Milby v. Templeton, No. 16-60022 (9th Cir. 2017)
Annotate this CaseUnder Gibbs v. Legrand, post-discovery delay does not preclude equitable tolling but is still relevant to assessing a party's "overall diligence." The Ninth Circuit affirmed the Bankruptcy Appellate Panel's decision reversing the bankruptcy court's dismissal as time-barred of a bankruptcy estate's claims seeking avoidance of fraudulent transfers and affirming the bankruptcy court's dismissal of other claims based on transfers not made by debtor. The panel held that neither court correctly applied the law on equitable tolling. In this case, the estate's overall diligence, combined with the extraordinary circumstances preventing earlier discovery of the subject transfers, warranted equitable tolling.
Court Description: Bankruptcy. The panel affirmed the judgment of the Bankruptcy Appellate Panel, which (1) reversed the bankruptcy court’s dismissal as time-barred of a bankruptcy estate’s claims seeking avoidance of fraudulent transfers and (2) affirmed the bankruptcy court’s dismissal of other claims based on transfers not made by the debtor. IN RE MILBY 3 Regarding the time bar, the bankruptcy court held that the bankruptcy estate’s delay in filing after discovering the transfers precluded equitable tolling of the statute of limitations. The BAP reversed, holding that such post- discovery delay is irrelevant to whether equitable tolling applies. The panel wrote that neither court correctly applied the law on equitable tolling. Under the correct standard, post- discovery delay does not preclude equitable tolling but is still relevant to assessing a party’s overall diligence. The panel affirmed the judgment of the BAP because the estate’s overall diligence, combined with extraordinary circumstances preventing earlier discovery of the transfers, warranted equitable tolling. The panel affirmed, for the same reasons stated in the BAP’s opinion, the BAP’s affirmance of the bankruptcy court’s dismissal of claims based on transfers that were made by individuals and entities other than the debtor and therefore could not serve as predicates for a claim under 11 U.S.C. § 544(b). The panel remanded the case to the bankruptcy court.
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