Author Archives: Ben

Payment of Judgment Cuts Off Creditor’s Recovery of Fees

DEBTORS’ PAYMENT OF JUDGMENT IN FULL BY CASHIER’S CHECK CUTS OFF CREDITOR’S RECOVERY OF POST-JUDGMENT ATTORNEY’S FEES 

This case highlights the necessity of creditors to act diligently post-judgment to file their motions for accrued fees as soon as possible in order to avoid cutting off their claims upon the debtor’s payment of the judgment in full. Accepting but not cashing a check that fulfills the judgment will not keep their claim open.

In Gray1CPB, LLC v. SCC Acquisitions, Inc. (2014) 225 Cal.App.4th 410, the Court considered whether the debtors’ payment of a judgment in full by cashier’s check cuts off the creditor’s right to move for attorney’s fees previously incurred in collection efforts. 

In August, 2010, Gray1 obtained a judgment against the debtors in excess of $9.1 million plus interest as a result of the debtors’ failure to make good on their guaranties of a loan made to a limited liability company.  The written guaranties provided for an award of attorney’s fees. 

In June, 2012, the debtors delivered a cashier’s check to Gray1 in the amount of $12.9 million which covered the amount of the judgment plus accumulated interest.  Gray1 did not immediately cash the check.  Rather, twelve days after receiving the cashier’s check, Gray1 filed a motion for post-judgment costs, including attorneys’ fees in attempting to enforce the judgment, and thereafter cashed the check.  Continue reading →

Only a Judge Can Extend Bankruptcy Deadlines – Even if Counsels Agree

A Stipulation to Extend the Deadline to File an Adversary Proceeding in a Chapter 7 Case Needs a Court Order to be Enforceable.

Creditors should be wary of relying on an agreement of Debtor’s counsel to extend the deadline to file a complaint objecting to discharge under Bankruptcy Code Section 727.  In In Re Alazzeh, 14 C.D.O.S. 5157, May 9, 2014, the Ninth Circuit Bankruptcy Appellate Panel held that notwithstanding a stipulation between counsel to extend the deadline documented and confirmed by email, the 60-day deadline in Bankruptcy Rule 4004 (a) was not extended because the parties did not obtain a Court Order approving the extension.  The Bankruptcy Court cited Bankruptcy  Rule 9006(b), which governs requests for extensions of time, stating that the parties had not complied with the requirements of filing a motion prior to the expiration of the deadline.  Additionally, the Bankruptcy Court made a point of stating that the extension is not automatically granted just because a motion has been filed, and that the Court has the discretion to determine if cause exists.  As a result of this ruling, creditors and debtors must jump through an additional hoop when trying to work out a potential objection to discharge and may not rely on informal extension agreements, even if confirmed in writing.  In this case, the debtor obtained summary judgment while the creditor probably felt like she was sand-bagged. 

Note: Sandbagging has a special meaning in legal contexts. Black’s Law Dictionary  defines it as a “trial lawyer’s remaining cagily silent when a possible error occurs at trial, with the hope of preserving an issue for appeal if the court does not correct the problem. This tactic does not usually preserve the issue for appeal because objections must be promptly made to alert the trial judge of the possible error.”