Shulman Hodges & Bastian LLP
949-340-3400|949-427-1654

Posts tagged "Bankruptcy Appellate"

Actual Intent to Cause Injury is Not Required Under Bankruptcy Code Section 523(a)(6)

In In re Hamilton, BAP Nos. SC-17-1126 and SC-17-1123, the Ninth Circuit Bankruptcy Appellate Panel ("BAP") considered the intent requirement for non-dischargeability of a debt under Section 523(a)(6). The debtor argued that the Supreme Court case of Kawaauhau v. Geiger, 523 U.S. 57 (1998) required actual intent or specific intent to cause injury to meet the "willful" injury requirement of Section 523(a)(6). The BAP clarified that while Geiger held that an intent to cause harm was required, it did not elaborate as to "the precise state of mind required," as stated by the Ninth Circuit in Petralia v. Jerchich (In re Jercich), 238 F.3d 1202 (9th Cir. 2001). The BAP commented that the holding in Jercich that the debtor must intentionally commit the act with a substantial certainty that injury will occur is controlling and not at odds with Geiger. As such, the BAP confirmed that a specific intent to cause injury is not required to meet the "willful" standard under Section 523(a)(6) but rather, only a substantial certainty that injury will occur as found in Jercich.

Ninth Circuit Applies California Supreme Court's Holding in Carmack v. Reynolds, Holding That Spendthrift Trust Distributions Are Property of the Estate and Confirming the Types of Distributions Which Need to Be Turned Over

On August 16, 2017, the Ninth Circuit Court of Appeals, more than two years after it issued an order certifying a probate question to the California Supreme Court, held that a bankruptcy estate is entitled to the full amount of spendthrift trust distributions due to be paid as of the petition date. However, based on the California Supreme Court's opinion in Carmack v. Reynolds, 391 P.3d 625, 628 (Cal. 2017), the Ninth Circuit confirmed that the estate may not access any portion that the beneficiary needs for his/her support or education (so long as the trust specifies that is the purpose of the funds). See also Cal. Prob. Code § 15302. The Ninth Circuit further held that the bankruptcy estate may also reach 25 percent of expected future payments from the spendthrift trust, reduced by amounts needed by the beneficiary to support himself/herself and his/her dependents. Carmack v. Reynolds, 391 P.3d at 632; Cal. Prob. Code § 15306.5.

Irvine
Shulman Hodges & Bastian LLP
• 100 Spectrum Center Drive, Suite 600 • Irvine, CA 92618
• Local: 949-340-3400 • Fax: 949-340-3000 • Map & Directions
or contact us at 949-427-1654

Riverside
Shulman Hodges & Bastian LLP
• 3550 Vine Street, Suite 210 • Riverside, CA 92507 
• Local: 951-275-9300 • Fax: 951-275-9303 • Map & Directions
or contact us at 949-427-1654

Map