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In re Taggart

United States Court of Appeals, Ninth Circuit

April 23, 2018

In re Bradley Weston Taggart, Debtor,
v.
Bradley Weston Taggart, Appellee. Shelley A. Lorenzen, Executor of Estate of Stuart Brown; Terry W. Emmert; Keith Jehnke; Sherwood Park Business Center, LLC, Appellants, IN RE BRADLEY WESTON TAGGART, Debtor, BRADLEY WESTON TAGGART, Appellant,
v.
SHELLEY A. LORENZEN, Executor of Estate of Stuart Brown; TERRY W. EMMERT; KEITH JEHNKE; SHERWOOD PARK BUSINESS CENTER, LLC, Appellees. IN RE BRADLEY WESTON TAGGART, Debtor, BRADLEY WESTON TAGGART, Appellant,
v.
TERRY W. EMMERT; KEITH JEHNKE; SHERWOOD PARK BUSINESS CENTER, LLC; SHELLEY A. LORENZEN, Executor of Estate of Stuart Brown, Appellees. IN RE BRADLEY WESTON TAGGART, Debtor, SHELLEY A. LORENZEN, Executor of the Estate of Stuart Brown, Appellant,
v.
BRADLEY WESTON TAGGART, Appellee. IN RE BRADLEY WESTON TAGGART, Debtor, TERRY W. EMMERT; KEITH JEHNKE; SHERWOOD PARK BUSINESS CENTER, LLC, Appellants,
v.
BRADLEY WESTON TAGGART, Appellee. IN RE BRADLEY WESTON TAGGART, Debtor, SHELLEY A. LORENZEN, Executor of Estate of Stuart Brown, Appellant,
v.
BRADLEY WESTON TAGGART, Appellee. IN RE BRADLEY WESTON TAGGART, Debtor, TERRY W. EMMERT; KEITH JEHNKE; SHERWOOD PARK BUSINESS CENTER, LLC, Appellants,
v.
BRADLEY WESTON TAGGART, Appellee.

          Argued and Submitted October 3, 2017 Portland, Oregon

          Appeal from the United States District Court for the District of Oregon Michael W. Mosman, Chief District Judge, Presiding D.C. No. 3:12-cv-00236-MO

          Appeal from the Ninth Circuit Bankruptcy Appellate Panel Kirscher, Jury, and Faris, Bankruptcy Judges, Presiding

          John Martin Berman (argued) and Damon J. Petticord, Tigard, Oregon, for Bradley Weston Taggart.

          Janet M. Schroer (argued), Hart Wagner LLP, Portland, Oregon; James Ray Streinz, Streinz Law Office, Portland, Oregon, for Shelley Lorenzen.

          Hollis Keith McMilan (argued), Hollis K. McMilan P.C., Portland, Oregon, for Terry W. Emmert, Keith Jehnke, and Sherwood Park Business Center LLC.

          Before: Edward Leavy, Richard A. Paez, and Carlos T. Bea, Circuit Judges.

         SUMMARY [*]

         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.

          OPINION

          BEA, CIRCUIT JUDGE

         This case arises out of a complex set of bankruptcy proceedings. Appellant Bradley Taggart was a real estate developer who owned a 25% interest in Sherwood Park Business Center, LLC ("SPBC"). Appellees and Cross-Appellants Terry Emmert and Keith Jehnke also each owned a 25% interest in SPBC. In 2007, Taggart allegedly transferred his share of SBPC to his attorney in this action, John Berman.

         When Emmert and Jehnke learned that Taggart had transferred his interest in SPBC to Berman, they sued Taggart and Berman in Oregon state court, asserting that the transfer breached SPBC's operating agreement because Taggart did not provide the notice required to allow Emmert and Jehnke to exercise their right of first refusal to buy Taggart's interest at the agreed upon price. The state court action also sought attorneys' fees pursuant to the operating agreement. Taggart filed an answer to the state court action, sought to dismiss the action, and filed a counterclaim for attorneys' fees pursuant to the operating agreement.

         On November 4, 2009, shortly before trial in the state court action, Taggart filed a voluntary Chapter 7 Bankruptcy petition (the "Petition"). The state court action was stayed pending the resolution of Taggart's bankruptcy Petition. On February 23, ...


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