*1
MBI,
by
agent,
on
being
decision in connection with
carried
its
would
for this court’s
523(a)(2)(A).
523(a)(6)
designed
policy
legal
be
to enhance
have relevance to
§
§
Fidelity
Had
retention.
United
known of
a
case
under
To
establish
circumstances,
pur-
it would not have
523(a)(2)(A)
following
five elements
MBI
block of Beneficial Stan-
chased
must exist:
dard
and would
ad-
business
have avoided
(1)
representation;
that the debtor made
vancing MBI
commissions on
first
(2) that at the
known to
time made were
year
premium.
court is satisfied
false;
be
requisite
each of
elements
(3) that
representations
were made
523(a)(2)(A)
met,
have been
but as recov-
purpose
with
intention and
of deceiv- ery
be
re-
would
limited to commissions
creditor;
ing
MBI,
judg-
by
grant
ceived
the court will
(4)
misrep-
creditor relied on
523(a)(6),
only upon
remedy
ment
resentations;
closely
Fidelity’s
meeting
more
United
damages.
(5)
prayer for
the creditor
the al-
sustained
leged injury
proximate
as
result of the
a
Conclusion
made.
representations having been
discussed,
For the reasons
IT IS OR-
(8th Cir.1987).
Ophaug, 827
In re
F.2d 340
plaintiff
Fidelity
DERED that the
United
uniformly agree
Courts
that the existence
Company
judgment
Life Insurance
have
or false
be inferred
fraud
intentions can
defendant
Vernon D. Haaken-
totality
from
of the circumstances. In
$1,050,339.00
sum
son in the
in conse-
(Bankr.S.D.Ohio
McCoy, 114 B.R.
re
quence of losses sustained due
rebat-
to the
1990);
Dunston,
(Bankr.
B.R.
ing program and
shall
that such sum
Colo.1990).
Schmidt,
In the case
of In
nondischargeable
523(a)(6)
(Bankr.N.D.Ind.1986),
stein, (Bankr.E.D.N.Y.
1983)noted that silence or the concealment of a material fact can be the basis for a impression.
false court said Dunston pretenses the false often involve series of PACE, In re Jeri L. Debtor. events, multiple representations acts or un purposely E. misleading dertaken create a John HAVELOCK John Strachan, Appellants, understanding of the R. transaction which induces the depart creditor to with some v. Dunston, thing supra value. at 641. TAXEL, Trustee, Appellee. S. Harold bar, special the case at Haakenson’s BAP No. SC-92-1761-ROJe. marketing program and in was hatched full Bankruptcy No. 88-04238-B7. previously bloom October 1988. As dis Adv. No. 91-90142-B7. detail, cussed in illegal he was aware of its and the implications nature it held for a Panel, Bankruptcy Appellate United States company yet policy years, successive he of the Ninth Circuit. did not Fidelity pro advise United Argued and Submitted June gram or of the virtually fact that all Bene Decided Oct. policies ficial being Standard assumed Moreover, program. were born of the he leaving
continued on with program Fidelity United everything to assume *3 Yerbich, AK, Anchorage,
Thomas J. E. John Havelock and John R. Strachan. Norton, Diego, CA, Richard C. San Taxel, Harold S. Trustee. RUSSELL, OLLASON, Before:
1, Bankruptcy Judges. JELLEN
OPINION RUSSELL, Bankruptcy Judge: The bankruptcy court awarded the trust- attorneys’ ee fees and costs attorneys2 pursuant debtor’s to 11 U.S.C. 362(h)3 for violations Jellen, 1. The Bankruptcy Honorable Edward appellants appeal both the in this and are re- California, Judge, sitting by Northern District collectively "Appellants”. ferred to designation. indicated, chapter, 3.Unless otherwise all sec- Attorney ("Strachan") John R. Strachan tion and Rule references are to the attorney (“Havelock”) Code, John E. Havelock seq. 11 U.S.C. 101 et and to the Federal 26, 1988, exercising May The violations involved On LeMai petition filed her dominion and control over Chapter 7 in the Southern District of estate, including debtor’s a state court mal- California. LeMai did not list her claim for practice lawsuit and the legal malpractice and her interest in the attorneys settlement of the lawsuit. The pending Alaska lawsuit on her Statement appeal. We AFFIRM. Of Financial Affairs and Schedules Of As- And bankrupt- sets Liabilities filed with the I. FACTS cy part petition court as of her for bank- The essential facts of the case are undis- ruptcy. Consequently, the trustee believed puted debtor, or uncontested. The Jeri L. LeMai’s estate had no assets. Pace, (“Le- presently known as Jeri LeMai 23, 1988, September On the order of dis- Mai”), husband, and her former H. Russell charge was entered LeMai’s *4 (“Pace”), Pace were the sole owners of two and the case was ordered closed on Febru- corporations Alaska known as The Pines 21, ary Corporation (herein- Corporation and Pace 26, 1989, July On shortly after her collectively
after dis- corpo- referred to as “the rations”). charge, LeMai entered an agreement into any proceeds with Pace to share received 1985, January corporations In sold pending from the Alaska lawsuit on a assets, including their the Alcohol Bever- 31, 1989, July 50/50 basis. On LeMai hired (hereinafter age Dispensary Licenses col- Appellant, attorney (“Ha- John E. Havelock lectively liquor referred to as “the licens- velock”), prosecute the Alaska lawsuit. es”), Corporation. to The New Pines Le- 1989, In Appel- the summer of Pace hired Mai and Pace legal retained counsel to as- lant, attorney (“Stra- John R. Strachan sist them the sale transaction to The chan”), prosecute the lawsuit and in- Corporation. New Pines formed bankruptcy. Strachan of his De- 1986, September In Pace Chapter filed a having spite attorneys, hired their active petition in the District of Alaska. In prosecution of the Alaska lawsuit did not 1986, December bankruptcy Pace case re-commence at this time. Pace had not Chapter was converted to 7 and Kenneth discharged bankruptcy been and his case Battley appointed trustee. yet appears had not closed. It 1987, July In LeMai and Pace discovered decision was made to wait until Pace was attorneys that their may have committed discharged re-commencing prosecu- before malpractice by failing to file a financing tion of the Alaska lawsuit and was based perfect statement to security their interest upon the mistaken belief that the lawsuit liquor 1987, In licenses. October would be deemed abandoned after the dis- LeMai and Pace complaint filed a in Alaska charge.4 “sug- Strachan admitted that he Superior Court their former attor- gested (Pace) point that there little neys malpractice for failing perfect proceeding only with a case if the benefi- security their interest in liquor licenses ciaries of the involved were to work (hereinafter lawsuit”). the “Alaska creditors.” 1987, In November the First Amended Complaint lawsuit, was filed in September the Alaska bankruptcy Pace’s removing plaintiff LeMai as a bankruptcy from law- case in the Alaska court was suit. discharged.5 closed and Pace was In No- Procedure, Bankruptcy Rules of appropriately fully Rules 1001 et schedules when he was seq. Pace, malpractice aware of the action. In re (Bankr.D.Alaska 1991), aff’d, B.R. 4. The Alaska lawsuit was not listed Pace in 1992). B.R. 562 Cir. BAP That case was Pace, bankruptcy his case. See In re 132 B.R. subsequently reopened purposes closed and (Bankr.D.Alaska 1991), aff’d, administering proper- the lawsuit 1992). Cir. BAP ty of the estate. bankruptcy 5. The bankruptcy court in Pace’s case determined that Pace failed to amend his 7, 1991, rejoined ary bankruptcy reopened
vember LeMai Alaska by filing bankruptcy reappointed Amended lawsuit Second Com- this case and plaint again named Pace and which once trustee as trustee of the LeMai plaintiffs. LeMai as estate. Ap- April On LeMai disclosed to 8, 1991, February the trustee in- On pellants Chapter had filed a 7 case that she Havelock, Appellants, formed Strachan and copy provided of her statements and had re- this estate been bankruptcy peti- schedules filed with her opened and that LeMai’s interests deposition in the Alaska lawsuit. tion at her legal malpractice claim and the Alaska law- they admit that were aware of suit were es- time, LeMai’s at this but that requested Appel- tate. The trustee
they ignored it this believed prosecution lants cease of the Alaska law- legally significant. fact was not As Stra- suit and informed them that further stated, deposition, chan “at the LeMai we prosecution of the Alaska lawsuit constitut- bankruptcy” first of her “I did learned but ed a violation further; pursue there was no need.” time, At Code. Stra- thereafter, clearly chan and Havelock were on notice Shortly the defendants in the that their actions were violative of the Alaska lawsuit discovered that both LeMai *5 In bankruptcy petitions and filed his letter addressed to both Pace had Havelock Strachan, Norton, and that LeMai and Pace did not and Richard both dis- C. of Estes P.C., (who respective Hoyt represented trustee, close the Alaska lawsuit to their & bankruptcy Taxel), trustees or to the court. The explained Harold S. that LeMai had urged in defendants the Alaska lawsuit removed herself from the Alaska state Appellants action; to contact the trustees of the malpractice that she moved to bankruptcy and inform estates them that Diego, bankruptcy, San filed and obtained property respective the lawsuit was of the discharge; that she back to Alas- moved Despite warning, estates. plaintiff; ka in and amended back as a and Appellants did not contact the trustees. appeared that it intentionally that she left Consequently, July in the defendants cause action off her schedules. In in the Alaska lawsuit filed a motion with addition, (1) explained: the letter Superior the Alaska Court to substitute the comprised legal estate is of all parties trustees as the real in interest debtor, equitable and citing interests of the the Alaska lawsuit. 541; (2) being that the lawsuit asserted by Appellants clearly in prop- included Appellants opposed this motion and estate; erty (3) any that act to Superior somehow convinced the Alaska exercise control over this lawsuit is in viola- Court that the trustees had abandoned stay citing tion of their interests in the Alaska lawsuit and 362(a)(3); (4) prose- that further parties were not the real interest. Con- cution of the Alaska lawsuit would be a sequently, Superior the Alaska Court de- subject violation of the and could them nied the motion to substitute the trustees Nonetheless, liability damages. Ap- to for parties as the real in interest in the Alaska pellants denied that LeMai’s interest in the Appellants lawsuit. continued to conceal pending Alaska lawsuit was the pending Alaska lawsuit from the trust- the bankruptcy estate and continued to ees and the courts. prosecute the lawsuit. In December the defendants in the Alaska lawsuit Diego February 13, 1991, informed the San Of- On a settlement con- fice of the United States Judge Trustee of the ference was Ripley held before existence of the pending Alaska lawsuit. Superior parties the Alaska Court and the (“trustee”) Harold S. Taxel was informed to the Alaska lawsuit reached a tentative for the first time about agreement $300,- the Alaska lawsuit to settle the lawsuit for by the United by States Trustee’s office liability 000.00. order to terminate their letter, January estates, dated 1991. On Febru- to the defendants in agree spect proceeds. adversary lawsuit would not set- to the It is this Alaska proceeding tle the LeMai and Pace with- culminated the order lawsuit with appealed herein. approval out the settlement the trustees’ agreement. Consequently, Judge Ripley 7, 1991, On March the escrow account held a conference his chambers with all opened proceeds and settlement were parties and their at- Alaska lawsuit deposited. 8, 1991, just day On March one present. attorneys torneys The for the proceeds after the settlement were deposit- participated in LeMai and Pace trustees account, Appellants ed into the escrow filed telephone purposes this conference a motion Superior with the Alaska Court to approving the terms of the settlement proceeds have all settlement released and agreement. Appellants disbursed March estate, approve trustee the Pace Kenneth
The trustees not the set- would Battley, was never served agreement with motion tlement unless the settlement action; and did initiate further proceeds deposited were into an escrow trustee for the LeMai estate received this account which would not be disbursed until 14, 1991, motion in San Diego on March to the LeMai Pace trustees’ claims day just one agreed proposed before disburse- proceeds were It was resolved. ment. (30) thirty the trustees would have days assert their claims the settle- immediately LeMai trustee6 de- proceeds ment would Appellants manded that withdraw their re- not be disbursed until the LeMai and Pace quest for disbursement of the settlement claims trustees’ were resolved. The terms proceeds and Appellants informed settlement, agreed upon by par- request their was a violation of the auto- ties to the Alaska lawsuit at settlement agreement. matic and the settlement conference, were on record announced motion, *6 the refused to withdraw and approved by the trustees for the LeMai describing “phony,” the trustee’s claims as and bankruptcy Pace estates. The relevant and threatened that the trustee’s counsel agreement terms of the settlement were as increasing “exposure” by asserting was his follows: proceeds. the trustee’s claims to the 1. The amount of the settlement Appellants’ motion for disbursement of $300,000; proceeds opposed the settlement $300,000 2. deposited The would be into trustees, of the both as well one defen- bearing an interest escrow account lawsuit, as con- being dants in the Alaska subject to the control of the Clerk trary agree- to the terms the settlement Superior Court; the Alaska 28, ment. March On the (on 3. days The would trustees have injunction en- preliminary court issued a 15, 1991) or before March to assert Appellants receiving or joining the from claim to proceeds; and disbursing proceeds deposit- the settlement proceeds
4. deposited pen- The during into the es- into ed the escrow account crow account be dency adversary proceeding. would not disbursed of the Conse- pro- until the to quently, Superior trustees’ claims Court did not the Alaska ceeds were resolved. grant Appellants’ requesting motion dis- proceeds. bursement the settlement agree- In accordance the settlement with ment, on March LeMai Appellants trustee The a motion to dismiss filed adversary proceeding initiating filed the instant with in- complaint the trustee’s asserting adversary proceeding estate’s stant and close claims proceeds. bankrupt- settlement This debtor’s estate. The adversary proceeding requested cy damages this motion be- court never reviewed for violations of the automatic stay, hearing and cause it in that no was defective declaratory injunctive requested relief with re- was or scheduled. point only litigation. From this forward LeMai trust- ee was involved in the Appellants priate proceedings stat- that the this case
In that to dismiss motion following: ed the referred to the California Bar Associa- be appropriate tion to take action. question of whether a There is a serious auto- reopened carries with an [ease] Further, support in his affidavit in of this matic a claim the debtor. motion, my job Strachan stated: “It was ongoing litiga- question There no fallacy argument point out the on behalf of the debtor is not affect- tion misrepresentation the trustee’s stat-. Anchorage byed an automatic personal ute to the court and have knowl- much trou- Superior did not have Court edge that no was entered.” of that claim.... ble with the merits 14, 1991, On March the trustee’s counsel motion, Ironically, in that same Strachan, Appellant, regarding Ap- called accused the LeMai trustee’s counsel pellants’ request for release settle- making misrepresentations to the court and proceeds. During telephone ment con- following made the threats: versation, Strachan threatened that if the attorney an misre- In some states where prosecute trustee’s counsel continued to untrue for presents facts known be estate’s claim to the settle- instigating litigation or purpose ment and seek for viola- grounds for extort a settlement is disbar- stay, tion of the automatic then counsel only we ment. this case reason exposing personal would lia- himself plaintiff’s taking counsel can discern for letter, bility. In his dated March attempt such actions is an to extort a confirming his conversation with the coun- settlement, perhaps to the extent of at- sel, repeated Strachan his threats.7 deprive tempting to defendants Havelock letter, 15, 1991, In another dated March of the earned fee and ex- Strachan Appellants conveyed penses litigation. in the Pace further threats and incurred appro- undersigned believes that it is insults to the trustee’s counsel8. letter, suggest you reading my In this Strachan stated: take a close remedy Motion to Dismiss and the we are Dear Mr. Norton: seeking Be court. assured from California your telephone This letter will confirm con- absolutely I am serious in what I intend to do today. versation to me absent some immediate remedial actions on you In that me conversation told your part. employment LeMai contract of was in viola- Sincerely, *7 stay, tion the automatic re- of and that (signed) be a lease of funds would further violation of John R. Strachan stay. the automatic You further threatened added). (emphasis personally complaint me with an amended punitive damages and for for viola- In that letter Strachan stated: stay. tion of automatic The reason for [the] Dear Mr. Norton: your receipt the call was our motion for By you this time should have received our you, release of funds which for some un- together Motion to dismiss with the Affidavits reason, thought inappropriate. known copies support and of the documents that it. you my opinion I informed that in arewe possibili- It has occurred to me that there is a ty repaid expenses entitled our and we are you duped taking posi- that were into paid Anything entitled to be for our work. you attorneys tion have for Insur- you may be entitled to would follow from Company, Silvey. ance Mr. Thomas and Mr. might whatever Jeri LeMai be entitled to. I exists, possibility suppose, The I that did your personally consider claim her provide you with all of documentation impressed by frivolous and am the fact that ought you to have been made available to you $120.00 did not think it was worth invest- you so would be aware of the weakness of the filing ment a fee. legal position suggests possi- taken. That suggest you your expo- I increase bility temptation before of a free lunch out- you you sure that remember have raised the weighed prudent the natural caution of a at- phony stay issue an automatic torney. before Anchorage Superior Judge case, and re- Court Hunt Assuming longer that was the it is no jected you problem it. If had a with that you key the case have most of now you steps (Mr. decision should have taken some documents. and Ms. LeMai Havelock you may surprises you.) but is an issue have lost and I believe have some additional appeal expired. point being now the time to it has The that there is no further excuse Appellants attorneys’ did not cease in their 3. Whether the award of fees proceeds efforts to the settlement and is appropriate. seize costs from the bankruptcy the trustees before 4. Whether the trustee is an “individu- ownership court could determine damages, attorneys’ al” entitled to recover proceeds. Appellants attempted settlement fees and costs for willful a violation of the yet gain another method to control of stay. 6, proceeds. 1991, Appel- On December Recovery lants filed a Motion to Allocate Superior
with requesting the Alaska Court III.STANDARD OF REVIEW (1) that court to: allocate settlement findings We review of fact under the proceeds post-petition pre-peti- and between clearly erroneous standard while conclu (2) damages; tion reopened order the case sions of law are reviewed de novo. In re determining for purposes allocation Bloom, (9th Cir.1989); F.2d jury; (3) agree- dissolve the settlement Probasco, (9th 839 F.2d 1353-54 ment. opposed Appellants’ The trustees 1988); Inc., Cir. Technology, Wheeler Superior motion which the Alaska Court 1992). Cir. BAP denied. A bankruptcy court’s award at On June court 362(h) torneys’ fees under will not be granted summary judgment favor of the disturbed absent an abuse of discretion or complaint LeMai trustee on his for attor- application an erroneous of the law. In re neys’ fees, declaratory costs and for Bradford, B.R. Cir. BAP injunctive relief. The order held that the 1990). “Under the abuse of discretion malpractice of a state' court action standard, reviewing court cannot reverse property estate, were indeed unless it has a definite and firm conviction did violate the automatic the court below a clear committed stay by their actions in prosecuting judgment error the conclusion it actions attempting to exercise control upon weighing reached of the relevant proceeds. over the awarded Id. factors.” damages in the form of costs and attor- neys’ fees these violations of the auto-
matic against the Appel- debtor and IV.DISCUSSION lants. We AFFIRM. attempt The debtor LeMai’s to conceal
the lawsuit from her estate is gross clearly a abuse II.ISSUES system, but this is not what is at issue in malpractice Whether the Alaska appeal. What is at issue whether cause of action of the debt- attorneys’ conduct violated the auto- protected by or’s estate pale matic LeMai’s actions com- after the *8 close the case. parison to the abusive conduct of the attor- 2. the Appellants Whether acts the neys, committed Strachan and Havelock. attorneys including whole, debtor’s prosecution of apparent From the facts as a it is claims, underlying the attempting attempt to take that what this case is about is an proceeds, control of the and other the acts to hide existence the from lawsuit obtain, stay. were violative of the the trustee bankruptcy and the court in your persisting pursuing my prior in what I believe ceived office to the close of busi- entirely 20, 1991,
to be an Anchorage frivolous action as I on have ness March time. Af- previously my you outlined Motion to time have Dismiss. ter that I will to assume that mislead, assumption you On ignorance. the were I did not act in prepared drop am receipt suggest you to let the matter on time I the next offers someone your of notice you of dismissal of claim a free lunch to see ask the menu. Sincerely, withdrawal funds claim to and such necessary other (signed) documents as is to conclude provided the matter those documents re- are John R. Strachan attorneys, against her former nor did she proceeds for LeMai and keep order to pending her interest in the Alaska attorneys. disclose their Pace and Of Financial Af- lawsuit on her Statement Their conduct involved: Assets And Liabili- fairs and Schedule Of concealing Knowingly the assets 1. part bankruptcy filed with the court as ties estate; bankruptcy petition. of her Consequently, malpractice claim Prosecuting the 2. believed the estate had no as- the trustee trustees; permission without closed. sets and caused case to be Preventing 3. the substitution into the state lawsuit LeMai trustee bankruptcy of a commencement legitimate is a when the trustee of, comprised among case creates an estate interest; things, legal equitable or inter other “all Misleading the state court as 4. property as of the ests of debtor law; bankruptcy 541(a)(1). commencement of the case.” § relinquish proceeds to Refusing 5. action, A such as LeMai’s state cause of trustee; the LeMai claim, malpractice squarely falls court in con- Attempting proceeds to take 6. property within 541 and is of the bank § agreement of the settlement travention ruptcy scope “The 541 is estate. of § stay; of the automatic in violation broad, and includes causes of action.” Si Westinghouse erra Co. v. juris- Switchboard Attempting to circumvent Corp., F.2d Electric Cir. diction of 1986). Further, all flow recovery; means of a motion to allocate property from of the estate fall within Harassing the trustee’s counsel with property 541 and are also of the estate: threats of sanctions and disbarment. rents, “[PJroceeds, product, offspring, profits” property are willfully Appellants’ A. actions violated 541(a)(6). estate. Appellants argue that their conduct after Appellants suggest that the unlisted law- bankruptcy case was closed did the LeMai is, been, by the suit or has abandoned stay not violate the automatic closing trustee and that the of the case stay upon terminated the close of the stay applica- no is indicates somehow case, 362(c)(2). pursuant to § agree. It property. ble to this We cannot They argue further that the automatic only assets not administered scheduled upon reopening of was not reinstated during the case that are considered aban- arguments case. Both That doned at the close of the case. sec- without merit. do not contest tion reads: that the violation was willful if it is found otherwise, (c) the court orders Unless was violated.9 any property scheduled under section 521(1)of this title not otherwise adminis- property 1. The debtor’s lawsuit was closing tered at the time of the of a case the estate and remained is abandoned to the debtor and adminis- closing the estate after purposes tered for of section 350 of this bankruptcy case. title. filing At the time of the of LeMai’s 554(c). However, petition bankruptcy, 554(c) LeMai held an in 11 U.S.C. does *9 pending apply in the Alaska and a in instant case terest lawsuit because legal malpractice against claim for her for Alaska not listed in LeMai’s lawsuit was However, attorneys. mer LeMai did not schedules. The facts of this case fall with- 554(d). legal malpractice her claim in disclose That section reads: that, Brief, 1, 1.) "Appellants dispute (Appellants’ p. do not if there was willful....” n. stay, [sic] violation of the automatic it was
899 (d) otherwise, Unless the court property orders remained of the estate because property of the estate that is not aban- they were not listed in doned ... and that is not in administered schedules and thus were by not abandoned property case remains of the estate. the estate. Id. 554(d). 11 U.S.C. Unscheduled assets Similarly, in In Benefield, 102 B.R. have not been “abandoned” or “adminis (Bankr.E.D.Ark.1989), 157 the debtor failed tered.” v. Corp., Stein United Artists 691 to disclose his interest in certain prop- real 885, (9th Cir.1982); F.2d Vreugdenhill erty. discharge After the trustee discover- v. Transp. Corp., Navistar Int’l 950 F.2d ed the debtor’s interest in the property real (8th Cir.1991); West, In re Auto reopened the case. The court conclud- Inc., (D.Utah 1984); 43 B.R. In re ed that the debtor’s property interest in the Harris, (Bankr.S.D.Fla. 32 B.R. property became of the estate when the 1983); Medley, In re 29 B.R. 86-87 petition despite was filed the fact that the (Bankr.M.D.Tenn.1983); Benefield, debtor’s interest was in undisclosed his (Bankr.E.D.Ark.1989) 102 B.R. schedules and the trustee was unaware of ¶ (citing 554.03, Bankruptcy, Collier on its existence until after the case was ¶ 554.11 1989)). to 554.12 ed. Further, closed. at Id. 158-59. the court argument that an malpractice unscheduled held that “the property in question was by cause of action is abandoned the trustee scheduled, therefore, never it remained previously rejected by the BAP in an property of the estate after the case was appeal other involving the debtor’s former closed.” Id. at 159. husband, Pace, Pace, H. Russell in In re 1992). BAP Cir. us, In the case before as in Stein and Artists, In Stein v. United supra, the Benefield, the estate’s interest the claim debtor failed to list in the bankruptcy case legal malpractice was neither adminis- against cause of action it held several tered nor abandoned at the time of the parties third for antitrust violations. After closing of the case because the property case was closed and the completely omitted from the debtor’s debtor received a discharge, the debtor’s Statement Of Financial Affairs and Sched- assignees complaint filed a asserting the ule Of Assets And Liabilities filed with the antitrust claims omitted from the schedules court. We therefore hold that the undis- proceeding. The Ninth legal malpractice, closed claim for and re- Circuit concluded that the trustee is vested sulting remained, proceeds, settlement with title to all of the property debtor’s at remain, continue property of the estate petition the time the is filed and the debtor after the discharged debtor was and may only assert title to assets that have Accordingly, case was closed. been by “abandoned” the trustee or “ad- prohibiting possession acts to obtain by ministered” the trustee with the intent legal malpractice resulting claims and the revest the debtor. Id. at 890. Fur- settlement have been effect ther, property unless is abandoned or inten- interruption without since the date of the revested, tionally title remains in the trust- petition and shall continue until proper- ee. Id. The court stated that when the ty is administered the trustee. asset, debtor “fails to list an he cannot claim abandonment because the trustee has 2. Appellants’ acts property had opportunity pursue no the claim.” the estate were stayed. Accordingly,
Id. at 891. parties asserting title to unlisted causes of action cannot Appellants fail to cite to this Panel enforce such claims cannot the correct sections of the demonstrate abandonment the trustee. 362(a)(3) Code. Under Therefore, Id. the court in conclud- Stein stay applies to: ed that the debtor did not have title to pursue the (3) causes of discharge action after possession act to obtain prop- in bankruptcy. Id. The causes of action erty of the estate or of from the
900 upon proper- bankruptcy estate does not terminate exercise control over
estate or to
estate;
closing
bankruptcy
the
of the
ease. Conse-
...
ty of the
stay
un-
quently, reinstatement of the
Further,
362(a)(3).
the dura-
11 U.S.C. §
necessary.
stay
Whether a
is or is not
stay
expressly
is
set
tion
the automatic
upon
re-opening
reinstated
the
of the case
362(c)
states as follows:
forth in
which
§
wholly
respect
to the
is
irrelevant with
(d),
(c)
Except
provided
subsections
Alaska lawsuit. Actions to control this
(e)
(f) of this section'—
362(c)(1).
property
stayed pursuant
to §
(1)
stay
against property
act
the
of an
(a) of this
the estate under subsection
B. The
court did not err in
property
until such
is
section continues
awarding
attorneys’
the trustee
fees
the
longer property
no
estate[.]
prosecuting
adversary proceed-
then,
stay
automatic
It is clear
ing.
prohibiting
against property
acts
of the
at-
The trustee is entitled to recover
property
continues until such
is no
estate
torneys’
prosecuting
and costs in
fees
362(c)(1).
longer property of the estate. §
adversary
proceeding
Therefore,
possess or exercise con
acts to
362(h) where
violations
§
willful
malpractice,
in
trol over the lawsuit
stay
the automatic
are found.
cluding
prosecution
the continued
of the
Appellants argue that the trustee is not
lawsuit,
attempts
direct or control
attorneys’
entitled to the reimbursement of
therefrom,
of the settlement
prosecuting
adversary
fees and costs
were in clear violation of the automatic
proceeding.
agree.
We do not
stay. Accordingly, Appellants’ conduct
stayed
the lawsuit
continued to be
attorneys’
An award of
fees is
despite
property
remained
of the estate
appropriate “where a
must
debtor
resort
case,
closing
supra.
of the
as stated
rights in
the Court to enforce his or her
incorrectly
assert that the au-
consequence of a violation of the automatic
stay
tomatic
was terminated at the time the
Stucka,
stay.”
B.R.
In re
discharged
pursuant
debtor was
to (Bankr.C.D.Cal.1987). Accordingly,
it
is
362(c)(2). Appellants ignore the fact that
§
attorneys’
well established that
fees
362(c)(2)applies
stay
to “the
other
prosecuting
and costs incurred in
an adver
i.e.,
act,”
against
acts
the debtor or the
sary proceeding seeking damages arising
property,
apply
debtor’s
and does not
stay
from a violation
involving property
violations
of the estate.
362(h).
recoverable under
In re Stain
ton,
1992);
B.R.
BAP
Cir.
We hold that the
court Bradford,
In re
Cir.
finding
stay
correct in
that
automatic
1990).
BAP
As one court stated:
applies to the Alaska lawsuit which was
362(h)
point
provision
The whole
of the
property
and remains to be
of the estate.
discourage
is to
violations
the auto-
stay by appropriate
matic
sanctions—and
Appellants’ argument
stay
litigation to
determine and enforce
re-opening
was not reinstated
implied.
necessarily
sanctions is
This
case is irrelevant.
accordingly
appropriate
believes
explained supra,
As
554 states
for the
award
violation of
property
that is not abandoned or ad
stay
appropri-
and to make an
property
ministered remains
of the estate.
attorneys’
ate
award
fees neces-
Trevino,
Appellants cite In re
opened. above, (h) As injured by any stated of acts An individual willful “unscheduled” provided violation of a this sec-
901
stay provided
shall
In re
damages,
tion
recover actual
includ- matic
362.
Zartun,
fees,
543,
attorneys’
and in
30
ing
ap-
costs and
B.R.
546
Cir. BAP
circumstances,
1983).
propriate
may
pu-
party
recover
the
believes in
“[W]hether
damages.
good
right
nitive
faith
it had
proper-
a
to the
ty
to
is
relevant
whether the act was
362(h). “By using
11
the
U.S.C.
words
compensation
‘willful’ or whether
must be
recover,’ Congress
‘shall
intended that the
Bloom,
awarded.”
bursement
fees,
allowed. Al-
attorneys’
the fees are
alleg-
against the trustee
the counterclaims
Group,
ness cut it when does not 613, (9th Cir.1993), F.2d held that term 362(h) do it about a violation. You at “individual,” 362(h), as used is not your peril. enough corporation broad to include a *13 entity.
other artificial
Id. at 619-20. The
adopted
analysis
Ninth Circuit
the
of the
issue,
362(h)
view,
The
in this court’s
is
in
Chateaugay Corp.,
Second Circuit
In re
very
that
clear and
is that come Febru-
(2nd Cir.1990), reading
and the Southern District of
for
California
in
“The trustee
a
this
case under
title is the
their
opinion
consideration. This
shall be
representative of the estate.” Under the
forwarded to
Alaska State Bar and the
Code, then,
Bankruptcy
the trustee is not
Attorney
Offices of the United States
at
individual;
an
a representa-
trustee is
the time when the Clerk of this Panel is-
thereunder,
entity
wit,
tive
anof
created
sues its mandate.
important
the estate.14 This
distinction is
unequivocally
case by
demonstrated
this
OLLASON, Bankruptcy Judge,
the bankruptcy
fact that
court awarded
concurring:
$43,090.83
as
to the estate
join
majority opinion
I
except
as to
and not to Harold Taxel for his
S.
individu-
being
discussion
the trustee
indi-
an
al account.
vidual;
thus,
join
Judge
I
with
Jellen’s
only.
concurrence as to Part I
Moreover, throughout
Bankruptcy
Code, Congress
uses
term “individual”
JELLEN, Bankruptcy Judge, with whom to
party
refer to the real
in interest rather
OLLASON, Bankruptcy
joins
Judge,
as to
the representative
than
of the real
I, concurring:
Part
example among many,
As one
interest.15
dispute
is beyond
that estates and trusts
I.
(other
qualify
than business trusts that
un
result,
I
101(9)
with the
corporations)
concur
but write
der
ineli
section
separately
disagree
because I
gible
any chapter
with the
for relief
Taxel,
holding
Bankruptcy
that Harold S.
trustee
This
clear from sec
Code.16
101(15)
16. See,
provides
"‘entity’
e.g.,
Goerg,
14. Section
in-
re
In
844 F.2d
1565-66
estate, trust,
(11th Cir.1988),
denied,
unit,
person,
governmental
cert.
488 U.S.
cludes
109
(1989) (decedents’
Therefore,
S.Ct.
would also
agree
the result because I
that section
522(b)(1),
Chapter
suant to section
file
105(a)
judges
im-
authorizes
109(e),
pursuant to section
cases
obtain
pose sanctions.
I believe that some elabo-
Chapter
discharges pursuant
to section
however,
required,
ration is
because of the
727(a), rights
only
that are available
holding
Sequoia
Brokers,
of In re
Auto
18 Corporations
partner-
“individuals.”
Ltd.,
Cir.1987)
bankruptcy judges’ resulting contempt au- v. thority would even be broader than that of COUNTY, CLARK WASHINGTON and Article III courts. Id. at 1290. Department Industries, of Labor & State, Washington Appellees. foregoing apply rationale does not presented here, eases such as that where: BAP No. WW-93-1057-BAsR. Bankruptcy No. 87-09042. 1. The imposed sanctions were for a Adv. No. A92-03174. statutory violation, not a violation of a order; United States Appellate Panel of the Ninth Circuit. 2. The sanctions were monetary; Argued July Submitted on 3. The imposed sanctions were to com- pensate, punish coerce; and not to Decided Oct.
4. The imposed sanctions did not exceed
the amount of the out pock- estate’s loss, thus,
et were in the nature of damages; actual sought 5. The relief by the estate did not involve the threat impris- of fine or
onment; and 6. The imposed sanctions were only af- notice,
ter hearing, opportunity and an appellants discovery conduct accordance with Part VII of the Feder-
al Rules of Bankruptcy Procedure. Thus, compensatory when sanctions are pursuant 105(a), at issue to section limita- *17 tions exist as to the relief that can be
requested, grounds on which relief may granted, procedures that must be followed, and the type of relief that can be
ordered.
Consequently, I concur in the result.