In re Taggert, No. 16-35402 (9th Cir. 2018)
Annotate this CaseThe Ninth Circuit affirmed the Bankruptcy Appellate Panel's opinion reversing the bankruptcy court's order entering contempt sanctions against creditors for knowingly violating the discharge injunction in the Chapter 7 case. The panel held that creditors did not knowingly violate the discharge injunction because they had a subjective good faith belief that the discharge injunction did not apply to their state-court claim for post-petition attorneys' fees. The panel explained that creditors' subjective good faith belief, even if unreasonable, insulated them from a finding of contempt.
Court Description: Bankruptcy. The panel affirmed the Bankruptcy Appellate Panel’s opinion reversing the bankruptcy court’s order entering contempt sanctions against creditors for knowingly violating the discharge injunction in a Chapter 7 case. The panel held that the creditors did not knowingly violate the discharge injunction because they had a subjective good faith belief that the discharge injunction did not apply to their state-court claim for post-petition attorneys’ fees. The creditors’ subjective good faith belief, even if unreasonable, insulated them from a finding of contempt. The panel concluded that it therefore need not reach the creditors’ cross-appeal from the district court’s holding that they violated the discharge injunction.
The court issued a subsequent related opinion or order on November 24, 2020.
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