165 F.3d 1243 (9th Cir. 1999), 97-55874, In re Southern California Plastics

Docket Nº:97-55874.
Citation:165 F.3d 1243
Party Name:99 Cal. Daily Op. Serv. 530, 99 Daily Journal D.A.R. 635, 3 Cal. Bankr. Ct. Rep. 32 In re: SOUTHERN CALIFORNIA PLASTICS, INC., Debtor. Lawrence A. Diamant, Chapter 7 Trustee, Appellant, v. Vartan Kasparian, Appellee.
Case Date:January 20, 1999
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 1243

165 F.3d 1243 (9th Cir. 1999)

99 Cal. Daily Op. Serv. 530,

99 Daily Journal D.A.R. 635,

3 Cal. Bankr. Ct. Rep. 32


Lawrence A. Diamant, Chapter 7 Trustee, Appellant,


Vartan Kasparian, Appellee.

No. 97-55874.

United States Court of Appeals, Ninth Circuit

January 20, 1999

Argued and Submitted Dec. 8, 1998.

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Damon G. Saltzburg, Saltzburg, Ray & Bergman, Los Angeles, California, for the Appellant.

John J. Jamgotchian, Woodland Hills, California, for the Appellee.

Appeal from the Bankruptcy Appellate Panel for the Ninth Circuit; McKeag, Meyers & Jones, Bankruptcy Judges, Presiding. B.A.P. No. CC-96-01647-McMeJ.

Before: D.W. NELSON, PAMELA ANN RYMER, and T.G. NELSON, Circuit Judges.

D.W. NELSON, Circuit Judge:

Appellant Lawrence A. Diamant ("Trustee") appeals the decision of the Bankruptcy Appellate Panel concluding that Vartan Kasparian's allowed claim is secure. Kasparian obtained a prejudgment attachment lien against the debtor's property pursuant to California Civil Procedure Code § 488.500. Before Kasparian could proceed to judgment, the debtor filed for bankruptcy protection. The bankruptcy court allowed Kasparian's claim as secured, and the BAP affirmed. The Trustee argues that Kasparian's claim is unsecured because (1) the attachment lien was unperfected because an allowance of a

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claim, in contrast to a judgment, cannot perfect an attachment lien and (2) Kasparian cannot perfect the lien because the underlying state court action is closed. We reverse and remand.

Facts and Procedural History

In 1991, Kasparian and the debtor entered into a written contract for Kasparian to purchase particular products and equipment. See Diamant v. Kasparian (In re Southern Cal. Plastics, Inc.), 208 B.R. 178, 179 (9th Cir.BAP 1997). Despite Kasparian paying part of the purchase price, the debtor did not deliver the items. See id. Kasparian filed an action against the debtor and its principals in state court on November 22, 1991. See id. Kasparian obtained a prejudgment writ of attachment against the debtor on February 13, 1992, and filed a notice of attachment with the California Secretary of State creating an attachment lien on February 27, 1992. See Cal.Civ.Proc.Code § 488.500; Kasparian, 208 B.R. at 179. After the debtor filed a voluntary Chapter 7 bankruptcy case on August 7, 1992, Kasparian proceeded to judgment in the state court action against one of the debtor's principals and a nonsuit was filed against Kasparian as to the other principal. See id.

Kasparian filed a timely proof of claim in the bankruptcy case; his claim included a secured $27,870 claim based on the attachment lien and an unsecured $100,000 claim. See id. at 180. The bankruptcy court disallowed the entire claim on July 5, 1995. See id. The bankruptcy court then granted Kasparian's motion for reconsideration and scheduled an evidentiary hearing. The parties agreed through a Joint Pretrial Order that the only issues were "whether the Debtor owed $127,870 to Kasparian; whether Kasparian was a secured or unsecured creditor; and certain evidentiary/estoppel questions." Id. The pretrial order also stipulated that the underlying state court action was closed. Kasparian withdrew the unsecured $100,000 claim and the Trustee stipulated to allow the $27,870 claim, reserving the question of whether it was secured. See id. After the evidentiary hearing, the bankruptcy court held that Kasparian's claim had expired pursuant to California Civil Procedure Code § 488.510. See id.

After Kasparian filed a second motion for reconsideration, the bankruptcy court determined that 11 U.S.C. § 108(c) tolled the prejudgment attachment lien's automatic expiration and that the lien therefore had not expired. See id. The bankruptcy court further determined that the lien's secured status did not depend on whether Kasparian could proceed with the state court action. See id. The Trustee appealed to the Bankruptcy Appellate Panel. See id.

The BAP affirmed. See id. It held that: (1) 11 U.S.C. § 108(c) applied to extend the life of the lien, see id. at 180-81; (2) in the bankruptcy context, an attachment lien creditor need not obtain a judgment to perfect its lien because obtaining an allowance of claim is sufficient, see id. at 181-82; and (3) the closing of the state court action, whatever that entailed, was a moot issue in light of the holding that the allowance of the claim perfected the lien, see id...

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