IN RE: POINT CENTER FINANCIAL (2021)

United States Court of Appeals, Ninth Circuit.2021-04-22No. No. 20-55600

Summary · law.co

Holding. The appellate court affirmed the bankruptcy court's classification of the Brewer Group's claim as unsecured, upholding the court's valuations of the senior claim and the debtor as of the petition filing date and its exclusion of the president's personal assets from the collateral calculation.

Richard Kipperman appealed a bankruptcy court's decision regarding how the Brewer Group's junior claim should be classified in the Point Center Financial bankruptcy. The appellate court upheld three key rulings. First, the bankruptcy court properly valued the senior claim held by Pacific Mercantile Bank at $9.7 million as of the petition filing date, as required by the Bankruptcy Code. Second, the court correctly valued Point Center Financial itself as of the petition date, finding that bankruptcy courts have broad discretion to select the appropriate valuation date based on the circumstances and purpose of the valuation. Third, the court properly excluded assets belonging to PCF's president Dan Harkey from the collateral valuation, since only the debtor's property comprises the bankruptcy estate, and a prior state court finding that Harkey was an alter-ego of PCF in unrelated litigation did not make him a debtor in this bankruptcy action.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Timing of claim valuation under Bankruptcy Code section 502(b)
Appropriate date for valuing collateral and debtor property
Scope of bankruptcy estate property and exclusion of non-debtor assets
Effect of alter-ego findings in other litigation on debtor status

Procedural posture

Kipperman appealed the bankruptcy court's determination regarding classification of a junior claim, with the appellate court reviewing factual findings for clear error and legal conclusions de novo.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

MEMORANDUM **

Appellant Richard Kipperman challenges the bankruptcy courts classification of the Brewer Groups junior claim as unsecured. Because the parties are familiar with the facts, we do not repeat them here, except where necessary to provide context for our ruling. We review the bankruptcy courts findings of fact for clear error and its conclusions of law de novo. In re Tucson Estates, Inc., 912 F.2d 1162, 1166 (9th Cir. 1990). We have jurisdiction under 28 U.S.C. § 158, and we affirm.

1. The bankruptcy court did not err by determining the value of the senior claim, belonging to Pacific Mercantile Bank (PMB), on the date the petition was filed. The bankruptcy code instructs that the court “shall determine the amount of such claim in lawful currency of the United States as of the date of the filing of the petition[.]” 11 U.S.C. § 502(b). The bankruptcy court determined that PMBs claim was in the amount of $9.7 million as of the date of the petition.

2. The bankruptcy court also did not err by valuing debtor Point Center Financial (PCF) on the date the petition was filed.

“The statutory provision [11 U.S.C. § 506(a)(1)] setting out the general rule for valuing collateral[ ] does not specify the time or date as of which the valuation is to be made.” 9C Am. Jur. 2d Bankr. § 2555 (2d ed. 2021). This reflects the judgment that “[t]he appropriate time as of which to value collateral ․ may differ depending on the facts presented, and bankruptcy courts are best situated to determine when is the appropriate time to value collateral in the first instance.” Id. The bankruptcy court has broad discretion to determine the value of a claim “in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use or on a plan affecting such creditors interest.” 11 U.S.C. § 506(a)(1). The bankruptcy appellate panel of this circuit has previously approved of the use of the petition date as the date of valuation in a similar context, and we see no reason to deviate from that here. See In re Abdelgadir, 455 B.R. 896, 903 (9th Cir. BAP 2011).

3. Finally, the bankruptcy court did not err by excluding assets belonging to PCFs president Dan Harkey in valuing the collateral. Only a debtors property becomes property of a bankruptcy estate, and only the property of a bankruptcy estate is part of collateral valuation for determining secured status. 11 U.S.C. § 506(a). PCF is the only debtor in this action, so property belonging to any other individual is not part of the bankruptcy estate. The state-court finding that Harkey was an alter-ego of PCF in unrelated litigation does not convert Harkey into a debtor for the purposes of this action, because “[c]ollateral estoppel precludes the relitigation of an issue only if [ ] the issue is identical to an issue decided in a prior proceeding․” Zevnik v. Superior Court, 159 Cal.App.4th 76, 70 Cal. Rptr. 3d 817, 821 (2008). Whether Harkey is an alter-ego of PCF in other litigation is not “identical” to the issue of whether he is a debtor in this action.

The judgment of the district court is AFFIRMED.

FOOTNOTES

. Dewsnup v. Timm, 502 U.S. 410, 112 S.Ct. 773, 116 L.Ed.2d 903 (1992) does not apply here because Kipperman does not argue that the Brewer Groups liens are being voided under 11 U.S.C. § 506(d).