{"ID":63074,"name":"Taggart v. Lorenzen","href":"https:\/\/api.oyez.org\/cases\/2018\/18-489","view_count":0,"docket_number":"18-489","additional_docket_numbers":null,"manner_of_jurisdiction":"Writ of \u003Ci\u003Ecertiorari\u003C\/i\u003E","first_party":"Bradley Weston Taggart","second_party":"Shelley A. Lorenzen, et al.","timeline":[{"event":"Granted","dates":[1546581600],"href":"https:\/\/api.oyez.org\/case_timeline\/case_timeline\/54416"},{"event":"Argued","dates":[1556082000],"href":"https:\/\/api.oyez.org\/case_timeline\/case_timeline\/54497"},{"event":"Decided","dates":[1559538000],"href":"https:\/\/api.oyez.org\/case_timeline\/case_timeline\/54519"}],"lower_court":{"ID":5,"name":"United States Court of Appeals for the Ninth Circuit","href":"https:\/\/api.oyez.org\/taxonomy\/term\/5"},"facts_of_the_case":"\u003Cp\u003EIn the words of the Ninth Circuit decision below, \u201c[t]his case arises out of a complex set of bankruptcy proceedings.\u201d\u003C\/p\u003E\n\u003Cp\u003EPetitioner Bradley Taggart is a real estate developer who owned 25% interest in Sherwood Park Business Center (\u201cSPBC\u201d). Respondents Terry Emmert and Keith Jehnke also each owned a 25% interest in SPBC. In 2007, Taggart purported to transfer his share of SPBC to his attorney, John Berman.\u003C\/p\u003E\n\u003Cp\u003EEmmert and Jehnke sued Taggart and Berman in Oregon state court, alleging that the transfer violated SPBC\u2019s operating agreement by not allowing Emmert and Jehnke the right of first refusal. Emmert and Jehnke also sought attorneys\u2019 fees. Taggart moved to dismiss the claim and filed a counterclaim for attorneys\u2019 fees.\u003C\/p\u003E\n\u003Cp\u003EIn November 2009, shortly before the case went to trial, Taggart filed a voluntary Chapter 7 bankruptcy petition. The state-court action was stayed pending the resolution of the bankruptcy petition, and in February 2010, Taggart received his discharge in the bankruptcy proceedings.\u003C\/p\u003E\n\u003Cp\u003EAfter the discharge, Emmert and Jehnke, represented by attorney Stuart Brown, continued the state-court action. Taggart was largely absent from subsequent proceedings, although Berman renewed his motion to dismiss on Taggart\u2019s behalf at the close of evidence. After a trial, the state court ruled in favor of Emmert and Jehnke and unwound the transfer of Taggart\u2019s share of SPBC to Berman and expelled Taggart from the company. The state court entered a judgment that allowed any party to petition for attorneys\u2019 fees, which led to yet more complicated litigation in state and federal courts.\u003C\/p\u003E\n\u003Cp\u003EBrown, the attorney for Emmert and Jehnke, filed a petition for attorneys\u2019 fees in state court on behalf of SPBC, Emmert, and Jehnke, against both Berman and Taggart, but limiting fees against Taggart to those incurred after the date of Taggart\u2019s bankruptcy discharge. The petition notified the court of Taggart\u2019s bankruptcy discharge but argued he could still be liable for attorneys\u2019 fees on the theory that Taggart had \u201creturned to the fray.\u201d\u003C\/p\u003E\n\u003Cp\u003EWhile the attorneys\u2019 fee petition was pending in state court, Taggart sought to reopen his bankruptcy proceeding in bankruptcy court. Once reopened, Taggart asked the court to hold Brown, Jehnke, Emmert, and SPBC (collectively the \u201cCreditors\u201d) in contempt for violating the bankruptcy discharge by seeking an award of attorneys\u2019 fees against him in the state court action.\u003C\/p\u003E\n\u003Cp\u003EThe state court ruled that Taggart had \u201creturned to the fray\u201d as a matter of law, so he could be held liable for attorneys\u2019 fees incurred after his bankruptcy. Taggart timely appealed the state-court determination.\u003C\/p\u003E\n\u003Cp\u003ESubsequently, the bankruptcy court denied Taggart\u2019s motion for contempt, agreeing with the state court that Taggart had \u201creturned to the fray.\u201d On appeal, the district court reversed, finding that Taggart\u2019s actions did not constitute a \u201creturn to the fray\u201d and thus the discharge injunction barred the claim against him for attorneys\u2019 fees. The district court remanded for a determination whether the Creditors had \u201cknowingly violated the discharge injunction in seeking attorneys\u2019 fees.\u201d On remand, the bankruptcy court found they had knowingly violated the discharge injunction and thus held them in contempt. On appeal, the Bankruptcy Appellate Panel (\u201cBAP\u201d) reversed the bankruptcy court\u2019s finding of contempt, finding they had a good faith belief that the discharge injunction did not apply to their attorneys\u2019 fee claim.\u003C\/p\u003E\n\u003Cp\u003EBack in state court, the state appellate court found that Taggart\u2019s actions did not constitute a \u201creturn to the fray\u201d and thus reversed the state trial court as to its ruling on attorneys\u2019 fees. As a result, the federal district court and the state appellate court both agreed that the Creditors could not pursue attorneys\u2019 fees against Taggart, and the BAP\u2019s ruling freed them from being held in contempt for knowingly violating the discharge injunction.\u003C\/p\u003E\n\u003Cp\u003EThe Ninth Circuit affirmed the BAP\u2019s opinion, holding that the Creditors did not knowingly violate the discharge injunction and thus could not be held in contempt because they had a subjective good-faith belief that the discharge injunction did not apply to their state-court claim for attorneys\u2019 fees.\u003C\/p\u003E\n","question":"\u003Cp\u003EDoes the bankruptcy code preclude a finding of civil contempt where a creditor\u2019s believes in good faith that the discharge injunction does not apply?\u003C\/p\u003E\n","conclusion":"\u003Cp\u003EThe bankruptcy code allows a court to hold a creditor in civil contempt for violating a discharge order if there is no fair ground of doubt as to whether the order barred the creditor\u2019s conduct. Justice Stephen Breyer authored the unanimous opinion of the Court.\u003C\/p\u003E\n\u003Cp\u003EThe bankruptcy code states that a discharge order \u201coperates as an injunction\u201d and that a court may issue any \u201corder\u201d or \u201cjudgment\u201d that is \u201cnecessary or appropriate\u201d to \u201ccarry out\u201d other bankruptcy provisions. In other, non-bankruptcy contexts, the Court has held that civil contempt is inappropriate where there is \u201ca fair ground of doubt as to the wrongfulness of the defendant\u2019s conduct.\u201d The Court found no reason that this principle should not apply equally in a bankruptcy context. Thus, civil contempt is appropriate only if the creditor violates a discharge order based on an objectively unreasonable understanding of the discharge order. Because the Ninth Circuit below applied a different standard in determining whether civil contempt was appropriate, the Court vacated the Ninth Circuit\u2019s decision and remanded for further proceedings.\u003C\/p\u003E\n","advocates":[{"advocate":{"ID":62794,"name":"Daniel L. 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