Shulman Hodges & Bastian LLP

October 2016 Archives

Court of Appeals Affirms Majority of Trial Court's Order Sustaining Demurrer to Class Action Complaint

Shulman Hodges & Bastian LLP was recently successful in defeating an appeal of an order sustaining its Hospital client's demurrer to a class action complaint. The Court of Appeal affirmed the majority of the trial court's order sustaining the demurrer to plaintiff's third amended complaint.

Guarantor Remains Liable for Deficiency Where the Guaranty Was Not a Sham

In LSREF2 Clover Property 4 LLC v. Festival Retail Fund 1LP, Case No. BC59937, the California Court of Appeal reversed the Los Angeles County Superior Court to say that a guaranty was not a sham guaranty and as such, the guaranty could be pursued upon a default by the primary obligor based on the guarantor's waiver of the antideficiency statutes. In summary, the facts are as follows: the guarantor entered into a contract to purchase a piece of property but reserved the right to assign its purchase rights to a LLC or single purpose entity; the guarantor then formed the borrower, a SPE owned and controlled by the guarantor; the guarantor then approached the lender about financing the purchase of the property; the guarantor then assigned its rights to purchase the property to the borrower; and finally, the borrower took title to the property and entered into a loan agreement with the lender for a $25 million loan of which the guarantor guaranteed $1.5 million.


The entry of a discharge order under 11 U.S.C. § 727 gives rise to what is commonly known as the "discharge injunction". The discharge injunction is what gives the discharge its bite. It empowers the debtor to seek recourse against creditors who seek to collect on their pre-petition claims despite the entry of a discharge order. The entry of a discharge enjoins any creditor's effort to collect a discharged debt as a personal liability of the debtor. The discharge injunction is permanent and is always applicable with respect to every debt that was discharged.

In re Obedian: Central District Bankruptcy Court Applies Valli To Find Property Held in Joint Tenancy is Community Property

In In re Obedian, 546 B.R. 409 (Bankr. C.D. Cal. March 1, 2016), a Central District Bankruptcy Court recently applied the California Supreme Court case, In re Marriage of Valli, 58 Cal. 4th 1396 (Cal. 2014). In Valli, the California Supreme Court found, that in an action between spouses, Cal. Fam. Code § 760 (property acquired by a married person during marriage) controls in purchases from a third party and thus the transmutation requirements apply. Specifically, the California Supreme Court found that while the form of title presumption under Cal. Evid. Code § 662 may sometimes apply, it does not apply when it conflicts with the transmutation statutes. In Obedian, the bankruptcy court held that, as provided in Valli, the form of title presumption does not trump the community property presumption under Section 760 of the Family Code. The Chapter 7 trustee did not rebut the evidentiary presumption under Cal. Fam. Code § 760 by proving by a preponderance of evidence that the property had been "transmuted" pursuant to the requirements of Cal. Fam. Code § 852. Therefore, the Bankruptcy Court determined that a property held in joint tenancy was community property. At Shulman Hodges & Bastian LLP our bankruptcy lawyers have extensive experience in representing Chapter 7 Trustees and Debtors. Please contact us at or call us at 949-340-3400 to speak with one of our lawyers.

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Shulman Hodges & Bastian LLP
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or contact us at 949-427-1654