15 F.4th 1214
9th Cir.2021Background
- Debtors had a pending state lawsuit against their mortgage servicer when they filed voluntary Chapter 7 bankruptcy.
- On Schedule A/B (Schedule of Assets), Debtors did not list the pending lawsuit; they listed the mortgage creditor and disclosed the lawsuit only on the Statement of Financial Affairs (SOFA).
- The Trustee reviewed the litigation papers, certified the estate as "fully administered," and the bankruptcy case was closed without the lawsuit being listed on a schedule or otherwise administered for estate benefit.
- Years later the creditor contacted the Trustee to reopen the case; the Trustee was reappointed, took control of the state suit, and settled it for the benefit of the bankruptcy estate.
- The BAP affirmed that § 554(c) abandonment applies only to property listed on a literal schedule; the Ninth Circuit reviewed that statutory interpretation de novo and affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 554(c) permits abandonment where property is disclosed only on non-schedule filings (e.g., SOFA) | Stevens: any required § 521(a)(1) filing suffices; disclosure on SOFA should qualify as "scheduled" | Trustee/estate: "scheduled" means listed on the literal schedules required by § 521(a)(1)(B)(i)–(ii); SOFA-only disclosure is insufficient | Held: "Scheduled" requires inclusion on a statutory schedule; SOFA-only disclosure does not trigger abandonment under § 554(c) absent trustee or court action |
Key Cases Cited
- BedRoc Ltd., LLC v. United States, 541 U.S. 176 (2004) (start statutory interpretation with the text)
- City of Chicago v. Fulton, 141 S. Ct. 585 (2021) (read statutory words in context)
- Perrin v. United States, 444 U.S. 37 (1979) (use ordinary meaning at time of enactment)
- Nat'l Credit Union Admin. v. First Nat'l Bank & Tr. Co., 522 U.S. 479 (1998) (similar language in same Act should have consistent meanings)
- United States v. Morton, 467 U.S. 822 (1984) (read cross-referenced provisions together)
- Atl. Cleaners & Dyers, Inc. v. United States, 286 U.S. 427 (1932) (identical words presumed to have the same meaning)
- Microsoft Corp. v. i4i Ltd. P'ship, 564 U.S. 91 (2011) (avoid surplusage in statutory construction)
- Catalano v. C.I.R., 279 F.3d 682 (9th Cir. 2002) (abandonment is a formal relinquishment)
- Vreugdenhill v. Navistar Int'l Transp. Corp., 950 F.2d 524 (8th Cir. 1991) (trustee's knowledge alone does not effect abandonment)
- Jeffrey v. Desmond, 70 F.3d 183 (1st Cir. 1995) (debtor must formally schedule an asset for abandonment to occur)