Hiefield, III v. Westlund
24-03050
Bankr. D. Or.May 20, 2025Background
- In 2009, Morris Westlund obtained a $225,000 judgment against Preston Hiefield, secured by a lien on Hiefield’s residence in Washington County, Oregon, later accruing high interest.
- Hiefield filed for chapter 7 bankruptcy in 2011 and moved to avoid Westlund’s lien, resulting in a court order limiting the lien’s attachment to $6,000.
- After the bankruptcy case, Hiefield transferred his property interest to his spouse, Gillian Stratton, who then transferred it to herself as trustee of her trust.
- In 2023, Hiefield filed for chapter 13 bankruptcy, while separately, he, and later Stratton, sought a declaration limiting Westlund’s lien to $6,000 with no interest accrual.
- Westlund moved to dismiss the complaint, raising multiple jurisdictional and preclusion arguments; Stratton was allowed to intervene as plaintiff.
- The court considered whether it had jurisdiction, whether Stratton had standing, whether abstention or claim preclusion applied, and if it should exercise discretion to decline declaratory relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of Stratton | Owner/trustee of property; harmed by lien | Stratton lacks standing, especially individually | Stratton (as trustee) has standing |
| Subject-matter jurisdiction | Court has ancillary jurisdiction to prior order | Court lacks bankruptcy or ancillary jurisdiction | Court has ancillary jurisdiction |
| Abstention/discretionary declination | Federal law/federal order at issue | Factors, forum shopping, outside property, etc. | No abstention/declination warranted |
| Claim preclusion/res judicata | New interpretation, not relitigation | Issues already adjudicated; precluded | Claim is not barred by preclusion |
Key Cases Cited
- Spokeo, Inc. v. Robins, 578 U.S. 330 (Article III standing requirements)
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (defining ancillary jurisdiction limits)
- Travelers Indem. Co. v. Bailey, 557 U.S. 137 (bankruptcy court can interpret/enforce its own orders)
- Stern v. Marshall, 564 U.S. 462 (limits bankruptcy court's constitutional authority to enter final judgment)
- Exec. Benefits Ins. Agency v. Arkison, 573 U.S. 25 (bankruptcy court's procedure for non-core matters)
- Christensen v. Tucson Estates, Inc., 912 F.2d 1162 (factors for permissive abstention in bankruptcy)
- Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (discretion to accept/decline declaratory judgment jurisdiction)