed substantive element. | Two-year period is a substantive element; oldest transfers dismissed; remaining claims evaluated on other timeliness grounds. |
Key Cases Cited
- Exxon Mobil Corp. v. Saudi Basic Indus., 544 U.S. 280 (2005) (Rooker-Feldman confines to state-court losers; bankruptcy can avoid state judgments)
- Lance v. Dennis, 546 U.S. 459 (2006) (limits of Rooker-Feldman doctrine in bankruptcy context)
- In re Sasson, 424 F.3d 864 (9th Cir. 2005) (bankruptcy avoidance actions and limitations doctrines)
- In re Slatkin, 525 F.3d 805 (9th Cir. 2008) (plea agreement and related issues; briefing boundaries)
- In re Gruntz, 202 F.3d 1074 (9th Cir. 2000) (en banc; bankruptcy jurisdiction and avoidance actions)
- In re G-I Holdings, Inc., 313 B.R. 612 (Bankr. D.N.J. 2004) (discovery of fraudulent transfer timing under §544/§548)