523 B.R. 680
9th Cir. BAP2015Background
- Trustee seeks to avoid certain fraudulent transfers from Debtor to Bank of America entities and Countrywide under 11 U.S.C. §544(b) and Cal. Civ. Code §§3439.04(a), 3439.07-12.
- Debtor operated as a Ponzi scheme from 2003 to petition; transfers at issue span 2003–2010 for Bank of America and 2003–2009 for Countrywide.
- Trustee filed complaints on Nov. 30 and Dec. 2, 2012, within the 2-year window of §546(a)(1)(A).
- Bankruptcy court held Cal. Civ. Code §3439.09(c) (seven-year repose) is a statute of repose not tolled by bankruptcy, thus limiting reach-back to transfers within seven years of the petition date rather than the complaint date.
- Bank of America and Countrywide moved to dismiss under Rule 12(b)(6), arguing the four-year limitations in §3439.09(a)/(b) and tolling to 2011 apply; Trustee argued §544(b) and §546(a) tolling preempts the state repose.
- Appellate panel reverses, holding §546(a) preempts the California statute of repose, allowing reach-back to seven years prior to petition date if timely filed under §546(a).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §546(a) preempts Cal. Civ.Code §3439.09(c). | Trustee contends §546(a) tolls state repose and extends reach-back to seven years before petition. | Appellees contend §3439.09(c) is a true statute of repose not tolled by §546(a). | §546(a) preempts §3439.09(c); reach-back to seven years before petition is permissible if timely under §546(a). |
| Interplay of §544(b), §546(a) and §3439.09(a)/(b) timing. | Trustee argues tolling extends filing window during pendency. | Defendants argue state four-year clock governs, tolled only by petition date per §546(a) analysis. | Timing governed by §546(a); reach-back measured from petition/order date, not complaint, where §3439.09(a)/(b) applicable; but §546(a) supersedes repose under circumstances described. (Rule applied to allow timely claims within two-year §546(a) window.) |
| Is §3439.09(c) tolled or non-tolling when bankruptcy petition filed? | Trustee asserts tolling or preemption by §546(a). | Appellees argue repose not tolled and measure from complaint date. | Court treats §3439.09(c) as preempted by federal §546(a); not tollable; reach-back bound by petition date with §546(a) window. |
Key Cases Cited
- Acequia, Inc. v. Clinton, 34 F.3d 800 (9th Cir. 1994) (tolling of state fraudulent-transfer statute when bankruptcy petition filed (preemption context))
- Donell v. Kowell, 533 F.3d 762 (9th Cir. 2008) (reaffirms §546(a) breathing room for trustee to file avoidance actions)