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In Kent v. United States, 185 F.3d 867 (9th Cir. 1999), an unpublished opinion, the Court of Appeals stated that its decisions in Nitzberg v. Commissioner, supra, and Boyd v. United States, 762 F.2d 1369 (9th Cir. 1985), "clearly hold that § 165(d) limits the deduction of gambling losses even of those who gamble professionally."
Summary of this case from Mayo v. COMMISSIONER OF INTERNAL REVENUEOpinion
By Orders filed on November 6, 1998, December 14, 1998, and January 25, 1999, submission was deferred to allow settlement negotiations to continue. On February 3, 1999, the Circuit Mediator informed the panel that settlement efforts had proven unavailing and the parties requested that the matter be submitted for a decision on the merits.
Editorial Note:
This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTA9 Rule 36-3 regarding use of unpublished opinions)
3 Cal. Bankr. Ct. Rep. 47
Appeal from the Ninth Circuit Bankruptcy Appellate Panel, Ryan, Robles and Jones, Judges Presiding.
Before CANBY and HAWKINS, Circuit Judges, and SILVER, District Judge.
Honorable Roslyn O. Silver, United States District Judge for the District of Arizona, sitting by designation.
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36.3.
The first issue on appeal is whether the bankruptcy court erred in granting summary judgment to Action Collection Service ("ACS") upon concluding that the claim assigned by Mahaffey Oil to ACS was not dischargeable in Laser Land Leveling Inc.'s ("Laser's") Chapter 11 bankruptcy proceeding. In reaching this conclusion, the bankruptcy court did not address Laser's argument that ACS had formal notice of the proceeding and should have asserted its right to payment upon assignment of the Mahaffey Oil account.
Because ACS was listed as one of Laser's creditors from the start of the latter's Chapter 11 proceeding, ACS already had formal notice of the proceeding for approximately two years before Mahaffey Oil assigned Laser's debt to ACS. Once a creditor in a Chapter 11 bankruptcy action has formal notice, the creditor must act to protect its interest before too much time passes or face discharge. See In re Maya Constr. Co., 78 F.3d 1395, 1400 (9th Cir.), cert. denied, 117 S.Ct. 168 (1996). Although the instant situation is atypical because ACS had actual, formal notice of the Chapter 11 proceeding before obtaining the assigned claim, ACS was no less obligated to protect its rights.
The bankruptcy court erred in granting summary judgment to ACS on the discharge issue and its decision will be reversed. ACS was assigned Mahaffey Oil's claim in July, 1994, but the record does not indicate whether ACS attempted either to prevent the bankruptcy court's confirmation of Laser's reorganization plan on November 30, 1994, or to do anything else in the bankruptcy proceedings to protect its rights. On remand, the bankruptcy court shall determine whether ACS could have taken prompt action in bankruptcy court to protect its interests in the claim assigned by Mahaffey Oil.
The second issue on appeal is whether the doctrine of judicial estoppel bars ACS from offering evidence pertaining to Laser's claim. Laser argued to the BAP that the doctrine of judicial estoppel should be invoked to bar ACS from claiming that Laser owed money to Mahaffey Oil. ACS claims in the instant action that Laser owes it, as assignee of Mahaffey Oil, over $30,000 plus interest. According to Laser, this claim is contrary to the position the Mahaffeys took during their Chapter 13 bankruptcy action, in which they submitted schedules containing the declaration, under penalty of perjury, that Mahaffey Oil had no accounts receivable.
Laser apparently did not make this argument initially before the bankruptcy court; nonetheless, the BAP addressed it.
In deciding not to invoke judicial estoppel, the BAP abused its discretion by relying on an erroneous view of the law. See Security Farms v. Int'l Brotherhood of Teamsters, 124 F.3d 999, 1016 (9th Cir.1997). The BAP relied on the principle that judicial estoppel is invoked only when inconsistent positions are asserted in the same litigation. However, we have held that the doctrine of judicial estoppel may be applied when inconsistent positions are taken in different causes of action. See Rissetto v. Plumbers and Steamfitters Local 343, 94 F.3d 597, 600, 605 (9th Cir.1996). Thus, the BAP's decision is contrary to our precedent.
The BAP further concluded that the doctrine of judicial estoppel was inapplicable because the Mahaffeys set forth the inconsistent statements in the financial schedules filed with their bankruptcy petition while performing what the BAP described as an "administrative task." This alternative basis for the BAP's decision is also based on an erroneous view of the law. See Security Farms, 124 F.3d at 1016. The financial information provided in bankruptcy schedules is integral to a bankruptcy proceeding because detailed financial information is necessary to liquidate or reorganize a debtor or to adjust the debtor's debts. Providing this information is not merely an ancillary administrative task to which the doctrine of judicial estoppel does not apply. See Editor's Comment, Bankr.R. 1007(b).
Although we reject the BAP's reasons for declining to invoke the doctrine of judicial estoppel, we affirm its decision on the judicial estoppel issue because Laser has failed to show that application of judicial estoppel is warranted. We have recognized that there are two different approaches to determining when to invoke judicial estoppel. See, e.g., Rissetto, 94 F.3d at 601. Rather than choosing between the approaches, we continually have applied both and arrived at the same result. See, e.g., Britton v. Co-op Banking Group, 4 F.3d 742, 744 (9th Cir.1993). Accordingly, we apply both approaches here.
Pursuant to the majority approach, judicial estoppel applies only when the court hearing the previous action adopted, in some manner, the inconsistent statement presented during that action. See Rissetto, 94 F.3d at 601 (quotation omitted). A favorable settlement is equivalent to a favorable judgment for purposes of applying the majority approach, at least under those circumstances in which a judicial or quasi-judicial body approves the settlement. See id. at 604-605. If the majority approach is interpreted conservatively, then the doctrine of judicial estoppel does not apply to the instant action because the Mahaffeys did not settle or obtain a judgment in their bankruptcy action, in which the inconsistent information was presented. Rather, they settled a claim owed to their only unsecured creditor, Blue & White Transport, Inc., and then dismissed the Chapter 13 action in its entirety.
Even if the majority approach is interpreted broadly to encompass settlement of an action other than that in which the previous inconsistent statement was offered, as long as the settlement relied, at least in part, on the inconsistent information, Laser has not set forth admissible facts warranting judicial estoppel. Laser has not set forth any admissible evidence to establish a nexus between the Mahaffeys' previous inconsistent statements about their accounts receivable and the Mahaffeys' settlement with Blue & White Transport. Absent evidence of a nexus, judicial estoppel cannot be invoked pursuant to the majority approach. See id. at 604-606.
Pursuant to the minority approach, judicial estoppel applies even when the litigant was unsuccessful in asserting the inconsistent statement during previous proceedings, if the litigant is playing "fast and loose" with the courts by changing his or her position. See id. at 601 (quotation omitted). Laser has established that the Mahaffeys made inconsistent statements, but the mere threshold fact of inconsistency is not enough to permit a conclusion that a party has been playing fast and loose. See General Signal Corp. v. MCI Telecomm. Corp., 66 F.3d 1500, 1505 (9th Cir.1995), cert. denied, 516 U.S. 1146 (1996)). Laser's failure to establish the requisite nexus discussed above is fatal to Laser's attempt to establish that the Mahaffeys played "fast and loose" with the courts.
The third issue on appeal is whether the bankruptcy court erred in granting summary judgment to ACS on the issues of the validity and amount of ACS's claim. ACS offered the affidavit of Ray Mahaffey and the attached Mahaffey Oil account statement setting forth Laser's purchases, including both date and amount, Laser's account payments, and the net amount Laser owed. Both the bankruptcy court and the BAP awarded summary judgment to ACS on this issue, concluding that the evidence Laser offered to counter ACS's evidence did not create a genuine issue of material fact.
We disagree. Laser has presented the schedules the Mahaffeys submitted with the Chapter 13 bankruptcy petition they filed, under penalty of perjury, on behalf of Mahaffey Oil. The Mahaffeys' declaration that Mahaffey Oil had no accounts receivable directly impeaches Ray Mahaffey's averments about the amount Laser owed Mahaffey Oil. ACS argues that the Mahaffeys inadvertently omitted the information about their accounts receivable; however, it offers no affidavits in support of this argument. Moreover, ACS's argument ignores the bankruptcy court's obligation to view the facts in the light most favorable to the non-moving party, Laser, and to draw all reasonable inferences in Laser's favor. See Brinson v. Linda Rose Joint Venture, 53 F.3d 1044, 1047 (9 th Cir.1995); T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 631 (9th Cir.1987). In addition, the bankruptcy court was obligated to avoid determining on summary judgment which of Ray Mahaffey's declarations is more credible. See Bator v. State of Hawaii, 39 F.3d 1021, 1026 (9th Cir.1994). Having been presented with conflicting evidence, the court was obliged to presume the truth of the evidence offered by Laser; the non-moving party. See T.W. Elec. Serv., 809 F.2d at 631. The evidence is sufficient to create a genuine issue of material fact about the validity and amount of the debt owed.
Finally, Laser argues for the first time that the statute of limitations bars ACS's claim. Generally this Court does not consider issues that were not presented to or developed before the trial court. See Foti v. City of Menlo Park, 146 F.3d 629, 638 (9th Cir.1998). Laser has not set forth the exceptional circumstances sufficient to justify an exception. See id. at 638. The defense has been waived.
The BAP's decision declining to apply the doctrine of judicial estoppel is AFFIRMED. The bankruptcy court's grants of summary judgment to ACS on the issues of whether the claim had been discharged and the validity and amount of the claim are REVERSED and the cause REMANDED to the bankruptcy court for further proceedings. Laser is entitled to its costs on this appeal.