Orange County Mother Wins Ninth Circuit Ruling in Bankruptcy Case

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For Immediate Release
August 12, 2016

Contact: George C. Wu

Orange County Mother Wins Ninth Circuit Ruling in Bankruptcy Case

In published opinion, the Ninth Circuit Court of Appeals reverses judgment of the Bankruptcy Appellate Panel and raises concerns over the County’s actions

 

Santa Ana, CA – The U.S. Ninth Circuit Court of Appeals concluded on August 10, 2016 that a mother’s debt to Orange County arising from her son’s involuntary juvenile detention is not a “domestic support obligation” and thus excepted from discharge in bankruptcy. Brett H. Ramsaur and Todd E. Lundell of Snell & Wilmer briefed and argued on Ms. Rivera’s behalf in front of the Court of Appeals after Caroline Djang of Rutan & Tucker briefed the trial court case. PLC’s Leigh Ferrin and EmmaElizabeth Gonzalez served as co-counsel throughout the case, including briefing and arguing before the trial court and the Bankruptcy Appellate Panel.

“This is huge win for not only our client but countless ‘honest but unfortunate’ debtors in Orange County and throughout the Ninth Circuit,” said Ferrin, Directing Attorney of PLC’s Consumer Law Unit.

In the published opinion, the panel reversed the judgment of the Bankruptcy Appellate Panel, which had affirmed the bankruptcy court’s denial of Ms. Rivera’s motion to sanction Orange County for persisting post-discharge in its efforts to collect the debt. Upon her son’s release from detention, the County sent Ms. Rivera a bill for $16,372. Ms. Rivera sold her house to pay for $9,508 of the bill, and her ex-husband paid the bill down further.

Ms. Rivera, who had to quit her job to take care of her ill son, filed a chapter 7 bankruptcy case and received her discharge. Nevertheless, the County continued to hound Ms. Rivera with collection-agent type tactics. The panel noted that “in relentlessly pursuing [Ms. Rivera’s] collection and opposing its discharge, the County raises yet another obstacle to [Ms.] Rivera’s efforts to provide her son with the support about which the County claims to be so deeply concerned.”While Brett Ramsaur of Snell & Wilmer is ecstatic with the outcome, he is particularly proud of the relief it will provide Maria, saying “we are grateful for the opportunity to fight for Maria in front of the Ninth Circuit and couldn’t be happier with the result.”

The Ninth Circuit Court of Appeals concluded that the Bankruptcy Code Amendments of 2005 did not “change the fundamental requirement that Domestic Support Obligations be for the purposes of child or family support.”

The panel further explained that Ms. Rivera “incurred her debt through no fault of her own. It was her son’s actions, not hers, that led to his detention in juvenile hall, and thus his actions, not hers, that enabled the County to burden her with this debt. Nevertheless, in the wake of her child’s incarceration, Ms. Rivera made a good faith effort to pay her bill [and] paid over half of it at great personal sacrifice. Rivera’s debt thus arises in precisely the circumstance in which the Bankruptcy Code seeks to provide a fresh start.”

Caroline Djang of Rutan & Tucker summed it up when she said “Rutan could not have asked for a better result for Ms. Rivera. Not only does the opinion vindicate our argument, i.e. that the debt to the County did not fit within the spirit of the law excepting ‘domestic support obligations’ from discharge, but it also states in no uncertain terms that the County acted in a manner contrary to the objectives of the Bankruptcy Code. Every now and then in this profession, we encounter a truly “feel-good” win. This is one of those wins.”

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  • OCservant_Leader

    This OC County Government gross abuse of power should be a warning to all citizens. How they (the corrupt family in power) abuse the legal system for personal gain.

    This is scary!! I had no idea that almost 50% of the Probation department’s general operating fund is extracted from the juvenile’s parents?

    This “Rehabilitative” Agency is fronting as a Debt Collection company? What??

    Now I see why the “family” has their operatives placed there managing the budget. I couldn’t understand why they were interested. Aha- It’s another profit center. Wow.

  • Jacki Livingston

    Wow. I am happy for the mom. But I am absolutely gobsmacked to find an attorney with the nerve to take on the County. Every lawyer I ever found was scared to death.

  • John Claxton

    I will bet the county paid outside counsel in excess of $50k to settle a $10k or less debt. Way to spend our tax dollars.

    • Jacki Livingston

      They spent twice that fighting my $800 worker’s comp claim, so I suspect that is right on point.

  • David Zenger

    Rutan better watch out. Doing the the right thing is bad for (their) business.