EASEMENTS: 1. The doctrine of easement by necessity applies, generally, against the United States. Plaintiff has year-round access to his property over a public highway, although in the winter, this access is limited to nonmotorized means. Even subject to the seasonal limitations imposed by the Park Service, and in spite of the associated inconvenience, the court concluded that plaintiff enjoys sufficient access to his property to defeat a finding of easement by necessity.
2. Plaintiff's claim of an express easement fails because the language in the patent conveying the property "with the appurtenances thereof" is insufficient to create an easement.
3. Plaintiff's claim of an implied easement under the Homestead Act fails because the Act's language recognizing a right "to enter" public lands to establish a homestead is insufficient to create an implied easement.
4. The National Park Service's denial of a permit to allow motorized access over a public highway during the winter was a reasonable exercise of its authority.

BANKRUPTCY: The automatic stay does not apply to sales or transfers of property initiated by the debtor and 11 U.S.C. 549(c) protects bona fide purchasers unless a copy of the petition is recorded. The court rejected the bankruptcy trustee's argument that the debtors' sale of their residence was void because it was property of the estate and the debtor had nothing to sell. The court held that California recording law applies. The transfer of the debtor's property to the bankruptcy estate amounted to an unrecorded conveyance that is void as to subsequent bona fide purchasers who record their title first.

INDIANS: The court states: "The word 'is' really means 'is,' at least as that word is employed in 25 U.S.C. Section 81." Section 81 requires approval by the Secretary as to only those contracts that implicate lands already held in trust by the United States for an Indian tribe. Because the contract between the Tribe and NGV involved lands that the parties expected to become Indian Lands in the future, but were not currently Indian Lands, the contract was valid without such approval.

BANKRUPTCY:
1. Under the Rooker-Feldman doctrine, the federal district court lacked jurisdiction to consider causes of action already decided by a state court because such claims constituted a de facto appeal from the state courts' refusal to vacate its default judgment.

2. A final order lifting the automatic stay is binding as to the property or interest in question--the res--and its scope is not limited to the particular parties before the court. Therefore the order obtained by a loan servicer in its own name also applied to the lender who was not a party.

BANKRUPTCY: 1. Loan made prior to 90-day preference period: The trustee could not set aside a mortgage that was recorded more than 10 days after the loan was made because the loan paid off a prior mortgage that was not released until after the new mortgage recorded. The trustee's hypothetical BFP status did not help because any purchaser who acquired an interest in the property during the period between the time the new loan paid off the earlier mortgage and the time the new mortgage recorded could not be a bona fide purchaser because the earlier mortgage remained on the record books and appeared to be in effect at all times during that period. A purchaser of an interest in property is on inquiry notice, and thus cannot be a bona fide purchaser, if he acquires his interest before earlier creditors' liens are cancelled. (NOTE: The 10-day period in 11 U.S.C. 547(e)(2)(A) is now 30 days.)

2. Loan made within 90-day preference period: The trustee could not set aside a mortgage that was recorded more than 10 days after the loan was made because the loan and mortgage were a "substantially contemporaneous exchange" under Section 547(c)(1). This section is not limited to the 10-day (now 30-day) time period of Section 547(e)(2)(A).

ESTATE TAX LIENS: Three title companies did not pick up the fact that the chains of title for three houses included an estate that had not paid all of its estate taxes. The companies paid the taxes under protest and brought this action challenging the valuation of a business that was part of the estate. The court held that the companies could not challenge the valuation of the property of the estate because 26 U.S.C. 7426, which allows lawsuits by third parties, contains a conclusive presumption that the amount of the assessment is valid.

RESPA: As with the Second, Third, Fourth, Seventh, and Eighth Circuits, the court held that subsection 8(b) of RESPA (12 U.S.C. 2607(b)) does not govern excessive fees because it is not a price control provision

PREEMPTION: Plaintiff brought a class action lawsuit under California's Unfair Competition and Unfair Advertising laws alleging that defendant (a federal thrift subject to the Home Owners' Loan Act ("HOLA") failed to refund lock-in fees in violation of the Truth In Lending Act. The court dismissed the lawsuit on the basis that HOLA preempts state law.

BANKRUPTCY: Paying off a Chapter 13 plan early (such as by refinancing a loan secured by a deed of trust on a residence) requires a court order under 11 U.S.C. 1329(a) confirming a modification of the Chapter 13 plan.

EMINENT DOMAIN: In 2005 the City and County of Honolulu repealed its 1991 ordinance that had created a mechanism allowing owners of leasehold interests in condominium units to convert their leasehold interests into fee interests by using the City’s power of eminent domain. Plaintiffs entered into contracts with the City that required each party to use its best efforts to effectuate the condemnation and transfer of fee interests, but the City refused to honor the contracts after passage of the new ordinance. The District Court granted a summary judgment in favor of the City, holding that the contracts were void under the "reserved powers doctrine" because they purported to limit the City's discretion over the use of its eminent domain power. The 9th Circuit reversed and remanded to allow the District Court to consider whether the City's conduct satisfied the very high level of scrutiny necessary to overcome a challenge under the Contracts Clause of the United States Constitution. 

BANKRUPTCY: In a Chapter 13 case, the more specific cure provisions of Bankruptcy Code Section 1322 apply to curing defaults rather than the more general provision of Section 108(b). Thus debtor's Plan could properly provide for curing the default and maintaining future payments under a land sale contract, and debtor was not bound by Section 108(b)'s requirement that defaults be cured within 60 days of the filing of the petition.

QUIET TITLE ACT: An action under the Quiet Title Act, 28 U.S. C. 2409, is time barred 12 years after the plaintiff or plaintiff's predecessor in interest knew or should have known of the claim of the United States. This limitation applies even where the predecessor in interest was a State, which is exempt from the 12-year statute of limitations. In this case, the State that conveyed title to plaintiff knew or should have known of the claim of the U.S. to the disputed portion of a riverbed when Congress passed the Northern Cheyenne Allotment Act of 1926.

BANKRUPTCY: Under Bankruptcy Code section 1141(c), the confirmation of a Chapter 11 plan voids liens on property dealt with by the plan unless they are specifically preserved, if the lien holder participates in the reorganization. Four conditions must therefore be met for a lien to be voided under section 1141(c): (1) the plan must be confirmed; (2) the property that is subject to the lien must be dealt with by the plan; (3) the lien holder must participate in the reorganization; and (4) the plan must not preserve the lien.

RESPA: HUD's Statement of Policy 2001-1 reasonably interprets RESPA Section 8(b) (12 U.S.C. § 2607(b)) to prohibit unearned fees, whether reflected in a charge divided among multiple parties or an undivided charge from a single lender. The court held that Kruse v. Wells Fargo Home Mortgage, Inc., 383 F.3d 49 (2d Cir. 2004), does not apply. That case held that RESPA prohibits "markups", but does not apply to "overcharges", neither of which applies to a charge for services that were not performed at all.

BANKRUPTCY - LIEN AVOIDANCE: 1) The court did not avoid a senior judicial lien when the lienholder did not appear in contest of a lien avoidance motion under Bankruptcy Code Section 522(f)(1). Granting a default judgment after a default is a matter of discretion, and it is an abuse of discretion to grant a default judgment where the defaulting creditor's lien clearly attaches to some equity above the exemption amount. 2) Section 522(f)(2) requires that liens against the entire fee be subtracted from the full value of the property before computing the value of the debtor's interest in co-owned property.

BANKRUPTCY - HOMESTEAD EXEMPTION: Postpetition appreciation in value of a residence in excess of the maximum amount permitted by the applicable exemption statute inures to the benefit of the estate. This rule applies whether the debtor chooses the state or federal exemption.

BANKRUPTCY: A minute entry granting a motion for summary judgment is not a final, appealable order, and the 10-day appeal time does not begin to run until actual entry of the order or judgment.

BANKRUPTCY:  Provided that the following criteria are met, the bankruptcy court may, but need not, grant an application for nunc pro tunc authorization of a post-petition refinancing of property of the estate:.(1) the financing transaction benefits the bankruptcy estate; (2) the creditor has adequately explained its failure to seek prior authorization or otherwise established that it acted in good faith when it failed to seek prior authorization; (3) there is full compliance with the requirements of section 364(c)(2); and (4) the circumstances of the case present one of those rare situations in which retroactive authorization is appropriate.

BANK REGULATION: A national bank's mortgage business, whether conducted by the bank itself or through the bank's operating subsidiary, is subject to OCC's (Office of the Comptroller of the Currency) superintendence, and not to the licensing, reporting, and visitorial regimes of the States in which the subsidiary operates. Therefore a national bank's mortgage lending subsidiary does not need a state license. (NOTE: This case is not directly related to the title insurance business, but it has a bearing on state laws with which we are concerned, such as California statutes prohibiting lenders from charging in excess of one day's interest prior to recordation of the deed of trust.)

CHAPTER 13 PLANS: 1) A bankruptcy court has authority to clarify a relief from stay order, even where it could not modify the order because it had relinquished jurisdiction over the property. 2) Confirmation of a Chapter 13 plan does not preclude a state court from deciding a controversy over the obligation secured by a deed of trust where the bankruptcy court has granted relief from the automatic stay and where the plan does not purport to resolve the controversy.

HAWAIIAN HOME COMMISSIONS ACT: The court held that plaintiffs lack standing to challenge state programs that preferentially treat persons of Hawaiian ancestry. NOTE: This case is included on this site because it contains a good historical discussion of the Hawaiian Homes Commission Act and a good explanation of how land was ceded by the U.S. to Hawaii in the Hawaii Admissions Act.

ACCESS OVER FEDERAL LANDS: The Court held that even if plaintiff had a valid right of access over Nation Park land (which was not decided), the access is subject to reasonable regulation by the Nation Park Service. Consequently, plaintiffs were required to apply for a permit to bring a bulldozer over an access road and the Park Service was justified in refusing to issue the permit until winter when the ground would be frozen and  the least amount of damage would be done to the ground.

BANKRUPTCY: A judgment lien could have been, but was not, avoided under Bankruptcy Code Section 522(f). Two years after the case was closed the debtor reopened the case and brought a 522(f) motion. But before the motion could be heard, the debtor refinanced and paid off the lien. The Court held that the lien can be avoided because impairment of the debtor's exemption is determined as of the date of filing the petition. However it is within the Bankruptcy Court's discretion to refuse to do so on equitable grounds. The Court cited with approval In re: Chiu (Culver LLC v. Chiu) 304 F.3d 905 (9th Cir. 2002) in which a debtor proceeded more intelligently by not paying off the lien and instead placed the proceeds in an escrow account pending the outcome of the 522(f) motion.

BANKRUPTCY: 1) REFINANCE: The Court refused to modify a Chapter 13 plan where the debtors refinanced with a "cash-out" loan that provided them with $64,000 cash because the reason for refinancing was the debtors' reduction in income, and because the proceeds were counter-balanced by a new, larger loan that did not improve the debtors' financial condition. 2) SALE: The Court modified a Chapter 13 plan to require payment of a portion of sales proceeds to creditors where the appreciation in the value of the property was unexpectedly high.

BANKRUPTCY/HOMESTEADS: When a Chapter 13 case is converted to a Chapter 7, the relevant valuation date of the debtor's residence, absent bad faith, is the date of filing the Chapter 13 petition. However, the valuation in the debtor's schedules does not control. At the time of a proposed sale during the Chapter 7 case, the court must determine what the property was worth when the Chapter 13 case was filed.

BANKRUPTCY/PREFERENCES/ANTECEDENT DEBT: In a typical refinance transaction, the Court avoided a mortgage that was recorded more than 10 days after the loan was made. Bankruptcy Code Section 547(e)(2)(A) provides that a mortgage is a contemporaneous transfer and not a preference if it is perfected within 10 days (now extended to 30 days by  the BAPCPA). Here, the lender's mortgage recorded 14 days after the loan was made, so it was a preference under Section 547. The Court refused to apply the "earmarking doctrine" which would allow the lender to treat the transaction as a transfer of the mortgage that was paid off.

BANKRUPTCY: A lender failed to record a deed of trust that was executed by the debtor to secure a loan, but listed the loan as a secured debt in the bankruptcy schedules and Statement of Financial Affairs ("SFA"). 1) A bankruptcy trustee is a hypothetical BFP, and is not charged with knowledge of matters listed in the schedules and SFA. The court acknowledged that the trustee is charged with notice of matters described in the petition, but held that the schedules and SFA are legally filed subsequent to the petition, even when they are actually filed simultaneously in the same electronic file. 2) For the same reason, the doctrine of equitable subrogation does not defeat the trustee's BFP status where the deed of trust securing the loan that was paid off was reconveyed. (This is different than the situation where the previous deed of trust was not reconveyed.)

BANKRUPTCY/HOMESTEADS: Under California law, the homestead exemption rights of registered domestic partners are identical to those of people who are married. Therefore, domestic partners are limited to a single combined exemption, in the same manner as people who are married. In the absence of a domestic partnership or marriage, each cotenant is entitled to the full homestead exemption.

BANKRUPTCY: Debtors sold their home, deposited the net proceeds into two bank accounts, and subsequently filed bankruptcy. Once the 18-month time limit under A.R.S. § 33-1101(C) passed without reinvestment of the sale proceeds in a new homestead property, those proceeds lost their exempt character, and the trustee could claim them for distribution to creditors.

JUDGMENTS / BANKRUPTCY: The time for filing an affidavit to renew a judgment is not extended when the debtor's bankruptcy is pending during that time. The automatic stay applies to actions to create, perfect or enforce liens or judgments, and not to the ministerial act of filing an affidavit of renewal. The phrase "suspension of such period" referenced in Section 108(c)(1) refers to either state or federal nonbankruptcy law. It clearly does not operate in itself to stop the running of a statute of limitations; rather, this language merely incorporates suspensions of deadlines that are expressly provided in other federal or state statutes.

EASEMENTS / LICENSES: Plaintiff's right of access over National Forest land is a license, not an easement, so the Federal Government may impose reasonable restrictions on plaintiff's use of a forest road for access to its property, including the imposition of a $114 annual fee.

EQUITABLE SUBROGATION / FEDERAL TAX LIENS: The court applied equitable subrogation to credit a husband with payments he made on his ex-wife's share of notes secured by deeds of trust that were senior to IRS tax liens against the wife. The case spends a lot of time on the math, which I will not discuss here. Also, the Court held that it was not an abuse of discretion for the trial court to deny the husband interest on such payments on the grounds that the husband already received a benefit from the appreciation of the house value.

BANKRUPTCY: This case was decided under the law that existed before October 17, 2005, when the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 became effective. Amendments to the Bankruptcy Code under that Act allow a Court to issue an in rem order precluding the effectiveness of the automatic stay in future bankruptcy cases. Here, the Court held that under the prior law, bankruptcy courts did not have the authority to issue such in rem orders affecting future bankruptcy actions.

The court makes the following interesting statements: A sale in violation of the automatic stay is void ab initio. This is true even if the case is later dismissed as a bad faith filing. After the case is dismissed, the court may annul the automatic stay, thereby retroactively ratifying an act otherwise violative of the stay.

BANKRUPTCY: A trustee's sale was held after the Bankruptcy Court issued an order reinstating a previously dismissed bankruptcy case, and before it was entered in the docket. The Court denied debtor's motion to set aside the sale, ruling that the order became effective when it was entered. The BAP affirmed, holding that the Bankruptcy Court has discretion to determine when the reinstatement of a case is effective. It can reinstate a case and reimpose the automatic stay as of the time it signs a reinstatement order, subject to review for abuse of discretion, but is not required to do so. The BAP pointed out that if reinstatement orders were to retroactively impose the automatic stay there would be no way to protect against the sale being rendered retroactively void at some future date.

LOANS: California's per diem interest statutes (Civil Code Section 2948.5 and Financial Code Section 50204(o)), which prohibit lenders from charging interest for a period in excess of one day prior to recordation (now amended to apply to disbursement) are NOT preempted by the Alternative Mortgage Transaction Parity Act (Parity Act), 12 U.S.C. §§ 3801-06,

BANKRUPTCY / HOMESTEAD EXEMPTION: Where state law provides that a debtor's homestead exemption attaches to sales proceeds for a period of time, and the debtor files bankruptcy before that time period expires, the bankruptcy estate holds a contingent, reversionary interest in the sale proceeds. When debtor fails to reinvest the proceeds within the requisite time period, the proceeds became nonexempt, and therefore, property of the estate.

TAX SALES: When a mailed notice of a tax sale is returned unclaimed, the State must take additional reasonable steps to attempt to provide notice to the property owner before selling his property, if it is practicable to do so. The State learned that the notices sent to the property owner were not received because the certified letters were returned unopened by the post office marked "unclaimed". Examples of additional reasonable steps are 1) resending the notice by regular mail, 2) post the notice on the front door or 3) address the mail to "occupant". The Court stated that it is not necessary to search for the owner's possible new address in the phonebook or other government records.

INDIANS: A deed of trust on Indian trust land, which was recorded in the County Recorder's Office, but not with the Bureau of Indian Affairs (BIA), had priority over a subsequent lease which was recorded with the BIA, but not in the County Recorder's Office. State law applied to determine priorities because 25 U.S.C. 483a provides that state law applies in the absence of a tribal foreclosure law.

BANKRUPTCY: Bankruptcy Code Section 549(c) prevents a trustee from setting aside a sale by debtor to a bona fide purchaser and his lenders. The Court rejected the trustee's argument that a sale by a debtor violates the automatic stay and is therefore void ab initio.

BANKRUPTCY: In a Chapter 7 case, the prohibition against lien stripping (Dewsnup v. Timm, 502 U.S. 410 (1992)) applies to both "stripping down" and "stripping off", and to both non-consensual, as well as consensual liens.

BANKRUPTCY / SOVEREIGN IMMUNITY: A bankruptcy trustee's proceeding to set aside preferential transfers by the debtor to state agencies is not barred by sovereign immunity. Congress' authority to enact bankruptcy laws intruding on states' sovereign immunity arises from the Bankruptcy Clause of Article I of the Constitution, so the enactment of 11 U. S. C. Section 106(a) was not necessary to authorize the Bankruptcy Courts' jurisdiction over States.

EASEMENTS:
1. Under the doctrine of merger, when a single owner acquires present possessory fee simple title to both the servient and dominant tenements, the easement merges into the fee and is terminated.
2. The Court almost deals with an interesting issue, but since it was not one of the holdings that is the subject of the appeal, it is left unanswered. The District Court held that a deed conveying a community pier conveyed only the pier itself, which is personal property. This particular issue was not appealed, so the 9th Circuit adopted the un-appealed holding that the rights in the pier were personal property, and reached the conclusion that since the rights were personal property, a subsequent grantee of the underlying land did not acquire them because they did not run with the land.

JUDGMENT LIENS: A judgment creditor recorded a judgment which did not contain the debtor's social security number. C.C.P. Section 674 requires that, if the creditor knows the debtor's SSN, it is one of the items of information that must be included in the abstract of judgment in order to create a judgment lien. The Court followed Keele v. Reich, which held that failure to comply with C.C.P. 674 invalidates the lien. It acknowledged that times have changed since the statute was enacted and that identity theft and privacy of social security numbers are now of paramount importance, but the statute and the Keele case are very clear. Also, even if the Court were to agree with Commonwealth Land Title Co. v. Kornbluth, which allowed in some cases an amendment of an abstract of judgment, the debt was discharged in bankruptcy, so the creditor is an unsecured creditor with a discharged debt and can no longer create a lien.

LOANS: California's per diem interest statutes (Civil Code Section 2948.5 and Financial Code Section 50204(o)), which prohibit lenders from charging interest for a period in excess of one day prior to recordation (now amended to apply to disbursement) are preempted by the National Bank Act, 12 U.S.C. Sections 21 et seq., but are NOT preempted by the Depository Institutions Deregulation and Monetary Control Act of 1980, 12 U.S.C. Sections 1735f-7a.

EMINENT DOMAIN: The term "public use" in the 5th amendment includes economic benefit. [Ed. note: In other words, the Court defines the term "public use" so broadly that private property can now be taken by eminent domain and sold  to a private party simply because the condemning authority thinks the new owner will use it to produce more tax revenue and economic activity.]

BANKRUPTCY: There is no legal basis for reducing the lien of real property taxes, although a Chapter 13 plan can provide for making payments over time of the delinquent amount. This case involved the res judicata effect of a County failing to object to a Plan that, so debtors argued, eliminated (improperly) the tax lien itself. The Court held that the Plan did not purport to do that. The Court points out that liens ordinarily pass through bankruptcy unaffected so that secured creditors, unlike unsecured creditors, may ignore the bankruptcy proceedings and look to the lien for satisfaction of the debt.

BANKRUPTCY: A debtor can avoid a judgment lien under Bankruptcy Code Section 522(f) to the extent it impairs the homestead exemption, even if the judgment lien is senior to a consensual lien and even though there would be too much equity to avoid the lien in the absence of the consensual lien. 

LETTERS OF CREDIT: The case discusses California Commercial Code Section 5109(b) which allows a court to enjoin a bank from honoring a letter of credit if the plaintiff claims that honor would facilitate a material fraud and certain requirements are satisfied.

BANKRUPTCY: A debtor can avoid a judgment lien under Bankruptcy Code Section 522(f) even if the lien is senior to a consensual lien and even though there would be too much equity to avoid the lien in the absence of the consensual lien. 

BANKRUPTCY: A notice of a 522(f) motion may be served by mail under Bankruptcy Rule 7003(b)(3), but it must be addressed to the attention of an officer or agent. The court set aside the order because it was addressed to the company without specifying an officer, but pointed out that the debtor can achieve her desired result by simply re-noticing the motion and serving it properly.

BANKRUPTCY: In a no-asset, no bar bankruptcy case, a discharge applies to unscheduled dischargeable debts. Under Bankruptcy Code section 523(a)(3)(A) a discharge does not apply to an unscheduled debt if the failure to schedule prevents the creditor from filing a timely claim. However, in a no-asset case, the concept of filing a "timely claim" does not apply because the court never sets a "bar" date, so creditors are never deprived of a right to file a claim. Creditors are not harmed because they receive no assets whether or not their debts are scheduled.

BANKRUPTCY ("Lien Stripping"): In a Chapter 13 case, 11 U.S.C. §506(d) does not apply to allow a creditor with an undersecured lien on real property, which was not the debtors' residence, to separate the secured loan into a secured claim equal to the value of the security and a dischargeable unsecured claim for the balance. The reason is that 11 U.S.C. §1322(b)(2) prohibits the modified secured debt from being paid over a period of time longer than the plan term (3 - 5 years). [So, apparently, this would have been possible in the unlikely situation of  the secured debt being paid within that time period.] The case contains a good discussion of "lien stripping" and the difference between "stripping down" and "stripping off"

BANKRUPTCY: A proceeding initiated by a debtor to determine the dischargeability of a student loan does not violate the Eleventh Amendment's protection of State sovereign immunity because it is not a "suit" against the State. The federal court's jurisdiction over the dischargeability of debt derives from in rem jurisdiction over the debtor, and a determination of dischargeability does not seek affirmative relief from the State. The Court specifically did not decide whether the Constitution's Bankruptcy Clause, Art. I, sec. 8, gives Congress the power to abrogate states' sovereign immunity, which Congress has attempted to do in 11 U.S.C. 106(a)

PRESCRIPTIVE EASEMENTS: (1) In order to establish a prescriptive easement over property owned by the United States, it is necessary to demonstrate that the necessary elements for a prescriptive easement occurred prior to the United States' ownership. The Court held that plaintiff was entitled to a prescriptive easement. The case contains an excellent discussion of the elements necessary to establish a prescriptive easement under Arizona law. (2) Under the Alaska National Interest Lands Conservation Act (“ANILCA”), the U.S. must provide access to land “within the boundaries” of the National Forest System. This applies only to landlocked property and not to plaintiff's property, which is surrounded on only three sides by National Forest land.

BANKRUPTCY/INDIANS: Indian tribes are subject to Bankruptcy Court jurisdiction because 11 U.S.C. 106(a) abrogates their sovereign immunity. (Note that the 11th Amendment protects States against abrogation of sovereign immunity.)

BANKRUPTCY: A debtor may reopen a closed bankruptcy case in order to amend the exemption schedule to assert a homestead exemption, and to make a motion to set aside a judgment lien under Bankruptcy Code Section 522(f).

FORFEITUre In a forfeiture action, when initial personal notice letters are returned undelivered, the government must make reasonable additional efforts to provide personal notice. This case involved personal property, but the notice rules are very similar for real property.

BANKRUPTCY: Under Arizona law (A.R.S. Section 33-810(A)), a trustee's sale is not complete until payment of the bid price. Therefore, the automatic stay prevented completion of a trustee's sale where a bankruptcy was filed after the bid was made, but before payment of the bid price.

MECHANIC'S LIENS: A lien claimant filed a mechanic's lien against a redevelopment project after the normal time for filing liens had expired. However, it claimed that its lien was timely under the last paragraph of California Civil Code Section 3086, which postpones "completion" to the date of acceptance by a public entity. The court held that such acceptance by a public entity was not required in this case. "Acceptance" under the statute is not to be equated with inspection and approval or the issuance of certificates of occupancy; it refers only to the acceptance of an improvement that is civic in nature. (Such as streets, sidewalks or sewers that will be used by the public.)

COMMUNITY PROPERTY: The California transmutation statute (Family Code Section 852), requiring a writing signed by the spouse whose interest is adversely affected, does not apply to a deed from a third party transferring title to spouses as joint tenants. Therefore, the deed created a valid joint tenancy between the spouses even though they apparently did not join in the execution of the deed.

BANKRUPTCY: When a state agency waives sovereign immunity by filing a proof of claim, the waiver extends to adversary proceedings, including dischargeability proceedings. The reason is that when a state waives immunity as to one action, its waiver extends to ancillary suits to enforce orders entered in that action.

BANKRUPTCY: The Court held that a tax sale was void and the successful bidder, who was a bona fide purchaser, is NOT protected where the tax sale was held in violation of the automatic stay. (The same reasoning applies to trustee's sales.) Bankruptcy Code Section 549(c) protects BFP's when the debtor initiates an unauthorized postpetition transfer, but not when the transfer is already void because it violated the automatic stay.

Also, the Bankruptcy Code preempts California law which requires a taxpayer to tender the purchase price to the tax sale purchaser in order to set aside the tax sale.

BANKRUPTCY: A trustee's sale was held in violation of the automatic stay without the knowledge of the successful bidder. The Court held that in determining whether to grant retroactive relief from the automatic stay and validate the sale, 1) the court must apply a balancing-of-the-equities test, 2) the BFP status of the purchaser is a factor to be considered and 3) Bankruptcy Code Section 549(c) protects BFP's only from the debtor's voluntary sales of estate property, not from acts which are void as a result of a violation of the automatic stay, so the purchaser's BFP status cannot be the sole determining factor.

LOANS: The National Bank Act and the Depository Institutions Deregulation and Monetary Control Act of 1980 preempt California Civil Code Section 2948.5 and Financial Code Section 50204(o), which prohibit lenders from charging interest for a period in excess of one day prior to recordation of a deed of trust.

PUNITIVE DAMAGES: Punitive damages violate the 14th amendment if they are not reasonable in light of three guideposts: 1) the degree of reprehensibility of the defendant's conduct, 2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award, and 3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.

Here, punitive damages of 145 times compensatory damages are invalid. The Court did not specify an acceptable ratio of punitive to compensatory damages, but stated that "single digit multipliers are more likely to comport with due process". Also, the Court stated that the wealth of the defendant cannot justify an otherwise unconstitutional punitive damages award.

FORECLOSURE: Non-judicial foreclosure under HRS Section 667-5 is constitutional. The statute does not violate the due process clause of the 14th Amendment because no state action is involved.

RESPA: Chicago Title Insurance Company provided title and escrow services at a discount in transactions where Residential Funding Corporation sold property it had acquired by foreclosing on deeds of trust securing its loans. RESPA was not violated because the discounts were based on Chicago's lower costs when dealing with the customer, and were not given for referring buyers.

BANKRUPTCY: (Note: this 6th Circuit case directly conflicts with the 9th Circuit opinion in In re: Mitchell.) Bankruptcy Code Section 106(a), which purports to abrogate state sovereign immunity against proceedings to determine tax liability and dischargeability of debts, is constitutional because Article I gives Congress the power to make uniform laws over bankruptcy.

BANKRUPTCY: (NOTE: Usually I include only 9th Circuit cases, but this one is interesting.) The 10-day statutory time to appeal never began because the Bankruptcy Court failed to enter a final judgment in the underlying matter, so the time to appeal cannot be said to have passed.

BANKRUPTCY: An appeal of an order for a sale of property is moot under 11 U.S.C. §363(m) if the property is sold pursuant to the order and the purchaser acts “in good faith”. When the issue of good faith is raised for the first time on appeal, the proper procedure is to use the device of a limited remand from the appellate court to the trial court for the purpose of determining the factual question of good faith.

BANKRUPTCY: The Court affirmed the judgment of the Bankruptcy Appellate Panel for the reasons stated in its opinion and reprinted that opinion as an appendix to the 9th Circuit opinion. The BAP opinion is set forth below.

BANKRUPTCY: A creditor may record an abstract of judgment during the pendency of a bankruptcy without violating the automatic stay where 1) the judgment is a nondischargeability judgment based on a pre-petition debt or 2) the judgment is based on a post-petition debt. The judgment lien does not attach to property of the estate, but does attach to any property subsequently acquired by the debtor, whether by purchase, abandonment by the bankruptcy trustee, non-administered property which re-vests in the debtor after the bankruptcy case is closed, or by some other means.

QUIET TITLE ACT: The District Court is deprived of jurisdiction under the Quiet Title Act once the U.S. files a disclaimer.

INDIANS: Land on an Indian reservation which has been allotted to individual Indians and which is freely alienable, is nevertheless not subject to a County's land use regulations.

BANKRUPTCY: Debtors filed a Chapter 7 petition and claimed their residence as a homestead. They did not take any action to avoid a judgment lien. They obtained a discharge and the case closed in 1995. In 1999 the debtors sold their residence and sufficient proceeds were retained in escrow to cover the judgment lien. The debtors then filed motions to reopen their bankruptcy case and to avoid the lien under Bankruptcy Code Section 522(f).

The Court affirmed the Bankruptcy Court's order reopening the case and setting aside the lien. The Court held that as long as the debtor owned the property at the time the judgment lien attached, Section 522(f) allows the avoidance of a judicial lien after the debtor has sold the exempt property. (The Court did not discuss whether the valuation date is the date of the petition or the date of sale.)

BANKRUPTCY: Where a debt is secured by a loan to a party who is not in bankruptcy and the debtor's guaranty is secured by a deed of trust on debtor's property, the automatic stay does not apply to optional advances made to the non-bankrupt debtor. Post-petition optional advances are secured by the lien on the guarantor/debtor's property, but the trustee has priority over advances made after the filing of the guarantor's bankruptcy.

HOMESTEADS (Recorded Homesteads): Under California law, a judgment creditor is entitled to surplus equity that accrues after the abstract of judgment recorded, even if there was no surplus equity when the A/J recorded. The Court rejected the earlier 9th Circuit case of Jones v. Heskett (In re: Jones), 106 F.3d 923 (9th Cir. 1997) because of two intervening California appellate cases that disagreed with the Jones case: Smith v. Merrill (1998) 64 Cal.App.4th 94, 75 Cal.Rptr.2d 108 (1998) and Teaman v. Wilkinson (1997) 59 Cal.App.4th 1259 , 69 Cal.Rptr.2d 705.

The concurring opinion contains an interesting discussion regarding the inability of one three-judge panel of the 9th Circuit to overrule the opinion of another three-judge panel.

INDIANS: Since an Indian tribe is not a citizen of any State, diversity jurisdiction does not exist. Therefore, the District Court properly dismissed the action against the tribe for want of subject matter jurisdiction, even though the subject contract stated that the tribe waived sovereign immunity and that either party may seek appropriate relief in a U.S. District Court.

BANKRUPTCY / SOVEREIGN IMMUNITY: A state cannot assert sovereign immunity in a bankruptcy case after answering a complaint and filing a motion for summary judgment. Such conduct is incompatible with an intent to preserve immunity.

BANKRUPTCY:
1. Bankruptcy Code Section 549(c) protects BFP's from unauthorized transfers of estate property by the debtor, but does not protect BFP's who purchase property at trustee's sales violating the automatic stay.

2. The trustee's deed recorded within 15 days of the sale, so under Cal. Civil Code Section 2924h(c) the transfer was perfected as of the date of the sale. However, since the foreclosure sale itself was void, later perfection could not validate it.

BANKRUPTCY: Under Bankruptcy Code Section 522(c)(2), a debtor's exempt property may be liable for a prepetition debt secured by a lien that is not avoided in bankruptcy. The homestead exemption applies to the debtor's residence, so the judgment lien attaches to the equity in the residence in excess of the homestead exemption..

BANKRUPTCY: (1) State courts do not have jurisdiction to determine whether a listed and scheduled creditor received adequate notice of discharge proceedings, (2) state courts do not have authority to modify a bankruptcy court's discharge order and (3) a bankruptcy court is required to reopen the proceedings to protect its exclusive jurisdiction over the enforcement of its orders.

However, state courts do have jurisdiction to: (1) Construe or determine the applicability of a discharge order when discharge in bankruptcy is raised as an affirmative defense in a state court action and (2) determine whether a discharge applies to a debt which was not listed in the bankruptcy because the creditor had actual notice of the bankruptcy in time to file a nondischargeability complaint.

BANKRUPTCY: A bankruptcy court has the power to grant retroactive relief from the automatic stay to cure a previous violation of the stay. Cause to annul the stay may exist where the stay harms the creditor and lifting the stay will not unjustly harm the debtor or other creditors.

In this case, a lender, who was not aware that the debtor had filed bankruptcy, proceeded with a foreclosure action in violation of the automatic stay. The debtor then dismissed the bankruptcy and the lender proceeded to obtain a writ of possession. The lender then learned of the bankruptcy and obtained the order for retroactive relief from the automatic stay.

FEDERAL TAX LIENS: A federal tax lien against one spouse attaches to the taxpayers interest in property held as tenants by the entirety. This is dramatically different than a state judgment lien, which in most states does not attach to tenants by the entirety property if the judgment is against only one spouse.

The case also contains a useful discussion even in states that do not recognize tenants by the entirety. The court, citing other cases, explained that the federal tax lien statute itself creates no property rights but merely attaches consequences, federally defined, to rights created under state law. Accordingly, we look initially to state law to determine what rights the taxpayer has in the property the Government seeks to reach, then to federal law to determine whether the taxpayer's state-delineated rights qualify as “property” or “rights to property” within the compass of the federal tax lien legislation.

PUNITIVE DAMAGES: The Court reduced a punitive damages award from $4.5 million to $500,000 based on the criteria set forth in BMW of North America v. Gore, 517 U.S. 559, 116 S.Ct. 1589 (1996). Those criteria are (1) the degree of reprehensibility of the defendant's conduct, (2) the disparity between the harm (or potential harm) suffered by the plaintiff and the punitive damages award, and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.

BANKRUPTCY: When a state agency waives sovereign immunity by filing a proof of claim, the waiver extends to adversary proceedings, including dischargeability proceedings. The reason is that when a state waives immunity as to one action, its waiver extends to ancillary suits to enforce orders entered in that action.

FORFEITUre A foreclosure of a deed of trust wipes out the government's interest in the subject property asserted in a forfeiture action where the government's lis pendens was recorded subsequent to the deed of trust. The government's continuation of the forfeiture action against the purchasers at the trustee's sale was so unreasonable that the court awarded attorney's fees against the government based on a statute providing for such fees where the government's position is not "substantially justified".

WATER: In a quiet title action for land created by avulsion, the court's analysis should begin on the date the federal government patented the land to the State under the Swamp and Overflowed Lands Act, and it should not consider pre-patent avulsive river movements.

FORFEITUre This was a 5 to 4 decision. The court held that in a forfeiture action, service on a defendant who was incarcerated in a federal prison was sufficient where service was mailed to the prison, even though there was no showing that the mail actually reached the prisoner. Note that at the time of the court hearing, the prison had changed its practices so that prisoners were required to sign a log book acknowledging receipt or, if a prisoner refuses to sign, a prison officer documents the refusal.

INDIANS: An Indian Community's corporate charter provided that it had the power “to sue and be sued in courts of competent jurisdiction within the United States”. This is sufficient to waive immunity with respect to a tribe's corporate activities, but not to its governmental activities. This case fell within the latter type of activity because it involved a tort action against the Community and against individual tribal police officers acting in their official capacity.

BANKRUPTCY: A State agency has 11th Amendment immunity from Chapter 7 adversary proceeding to determine the dischargeability of a debt owed to the agency because an adversary proceeding to determine the dischargeability of a debt is a "suit" under the Eleventh Amendment. The Court explains that the 11th Amendment only precludes an adversary proceeding to enforce or clarify the discharge, but does not preclude the discharge, itself.

PROMISSORY NOTES: Even though the real properties securing promissory notes were located in California, Nevada law regarding usury applied to the notes where they did not contain a choice of law provision and where they provided for payment in Nevada. Also, since the lenders were Nevada residents, providing for payment in Nevada was not an impermissible scheme to avoid California law.

AFFIRMED. See In re: Chiu (Culver v. Chiu) 9th Circuit 9/18/02.

BANKRUPTCY: This was an action for damages for wrongful seizure of property pursuant to 21 U.S.C. Section 881(a)(6), which subjects to forfeiture property purchased with proceeds traceable to drug transactions. The property was sold pursuant to a stipulation between the claimants and the government, so only damages and not the validity of the sale were at issue.

Of interest are the following statements and holdings by the Court:
1) The Due Process Clause requires notice and a meaningful opportunity to be heard before seizing real property subject to civil forfeiture.
2) Forfeiture does not constitute an excessive fine in violation of the Eighth Amendment because it simply parts the owner with the fruits of criminal activity.

BANKRUPTCY
1. The usual rule is that a trustee's failure to timely object to a claim of exemption precludes him from challenging its validity, regardless of whether or not there is a valid basis for the exemption. However, the rule does not apply where the description in Schedule C of the property being claimed as exempt is so inadequate that potential objectors are not put on notice of what property is being claimed as exempt.
2. Bankruptcy Code Section 363(f)(4), which allows a sale free and clear of liens where an interest in property is in bona fide dispute, does not apply to a dispute about whether property is exempt.

BANKRUPTCY: The debtors reopened their bankruptcy case 5 years after it was closed in order to set aside a judicial lien pursuant to Bankruptcy Code Section 522(f). The Court held that the date of valuation for determining whether a lien can be avoided under Section 522(f) is the petition date, unless the creditor can show it detrimentally relied on the debtor's inaction in avoiding the lien. The Court points out that there are no cases on point in the 9th Circuit and that there is a split of authority in other jurisdictions as to whether the date of valuation is the petition date or the date of the hearing.

BANKRUPTCY: A bankruptcy discharge cannot be enforced against a State in an adversary proceeding where the State does not consent to a bankruptcy court's jurisdiction by filing a proof of claim or otherwise participating in the bankruptcy proceeding. This was the holding in In re: Mitchell, 209 F.3d 1111 (9th Cir. 2000), based upon 11th Amendment immunity. HOWEVER, the discharge order is binding upon a State and, while the State is immune from suit in Federal Court, a State official is subject to suit in an adversary proceeding seeking to enjoin the official from violating the discharge order.

FOREST LANDS: 1) A landowner whose only access is over National Forest land must apply for a permit for access if his use of the access goes beyond uses made by the general public, 2) The landowner must comply with reasonable Forest Service regulations with regard to road maintenance and improvement, 3) Under the Alaska National Interest Lands Conservation Act, a landowner must provide the U.S. a right of way where it is necessary for the management of adjacent Federal land and is entitled to receive compensation for doing so.

WATER/INDIANS: In any equal footing case, the court begins with a strong presumption against defeat of the state's title. But the question of title to submerged land is ultimately a matter of federal intent. Here, Congress intended to include submerged lands within the Coeur D'Alene Tribe of Idaho Indian reservation. (Affirmed 9th Circuit opinion at 210 F.3d 1067.)

INDIANS: A state's laws apply to an Indian tribe off a reservation. However, the Court distinguishes Kiowa Tribe of Oklahoma v. Manufacturing, 523 U.S. 751 (1998) in which the Supreme Court held that a tribe's sovereign immunity barred a civil suit in state court, where the activity giving rise to the suit occurred off the reservation. The distinction is that while a state's laws apply to a tribe off the reservation, the state's courts are not available to enforce those laws.

TAX LIENS: The requirement of recording a tax lien (26 U.S.C. 6323(a)) does not apply to a judgment against a debtor based on the debtor's failure to comply with a levy. (A taxpayer owed taxes and the federal government levied on funds of the taxpayer held by the debtor.) Such a judgment is governed by 31 U.S.C 3713 because it is an ordinary judgment and not a tax lien.

INDIANS: Where an arbitration clause in the contract proposed by the Indian Tribe specifies the enforcement of arbitral awards "in any court having jurisdiction thereof", the Indian Tribe has waived its immunity to suit in state court.

INDIANS: Indian tribes and tribal corporations are immune from tort actions in state court, even where the alleged acts were committed outside of Indian country.

INDIANS:
1. The Nonintercourse Act (25 U.S.C. §177) applies only to tribal land, not to allotted land.
2. Only Indian Tribes may bring §177 actions.
3. A corporation chartered by a tribe is not a tribe.
4. Congress has enacted a comprehensive regulatory regime governing conveyances of property from both tribal and allottee landowners, but it has not provided comparable remedies for these landowner's lessees.

FORFEITUre Spouse's community property interest in property acquired with proceeds of an illegal activity is subject to forfeiture, along with the interest of the spouse who committed the crime.

BANKRUPTCY: Bankruptcy Code Section 106(a), which purports to abrogate state sovereign immunity against proceedings to determine tax liability and dischargeability of debts, is unconstitutional.