Cca Selected 1995 Documents

EVENTS AND TIME FRAME OF YAMAGUCHI

,ql~

GRADUATED COLLEGE WITH B.A. AND DEGREE IN LAW

6 YEARS WORKED FOR PEAT MARWICK IN THEIR TAX DIVISION '~L<

DURING THIS TIME ACQUIRED A MASTER IN LAW FROM NEW YORK UNIVERSITY

WENT TO WORK AS ASSISTANT U.S. ATTORNEY

WORKED FOR 13 YEARS, UNTIL 1993 AS AN ASSISTANT U.S. ATTORNEY

1993 APPOINTED BY CLINTON U.S. ATTORNEY FOR NORTHERN CALIFORNIA 1ST YEAR: 93-94: APPOINTED U.S. ATTORNEY APPOINTED TO A.G. ADVISORY COMMITTEE 2ND YEAR: 94-95: NOMINATED FOR FEDERAL JUDGE BY BARBARA BOXER INDICTED ARMSTRONG FOR FRAUD rqq8 FILED AMICUS BRIEF ON BEHALF OF WASHINGTON TO VACATE IN RE. HAMILTON 4TH YEAR: 96-97: TRIED ARMSTRONG/FOUND GUILTY SENTENCED ARMSTRONG 9 YEARS 5TH YEAR: 98: REMOVED FROM OFFICE AND ASK TO RESIGN HIS NAME FROM FEDERAL JUDGESHIP

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Document Links: Start of Document CASE SUMMARY PROCEDURAL POSTURE: OVERVIEW: OUTCOME: CORE TERMS: LexisNexis!Rl Headnotes COUNSEL: JUDGES: OPINION BY: OPINION:

SHEPARD'S®

176 BR. 895, "; 1995 Bankr. LEX/S 45, "; 32 Collier Bankr. Gas. 2d (MB) 1727; 26 Bankr. Gt. Dec. 665

In re HAMILTON TAFT & COMPANY, Debtor. FREDERICK S. WYLE, Trustee of Hamilton Taft & Company, Plaintiff, vs. HOWARD, WElL, LABOUISSE, FRIEDRICHS INCORPORATED, a Louisiana corporation; HOWARD WElL FINANCIAL CORPORATION, a Louisiana corporation; and LEGG MASON, INC., a Maryland corporation, Defendants. Chapter 11, No. 91-3-1077-TC, Adv. No. 93-3-121-TC UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA 176 B.R. 895; 1995 Bankr. LEXIS 45; 32 Collier Bankr. Cas. 2d (MB) 1727; 26 Bankr. Cl. Dec. 665; 32 Oil & Gas Rep. 1727

January 18, 1995, Decided January 19,1995, FILED

CASE SUMMARY PROCEDURAL POSTURE: Chapter 11 bankruptcy trustee brought an action to recover, as a fraudulent conveyance, transfers made by defendant pursuant to a reverse repurchase agreement used to facilitate a leveraged buyout under 11 u.s.c.s. § 546{e}. OVERVIEW: Chapter 11 bankruptcy trustee brought an action to recover, as a fraudulent conveyance, transfers made by defendant pursuant to a reverse repurchase agreement used to facilitate leveraged buyout. The court held that the oanl:ruptcy Code (Code), 11 U.S.C.S. § 546{el, prevented trustee from recovering such transfers. The transaction in which debtor sold a treasury bill to defendant after agreeing to repurchase the bill came within the broad definition of settlement payment under the Code, 11 U.S.C.S. § 546(e), defining settlement payment as any transfer of cash or securities completing a securities transaction. Furthermore, even if defendant knew that transaction was part of a leveraged buyout, the transaction could not be recovered as a fraudulent transfer because the Code, ~ 546{el, barred recovery of settlement payments more than one year pre-petition irrespective of defendant's mental state. 'l'hc court also held that the Codc, 11 U.S.C.S. § 544 (Il), deprived trustee of standing to assert a claim for aiding and abetting a fraudulent transfer. OUTCOME: The Ban);ruptcy Code barred trustee's fraudulent transfer action. The transaction where debtor sold defendant a treasury bill after agreeing to repurchase the bill came wi.thin the Bankruptcy Code's definition of settlement payment. Even if defendant knew that the transaction was part of a leveraged buyout, no recovery was possible because the Bankruptcy Code barred settlement payment recovery one year post-petition.

CORE TERMS: repo, settlement payment, stockbroker, commodity, broker, aiding and abelling, shareholder, transferred, settlement, fraudulent conveyance, summary judgment, handling, fraudulent transfer, stock, forward contract, clearing, merchant, reverse repurchase agreement, repurchase agreement, present action, prepetition, undisputed, repurchase, buy, dealer, chain, legislative history, cause of action, insolvent, defraUd LexlsNexis(R) Headnotes • Hide Headnotes Civil Procedure> Summary JUdgment> Standards> Legal Entillement

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Civil Procedure> Summary Judgment> Standards> Materiality HN1Summary judgment is properly granted when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.

!

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power HN2See

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the Bankruptcy Code, 11 U.5.C.S.§546(e).

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power HN3 Congress

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enacted Bankruptcy Code, 11 U.S.C.S.

§

546 (e), to protect the n
the reversal of settled securities transactions.

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power HN4

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Repos and Reverse Repos are securities transactions covered by Ban};ruptcy Code, 11 U.S.C.S.

§

546 {ej .

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power HN5In a Rapa arrangement, the dealer sells specified securities to a purchaser, but also agrees to repurchase the securities later at the original price, plus an agreed upon additional amount usually representing interest on the original purchase price. A Reverse Repo basically is the reverse: the dealer buys securities and agrees to resell the securities to the seller in the future. Reverse Repos can function as a loan. The seller receives cash for the securities, but must repurchase the securities in the future at the same price. Thus, the securities sold to ttle dealer can be viewed as being collater'll for a loan.

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.~

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power HN61~hether

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a tr
Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power HN7Several courts have also helel that Bankruptcy Code, 11 U.S.C.S. § 546 (e), covers unusual as \>le11 as routine securities transactions.

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Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power Bankruptcy Code, 11 U.S.C.S. § 546 (e), does not cover only Repos and Reverse Repos; it covers all types of securities transactions. The Bankruptcy Code, 11 U.S.C.S.§546(e) , includes a transfer of securities that completes any securities transaction.

HNBThe

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Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power Bankruptcy Law> Liquidations> Clearing Banks, Commodity Brokers & Stockbrokers HN9See the Bankruptcy Code, 11 U.S.C.S. § 741 (Bl ,

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Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power HN10A

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settlement payment clearly includes a transfer of securities that completes a securities transaction.

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power HNllSettlement payment includes any transfer of cash or securities toward completion of a securities transaction.

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Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power HN12See

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the Bankruptcy Code, 11 U.S.C.S.§546(f).

Bankruptcy Law> Case Administration> Commencement> General Overview HN13S ee the Bankruptcy Code, 11 U.S.C.S.

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§

101 (46).

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power HN14

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The Banl:ruptcy Code (Code), 11 U.S.C.S. § 546 (f), was intended to supplement rather than narrow Code, 11 U.S.C.S. § 546 (e), and a ~:~~n~:~~l~~~~n~~alifies under Code, 11 U.S.C.S. § 546(e), as a stoc);bro}:er need not qualify under Code, 11 U.S.C.S. § 546(f), as a

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Fraudulent Transfers> Constructively Fraudulent Transfers Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Fraudulent Transfers> Elements Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Fraudulent Transfers> Intent Bankruptcy Code, 11 U.S.C.S. § 546 (e), contains a limited exception for cases involving actual fraud. The statute does not bar actions brought under the Bankruptcy Code, 11 U.S.C.S.§548(a) (1), which a1lo\>l5 a trustee to recover a transfer made within one year before the petition date with actual intent to hinder, delay, or defraud creditors. The Bankruptcy Code, 11 U.S.C.S.§ 546(8), does bar actions brought under the Bankruptcy Code, 11 U.S.C.S. § 544 (using state fraudulent conveyance statutes) to recover transfers made more than one year prepetition with actual intent to hinder, delay, or defraud creditors.

HN15The

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Bankruptcy Law> Bankruptcy Crimes HN15California courts permit a creditor to ± hinder, delay, or defraud creditors.

recover civil damages from those who conspire to transfer property of a debtor to

Bankruptcy Law> Bankruptcy Crimes Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Duties & Functions> Reorganizations Real Property Law> Purchase & Sale> Fraudulent Transfers HN17A

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debtor's bankruptcy trustee is not authorized to pursue every action that creditors of the debtor might pursue.

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Duties & Functions> Reorganizations Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Voidable Transfers> Unsecured Creditors Bankruptcy Law> Claims> Allowance HN18 See the Bankruptcy Code,

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11 U.S.C.S. G544 (b) .

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Duties & Functions> Reorganizations Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Fraudulent Transfers> General Overview Estate, Gift & Trust Law> Trusts> Trustees> Duties & Powers> General Overview trustee's pO\'ier to avoid fraudulent transfers does not enable a trustee to recover damages for aiding and abetting a fraudulent transfer.

HN19A

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COUNSEL: [-1] J. Michael Kelly, Esq., COOLEY GODWARD CASTRO, San Francisco, CA, OF COUNSEL. Thomas K. Polter, III, Esq., JONES, WALKER, WAECHTER, POITEVENT, CARRERE & DENEGRE, New Orleans, LA, Counsel for Defendants, Howard, Weil, LaBoliisse, Friedrichs Incorporated; Howard Weil Financial Corporation; and Legg Mason, Inc.

L.J. Chris Martiniak, Esq., FELDMAN, WALDMAN & KLINE, San Francisco, CA, Counsel for Plaintiff, Frederick S. Wyle, Trustee. JUDGES: Thomas E. Carlson, United States Bankruptcy Judge OPINION BY: Thomas E. Carlson OPINION: ["897] OPINION Thomas E. Carlson, Bankruptcy JUdge. The principal question in this case is whether section 546(e) of the Bankruptcy Code bars a trustee from recovering as a fraudulent conveyance transfers made by a stockbroker pursuant to a reverse repurchase agreement used to facilitate a leveraged buyout. I conclude that there are no genuine issues of material fact and that section 546(e) bars trustee's action, and therefore grant summary jUdgment for defendant. FACTS The material facts are not in dispute. On December 30,1987, MaxPhanma, Inc. paid Connecticut General Corporation (CIGNA) $ 500,000 for an option entitling it to purchase stock of Debtor Hamilton Taft & Company [""2] (Debtor) from CIGNA for $ 4,100,000. MaxPhanma could exercise the option only through January 29,1988. The $ 500,000 option price was applicable to the purchase price, but was otherwise non-refundable. MaxPharma was unable to find a lender willing to arrange financing through a "stock loan," whereby Debto~s stock would be used as collateral to secure the loan. Defendant Howard, Weil, Labouisse, Friedrichs Incorporated (Defendant) informed MaxPharma that it did not make "stock loans," but could lend money with a treasury bill as security by perfonming a reverse repurchase transaction. On January 28, 1988, Debtor wired $ 5.0 million to Defendant. On January 29, 1988, Defendant used approximately $ 4.9 million of those funds to purchase for Debtor a 90-day T-Bill having a face value of $ 5.0 million. On the same day, Debtor sold the T-Bill back to Defendant for $ 4.1 million, subject to a reverse repurchase agreement, under which Debtor agreed to repurchase the T-Bill in 90 days for the sale price plus interest. What happened to the $ 4.1 million is contested by the parties. Debto~s chapter 11 trustee (Trustee) contends that the $ 4.1 million was transferred directly to MaxPhanma immediately ["*3] upon sale of the T-Bili. Defendant claims that it credited Debto~s account for $ 4.1 million, and that those funds were subsequently wired to MaxPharma. For the purpose of the present motion, I accept Trustee's version of the facts. It is undisputed that Debtor transferred the funds to MaxPhanma at the request of Debtor and that MaxPharma used $ 3.6 million to purchase Debtor's stock from CIGNA. When the gO-day repurchase agreement matured, Debtor rolled over its obligation into new T-Bills and later into T-Notes. In

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January 1989, Debtor directed Defendant to sell the T-Notes and apply the proceeds to satisfy Debtor's obligation under the reverse repurchase agreement. Creditors filed an involuntary chapter 11 petition against Debtor on March 20, 1992. Trustee was appointed on March 26, 1992. An order for relief was entered on May 31, 1992. Trustee filed the present action on March 26, 1993. ~ contends that the transaction involving Debtor, Defendant, and MaxPharma was in substance a leveraged buyout (LBO), in which MaxPharma used Debtor's funds to purchase CIGNA's stock in Debtor. Trustee further contends that the transaction rendered Debtor insolvenl'ana that the LBO therefore [-4] constituted a fraudulent conveyance. In the present action, Trustee seeks to recover, pursuant to California Civil Code sections 3439.04 and 3439.05 and Bankruptcy Code section 544, the value of the $ 5.0 million T-Billtransferred from Debtor to Defendant on January 29, 1988, or the $ 4.1 million proceeds of the sale of that T-Bill that were transferred from Defendant to MaxPharrna the same [*898] day. n1 Trustee and Defendant filed cross motions for summary jUdgment. - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -

n1 Trustee previously filed a similar action against CIGNA. That action was settled by the parties before trial.

- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

DISCUSSION

Standard for Summary Judgment HN1't"Summary judgment is properly granted when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Clipper Exxpress v. Rocky Mountain Motor Tariff Bureau, Inc., 690 F.2d 1240. 1250 (9th Cir. 1982), cert. denied, 459 U.S. 1227,75 L. Ed. 2d 468, 103 S. Ct. 1234 (1983). [-5j

II Section 546(e) Defense Defendant contends that Trustee's action is barred under section 546(e) of the Bankruptcy Code. That section provides:

HN2tnotwithstanding sections 544, 545, 547, 548(a)(2), and 548(b) of this tille, the trustee may not avoid a transfer that is a margin payment, as defined in section 101(34),741(5), or 761 (15) of this tille, or settlement payment, as defined in section 101(35) or 741(8) of this title, made by or to a commodity broker, forward contract merchant, stockbroker, financial institution, or securities clearing agency, that is made before the commencement of the case, except under section 548(a)(1) of this tille.

11 U.S.C. § 546(e). HN3'tCongress enacted section 546(e) "to protect the nation's financial markets from the instability caused by the reversal of settled securities transactions." Kaiser Steel Resources, Inc. v. Jacobs, 110 Bankr. 514, 522 (D. Coio. 1990), affd, 913 F.2d 846 (10th Cir. 1990) (citation omitted). Trustee does not contest many of the elements of the section 546(e) defense: that Defendant is a stockbroker, that the [-6] T-Bill transferred was a security, and that the present action is brought under section 544. Trustee contends that section 546(e) does not apply, however, because: (i) the transaction was not a true repurchase agreement (Repo), (Ii) the transfer of the T-Bill to Defendant was not a "settlement payment," (iii) the present transaction is govemed by section 546(1), and (iv) section 546(e) should not be applied to LBOs. A. Whether Transaction a True Repo

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Defendant characterizes its transaction with Debtor as a reverse repurchase agreement (Reverse Repo). HN4tThe Ninth Circuit has held that Repos and Reverse Repos are securities transactions covered by section 546(e). In re Comark, 971 F.2d 322, 325 (9th Gif. 1992) (Comark I); In re Comark, 145 Banl'f. 47, 52-53 (Bankf. 9th Cif. 1992) (Comark II). HNstThe Ninth Circuit has described the characteristics of Repos and Reverse Repos as follows. In a Repo arrangement, the dealer sells specified securities to a purchaser, but also agrees to repurchase the securities later at the original price, plus an agreed upon additional amount usually representing interest on the original [-7] purchase price. A Reverse Repo basically is the reverse: the dealer bUyS securities and agrees to resell the securities to the seller in the future. Reverse Repos can function as a loan. The seller receives cash for the securities, but must repurchase the securities in the future at the same price. Thus, the securities "sold" to the dealer can be viewed as being collateral for a loan,

Comark I, 971 F.2d at 323 (footnote omitted), Accord 11 U,S.C. § 101(47). Trustee contends that the transaction between Defendant and Debtor was not a true Reverse Repo, but rather was a sham usejlj§·§Qi:r9'~:fii)heJa.ft!h§!J::)~.I;>tgr:"J'!Qc!"w ere being used to fund an LBO. Trustee notes that Debtor used cash to buy a T-BiIl, then immediately sold the T-Bill SUbject to the Reverse Repo, leaving itself essentially in the place it started. Because there was no net borrowing of funds, which is the essential characteristic of a Reverse Repo, Trustee argues, the transaction is not entitled to protection under section 546(e). This argument is unpersuasive,

n:tJmlnlon

["899] First, the transaction constituted a Reverse Repo in the objective sense. [-8J Debtor sold a T-Bill to Defendant and agreed to repurchase it again later for the sale price plus interest. HN6'iWhether a transaction is a Repo or Reverse Repo covered under section 546(e) is to be governed by an objective test. See Comark 11,145 Bankr. at 53. Courts have noted that there are several varieties of genuine Repo transactions, See Bevill, Bresler & Schulman Asset Management Corp. v. Spencer Sav. & Loan Ass'n, 878 F.2d 742, 746 (3rd CiL 1989); Comark II, 145 Bankf. at 50 n.6, HN7"tSeveral courts have also held that section 546(e) covers unusual as well as routine securities transactions. See Comark I, 971 F.2d at 326; Kaiser Steel Corp. v. Charles Schwab & Co., Inc.. 913 F.2d 846, 849 n.6 (10th Cif. 1990) (Kaiser I); In re I
S, Whether Transfer a "Settlement Payment" Trustee argues that the transfers involving Defendant are not protected under section 546(e) because they do not constitute settlement payments. "Settlement payment" is defined in section 741 (8) of the Bankruptcy Code. HN9t "Settlement payment" means a preliminary settlement payment, a partial settlement payment, an interim settlement payment, a settlement payment on account, a final settlement payment, or any other similar payment commonly used in [-10] the securities trade.

11 U.S.C. § 741(8), The Ninth Circuit has construed the term very broadly.

HN10tWe now join with the Third and Tenth Circuits and broadly define the term settlement payment. A

settlement payment clearly includes a transfer of securities that completes a securities transaction.

Comarl' I, 971 F.2d at 326 (citation omitted). Accord Comark II, 145 Bankf. at 52.

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comR~';t~J,he R~V",[§~B!ll'0'T_~L~3'~~"'~1J,~~:':'115z!,!¥,~qB~J~\\§~iye. The clear thrust of both Comark I and Comark II is that HN11+ll seUlement payment" includes any transfer of cash or securities toward completion of a securities transaction. See

Comark I, 971 F.2d at 326; Comark II, 145 Bankr at 52. To hold that section 546(e) does not apply to the initial transfer of securities to a broker handling a Reverse Repo would eviscerate section 546(e) and frustrate Congress's intent in enacting it, by leaving the broker open to suit [-11] for doing nothing more than handling a securities transaction for the debtor n2 - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - n2 Trustee contends that Defendant's expert witness testified that the initial transfer of the T-Bill to Defendant was not a settlement payment. This argument fails for two reasons. First, the relevant historical facts are undisputed. The application of section 546(e) to those facts is question of law, not a question of fact subject to expert testimony. See Comark I, 971 F.2d at 324-25. Second, Trustee mischaracterizes the testimony of Defendant's expert, Dr Marcia L. Stigum. Dr Stigum's testimony, taken as a whole, supports a finding that the initial transfer of the T-Bill was a settlement payment. Plaintiff failed to submit affidavits controverting that testimony.

- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - Trustee next argues that the transfer to MaxPharma of the $ 4.1 million proceeds of the sale of the T-Bill was. not a ~~J§r]lIr]Ip~Ym~E!:~~SilH§~Jh~p§YrrL~nt wljg.n9trnade!QJ)~blor, the other party to the Reverse Repo. Tnis-arg'ument is frivolous. [**12] It is [ogOO] undisput~<J.!ilaLth"Jljn9s_"""ca !fansfe"ecjto Ma~F'hall11aatth~gir~g\i9n9fP~1?19r. In directing payment of the sale proceedsloMa'xPharma, l:leJ: rel="nofollow">JgL§'~,,[JacjcjQrniniQnQYarJhaJljncj§ljncjlj~~cj.!ham!QrJ!§9""nRljrp9~~§' Thus, from the viewpoint of Defendant, payment to MaxPharma constituted payment to Defendant and fulfilled Defendant's obligation under the first leg of the Reverse Repo. n3 --- - - - -- - - - -- - Footnotes - - - - -- - - - - - ---n3 Trustee's separate statement of undisputed facts asserts that Debtor's instructions to Defendant to transfer the proceeds to MaxPharma were not properly authorized by Debtor's board and were therefore ultra vires. The facts asserted by Trustee clearly establish that the instructions were made with at least apparent authority, and that Debtor implicitly ratified the transaction after the fact. Moreover, Trustee raise no ultra vires argument in the memoranda filed in support of his motion for summary judgment or in opposition to Defendant's motion for summary judgment. - - - -- -- - - - - - End Footnotes- - - - - - - - - - - - --

C. Must Defendant Satisfy Section 546(1)1 Trustee [-13] argues that section 546(1) governs Repo transactions and that Defendant is not entitled to protection under that statute. Section 546(1) provides: HN12+notwithstanding sections 544, 545, 547, 548(a)(2), and 548(b) of this title, the trustee may not avoid a transfer that is a margin payment, as defined in section 741 (5) or 761 (15) of this title, or settlement payment, as defined in section 741 (8) of this title, made by or to a repo participant, in connection with a repurchase agreement and that is made before the commencement of the case, except under section 548(a)(1) of this title.

11 U.S.C, § 546(1). Section 101(46) defines "repo participant" as follows: HN13+"repo participant" means an entity that, on any day during the period beginning 90 days before the date of the filing of the petition, has an outstanding repurchase agreement with the debtor;

11 U.S.C. § 101(46). Trustee argues that section 546(1) governs, because it is the more specific statute, expressly addressing Repo transactions. Trustee argues that Defendant is not protected under section 546(1), because any Reverse Repo transaction between [-14] Defendant and Debtor closed more than 90 days prepetition, and Defendant is therefore not a "repo participant" under section 101(46).

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Both the statutory language and legislative history indicate that section 546(1} was intended to address Repo transactions not already covered by section 546(e) rather than to narrow the application of 546(e). Section 546(e) protects only a "commodity broker, forward contract merchant, stockbroker, financial institution, or securities clearing agency." Section 546(1} protects additional participants in certain Repo transactions. The legislative history to section 546(1} states in relevant part: the proposed amendments are intended to afford participants in the repo market the same treatment with respect to the stay and avoidance provisions of the Code that Public Law 97-222 explicitly provided stockbrokers, securities clearing agencies, commodity brokers and forward contract merchants in connection with securities contracts, commodity contracts and forward contracts.

S. Rep. No. 65, 98th Cong., 1st Sess. 45, 49 (1983). The same legislative history states clearly that section 546(e) continues to protect stockbrokers engaged in Repo transactions. [~15]

These amendments are not intended, however, to affect the status of repos Involving securities or involving commodities as securities contracts, commodity contracts, or forward contracts, and their consequent eligibility for similar treatment under other proVisions of the Code, such as the provisions giving protection to stockbrokers, securities clearing agencies, commodity brokers, and forward contract merchants for liquidation and setoff in respect of securities contracts, commodity contracts or forward contracts.

Id. See also Comark II, 145 Bankr. at 52-53. In summary, section 546(1} HN14twas intended to supplement rather than narroW section 546(e), and a defendant that qualifies under 546(e) as a stockbroker need not qualify under section 546(1} as a repo participant. ['901] D. Is there an LBO Exception to Section 546(e)? Trustee argues that 546(e) should not be interpreted to protect a stockbroker involved in a securities transaction that implements an LBO, relying on Lipoi v. City Bank, 955 F.2d 599 (9th Cir. 1992), Kendall v. Soran;, 151 Bankr. 1012 (Bankr. N.D. Cal. 1993), and Wieboldt Stores Inc. v. Schottenstein, 131 Bankr. 655 (N.D. III. 1991). ["16] Trustee contends that this LBO exception to section 546(e) applies with special force in the present case, because Defendant knew Debtor was rendered insolvent by the transaction. Trustee's argument is not supported by the authorities cited. Trustee's reliance on Wieboldt is misplaced. That case held that section 546(e) did not preclude a fraudulent conveyance action against shareholders whose shares were purchased in an LBO. In the present action, Trustee seeks recovery not from former shareholders, but from a stockbroker that transferred certain securities as a part of the LBO. The Wieboldt court carefully noted that its holding did not leave the stockbroker handling the LBO open to suit. The court acknowledged that the purpose of section 546(e) was to protect brokerage firms, and then stated:

In the instant case, however, reqUiring the [shareholders] to return to the Trustee payments they received ... poses no significant threat to those in the clearance and settlement chain.

Wieboldt. 131 Bankr. at 664 (footnote omitted). The court also quoted with approval the following excerpt from the law review article it had previously cited [~17] in holding that section 546(e) does not protect seliing shareholders.

"Neither the system of guarantees nor the solvency of participants in the chain is threatened by a legal order in which payments to the shareholders by their brokers are subject to recovery by a trustee in bankruptcy. ThUS, while the flows of funds to and between financial intermediaries in the clearance and settlement chain must be protected in order to Insure the stability of those systems, funds flOWing from the intermediaries to the shareholders do not require protection, and section 546(e) should therefore not apply."

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Id. at 664 n.11 (quoting Neil M. Garfinkel, Note, No Way Out: Section 546(e) Is No Escape for the Public Shareholder of a Failed LBO, 1991 Colum. Bus. L. Rev. 51, 61-63). The Tenth Circuit has held that there is no LBO exception to section 546(e). That court has applied section 546(e) to bar recovery both from the brokerage handling the transfer of shares in an LBO, see Kaiser I, and from the selling shareholders, see Kaiser II. The court noted that the plain language of section 546(e) covers LBOs as well as more conventional securities transactions [**18] and reasoned "it would be an act of judicial legislation to establish such a limitation." Kaiser I, 913 F.2d at 850. In short, only Wieboldt supports any LBO exception to section 546(e), but even that case does not permit an action against the stockbroker handling the securities transactions involved In the LBO. Trustee's reliance on Lippi and Kendall is equally misplaced. In each of those cases, the plaintiff sought recovery from the bank that financed the LBO. In neither case did section 546(e) even arguably apply, and neither opinion mentions that statute. Finally, assuming arguendo that Defendant knew the Reverse Repo was part of an LBO and that the LBO rendered Debtor insolvent, such knowledge does not bar application of section 546(e). Section 546(e) HNl5"tcontains a limited exception for cases involving actual fraud. The statute does not bar actions brought under section 548(a)(1) of the Bankruptcy Code, which allows a trustee to recover a transfer made within one year before the petition date with actual intent to hinder, delay, or defraUd creditors. Section 546(e) does bar actions brought under section 544 (using state fraudulent conveyance [**19] statutes) to recover transfers made more than one year prepetition with actual intent to hinder, delay, or defraud creditors. Thus, it is clear Congress intended to prohibit recovery of "settlement payments" received by stockbrokers more than one year prepetition, irrespective of the stockbrokers mental state. Because the transfers at issue here [*902] occurred more than one year prepetition and Trustee's action is brought under section 544, Defendant's knowledge about the LBO and its effect on Debtor is irrelevant.

III Aiding And Abetting Trustee asserts that even if his action to avoid the transfers to Defendant are barred by section 546(e), he may recover damages from Defendant under state law on the theory that Defendant aided and abetted the fraudulent LBO. Trustee argues that liability for damages for aiding and abetting a fraudulent transfer is not barred by section 546(e). Defendant argues that Trustee's aiding and abetting theory fails because: (i) Trustee failed to plead it as a separate claim for relief; (i1) no such cause of action exists under California law; (iii) Trustee lacks standing to assert such a cause of action; and (iv) any such cause of action is barred by [**20] section 546(e). I determine that the Trustee lacks standing to assert the aiding and abetting claim. HN16j:California courts permit a creditor to recover civil damages from those who conspire to transfer property of a debtor to hinder, delay, or defraud creditors. See Taylor v. S & M Lamp Co., 190 Cal. ApD. 2d 700, 706, 12 Cal. Rptr. 323 (1961); Hickson v. Thielman, 147 Cal. App. 2d 11, 15, 304 P.2d 122 (1956). HNl7'tA debtors bankrupLcYJr.lJ.st~e,Dgwever, is not authorized to pursue~very ",tio~ that ,r"ditors afthe. debtor [l'llght pur.su~. Cf. In re OzarkRestaurant EguipmenfCo':,liic., 81'6F.'2ill;tZZ;'fZ26-30(8Ih ti,:), aeriied;484 U.S: 8'48 (1987):'A'lrustee's only authority to assert creditor's state-law causes of action related to fraudulent conveyances is found in section 544(b) of the Bankruptcy Code. n4 That section only permits the trustee to avoid a fraudulent transfer.

cert.

HN18tThe trustee may avoid any transfer of an interest of the debtor in property or any obligation incurred by the debtor that is voidable under applicable [**21] law by a creditor holding an unsecured claim that is allowable under 502 of this title or that is not allowable only under section 502(e) of this title.

ta

11 U.S.C. § 544(b) (emphasis added). The Ninth Circuit has squarely held that HN19 trustee's power to avoid fraudulent transfers does not enable a trustee to recover damages for aiding and abetting a fraudulent transfer. - - - - - - - -- -- - - - Footnotes - - - -- - -- - - - -- --

n4 Section 548 of the Bankruptcy Code creates a federal cause of action for recovery of a fraudulent conveyance. Trustee cannot Use section 548, however, because that statute only permits avoidance of transfers made within one year of the petition date. It is undisputed that all transfers to Defendant occurred more than one year before the bankruptcy petition was filed.

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The Act carefully speaks of conveyances of property as being "null and void," and authorizes suit by the trustee to "reclaim and recover such property or collect its value." The actions legislated against are not "prohibited"; those persons [**221 whose actions are rendered lI null and voidll are not made "liable"; and terms such as "damages" are not used. The legislative theory is cancellation, not the creation of liability for the consequences of a wrongful act.

Elliott v. Glushon, 390 F.2d 514. 516 (9th Cir. 1967) (footnote omitted). In short, Trustee's only authority to bring state-law claims of creditor's is section 544(b), and section 544(b) does not authorize Trustee to assert a claim for aiding and abetting a fraudulent transfer. CONCLUSION

Bankruptcy Code section 546(e) bars Trustee's fraudulent transfer action against Defendant. Trustee lacks standing to sue Defendant for aiding and abetting a fraudulent conveyance. Accordingly, I grant summary judgment in favor of Defendant. Date: 1-18-95 Thomas E. Carlson United States Bankruptcy Judge Copyright © 2006 LexisNexis, a division of Reed Elsevier Inc. All rights reserved. Your use of this service is governed by Terms & Conditions. Please review them.

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~~;;;;;;;;-~-~Co.• 176 I =B,:,' R::'::,8=9=5:,(::N,,:'D=::.c",a=I::":::,1=9=9=5:)_ _..J1 • I I 1.

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case, next case. In re Hamilton Taft &

c1:?l\"ffs.~9~95

(N.D. Cal., 1995)

In re HAMILTON TAFT 8< COMPANY, Debtor. Frederick S. WVLE, Trustee of Hamilton Taft & Company, Plaintiff,

v. HOWARD, WElL, LABOUISSE, FRIEDRICHS INCORPORATED, a Louisiana corporation; Howard Weil Financial Corporation, a Louisiana corporation; and Legg Mason, Inc., a Maryland corporation, Defendants. Bankruptcy No. 91-3-1077-TC. Adv. No. 93-3-121-TC.

United States Bankruptcy Court, N.D. California. January 19, 1995. Page 896 COPYRIGHT MATERIAL OMITIED Page 8g7

J. Michael Kelly, Cooley Godward Castro, San Francisco, CA (Thomas K. Potter, III, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, LA, of counsel), for defendants Howard, Weil, Labouisse, Friedrichs

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KeyCite - 176 B.R. 895 History (Showing 6 documents) Direct History IIIIIn re Hamilton Taft &. Co., 176 B.R. 895, 32 Collier Bankr.Cas.2d 1727, 26 Bankr.Ct.Dec. 665 (Bankr.N.D.Cal. Jan 19, 1995) (NO. 91-3-1077-TC, 93-3-121-TC) Affirmed by H In re Hamilton Taft & Co., 196 B.R. 532 (N.D. Cal. Oct 12, 1995) (NO. C 95-1612-51) Judgment Affirmed by PIn re Hamilton Taft & Co., 114 F.3d 991, 30 Bankr.Ct.Dec. 1236, Bankr. L. Rep. P 77,405, 97 Cal. Daily Op. Servo 4410, 97 Daily Journal DAR. 7369 (9th Cir.(Cal.) Jun 11, 1997) (NO. 95-17058) Court Documents Appellate Court Documents (U.S.A.) C.A.9 Appellate Briefs IN RE HAMILTON TAFT & COMPANY, Debtor. Frederick S. Wyle, Trustee of Hamilton Taft & Company, Plaintiff-Appellant, V. HOWARD, Howard Weil, Labouisse, Friedrichs Incorporated, a Louisiana corporation; Howard Weil Financial Corporation, a Louisiana corporation; and Legg Mason, Inc., a Maryland corporation, Defendants-Appellees., 1996 WL 33489911 (Appellate Brief) (C.A.9 Feb. 20, 1996) Opening Brief of Appellant Frederick S. Wyle, Trustee of Hamilton Taft &. Company (NO. 95-17058) IN RE HAMILTON TAFT & COMPANY, Debtor. Frederick S. Wyle, Trustee of Hamilton Taft & Company, Plaintiff-Appellant v. HOWARD, Wei!, Labouisse, Friedrichs Incorporated, a LOUisiana corporation, Howard Wei! Financial Corporation; and Legg Mason, Inc., a Maryland corporation, Defendants-Appellees., 1996 WL 33489913 (Appellate Brief) (C.A.9 Mar. 21, 1996) Original Brief of Defendant-Appellee Howard, Wei!, Labouisse, Friendrichs, Inc. (NO. 95-17058) IN RE HAMILTON TAFT & COMPANY, Debtor. Frederick S. Wyle, Trustee of Hamilton Taft & Company, Plaintiff-Appellant, V. Howard, Howard WElL, Labouisse, Friedrichs Incorporated, a Louisiana corporation; Howard Weil Financial Corporation, a Louisiana corporation; and Legg Mason, Inc., a Maryland corporation, Defendants-Appellees., 1996 WL 33489912 (Appellate Brief) (C.A.9 Apr. 05, 1996) Reply Brief of Appellant Frederick S. Wyle, Trustee of Hamilton Taft &. Company (NO. 95-17058) Neqative Only

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KeVCite - 176 B.R. 895 Citing References (Showing 41 documents)

Positive Cases (U.S.A.)

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Discussed

I11III1. In re Hamilton Taft & Co., 114 F.3d 991, 992+, 30 Bankr.Ct.Dec. 1236, 1236+, Bankr. L. Rep. P 77,405, 77405+,97 Cal. Daily Op. Servo 4410, 4410+, 97 Daily Journal DAR. 7369, 7369+ (9th Cir.(Cal.) Jun 11, 1997) (NO. 95-17058) 99 HN: 1,2,4 (B.R.)

**

Cited

P2. In re Gandy, 299 F.3d 489, 496, 48 Collier Bankr.Cas.2d 895, 895, Bankr. L. Rep. P 78,709, 78709 (5th Cir.(Tex.) Jul 22, 2002) (NO. 02-50185) 3. In re Mark Industries, Inc., 110 F.3d 69, 69 (9th Cir.(Cal.) Mar 20, 1997) (Table, text in WESTLAW, NO. 95-55712) P4. Forum Ins. CO. V. Devere Ltd., 151 F.Supp.2d 1145, 1149 (C.D.Cal. Jan 02, 2001) (NO. CV 97-9386 NM RCX) HN: 8 (B.R.) P 5. In re Hechinger Investment Co. of Delaware, 274 B.R. 71, 98 (D. Del. Feb 20, 2002) (NO. 99-2283, CIV.A.00-840-RRM) ,.. HN: 5 (B.R.) IH 6. In re National Forge Co., 344 B.R. 340, 371 (W.D.Pa. Jun 09, 2006) (NO. CIV.A. 04-21 ERIE) 1 (B.R.)

99

HN:

C 7. In re Lucas Dallas, Inc., 185 B.R. 801, 805, 34 Collier Bankr.Cas.2d 1095, 1095, 27 Bankr.Ct.Dec. 955,955,95 Daily Journal D.A.R. 12,382, 12382 (9th Cir.BAP (Cal.) Aug 17, 1995) (NO. NC-94-2055-HVR, 93-4562 AN, NC-94-2116-HVR, 91-46079 IN) .. HN: 8 (B.R.) 8. In re Sia, 2006 WL 2472995, *12 (Bankr.D.Hawai'i Aug 25, 2006) (NO. 98-04912, ADV. 00-00102)

Secondary Sources (U.S.A.) Ii 9. Right of creditor to recover damaqes for conspiracy to defraud him of claim, 11 A.L.RAth 345, §10+ (1982) HN: 4 (B.R.)

10. s 6:12. Fraudulent conveyance attacks -- Cases, SECACQMERG s 6:12, s 6:12+ (2006) HN: 1,5

(B.R.) 11. Bankruptcy Service Lawyers Edition s 31:254, s 31:254. Leveraged buyouts (2006) HN: 6 (B.R.) 12. Bankruptcy Service Lawyers Edition s 32:208, s 32:208. Generally (2006) HN: 1,4,5 (B.R.) 13. Bankruptcy Service Lawyers Edition s 32:210, s 32:210. Congressionai intent (2006) HN: 1,5 (B.R.) 14. Bankruptcy Service Lawyers Edition s 32:213, s 32:213. What constitutes "settlement payment" -Particular determinations -- Reverse repo's (2006) HN: 1,5 (B.R.)

c

15. CJS Consoiracy s 49, s 49. Defrauding creditors (2006) HN: 7 (B.R.)

C 16. DERIVATIVES AND REHYPOTHECATION FAILURE: IT'S 3:00 P.M., DO YOU KNOW WHERE YOUR COLLATERAL IS?, 39 Ariz. L. Rev. 949, 1001 (1997)

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e 17. LEVERAGED BUYOUTS AND FRAUDULENT CONVEYANCES: YET ANOTHER UPDATE, 7 J. Bankr. L. & Prac. 315, 333 (1998) HN: 6 (B.R.) e 18. FORWARD CONTRACTS, BANKRUPTCY SAFE HARBORS AND THE ELECTRICITY INDUSTRY, 51 Wayne L. Rev. 49, 106 (2005) HN: 3 (B.R.) 19. ACQUISITION FINANCING, 754 PLI/Comm 385, 449 (1997) HN: 1,5 (B.R.) 20. ACQUISITION FINANCING, 739 PLI/Comm 367, 427 (1996) HN: 1,5 (B.R.) 21. SPECIAL BANKRUPTCY CODE PROTECTIONS FOR DERIVATIVE AND OTHER CAPITAL MARKET TRANSACTIONS, 721 PLI/Comm 95, 114 (1995) HN: 1,5,6 (B.R.) 22. SECURITIES, FORWARD AND COMMODITY CONTRACTS AND REPURCHASE AND SWAP AGREEMENTS UNDER U.S. INSOLVENCY LAWS, 721 PLI/Comm 401, 410+ (1995) HN: 1,2,4 (B.R.)

Court Documents Appellate Court Documents (U.S.A.) Appellate Petitions, Motions and Filings 23. Wyatt R, HASKELL, Petitioner, v. PWS HOLDING CORPORATION, Bruno's Inc., Foodmax of Mississippi, Inc., A.F. Stores Inc., Br Air, Inc., Foodmax of Georgia, Inc., Foodmax of Tennessee, Inc., Foodmax Inc., Lakeshore Foods, Inc., Bruno's Food Stores, Inc., Georgia Sales Company, SSS Enterprise, Inc., Respondents., 2003 WL 21698608, *21698608+ (Appeliate Petition, Motion and Filing) (U.S. Jan 29, 2003) Petition for Writ of Certiorari (NO. 02-1134) HN: 6 (B.R.)

**

Appellate Briefs 24, In re: PWS HOLDING CORPORATION, BRUNO'S, INC., Food Max of Mississippi, Inc., A.F. Stores, Inc., Br Air, Inc., Food Max of Georgia, Inc., Food Max of Tennessee, Inc., Food Max, Inc., Lakeshore Foods, Inc., Bruno's Food Stores, Inc., Georgia Sales Company, and SSS Enterprise, Inc., Debtors, Wyatt R. HASKELL, Appellant., 2001 WL 34095042, *34095042+ (Appellate Brief) (3rd Clr. Aug 28, 2001) Brief of Appellant (NO. 01-1462) HN: 6 (B.R.)

**

25. In The Matter Of: Joe Aivin ANDREWS, Sr., Debtor. CADLE COMPANY, Appeliant, v. WHATABURGER OF ALICE, INC.; M. Louise Andrews; Kathy A. Reese; George P. Braun; Herbert E. Pounds, Jr.; Joe Alvin Andrews, Jr.; Michael Boudloche; Joe Alvin Andrews, Sr., Appeliees., 2001 WL 34353904, *34353904+ (Appellate Brief) (5th Cir. Nov 07, 2001) Appellant's Brief (NO. 01-40807) 111111 HN: 3 (B.R.) 26. THE CADLE COMPANY, Plaintiff-Appellant, v. WHATABURGER OF ALICE, INC.; M. Louise Andrews; Kathy A. Reese; Herbert E. Pounds, Jr.; George P. Braun; and Joe AlVin Andrews, Jr., Defendants-Appeliees., 1998 WL 34114582, *34114582+ (Appellate Brief) (5th Cir. Jut 09, 1998) Brief of Appellant (NO. 98-50368) HN: 6 (B.R.)

**

27. FORUM INSURANCE COMPANY, Plaintiff/Appeliant, v. DEVERE LIMITED; Harrington Trust Limited, As Trustee for the Ogaps Trust; Ephraim P. Kranitz; Thomas Comparet; Kranitz Comparet & Sarrow, P.C.; Jerome Eglin; Ayk, Inc.; Otw Investments; and Jeja Investments, Defendants/Appeliees., 2002 WL 32120536, *32120536+ (Appellate Brief) (9th Cir. Aug 20, 2002) Reply Brief of Appellant Forum Insurance Company (NO. 02-55053)

***

28. FORUM INSURANCE COMPANY, Petitioner/Appeliant, v. DEVERE LIMITED; Harrington Trust Limited, As Trustee for the Ogaps Trust; Ephraim P. Kranitz; Thomas Comparet; Kranitz Comparet & Sarrow, P.c.; Jerome Eglin; Ayk, Inc.; Otw Investments; and Jeja Investments, Defendants/Appeliees., 2002 WL 32120535, *32120535+ (Appellate Brief) (9th Cir. Jut 20, 2002) Brief of Appellee Jerome Eglin (NO. 02-55053) *:

*

29. FORUM INSURANCE COMPANY, Plaintiff/Appeliant, v. DEVERE LIMITED; Harrington Trust Limited, As Trustee for the Ogaps Trust; Ephraim P. Kranitz; Thomas Comparet; Kranitz Campa ret & Sarrow, P.C.; Jerome Eglin; Ayk, Inc.; Otw Investments; and Jeja Investments, Defendants/Appeliees., 2002 WL

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32120534, *32120534+ (Appellate Brief) (9th Cir. Jun 11, 2002) Brief of Appellant Forum Insurance Company (NO. 02-55053)

* *' *

30. Robert B. BURNS, Plaintiff-Appellant, v. James BALDWIN, et aI., Defendants-Appellees., 2002 WL 32115580, *32115580+ (Appellate Brief) (9th Cir. May 30, 2002) Appellant's Opening Brief (NO. 02-55115) '" IIIII!IIIIII!I HN: 6,7 (B.R.) 31. In re THRIFTY OIL CO., a California Corporation; Golden West Refining Company, a California Corporation; Cluj Distribution Company, a California, Corporation; Benzin Supply Company, a California Corporation; and Goiden West Distribution Company, a California Corporation, Debtors, THRIFTY OIL CO., Appellant, v. BANK OF AMERICA NATIONAL TRUST & Savings Association, Appellee., 2000 WL 33981185, *33981185+ (Appellate Brief) (9th Clr. Dec 18, 2000) Appellant's Reply Brief (NO. 00-5(159) HN: 2,4 (B.R.)

**

32. In reo THRIFTY OIL CO., a California corporation; Golden West Refining Company, a California corporation; Cluj Distribution Company, a California corporation; Benzin Supply Company, a corporation; and Golden West Distribution Company, a California corporation, Debtors. THRIFTY OIL CO., Appellant, v. BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, Appellee., 2000 WL 33978038, *33978038+ (Appellate Brief) (9th Cir. Nov 15, 2000) Appellee's Brief (NO. 00-56159) HN: 2,4,5 (B.R.)

,,* '* *

33. In reo THRIFTY OIL CO., a California corporation; Golden West Refining Company, a California corporation; CLUJ Distribution Company, a California corporation; Benzin Supply Company, a corporation; and Golden West Distribution Company, a California corporation, Debtors. THRIFTY OIL CO., Appellant, v. BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, Appellee., 2000 WL 34017800, *34017800+ (Appellate Brief) (9th Cir. Nov 14, 2000) Appellee's Brief (NO. 00-56159) .. HN: 1,2,5 (B.R.)

* '* **

34. IN RE HAMILTON TAFT & COMPANY, Debtor. Frederick S. Wyle, Trustee of Hamilton Taft & Company, Plaintiff-Appellant v. HOWARD, Well, Labouisse, Friedrichs Incorporated, a Louisiana corporation, Howard Weil Financial Corporation; and Legg Mason, Inc., a Maryland corporation, Defendants-Appellees., 1996 WL 33489913, *33489913+ (Appellate Brief) (9th Cir. Mar 21, 1996) Original Brief of Defendant-Appellee Howard, '" (NO. 95-17058) .. HN: 4 (B.R.)

* '* *

Trial Court Documents (U.S.A.) Trial Motions, Memoranda and Affidavits 35. Diane MANN, as Trustee for the Estate of LeapSource, Inc.; Christine V. Kirk; Thomas F. Gilman; Indu Gupta; Kimberly C. Hartmann; Julie B. McCollum; Kelly A. Powers; Bobby D. Scott; and Patricie E. Waiker, Plaintiffs, v. GTCR GOLDER RAUNER, L.L.C.; a Delaware limited liability company; GTCR Fund VI, L.P., a Delaware limited partnership; GTCR VI Executive Fund, L.P. a Delaware limited partnership; GTCR Associates VI, a Delaware general partnership; Michael Makings;, 2006 WL 1183016, *1183016 (Trial Motion, Memorandum and Affidavit) (D.Ariz. Mar 10, 2006) Motion for Summary Judgment on (1) Contract ... (NO. CIV-02-2099-PHX-RCB)

'*

36. Robert B. BURNS, Plaintiff, v. James P. BALDWIN, et al., Defendants., 2000 WL 34631826, *34631826+ (Trial Motion, Memorandum and Affidavit) (C.D.Cal. Sep 11, 2000) Plaintiff's Memorandum of Points and Authorities ... (NO. SACVOO-0249AHS, ANX)

**

37. IN RE: 30FX INTERACTIVE, INC., a California corporation, Debtor, Ein: 77-0390421 Carlyle Fortran Trust, a Maryland real estate investment trust, Plaintiff, v. NVIDIA CORPORATION, a Delaware corporation; Nvidia Us Investment Company, f/k/a Titan Acquisition Corp. No.2, a Deiaware corporation; 3dfx Interactive, Inc., a California corporation, Jen-Hsun Huang, an individual; James C. Gaither, an individual; A. Brooke Seawell, an indiVidual; William J. Miller" 2005 WL 2868911, *2868911+ (Trial Motion, Memorandum and Affidavit) (N.D.Cal. Oct 17,2005) Opposition of Carlyle Fortran Trust to 3dfx ... (NO. 05-00427JW) IIIII!IIIIII!I 38. In reo P.R.T.C., INC., Braunstein International Corporation, Debtors, Gregory A. Akers, Trustee, and Harold S. Taxel, Trustee, Plaintiffs, v. David Troy Braunstein, Christina Braunstein, Braunstein De Mexico,

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S.A. De C.V., BIC Technologies, Inc., Solution Technology Group, LLC, Solution Technology De Mexico, Almacen De Computadoras, Rosenbaum & Diehl, a Professional Corporation, Keith A. Rosenbaum, Duckor, Spradling, & Metzger, a Professional Corporation, and, 2002 WL 32955064, *32955064 (Trial Motion, Memorandum and Affidavit) (S.D.Cal. Jan 02, 2002) Memorandum of Points and Authorities in Support ... (NO. 00CV2307-H, JFS) -k 39. In Re: ENRON CORP., et aI., Debtors. Enron Corp., Plaintiff, v. J.P. Morgan Secuiities, Inc., et aI., Defendants. Enron Corp., Plaintiff, v. Mass Mutual Life Insurance Co., et aI., Defendants., 2005 WL 3038836, *3038836+ (Trial Motion, Memorandum and AffidaVit) (S.D.N.Y. Aug 01, 2005) Memorandum of Law in Support of Lehman's Motion ... (NO. 01-16034, AJG) *: *: HN: 1,3 (B.R.)

40. GREAT AMERICAN UFE INSURANCE COMPANY, Plaintiff, v. Katharine Shaw Waliace THOMPSON, Defendant., 2006 WL 1442021, *1442021 (Trial Motion, Memorandum and Affidavit) (S.D.Ohio Apr 25, 2006) Reply in Support of Plaintiff's Emergency Motion ... (NO. 104CV815) *:

*

41. In re: John SASSER, Debtor; In re Mayflower Transit, LLC, Plaintiff, v. John Sasser, Defendant., 2002 WL 32931587, *32931587 (Trial Motion, Memorandum and AffidaVit) (Bankr.E.O.Cal. Jun 03, 2002) Reply to Opposition of Chapter 7 Trustee's ... (NO. 02-10300A-ll)

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(N,D. Cal., 1995)

In re HAMILTON TAFT & COMPANY, Debtor. Frederick S. WYLE, Trustee for Hamilton Taft &. Co., Plaintiff/Appellant,

v. HOWARD, WEll, lABOUISSE, FRIEDRICHS, INC., a louisiana corporation; Howard Wei! Financial Corporation, a Louisiana corporation; Legg Mason, a Maryland corporation, Defendants/ Appellees. No. C 95-1512-51.

United States District Court, N.D. California. October 12, 1995. Page 533

Abram S. Feuerstein, L.J. Martiniak, Feldman Waldman & Kline, San Francisco, CA, for plaintiff/appellant Frederick J, Wyie,

J. Michael Kelly, Robert L. Eisenbach, III, Cooley Godward Castro Huddelson & Tatum, San Francisco, CA, for defendants/appellees Howard, Weil, Labouisse, Freidrichs, Inc., et a!. ORDER AFFIRMING SUMMARY JUDGMENT

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Hamilton Taft & Co., In re(11JtlP':3llI&§1 (C.A.9 (Cal.), 1997) 30 Bankr.Ct.Dec. 1236, Bankr. L. Rep. P 77,405, 97 Cal. Daily Op. Servo 4410, 97 Daily Journal D.A.R. 7369 In re HAMILTON TAFT &. COMPANY, Debtor. Frederick S. WYLE, Trustee of Hamilton Taft &. Company, Plaintiff-Appellant,

v. HOWARD, WElL, LABOUI55E, FREIDRICHS INC.; Howard WeiI Financial Corporation; Legg Mason Inc., Defendants-Appellees. No. 95-17058.

United States Court of Appeals, Ninth Circuit. Ar9ued and Submitted Nov. 8, 1996. Decided June 11, 1997.

L.J. Chris Martiniak, Feldman, Waldman & Kline, San Francisco, CA, for pia intiff-appellant.

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Auto-Cite(R)Citation SelVice, (c)2006 LEXIS-NEX/S. All righls reselVed. 176 Bankr. 895 (Bankr 1995) CITATION YOU ENTERED: Wyle v. Howard, Weil, Labouisse, Friedrichs (In re Hamilton Taft & Co.), 176 B.R. 895, 1995 Bankr. LEXIS 45, 26 Bankr. Ct. Dec. (CRR) 665, 32 O.G.R. 1727 (Bankr. N.D. Cal. 1995)

SUBSEQUENT APPELLATE HISTORY: affd, Wyle v. Howard, Weil, Labouisse, Friedrichs (In re Hamilton Taft & Co.), 196 B.R. 532, 1995 U.S. Dist. LEXIS 15576 (N.D. Cal. 1995) aft'd, Wyle v. Howard, Weil, Labouisse, Freidrichs Inc. (In re Hamilton Taft & Co.), 114 F.3d 991, 1997 U.S. App. LEXIS 13689, ~ C.D.O.S. 4410, 97 Daily Journal DAR. 7369, 30 Bankr. Ct. Dec. (CRR) 1236, Bankr. L. Rep. (CCH) P 77405 (9th Cir. Cal. 1997)

PRIOR HISTORY: In re Hamilton & Taft Co. (Chapter 11), (Bankr. N.D. Cal. Mar. 20,1991) summ. judgment granted, (BY CITATION YOU ENTERED)

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Document Links: Start of Document CITATION YOU ENTERED: PRIOR HISTORY:

Auto-Cite(R)Citation Service, (c)2006 LEXtS-NEXIS. All rights reserved. In re hamillon Taft 114 F3D 991 CITATION YOU ENTERED: Wyle v. Howard, Weil, Labouisse, Freidrichs Inc. (In re Hamilton Taft & Co.), 114 F.3d 991, 1997 U.S. ApD. LEXIS 13689, 97 C.D.O.S. 4410, 97 Daily Journal DAR. 7369, 30 Bankr. C!. Dec. (CRR) 1236, Bankr. L. Rep. (CCH) P 77405 (9th Cir. Cal. 1997) PRIOR HISTORY: In re Hamilton & Taft Co. (Chapter 11), (Bankr. N.D. Cal. Mar. 20, 1991) summ. judgment granted, Wyle v. Howard, Weil, Labouisse, Friedrichs (In re Hamilton Taft & Co.), 176 B.R. 895, 1995 Bani", LEXIS 45, 26 Bankr. C!. Dec. (CRR) 665, 32 O.G.R. 1727 (Bankr. N.D. Cal. 1995) alrd, Wyle v. Howard, Weil, Labouisse, Friedrichs (In re Hamilton Taft & Co.), 196 B.R. 532, 1995 U.S. Dis!. LEXIS 15576 (N.D. Cal. 1995) alrd, (BY CITATION YOU ENTERED)

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Memorandum

To

SAC, SAN FRANCISCO 1961YSF-93255 (P) ,

FJ7~

SAl

SubJ(lct

CONNI TAFT; TAFT;

/~/

Dnte

1/25/95

b7C

/ ILTON F HAMILTON ) ;

MAIL FRAUD; ITSP; OO:SF

The pufpose of this memo is to provide an update as to the status of captioned case. A firm trial date has been set for this matter on June 26, 1995 before U.S. D.C. Judge Charles Legge at San Francisco~ The discovery process is continuing and it is anticipated that approximately thirty to forty-five witnesses will be called by the government for trial which is expected to last three to four weeks. The current strategy for preparing these witnesses for trial is to hopefully employ video conferencing as much as possible in order to make the best use of both agent resources and the attorney's time trying this matter. Cost and time expenditures dictate that the use of video conferencing be utilized whenever possible. It is also anticipated that one trip to Texas will be made prior to trial for preparing numerous witnesses who were employed in several companies operated by captioned subject Armstrong in the Dallas metropolitan area. The defense counsel for captioned sUbjectl Ihas indicated a willingness to plead him out but no action has been taken to date on this matter due to the probability that his counsel has yet to become thoroughly familiar with the evidence accumulated against her client. LEAD: continue to prepare for trial.

'if

196A-SF-93255

J~/dbC

SfAIlCHED_~INDEXED

TC::::-

SEAtAUZE~ RLro_.,,~;.,<=-

FEB 1 7 1995

Memorandum

To

SAC, SAN FRANCISCO 196!j,-'SF-93255 (P) , SA

SubJl;~ct

1/25/95

DOl'

1-------::0---/

CONNI~ CHT~ARciSTRQNG. FORMER CHAIRMAN OF H~ILTON TAFT; L joF HAMILTON TAFT; FBW); MAIL FRAUD; ITSP; OO,SF

// The purpose of this memo is to provide an update as to the status of captioned case. A firm trial date has been set for this matter on June 26, 1995 before U.S.D:C. Judge Charles Legge at San Francisco. The discovery process is continuing and it is anticipated that approximately thirty to forty-five witnesses will be called by the government for trial which is expected to last three to four weeks. The current strategy for preparing these witnesses for trial is to hopefUlly employ video conferencing as much as possible in order to make the best use of both agent resources and the attorney's time trying this matter. Cost and time expenditures dictate that the use of video conferencing be utilized whenever possible. It is also anticipated that one trip to Texas will be made prior to trial for preparing numerous witnesses who were employed in several companies operated by captioned subject Armstrong in the Dallas metropolitan area. b ,.-'

I

The defense counsel for captioned sUbject Ihas indicated a willingness to plead him out but no action has been taken to date on this matter due to the probability that his counsel has yet to become thoroughly familiar with the evidence accumulated against her client. LEAD: Continue to prepare for trial.

cif

196A-SF-93255 tf.KM/dbc

r)M,

SEARC-HED_~ INDEXED

SEAIALlZE~ FILED

ff "

FEB 1 71995

0'

William J. Perlstein (WP 1073) Craig Goldblatt (CG 6793) Jonathan E. Paikin (JP 7599) Caroline Rogus (CR 6931) WILMER CUTLER PICKERING LLP 2445 M Street, N.W. Washington, DC 20037 Telephone: (202) 663-6000 Facsimile: (202) 663-6363 Attorneys for Amici Curiae International Swaps and Derivatives Association, Inc., Securities Industry Association, and The Bond Market Association

UNnED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------

lC

Chapter 11 Case No. 01-16034 (AJG)

Inre ENRON CORP., et aI.,

Jointly Administered

Debtors. -------------------------------------------------------------

lC

Adv. No. 03-93383 (AJG)

ENRON CORP., Plaintiff,

v. LEHMAN BROTHERS FINANCE S.A., et aI., Defendants. -------------------.--••-------------------••----------••----

lC

MEMORANDUM OF LAW OF INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION, INC., SECURITIES INDUSTRY ASSOCIATION, AND THE BOND MARKET ASSOCIATION AS AMICUS CURIAE IN SUPPORT OF DISMISSAL OF ADVERSARY PROCEEDING

TABLE OF CONTENTS Page TABLE OF AUTHORITIES

ii

PRELIMINARY STATEMENT

1

STATEMENT OF INTEREST

3

STATUTORY, FACTUAL AND PROCEDURAL BACKGROUND

5

I.

SECTION 546(e) PROTECTS PAYMENTS MADE UNDER OTC EQUITY DERIVATIVES CONTRACTS FROM PREFERENCE AND FRAUDULENT CONVEYANCE ACTIONS The Transfers Are Protected "Settlement Payments" In The Forward Contracts Trade

14

The Transfers Are Protected "Settlement Payments" In The Securities Trade

16

SECTION 546(g) PROTECTS PAYMENTS MADE IN CONNECTION WITH OTC DERIVATIVES TRANSACTIONS FROM PREFERENCE AND FRAUDULENT CONVEYANCE ACTIONS

18

STATE LAW CLAIMS THAT CIRCUMVENT THE PROTECTIONS AFFORDED TO THE FINANCIAL MARKETS BY THE FEDERAL BANKRUPTCY LAWS ARE PREEMPTED

23

A.

B. II.

ill.

13

CONCLUSION

27

TABLE OF AUTHORITIES CASES Page(s)

Bessette v. Avco Financial Services, Inc., 230 F.3d 439 (1st Cir. 2000) .".""

25

Bevill, Bresler & Schulman Asset Management Corp. v. Spencer Savings & Loan Ass'n, 878 F.2d 742 (3d Cir. 1989) " .."""".".."" " ""

7,8,9, 17

Century Glove, Inc. v. Iselin (In re Century Glove), 151 B.R. 327 (Bankr. D. Del. " " " " "" 1993) Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992)

"""

25

"

""

25

Cox v. Zale Delaware, Inc., 239 F.3d 910 (7th Cir. 2001)

25

Curtin v. Port Authority, 183 F. Supp. 2d 664 (S.D.N.Y. 2002) .."

24

Diamante v. Solomon & Solomon, P.e., No. 1:99CV1339 (FJSIDRH), 2001 WL 1217226 (N.D.N.Y. Sept. 18, 2001) " " " " In re Comark, 971 F.2d 322 (9th Cir. 1992)

" .."

"

"

26

"

17

In re Hamilton Taft & Co., 176 B.R. 895 (Bankr. N.D. Cal.), aff'd, 196 B.R. 532 "" (N.D. Cal. 1995), aff'd, 114 F.3d 991 (9th CiT: 1997) In re Hechinger Investment Co. of Delaware, 274 B.R. 71 (D. Del. 2002) In re Interbulk, Ltd., 240 B.R. 195 (Bankr. S.D.N.Y. 1999) In re Nation, 236 B.R. 150 (S.D.N.Y. 1999) " .."

17,18 16, 17,24-25,26

"

""

"

"

9,20 "

""

In re Olympic Natural Gas Co., 294 F.3d 737 (5th Cir. 2002)"

"

In re Resorts International, Inc., 181 F.3d 505 (3d Cir. 1999) International Shoe Co. v. Pinkus, 278 U.S. 261 (1929)

"

,,.. 24 14

"

"

"."

Kaiser Steel Corp. v. Charles Schwab & Co., 913 F.2d 846 (lOth Cir. 1990)

" "

Kaiser Steel Corp. v. Pearl Brewing Co., 952 F.2d 1230 (10th Cir. 1991) MSR Exploration, Ltd. v. Meridian Oil, Inc., 74 F.3d 910 (9th Cir. 1996)

" 17

""".24 7, 17, 18 17

"

" 25

Penn Terra Ltd. v. Department ofEnvironmental Resources, 733 F.2d 267 (3d Cir. 1984) "

25

Pereira v. First North American National Bank, 223 B.R. 28 (N.D. Ga. 1998)

" 25

ii

Pertuso v. Ford Motor Credit Co., 233 F.3d 417 (6th Cir. 2000)

25-26

Thrifty Oil Co. v. Bank ofAmerica National Trust & Savings Ass'n, 322 F.3d 1039 (9th Cir. 2003)

9, 10

SEC NO·ACTION LETTERS Chicago Bd. Options R'Cchange, SEC No-Action Letter, Fed. Sec. L. Rep. 'JI 79,665 (Feb. 22, 1991)

20,21

Goldman, Sachs & Co., SEC No-Action Letter, 2003 WL 22358822 (Oct. 9, 2003)

20

Goldman. Sachs & Co., SEC No-Action Letter, 1999 WL 1244018 (Dec. 20, 1999)

20

STATUTES 7 U.S.c. § la(4)

15

11 U.S.c. § 101(25)

14, 15, 16

11 U.S.C. § 101(51A)

14

11 U.S.c. § 101(53B)

passim

11 U.S.c. § 546(e)

passim

11 U.S.c. § 546(g)

passim

11 U.S.c. § 547

5

11 U.S.c. § 548

:

11 U.S.c. § 548(a)(l)(A)

5 13

11 U.S.c. § 550

5

11 U.S.c. § 741(8)

17

11 U.S.c. § 761(8)

15

15 U.S.C. § 78 et seq

6, 22

iii

1982 Amendments to Bankruptcy Code, Pub. L. No. 97-222, 96 Stat. 235 1984 Amendments to Bankruptcy Code, Pub. L. No. 98-353, 98 Stat. 2706

7, 13 9

1990 Bankruptcy: Swap Agreements and Forward Contracts, Pub. L. No. 101311,104 Stat. 267

11

Commodity Futures Modernization Act of 2000, Pub. L. No. 106-554, 114 Stat. 2763

21-22

LEGISLATIVE MATERIALS H.R. Rep. No. 97-420 (1982), available at 1982 WL 25042 H.R. Rep. No. 101-484 (1990), available at 1990 WL 92539 S. Rep. No. 98-65 (1983)

7,13,16

passim 8,9

S. Rep. No. 101-285 (1990), available at 1990 WL 259288

Bankruptcy Treatment ofSwap Agreemellts and Forward Contracts: Hearing on H.R. 2057 and H.R. 1754 Before the Subcommittee on Economic and Commercial Law of the House Committee on the Judiciary, 101st Congo 1 (1990) Financial Contract Netting Improvement Act of200I, H.R. 11, 107th Congo (2001) , Interest Swap: Hearing on S. 396 Before the Subcommittee on Courts and Administrative Practices ofthe Senate Committee on the Judiciary, WIst Congo 1 (1989)

passim

6

22

10, 11, 19

136 Congo Rec. S7535 (1990)

6, 12

136 Congo Rec. S7536 (1990)

11, 18

MISCELLANEOUS 2000 Enron Corp. lO-K, available at http://www.sec.gov/Archivesledgar/datall024401l000102440101500010/ 0001024401-01-500010.txt

12

Collier on Bankruptcy '11560.02 (l5th ed. 2003)

20

iv

William J. Perlstein (WP 1073) Craig Goldblatt (CG 6793) Jonathan E. Paikin (JP 7599) Caroline Rogus (CR 6931) Wll.JvIER CUTIER PICKERING HALE AND DORR LLP 2445 M Street, N.W. Washington, DC 20037 Telephone: (202) 663-6000 Facsimile: (202) 663-6363 Attorneys for Amici Curiae International Swaps and Derivatives Association, Inc., Securities Industry Association, and The Bond Market Association UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------

J(

In re

Chapter 11 Case No. 01-16034 (AJG)

ENRON CORP., et aI., Jointly Administered Debtors. ----------------------------------------------.-.------------

J(

ENRON CORP., Adv. Pro. No. 03-93373 (AJG)

Plaintiff,

v. UBSAG and UBS SECURITIES LLC, fIkIa UBS W ARBURG LLC (alkla UBS WARBURG), Defendants. ----------------------•••• -.----------------.----------------

J(

MEMORANDUM OF LAW OF INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION, INC., SECURITIES INDUSTRY ASSOCIATION, AND THE BOND MARKET ASSOCIATION AS AMICI CURIAE IN SUPPORT OF DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

TABLE OF CONTENTS Page

TABLE OF AUTHORITIES

ii

PRELIMINARY STATEMENT

1

STATEMENT OF INTEREST

2

STATUTORY, FACTUAL AND PROCEDURAL BACKGROUND

5

I.

SECTION 546(e) PROTECTS PAYMENTS MADE UNDER OTC EQUITY DERNATIVES CONTRACTS FROM PREFERENCE AND FRAUDULENT CONVEYANCE ACTIONS The Transfers Are Protected "Settlement Payments" In The Forward Contracts Trade

13

The Transfers Are Protected "Settlement Payments" In The Securities Trade

15

SECTION 546(g) PROTECTS PAYMENTS MADE IN CONNECTION WITH OTC DERNATIVES TRANSACTIONS FROM PREFERENCE AND FRAUDULENT CONVEYANCE ACTIONS

17

STATE LAW CLAIMS TIIAT CIRCUMVENT THE PROTECTIONS AFFORDED TO THE FINANCIAL MARKETS BY THE FEDERAL BANKRUPTCY LAWS ARE PREEMPTED

23

A. B.

II.

Ill.

12

CONCLUSION

27

TABLE OF AUTHORITIES CASES Page(s)

Bessette v. Avco Financial Services. Inc.• 230 F.3d 439 (1st Cir. 2000)

25

Bevill. Bresler & Schulman Asset Management Corp. v. Spencer Savings & Loan Ass·n. 878 F.2d 742 (3d Cir. 1989)

7.8, 16

Century Glove. Inc. v. Iselin (In re Century Glove), 151 B.R. 327 (Bankr. D. Del. 1993)

25

Cipollone v. Liggett Group. Inc.• 505 U.S. 504 (1992)

25

Cox v. Zale Delaware. Inc., 239 F.3d 910 (7th Cir. 2001)

25

Curton v. Port Authority, 183 F. Supp. 2d 664 (S.D.N.Y. 2002)

24

Diamante v. Solomon & Solomon. P.C, No. 1:99CV1339 (FJSIDRH), 2001 WL 1217226 (N.D.N.Y. Sept. 18. 2001)

25

In re Comark, 971 F.2d 322 (9th Cir. 1992)

17

In re Hamilton Taft & Co., 176 B.R. 895 (Bankr. N.D. Cal.), aff'd, 196 B.R. 532 (N.D. Cal. 1995), affd, 114 F.3d 991 (9th Cir. 1997) In re Hechinger Investment Co. ofDelaware, 274 B.R. 71 (D. Del. 2002) In re Interbulk. Ltd., 240 B.R. 195 (Bankr. S.D.N.Y. 1999)

15. 18 16-17. 24, 25, 26 9,20

In re Nation, 236 B.R. 150 (S.D.N.Y. 1999)

24

In re Olympic Natural Gas Co., 294 F.3d 737 (5th Cir. 2002)

14

In re Resorts International. Inc., 181 F.3d 505 (3d Cir. 1999)

16

International Shoe Co. v. Pinkus. 278 U.S. 261 (1929)

23

Kaiser Steel Corp. v. Charles Schwab & Co., 913 F.2d 846 (10th Cir. 1990)

6, 16, 17

Kaiser Steel Corp. v. Pearl Brewing Co., 952 F.2d 1230 (10th Cir. 1991)

16

MSR Exploration. Ltd. v. Meridian Oil. Inc., 74 F.3d 910 (9th Cir. 1996)

25

Penn Terra Ltd. v. Department of Environmental Resources, 733 F.2d 267 (3d Cir. 1984)

24

Pereira v. First North American National Bank, 223 B.R. 28 (N.D. Ga. 1998)

25

11

Pertuso v. Ford Motor Credit Co., 233 F.3d 417 (6th CiT. 2000) Thrifty Oil Co. v. Bank ofAmerica National Trust & Savings Ass'n, 322 F.3d 1039 (9th CiT. 2003)

25 9

SEC NO-ACTION LETTERS Chicago Bd. Options E'Cchange, SEC No-Action Letter, Fed Sec. L. Rep. 'll 79,665 (Feb. 22, 1991)

20

Goldman. Sachs & Co., SEC No-Action Letter, 2003 WL 22358822 (Oct. 9, 2003)

20

Goldman, Sachs & Co., SEC No-Action Letter, 1999 WL 1244018 (Dec. 20, 1999)

20

STATUTES 7 U.S.C. § la(4)

14

11 U.S.c. § 101(25)

14, 15

11 U.S.C. § 101(51A)

13

11 U.S.C. § 101(53B)

18,20, 21

11 U.S.c. § 546(e)

passim

11 U.S.C. § 546(g)

passim

11 U.S.C. § 547

5

11 U.S.C. § 548

5, 13

11 U.S.c. § 550

5

11 U.S.c. § 741(8)

16

11 U.S.C. § 761(8)

14

15 U.S.c. § 78 et seq

6, 21

1982 Amendments to Bankruptcy Code, Pub. L. No. 97-222, 96 Stat. 235

7, 13

iii

285

[}; RE HA.'I'IILTON TAFT & CO. United Sbltes under

lilt.

to Justice Act ("EA.rA."-:i' .,dlilHAll. EAJ."- is not an"", . "hUtin~ statute in favor of lit(~

\d.il :J.g'J.inst the g'Ove~~

Z..l12idl(l)iAI says that ~~.

larry is not entitled to an

awVt~

:::nds that the position of ~ ,;ubstantially justified ai:.~ -:..rr:umst.1.nc:es make an 3'W111I-:W " "subsuntially justified" """",~. e.shed out in Pierce v. Unan:1fi. i;;z. 505, lOS S.CL 25-11. ~~ :90 (19&3l, followed in Com""':'~ . 4% C.S. 154. 158 n. 6, m"¥' n. 6. 110 L.Ed.2d 13-1 (1900},:11

"as

"Tls

he underl)ing

:~:.

subst.z,n:';~

.e magistrar.e judge u.a~ : """-ere correct in concludiIifi J.rd of Immigration Appe>la Y. s....-etion in refusing to ~ -'~ deportation: Under a th"';;f 1

amendment to the Im~'~

. 'It,i "

"itv Act (8 U.s.c::·~ filing of a motion' ti

'% the t'"' ..,.:1\

.~j"oceedings where 'eel", given notice of such ~~ . ~ ~ cally Stays deportation. r(;.: mmigration Judge had . :a:ion hearing in absentla-"':" :'" ""at Zapons had not ~~, Jt hearing (something th.lt .~ ,- t h' ~" •.:. ""1Z' . elr fail ure to ap~:':..~ ne dency of a motion ~.;~ ·1 .... ~lon authorities :u:ti"'~l Ith a \;ew toward depoJ"to....Jt

"""""'i

'.•

C=''C

~'culty

Cllo:: ... 5J F...3d 285 (':Jthell'". 19951

~i~

in recovaring ~~ their having gone fugi~' _ still-outstancling (tho~ :i) deportation order. I Tb<1.' ,

nl:lln

('I.~rJ,

t

th:lt

the deportation order created

·.J.lch-~ dileml1l:l becau~e surrendering

_..,•.dd h:lve ui/-.~rere-d their immediate depurmwtln){ their meritoriou.s attack nn ~ "nk'r':: yalidit.y. But feder.:J...l co~ reguw..~' ",'T':mt ~mergency relief again5t arbi.t":LJ'\' r.llin~"S in immigrJtion procedures ::-~h. juuhring by the reported c~es and by ~,.;U t.'.:\:perience, do :;eem to pronuce far ::a..n' t.h~ their :5h.'I.l"'e of :Jl'bitr:l.1im::55), :lIld :-'f"'n... did not immedb.tely attempt to avail :.:rrn...:.t.·I\·L'S ar' th:H. lJppormnity rather than :.J,:.}llfl.

sue an appeaJ of the deportation order or <1 deni:::L! of his application for a wai';e!" of deport.ltion. In light of thm pre:iti¢oU5 court's pronounce ment and the similar c:ircumsw.nces of this C:::LSe, it can sc:rrcely be ;iaid that the ("ruled StateS was not "substantially jusr.iii.ecl" in opposing Zapons' e1Tort5 to obtain il stay of M

depol~tion.

We therefore AFFIR:.I.

,,-...;.~ (u,l-..,th'e.;:

r: J

nnly in the rarest of situations do It')rr;tl C"Our~<; counlen:mce a part)-'S disre;:lJ"I'i III an exi$ting court order bec:lUse it "'V

o

.:::-c===,,-

w ~ tlT~U"!'" ,'riTI" T

mi:.t:lkenly issued-a clearly im"alid pri-

,~ n·~tr;unt

in the First Amendment context, ..... ~I'n' the injunction was cr:msparently in··~~d llr hurl onj)' a n;\"l')!aus preten:;e to ·"'J.l.:,dl::-·:' is the only e.umple th;]l comes to "':':::'lfl. a'Hlker r. City oj Bimzinghnm. 3&S , ••". :U17, :lI5. ~7 S.CL 1824. 1829. 18 L.Ed.2d :::! f} ( 19ti'j). rn all other situations obedience '.D f"'\,..n an :l."~ertedly "oid (not merely void a~I order is required unless and until it has ~ ...ac;]wd or reversed. lYalker, irL ar. .::n-':l. ~i S.CL at 1832: United States 1,1. ;·.,'rd .\lille Workers. 330 U.S. 258, 290-94, <7 ".n. 1;77, 094--96. 91 L.Ed. 88.J rt94/l, !b~h C"", The Void Order and ihe Duty To '>!r'I. U; L'.Chi.L.Rev. 86 (1948), Hm' lapons engaged in seli-help rather '-'::.:... ,1}00pl!;ng- \\ith an outstanding order r.o 1q,"'7"!'ndcr for cleport.:ltion, and the immigra'.icon JUU10rities responded by denying a stay ,0{ ,j"!)(U·t..1 tion. As Bar-Le"L"!J L'. United '.,c:" f)"p'l <,'- .I11.sti". 990 F.2d 3.1, 35 (2d IJ.!!l.tl) (citJ.tions omitted) has put it: ,'JlbllJl!h an ::ilien who fails to surrender to !}.r I;';S despite a la,,,ful order of deporlaUon L~ nut, stricr.ly speaking, a fugitive in a C'r'.rniru.! matter, we think that he is noneth.i<"'" a fugitive from justice. Like the t-.1l{lU\'e in a crirn..inal matter, the alien \\-'ho fA ;It fUgllh'e from a deportation order ""'"hi onlinarily be barred by his fugitive ....tu., from calling upon the resources of U:.o coun to determine his claims. An AJi<,n Who jg a fugitive from a depoltltion ""'ler shtluld thus not be permitted to purl. J.ndc.c.t.I, II WIU their laler.Rlcci habeas petition

In re a.\c'l!LTON TAFT & CO., Debtor. Frederick S. WYLE, Trustee in Bankruptc)' of Hamilton Taft & Coo, Plaintiff-AppellanL v.

S & S CREDIT CO.• Defendant-Appellee. No. 93-1:>15.5. United States Court of Appeals. Ninth CircuiL Argued and Subntitted _"-ug. 12. 1994. Decided :>by 2, 1995.

Bankruptcy trustee for debtor ~...ho contracted "ith clients to pay clients' federal. state and 10c.aJ payroll taxes and prepare all relevant reports filed action to reCO\'er as Ereference tax pavments made bv debtor. to Internal Revenue Service (IRS) on behalf of S!!enL The Bankruotcy Court dismissed complaint and denied tnlSr:.ee·S motion for Qartial summary judgment thet ta.:(es were estate propero, Trustee appealed. The United States District Court for the N orthern Distmt of California. Charles A. Legge, L-~ed. Trustee appealed. The Court of Appeals, William A. Norris, Circuit Judge, held that debtor did not hold ta.~ funds transferred to it by client in trust because client that !ipnred Z-3pons from depon:nion.

000130

286

53 FEDERAL REPORTER. 3d SERIES

did not require debtor to ~egregate ta."te5. and thus.. ta.."( funcis tr.lI1:i.lerred to debtor were property of debtor's es~te. and tax payments made by debtor to IRS on behalf of c.Uent were subject to :lvoid::J.!lce as preference.

1. Bankrupt",·


.-\.ltJ:oug-h iund, \\ithheJd from employees of client or debtor. who contracted \\jtV client to pay iedenl. 5t.:H.e and local pa;TOII t.:Lxes ::lI1d prepare :ill relevant reports, were impressed'in st:ltutory n-ust ~ coUected. after O""..l5t fund "-1-"\e:5 were tr:msferred to debtor. debtor held r.a.,es free oi trUSt. and ta:'tES were orooem' of nebtar's estate, where client tr::lI1SI"erred :.J.."\e..:5 to debcor \\ithQut reguiri."g debtor :0 ':'e~eg:J.te tho$e funds :rnd hold them in trU5f-: thus. t2.x pa)ment.5 made OD behalf oi client by debtor within 90 days of ban.ia1.tptcy filing were avoidable preference;. Bankr.Code. 11 U.s.C_-\.. §i:!7(bl: "6 C.S.L-\.. §§ 7501. 7501(a). 2. Trusts


t"nder nonnal principles of trust. If trus"", tr.ll1Sfers trUSt property to third party, third pan... hoids i.hat grown)" free qI LTUSt /.;;nJess) crJ.5t.ee committed breach gi trust in conveying property. Restatement lSecondl oi Tl"USt.5 § ~.

3. Trust.5 =:156(21

Absent bre.a.cn or Ullit. \vhen t.rtlStEte enters into contner ',\ith third part;)". :lIly trust funds tI'"'J.nSierreci to th::lt third pan\" in c:onsidel'jltion of contr.l.Ct are trill1Sierred free of trust unle.;;.s conrract nrO\ides that transferred funds shall be held in trnsL Restatement (Second) of Trust.5 § 233. 4. Trusts =356(2) Depositing trUSt. funds in bank account is not trnnsfer of trust property. to third party within meaning of provision Resbtement (Second) of Trusl.'l that when trust.., tran.sfers trust property to third party. third party holdB that property 1're
5. Bankruptcy =3766.1 Court of Appeals had jwisdiction to redew denial of bankrupLeY crustee's motion for partial sununary judgment in preference a....oidance proceeding on issue that trUSt fund t2.,es paid by debtor to IRS on behalf of nebtor's client. n.ith whom riebtor had 1:00t.r.lCte
,;..-,

:::-:::

6. Fe660.25 In geDeraL denial of motion for SUIDjudgment is not flnal order since consequence of denial is that case will go to trial; thus. ordi.n.ariIy, re...iew of such denial is sought through interlocutor;." appeal mar}.

7. Fe
--

.., DO\id L. Kane! and Patricia S. ~Iar, Feldman. Waldman & Kline. San fr:rncisco. CA. ::.' for plaimiff-appell:rnt. _. Susan C. Cag
--

. ~iI

Appeal from the United States Distri<:t Court for the Northern District. of Califo~ Before: NORRIS, THOMPSON, TROTT. Circuit Judges. WILLIAM A.. NORRIS. Circuit Judge: The bankruptcy trustee of debtor ton Taft & Company (Taft(llappeob the <~, rupt.ey court's disrni:lw of his suit to from S & S Com an S & 5) ents

IN RE HANIILTO~ TAFT & CO. CUeu!.:! FJd l!.5:

:>1766.1 5 had jurisdiction to re:ucruptcy trustee's motion

......... judgment in preference on issue that trust fund r to IRS on behalf of :h whom debtor had con. II t,,-xes and prep""" :ill e property of debtor for ~ce purposes after trial on rt of Appeals reversed disI of trustee's complain~ ._~..!r of law trustee could -~nt funds paid to r:.or': ..ng preference peri. ,d t,,-xes to debtor \\ith. .or to hold funds in trust; f ~urnmary judgment """'aB lie e.xercise.

=06025 motion for sum~ . order since COI15echat case will go to trial; . . e\iew of such denial is 'locutory appeal. . =769 .. , Jry appeal from deoW ry judgment is not taJ<. 'la..ry :·'dgment. is revieW'B~ nn :dgment.

md Patricia S. ~ar, Feld· L~li.ne. San Francisco, CA.

.'.,'':

Latham & Watkins, Sao l'(obert D. Crockett, w· Angeles, CA, for def.",..' .

u ruted States District .." District of CaliforniL . S, THOMPSON, and

1995)

287

m.:Jde to tile Internal Revenue Senice)(improper diversion of fundS) and Tm's un behalf of S & The trustee also appeals clients filed the..im:ol~anknt~peti· :ill! court's deniaJ of his mQtion for partial non th'!LZ~ rise,_to this ::u:ti.Ql1,.-,>-

:'1J.ffimar\" judgrnenJ;.. The ouestion ~f~sen~d G:J);othtiSpects of the ap!?":lj)is \\'h;ther ~e :none)' Taft paid the IRS 00 behalf of S & S ~ e\'er the orooenv of the debtor within . . Bankrt ["'_.J.o,: ::/-fh ~"e ",.,rung ol'p'G,uue , "" ,...,1, ~ 1 C.S.C, § ,54j(b), kAJ.:- )1'/;'... '?nf,J"'1' Ct(- DIC-dr''''"fii,·;e.,,, ,~~ /fIa't<1J/i..,) .7~i"'''·

/";&.".r./-

I

TI,.

relevant facts are not in disputeJ'i)

T:'Lft t,;oncr::lcted \\ith S & S and 286 ot.her client:) to pay the clients' federnl. state and :.x-.l1 pa)TolI ta.'es and prepare all the relE'\~t reports, As considention. S & Spaid TJJt the amount of the ta.\':es ill advance of :"l.' due date Df the ta..'(es which enabled Taft '" ":l.'t ~ he benent of the use 1)( the funu3 ::lr:.ng the inten'a1 bern'een the date it re.%!.... ed the funds from its clients and the date

paid the ta.,... Thus. Taft was paid ior its 1IeT\iCe:3 from the "noat" on S & S's money.

In ~1arch, just prior to the filing of the bankruptcy petition. S & S was notified that :t. was going to be audited and requesr.ed that Taft prO\·ide proof th:lt S & S's payTOU taxes

?;ere up to date through 'the end Df Janu2.I"Y· in truth. Taft had withheld m'o pa}'TDenL3 :'rom the IRS that had been due on JanuarY ! 7 and 24. Howe....er. in order to conceal tris :'rom 5 & 5, Taft immediately issued cneck; for the missed payments i.TJ the amount of ,7,632.269 and sent 5 & S proof of pa)1TIent. .-\.5 a result, when the bankruptcy petition .-as filed, S & S had ani)' $158,929 in clain;s againSt Taft ior unpaid taxes. Taft's other clientS .were l:ss fo~~nate-their.~n~aid'~"(G 4" -:-5 total over ~90 million dollars, NO jJ ffi'li!Qn ..r.... ~! '1f which is attributable to taxes that '"ere ;; ·-"'t.1~ ... ,;;~(; ::lOt paid fQr Januanr '~

:1

The funds Taft received from S & S and its were not placed in separate .scrounts with the e.''\:ception of funds from clients which had speciiicolly contracted ~OT >em-egoted treatment of their funds. .all Jther funds were CQnuningled and used bv T=t.it lor its OVoi1 purposes until paid to tjle :.4ting: authorities as the ta..\':es beeame du~. .\ppro:timatelv 56 billion of client man,,· ~C'wP.rl throu"gh Taft's accounts annuall):. "'t.ht>f clients

"''T]

Howe\'p.r, because of had investments and

>
1,

C~CLr.

t. Thes.c: f=-c:Ls :u-e derived from the affidavits p~ ~ in the context of 1l11~' tnlStee's motion for ~~;al "umman' iudg~el),!-- While the summ::u-y JUdgment papers provided details to supplcmcm the pleadings, the appellee does not dispute these: 8dd,uonal facts and agree5 that they do not malel"laUy affect the outcome of the motion to dlsmis.s,

The trustee filed this action to reeQ\'er :'rom S & S the January ta., pa)1TIents made Taft on behalf of S & S to the IRS. S & S moved for dismissal, under Rule 12fbJ(6),

oy

"'5Uing that the funds paid to the IRS ",ere ~eld in statutory trust under LR.C. § -;-001 and, therefore. were not property Qf the debtor. The trustee, in turn, moved for partial summary judgment seeking a determina· :ioo that the funds used to pay the IRS "'ere property of the debtor under 11 USC. S 54;[b), The bankruptcy court disrni.-..-ed :he complaint and denied the plaintiff; mo:iDn Jor partial summary judgmem.. The dis-:::Ct COUrt affirmed the decision. T:'1e O"".l5tee appealed the dismissal and the deoW of portia! summary judgment.' We review both decisions de nDVD, In;e

Stet''''Y.f- 107 B.R. 702,-705 (9th-Gir, B.-\.P 1989) ~(decision to dismiss complaint under . Rule 12(b)(6) reviewed de novo); In re Srn EngllJ.n:J- Fi:lh. Co., 749 F 2d 1m, 1280 (9th 1.. The trustee also argu~ that in rulicg on the motion to dismi.s.s, the bankrupu:y judge improp-

erly considered e:vidcncc outsid~ the:. compl~J1[ without converting the motion to Jismiss into a :notion for summary juugmenL SecaU*" we ~~ verse the dismis.sal on ot.her grounds and erda the district coun to enter partial summ.uy judg· mt:nl in the lrUStc:c's favor. we: need nOl addn:-:>.s

this issue,

000132

288

;;J

FEDER,\L REPORTER. 3d SERJES

Cir.19S...0 (sununary judj..,'l'T1ent reviewed de no....o).

II OJ

reco....er

Section

~j(b}

~nsrers

permit.s the t.ru.stee to

L1f the debtor's property

when the trmsfer occurrerl \\ithin the 9U--day "preference period" prior to the filing of the bankruptcy petition. iJ the tr.lnsfer was made for the benent of one of it.:; creditors. J If the requirements of ~ &.li(h) are met. the trustee may reco....er the value of the property transferred from either the creditor on \vhose behalf the tr:lnsier \l,.":::LS made or from the party to \.... hom the tr::lI1:5fer was made. 11 U.S.C. § 550101(1). In this C:lSe. the,." is no

disputE that the ta..\: pu}ments the trustee seeks to a....oid were made for the beneiit oi S & S \\ithin the preierence pl::!riod. However. S ..\: S ar.':,rue~ that .~ ;~-l.j(bj doe::; not apply because the r..a..x payments Taft transferred to the IRS were not property of the debtor, but r:J.ther funds held in : J. ::3t.:ltutory truSt for the benefit of the IRS. S & S argues that the funds paid to the IRS by Taft were funds held in trust pursu. ant to Internal Revenue Code § 7501, which prol,ides: "[\l,'Jhenever ::J.ny person is required to collect or \\ithhold any internal revenue t::L'{ from any other p!:!rson and to pay over such t:l."( to the United States, the amount ui the Ul.' so collected or withheltJ shall be held to be a special fund in trust for the Uruled States:' ~6 L.S.C. § 7.;01la).

[2.31 It is clear that the funds S & S withheld from its employee:::; were impressed in a statutory trust when collected. SCglcr L'. /ute.nwl Rcrenu.e Sen.·ice. -196 t:.S. 53, 01-62, 3.

no S.Ct. '''''S, 226-1. no L.Ed2d 46 (1990). However, after collection. the O1l5t·fund UL"~ es ' ...· ere tr"J.ns(erred to Tait \loithout requiring Taft to ;;egreg-.lte tho:iie funds and hold them in trust. Under nannal principle:i of trusts, if :l trustee tn..n5fers trust property to a third P:J.rrY, the third party holds that prop~rty free oi trust unless the U'J.Stee c:ornmit· ted :.l breach of trust in convE:ving the prop· en)". Re:H.a.tement (Second) oi Trusts 2S3 119591: IV Austin W. Scon & William F. Fr::ltoher. The Law of Trust;; § 2S-3 \4th ed. 1989), Thus, absent a breach of cruSt. \\'hen a trustee enters into ::l contract \nth ::J. third party, any trJ..5t funds tr::J....1'Jsferred to that third party in consideILltion of the contr'::J..ct are tr:lnsferred free of trust unless the contr':lct prO\ide:i th::J.t· the transferred funds shall be held in trust.

*

[-11 In this t:ase. S & S does not contend that it committed a breach of O1lSt by con\'e}in~ the trust-fund ta:,(85 to Taft as consid~ eradcn for Taft's promise to pay S &: S'S U"( obligations and prepare the appropriate reportS. Nor does S & S ::J.ttempt to .:ihaw tPat it arranged \\ith Taft for the o-ansferred funds to be held in trust. While '"0 of Taft's clien ts arranged to have their rrust-fund ta.'C pa}"tTlents kept in segregated accDums, S & S and the other client;; did noL Ins"ad, Taft extensively commingled all of the funds it received and treated the ru"1d:::; a=i its o\\." :lSSets, using them to pay irs uperating E.":penses and in.. . esting the fund.5 ror irs OV.Ll benefit. Therefore, under orriinary principles of trust. T",l did not hold the funds in trust. Thus, the funds were propcrty of the debtor and the January ta'C payments were subject to avoidance.~

In full, the sr::nute provides:

(5) [h::n eO:J.bles such cn:=ditor to n-ceive

the trLlStce mav avoid any lr:J.nsfcr of an inter·

c~t uf the deb;or in propcny-

.::!

(I) to or for lhe benefit of a c~ditor;

for ur on act.:ount of :10 antecedent debt owed by the ueblor before such tr.:J.nsfer W:J.S rt1:1dt:: (3) m:uie while the: debtor was insolvent:

(2)

(4) madc."-

CAl on or within 90 dOl~ before the dOlte of the filing uf the petition: or (S) between ninety 1.l:J.y.s .:mel one year befon: the dote of the filing of the petition, if .such cn:ditor ::lt the time of such tr.:m~fer wa:s an iruider; ::lod

more

than such creditor would reo:ive if....; -:II (A) the ca:;.e were a C:J.5e under chapter 7 ol ~ this tit.h.:: . (8) the lr.:J.nsfer h::ld nOl ~ m:J.de: and ~ (e) such creditor recl.:ived p:a\ment of such j debt to the c;.;tcnt prm'ided bv" the provisioru "'i . . 1-:d of this title. ~ 11 U.S.C. § 547(b). .: ~ 4.

1

S & S assens tholt under on:linary principlo cl the trust fumb n:m.o.in trUSt funei5 even ~ while in po~s::;ion of an intcrmcJi:1ry, citinl : B~t:iu and E, John Vi,O. Inc. v. Finl ~ Ba"k .\Jwy/amJ, Bankr.LRptr. 7-l.012. t99~. WL 56335 (8anh.D.Md.1991l. In both ~ trus~,

or

000133

289

IN RE HA",nLTON TAFT & CO. C1~

110 L.Ed.~d 40 (1990>. tian. the trust-fund ta:s::.

::i

funds :lJ1d hold the.m ....;.

nal principl"~ of trusts, - ~rs trust property to a .rd party holds that prop-

T

-h creditor to receive more lould l"'ecdv~ if.. :ase under chDpter 7 oJ.

and

!-lau not been rn
. ordinary principle:s of moin trust funds even ;"lcnncdiOiry. citing First Amolcart •. 74,012. 1991 [n both these"

~\:

S argues, however. that such common were abrog:J.ted by Congress :n t..'n:lI.:ung § 7501, relying upon the Sunn'lllt.! Court's decision in Begit'r. In that ~-...L..;.t'. an :lirline declared bankruptcy mer i";l~in"l: l:ertain v,.ithholding ta:tE:; to the IRS.

not kept all of the trost-fund in a segregated account. but had paid a :-ub.-:tantiai pardon of the ta.~es out of its ..."t'n~ral funds. The tnl5tee attempted to :"l"':...l\"~r from the IRS all oi the ta."\es paid ,::.lr.:l.l! the preference period. The IRS ,';;UI1"'U that the taxes paid by the banlaupt l'rnpiu:ver were never propeny Ll( the debtor. hUl in~teud were funds held in trust for the

in conveying the pro~ (St::connl of Tru~t5 § 2S3 "'. Scott & \Villiam F. :' Trusts § :?S3 14th ed. :t :l breach of trust. when '..0 a l:ontract \\ith a third ls tr:lnsferred to that __ ~~tion of the contract ~ C 15t unless the con:.. transferred funds

appropriate re.ropt t.o show that aft for the transferred CUSt. '.'ihDe two uf Taft's 'e their trust-fund tax " .gated accounts, S & S 3 did not. Instead. Taft j all of the funds it he funds as its own :0 its operating ex. r .unds for its own lcier ordinary princi. ~ .10t hold the funds in ds were property of the . ta,x payments were

F.3d 285 (9thClr. 19951

The airline had

~ss the tn.lstee commit,..

S & S rices not contend :-eaeh IJf tn..l::it by conw a."(e5 to Tait as consid'omio:: o to pay S &; S's tax

~3

~w l"'t.!~aictions

-, to Taft \\ithout requiring "'~se

..

"~.

lIO S.Ct. at 2266 (quoting 124 Cong.Rec. 32393, 32417 (1978) (remarks of Rep. Ed-

wards)). The Court held that a reasonable assumption in the case before it was that

"[t]he debtor's act oi voluntarily paling its trust-fund la, obligation _.. is alone suffi-

:.;L.,\!.':;

cient to establish the required nexus ben-~n the 'amount' held in trust and the funds paid." lei at 66-li7, 110 S.Ct. at 2257.

!l\':-; pursuant to LR.C. § 7501. Under com-

S & S argues that Begier compeLs Lhe conclusion that the funds paid to the IP.5 in this case were funds held in statmor:: t:"J.Sr. However, the holding of Segier is not ciir~t­ Iy applicable to t.h.is case because dus c.a...:::.e does not invol .... e a debtor "volum.arily pa:.~. .!lg its trust-fund tax obligation." lei at 66. 110 S.Ct. at 2267 (emphasis added). Ilt5teuL Taft was paying the tax obligation oi a tl'.i!-d party pursuant to a contr.:lct. S & S arg-..:e5 that the fact that there 'tI."'aS an intermeciia..-::

:nun i:J.w principles. the IRS would huve been ,"mP<'lIed to trace the funds it was paid back :.1 ~r.L' original trust-fund ta.'\es \\ithheld from :.:-.~ t:mployees' pay. However, the Court "·il~r\"{'d the legal ch.::J..ncc.eristics of a sUm"..r:: :r·...i:;t m:.l~· be derined by CLlngre~s in :.l ".;'-:l~'

that. is "rari.ically diiferent ITom the com::lon-iaw paradigm." 49£ L'.5. at 02, 110 :'.LL at :!264. The Court DOted that, con~ :"-.lry to cornman law trusts.. § 7501 created a :r.l.St in the amount \l,ithheld, not in the

-"-'tual

property withheld. It concluded, that 'Congress had intended to ab~l.."::He the strict common law requirement ~t the putative trust funds paid to the IRS .,.. directly traceable to the actual dollars ·.ithheld from the employees. Instead. the COUrt ;tated. Congress intended that "[t]he :.h~rclore.

roun..:; should pennit the use of reasonable umpr.ions under which the Internal Reve:'lue ~el"\ice. and other ta.-ring authorities, can d..I"'~onstr::lte that the amounts of ~ithheld '.J..:tf.":-i arc :Still in the possession of the debtor :u ~!:e ClJmmencement of the case." lei at 65, :l.........

~.I;'>oC'S.

trust funds we.e held in : :I bank :::Iccount. 3PP.:::lrently contends th011 placing trUSt lunds in :1 b:::lnk. 3.ccoum is equivalent to paying UU1 the funds (0 a third parry as consider-aion for ~ Ctmtr:JcI. However. depositing trust funds in OJ. ~k. :::Iccoum is not OJ. tr.losfe. of trust property to ... third pOiny \o,;thin the meaning of § 283 of the "i -&

.s

~1.alemcnL

S &: S 01150 n:lies upon Selby v. Ford Moror Co.• But Selby did not 1.tn"Olve money tr.:U'l.Sferred by the SUWtory truSt~ 10 ;"l third p::lrt:.. Inste:td. the ClSe involved : :I lot:chiJ,{::In l>t01lUtc which Slated that ::II! money p.:al(.J mtn ::l budding contr.3ct fund was to be held tn InL~t for lhe owner of the building and the -..beOntr.lcto~. In Selby. the ~ontraetor ~90 F.2u 642 (6th Cir.1979,.

in this l::lSe is not a ;:iignificant difference c..::d that the rule of Begier still applies--once :..~e

funds are paid to the IRS, they are

cooci~­

sively presumed to have been the tI"USt property. However, the fact that the debtor ~ this case is a third party to whom tI1.l5t-fund t.a-"<es were conveyed as consideration for a contract is of paramount importance. The exception to the common !a~ 'C!""'...a.tment of tnlst.s elabor::lted in Beg1er. was j:L~ tified by the language and purpose of § ;-001. However, these factors do not requL""€ '±e E."<:ception to the common law that S &: !.5 seeking in this case. The statutory lang-;ag-e clearly indicates that the statutory t:="..l5t :s

.s

created for the benefit of the IRS. not ti:.e la'<Payer. See LR.C. § i501. We 5ho!id not, therefore,. easily impute to Congress 81 O1tT:U1ged lo have some of the COT1.SlrUcdoo :.~ paid din:'ctly [0 the beneficiaries. rath~r ti1J.n h:::l...· ing th~ funds pass through the COOtr.lCtol:i :lccounts first. The issue before th~ court ....':15 whethl::r feder.ll bankruptcy law would recog:--.i== a selte-law st::ttutory trust. The coun hdd on J. m::llte. of fedl::ra.l law that funds in sLate-c~ SCltulory trusts we~ not property of the debtor under 547(bl. Id. O1t 647. It also implicitf:.· held that. :J..S a matter of state lO1W. the ~ paid to the subcontr:Jclo~ was property !.hal ~ contmcto. held in 01 stal~·law St01tu[Ory rrw.t. . The court did not consider whether the bc: ~t the money was ne.. · ei p01id directly to the suru:..>ry trustee deprived the funds of thei. St:ltu~· trust srarw. unda the Michignn statutI:..

e

000134

290

5.1 FEDERAL REPORTER. 3d SERIES

intention to alter the common bw of trusts \vouJd not materially further the intere::H...'i llf the beneticiary ot' the statute. wh~n doin~ ::'0

)lur ~houlc.l we ~'\tenLl the hollling" in Begi"r more broadly than is nt:::ee::osary to accompU::oh it.:; purpo:;e:;; \\'h~n tioin~ :-\0 necessarily undermines the Bankruptcy C0de'::; core principle of equality or distrihution among l."redito~. In Bf'.fTit"r. the CuUrt found :::m exception to the common

la,,,'

of tn1~t.."i was

nece~sary to effectuate the con~::,siunal intent tbt the IRS not be deprived ni fund, thut hud heen opecifically withheld iram em· ployees' pay for the e..'qJre::iS purpose of payment to the IRS. Had the tru.,t·fund taxes been considered property nf the debtor in Bprrier. tho IRS would have been compelled

to recei\'e p:rrtial rayment of the t:.L'\es rlue like all the other creditor;;, However. \vhen

the bankrupt dehtar is u third party and the employer remains :::olvent. the concerns of Begir:-r dissolve. The ubility ai the IRS to collect the ta.~es owed- by Taft's clients is ~imply not implicated in this case. S & S and Tuft's other clients remain liable to the IRS and. us iar us we know. are financially able to make the paymen ts. The IRS ",ill be able to collect the taxes owed to it regardless of whether the trustee is able to avoid Taft's last-minute payments on behalf of some of its creditors. :'vlare import;Ultly, the money returned to the esr.:u.e through the avoidance is money that can be paid to the other creditor~ emplo~. . ers and ll$~d to pay thf:!ir outstanding t:l.'( obligations.:i In sum, BefJier does not address the cirL1Jmstances of t.hi:; case. I n the ab:;ence of any dear polley reason iar extending Begier. we apply the common lawai trusts and hold that the iunds paid to the IRS on behalf ai S & S were not held in statutory trust and. thu.s, the parments are avaiduble under 11 U.S.C. !i 547(b). Therefore, we hold that

di'ltrict court erred in dismiss.

~ting

the motion to

III also appeals the disaier or the trustee's motlo:l lor par~ tial ~umm:.lr'Y judgment. Rather than ad~ dre~s the IT:t:'r1ts of the; portion of the appeal. S & S me",ly ar!!Ues that this court lacks jUrl~diction to re\iew a denial of :3ummary judgment. [51

court's

Tne

t:ru.ste€

cie~

[6, 71 [n general. the denial at" a motion for summ,1...ry judgment is not a final order since the C'Jnsequence of the denial is that

the case \\ill go to mal. Ordinarily, re\;e",,' of :mch a denial is sought through an interlocutory :iF?€a.l. However. ·.\·hen interlocutory app~~ ~ not taken. :l denial oi ~umm::l.I'Y jucigment :...:: re\iewable upon entry of:l finaJ judgment. .Warnn P• •4elna Lije In•. Co.. 872 F.2d ':!96. :lOO-Dl 19th Cir.l989). WhUe We v.ill often decline to engage in the "'pointless ac:J.der:'Jc exercise" of re\iemng :l de:nial ai sununary judgment ufter a trial on the merits. Lllm 1.'. City and COlLnty of HOTUJlu~ 17" 963 F 2d 1167, 1169-70 19th Cir.1992), such :l C':::L-~ is not presented here. :~ _ There are no disputed i55ues of mar.erial fact. 6 \Ve have held as a matter of law that if S & S =nsieITed its tru.;t·iund ca.,.. tv Taft without requiring Tuit to hold. those fund::; in tr.1.St. the trU:itee rna \. recorer from S & S the funds p:tid to the IRS on its behalf during the preference period. 5 & S disa\'O~"5 any attempt to show rklt tr"a!1Sfer ~ . funds creared any common l.:l\V crust.. There- ~ iare, par...al summary judgment should be , entered in iavar ai the trustee. holding that.) the funds paid to the IRS were the propertY 1 ai the deb",r under § 5.J7(b). -~i .~

The dLmie:t court's clli;rni=l uf the cotI>:~ ... plaint is REVERSED. Upon RE:.iAND,:

..~~

~

~

,.

Nor does !.his C:lSe' involve an attempt by the to recover pa.vmem from Lhc: IRS. We: na:t.! not decide. I.hcn:fore. whether the: pulicy c:onl:cm:<; anim:llin~ 8~xi~r would forbit.! the tr\1Stee from collecting the avoided pUyTnC:nl!l. from thc: IRS rather thun from S ok S. lrutend. we only need to decide whether 5 &. S i.:l to receive preferential Lrearmcnt .:limply beesUSC' of the fonuiwtU acddent that iu laXC:S. ralher thun

some: other client's. were paid just before banlr.ruptey peti tion was fih:u.

lrU~tee

'?~

,I .~.,. ••• ...,:11

6.

· i

5 & 5 3SSl:1""tS in passing: that th~n:: may ~ ~ a {actU2l d.i:sPUtt: about S OL 5'.1 ability. to a~>d the fun.cb through Taft's accounU. Su::u:.e·: holding ~ not depend on whether nu:b tr.1cing is pos.:lible or not. n.ny such facro.al db" pute ~ not material. .~}tk.1

00011_"

I'

u.s.

:.b< .!i.
w'--__-"

distr'ct":ifr

'. motion (or n-..':'~'~: ~. -..$;.

Q

~ ttr .,UloIDI. ;Y"iH~

,

lther than ad-'':; -:1On of the appe:sJ. ~'-~ [his L"OUrt ~ .:. aJ 0 f 5tlI1UlUry "-

I~<j!l

1. Criminal Law =1139, 11-1-1.13(3, 5, 6),

~ent

Jpeals the

291

v. VER.'lERS

Cite u.B F.Jd l'1 IIOth C1r.

1159':!(j)

In determining sufficiency of evidence. court re\ieW5 record de no"-o and asks onlY ,,-hether. taking evidence. both dire<:t and circumSUlntial. together v.ith reasonable inferences to be dr::J.Vrl1 therefrom. in li~ht most favor::Ible to government. reasonable jury

could find defendant guilty beyond re:!.Sonable doubt. ~.

C:\lTED STATES of America. Plaintiff-A ppell ee.

.

--bl of a rn~ ~~ ,. t a nnal ortler ...", :ne rl°nial is thot ~ Jrc .it~, y t1:'r"ie'w;j;:. 4 'ttu,l£h

v

L'U'Uan F. VER:'ffiRS, Defendant,\pP"1lan t.

an in~-~

':hen interlOCOoo -:-" ienial of ::.umrrwj '.'~ ~ntr:,,,

l-:-;ITED STATES of America. I' Iaintiff-Appellee.

"r :1 fi:u.l ...

L iff! 11l:L Ca.. . L 11'.19S91. 'W!liJo .. 'he"point' ~ 5 a dem.il _ _ trial 0 n thii "?,, ._~ Qll11ty of Honel ... :~ 19th Cir.l99'.!l,·i here. ~~ 3:::;ues of

v. GUeulinia VER~RS also known as

Goessinia Holland, DefendantAppellant. :-; 0 ••

- -'''''i IDAt.e.riaI ~

Cniled

-~

~~ .-fund taxe:! tI ...~

tel' of law

.~

,t _.\\

>'old

9-1-5029, 94-5030.

S~tes

Coun of Appeals, Tenth Circuit.

April 11, 1996.

thOOl'~

.:over from--=~

S on its beluIr'j! - ~,- '" S & S~.~ that transfer rJ "" ..• """Ii

IJU.

trus L

Th~.:ji

ent should ~~ ..., 'tee. holding thJt -e the propert1:

l..}.!II!nd:,mt and his mother \\iere convict.n Lhc Cnited States District Coun for the \"rtl:cm Di.
......:j

I .....

,x.. J., 'JI \'::u-:ious drug olTenses, and they

~:U,-d. The Court of Appeals. McKay, ':'l'nUt .Judge, held that: (1) e'idence sup-

~ deiendant's conviction for possession to distribute; (2) evidence that

..,u, mu,nt

\I,'us aware of presence of dru~ in .... hame would support alcling and abetting """ictJo n hut did not show intent to distrib""': fa) e;idence did not show that mother """'to.ined home for purpose of drug manu!>.-turinJ<. and r·l) mother was not entitled to b:Jlht-r'

just

J.

'"""'rom ce . A!lIrmed in Part. reversed in part, and '""-Jed.

Drugs and :"farcotics C=J73.1 To support coO\icdon ior posses.sion \\ith intent, government mU.:it prove knO\\i.ng pos.session of controlled :mb5tance \\;th intent to distribute. although possession may be

constrUcti....e ratber than actual.

3. Drugs and :-<arcotics =73.1 In order for indhidual constructively to po~sess property. he must knO\\indy hold power .:md ability r:o exercise dominion .:lnd control over it. 4. Drugs and Narcotics =73.1 For purposes of co miction of possession of narcotics. "'constructive possession" is de-

fined as appreciable ability to guide destiny of the drug. . See publication Words and Phr:lSe5 for other judicia.! constructions and definitions.

6. Drugs and :'Iarcotics =107

Jury could reasonably inier that defendam: had constructive pos.5ession or cocaine found in his former bedroom and kitchen. despite testimony that he no longer .slept at. residence, in light of e\idence that he continued to keep his posse::sions at residence. had dominion und control over bedroom, and had unfettered access to kir.ehen.

6. Drugs and Narcotics e=>123.2 Testimony that amount of cocaine recovered was in e."tcess of amount which might be

possessed for personal use supported findlng intent w distribute, when coupled "ith presence of scales. razor blades. guns and ammunition, large amounts of cash, and notebook in defendant's bedroom.

7. Drul:" and Narcotics =73.1 Defendant's mother could not be convicted of possession with intent to distribute

000136

Memonmdum

SAC, SAN FRANCISCO

To

From

~f\14

Subject

i

I

=~:

C

. _

ITSP, 00

(196A-SF-93255)

SlY

6/9/95

b 7 i:

ARfLSWONG,

AKA CHIP ARMSTRONG; J FORMER OFFICERS OF

ON/TAFT, SAN FRANCISCO pEw (A); MAIL FRAUD

/

The purpose of this memo is to provide an update as to the status of the above captioned lnvestigatlon. On June 1, 1995 captioned subjects appeared before USDJ Charles Legge for a scheduled pretrial conference. The trial was to commence on June 26, 1995. At the conference, Armstrong requested a new attorney and the Judge granted this motion. The next court date is scheduled for July 6, 1995 and the purpose of this appearance lS to set a trlal date. It is antlcipated that the judge will set a trial date several months from now In order to provide the new defense counsel wlth an opportunity to prepare a defense. The Judge, in open court suggested to the government counsel that they once again flle a speedy trlal act memorandum with the court. In the interim trial preparatlon is contlDulng More specifically, pretrial wltness lntervlews are belng conducted for vlctim companles around the country. This however lS being accomplished 18 a unique manner. The maJority of the wltnesses are belng lnterviewed Vla video conferencing Thls lS being done at the Reglonal Offlce of the Internal Revenue Service (IRS) In Oakland. The obvious advantage to the government and thus to the San Franclsco travel budget lS one of cost savlngs.

It is expected that it will be necessary to travel to Dallas wlth the AUSA handllng thls case to lntervlew a number of witnesses. This will no doubt take place in the next sixty days. LEAD· Wlll continue trlal preparatlon.

r I, 1- 196A-SF-93255

~/dbC

,.' .-:c..'

~.,-' .'t "1__ .1

J

",

i.l--:""

•

__ ;

Memorandum

To

Subject

SAC, SAN FRANCISCO

Date

8/9/95

CONNIE CHIP STRONG,FORMER b7C PRESIDENT, ILTON TAFT SAN FRAN SCO CA' ~~~~~~~~~FORMEROFFICER HAMILTON TAFT FBW (l\< ; MAIL FRAUD OO:SF

The purpose of this memo ~s to provide an update as to the status of this case. On August 4, 1995 a status conference was held in open court before USDJ Charles Legge. The result being that Judge Legge granted another continuance to the defendants unt~l September 5, 1995. On this date the case is supposedly going to be set for trial. The prosecutors in this matter antlcipate that the trial date wlll in all probability be set for the first part of next year. In the last several months we have continued to lntervlew prosecution witnesses In this matter via

teleconferencing. The witnesses we have been concentrat~ng on are the people who dealt with Ham~lton Taft representatives at the various victlffi companies. Generally speaklng,

this matter has met

with success and has resulted in sav~ngs to the government by cutting back on the need for travel throughout the United States. It is ant~c~pated that further teleconferencing of our witnesses will commence once again in September when the trial schedule of AUSA George Hardy has been completed.

~)196A-SF-93255 YKM/dbc

Memorandum

To

From

Subject

SAC, SAN FRANCISCO

D,te

8/9/95

?~I,--__-:---_ CONNIE CHIP STRONG,FORMER PRESIDENT, ILTON TAFT SAN FRAN SCO CA· ~~~~~~~~-1FORMEROFFICER HAMILTON TAFT FBW (1'. ; MAIL FRAUD 00: SF

The purpose of this memo ~s to provide an update as to the status of this case. On August 4, 1995 a status conference was held in open court before USDJ Charles Legge. The result being that Judge Legge granted another continuance to the defendants unt~l September 5, 1995. On this date the case is supposedly going to be set for trial. The prosecutors in this matter ant~cipate that the trial date w~ll in all probability be set for the first part of next year. In the last several months we have continued to lntervlew prosecution witnesses In this matter via

teleconferencing. The witnesses we have been concentrat~ng on are the people who dealt with Ham~lton Taft representatives at the various victlID companies. Generally speaklng, this matter has met

with success and has resulted in sav~ngs to the government by cutting back on the need for travel throughout the United States. It is ant~c~pated that further teleconferencing of our witnesses will commence once again in September when the trial schedule of AUSA George Hardy has been completed.

~)196A-SF-93255 YKM/dbc

.. :Ifl;1,

,

..

IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 93-15455 IN RE:

HAMILTON TAFT & COMPANY,

,

Debtor FREDERICK S. WYLE, TRUSTEE, Appellant

v. S & S CREDIT COMPANY, Appellee

ON APPEAL FROM THE JUDGMENT OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA BRIEF OF THE UNITED STATES AS AMICUS CURIAE ON PETITION FOR REHEARING

On May 23, 1995, this Court invited the Government to file an amicus brief "addressing whether the opinion filed in this case, In re Hamilton Taft & Co., No. 93-15355 [sic], slip op. filed May 2, 1995, adversely affects in any way the interests of the IRS in collecting federal taxes."

The following brief is

sUbmitted in response to that invitation. STATEMENT The case is an appeal from a District Court judgment ~ffirming

a Bankruptcy Court's refusal to treat a payment of

federal taxes as a voidable preference under Bankruptcy Code (11

000154

,

- 15 CONCLUSION

For the above stated reasons, this Court should grant the petition for rehearing and affirm the jUdgment of the District Court affirming the Bankruptcy Court's jUdgment insofar as it refuses to treat payments made by debtor for S & S's trust fund tax liabilities as voidable preferences. Respectfully submitted, LORETTA C. ARGRETT Assistant Attorne L

c:::c..

<1.

(oJ

I)

General

(L[LLtLA',c,J

GARY R~ ALLEN 1 (202) 514-3361 GARY D. GRAY (202) 514~3005 PAULA K. SPECK (202) 514-4329 Attorneys Tax Division Department of Justice Post Office Box 502 Washington, D.C. 20044

Of Counsel: MICHAEL JOSEPH YAMAGUCHI United States Attorney AUGUST 1995

000155 J

Page 3

68 F.3d 337 printed in FULL format. IN RE: HAMILTON TAFT & CO., Debtor. FREDERICK S. WYLE, Trustee in Bankruptcy of Hamilton Taft & Co., Plaintiff-Appellant, v. S & S CREDIT CO., Defendant-Appellee. No. 93-15455 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 68 F.3d 337; 1995 U.S. App. LEXIS 28742; Bankr. L. Rep. (CCH) P76,492; 95 Cal. Daily Op. Service 8031; 95 Daily Journal DAR 13763

October 12, 1995, Filed PRIOR HISTORY:

[~1]

nc. No.

CV-92"()2996-CAL.

Original Opinion of May 2, 1995, Previously Reported at: 1995 US. App. LEXlS 9848. JUDGES: Before: William A. Norris, David R. Thompson, and-Stephen S. Trott; Circuit Judges.

OPINION: ORDER The Court is advised tbat tbe case has been settled. Accordingly, the appeal is dismissed as moot and the decision filed May 2, 1995, appearing at 53 F.3d 285, is vacated.

000137

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Document Links: Start of Document CASE SUMMARY PROCEDURAL POSTURE: OVERVIEW: OUTCOME: CORE TERMS: LexisNexislRl Headnotes COUNSEL: JUDGES: OPINION BY: OPINION:

SHEPARD'S®

196 B.R. 532, *; 1995 U.S. D/st. LEXIS 15576, **

IN RE: HAMILTON TAFT & COMPANY, Debtor. FREDERICK S. WYLE, Trustee for Hamilton Taft & Co., Plaintiff/Appellant, v. HOWARD, WElL, LABOUISSE FRIEDRICHS INC., a Louisiana corporation; HOWARD WElL FINANCIAL CORPORATION, a Louisiana corporation; LEGG MASON, a Maryland corporation, Defendants/Appellees. No. C 95-1612-SI UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA 196 B.R. 532; 1995 U,S. Dist. LEXIS 15576

October 12, 1995, Decided October 12, 1995, FILED; October 19, 1995, ENTERED

CASE SUMMARY PROCEDURAL POSTURE: Appellant trustee challenged the order of the United States Banli.ruptcy Court for the Northern District of California, which granted summary jUdgment to appellee, in an adversary proceeding against a securities brokerage company arising out of debtor's involuntary bankruptcy proceeding.

OVERVIEVV:

Debtor company collected funds from clients and paid payroll taxes when due. Debtor was placed

in involuntary Chapter 11 bankruptcy when its principal absconded with funds. Debtor wired funds to appellee, who used funds to purchase a treasury bill. Debtor sold the treasury bill to appellee based on a "reverse repurchase" agreement. Appellant trustee brought suit c.£.!.lf-~!}.bng,,"9~frb9f,,'c,;;;,,.,,~,Ec:l:,I1~f~_:,~,,~,,2~11,:;~~~,p. Appellant contended, inter alia, that the transaction rendered debtor insolvent~ -ann sought Eo·"te'cDver"THe value of the treasury bill. Appellant further contended that 11 U.S_C_S_ § 546 (e) was inapplicable to the transaction. Appellee moved for summary judgment, which the bankruptcy court granted, finding the transaction was a "reverse repurchase" governed by an objective standard and statutorily protected. Appellant challenged the bankruptcy court's decision. On appeal, the court affirmed summary judgment because it found bankruptcy court had correctly interpreted 11 U.S.C.S. § 546 (e) and there remained no genuine issues of material fact.

OUTCOME; The court affirmed summary judgment in favor of defendant appellee because the bankruptcy court correctly found transaction was a "reverse repurchase" governed by an objective standard and statutorily protected, and correctly determined that there were no genuine issues of material fact to be resolved. CORE TERMS: repo, settlement payment, summary judgment, stockbroker, correctly, treasury, le9islative history, nonmoving party, issues of fact, analyzed, genuine, entity, stock, repurchase agreement, genuine issue, set forth, commencement, mar9in, fraudulent conveyance, bankruptcy petition, repurchase, clarify, lawsuit, wired LexisNexis(R) Headnotes " Hide Headnotes Bankruptcy Law> Practice & Proceedings> Appeals> Standards of Review> Clear Error Review Civil Procedure> Summary Judgment> Appellate Review> General Overview Civil Procedure> Appeals> Standards of Review> Clearly Erroneous Review HNl In reviewing summary judgment, the court accepts the bankruptcy court's factual findings unless they +- are clearly erroneous. n.;'

Bankruptcy Law> Practice & Proceedings> Appeals> General Overview

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nrrp:llweO.leXIS.COffi/xcnange/searciliUlspUOC.asp!_lpUlUg-O"tK.UU 1...

Civil Procedure> Appeals> Standards of Review> De Novo Review HN2The appellate court must determine de novo whether facts support summary judgment.

±

Civil Procedure> Discovery> General Overview

Civil Procedure> Summary Judgment> Standards> Materiality Civil Procedure> Summary Judgment> Supporting Materials> Affidavits HN3Fed. R. Civ. P. 56(e) provides for summary adjudication when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no h& genuine issue as to any material fact and that the party is entitled to a judgment as a matter of law.

+

Civil Procedure> Summary Judgment> Bundens of Production & Proof> General Overview HN4In a motion for summary judgment, if the party moving for summary judgment meets its initial burden of identifying for the court those portions of the materials on file that it believes demonstrate the "''''' absence of any genuine issues of material fact, the burden of production then shifts so that the nonmoving party must set forth, by affidavit or as otherwise provided in Fed. R. Civ. P., specific facts showing that there is a genuine issue for trial.

t

Civil Procedure> Summary Judgment> Bundens of Production & Proof> General Overview HNSA moving party who will not have the burden of proof at trial need only point to the insufficiency of

t

kM

the other side's evidence, thereby shifting to the nonmoving party the burden of raising genuine issues of fact by substantial evidence.

Civil Procedure> Summary Judgment> Burdens of Production & Proof> General Overview Civil Procedure> Summary Judgment> Evidence Evidence> Inferences & Presumptions> General Overview HN6In judging evidence at the summary judgment stage, the court does not make credibility determinations

t

u,

or weigh conflicting evidence, and draws all inferences in the light most favorable to the nonmoving party.

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power Governments> Legislation> Effect & Operation> General Overview HN7 See 11 U.S.C.S.

±

§ 546 (e) .

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power Governments> Legislation> Interpretation HNBTrue reverse repurchases are covered by 11 U.S.C.S. § 546(e).

±,

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power Bankruptcy Law> Estate Property> Contractual Rights HN9Whether or not a transaction is a reverse repurchase is analyzed under an objective test.

y ;J,.."

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power

Governments> Legislation> Interpretation HN1011 U.S.C.S.

±

§ 546 (e) covers a broad range of securities transactions.

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power Governments> Legislation> Interpretation HNllA treasury bill is clearly a security,

±

and hence the transaction is a "securities transaction" under

11 U.S.C.S. § 5641e) .

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power Governments> Legislation> Effect & Operation> General Overview HN12 See 11 U.S.C.S. § 546 (f) .

±

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power Bankruptcy Law> Estate Property> Contractual Rights HN13See 11

±

U.S.C.S. § 101 (46).

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power Bankruptcy Law> Estate Property> Contractual Rights Governments> Legislation> Effect & Operation> General Overview

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LexisNexis by Credit Card -- Document

§ 546 (e) applies to a specific class of financial entities including commodity broker I forward contract merchant, stockbroker, financial institution, or securities clearing agency .

HN1411 U.s.C.S.

...

."'..Iii

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power Bankruptcy Law> Estate Property> Contractual Rights Governments> Legislation> Effect & Operation> General Overview HN1511 U.S.C.S.

§ 546 (f) applies more generally to other "participants" in the repurchase market.

~ Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power Bankruptcy Law> Estate Property> Contractual Rights Governments> Legislation> Interpretation HN16Where one of the parties to a transaction is a stockbroker, the specificity of language would support

!

application of 11 U.S.C.S.

§

546 (e) over 11 U.S.CS. § 546 (fl.

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power Governments> Legislation> Interpretation U.S.C.S. § 546 (e) / by its terms, clearly applies to repurchase of treasury bills; the alternative section, 11 U.S.C.S. § 546 (f), will not be applied absent clear indication that the alternative was intended to be exclusive. Based on the language of the two sections and the cited legislative history / 11 U.S.C.S. § 546 (f) does not narrow the scope of 11 U.S.C.S. § 546 (e) and nothing suggests that it was intended to be exclusive.

HN1711

i,

a~

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power Civil Procedure> Settlements> Settlement Agreements> General Overview Governments> Legislation> Interpretation HN18"Settlement payment" is to be defined broadly. A settlement payment clearly includes a transfer of t securities that completes a securities transaction. More specifically, a settlement payment includes M a transfer of cash or securities going toward completion of a securities transaction. Thus, under 11 U.S.C.S.§546(el, repurchase of a treasury bill is a settlement payment and cannot be avoided.

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power Bankruptcy Law> Estate Property> Contractual Rights Governments> Legislation> Interpretation HN19 Any

t,

"LBO exception" in 11 U.S.C.S. § 546 (e) is inapplicable to stockbrokers.

For FREDERICK S. WYLE, Trustee, trustee of Hamilton Tall & Co., Plaintiff: Abram S. Feuerstein, L. J. Martiniak, Feldman Waldman & Kline, San Francisco, CA. For HOWARD, WElL, LABOUISSE, FREIDRICHS, INC., HOWARD WElL FINANCIAL CORP., LEGG MASON, INC., Defendants: J. Michael Keliy, Robert L. Eisenbach, III, Cooley Godward Castro Huddelson & Tatum, San Francisco, CA. JUDGES: SUSAN ILLSTON, United States District Judge OPINION BY: SUSAN ILLSTON OPINION: [*533] ORDER AFFIRMING SUMMARY JUDGMENT On September 29, 1995, the Court heard argument on plaintiff/appellant Frederick Wyle's appeal from the granting of summary [*534] judgment to defendanVappellee, Howard, Weil, Labouisse, Friedrichs, Inc. ("Howard Well") by the Bankruptcy Court for the Northern District of California. Having considered the arguments of counsel and the papers submitted, the Court hereby AFFIRMS the Bankruptcy Court's decision. STANDARD OF REVIEW HN1tln reviewing summary judgment, the court accepts the bankruptcy court's factual finding unless they are clearly erroneous but HN2tmust determine de novo whether these facts support summary judgment. In re Siragusa, 27 F.3d 406 (9th Clf. 1994): In re Weisman, 5 F.3d 417, 419 (9th Cif. 1993). FACTUAL BACKGROUND Debtor Hamilton Tall & Co. was a company ""hich collected payroll tax funds from its clients and then paid over the payroll , .••..•••.•••...•. < .••.•.,

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taxes for them when due, relieving the clients of the administrative burdens of tax computation and filing, 'illsLt,,~lQg ri aQ.,@]t"ge,ofthe,time,yalue of moQeyJoe"miDlere§LqQJbejYQd§.YnliLth.eJa~\m<JmentRefgIe!be!;'l~e.§lf(ere,due, [ 2] Hamilton Taft was placed in involuntary bankruptcy by its creditors in March of 1991, after it failed to make the tax payments then due for many of its major clients, It was later determined that Mr. Connie C, "Chip" Armstrong, Jr., who had obtained control of Hamilton Taft in approximately 1989, had invested the entrusted furdsin a variety of speculative and unsound investments, had spent a good deal of it on himself and, as a gen"ral proposition, had lost the money which was supposed to be paid over to the taxing authorities, See Hamilton Taft & Company v, Federal Express (91-03518-JPV N,D, CaL) The bankruptcy proceedings have spanned many years and many lawsuits, The one involved here, brought by the trustee in March, 1993, against a securities brokerage company in Louisiana, invoived transactions which occurred in late 1987 and early 1988, before Mr. Armstrong's involvement with Hamilton Taft led it to the bankruptcy courts, The trustee challenges financial transactions engaged in by prior owners of the company, in connection with their transfers of ownership, before Mr. Armstrong acquired his ownership interest in the firm, As found by the bankruptcy judge, the undisputed [r i 3] facts involved in the instant lawsuit are as follows: On December 3D, 1987, MaxPharma, Inc, paid $ 500,000 for an option to buy the stock of Hamilton Taft & Company from its then-owner, Connecticut General Corporation ("CIGNA"), The option had to be exercise by January 29, 1988 and the $ 500,000 would be applied toward the $ 4,100,000 purchase price, MaxPharma was unable to arrange financing for the stock purchase using the stock as collateral. Howard Weil, however, was willing to finance the transaction based on a reverse repurchase ("reverse repo") of a treasury bill. On January 28, 1988, Hamilton Taft wired $ 5,000,000 to Howard WeiL On January 29,1988, Howard Weil used approximately $ 4,900,000 of those funds to purchase a 90-day treasury bill having the face value of$ 5,000,000 ("the T-bill"), Also on January 29, Hamilton Taft sold the T-bill back to Howard Weil for $ 4,100,000 based on a "reverse repo" agreement under which Hamilton Taft would repurchase the T-bill in 90 days for the sale price plus interest. Wyle, the bankruptcy trustee for Hamilton Taft, claims that the $ 4,100,000 Was transferred directly to MaxPharma upon sale of the T-bilL Howard Weil claims that the [r i4] $ 4,100,000 was credited to Hamilton Taft's account and that the money was subsequently wired to MaxPharma. For the purpose of the summary judgment motion, the bankruptcy court accepted Wyle's position. Hamilton Taft rolled the T-bill over into new treasury bills and eventually into treasury notes, In January 1989, Hamilton Taft directed Howard Weil to sell the treasury notes and use the proceeds to satisfy its obligations under the reverse repo agreement. On March 20, 1991, creditors filled an involuntary chapter eleven bankruptcy petition against Hamilton Taft, Wyle was appointed trustee on March 26, 1991 and filed this action in bankruptcy court on March 26. 1993, Wyle argued that the transaction was, [*535] in reality, a leveraged buyout ("LBO") in which MaxPharma used Hamilton Taft's funds to purchase CIGNA's stock in Hamilton Taft, Wyle also contended that the transaction rendered Hamilton Taft insolvent and was a fraudulent conveyance, Wyle sought to recover the value of the T-bill or the $ 4,100,000 proceeds from the sale of the T-bilL PROCEDURAL HISTORY On January 19, 1995, the United States Bankruptcy Court for the Northem District of California issued an opinion granting r5] summary judgment to defendant Howard WeiL n1 Wyle then filed this appeal to the district court, - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -

n1 Defendants Howard Weil Financial Corp" Legg Mason, Inc" CIGNA, and CIGNA Holdings, Inc., were named in the bankruptcy court action but dismissed before summary judgment was entered,

- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - LEGAL STANDARD

HN3+The Federal Rules of Civil Procedure provide for summary adjudication when "the pleadings, depositions. answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genUine issue as to any material fact and that the party is entitled to a judgment as a matter of law," FRC.P, 56(e). HN4+ln a motion for summary judgment, "if the party moving for summary jUdgment meets its initial burden of identifying for the court those portions of the materials on file that it believes demonstrate the absence of any genUine issues of material

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fact," the burden of production then shifts so that "the nonmoving party must set forth, by affidavit or as otherwise provided in Rule 56, '[**6] specific facts showing that there is a genuine issue for trial.'" T.W. Elec. Service, Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987) (citing Ceiotex Corp. v. Catrett, 477 U.S. 317. 91 L. Ed. 2d 265,106 S. Ct. 2548 (1986)); Kaiser Cement Corp. v. Fischbach & Moore. Inc.. 793 F.2d 1100, 1103-04 (9th Cir.), cert. denied, HN5t 479 U.S. 949, 93 L. Ed. 2d 384, 107 S. Ct. 435 (1986). A moving party who will not have the burden of proof at trial need only point to the insufficiency of the other side's evidence, thereby shifting to the nonmoving party the burden of raising genuine issues of fact by substantial evidence. T. W. Electric, 809 F.2d at 630 citing HN6¥' Celotex. 477 U.S. at 323; Kaiser Cement. 793 F.2d at 1103-04. In judging evidence at the summary judgment stage, the Court does not make credibility determinations or weigh conflicting evidence, and draws all inferences in the light most favorable to the nonmoving party. T.W. Electric, 809 F.2d at 630-31 (citing Matsushita Elec. Indus. Co.. Ltd. v. Zenith Radio Corp.. 475 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986)); Ting v. United States, 927 F.2d 1504, 1509 (9th [**7] Cir. 1991). DISCUSSION Plaintiff/appellant Wyle contends that the bankruptcy court erred in four respects: 1) He contends that Banl
4) He contends that a triable issue of fact existed as to whether or not the transaction was a genuine l1reverse repo" transaction. 1. Section 546(e) versus Section 546(1) The bankruptcy court found that section 546(e) rather than 546(1) applied to this transaction, and that under 546(e), the transaction cannot be avoided by Wyle. Section 546(e) states in relevant part: ... the trustee may not avoid a transfer that is a margin payment ... or settlement payment ... made by or to a ... stockbroker ... that is made before the [*536] commencement of the case ... [**8] HNTt 11 U.S.C. § 546(e).

Under Ninth Circuit case law, HN8ttrue reverse repos are covered by section 546(e). See In re Comark. 971 F.2d 322, 325 (9th Cir. 1992) ("Comark I"); In re Comark, 145 Bankr. 47, 52-53 (Bankr. 9th Cir. 1992) ("Comark II"). Despite Wyle's contentions to the contrary, HN9twhether or not a transaction is a reverse repo is analyzed under an objective test. Id. at 53. The transaction at issue meets the objective definition of a reverse repo because a security was sold with an agreement to repurchase it with interest. Id. n2 - -- - -- - - -- -- - - Footnotes -- - -- - --- - -- ---

n2 Comark II set forth additional objective factors to be considered in determining whether a transaction was a reverse repo. 147 Bankr. at 53.

- - - - - -- -- -- - End Footnotes- - -- -- - - -- - -- In addition, even if the transaction was not a conventional reverse repo, section HN10t546(e) covers a broad range of securities transactions. Id. at 52 (§ 546(e) "includes a transfer of securities that completes any securities transaction"). Here, the transaction involved Hamilton Taft buying the T-bill from Howard [**9] Weil and then selling it back to Howard Weil. HNlltA T-bill is clearly a security, and hence the transaction is a "securities transaction" under 564(e). In re Kaiser Steel Corp., 952 F.2d 1230, 1238-40 (10th Cir.1990), cert. denied, 505 U.S. 1213, 112 S. Ct. 3015,120 L. Ed. 2d 887 (1992). Wyle argues that the transaction must be anaiyzed under section 546(1) and that under 546(1) the transaction may be avoided. Section 546(1) states in reievant part:

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... the trustee may not avoid a transfer that is a margin payment ... or settlement payment ... made by or to a repo participant in connection with a repurchase agreement and that is made before the commencement of the case. . .

HN12v~

.. 11 U.S.C. § 546(1).

"Repo participant" is defined as: ... an entity that. on any day during the period beginning gO days before the date of the filing of the petition. has an outstanding repurchase agreement with the debtor ... HN13t 11 U.S.C. § 101 (46).

Wyle argues that 546(1) is more specific than section 546(e) and thus should apply to this transaction. He contends that Howard Wei! would not be protected under 546(1) because the reverse repo transaction closed more than 90 [-1 OJ days before the bankruptcy petition was filed. This court agrees with the bankruptcy judge that. based on the statutory language and legislative history of section 546(1), Wyle's argument is incorrect. HN14tSection 546(e) applies to a specific class of financial entities including "commodity broker, forward contract merchant, stockbroker, financial institution, or securities clearing agency" (emphasis supplied). It is uncontroverted that the defendant in this case is a stockbroker and thus a member of the specific class of entities covered by this section. HN15t Section 546(1) applies more generally to other "participants" in the repo market. See Comark II, 145 Bankr. at 52-53. Thus, HN16tthe specificity of language would support application of 546(e) to this transaction over 546(1), because one of the parties to the transaction was a stockbroker. In addition, the legislative history of section 546(1) indicates that 546(1) was enacted to clarify section 546(e), not to modify it: On balance, the legislative history of section 564(1) refiects that the enactment of section 546(1) was intended to clarify rather than change earlier law. Id.; see also S.Rep. No. 65, 98th Cong., 1st [-11] Sess. 45, 49 (1983).

HNITtsection 546(e), by its terms, clearly applies to this transaction; the alternative section will not be applied absent clear indication that the alternative Was intended to be exclusive. Based on the language of the two sections and the cited legislative history, 546(1) does not narrow the scope of 546(e) and nothing suggests that it was intended to be exclusive. Thus, Wyle's position that the transaction must be analyzed under 546(1) is unpersuasive. 2. Settlement Payment Wyle argues that the transaction was not a "settlement payment" under section [*537] 546(e). In Comark I, the Ninth Circuit joined the Third and the Tenth Circuits in determining that "settlement HN18tpayment" is to be defined broadly. 971 F.2d at 326. The Comark I court stated, "[a] settlement payment clearly includes a transfer of securities that completes a securities transaction." Comark I, 971 F.2d at 326 (citation omitted). More specifically, Comark I and Comark II both held that a settlement payment includes a transfer of cash or securities going toward completion of a securities transaction. 971 F.2d at 326; 145 Bankr. at 52. n3 Thus, under section 546(e), the transaction [-12] was a settlement payment and cannot be avoided by Wyie. - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -

n3 In addition, the bankruptcy court found, as a matter of undisputed fact, that Hamilton Tafl directed Howard Weil to pay the funds to MaxPharma. Thus Wyle's argument that the transfer was not a settlement payment because it was made to a third party is meritless.

- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

3. The "LBO Exception" Next, Wyle argues that there is an exception for LBO transactions in section 546(e). Wyle relies extensively on Wieboldt Stores Inc. v. Schottenstein. 131 Bankr. 655 (N.D. III, 1991). In Wiedboldt, the court found that section 546(e) did not prevent a trustee from avoiding a fraudulent conveyance from shareholders Whose shares were purchased in an LBO. In the present case, Wyle seeks to avoid a transfer involving a stockbroker. The Wiedboldt court noted that stockbrokers were

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specifically protected from such actions by bankruptcy trustees under section 546(e). Wyle also relies on Lippi v. City Bank. 955 F.2d 599 (9th Cir. 1992) and Kendall v. [**13J Sorani, 151 Bankr. 1012 (Bankr. N.D. Cal. 1993). However, neither of these cases even mentions section 546(e) and, hence, add little weight to Wyle's argument. The bankruptcy court correctly determined HN19+that any "LBO exception" in section 546(e) is inapplicable to stockbrokers. 4. Factual Issues Finally, because the bankruptcy court correctly found that the transaction was a reverse repo; that reverse repos are governed by an objective standard; and that reverse repos are protected under section 546(e), the bankruptcy court correctly determined there are no issues of fact that must be resolved by a finder of fact. CONCLUSION The bankruptcy court correctly interpreted section 546(e) and correctly determined that no material issues of fact existed. Accordingly, the bankruptcy court's granting of summary judgment is AFFIRMED. The clerk shall close the file. IT IS SO ORDERED. Dated: October 12,1995. SUSAN ILLSTON United States District Judge Copyright © 2006 LexisNexis, a division of Reed Elsevier Inc. All rights reserved. Your use of this service is governed by Terms & Conditions. Please review them.

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l> 11 U.S.C.A. s 548 s 548. Fraudulent transfers and obligations Effective: [See Notes] 11 U.S.C.A. § 548 United States Code Annotated Currentness Title 11. Bankruptcy (Refs & Annos) Chapter 5. Creditors, The Debtor, and the Estate (Refs & Annos) SUbchapter III. The Estate (Refs & Annos)

...§ 548. Fraudulent transfers and obligations

(a)(l) The trustee may avoid any transfer (including any transfer to or for the benefit of an insider under an employment contract) of an interest of the debtor in property, or any obligation (Including any obligation to or for the benefit of an insider under an employment contract) incurred by the debtor, that was made or incurred on or within 2 years before the date of the filing of the petition, if the debtor voluntarily or involuntarily--

(A)

made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made or such obligation was incurred, indebted; or

( (8)(i) received less than a reasonably equivalent value in exchange for such transfer or obligation; and

< (11)(1)

was insolvent on the date that such transfer was made or such obligation was Incurred, or became Insolvent as a result of such transfer or obligation;

(II) was engaged In business or a transaction, or was about to engage In business or a transaction, for which any property remaining with the debtor was an unreasonably small capital; (III) Intended to Incur, or believed that the debtor wouid incur, debts that would be beyond the debtor's ability to pay as such debts matured; or

(IV) made such transfer to or for the benefit of an Insider, or incurred such obligation to or for the ~enefit of an insider, under an employment contract and not in the ordinary course of business.

(2) A transfer of a charitable contribution to a qualified religious or charltabie entity or organization shall not be considered to be a transfer covered under paragraph (l)(B) In any case in which.-(A) the amount of that contribution does not exceed 15 percent of the gross annual income of the debtor for the year in which the transfer of the contribution Is made; or (8) the contribution made by a debtor exceeded the percentage amount of gross annual income specified in subparagraph (A), if the transfer was consistent with the practices of the debtor in making charitable contributions.

(b) The trustee of a partnership debtor may avoid any transfer of an interest of the debtor in property, or

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any obligation incurred by the debtor, that was made or incurred on or within 2 years before the date of the filing of the petition, to a general partner in the debtor, if the debtor was insolvent on the date such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation.

(e) Except to the extent that a transfer or obligation voidabie under this section is voidable under section 544, 545, or 547 of this title, a transferee or obligee of such a transfer or obligation that takes for value and in good faith has a lien on or may retain any interest transferred or may enforce any obligation incurred, as the case may be, to the extent that such transferee or obligee gave value to the debtor in exchange for such transfer or obligation.

(d)(l) For the purposes of this section, a transfer is made when such transfer is so perfected that a bona fide purchaser from the debtor against whom applicable law permits such transfer to be perfected cannot acquire an interest in the property transferred that is superior to the interest in such property of the transferee, but if such transfer is not so perfected before the commencement of the case, such transfer is made immediately before the date of the filing of the petition. (2) In this section-(A) "value" means property, or satisfaction or securing of a present or antecedent debt of the debtor, but does not include an unperformed promise to furnish support to the debtor or to a relative of the debtor; (B) a commodity broker, forward contract merchant, stockbroker, financial institution, financial participant, or securities clearing agency that receives a margin payment, as defined in section 101, 741, or 761 of this title, or settlement payment, as defined in section 101 or 741 of this title, takes for value to the extent of such payment; (e) a repo participant or financial participant that receives a margin payment, as defined in section 741 or 761 of this title, or settlement payment, as defined in section 741 of this title, in connection with a repurchase agreement, takes for value to the extent of such payment; (D) a swap participant or financial participant that receives a transfer in connection with a swap agreement takes for value to the extent of such transfer; and (E) a master netting agreement participant that receives a transfer in connection with a master netting agreement or any individual contract covered thereby takes for value to the extent of such transfer, except that, with respect to a transfer under any individual contract covered thereby, to the extent that such master netting agreement participant otherwise did not take (or is otherwise not deemed to have taken) such transfer for value.

(3) In this section, the term "charitable contribution" means a charitable contribution, as that term' is defined in section 170(c) of the Internal Revenue Code of 1986, if that contribution-(A) is made by a natural person; and (B) consists of.-(i) a financial instrument (as that term is defined in section 731(c)(2)(C) of the Internal Revenue Code of 1986); or (ii) cash.

(4) In this section, the term "qualified religious or charitable entity or organization" means-(A) an entity described in section 170(c)(1) of the Internal Revenue Code of 1986; or

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(8) an entity Dr DrganizatiDn described in sectiDn 170(c)(2) Df the Internal Revenue CDde Df 1986. (e)(l) In additiDn tD any transfer that the trustee may Dtherwise aVDid, the trustee may aVDid any transfer Df an interest Df the debtDr in prDperty that was made Dn Dr within 10 years befDre the date Df the fiiing Df the petitiDn, if-(A) such transfer was made tD a self-settled trust Dr similar device; (8) such transfer was by the debtDr;

(e) the debtDr is a beneficiary Df such trust Dr similar device; and (D) the debtDr made such transfer with actual intent tD hinder, delay, Dr defraud any entity tD which the debtDr was Dr became, Dn Dr after the date that such transfer was made, indebted.

(2) FDr the purpDses Df this subsectiDn, a transfer includes a transfer made in anticipatiDn Df any mDney judgment, settlement, civil penalty, equitable Drder, Dr criminal fine incurred by, Dr which the debtDr believed wDuld be incurred by-(A) any viDlatiDn Df the securities laws (as defined in sectiDn 3(a)(47) Df the Securities Exchange Act Df 1934 (15 U.S.c. 78c(a)(47))), any State securities laws, Dr any reguiatiDn Dr Drder issued under Federal securities laws Dr State securities laws; Dr (8) fraud, deceit, Dr manipulatiDn in a fiduciary capacity Dr in cDnnectiDn with the purchase Dr sale Df any security registered under sectiDn 12 Dr 15(d) Df the Securities Exchange Act Df 1934 (15 U.S.C. 781 and 78D(d» Dr under sectiDn 6 Df the Securities Act Df 1933 (15 U.S.c. 77f).

CREDIT(S) (Pub.L. 95-598, NDv. 6, 1978, 92 Stat. 2600; Pub.L. 97-222, § 5, July 27, 1982, 96 Stat. 236; Pub.L. 98-353, Title Ill, §§ 394,463, July 10, 1984, 98 Stat. 365, 378; Pub.L. 99-554, Title II, § 283(n), Oct. 27, 1986, 100 Stat. 3117; Pub.L. 101-311, Title I, § 104, Title II, § 204, June 25, 1990, 104 Stat. 268, 269; Pub.L. 103-394, Title V, § 501(b)(5), Oct. 22, 1994,108 Stat. 4142; Pub.L. 105-183, §§ 2, 3(a), June 19, 1998, 112 Stat. 517; Pub.L. 109-8, Title IX, § 907(f), (D)(4) tD (6), Title XIV, § 1402, Apr. 20, 2005,119 Stat. 177, 182, 214.) HISTORJCAL AND STATUTORY NOTES RevisiDn NDtes and Legislative RepDrts 1978 Acts. This sectiDn is derived in large part frDm sectiDn 67d Df the Bankruptcy Act [sectiDn 107(d) Df fDrmer Title 11]. It permits the trustee tD aVDid transfers by the debtDr in fraud Df his creditDrs. Its histDry dates frDm the statute Df 13 Eliz. c. 5 (1570). The trustee may aVDid fraudulent transfers Dr DbligatiDns if made with actual intent tD hinder, delay, Dr defraud a past Dr future creditDr. Transfers made fDr less than a reasDnably equivalent cDnsideratiDn are alsD vulnerable if the debtDr was Dr thereby becDmes insDlvent, was engaged in business with an unreasDnably small capital, Dr intended tD incur debts that wDuld be beyDnd his ability tD repay. The trustee Df a partnership debtDr may aVDid any transfer Df partnership prDperty tD a partner in the debtDr if the debtDr was Dr thereby became insDlvent.

If a transferee's Dnly liability tD the trustee is under this sectiDn, and if he takes fDr value and in gDDd faith, then subsectiDn (c) grants him a lien Dn the prDperty transferred, Dr Dther similar prDtectiDn. SubsectiDn (d) specifies that fDr the purpDses Df fraudulent transfer sectiDn, a transfer is made when it is valid against a subsequent bDna fide purchaser. If nDt made befDre the CDmmencement Df the case, it is

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Document Links: Start of Document CITATION YOU ENTERED: SUBSEQUENT APPELLATE HISTORY:

•

Aulo-Cile(R)Citation Service, (c)2006 LEXiS-NEXIS. All n"ghls reserved. in re Hamiilon Taft 53 F3D 285

CITATION YOU ENTERED: Wyle v. S & S Credit Co. (In re Hamilton Taft & Co.), 53 F.3d 285, 1995 U.S. ADD. LEXIS 9848, 95 C.D.O.S. 3260, 95 Daily Journal DAR. 5613, 27 Bankr. C!. Dec. (CRR) 249, 33 Collier Bankr. Cas. 2d (MB) 716, Bankr. L. ReD. (CCH) P 76492, 75 A.F.T.R.2d (RIA) 2002, 95 T.N.T. 91-16 (9th Cir. Cal. 1995) SUBSEQUENT APPELLATE HISTORY: vacated, appeal settled and dismissed, Wyle v. S & S Credit Co. (In re Hamilton Taft & Co.), 68 F.3d 337, 1995 U.S. ADD. LEXIS 28742, illL C.D.O.S. 8031, 95 Daily Journal DAR. 13763, Bankr. L. ReD. (CCH) P 76492 (9th Cir. 1995) and related proceeding, Stop & Shop Cos. v. Federal Ins. Co., 946 F. SUDD' 99, 1996 U.S. Dis!. LEXIS 18434 (D. Mass. 1996) rev'd, Slop & Shop Cos. v. Federal Ins. Co., 136 F.3d 71, 1998 U.S. ADD. LEXIS 2028 (1 st Cir. Mass..1998)

Copyright © 2006 LexisNexis, a division of Reed Elsevier Inc. All rights reserved. Your use of this service is governed by Terms & Conditions. Please review them.

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KeyCite - 176 B.R. 895 History (Showing 6 documents) Direct History IIIIIIn re Hamilton Taft &. Co., 176 B.R. 895,32 Collier Bankr.Cas.2d 1727,26 Bankr.Ct.Dec. 665 (Bankr.N.D.Cal. Jan 19, 1995) (NO. 91-3-1077-TC, 93-3-121-TC) Affirmed by H In re Hamilton Taft & Co., 196 B.R. 532 (N.D. Cal. Oct 12, 1995) (NO. C 95-1612-51) Judgment Affirmed by Pin re Hamilton Taft & Co., 114 F.3d 991, 30 Bankr.Ct.Dec. 1236, Bankr. L. Rep. P 77,405,97 Cal. Daily Op. Servo 4410, 97 Daily Journal D.A.R. 7369 (9th Cir.(Ca1.) Jun 11, 1997) (NO. 95-17058) Court Documents Appellate Court Documents (U.S.A.) C.A.9 Appellate Briefs IN RE HAMILTON TAFT & COMPANY, Debtor. Frederick S. Wyle, Trustee of Hamilton Taft & Company, Plaintiff-Appellant, V. HOWARD, Howard Wei I, Labouisse, Friedrichs Incorporated, a Louisiana corporation; Howard Weil Financial Corporation, a Louisiana corporation; and Legg Mason, Inc., a Maryland corporation, Defendants-Appellees., 1996 WL 33489911 (Appellate Brief) (C.A.9 Feb. 20, 1996) Opening Brief of Appellant Frederick S. Wyle, Trustee of Hamilton Taft &. Company (NO. 95-17058) IN RE HAMILTON TAFT & COMPANY, Debtor. Frederick S. Wyle, Trustee of Hamilton Taft & Company, Plaintiff-Appellant v. HOWARD, Weil, Labouisse, Friedrichs Incorporated, a Louisiana corporation, Howard Weil Financial Corporation; and Legg Mason, Inc., a Maryland corporation, Defendants-Appellees., 1996 WL 33489913 (Appellate Brief) (C.A.9 Mar. 21, 1996) Original Brief of Defendant-Appellee Howard, Weil, Labouisse, Friendrichs, Inc. (NO. 95-17058) IN RE HAMILTON TAFT & COMPANY, Debtor. Frederick S. Wyle, Trustee of Hamilton Taft & Company, Plaintiff-Appellant, V. Howard, Howard WElL, Labouisse, Friedrichs Incorporated, a Louisiana corporation; Howard Weil Financial Corporation, a Louisiana corporation; and Legg Mason, Inc., a Maryland corporation, Defendants-Appellees., 1996 WL 33489912 (Appellate Brief) (C.A.9 Apr. OS, 1996) Reply Brief of Appellant Frederick S. Wyle, Trustee of Hamilton Taft &. Company (NO. 95-17058) Negative Only

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KevCite - 176 B.R. 895 Citing References (Showing 41 documents)

Positive Cases (U.S.A.) Discussed 11III1. In re Hamilton Taft & Co., 114 F.3d 991, 992+, 30 Bankr.Ct.Dec. 1236, 1236+, Bankr. L. Rep. P 77,405,77405+,97 Cal. Daily Op. Servo 4410,4410+,97 Daily Journal D.A.R. 7369, 7369+ (9th Cir.(CaL) Jun 11, 1997) (NO. 95-17058) .. HN: 1,2,4 (B.R.)

Cited P2. In re Gandy, 299 F.3d 489, 496, 48 Collier Bankr.Cas.2d 895, 895, Bankr. L. Rep. P 78,709,78709 (5th Cir.(Tex.) Jul 22, 2002) (NO. 02-50185) 3. In re Mark Industries, Inc., 110 F.3d 69, 69 (9th Cir.(CaL) Mar 20, 1997) (Table, text in WESTLAW, NO. 95-55712) P4. Forum Ins. Co. v. Devere Ltd., 151 F.Supp.2d 1145, 1149 (C.D.CaL Jan 02, 2001) (NO. CV 97-9386 NM RCX) HN: 8 (B.R.) P5. In re Hechinger Investment Co. of Delaware, 274 B.R. 71, 98 (D.DeL Feb 20,2002) (NO. 99-2283, CIV.A.00-840-RRM) .. HN: 5 (B.R.) H 6. In re National Forge Co., 344 B.R. 340, 371 (W.D.Pa. Jun 09, 2006) (NO. CIV.A. 04-21 ERIE) •• HN: 1 (B.R.) C 7. In re Lucas Dallas, Inc., 185 B.R. 801, 805, 34 Collier Bankr.Cas.2d 1095, 1095, 27 Bankr.Ct.Dec. 955,955,95 Daily Journal DAR. 12,382, 12382 (9th Cir.BAP (CaL) Aug 17, 1995) (NO. NC-94-2055-HVR, 93-4562 AN, NC-94-2116-HVR, 91-46079 IN) .. HN: 8 (B.R.)

8. In re Sia, 2006 WL 2472995, *12 (Bankr.D.Hawai'i Aug 25, 2006) (NO. 98-04912, ADV. 00-00102)

Secondary Sources (U.S.A.) H 9. Right of creditor to recover damages for conspiracy to defraud him of claim, 11 A.L.R.4th 345, §10+ (1982) HN: 4 (B.R.)

10. s 6:12. Fraudulent conveyance attacks -- Cases, SECACQMERG s 6:12, s 6:12+ (2006) HN: 1,5

(B.R.) 11. Bankruptcy Service Lawyers Edition s 31:254, s 31:254. Leveraged buyouts (2006) HN: 6 (B.R.) 12. Bankruptcy Service Lawyers Edition s 32:208, s 32:208. Generally (2006) HN: 1,4,5 (B.R.) 13. Bankruptcy Service Lawyers Edition s 32:210, s 32:210. Congressional intent (2006) HN: 1,5 (B.R.) 14. Bankruptcy Service Lawyers Edition s 32:213, s 32:213. What constitutes "settlement payment" -Particular determinations -- Reverse repo's (2006) HN: 1,5 (B.R.) C 15. CJS Conspiracy s 49, s 49. Defrauding creditors (2006) HN: 7

(B.R.)

C 16. DERIVATIVES AND REHYPOTHECATION FAILURE: IT'S 3:00 P.M., DO YOU KNOW WHERE YOUR COLLATERAL IS?, 39 Ariz. L. Rev. 949, 1001 (1997)

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l: 17. LEVERAGED BUYOUTS AND FRAUDULENT CONVEYANCES: YET ANOTHER UPDATE, 7 J. Bankr. L. & Prac. 315, 333 (1998) HN: 6 (B.R.) l: 18. FORWARD CONTRACTS, BANKRUPTCY SAFE HARBORS AND THE ELECTRICITY INDUSTRY, 51 Wayne

L. Rev. 49, 106 (2005) HN: 3 (B.R.) 19. ACQUISITION FINANCING, 754 PU/Comm 3B5, 449 (1997) HN: 1,5 (B.R.) 20. ACQUISITION FINANCING, 739 PU/Comm 367, 427 (1996) HN: 1,5 (B.R.) 21. SPECIAL BANKRUPTCY CODE PROTECTIONS FOR DERIVATIVE AND OTHER CAPITAL MARKET TRANSACTIONS, 721 PLI/Comm 95, 114 (1995) HN: 1,5,6 (B.R.) 22. SECURITIES, FORWARD AND COMMODITY CONTRACTS AND REPURCHASE AND SWAP AGREEMENTS UNDER U.S. INSOLVENCY LAWS, 721 PLI/Comm 401, 410+ (1995) HN: 1,2,4 (B.R.)

Court Documents Appellate Court Documents (U.S.A.) Appellate Petitions, Motions and Filings 23. Wyatt R. HASKELL, Petitioner, v. PWS HOLDING CORPORATION, Bruno's Inc., Foodmax of Mississippi, Inc., A.F. Stores Inc., Br Air, Inc., Foodmax of Geor9ia, Inc., Foodmax of Tennessee, Inc., Foodmax Inc., Lakeshore Foods, Inc., Bruno's Food Stores, Inc., Georgia Sales Company, SSS Enterprise, Inc., Respondents., 2003 WL 2169B60B, *2169B60B+ (Appellate Petition, Motion and Filing) (U.S. Jan 29, 2003) Petition for Writ of Certiorari (NO. 02-1134) HN: 6 (B.R.)

Appellate Briefs 24. In reo PWS HOLDING CORPORATION, BRUNO'S, INC., Food Max of Mississippi, Inc., A. F. Stores, Inc., Br Air, Inc., Food Max of Georgia, Inc., Food Max of Tennessee, Inc., Food Max, Inc., Lakeshore Foods, Inc., Bruno's Food Stores, Inc., Georgia Sales Company, and 555 Enterprise, Inc., Debtors, Wyatt R. HASKELL, Appellant., 2001 WL 34095042, *34095042+ (Appellate Brief) (3rd Cir. Aug 2B, 2001) Brief of Appellant (NO. 01-1462) HN: 6 (B.R.) 25. In The Matter Of: Joe Alvin ANDREWS, Sr., Debtor. CADLE COMPANY, Appellant, v. WHATABURGER OF AUCE, INC.; M. Louise Andrews; Kathy A. Reese; George P. Braun; Herbert E. Pounds, Jr.; Joe Alvin Andrews, Jr.; Michael Boudloche; Joe Alvin Andrews, Sr., Appellees., 2001 WL 34353904, *34353904+ (Appellate Brief) (5th Cir. Nov 07,2001) Appellant's Brief (NO. 01-40B07) 11IIII11IIII HN: 3 (B.R.) 26. THE CADLE COMPANY, Plaintiff-Appellant, v. WHATABURGER OF ALICE, INC.; M. Louise Andrews; Kathy A. Reese; Herbert E. Pounds, Jr.; George P. Braun; and Joe Alvin Andrews, Jr., Defendants-Appellees., 199B WL 341145B2, *341145B2+ (Appellate Brief) (5th Cir. Jul 09, 1998) Brief of Appellant (NO. 9B-5036B) HN: 6 (B.R.) 27. FORUM INSURANCE COMPANY, Plaintiff/Appellant, v. DEVERE UMITED; Harrington Trust Limited, As Trustee for the Ogaps Trust; Ephraim P. Kranitz; Thomas Comparet; Kranitz Comparet & Sarrow, P.c.; Jerome Eglin; Ayk, Inc.; Otw Investments; and Jeja Investments, Defendants/Appellees., 2002 WL 32120536, *32120536+ (Appellate Brief) (9th Cir. Aug 20, 2002) Reply Brief of Appellant Forum Insurance Company (NO. 02-55053)

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2B. FORUM INSURANCE COMPANY, Petitioner/Appellant, v. DEVERE LIMITED; Harrington Trust Limited, As Trustee for the Ogaps Trust; Ephraim P. Kranitz; Thomas Comparet; Kranitz Comparet & Sarrow, P.C.; Jerome Eglin; Ayk, Inc.; Otw Investments; and Jeja Investments, Defendants/Appellees., 2002 WL 32120535, *32120535+ (Appellate Brief) (9th Cir. Jul 20, 2002) Brief of Appellee Jerome Eglin (NO. 02-55053) 29. FORUM INSURANCE COMPANY, Plaintiff/Appellant, v. DEVERE UMITED; Harrington Trust Limited, As Trustee for the Ogaps Trust; Ephraim P. Kranitz; Thomas Comparet; Kranitz Comparet & Sarrow, P.c.; Jerome Eglin; Ayk, Inc.; Otw Investments; and Jeja Investments, Defendants/Appellees., 2002 WL

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32120534, *32120534+ (Appellate Brief) (9th Cir. Jun 11, 2002) Brief of Appellant Forum Insurance Company (NO. 02-55053) 30. Robert B. BURNS, Plaintiff-Appellant, v. James BALDWIN, et al., Defendants-Appellees., 2002 WL 32116680, *32116680+ (Appellate Brief) (9th Cir. May 30, 2002) Appellant's Opening Brief (NO. 02-55116) .. 11I11I HN: 6,7 (B.R.) 31. In re THRIFTY OIL CO., a California Corporation; Golden West Refining Company, a California Corporation; ClUj Distribution Company, a California, Corporation; Benzin Supply Company, a California Corporation; and Goiden West Distribution Company, a California Corporation, Debtors, THRIFTY OIL CO., Appellant, v. BANK OF AMERICA NATIONAL TRUST & Savings Association, Appellee., 2000 WL 33981185, *33981185+ (Appellate Brief) (9th Cir. Dec 18, 2000) Appellant's Reply Brief (NO. 00-56159) HN: 2,4 (B.R.) 32. In re: THRIFTY OIL CO., a California corporation; Golden West Refining Company, a California corporation; ClUj Distribution Company, a California corporation; Benzin Supply Company, a corporation; and Golden West Distribution Company, a California corporation, Debtors. THRIFTY OIL CO., Appellant, v. BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, Appellee., 2000 WL 33978038, *33978038+ (Appellate Brief) (9th Cir. Nov 15, 2000) Appellee's Brief (NO. 00-56159) .. HN: 2,4,5 (B.R.)

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33. In reo THRIFTY OIL CO., a California corporation; Golden West Refining Company, a California corporation; CLUJ Distribution Company, a California corporation; Benzin Supply Company, a corporation; and Golden West Distribution Company, a California corporation, Debtors. THRIFTY OIL CO., Appellant, v. BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, Appellee., 2000 WL 34017800, *34017800+ (Appellate Brief) (9th Cir. Nov 14, 2000) Appellee's Brief (NO. 00-56159) .. HN: 1,2,5 (B.R.)

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34. IN RE HAMILTON TAFT & COMPANY, Debtor. Frederick S. Wyle, Trustee of Hamilton Taft & Company, Plaintiff-Appellant v. HOWARD, Weil, Labouisse, Friedrichs Incorporated, a Louisiana corporation, Howard Weil Financial Corporation; and Legg Mason, Inc., a Maryland corporation, Defendants-Appellees., 1996 WL 33489913, *33489913+ (Appellate Brief) (9th Cir. Mar 21, 1996) Original Brief of Defendant-Appellee Howard, ... (NO. 95-17058) .. HN: 4 (B.R.)

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Trial Court Documents (U.S.A.) Trial Motions, Memoranda and Affidavits 35. Diane MANN, as Trustee for the Estate of LeapSource, Inc.; Christine V. Kirk; Thomas F. Gilman; Indu Gupta; Kimberly C. Hartmann; Julie B. McCollum; Kelly A. Powers; Bobby D. Scott; and Patricie E. Walker, Plaintiffs, v. GTCR GOLDER RAUNER, L.L.C.; a Delaware limited liability company; GTCR Fund VI, L.P., a Delaware limited partnership; GTCR VI Executive Fund, L.P. a Delaware limited partnership; GTCR Associates VI, a Delaware general partnership; Michael Makings;, 2006 WL 1183016, *1183016 (Trial Motion, Memorandum and Affidavit) (D.Ariz. Mar 10, 2006) Motion for Summary Judgment on (1) Contract ... (NO. CIV-02-2099-PHX-RCB)

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36. Robert B. BURNS, Plaintiff, v. James P. BALDWIN, et aI., Defendants., 2000 WL 34631826, *34631826+ (Trial Motion, Memorandum and AffidaVit) (C.D.Cal. Sep 11, 2000) Plaintiff's Memorandum of Points and Authorities ... (NO. SACVOO-0249AHS, ANX)

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37. IN RE: 3DFX INTERACTIVE, INC., a California corporation, Debtor, Ein: 77-0390421 Carlyle Fortran Trust, a Maryland reai estate investment trust, Plaintiff, v. NVIDIA CORPORATION, a Delaware corporation; Nvidia Us Investment Company, f/k/a Titan Acquisition Corp. No.2, a Delaware corporation; 3dfx Interactive, Inc., a California corporation, Jen-Hsun Huang, an individual; James C. Gaither, an individual; A. Brooke Seawell, an individual; William J. Miller" 2005 WL 2868911, *2868911+ (Trial Motion, Memorandum and Affidavit) (N.D.Cal. Oct 17,2005) Opposition of Carlyle Fortran Trust to 3dfx ... (NO. 05-00427JW) 11I11I 38. In reo P.R.T.C., INC., Braunstein International Corporation, Debtors, Gregory A. Akers, Trustee, and Harold S. Taxel, Trustee, Plaintiffs, v. David Troy Braunstein, Christina Braunstein, Braunstein De MeXico,

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S.A. De C.V., BIC Technologies, Inc., Solution Technology Group, LLC, Solution Technology De Mexico, Almacen De Computadoras, Rosenbaum & Diehl, a Professional Corporation, Keith A. Rosenbaum, Duckor, Spradling, & Metzger, a Professional Corporation, and, 2002 WL 32955064, *32955064 (Trial Motion, Memorandum and Affidavit) (S.D.Cal. Jan 02, 2002) Memorandum of Points and Authorities in Support ••• (NO. 00CV2307-H, JFS)

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39. In Re: ENRON CORP., et aI., Debtors. Enron Corp., Piaintiff, v. J.P. Morgan Securities, Inc., et aI., Defendants. Enron Corp., Plaintiff, v. Mass Mutual Life Insurance Co., et aI., Defendants., 2005 WL 303BB36, *303BB36+ (Trial Motion, Memorandum and Affidavit) (S.D. N.Y. Aug 01, 2005) Memorandum of Law in Support of Lehman's Motion ... (NO. 01-16034, AJG) HN: 1,3 (B.R.) 40. GREAT AMERICAN LIFE INSURANCE COMPANY, Plaintiff, v. Katharine Shaw Wallace THOMPSON, Defendant., 2006 WL 1442021, *1442021 (Trial Motion, Memorandum and Affidavit) (S.D.Ohio Apr 25, 2006) Reply in Support of Plaintiff's Emergency Motion ••• (NO. 104CVB15)

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41. In reo John SASSER, Debtor; In re Mayflower Transit, LLC, Plaintiff, v. John Sasser, Defendant., 2002 WL 329315B7, *329315B7 (Trial Motion, Memorandum and Affidavit) (Bankr.E.D.Cal. Jun 03, 2002) Reply to Opposition of Chapter 7 Trustee's ... (NO. 02-10300A-ll)

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KeyCite - 176 B.R. 895 History (Showing 3 of 6 documents) Direct History 1III1n re Hamilton Taft &. Co., 176 B.R. 895, 32 Collier Bankr.Cas.2d 1727, 26 Bankr.Ct.Dec. 665 (Bankr.N.D.Cal. Jan 19, 1995) (NO. 91-3-1077-TC, 93-3-121-TC) Affirmed by Ii In re Hamilton Taft & Co., 196 B.R. 532 (N.D.Cal. Oct 12, 1995) (NO. C 95-1612-51) Judgment Affirmed by [>In re Hamilton Taft & Co., 114 F.3d 991, 30 Bankr.Ct.Dec. 1236, Bankr. L. Rep. P 77,405, 97 Cal. Daily Op. Servo 4410, 97 Daily Journai DAR. 7369 (9th Cir.(Cal.) Jun 11, 1997) (NO. 95-17058) Full History

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KeyCite - 114 F.3d 991 - Limited Citing References: limited to Headnotes = 1 (F.3d), selected document types (Showing 45 of 5B documents) Secondary Sources (U.S.A.) 1. s 6:12. Fraudulent conveyance attacks -- Cases, SECACQMERG s 6:12, s 6:12+ (2006) HN: 1,3 (F.3d) 2. Bankruptcy Law Manual s B:0.50, s B:0.50. Introduction to the avoiding powers of a trustee or debtor in possession (2006) HN: 1,3 (F.3d) 3. Bankruptcy Service Lawyers Edition s 31:254, s 31:254. Leveraged buyouts (2006) HN: 1,3 (F.3d) 4. Bankruptcy Service Lawyers Edition s 32:20B, s 32:20B. Generally (2006) HN: 1,2,3 (F.3d) 5. Bankruptcy Service Lawyers Edition s 32: 209, s 32:209. Scope and applicability (2006) HN: 1,2,3 (F.3d) 6. Bankruptcy Service Lawyers Edition s 32:210, s 32:210. Congressional intent (2006) HN: 1,2,3 (F.3d) 7. Bankruptcy Service Lawyers Edition s 32: 212, s 32: 212. What constitutes "settlement payment" -Particular determinations (2006) HN: 1,2,3 (F.3d) B. Bankruptcy Service Lawyers Edition s 32:213, s 32:213. What constitutes "settlement payment" -Particular determinations -- Reverse repo's (2006) HN: 1,2,3 (F.3d) 9. Bankruptcy Service Lawyers Edition s 32:215, s 32:215. What constitutes "repurchase agreement" (2006) HN: 1,2,3 (F.3d) 10. Bankruptcy Service Lawyers Edition s 32:216, s 32:216. other particular applications (2006) HN: 1,2,3 (F.3d) 11. Creditors' Rights In Bankruptcy s 14:4, s 14:4. limitations on the avoiding powers (2006) HN: 1,3 (F.3d) 12. Norton Bankruptcy Law and Practice 2d s 56:6, s 56:6. Margin payments, repurchase agreements, swap agreements, and netting agreements (2006) HN: 1,2 (F.3d) 13. Norton Bankruptcy Law and Practice 2d 11 USC s 546, s 546. Limitations on avoiding powers (2006) HN: 1,2,3 (F.3d) C 14. FINANCIAL CONTRACTS AND THE NEW BANKRUPTCY CODE: INSULATING MARKETS FROM BANKRUPT DEBTORS AND BANKRUPTCY JUDGES, 13 Am. Bankr. Inst. L. Rev. 641, 664+ (2005) HN: 1 (F.3d) C 15. DERIVATIVES AND REHYPOTHECATION FAILURE: IT'S 3:00 P.M., DO YOU KNOW WHERE YOUR COLLATERAL IS?, 39 Ariz. L. Rev. 949, 1001 (1997) HN: 1,3 (F.3d)

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16. DERIVATIVES IN BANKRUPTCY, 60 Bus. Law. 1507, 1546+ (2005) HN: 1 (F.3d)

e 17. LEVERAGED BUYOUTS AND FRAUDULENT CONVEYANCES: YET ANOTHER UPDATE, 7 J. Bankr. L. & Prac. 315, 333 (199B) HN: 1 (F.3d) C lB. FORWARD CONTRACTS, BANKRUPTCY SAFE HARBORS AND THE ELECTRICITY INDUSTRY, 51 Wayne L. Rev. 49, 106 (2005) HN: 1,3 (F.3d)

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19. (RE1CHARACTERIZATION IN BANKRUPTCY, SK092 ALI-ABA 237, 244 (2005) HN: 1 (F.3d) 20. (RE1CHARACTER17ATION IN BANKRUPTCY OF TRANSACTIONS AFFECTING THE PUBLIC MARKETS: THE TREATMENT OF REPURCHASE, SJ082 ALI-ABA 103, 110 (2004) HN: 1 (F.3d) 21. FRAUDULENT TRANSFERS, 887 PLIjComm 183, 265+ (2006) HN: 1,3 (F.3d) 22. PREFERENCES AND FRAUDULENT TRANSFERS, 887 PLIjComm 479, 666+ (2006) HN: 1,2 (F.3d) 23. FRAUDULENT TRANSFERS, 880 PLIjComm 357, 436+ (2005) HN: 1,2,3 (F.3d) 24. FRAUDULENT TRANSFERS, 876 PLIjComm 511, 598 (2005) HN: 1,2,3 (F.3d) 25. PREFERENCES AND FRAUDULENT TRANSFERS, 876 PLIjComm 667, 867+ (2005) HN: 1,2 (F.3d) 26. FRAUDULENT TRANSFERS, 869 PLIjComm 387, 439 (2004) HN: 1,2,3 (F.3d) 27. FRADULENT TRANSFERS, 861 PLIjComm 567, 619 (2004) HN: 1,2,3 (F.3d) 28. PREFERENCES AND FRAUDULENT TRANSFERS, 861 PLIjComm 637, 847+ (2004) HN: 1,2 (F.3d) 29. AVOIDANCE POWERS, 855 PLIjComm 331, 442 (2003) HN: 1,2,3 (F.3d) 30. FRAUDULENT TRANSFERS, 849 PLIjComm 659, 711 (2003) HN: 1,2,3 (F.3d) 31. PREFERENCES AND FRAUDULENT TRANSFERS, 849 PLIjComm 729, 922+ (2003) HN: 1,2 (F.3d) 32. AVOIDANCE POWERS, 842 PLIjComm 321, 431 (2002) HN: 1,2,3 (F.3d) 33. 837 PLI/Comm 881, 931 (2002) HN: 1,2,3 (F.3d) 34.837 PLIjComm 947, 1135+ (2002) HN: 1,2 (F.3d) 35. FRAUDULENT TRANSFERS, 828 PLIjComm 337, 387 (2001) HN: 1,2,3 (F.3d) 36. FRAUDULENT TRANSFERS, 819 PLIjComm 815, 864 (2001) HN: 1,2,3 (F.3d) 37. FRAUDULENT TRANSFERS, 810 PLIjComm 609, 659 (2000) HN: 1,2,3 (F.3d) 38. FRAUDULENT TRANSFERS, 804 PLIjComm 473, 554 (2000) HN: 1,2,3 (F.3d) 39. FRAUDULENT TRANSFERS, 796 PLIjComm 421, 499 (1999) HN: 1,2,3 (F.3d) 40. FRAUDULENT TRANSFERS, 787 PLIjComm 651, 729 (1999) HN: 1,2,3 (F.3d)

Court Documents Appellate Court Documents (U.S.A.) Appellate Briefs 41. In re GRAFTON PARTNERS, L.P., a California Limited Partnership, and its Affiliates, Debtors; Circle Trust, F.B.O. Michele Montano, NjKjA Circle Trust, Trustee for the Stable Value Plus Fund, Appellant, v. Richard M. Kipperman, Chapter 7 Trustee, Appellee., 2005 WL 3227165, *3227165+ (Appellate Brief) (9th Cir. Sep 07, 2005) Appellant Circle Trust's Opening Brief (NO. 05-55485)" HN: 1,2,3 (F.3d)

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42. In re: THRIFTY OIL CO., a California corporation; Golden West Refining Company, a California corporation; Cluj Distribution Company, a California corporation; Benzin Supply Company, a corporation; and Golden West Distribution Company, a California corporation, Debtors. THRIFTY OIL CO., Appellant, v. BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, Appellee., 2000 WL 33978038, *33978038+ (Appellate Brief) (9th Cir. Nov 15, 2000) Appellee's Brief (NO. 00-56159) -jr: HN:

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1,2,3 (F.3d) 43. In reo THRIFTY OIL CO., a California corporation; Golden West Refining Company, a California corporation; CLUJ Distribution Company, a California corporation; Benzin Supply Company, a corporation; and Golden West Distribution Company, a California corporation, Debtors. THRIFTY OIL CO., Appellant, v. BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, Appellee., 2000 WL 34017800, *34017800+ (Appellate Brief) (9th Cir. Nov 14, 2000) Appellee's Brief (NO. 00-56159) HN: 1,3 (F.3d)

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44. In re WORLD AUXILIARY POWER COMPANY, World Aerotechnology Corporation, Air Refrigeration Systems, Inc., Debtors. AEROCON ENGINEERING INC., Appellant, v. SILICON VALLEY BANK, Advanced Aerospace LLC, Airweld, Inc., Michael Gilsen, and Merritt Widen, Respondents., 2000 WL 34004509, *34004509 (Appellate Brief) (9th Cir. Oct 05,2000) Appellant's Opening Brief (NO. 00-16550) HN: 1,2,3 (F.3d)

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Trial Court Documents (U.S.A.) Trial Motions, Memoranda and Affidavits 45. In re COUNTY OF ORANGE, a political subdivision of the State of California, Debtor. COUNTY OF ORANGE, a political subdivision of the State of California, and John M.W. Moorlach, in his official capacity as Treasurer-Tax Collector of the County of Orange, Plaintiffs, v. MERRILL LYNCH & CO., INC., et ai., Defendants., 1998 WL 34192312, *34192312+ (Trial Motion, Memorandum and Affidavit) (C.D.Cai. Feb 17,1998) Memorandum of Points and Authorities of the Bond ... (NO. SACV95-0037-GLT, BANKRSA94-22272JR) HN: 1,3 (F.3d) Negative Only

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KevCite - 114 F.3d 991 History (ShoWing 2 of 7 documents) Direct History IIiIIIn re Hamilton Taft &. Co., 114 F.3d 991, 30 Bankr.Ct.Dec. 1236, Bankr. L. Rep. P 77,405,97 Cal. Daily Op. Servo 4410, 97 Daily Journal DAR. 7369 (9th Cir.(Cal.) Jun 11, 1997) (NO. 95-17058) Negative Citing References (U.S.A.) Distinguished by Ern re Grafton Partners, 321 B.R. 527, 53 Collier Bankr.Cas.2d 1589, 44 Bankr.Ct.Dec. 115 (9th Cir.BAP (Cal.) Feb 17, 2005) (NO. SC-04-1028-KNOS, 01-10606-H702-90555) Full History

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