CCA Selected 1995 Documents

EVENTS AND TIME FRAME OF YAMAGUCHI
,ql~ GRADUATED COLLEGE WITH B.A. AND DEGREE IN LAW

6 YEARS WORKED FOR PEAT MARWICK IN THEIR TAX DIVISION
'~L< DURING THIS TIME ACQUIRED A MASTER IN LAW FROM NEW YORK UNIVERSITY
WENT TO WORK AS ASSISTANT U.S. ATTORNEY
WORKED FOR 13 YEARS, UNTIL 1993 AS AN ASSISTANT U.S. ATTORNEY
1993 APPOINTED BY CLINTON U.S. ATTORNEY FOR NORTHERN CALIFORNIA

1ST YEAR: 93-94: APPOINTED U.S. ATTORNEY
APPOINTED TO A.G. ADVISORY COMMITTEE
2ND YEAR: 94-95: NOMINATED FOR FEDERAL JUDGE BY BARBARA BOXER
INDICTED ARMSTRONG FOR FRAUD
rqq8 FILED AMICUS BRIEF ON BEHALF OF WASHINGTON TO VACATE IN RE. HAMILTON
4TH YEAR: 96-97: TRIED ARMSTRONG/FOUND GUILTY
SENTENCED ARMSTRONG 9 YEARS
5TH YEAR: 98: REMOVED FROM OFFICE AND ASK TO RESIGN HIS NAME FROM FEDERAL JUDGESHIP
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CASE SUMMARY
PROCEDURAL POSTURE:
OVERVIEW:
OUTCOME:
CORE TERMS:
LexisNexis!Rl Headnotes
COUNSEL:
JUDGES:
OPINION BY:
OPINION:
176 BR. 895, "; 1995 Bankr. LEX/S 45, ";

SHEPARD'S® 32 Collier Bankr. Gas. 2d (MB) 1727; 26 Bankr. Gt. Dec. 665
In re HAMILTON TAFT & COMPANY, Debtor. FREDERICK S. WYLE, Trustee of Hamilton Taft & Company, Plaintiff, vs.
HOWARD, WElL, LABOUISSE, FRIEDRICHS INCORPORATED, a Louisiana corporation; HOWARD WElL FINANCIAL
CORPORATION, a Louisiana corporation; and LEGG MASON, INC., a Maryland corporation, Defendants.
Chapter 11, No. 91-3-1077-TC, Adv. No. 93-3-121-TC
UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA
176 B.R. 895; 1995 Bankr. LEXIS 45; 32 Collier Bankr. Cas. 2d (MB) 1727; 26 Bankr. Cl. Dec. 665; 32 Oil & Gas Rep. 1727
January 18, 1995, Decided

January 19,1995, FILED
CASE SUMMARY
PROCEDURAL POSTURE: Chapter 11 bankruptcy trustee brought an action to recover, as a fraudulent conveyance, transfers made by
defendant pursuant to a reverse repurchase agreement used to facilitate a leveraged buyout under 11 u.s.c.s. § 546{e}.
OVERVIEW: Chapter 11 bankruptcy trustee brought an action to recover, as a fraudulent conveyance, transfers made by defendant
pursuant to a reverse repurchase agreement used to facilitate leveraged buyout. The court held that the oanl:ruptcy Code (Code),
11 U.S.C.S. § 546{el, prevented trustee from recovering such transfers. The transaction in which debtor sold a treasury bill to
defendant after agreeing to repurchase the bill came within the broad definition of settlement payment under the Code, 11 U.S.C.S. §
546(e), defining settlement payment as any transfer of cash or securities completing a securities transaction. Furthermore, even
if defendant knew that transaction was part of a leveraged buyout, the transaction could not be recovered as a fraudulent
transfer because the Code, ~ 546{el, barred recovery of settlement payments more than one year pre-petition irrespective of
defendant's mental state. 'l'hc court also held that the Codc, 11 U.S.C.S. § 544 (Il), deprived trustee of standing to assert a claim for
aiding and abetting a fraudulent transfer.
OUTCOME: The Ban);ruptcy Code barred trustee's fraudulent transfer action. The transaction where debtor sold defendant a treasury
bill after agreeing to repurchase the bill came wi.thin the Bankruptcy Code's definition of settlement payment. Even if defendant
knew that the transaction was part of a leveraged buyout, no recovery was possible because the Bankruptcy Code barred settlement
payment recovery one year post-petition.
CORE TERMS: repo, settlement payment, stockbroker, commodity, broker, aiding and abelling, shareholder, transferred,
settlement, fraudulent conveyance, summary judgment, handling, fraudulent transfer, stock, forward contract, clearing,
merchant, reverse repurchase agreement, repurchase agreement, present action, prepetition, undisputed, repurchase, buy,
dealer, chain, legislative history, cause of action, insolvent, defraUd
LexlsNexis(R) Headnotes • Hide Headnotes
Civil Procedure> Summary JUdgment> Standards> Legal Entillement
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Civil Procedure> Summary Judgment> Standards> Materiality

HN1Summary judgment is properly granted when there is no genuine issue of material fact and the moving party is entitled to
! judgment as a matter of law.
Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Limitations on Trustee's Power
HN2See the Bankruptcy Code, 11 U.5.C.S.§546(e).
±
HN3 Congress enacted Bankruptcy Code, 11 U.S.C.S. § 546 (e), to protect the n<ltion' s financial markets from the instability caused by
! the reversal of settled securities transactions.
HN4 Repos and Reverse Repos are securities transactions covered by Ban};ruptcy Code, 11 U.S.C.S. § 546 {ej .
±
HN5In a Rapa arrangement, the dealer sells specified securities to a purchaser, but also agrees to repurchase the securities
+ later at the original price, plus an agreed upon additional amount usually representing interest on the original purchase
.~ price. A Reverse Repo basically is the reverse: the dealer buys securities and agrees to resell the securities to the seller
in the future. Reverse Repos can function as a loan. The seller receives cash for the securities, but must repurchase the
securities in the future at the same price. Thus, the securities sold to ttle dealer can be viewed as being collater'll for a
loan.
HN61~hether a tr<lnsaction is a Repo or Reverse Repo covered under Ban):ruptcy Code, 11 U.S.C.S. § 546(e), is to be governed by an
± objective test.
HN7Several courts have also helel that Bankruptcy Code, 11 U.S.C.S. § 546 (e), covers unusual as \>le11 as routine securities
± transactions.
HNBThe Bankruptcy Code, 11 U.S.C.S. § 546 (e), does not cover only Repos and Reverse Repos; it covers all types of securities
±, transactions. The Bankruptcy Code, 11 U.S.C.S.§546(e) , includes a transfer of securities that completes any securities
transaction.
Bankruptcy Law> Liquidations> Clearing Banks, Commodity Brokers & Stockbrokers
HN9See the Bankruptcy Code, 11 U.S.C.S. § 741 (Bl ,
±
HN10A settlement payment clearly includes a transfer of securities that completes a securities transaction.
±
HNllSettlement payment includes any transfer of cash or securities toward completion of a securities transaction.
±
HN12See the Bankruptcy Code, 11 U.S.C.S.§546(f).
±
Bankruptcy Law> Case Administration> Commencement> General Overview
HN13S ee the Bankruptcy Code, 11 U.S.C.S. § 101 (46).
±
HN14 The Banl:ruptcy Code (Code), 11 U.S.C.S. § 546 (f), was intended to supplement rather than narrow Code, 11 U.S.C.S. § 546 (e), and a
± ~:~~n~:~~l~~~~n~~alifies under Code, 11 U.S.C.S. § 546(e), as a stoc);bro}:er need not qualify under Code, 11 U.S.C.S. § 546(f), as a
Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Fraudulent Transfers> Constructively Fraudulent
Transfers
Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Fraudulent Transfers> Elements
Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Fraudulent Transfers> Intent
HN15The Bankruptcy Code, 11 U.S.C.S. § 546 (e), contains a limited exception for cases involving actual fraud. The statute does not
± bar actions brought under the Bankruptcy Code, 11 U.S.C.S.§548(a) (1), which a1lo\>l5 a trustee to recover a transfer made within
one year before the petition date with actual intent to hinder, delay, or defraud creditors. The Bankruptcy Code, 11 U.S.C.S.§
546(8), does bar actions brought under the Bankruptcy Code, 11 U.S.C.S. § 544 (using state fraudulent conveyance statutes) to
recover transfers made more than one year prepetition with actual intent to hinder, delay, or defraud creditors.
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Bankruptcy Law> Bankruptcy Crimes

HN15California courts permit a creditor to recover civil damages from those who conspire to transfer property of a debtor to
± hinder, delay, or defraud creditors.
Bankruptcy Law> Bankruptcy Crimes

Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Duties & Functions> Reorganizations
Real Property Law> Purchase & Sale> Fraudulent Transfers
HN17A debtor's bankruptcy trustee is not authorized to pursue every action that creditors of the debtor might pursue.
±
Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Voidable Transfers> Unsecured Creditors
Bankruptcy Law> Claims> Allowance
HN18 See the Bankruptcy Code, 11 U.S.C.S. G544 (b) .
±
Bankruptcy Law> Case Administration> Examiners, Officers & Trustees> Fraudulent Transfers> General Overview
Estate, Gift & Trust Law> Trusts> Trustees> Duties & Powers> General Overview
HN19A trustee's pO\'ier to avoid fraudulent transfers does not enable a trustee to recover damages for aiding and abetting a
± fraudulent transfer.
COUNSEL: [-1] J. Michael Kelly, Esq., COOLEY GODWARD CASTRO, San Francisco, CA, OF COUNSEL.
Thomas K. Polter, III, Esq., JONES, WALKER, WAECHTER, POITEVENT, CARRERE & DENEGRE, New Orleans, LA,
Counsel for Defendants, Howard, Weil, LaBoliisse, Friedrichs Incorporated; Howard Weil Financial Corporation; and Legg
Mason, Inc.
L.J. Chris Martiniak, Esq., FELDMAN, WALDMAN & KLINE, San Francisco, CA, Counsel for Plaintiff, Frederick S. Wyle,
Trustee.
JUDGES: Thomas E. Carlson, United States Bankruptcy Judge
OPINION BY: Thomas E. Carlson
OPINION: ["897] OPINION
Thomas E. Carlson, Bankruptcy JUdge.
The principal question in this case is whether section 546(e) of the Bankruptcy Code bars a trustee from recovering as a
fraudulent conveyance transfers made by a stockbroker pursuant to a reverse repurchase agreement used to facilitate a
leveraged buyout. I conclude that there are no genuine issues of material fact and that section 546(e) bars trustee's action,
and therefore grant summary jUdgment for defendant.
FACTS
The material facts are not in dispute. On December 30,1987, MaxPhanma, Inc. paid Connecticut General Corporation
(CIGNA) $ 500,000 for an option entitling it to purchase stock of Debtor Hamilton Taft & Company [""2] (Debtor) from
CIGNA for $ 4,100,000. MaxPhanma could exercise the option only through January 29,1988. The $ 500,000 option price
was applicable to the purchase price, but was otherwise non-refundable. MaxPharma was unable to find a lender willing to
arrange financing through a "stock loan," whereby Debto~s stock would be used as collateral to secure the loan. Defendant
Howard, Weil, Labouisse, Friedrichs Incorporated (Defendant) informed MaxPharma that it did not make "stock loans," but
could lend money with a treasury bill as security by perfonming a reverse repurchase transaction.
On January 28, 1988, Debtor wired $ 5.0 million to Defendant. On January 29, 1988, Defendant used approximately $ 4.9
million of those funds to purchase for Debtor a 90-day T-Bill having a face value of $ 5.0 million. On the same day, Debtor
sold the T-Bill back to Defendant for $ 4.1 million, subject to a reverse repurchase agreement, under which Debtor agreed to
repurchase the T-Bill in 90 days for the sale price plus interest.
What happened to the $ 4.1 million is contested by the parties. Debto~s chapter 11 trustee (Trustee) contends that the $ 4.1
million was transferred directly to MaxPhanma immediately ["*3] upon sale of the T-Bili. Defendant claims that it credited
Debto~s account for $ 4.1 million, and that those funds were subsequently wired to MaxPharma. For the purpose of the
present motion, I accept Trustee's version of the facts. It is undisputed that Debtor transferred the funds to MaxPhanma at
the request of Debtor and that MaxPharma used $ 3.6 million to purchase Debtor's stock from CIGNA.
When the gO-day repurchase agreement matured, Debtor rolled over its obligation into new T-Bills and later into T-Notes. In
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January 1989, Debtor directed Defendant to sell the T-Notes and apply the proceeds to satisfy Debtor's obligation under the
reverse repurchase agreement.
Creditors filed an involuntary chapter 11 petition against Debtor on March 20, 1992. Trustee was appointed on March 26,
1992. An order for relief was entered on May 31, 1992. Trustee filed the present action on March 26, 1993. ~
contends that the transaction involving Debtor, Defendant, and MaxPharma was in substance a leveraged buyout (LBO), in
which MaxPharma used Debtor's funds to purchase CIGNA's stock in Debtor. Trustee further contends that the transaction
rendered Debtor insolvenl'ana that the LBO therefore [-4] constituted a fraudulent conveyance. In the present action,
Trustee seeks to recover, pursuant to California Civil Code sections 3439.04 and 3439.05 and Bankruptcy Code section
544, the value of the $ 5.0 million T-Billtransferred from Debtor to Defendant on January 29, 1988, or the $ 4.1 million
proceeds of the sale of that T-Bill that were transferred from Defendant to MaxPharrna the same [*898] day. n1 Trustee and
Defendant filed cross motions for summary jUdgment.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n1 Trustee previously filed a similar action against CIGNA. That action was settled by the parties before trial.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
DISCUSSION
Standard for Summary Judgment
HN1't"Summary judgment is properly granted when there is no genuine issue of material fact and the moving party is
entitled to judgment as a matter of law." Clipper Exxpress v. Rocky Mountain Motor Tariff Bureau, Inc., 690 F.2d 1240. 1250
(9th Cir. 1982), cert. denied, 459 U.S. 1227,75 L. Ed. 2d 468, 103 S. Ct. 1234 (1983). [-5j
II
Section 546(e) Defense
Defendant contends that Trustee's action is barred under section 546(e) of the Bankruptcy Code. That section provides:
HN2tnotwithstanding sections 544, 545, 547, 548(a)(2), and 548(b) of this tille, the trustee may not avoid a
transfer that is a margin payment, as defined in section 101(34),741(5), or 761 (15) of this tille, or settlement
payment, as defined in section 101(35) or 741(8) of this title, made by or to a commodity broker, forward contract
merchant, stockbroker, financial institution, or securities clearing agency, that is made before the commencement
of the case, except under section 548(a)(1) of this tille.
11 U.S.C. § 546(e). HN3'tCongress enacted section 546(e) "to protect the nation's financial markets from the instability
caused by the reversal of settled securities transactions." Kaiser Steel Resources, Inc. v. Jacobs, 110 Bankr. 514, 522 (D.
Coio. 1990), affd, 913 F.2d 846 (10th Cir. 1990) (citation omitted). Trustee does not contest many of the elements of the
section 546(e) defense: that Defendant is a stockbroker, that the [-6] T-Bill transferred was a security, and that the present
action is brought under section 544. Trustee contends that section 546(e) does not apply, however, because: (i) the
transaction was not a true repurchase agreement (Repo), (Ii) the transfer of the T-Bill to Defendant was not a "settlement
payment," (iii) the present transaction is govemed by section 546(1), and (iv) section 546(e) should not be applied to LBOs.
A. Whether Transaction a True Repo
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Defendant characterizes its transaction with Debtor as a reverse repurchase agreement (Reverse Repo). HN4tThe Ninth
Circuit has held that Repos and Reverse Repos are securities transactions covered by section 546(e). In re Comark, 971
F.2d 322, 325 (9th Gif. 1992) (Comark I); In re Comark, 145 Banl'f. 47, 52-53 (Bankf. 9th Cif. 1992) (Comark II). HNstThe
Ninth Circuit has described the characteristics of Repos and Reverse Repos as follows.
In a Repo arrangement, the dealer sells specified securities to a purchaser, but also agrees to repurchase the
securities later at the original price, plus an agreed upon additional amount usually representing interest on the
original [-7] purchase price. A Reverse Repo basically is the reverse: the dealer bUyS securities and agrees to
resell the securities to the seller in the future. Reverse Repos can function as a loan. The seller receives cash for
the securities, but must repurchase the securities in the future at the same price. Thus, the securities "sold" to the
dealer can be viewed as being collateral for a loan,
Comark I, 971 F.2d at 323 (footnote omitted), Accord 11 U,S.C. § 101(47).
Trustee contends that the transaction between Defendant and Debtor was not a true Reverse Repo, but rather was a sham
n:tJmlnlon
usejlj§·§Qi:r9'~:fii)heJa.ft!h§!J::)~.I;>tgr:"J'!Qc!"w ere being used to fund an LBO. Trustee notes that Debtor used
cash to buy a T-BiIl, then immediately sold the T-Bill SUbject to the Reverse Repo, leaving itself essentially in the place it
started. Because there was no net borrowing of funds, which is the essential characteristic of a Reverse Repo, Trustee
argues, the transaction is not entitled to protection under section 546(e). This argument is unpersuasive,
["899] First, the transaction constituted a Reverse Repo in the objective sense. [-8J Debtor sold a T-Bill to Defendant and
agreed to repurchase it again later for the sale price plus interest. HN6'iWhether a transaction is a Repo or Reverse Repo
covered under section 546(e) is to be governed by an objective test. See Comark 11,145 Bankr. at 53. Courts have noted
that there are several varieties of genuine Repo transactions, See Bevill, Bresler & Schulman Asset Management Corp. v.
Spencer Sav. & Loan Ass'n, 878 F.2d 742, 746 (3rd CiL 1989); Comark II, 145 Bankf. at 50 n.6, HN7"tSeveral courts have
also held that section 546(e) covers unusual as well as routine securities transactions. See Comark I, 971 F.2d at 326;
Kaiser Steel Corp. v. Charles Schwab & Co., Inc.. 913 F.2d 846, 849 n.6 (10th Cif. 1990) (Kaiser I); In re I<aiser Steel Corp..
952 F,2d 1230, 1238-40 (10th CiL 1990), cert. denied, 120 L. Ed, 2d 887,112 S. Ct. 3015 (1992) (Kaiser II).
Second, whether or not it was a conventional Reverse Repo, the transaction between Defendant and Debtor [""9] was
clearly a securities transaction. Section 546(e) HNB'tdoes not cover only Repos and Reverse Repos; it covers all types of
securities transactions. "Section 546(e) ... includes a transfer of securities that completes any securities transaction."
Comark II, 145 Bankf. at 52. The transaction between Debtor and Defendant in substance reduces to the following. Debtor
purchased a T-Bill from Defendant then sold it back to Defendant. Whatever else it was, this transaction was a transfer of
securities. See Kaiser II, 952 F.2d at 1239-40 (transfer of securities that is part of LBO is a securities transaction covered by
section 546(e)).
S, Whether Transfer a "Settlement Payment"
Trustee argues that the transfers involving Defendant are not protected under section 546(e) because they do not constitute
settlement payments. "Settlement payment" is defined in section 741 (8) of the Bankruptcy Code.
HN9t "Settlement payment" means a preliminary settlement payment, a partial settlement payment, an interim
settlement payment, a settlement payment on account, a final settlement payment, or any other similar payment
commonly used in [-10] the securities trade.
11 U.S.C. § 741(8), The Ninth Circuit has construed the term very broadly.
HN10tWe now join with the Third and Tenth Circuits and broadly define the term settlement payment. A
settlement payment clearly includes a transfer of securities that completes a securities transaction.
Comarl' I, 971 F.2d at 326 (citation omitted). Accord Comark II, 145 Bankf. at 52.
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The clear thrust of both Comark I and Comark II is that
HN11+ll seUlement payment" includes any transfer of cash or securities toward completion of a securities transaction. See
Comark I, 971 F.2d at 326; Comark II, 145 Bankr at 52. To hold that section 546(e) does not apply to the initial transfer of
securities to a broker handling a Reverse Repo would eviscerate section 546(e) and frustrate Congress's intent in enacting
it, by leaving the broker open to suit [-11] for doing nothing more than handling a securities transaction for the debtor n2
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n2 Trustee contends that Defendant's expert witness testified that the initial transfer of the T-Bill to Defendant was not a
settlement payment. This argument fails for two reasons. First, the relevant historical facts are undisputed. The application
of section 546(e) to those facts is question of law, not a question of fact subject to expert testimony. See Comark I, 971 F.2d
at 324-25. Second, Trustee mischaracterizes the testimony of Defendant's expert, Dr Marcia L. Stigum. Dr Stigum's
testimony, taken as a whole, supports a finding that the initial transfer of the T-Bill was a settlement payment. Plaintiff failed
to submit affidavits controverting that testimony.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
Trustee next argues that the transfer to MaxPharma of the $ 4.1 million proceeds of the sale of the T-Bill was. not a
~~J§r]lIr]Ip~Ym~E!:~~SilH§~Jh~p§YrrL~nt wljg.n9trnade!QJ)~blor, the other party to the Reverse Repo. Tnis-arg'ument is
frivolous. [**12] It is [ogOO] undisput~<J.!ilaLth"Jljn9s_"""ca !fansfe"ecjto Ma~F'hall11aatth~gir~g\i9n9fP~1?19r. In directing
payment of the sale proceedsloMa'xPharma, l:leJ:>JgL§'~,,[JacjcjQrniniQnQYarJhaJljncj§ljncjlj~~cj.!ham!QrJ!§9""nRljrp9~~§'
Thus, from the viewpoint of Defendant, payment to MaxPharma constituted payment to Defendant and fulfilled Defendant's
obligation under the first leg of the Reverse Repo. n3
--- - - - -- - - - -- - Footnotes - - - - -- - - - - - ----
n3 Trustee's separate statement of undisputed facts asserts that Debtor's instructions to Defendant to transfer the proceeds
to MaxPharma were not properly authorized by Debtor's board and were therefore ultra vires. The facts asserted by Trustee
clearly establish that the instructions were made with at least apparent authority, and that Debtor implicitly ratified the
transaction after the fact. Moreover, Trustee raise no ultra vires argument in the memoranda filed in support of his motion for
summary judgment or in opposition to Defendant's motion for summary judgment.
- - - -- -- - - - - - End Footnotes- - - - - - - - - - - - --
C. Must Defendant Satisfy Section 546(1)1
Trustee [-13] argues that section 546(1) governs Repo transactions and that Defendant is not entitled to protection under
that statute. Section 546(1) provides:
HN12+notwithstanding sections 544, 545, 547, 548(a)(2), and 548(b) of this title, the trustee may not avoid a
transfer that is a margin payment, as defined in section 741 (5) or 761 (15) of this title, or settlement payment, as
defined in section 741 (8) of this title, made by or to a repo participant, in connection with a repurchase agreement
and that is made before the commencement of the case, except under section 548(a)(1) of this title.
11 U.S.C, § 546(1). Section 101(46) defines "repo participant" as follows:
HN13+"repo participant" means an entity that, on any day during the period beginning 90 days before the date of
the filing of the petition, has an outstanding repurchase agreement with the debtor;
11 U.S.C. § 101(46).
Trustee argues that section 546(1) governs, because it is the more specific statute, expressly addressing Repo transactions.
Trustee argues that Defendant is not protected under section 546(1), because any Reverse Repo transaction between [-14]
Defendant and Debtor closed more than 90 days prepetition, and Defendant is therefore not a "repo participant" under
section 101(46).
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Both the statutory language and legislative history indicate that section 546(1} was intended to address Repo transactions
not already covered by section 546(e) rather than to narrow the application of 546(e). Section 546(e) protects only a
"commodity broker, forward contract merchant, stockbroker, financial institution, or securities clearing agency." Section
546(1} protects additional participants in certain Repo transactions. The legislative history to section 546(1} states in relevant
part:
the proposed amendments are intended to afford participants in the repo market the same treatment with respect
to the stay and avoidance provisions of the Code that Public Law 97-222 explicitly provided stockbrokers,
securities clearing agencies, commodity brokers and forward contract merchants in connection with securities
contracts, commodity contracts and forward contracts.
S. Rep. No. 65, 98th Cong., 1st Sess. 45, 49 (1983). The same legislative history states clearly that section 546(e) continues
to protect stockbrokers engaged in Repo transactions. [~15]
These amendments are not intended, however, to affect the status of repos Involving securities or involving
commodities as securities contracts, commodity contracts, or forward contracts, and their consequent eligibility for
similar treatment under other proVisions of the Code, such as the provisions giving protection to stockbrokers,
securities clearing agencies, commodity brokers, and forward contract merchants for liquidation and setoff in
respect of securities contracts, commodity contracts or forward contracts.
Id. See also Comark II, 145 Bankr. at 52-53. In summary, section 546(1} HN14twas intended to supplement rather than
narroW section 546(e), and a defendant that qualifies under 546(e) as a stockbroker need not qualify under section 546(1} as
a repo participant.
['901] D. Is there an LBO Exception to Section 546(e)?
Trustee argues that 546(e) should not be interpreted to protect a stockbroker involved in a securities transaction that
implements an LBO, relying on Lipoi v. City Bank, 955 F.2d 599 (9th Cir. 1992), Kendall v. Soran;, 151 Bankr. 1012 (Bankr.
N.D. Cal. 1993), and Wieboldt Stores Inc. v. Schottenstein, 131 Bankr. 655 (N.D. III. 1991). ["16] Trustee contends that
this LBO exception to section 546(e) applies with special force in the present case, because Defendant knew Debtor was
rendered insolvent by the transaction. Trustee's argument is not supported by the authorities cited.
Trustee's reliance on Wieboldt is misplaced. That case held that section 546(e) did not preclude a fraudulent conveyance
action against shareholders whose shares were purchased in an LBO. In the present action, Trustee seeks recovery not
from former shareholders, but from a stockbroker that transferred certain securities as a part of the LBO. The Wieboldt court
carefully noted that its holding did not leave the stockbroker handling the LBO open to suit. The court acknowledged that the
purpose of section 546(e) was to protect brokerage firms, and then stated:
In the instant case, however, reqUiring the [shareholders] to return to the Trustee payments they received ...
poses no significant threat to those in the clearance and settlement chain.
Wieboldt. 131 Bankr. at 664 (footnote omitted). The court also quoted with approval the following excerpt from the law
review article it had previously cited [~17] in holding that section 546(e) does not protect seliing shareholders.
"Neither the system of guarantees nor the solvency of participants in the chain is threatened by a legal order in
which payments to the shareholders by their brokers are subject to recovery by a trustee in bankruptcy. ThUS,
while the flows of funds to and between financial intermediaries in the clearance and settlement chain must be
protected in order to Insure the stability of those systems, funds flOWing from the intermediaries to the
shareholders do not require protection, and section 546(e) should therefore not apply."
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Id. at 664 n.11 (quoting Neil M. Garfinkel, Note, No Way Out: Section 546(e) Is No Escape for the Public Shareholder of a
Failed LBO, 1991 Colum. Bus. L. Rev. 51, 61-63).
The Tenth Circuit has held that there is no LBO exception to section 546(e). That court has applied section 546(e) to bar
recovery both from the brokerage handling the transfer of shares in an LBO, see Kaiser I, and from the selling shareholders,
see Kaiser II. The court noted that the plain language of section 546(e) covers LBOs as well as more conventional securities
transactions [**18] and reasoned "it would be an act of judicial legislation to establish such a limitation." Kaiser I, 913 F.2d
at 850.
In short, only Wieboldt supports any LBO exception to section 546(e), but even that case does not permit an action against
the stockbroker handling the securities transactions involved In the LBO.
Trustee's reliance on Lippi and Kendall is equally misplaced. In each of those cases, the plaintiff sought recovery from the
bank that financed the LBO. In neither case did section 546(e) even arguably apply, and neither opinion mentions that
statute.
Finally, assuming arguendo that Defendant knew the Reverse Repo was part of an LBO and that the LBO rendered Debtor
insolvent, such knowledge does not bar application of section 546(e). Section 546(e) HNl5"tcontains a limited exception for
cases involving actual fraud. The statute does not bar actions brought under section 548(a)(1) of the Bankruptcy Code,
which allows a trustee to recover a transfer made within one year before the petition date with actual intent to hinder, delay,
or defraUd creditors. Section 546(e) does bar actions brought under section 544 (using state fraudulent conveyance [**19]
statutes) to recover transfers made more than one year prepetition with actual intent to hinder, delay, or defraud creditors.
Thus, it is clear Congress intended to prohibit recovery of "settlement payments" received by stockbrokers more than one
year prepetition, irrespective of the stockbrokers mental state. Because the transfers at issue here [*902] occurred more
than one year prepetition and Trustee's action is brought under section 544, Defendant's knowledge about the LBO and its
effect on Debtor is irrelevant.
III
Aiding And Abetting
Trustee asserts that even if his action to avoid the transfers to Defendant are barred by section 546(e), he may recover
damages from Defendant under state law on the theory that Defendant aided and abetted the fraudulent LBO. Trustee
argues that liability for damages for aiding and abetting a fraudulent transfer is not barred by section 546(e). Defendant
argues that Trustee's aiding and abetting theory fails because: (i) Trustee failed to plead it as a separate claim for relief; (i1)
no such cause of action exists under California law; (iii) Trustee lacks standing to assert such a cause of action; and (iv) any
such cause of action is barred by [**20] section 546(e). I determine that the Trustee lacks standing to assert the aiding and
abetting claim.
HN16j:California courts permit a creditor to recover civil damages from those who conspire to transfer property of a debtor to
hinder, delay, or defraud creditors. See Taylor v. S & M Lamp Co., 190 Cal. ApD. 2d 700, 706, 12 Cal. Rptr. 323 (1961);
Hickson v. Thielman, 147 Cal. App. 2d 11, 15, 304 P.2d 122 (1956). HNl7'tA debtors bankrupLcYJr.lJ.st~e,Dgwever, is not
authorized to pursue~very ",tio~ that ,r"ditors afthe. debtor [l'llght pur.su~. Cf. In re OzarkRestaurant EguipmenfCo':,liic.,
81'6F.'2ill;tZZ;'fZ26-30(8Ih ti,:), cert.
aeriied;484 U.S: 8'48 (1987):'A'lrustee's only authority to assert creditor's state-law
causes of action related to fraudulent conveyances is found in section 544(b) of the Bankruptcy Code. n4 That section only
permits the trustee to avoid a fraudulent transfer.
HN18tThe trustee may avoid any transfer of an interest of the debtor in property or any obligation incurred by the
debtor that is voidable under applicable [**21] law by a creditor holding an unsecured claim that is allowable under
502 of this title or that is not allowable only under section 502(e) of this title.
11 U.S.C. § 544(b) (emphasis added). The Ninth Circuit has squarely held that HN19 ta
trustee's power to avoid fraudulent
transfers does not enable a trustee to recover damages for aiding and abetting a fraudulent transfer.
- - - - - - - -- -- - - - Footnotes - - - -- - -- - - - -- --
n4 Section 548 of the Bankruptcy Code creates a federal cause of action for recovery of a fraudulent conveyance. Trustee
cannot Use section 548, however, because that statute only permits avoidance of transfers made within one year of the
petition date. It is undisputed that all transfers to Defendant occurred more than one year before the bankruptcy petition was
filed.
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- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
The Act carefully speaks of conveyances of property as being "null and void," and authorizes suit by the trustee to
"reclaim and recover such property or collect its value." The actions legislated against are not "prohibited"; those
persons [**221 whose actions are rendered lI null and voidll are not made "liable"; and terms such as "damages"
are not used. The legislative theory is cancellation, not the creation of liability for the consequences of a wrongful
act.
Elliott v. Glushon, 390 F.2d 514. 516 (9th Cir. 1967) (footnote omitted).
In short, Trustee's only authority to bring state-law claims of creditor's is section 544(b), and section 544(b) does not
authorize Trustee to assert a claim for aiding and abetting a fraudulent transfer.
CONCLUSION
Bankruptcy Code section 546(e) bars Trustee's fraudulent transfer action against Defendant. Trustee lacks standing to sue
Defendant for aiding and abetting a fraudulent conveyance. Accordingly, I grant summary judgment in favor of Defendant.
Date: 1-18-95
Thomas E. Carlson
United States Bankruptcy Judge

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In re Hamilton Taft & c1:?l\"ffs.~9~95 (N.D. Cal., 1995)

In re HAMILTON TAFT 8< COMPANY, Debtor.
Frederick S. WVLE, Trustee of Hamilton Taft & Company, Plaintiff,
v.
HOWARD, WElL, LABOUISSE, FRIEDRICHS INCORPORATED, a
Louisiana corporation; Howard Weil Financial Corporation, a Louisiana
corporation; and Legg Mason, Inc., a Maryland corporation,
Defendants.
Bankruptcy No. 91-3-1077-TC.
Adv. No. 93-3-121-TC.
United States Bankruptcy Court, N.D. California.
January 19, 1995.
Page 896
COPYRIGHT MATERIAL OMITIED
Page 8g7
J. Michael Kelly, Cooley Godward Castro, San Francisco, CA (Thomas K.

Potter, III, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New
Orleans, LA, of counsel), for defendants Howard, Weil, Labouisse, Friedrichs
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History
(Showing 6 documents)
Direct History
IIIIIn re Hamilton Taft &. Co., 176 B.R. 895, 32 Collier Bankr.Cas.2d 1727, 26 Bankr.Ct.Dec. 665
(Bankr.N.D.Cal. Jan 19, 1995) (NO. 91-3-1077-TC, 93-3-121-TC)
Affirmed by
H In re Hamilton Taft & Co., 196 B.R. 532 (N.D. Cal. Oct 12, 1995) (NO. C 95-1612-51)
Judgment Affirmed by
PIn re Hamilton Taft & Co., 114 F.3d 991, 30 Bankr.Ct.Dec. 1236, Bankr. L. Rep. P 77,405, 97 Cal. Daily
Op. Servo 4410, 97 Daily Journal DAR. 7369 (9th Cir.(Cal.) Jun 11, 1997) (NO. 95-17058)
Court Documents
Appellate Court Documents (U.S.A.)
C.A.9 Appellate Briefs

IN RE HAMILTON TAFT & COMPANY, Debtor. Frederick S. Wyle, Trustee of Hamilton Taft & Company,
Plaintiff-Appellant, V. HOWARD, Howard Weil, Labouisse, Friedrichs Incorporated, a Louisiana corporation;
Howard Weil Financial Corporation, a Louisiana corporation; and Legg Mason, Inc., a Maryland
corporation, Defendants-Appellees., 1996 WL 33489911 (Appellate Brief) (C.A.9 Feb. 20, 1996) Opening
Brief of Appellant Frederick S. Wyle, Trustee of Hamilton Taft &. Company (NO. 95-17058)
Plaintiff-Appellant v. HOWARD, Wei!, Labouisse, Friedrichs Incorporated, a LOUisiana corporation, Howard
Wei! Financial Corporation; and Legg Mason, Inc., a Maryland corporation, Defendants-Appellees., 1996
WL 33489913 (Appellate Brief) (C.A.9 Mar. 21, 1996) Original Brief of Defendant-Appellee Howard,
Wei!, Labouisse, Friendrichs, Inc. (NO. 95-17058)
Plaintiff-Appellant, V. Howard, Howard WElL, Labouisse, Friedrichs Incorporated, a Louisiana corporation;
corporation, Defendants-Appellees., 1996 WL 33489912 (Appellate Brief) (C.A.9 Apr. 05, 1996) Reply
Neqative Only I Citino References
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Citing References
Positive Cases (U.S.A.)

** * Discussed
I11III1. In re Hamilton Taft & Co., 114 F.3d 991, 992+, 30 Bankr.Ct.Dec. 1236, 1236+, Bankr. L. Rep. P
77,405, 77405+,97 Cal. Daily Op. Servo 4410, 4410+, 97 Daily Journal DAR. 7369, 7369+ (9th
Cir.(Cal.) Jun 11, 1997) (NO. 95-17058) 99 HN: 1,2,4 (B.R.)
** Cited
P2. In re Gandy, 299 F.3d 489, 496, 48 Collier Bankr.Cas.2d 895, 895, Bankr. L. Rep. P 78,709, 78709
(5th Cir.(Tex.) Jul 22, 2002) (NO. 02-50185)
3. In re Mark Industries, Inc., 110 F.3d 69, 69 (9th Cir.(Cal.) Mar 20, 1997) (Table, text in WESTLAW, NO.
95-55712)
P4. Forum Ins. CO. V. Devere Ltd., 151 F.Supp.2d 1145, 1149 (C.D.Cal. Jan 02, 2001) (NO. CV 97-9386
NM RCX) HN: 8 (B.R.)
P 5. In re Hechinger Investment Co. of Delaware, 274 B.R. 71, 98 (D. Del. Feb 20, 2002) (NO. 99-2283,
CIV.A.00-840-RRM) ,.. HN: 5 (B.R.)
IH 6. In re National Forge Co., 344 B.R. 340, 371 (W.D.Pa. Jun 09, 2006) (NO. CIV.A. 04-21 ERIE) 99 HN:
1 (B.R.)
C 7. In re Lucas Dallas, Inc., 185 B.R. 801, 805, 34 Collier Bankr.Cas.2d 1095, 1095, 27 Bankr.Ct.Dec.
955,955,95 Daily Journal D.A.R. 12,382, 12382 (9th Cir.BAP (Cal.) Aug 17, 1995) (NO.
NC-94-2055-HVR, 93-4562 AN, NC-94-2116-HVR, 91-46079 IN) .. HN: 8 (B.R.)
8. In re Sia, 2006 WL 2472995, *12 (Bankr.D.Hawai'i Aug 25, 2006) (NO. 98-04912, ADV. 00-00102)
Secondary Sources (U.S.A.)

Ii 9. Right of creditor to recover damaqes for conspiracy to defraud him of claim, 11 A.L.RAth 345, §10+
(1982) HN: 4 (B.R.)
10. s 6:12. Fraudulent conveyance attacks -- Cases, SECACQMERG s 6:12, s 6:12+ (2006) HN: 1,5
(B.R.)
11. Bankruptcy Service Lawyers Edition s 31:254, s 31:254. Leveraged buyouts (2006) HN: 6 (B.R.)
12. Bankruptcy Service Lawyers Edition s 32:208, s 32:208. Generally (2006) HN: 1,4,5 (B.R.)
13. Bankruptcy Service Lawyers Edition s 32:210, s 32:210. Congressionai intent (2006) HN: 1,5 (B.R.)
14. Bankruptcy Service Lawyers Edition s 32:213, s 32:213. What constitutes "settlement payment" --
Particular determinations -- Reverse repo's (2006) HN: 1,5 (B.R.)
c 15. CJS Consoiracy s 49, s 49. Defrauding creditors (2006) HN: 7 (B.R.)
C 16. DERIVATIVES AND REHYPOTHECATION FAILURE: IT'S 3:00 P.M., DO YOU KNOW WHERE YOUR
COLLATERAL IS?, 39 Ariz. L. Rev. 949, 1001 (1997)
10f4 9/14/200610:52 AM
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e 17. LEVERAGED BUYOUTS AND FRAUDULENT CONVEYANCES: YET ANOTHER UPDATE, 7 J. Bankr. L. &
Prac. 315, 333 (1998) HN: 6 (B.R.)
e 18. FORWARD CONTRACTS, BANKRUPTCY SAFE HARBORS AND THE ELECTRICITY INDUSTRY, 51 Wayne
L. Rev. 49, 106 (2005) HN: 3 (B.R.)
19. ACQUISITION FINANCING, 754 PLI/Comm 385, 449 (1997) HN: 1,5 (B.R.)
20. ACQUISITION FINANCING, 739 PLI/Comm 367, 427 (1996) HN: 1,5 (B.R.)
21. SPECIAL BANKRUPTCY CODE PROTECTIONS FOR DERIVATIVE AND OTHER CAPITAL MARKET
TRANSACTIONS, 721 PLI/Comm 95, 114 (1995) HN: 1,5,6 (B.R.)
22. SECURITIES, FORWARD AND COMMODITY CONTRACTS AND REPURCHASE AND SWAP AGREEMENTS
UNDER U.S. INSOLVENCY LAWS, 721 PLI/Comm 401, 410+ (1995) HN: 1,2,4 (B.R.)
Court Documents
Appellate Petitions, Motions and Filings

23. Wyatt R, HASKELL, Petitioner, v. PWS HOLDING CORPORATION, Bruno's Inc., Foodmax of Mississippi,
Inc., A.F. Stores Inc., Br Air, Inc., Foodmax of Georgia, Inc., Foodmax of Tennessee, Inc., Foodmax Inc.,
Lakeshore Foods, Inc., Bruno's Food Stores, Inc., Georgia Sales Company, SSS Enterprise, Inc.,
2003) Petition for Writ of Certiorari (NO. 02-1134) **

Respondents., 2003 WL 21698608, *21698608+ (Appeliate Petition, Motion and Filing) (U.S. Jan 29,
HN: 6 (B.R.)
Appellate Briefs
24, In re: PWS HOLDING CORPORATION, BRUNO'S, INC., Food Max of Mississippi, Inc., A.F. Stores, Inc.,
Br Air, Inc., Food Max of Georgia, Inc., Food Max of Tennessee, Inc., Food Max, Inc., Lakeshore Foods,
Inc., Bruno's Food Stores, Inc., Georgia Sales Company, and SSS Enterprise, Inc., Debtors, Wyatt R.
Appellant (NO. 01-1462) **

HASKELL, Appellant., 2001 WL 34095042, *34095042+ (Appellate Brief) (3rd Clr. Aug 28, 2001) Brief of
HN: 6 (B.R.)
25. In The Matter Of: Joe Aivin ANDREWS, Sr., Debtor. CADLE COMPANY, Appeliant, v. WHATABURGER OF
ALICE, INC.; M. Louise Andrews; Kathy A. Reese; George P. Braun; Herbert E. Pounds, Jr.; Joe Alvin
Andrews, Jr.; Michael Boudloche; Joe Alvin Andrews, Sr., Appeliees., 2001 WL 34353904, *34353904+
(Appellate Brief) (5th Cir. Nov 07, 2001) Appellant's Brief (NO. 01-40807) 111111 HN: 3 (B.R.)
26. THE CADLE COMPANY, Plaintiff-Appellant, v. WHATABURGER OF ALICE, INC.; M. Louise Andrews;
Kathy A. Reese; Herbert E. Pounds, Jr.; George P. Braun; and Joe AlVin Andrews, Jr.,
Defendants-Appeliees., 1998 WL 34114582, *34114582+ (Appellate Brief) (5th Cir. Jut 09, 1998) Brief of
Appellant (NO. 98-50368) ** HN: 6 (B.R.)
27. FORUM INSURANCE COMPANY, Plaintiff/Appeliant, v. DEVERE LIMITED; Harrington Trust Limited, As
Trustee for the Ogaps Trust; Ephraim P. Kranitz; Thomas Comparet; Kranitz Comparet & Sarrow, P.C.;
Jerome Eglin; Ayk, Inc.; Otw Investments; and Jeja Investments, Defendants/Appeliees., 2002 WL
***
32120536, *32120536+ (Appellate Brief) (9th Cir. Aug 20, 2002) Reply Brief of Appellant Forum
Insurance Company (NO. 02-55053)
28. FORUM INSURANCE COMPANY, Petitioner/Appeliant, v. DEVERE LIMITED; Harrington Trust Limited, As
Trustee for the Ogaps Trust; Ephraim P. Kranitz; Thomas Comparet; Kranitz Comparet & Sarrow, P.c.;
32120535, *32120535+ (Appellate Brief) (9th Cir. Jut 20, 2002) Brief of Appellee Jerome Eglin (NO.
02-55053) * *:
29. FORUM INSURANCE COMPANY, Plaintiff/Appeliant, v. DEVERE LIMITED; Harrington Trust Limited, As
Trustee for the Ogaps Trust; Ephraim P. Kranitz; Thomas Comparet; Kranitz Campa ret & Sarrow, P.C.;
2 of4 9/14/2006 10:52 AM

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32120534, *32120534+ (Appellate Brief) (9th Cir. Jun 11, 2002) Brief of Appellant Forum Insurance
Company (NO. 02-55053) * *' *
30. Robert B. BURNS, Plaintiff-Appellant, v. James BALDWIN, et aI., Defendants-Appellees., 2002 WL
32115580, *32115580+ (Appellate Brief) (9th Cir. May 30, 2002) Appellant's Opening Brief (NO.
02-55115) '" IIIII!IIIIII!I HN: 6,7 (B.R.)
31. In re THRIFTY OIL CO., a California Corporation; Golden West Refining Company, a California
Corporation; Cluj Distribution Company, a California, Corporation; Benzin Supply Company, a California
Corporation; and Goiden West Distribution Company, a California Corporation, Debtors, THRIFTY OIL CO.,
Appellant, v. BANK OF AMERICA NATIONAL TRUST & Savings Association, Appellee., 2000 WL 33981185,
*33981185+ (Appellate Brief) (9th Clr. Dec 18, 2000) Appellant's Reply Brief (NO. 00-5(159)
HN: 2,4 (B.R.)
**
32. In reo THRIFTY OIL CO., a California corporation; Golden West Refining Company, a California
corporation; Cluj Distribution Company, a California corporation; Benzin Supply Company, a corporation;
and Golden West Distribution Company, a California corporation, Debtors. THRIFTY OIL CO., Appellant, v.
,,* '* *
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, Appellee., 2000 WL 33978038,
*33978038+ (Appellate Brief) (9th Cir. Nov 15, 2000) Appellee's Brief (NO. 00-56159) HN:
2,4,5 (B.R.)
corporation; CLUJ Distribution Company, a California corporation; Benzin Supply Company, a corporation;
*34017800+ (Appellate Brief) (9th Cir. Nov 14, 2000) Appellee's Brief (NO. 00-56159) ..
HN: 1,2,5 (B.R.)
* '* **
34. IN RE HAMILTON TAFT & COMPANY, Debtor. Frederick S. Wyle, Trustee of Hamilton Taft & Company,
Plaintiff-Appellant v. HOWARD, Well, Labouisse, Friedrichs Incorporated, a Louisiana corporation, Howard
Weil Financial Corporation; and Legg Mason, Inc., a Maryland corporation, Defendants-Appellees., 1996
Defendant-Appellee Howard, '" (NO. 95-17058) .. * '* *

WL 33489913, *33489913+ (Appellate Brief) (9th Cir. Mar 21, 1996) Original Brief of
HN: 4 (B.R.)
Trial Court Documents (U.S.A.)
Trial Motions, Memoranda and Affidavits

35. Diane MANN, as Trustee for the Estate of LeapSource, Inc.; Christine V. Kirk; Thomas F. Gilman; Indu
Gupta; Kimberly C. Hartmann; Julie B. McCollum; Kelly A. Powers; Bobby D. Scott; and Patricie E. Waiker,
Plaintiffs, v. GTCR GOLDER RAUNER, L.L.C.; a Delaware limited liability company; GTCR Fund VI, L.P., a
Delaware limited partnership; GTCR VI Executive Fund, L.P. a Delaware limited partnership; GTCR
Associates VI, a Delaware general partnership; Michael Makings;, 2006 WL 1183016, *1183016 (Trial
'*
Motion, Memorandum and Affidavit) (D.Ariz. Mar 10, 2006) Motion for Summary Judgment on (1)
Contract ... (NO. CIV-02-2099-PHX-RCB)
36. Robert B. BURNS, Plaintiff, v. James P. BALDWIN, et al., Defendants., 2000 WL 34631826,
**
*34631826+ (Trial Motion, Memorandum and Affidavit) (C.D.Cal. Sep 11, 2000) Plaintiff's
Memorandum of Points and Authorities ... (NO. SACVOO-0249AHS, ANX)
37. IN RE: 30FX INTERACTIVE, INC., a California corporation, Debtor, Ein: 77-0390421 Carlyle Fortran
Trust, a Maryland real estate investment trust, Plaintiff, v. NVIDIA CORPORATION, a Delaware
corporation; Nvidia Us Investment Company, f/k/a Titan Acquisition Corp. No.2, a Deiaware corporation;
3dfx Interactive, Inc., a California corporation, Jen-Hsun Huang, an individual; James C. Gaither, an
individual; A. Brooke Seawell, an indiVidual; William J. Miller" 2005 WL 2868911, *2868911+ (Trial
Motion, Memorandum and Affidavit) (N.D.Cal. Oct 17,2005) Opposition of Carlyle Fortran Trust to
3dfx ... (NO. 05-00427JW) IIIII!IIIIII!I
38. In reo P.R.T.C., INC., Braunstein International Corporation, Debtors, Gregory A. Akers, Trustee, and
Harold S. Taxel, Trustee, Plaintiffs, v. David Troy Braunstein, Christina Braunstein, Braunstein De Mexico,
30f4 9/14/200610:52 AM
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S.A. De C.V., BIC Technologies, Inc., Solution Technology Group, LLC, Solution Technology De Mexico,
Almacen De Computadoras, Rosenbaum & Diehl, a Professional Corporation, Keith A. Rosenbaum, Duckor,
Spradling, & Metzger, a Professional Corporation, and, 2002 WL 32955064, *32955064 (Trial Motion,
Memorandum and Affidavit) (S.D.Cal. Jan 02, 2002) Memorandum of Points and Authorities in
Support ... (NO. 00CV2307-H, JFS) -k
39. In Re: ENRON CORP., et aI., Debtors. Enron Corp., Plaintiff, v. J.P. Morgan Secuiities, Inc., et aI.,
Defendants. Enron Corp., Plaintiff, v. Mass Mutual Life Insurance Co., et aI., Defendants., 2005 WL
3038836, *3038836+ (Trial Motion, Memorandum and AffidaVit) (S.D.N.Y. Aug 01, 2005) Memorandum
of Law in Support of Lehman's Motion ... (NO. 01-16034, AJG) *: *: HN: 1,3 (B.R.)
40. GREAT AMERICAN UFE INSURANCE COMPANY, Plaintiff, v. Katharine Shaw Waliace THOMPSON,
*
Defendant., 2006 WL 1442021, *1442021 (Trial Motion, Memorandum and Affidavit) (S.D.Ohio Apr 25,
2006) Reply in Support of Plaintiff's Emergency Motion ... (NO. 104CV815) *:
41. In re: John SASSER, Debtor; In re Mayflower Transit, LLC, Plaintiff, v. John Sasser, Defendant., 2002
**
WL 32931587, *32931587 (Trial Motion, Memorandum and AffidaVit) (Bankr.E.O.Cal. Jun 03, 2002) Reply
to Opposition of Chapter 7 Trustee's ... (NO. 02-10300A-ll)
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In re Hamilton Taft & d,9,~~aRa.~~~32 (N,D. Cal., 1995)

In re HAMILTON TAFT & COMPANY, Debtor.
Frederick S. WYLE, Trustee for Hamilton Taft &. Co.,
Plaintiff/Appellant,
v.
HOWARD, WEll, lABOUISSE, FRIEDRICHS, INC., a louisiana
corporation; Howard Wei! Financial Corporation, a Louisiana
corporation; Legg Mason, a Maryland corporation,
Defendants/ Appellees.
No. C 95-1512-51.
United States District Court, N.D. California.
October 12, 1995.
Page 533
Abram S. Feuerstein, L.J. Martiniak, Feldman Waldman & Kline, San

Francisco, CA, for plaintiff/appellant Frederick J, Wyie,
J. Michael Kelly, Robert L. Eisenbach, III, Cooley Godward Castro

Huddelson & Tatum, San Francisco, CA, for defendants/appellees Howard,
Weil, Labouisse, Freidrichs, Inc., et a!.
ORDER AFFIRMING SUMMARY JUDGMENT
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Hamilton Taft & Co., In re(11JtlP':3llI&§1 (C.A.9 (Cal.), 1997)
30 Bankr.Ct.Dec. 1236, Bankr. L. Rep. P 77,405,

97 Cal. Daily Op. Servo 4410,
97 Daily Journal D.A.R. 7369
In re HAMILTON TAFT &. COMPANY, Debtor.

Frederick S. WYLE, Trustee of Hamilton Taft &. Company,
Plaintiff-Appellant,
v.
HOWARD, WElL, LABOUI55E, FREIDRICHS INC.; Howard WeiI
Financial Corporation; Legg Mason Inc.,
Defendants-Appellees.
No. 95-17058.
United States Court of Appeals,

Ninth Circuit.
Ar9ued and Submitted Nov. 8, 1996.

Decided June 11, 1997.
L.J. Chris Martiniak, Feldman, Waldman & Kline, San Francisco, CA, for
pia intiff-appellant.
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CITATION YOU ENTERED:
SUBSEQUENT APPELLATE HISTORY:
PRIOR HISTORY:
Auto-Cite(R)Citation SelVice, (c)2006 LEXIS-NEX/S. All righls reselVed.

176 Bankr. 895 (Bankr 1995)
Wyle v. Howard, Weil, Labouisse, Friedrichs (In re Hamilton Taft & Co.),
176 B.R. 895, 1995 Bankr. LEXIS 45, 26 Bankr. Ct. Dec. (CRR) 665, 32
O.G.R. 1727 (Bankr. N.D. Cal. 1995)
affd, Wyle v. Howard, Weil, Labouisse, Friedrichs (In re Hamilton Taft

& Co.), 196 B.R. 532, 1995 U.S. Dist. LEXIS 15576 (N.D. Cal. 1995)
aft'd, Wyle v. Howard, Weil, Labouisse, Freidrichs Inc. (In re

Hamilton Taft & Co.), 114 F.3d 991, 1997 U.S. App. LEXIS 13689, ~
C.D.O.S. 4410, 97 Daily Journal DAR. 7369, 30 Bankr. Ct. Dec.
(CRR) 1236, Bankr. L. Rep. (CCH) P 77405 (9th Cir. Cal. 1997)
PRIOR HISTORY:
In re Hamilton & Taft Co. (Chapter 11), (Bankr. N.D. Cal. Mar. 20,1991)
summ. judgment granted, (BY CITATION YOU ENTERED)
lofl 9/18/200610:58 AM
LexisNexis by CredIt Cant - Uocument
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Documents Purchased I New Search Auto-Cite® I Shepard's® View in Printable Form

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PRIOR HISTORY:
Auto-Cite(R)Citation Service, (c)2006 LEXtS-NEXIS. All rights reserved.

In re hamillon Taft 114 F3D 991
Wyle v. Howard, Weil, Labouisse, Freidrichs Inc. (In re Hamilton Taft &
Co.), 114 F.3d 991, 1997 U.S. ApD. LEXIS 13689, 97 C.D.O.S. 4410, 97
Daily Journal DAR. 7369, 30 Bankr. C!. Dec. (CRR) 1236, Bankr. L. Rep.
(CCH) P 77405 (9th Cir. Cal. 1997)
PRIOR HISTORY:
In re Hamilton & Taft Co. (Chapter 11), (Bankr. N.D. Cal. Mar. 20, 1991)
summ. judgment granted, Wyle v. Howard, Weil, Labouisse, Friedrichs (In

re Hamilton Taft & Co.), 176 B.R. 895, 1995 Bani", LEXIS 45, 26
Bankr. C!. Dec. (CRR) 665, 32 O.G.R. 1727 (Bankr. N.D. Cal. 1995)
alrd, Wyle v. Howard, Weil, Labouisse, Friedrichs (In re Hamilton

Taft & Co.), 196 B.R. 532, 1995 U.S. Dis!. LEXIS 15576 (N.D. Cal.
1995)
alrd, (BY CITATION YOU ENTERED)
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I of 1 9/18/2006 10:53 AM
Memorandum
To SAC, SAN FRANCISCO 1961YSF-93255 (P) Dnte 1/25/95

/~/
,
FJ7~ SAl
/
b7C
SubJ(lct CONNI ILTON

TAFT; F HAMILTON
TAFT; ) ; MAIL FRAUD; ITSP; OO:SF
The pufpose of this memo is to provide an update as to

the status of captioned case. A firm trial date has been set for
this matter on June 26, 1995 before U.S. D.C. Judge Charles Legge
at San Francisco~ The discovery process is continuing and it is
anticipated that approximately thirty to forty-five witnesses
will be called by the government for trial which is expected to
last three to four weeks.
The current strategy for preparing these witnesses for

trial is to hopefully employ video conferencing as much as
possible in order to make the best use of both agent resources
and the attorney's time trying this matter. Cost and time
expenditures dictate that the use of video conferencing be
utilized whenever possible.
It is also anticipated that one trip to Texas will be

made prior to trial for preparing numerous witnesses who were
employed in several companies operated by captioned subject
Armstrong in the Dallas metropolitan area.
The defense counsel for captioned sUbjectl Ihas

indicated a willingness to plead him out but no action has been
taken to date on this matter due to the probability that his
counsel has yet to become thoroughly familiar with the evidence
accumulated against her client.
LEAD: continue to prepare for trial.
'if 196A-SF-93255 SfAIlCHED_~INDEXED TC::::-

J~/dbC SEAtAUZE~ RLro_.,,~;.,<=-
FEB 1 7 1995
Memorandum
To SAC, SAN FRANCISCO 196!j,-'SF-93255

, (P) DOl' 1/25/95
SA 1-------::0----
/
SubJl;~ct CONNI~ CHT~ARciSTRQNG. FORMER CHAIRMAN OF H~ILTON
TAFT; L joF HAMILTON
TAFT; FBW); MAIL FRAUD; ITSP; OO,SF
//
The purpose of this memo is to provide an update as to
the status of captioned case. A firm trial date has been set for
this matter on June 26, 1995 before U.S.D:C. Judge Charles Legge
at San Francisco. The discovery process is continuing and it is
anticipated that approximately thirty to forty-five witnesses
will be called by the government for trial which is expected to
last three to four weeks.
The current strategy for preparing these witnesses for

trial is to hopefUlly employ video conferencing as much as
possible in order to make the best use of both agent resources
and the attorney's time trying this matter. Cost and time
expenditures dictate that the use of video conferencing be
utilized whenever possible.
It is also anticipated that one trip to Texas will be

made prior to trial for preparing numerous witnesses who were
employed in several companies operated by captioned subject
Armstrong in the Dallas metropolitan area.
b ,.-'
The defense counsel for captioned sUbject Ihas
indicated a willingness to plead him out but no action has been
I
taken to date on this matter due to the probability that his
counsel has yet to become thoroughly familiar with the evidence
accumulated against her client.
LEAD: Continue to prepare for trial.
cif 196A-SF-93255 SEARC-HED_~ INDEXED

tf.KM/dbc SEAIALlZE~ FILED ff "
r)M,
FEB 1 71995
0'
William J. Perlstein (WP 1073)
Craig Goldblatt (CG 6793)
Jonathan E. Paikin (JP 7599)
Caroline Rogus (CR 6931)
WILMER CUTLER PICKERING LLP
2445 M Street, N.W.
Washington, DC 20037
Telephone: (202) 663-6000
Facsimile: (202) 663-6363
Attorneys for Amici Curiae

International Swaps and Derivatives Association, Inc.,
Securities Industry Association, and The Bond Market Association
UNnED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------------- lC
Inre Chapter 11
Case No. 01-16034 (AJG)
ENRON CORP., et aI.,
Jointly Administered
Debtors.
------------------------------------------------------------- lC
ENRON CORP., Adv. No. 03-93383 (AJG)
Plaintiff,
v.
LEHMAN BROTHERS FINANCE S.A., et aI.,
Defendants.
-------------------.--••-------------------••----------••---- lC
MEMORANDUM OF LAW OF INTERNATIONAL SWAPS AND DERIVATIVES

ASSOCIATION, INC., SECURITIES INDUSTRY ASSOCIATION, AND THE BOND
MARKET ASSOCIATION AS AMICUS CURIAE IN SUPPORT OF DISMISSAL OF
ADVERSARY PROCEEDING
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ii
PRELIMINARY STATEMENT 1
STATEMENT OF INTEREST 3
STATUTORY, FACTUAL AND PROCEDURAL BACKGROUND 5
I. SECTION 546(e) PROTECTS PAYMENTS MADE UNDER OTC

EQUITY DERIVATIVES CONTRACTS FROM PREFERENCE AND
FRAUDULENT CONVEYANCE ACTIONS 13
A. The Transfers Are Protected "Settlement Payments" In The

Forward Contracts Trade 14
B. The Transfers Are Protected "Settlement Payments" In The

Securities Trade 16
II. SECTION 546(g) PROTECTS PAYMENTS MADE IN CONNECTION

WITH OTC DERIVATIVES TRANSACTIONS FROM PREFERENCE
AND FRAUDULENT CONVEYANCE ACTIONS 18
ill. STATE LAW CLAIMS THAT CIRCUMVENT THE PROTECTIONS

AFFORDED TO THE FINANCIAL MARKETS BY THE FEDERAL
BANKRUPTCY LAWS ARE PREEMPTED 23
CONCLUSION 27
TABLE OF AUTHORITIES
CASES
Page(s)
Bessette v. Avco Financial Services, Inc., 230 F.3d 439 (1st Cir. 2000) ."."" 25
Bevill, Bresler & Schulman Asset Management Corp. v. Spencer Savings & Loan
Ass'n, 878 F.2d 742 (3d Cir. 1989) " .."""".".."" " "" 7,8,9, 17
Century Glove, Inc. v. Iselin (In re Century Glove), 151 B.R. 327 (Bankr. D. Del.
1993) " " " " "" 25
Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992) """ " "" 25
Cox v. Zale Delaware, Inc., 239 F.3d 910 (7th Cir. 2001) 25
Curtin v. Port Authority, 183 F. Supp. 2d 664 (S.D.N.Y. 2002) .." 24
Diamante v. Solomon & Solomon, P.e., No. 1:99CV1339 (FJSIDRH), 2001 WL

1217226 (N.D.N.Y. Sept. 18, 2001) " " " " " 26
In re Comark, 971 F.2d 322 (9th Cir. 1992) " .." " " 17
In re Hamilton Taft & Co., 176 B.R. 895 (Bankr. N.D. Cal.), aff'd, 196 B.R. 532
(N.D. Cal. 1995), aff'd, 114 F.3d 991 (9th CiT: 1997) "" 17,18
In re Hechinger Investment Co. of Delaware, 274 B.R. 71 (D. Del. 2002) 16, 17,24-25,26
In re Interbulk, Ltd., 240 B.R. 195 (Bankr. S.D.N.Y. 1999) " 9,20
In re Nation, 236 B.R. 150 (S.D.N.Y. 1999) " .." "" " " " "" ,,.. 24
In re Olympic Natural Gas Co., 294 F.3d 737 (5th Cir. 2002)" " 14
In re Resorts International, Inc., 181 F.3d 505 (3d Cir. 1999) " " " 17
International Shoe Co. v. Pinkus, 278 U.S. 261 (1929) " "." " """.24
Kaiser Steel Corp. v. Charles Schwab & Co., 913 F.2d 846 (lOth Cir. 1990) " 7, 17, 18
Kaiser Steel Corp. v. Pearl Brewing Co., 952 F.2d 1230 (10th Cir. 1991) 17
MSR Exploration, Ltd. v. Meridian Oil, Inc., 74 F.3d 910 (9th Cir. 1996) " " 25
Penn Terra Ltd. v. Department ofEnvironmental Resources, 733 F.2d 267 (3d
Cir. 1984) " 25
Pereira v. First North American National Bank, 223 B.R. 28 (N.D. Ga. 1998) " 25
ii
Pertuso v. Ford Motor Credit Co., 233 F.3d 417 (6th Cir. 2000) 25-26
Thrifty Oil Co. v. Bank ofAmerica National Trust & Savings Ass'n, 322 F.3d
1039 (9th Cir. 2003) 9, 10
SEC NO·ACTION LETTERS
Chicago Bd. Options R'Cchange, SEC No-Action Letter, Fed. Sec. L. Rep. 'JI
79,665 (Feb. 22, 1991) 20,21
Goldman, Sachs & Co., SEC No-Action Letter, 2003 WL 22358822 (Oct. 9,
2003) 20
Goldman. Sachs & Co., SEC No-Action Letter, 1999 WL 1244018 (Dec. 20,
1999) 20
STATUTES
7 U.S.c. § la(4) 15
11 U.S.c. § 101(25) 14, 15, 16
11 U.S.C. § 101(51A) 14
11 U.S.c. § 101(53B) passim
11 U.S.c. § 546(e) passim
11 U.S.c. § 546(g) passim
11 U.S.c. § 547 5
11 U.S.c. § 548 : 5
11 U.S.c. § 548(a)(l)(A) 13
11 U.S.c. § 550 5
11 U.S.c. § 741(8) 17
11 U.S.c. § 761(8) 15
15 U.S.C. § 78 et seq 6, 22
iii
1982 Amendments to Bankruptcy Code, Pub. L. No. 97-222, 96 Stat. 235 7, 13
1984 Amendments to Bankruptcy Code, Pub. L. No. 98-353, 98 Stat. 2706 9
1990 Bankruptcy: Swap Agreements and Forward Contracts, Pub. L. No. 101-
311,104 Stat. 267 11
Commodity Futures Modernization Act of 2000, Pub. L. No. 106-554, 114 Stat.
2763 21-22
LEGISLATIVE MATERIALS
H.R. Rep. No. 97-420 (1982), available at 1982 WL 25042 7,13,16
H.R. Rep. No. 101-484 (1990), available at 1990 WL 92539 passim
S. Rep. No. 98-65 (1983) 8,9
S. Rep. No. 101-285 (1990), available at 1990 WL 259288 passim
Bankruptcy Treatment ofSwap Agreemellts and Forward Contracts: Hearing on

H.R. 2057 and H.R. 1754 Before the Subcommittee on Economic and
Commercial Law of the House Committee on the Judiciary, 101st Congo 1
(1990) 6
Financial Contract Netting Improvement Act of200I, H.R. 11, 107th Congo
(2001) , 22
Interest Swap: Hearing on S. 396 Before the Subcommittee on Courts and

Administrative Practices ofthe Senate Committee on the Judiciary, WIst
Congo 1 (1989) 10, 11, 19
136 Congo Rec. S7535 (1990) 6, 12
136 Congo Rec. S7536 (1990) 11, 18
MISCELLANEOUS
2000 Enron Corp. lO-K, available at

http://www.sec.gov/Archivesledgar/datall024401l000102440101500010/
0001024401-01-500010.txt 12
Collier on Bankruptcy '11560.02 (l5th ed. 2003) 20
iv
William J. Perlstein (WP 1073)
Craig Goldblatt (CG 6793)
Jonathan E. Paikin (JP 7599)
Caroline Rogus (CR 6931)
Wll.JvIER CUTIER PICKERING
HALE AND DORR LLP
2445 M Street, N.W.
Washington, DC 20037
Telephone: (202) 663-6000
Facsimile: (202) 663-6363
Attorneys for Amici Curiae

International Swaps and Derivatives Association, Inc.,
Securities Industry Association, and The Bond Market Association
UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------------- J(
In re Chapter 11
Case No. 01-16034 (AJG)
ENRON CORP., et aI.,
Jointly Administered
Debtors.
----------------------------------------------.-.------------ J(
ENRON CORP.,
Plaintiff, Adv. Pro. No. 03-93373 (AJG)
v.
UBSAG
and
UBS SECURITIES LLC, fIkIa UBS

W ARBURG LLC (alkla UBS WARBURG),
Defendants.
----------------------•••• -.----------------.---------------- J(
MEMORANDUM OF LAW OF INTERNATIONAL SWAPS AND DERIVATIVES

ASSOCIATION, INC., SECURITIES INDUSTRY ASSOCIATION, AND THE BOND
MARKET ASSOCIATION AS AMICI CURIAE IN SUPPORT OF DEFENDANTS'
MOTION FOR SUMMARY JUDGMENT
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ii
PRELIMINARY STATEMENT 1
STATEMENT OF INTEREST 2
STATUTORY, FACTUAL AND PROCEDURAL BACKGROUND 5
I. SECTION 546(e) PROTECTS PAYMENTS MADE UNDER OTC

EQUITY DERNATIVES CONTRACTS FROM PREFERENCE AND
FRAUDULENT CONVEYANCE ACTIONS 12
A. The Transfers Are Protected "Settlement Payments" In The

Forward Contracts Trade 13
B. The Transfers Are Protected "Settlement Payments" In The

Securities Trade 15
II. SECTION 546(g) PROTECTS PAYMENTS MADE IN CONNECTION

WITH OTC DERNATIVES TRANSACTIONS FROM PREFERENCE
AND FRAUDULENT CONVEYANCE ACTIONS 17
Ill. STATE LAW CLAIMS TIIAT CIRCUMVENT THE PROTECTIONS

AFFORDED TO THE FINANCIAL MARKETS BY THE FEDERAL
BANKRUPTCY LAWS ARE PREEMPTED 23
CONCLUSION 27
TABLE OF AUTHORITIES
CASES
Page(s)
Bessette v. Avco Financial Services. Inc.• 230 F.3d 439 (1st Cir. 2000) 25
Bevill. Bresler & Schulman Asset Management Corp. v. Spencer Savings & Loan
Ass·n. 878 F.2d 742 (3d Cir. 1989) 7.8, 16
Century Glove. Inc. v. Iselin (In re Century Glove), 151 B.R. 327 (Bankr. D. Del.
1993) 25
Cipollone v. Liggett Group. Inc.• 505 U.S. 504 (1992) 25
Cox v. Zale Delaware. Inc., 239 F.3d 910 (7th Cir. 2001) 25
Curton v. Port Authority, 183 F. Supp. 2d 664 (S.D.N.Y. 2002) 24
Diamante v. Solomon & Solomon. P.C, No. 1:99CV1339 (FJSIDRH), 2001 WL

1217226 (N.D.N.Y. Sept. 18. 2001) 25
In re Comark, 971 F.2d 322 (9th Cir. 1992) 17
In re Hamilton Taft & Co., 176 B.R. 895 (Bankr. N.D. Cal.), aff'd, 196 B.R. 532
(N.D. Cal. 1995), affd, 114 F.3d 991 (9th Cir. 1997) 15. 18
In re Hechinger Investment Co. ofDelaware, 274 B.R. 71 (D. Del. 2002) 16-17. 24, 25, 26
In re Interbulk. Ltd., 240 B.R. 195 (Bankr. S.D.N.Y. 1999) 9,20
In re Nation, 236 B.R. 150 (S.D.N.Y. 1999) 24
In re Olympic Natural Gas Co., 294 F.3d 737 (5th Cir. 2002) 14
In re Resorts International. Inc., 181 F.3d 505 (3d Cir. 1999) 16
International Shoe Co. v. Pinkus. 278 U.S. 261 (1929) 23
Kaiser Steel Corp. v. Charles Schwab & Co., 913 F.2d 846 (10th Cir. 1990) 6, 16, 17
Kaiser Steel Corp. v. Pearl Brewing Co., 952 F.2d 1230 (10th Cir. 1991) 16
MSR Exploration. Ltd. v. Meridian Oil. Inc., 74 F.3d 910 (9th Cir. 1996) 25
Penn Terra Ltd. v. Department of Environmental Resources, 733 F.2d 267 (3d
Cir. 1984) 24
Pereira v. First North American National Bank, 223 B.R. 28 (N.D. Ga. 1998) 25
11
Pertuso v. Ford Motor Credit Co., 233 F.3d 417 (6th CiT. 2000) 25
Thrifty Oil Co. v. Bank ofAmerica National Trust & Savings Ass'n, 322 F.3d
1039 (9th CiT. 2003) 9
SEC NO-ACTION LETTERS
Chicago Bd. Options E'Cchange, SEC No-Action Letter, Fed Sec. L. Rep. 'll
79,665 (Feb. 22, 1991) 20
Goldman. Sachs & Co., SEC No-Action Letter, 2003 WL 22358822 (Oct. 9,
2003) 20
Goldman, Sachs & Co., SEC No-Action Letter, 1999 WL 1244018 (Dec. 20,
1999) 20
STATUTES
7 U.S.C. § la(4) 14
11 U.S.c. § 101(25) 14, 15
11 U.S.C. § 101(51A) 13
11 U.S.C. § 101(53B) 18,20, 21
11 U.S.c. § 546(e) passim
11 U.S.C. § 546(g) passim
11 U.S.C. § 547 5
11 U.S.C. § 548 5, 13
11 U.S.c. § 550 5
11 U.S.c. § 741(8) 16
11 U.S.C. § 761(8) 14
15 U.S.c. § 78 et seq 6, 21
1982 Amendments to Bankruptcy Code, Pub. L. No. 97-222, 96 Stat. 235 7, 13
iii
[}; RE HA.'I'IILTON TAFT & CO. 285
Cllo:: ... 5J F...3d 285 (':Jthell'". 19951
United Sbltes under lilt. nl:lln th:lt the deportation order created sue an appeaJ of the deportation order or <1
('I.~r-
to Justice Act ("EA.rA."-:i' J, t ·.J.lch-~ dileml1l:l becau~e surrendering deni:::L! of his application for a wai';e!" of
.,dlilHAll. EAJ."- is not an"", . _..,•.dd h:lve ui/-.~rere-d their immediate depur- deport.ltion.
"hUtin~ statute in favor of lit(~ :.J,:.}llfl. mwtln){ their meritoriou.s attack nn In light of thm pre:iti¢oU5 court's pronounce
\d.il :J.g'J.inst the g'Ove~~
M
~ "nk'r':: yalidit.y. But feder.:J...l co~ regu-

ment and the similar c:ircumsw.nces of this
Z..l12idl(l)iAI says that ~~. w..~' ",'T':mt ~mergency relief again5t arbi-
larry is not entitled to an awVt~ .t":LJ'\' r.llin~"S in immigrJtion procedures
C:::LSe, it can sc:rrcely be ;iaid that the ("ruled
:::nds that the position of ~

StateS was not "substantially jusr.iii.ecl" in
::-~h. juuhring by the reported c~es and by opposing Zapons' e1Tort5 to obtain il stay of
"as ,;ubstantially justified ai:.~ ~,.;U t.'.:\:perience, do :;eem to pronuce far
depol~tion.
-:..rr:umst.1.nc:es make an 3'W111I-:W ::a..n' t.h~ their :5h.'I.l"'e of :Jl'bitr:l.1im::55), :lIld
" "subsuntially justified" """",~. :-'f"'n... did not immedb.tely attempt to avail We therefore AFFIR:.I.
e.shed out in Pierce v. Unan:1fi. :.:rrn...:.t.·I\·L'S ar' th:H. lJppormnity rather than
i;;z. 505, lOS S.CL 25-11. ~~ ,,-...;.~ (u,l-..,th'e.;:
:90 (19&3l, followed in Com""':'~ o w .:::-c===,,-
~ tlT~U"!'" ,'riTI"
. 4% C.S. 154. 158 n. 6, m"¥'

r: J nnly in the rarest of situations do T
It')rr;tl C"Our~<; counlen:mce a part)-'S disre-

n. 6. 110 L.Ed.2d 13-1 (1900},:11
;:lJ"I'i III an exi$ting court order bec:lUse it
:~:.
"Tls he underl)ing subst.z,n:';~ "'V mi:.t:lkenly issued-a clearly im"alid pri-
1 .e magistrar.e judge u.a~ ,~ n·~tr;unt in the First Amendment context,
: """-ere correct in concludiIifi ..... ~I'n' the injunction was cr:msparently in-
··~~d llr hurl onj)' a n;\"l')!aus preten:;e to In re a.\c'l!LTON TAFT & CO., Debtor.
J.rd of Immigration Appe>la Y.
s....-etion in refusing to ~ -'~ ·"'J.l.:,dl::-·:' is the only e.umple th;]l comes to
Frederick S. WYLE, Trustee in
deportation: Under a th"';;f "':':::'lfl. a'Hlker r. City oj Bimzinghnm. 3&S
Bankruptc)' of Hamilton Taft
amendment to the Im~'~ , ••". :U17, :lI5. ~7 S.CL 1824. 1829. 18 L.Ed.2d
& Coo, Plaintiff-AppellanL
. 'It,i " "itv Act (8 U.s.c::·~ :::! f} ( 19ti'j). rn all other situations obedience
filing of a motion' ti '%
..,.:1\
'.D f"'\,..n an :l."~ertedly "oid (not merely void a- v.
.~j"oceedings where the t'"' ~I order is required unless and until it has
S & S CREDIT CO.• Defendant-Appellee.
'eel", given notice of such ~~ . ~ ...ac;]wd or reversed. lYalker, irL ar.
~ ~ cally Stays deportation. r(;.: .::n-':l. ~i S.CL at 1832: United States 1,1. No. 93-1:>15.5.
mmigration Judge had """""'i ;·.,'rd .\lille Workers. 330 U.S. 258, 290-94,
United States Court of Appeals.
. :a:ion hearing in absentla-"':" <7 ".n. 1;77, 094--96. 91 L.Ed. 88.J rt94/l,
Ninth CircuiL
:'" ""at Zapons had not ~~, !b~h C"", The Void Order and ihe Duty To
Jt hearing (something th.lt .~ '>!r'I. U; L'.Chi.L.Rev. 86 (1948), Argued and Subntitted _"-ug. 12. 1994.
. ,- t h' ~" •.:. ""1Z'
elr fail ure to ap~:':..~ Hm' lapons engaged in seli-help rather Decided :>by 2, 1995.
ne dency of a motion ~.;~ '-'::.:... ,1}00pl!;ng- \\ith an outstanding order r.o
·1 .... ~lon authorities :u:ti"'~l 1q,"'7"!'ndcr for cleport.:ltion, and the immigra-
Ith a \;ew toward depoJ"to....Jt '.icon JUU10rities responded by denying a stay Bankruptcy trustee for debtor ~...ho con-
C=''C
As Bar-Le"L"!J L'. United
'.• ~i~
,0{ ,j"!)(U·t..1 tion. tracted "ith clients to pay clients' federal.
~'culty
in recovaring ~~ '.,c:" f)"p'l <,'- .I11.sti". 990 F.2d 3.1, 35 (2d state and 10c.aJ payroll taxes and prepare all
IJ.!!l.tl) (citJ.tions omitted) has put it: relevant reports filed action to reCO\'er as
their having gone fugi~'
,'JlbllJl!h an ::ilien who fails to surrender to Ereference tax pavments made bv debtor. to
_ still-outstancling (tho~
!}.r I;';S despite a la,,,ful order of deporla- Internal Revenue Service (IRS) on behalf of
:i) deportation order. I Tb<1.' ,
Uon L~ nut, stricr.ly speaking, a fugitive in a S!!enL The Bankruotcy Court dismissed
C'r'.rniru.! matter, we think that he is none- complaint and denied tnlSr:.ee·S motion for
th.i<"'" a fugitive from justice. Like the Qartial summary judgment thet ta.:(es were
t-.1l{lU\'e in a crirn..inal matter, the alien \\-'ho estate propero, Trustee appealed. The
fA ;It fUgllh'e from a deportation order United States District Court for the N orth-
""'"hi onlinarily be barred by his fugitive ern Distmt of California. Charles A. Legge,
....tu., from calling upon the resources of L-~ed. Trustee appealed. The Court
U:.o coun to determine his claims. An of Appeals, William A. Norris, Circuit Judge,
AJi<,n Who jg a fugitive from a depoltltion held that debtor did not hold ta.~ funds trans-
""'ler shtluld thus not be permitted to pur- ferred to it by client in trust because client
l. J.ndc.c.t.I, II WIU their laler.Rlcci habeas petition that !ipnred Z-3pons from depon:nion.
000130
286 53 FEDERAL REPORTER. 3d SERIES
did not require debtor to ~egregate ta."te5. 5. Bankruptcy =3766.1

and thus.. ta.."( funcis tr.lI1:i.lerred to debtor Court of Appeals had jwisdiction to re-
were property of debtor's es~te. and tax dew denial of bankrupLeY crustee's motion
payments made by debtor to IRS on behalf for partial sununary judgment in preference
of c.Uent were subject to :lvoid::J.!lce as prefer- a....oidance proceeding on issue that trUSt fund
ence. t2.,es paid by debtor to IRS on behalf of
nebtor's client. n.ith whom riebtor had 1:00-
t.r.lCte<l to pa)' payroll t:l.~es :rnd prepare ;ill
rele'::lJ1t reports. were property of debtor for
1. Bankrupt",· <?:5!3. ~6IO preference avoidance pUrposes after trial on
.-\.ltJ:oug-h iund, \\ithheJd from employ- meri~. where Court of Appeals reve!"'Sed dis-
ees of client or debtor. who contracted \\jtV trict coun's dismiss:l1 of trUstee's complaint.
client to pay iedenl. 5t.:H.e and local pa;TOII ruling that as matter of lav,' trUstee coUld
t.:Lxes ::lI1d prepare :ill relevant reports, were reeO\'er 'from debtor's client funds paid to
impressed'in st:ltutory n-ust ~ coUected. IRS on client's behalf during preierence peri- ,;..-,
:::-:::
after O""..l5t fund "-1-"\e:5 were tr:msferred to od if client =ierred t2.xes to debtor \\ith-
debtor. debtor held r.a.,es free oi trUSt. and out. requiring debtor to hoid funds in trUSt.;
ta:'tES were orooem' of nebtar's estate, where -re.. .; ev.ing denial or" :sununary judgment .~"¥
client tr::lI1SI"erred :.J.."\e..:5 to debcor \\ithQut '-riQLQ9intless aodemic e..'tercistil
reguiri."g debtor :0 ':'e~eg:J.te tho$e funds
6. Fe<leral Courts <>660.25
:rnd hold them in trU5f-: thus. t2.x pa)ment.5
In geDeraL denial of motion for SUID-
made OD behalf oi client by debtor within 90
mar}. judgment is not flnal order since conse-
days of ban.ia1.tptcy filing were avoidable
quence of denial is that case will go to trial;
preference;. Bankr.Code. 11 U.s.C_-\..
§i:!7(bl: "6 C.S.L-\.. §§ 7501. 7501(a).
thus. ordi.n.ariIy, re...iew of such denial is
sought through interlocutor;." appeal
2. Trusts <?:!56(J)
7. Fe<leral Courts =769
t"nder nonnal principles of trust. If .,
trus"", tr.ll1Sfers trUSt property to third par-
,Vhen interlocUtory appeal from denial
of motion for summa.ry judgment is not tak~ _~.
--
ty, third pan... hoids i.hat grown)" free qI
en. denial of swnrnary judgment is re\ie~-a-
LTUSt /.;;nJess) crJ.5t.ee committed breach gi
ble upon entry of fina..1 judgrnenL . :f;:
trust in conveying property. Restatement
lSecondl oi Tl"USt.5 § ~. ..,
3. Trust.5 =:156(21 DO\id L. Kane! and Patricia S. ~Iar, Feld-
man. Waldman & Kline. San fr:rncisco. CA. ::.'
Absent bre.a.cn or Ullit. \vhen t.rtlStEte
for plaimiff-appell:rnt. _.
enters into contner ',\ith third part;)". :lIly
trust funds tI'"'J.nSierreci to th::lt third pan\" in Susan C. Cag<lIln, Latham & Watkins. San-1;
Francisco. C.'_ :l.I1d Robert D. Crocltett. ~,"]i
c:onsidel'jltion of contr.l.Ct are trill1Sierred free
of trust unle.;;.s conrract nrO\ides that trans-
ferred funds shall be held in trnsL Restate-
ment (Second) of Trust.5 § 233.
tharo & War.kin.s. Los Angeles. c.-\.. ior defen- _~
dant-appellee.
Appeal from the United States Distri<:t
--
. ~iI
4. Trusts =356(2) Court for the Northern District. of Califo~

Depositing trUSt. funds in bank account
is not trnnsfer of trust property. to third Before: NORRIS, THOMPSON,
party within meaning of provision Resbte- TROTT. Circuit Judges.
ment (Second) of Trusl.'l that when trust..,
tran.sfers trust property to third party. third WILLIAM A.. NORRIS. Circuit Judge:
party holdB that property 1're<! of trust unless The bankruptcy trustee of debtor
trus"", committed breach of trust in con\'ey- ton Taft & Company (Taft(llappeob the <~,
ing property. R.estatement (Second) of rupt.ey court's disrni:lw of his suit to
Trusl.'l § 283. from S & S Com an S & 5) ents
IN RE HANIILTO~ TAFT & CO. 287
CUeu!.:! FJd l!.5: C~CLr. 1995)
m.:Jde to tile Internal Revenue Senice)(improper diversion of fundS) and Tm's
:>1766.1
.'.,'':
un behalf of S & The trustee also appeals clients filed the..im:ol~anknt~peti·
5 had jurisdiction to re-
:ill! court's deniaJ of his mQtion for partial non th'!LZ~ rise,_to this ::u:ti.Ql1,.-,>-
:ucruptcy trustee's motion :'1J.ffimar\" judgrnenJ;.. The ouestion ~f~sen~d
......... judgment in preference G:J);othtiSpects of the ap!?":lj)is \\'h;ther ~e In ~1arch, just prior to the filing of the
on issue that trust fund :none)' Taft paid the IRS 00 behalf of S & S bankruptcy petition. S & S was notified that
r to IRS on behalf of ~ e\'er the orooenv of the debtor within :t. was going to be audited and requesr.ed that
:h whom debtor had con. . . Bankrt
~"e ",.,rung ol'p'G,uue , "" ,...,1,
["'_.J.o,: ::/-fh Taft prO\·ide proof th:lt S & S's payTOU taxes
II t,,-xes and prep""" :ill ~ 1 C.S.C, § ,54j(b), kAJ.:- )1'/;'... '?nf,J"'1' /";&.".r./- ?;ere up to date through 'the end Df Janu2.I"Y·
e property of debtor for Ct(- DIC-dr''''"fii,·;e.,,, ,~~ /fIa't<1J/i..,) .7~i"'''· in truth. Taft had withheld m'o pa}'TDenL3
~ce purposes after trial on :'rom the IRS that had been due on JanuarY
I
rt of Appeals reversed dis- ! 7 and 24. Howe....er. in order to conceal tris
I of trustee's complain~ TI,. relevant facts are not in disputeJ'i) :'rom 5 & 5, Taft immediately issued cneck;
._~..!r of law trustee could T:'Lft t,;oncr::lcted \\ith S & S and 286 ot.her for the missed payments i.TJ the amount of
r:.or': -~nt funds paid to client:) to pay the clients' federnl. state and ,7,632.269 and sent 5 & S proof of pa)1TIent.
..ng preference peri. :.x-.l1 pa)TolI ta.'es and prepare all the relE'- .-\.5 a result, when the bankruptcy petition
,d t,,-xes to debtor \\ith. \~t reports, As considention. S & Spaid .-as filed, S & S had ani)' $158,929 in clain;s
.or to hold funds in trust; TJJt the amount of the ta.\':es ill advance of againSt Taft ior unpaid taxes. Taft's other
:"l.' due date Df the ta..'(es which enabled Taft
f ~urnmary judgment """'aB clientS .were l:ss fo~~nate-their.~n~aid'~"(G 4"
lie e.xercise. '" ":l.'t ~ he benent of the use 1)( the funu3 -:-5 total over ~90 million dollars, NO jJ ffi'li!Qn ..r.... ~!
::lr:.ng the inten'a1 bern'een the date it re- '1f which is attributable to taxes that '"ere ;; ·-"'t.1~
=06025 .%!.... ed the funds from its clients and the date ::lOt paid fQr Januanr ... ,;;~(;
motion for sum~ :1 paid the ta.,... Thus. Taft was paid ior its '~
. order since COI15e- 1IeT\iCe:3 from the "noat" on S & S's money. The trustee filed this action to reeQ\'er
chat case will go to trial; :'rom S & S the January ta., pa)1TIents made
The funds Taft received from S & S and its
. . e\iew of such denial is "'t.ht>f clients were not placed in separate
oy Taft on behalf of S & S to the IRS. S &
'locutory appeal. . S moved for dismissal, under Rule 12fbJ(6),
.scrounts with the e.''\:ception of funds from
"'5Uing that the funds paid to the IRS ",ere
=769 "''T] clients which had speciiicolly contracted
~eld in statutory trust under LR.C. § -;-001
.. , Jry appeal from deoW ~OT >em-egoted treatment of their funds. .all
and, therefore. were not property Qf the
ry judgment is not taJ<. Jther funds were CQnuningled and used bv
debtor. The trustee, in turn, moved for par-
'la..ry :·'dgment. is revieW'B~
T=t.it lor its OVoi1 purposes until paid to tjle
tial summary judgment seeking a determina·
:.4ting: authorities as the ta..\':es beeame du~.
nn :dgment. :ioo that the funds used to pay the IRS "'ere
.\ppro:timatelv 56 billion of client man,,·
property of the debtor under 11 USC.
~C'wP.rl throu"gh Taft's accounts annuall):.
S 54;[b), The bankruptcy court disrni.-..-ed
md Patricia S. ~ar, Feld· Howe\'p.r, because of had investments and
:he complaint and denied the plaintiff; mo-
L~li.ne. San Francisco, CA. ><her improper handling of these funds, Taft
:iDn Jor partial summary judgmem.. The dis--
tD have dramatic cash flow problems
::L."T:.e
:::Ct COUrt affirmed the decision. T:'1e O"".l5t-
"""" :011 behind in making t;lX payments 00
1, Latham & Watkins, Sao ee appealed the dismissal and the deoW of
""half of its clients. It then began selectivE'-
l'(obert D. Crockett, w· portia! summary judgment.'
:)' "ithhoJding federal payroll ta."s during
Angeles, CA, for def.",..' .
:he fIrst month of each quarter in order to We review both decisions de nDVD, In;e
- thOBe funds to pay delinquent ta.". from Stet''''Y.f- 107 B.R. 702,-705 (9th-Gir, B.-\.P
u ruted States District :he prior quarter. Taft attempted to conceal 1989) ~(decision to dismiss complaint under .
.." District of CaliforniL . :h<ooe f""ts from its clients. But in March, Rule 12(b)(6) reviewed de novo); In re Srn
19!Il. " former Taft comptroller disclosed the EngllJ.n:J- Fi:lh. Co., 749 F 2d 1m, 1280 (9th
S, THOMPSON, and t. Thes.c: f=-c:Ls :u-e derived from the affidavits p~ 1.. The trustee also argu~ that in rulicg on the
~ in the context of 1l11~' tnlStee's motion for motion to dismi.s.s, the bankrupu:y judge improp-
~~;al "umman' iudg~el),!-- While the summ::u-y erly considered e:vidcncc outsid~ the:. compl~J1[
JUdgment papers provided details to supplcmcm without converting the motion to Jismiss into a
the pleadings, the appellee does not dispute these: :notion for summary juugmenL SecaU*" we ~~
8dd,uonal facts and agree5 that they do not male- verse the dismis.sal on ot.her grounds and erda
l"laUy affect the outcome of the motion to dlsmis.s, the district coun to enter partial summ.uy judg·
mt:nl in the lrUStc:c's favor. we: need nOl addn:-:>.s
this issue,
000132
288 ;;J FEDER,\L REPORTER. 3d SERJES
Cir.19S...0 (sununary judj..,'l'T1ent reviewed de no S.Ct. '''''S, 226-1. no L.Ed2d 46 (1990).

no....o). However, after collection. the O1l5t·fund UL"~
es ' ...· ere tr"J.ns(erred to Tait \loithout requiring
II Taft to ;;egreg-.lte tho:iie funds and hold them
in trust. Under nannal principle:i of trusts,
OJ Section ~j(b} permit.s the t.ru.stee to if :l trustee tn..n5fers trust property to a
reco....er ~nsrers L1f the debtor's property third P:J.rrY, the third party holds that prop-
when the trmsfer occurrerl \\ithin the 9U--day ~rty free oi trust unless the U'J.Stee c:ornmit·
"preference period" prior to the filing of the ted :.l breach of trust in convE:ving the prop·
bankruptcy petition. iJ the tr.lnsfer was made
for the benent of one of it.:; creditors. J If the
en)". Re:H.a.tement (Second) oi Trusts 2S3 *
119591: IV Austin W. Scon & William F.
requirements of ~ &.li(h) are met. the trustee Fr::ltoher. The Law of Trust;; § 2S-3 \4th ed.
may reco....er the value of the property trans- 1989), Thus, absent a breach of cruSt. \\'hen
ferred from either the creditor on \vhose a trustee enters into ::l contract \nth ::J. third
behalf the tr:lnsier \l,.":::LS made or from the party, any trJ..5t funds tr::J....1'Jsferred to that
party to \.... hom the tr::lI1:5fer was made. 11 third party in consideILltion of the contr'::J..ct
U.S.C. § 550101(1). In this C:lSe. the,." is no are tr:lnsferred free of trust unless the con-
disputE that the ta..\: pu}ments the trustee tr':lct prO\ide:i th::J.t· the transferred funds
seeks to a....oid were made for the beneiit oi S shall be held in trust.
& S \\ithin the preierence pl::!riod. However.
S ..\: S ar.':,rue~ that .~ ;~-l.j(bj doe::; not apply [-11 In this t:ase. S & S does not contend
because the r..a..x payments Taft transferred to that it committed a breach of O1lSt by con-
the IRS were not property of the debtor, but \'e}in~ the trust-fund ta:,(85 to Taft as consid~
r:J.ther funds held in : J. ::3t.:ltutory truSt for the eradcn for Taft's promise to pay S &: S'S U"(
benefit of the IRS. obligations and prepare the appropriate re-
S & S argues that the funds paid to the portS. Nor does S & S ::J.ttempt to .:ihaw tPat
IRS by Taft were funds held in trust pursu- it arranged \\ith Taft for the o-ansferred
. ant to Internal Revenue Code § 7501, which funds to be held in trust. While '"0 of Taft's
prol,ides: "[\l,'Jhenever ::J.ny person is required clien ts arranged to have their rrust-fund ta.'C
to collect or \\ithhold any internal revenue pa}"tTlents kept in segregated accDums, S & S
t::L'{ from any other p!:!rson and to pay over and the other client;; did noL Ins"ad, Taft
such t:l."( to the United States, the amount ui extensively commingled all of the funds it
the Ul.' so collected or withheltJ shall be held received and treated the ru"1d:::; a=i its o\\."
to be a special fund in trust for the Uruled :lSSets, using them to pay irs uperating E.":-
States:' ~6 L.S.C. § 7.;01la). penses and in.. . esting the fund.5 ror irs OV.Ll
benefit. Therefore, under orriinary princi-
[2.31 It is clear that the funds S & S ples of trust. T",l did not hold the funds in
withheld from its employee:::; were impressed trust. Thus, the funds were propcrty of the
in a statutory trust when collected. SCglcr L'. debtor and the January ta'C payments were
/ute.nwl Rcrenu.e Sen.·ice. -196 t:.S. 53, 01-62, subject to avoidance.~
3. In full, the sr::nute provides: (5) [h::n eO:J.bles such cn:=ditor to n-ceive more
than such creditor would reo:ive if- ....; -:II
the trLlStce mav avoid any lr:J.nsfcr of an inter·
(A) the ca:;.e were a C:J.5e under chapter 7 ol ~
c~t uf the deb;or in propcny- this tit.h.:: .::!
(I) to or for lhe benefit of a c~ditor;
. (8) the lr.:J.nsfer h::ld nOl ~ m:J.de: and ~
(2) for ur on act.:ount of :10 antecedent debt
(e) such creditor recl.:ived p:a\ment of such j
owed by the ueblor before such tr.:J.nsfer W:J.S debt to the c;.;tcnt prm'ided bv" the provisioru "'i
rt1:1dt:: . . 1-:d
of this title. ~
(3) m:uie while the: debtor was insolvent:
11 U.S.C. § 547(b). .: ~
(4) madc."-
CAl on or within 90 dOl~ before the dOlte of 4. S & S assens tholt under on:linary principlo cl 1
the filing uf the petition: or trus~, the trust fumb n:m.o.in trUSt funei5 even ~
(S) between ninety 1.l:J.y.s .:mel one year befon: while in po~s::;ion of an intcrmcJi:1ry, citinl :
the dote of the filing of the petition, if .such B~t:iu and E, John Vi,O. Inc. v. Finl ~
cn:ditor ::lt the time of such tr.:m~fer wa:s an Ba"k or
.\Jwy/amJ, Bankr.LRptr. 7-l.012. t99~.
iruider; ::lod WL 56335 (8anh.D.Md.1991l. In both ~
000133
IN RE HA",nLTON TAFT & CO. 289
C1~ .. ~3 F.3d 285 (9thClr. 19951
110 L.Ed.~d 40 (1990>.
::i ~\:
S argues, however. that such common lIO S.Ct. at 2266 (quoting 124 Cong.Rec.
tian. the trust-fund ta:s::.
~w l"'t.!~aictions were abrog:J.ted by Congress 32393, 32417 (1978) (remarks of Rep. Ed-
-, to Taft \\ithout requiring
:n t..'n:lI.:ung § 7501, relying upon the Su- wards)). The Court held that a reasonable
"'~se funds :lJ1d hold the.m ....;.
nn'lllt.! Court's decision in Begit'r. In that assumption in the case before it was that
nal principl"~ of trusts, ~-...L..;.t'. an :lirline declared bankruptcy mer "[t]he debtor's act oi voluntarily paling its
- ~rs trust property to a i";l~in"l: l:ertain v,.ithholding ta:tE:; to the IRS. trust-fund la, obligation _.. is alone suffi-
.rd party holds that prop- The airline had not kept all of the trost-fund cient to establish the required nexus ben-~n
~ss the tn.lstee commit,.. in a segregated account. but had paid a
:.;L.,\!.':; the 'amount' held in trust and the funds
in conveying the pro~ :-ub.-:tantiai pardon of the ta.~es out of its paid." lei at 66-li7, 110 S.Ct. at 2257.
(St::connl of Tru~t5 § 2S3 ..."t'n~ral funds. The tnl5tee attempted to
"'. Scott & \Villiam F. :"l"':...l\"~r from the IRS all oi the ta."\es paid S & S argues that Begier compeLs Lhe
:' Trusts § :?S3 14th ed. ,::.lr.:l.l! the preference period. The IRS conclusion that the funds paid to the IP.5 in
:t :l breach of trust. when ,';;UI1"'U that the taxes paid by the banlaupt this case were funds held in statmor:: t:"J.Sr.
'..0 a l:ontract \\ith a third l'rnpiu:ver were never propeny Ll( the debtor. However, the holding of Segier is not ciir~t
ls tr:lnsferred to that hUl in~teud were funds held in trust for the Iy applicable to t.h.is case because dus c.a...:::.e
__ ~~tion of the contract !l\':-; pursuant to LR.C. § 7501. Under com- does not invol .... e a debtor "volum.arily pa:.~. .!lg
~ C 15t unless the con- :nun i:J.w principles. the IRS would huve been its trust-fund tax obligation." lei at 66. 110
:.. transferred funds ,"mP<'lIed to trace the funds it was paid back S.Ct. at 2267 (emphasis added). Ilt5teuL
:.1 ~r.L' original trust-fund ta.'\es \\ithheld from Taft was paying the tax obligation oi a tl'.i!-d
"~. :.:-.~ t:mployees' pay. However, the Court party pursuant to a contr.:lct. S & S arg-..:e5
S & S rices not contend "·il~r\"{'d the legal ch.::J..ncc.eristics of a sUm- that the fact that there 'tI."'aS an intermeciia..-::
:-eaeh IJf tn..l::it by conw "..r:: :r·...i:;t m:.l~· be derined by CLlngre~s in :.l in this l::lSe is not a ;:iignificant difference c..::d
a."(e5 to Tait as consid- ".;'-:l~'
that. is "rari.ically diiferent ITom the com- that the rule of Begier still applies--once :..~e
'omio:: o to pay S &; S's tax ::lon-iaw paradigm." 49£ L'.5. at 02, 110 funds are paid to the IRS, they are cooci~
appropriate re- :'.LL at :!264. The Court DOted that, con~ sively presumed to have been the tI"USt prop-
.ropt t.o show that :"-.lry to cornman law trusts.. § 7501 created a erty. However, the fact that the debtor ~
aft for the transferred :r.l.St in the amount \l,ithheld, not in the this case is a third party to whom tI1.l5t-fund
CUSt. '.'ihDe two uf Taft's -"-'tual property withheld. It concluded, t.a-"<es were conveyed as consideration for a
'e their trust-fund tax :.h~rclore. that 'Congress had intended to ab- contract is of paramount importance.
" .gated accounts, S & S ~l.."::He the strict common law requirement
3 did not. Instead. Taft ~t the putative trust funds paid to the IRS The exception to the common !a~ 'C!""'...a.t-
j all of the funds it .,.. directly traceable to the actual dollars ment of tnlst.s elabor::lted in Beg1er. was j:L~
he funds as its own ·.ithheld from the employees. Instead. the tified by the language and purpose of § ;-001.
:0 its operating ex. COUrt ;tated. Congress intended that "[t]he However, these factors do not requL""€ '±e
T r .unds for its own roun..:; should pennit the use of reasonable E."<:ception to the common law that S &: !.5 .s
lcier ordinary princi. umpr.ions under which the Internal Reve-
:l......... seeking in this case. The statutory lang-;ag-e
~ .10t hold the funds in :'lue ~el"\ice. and other ta.-ring authorities, can clearly indicates that the statutory t:="..l5t :s
ds were property of the d..I"'~onstr::lte that the amounts of ~ithheld created for the benefit of the IRS. not ti:.e
. ta,x payments were '.J..:tf.":-i arc :Still in the possession of the debtor la'<Payer. See LR.C. § i501. We 5ho!id
:u ~!:e ClJmmencement of the case." lei at 65, not, therefore,. easily impute to Congress 81
-h creditor to receive more ~.I;'>oC'S.

trust funds we.e held in : :I bank :::Iccount. O1tT:U1ged lo have some of the COT1.SlrUcdoo :.~
lould l"'ecdv~ if- .. "i -& .s
3PP.:::lrently contends th011 placing trUSt paid din:'ctly [0 the beneficiaries. rath~r ti1J.n
:ase under chDpter 7 oJ. lunds in :1 b:::lnk. 3.ccoum is equivalent to paying h:::l...· ing th~ funds pass through the COOtr.lCtol:i
UU1 the funds (0 a third parry as consider-aion for :lccounts first. The issue before th~ court ....':15
!-lau not been rn<lde: and ~ Ctmtr:JcI. However. depositing trust funds in OJ.
~k. :::Iccoum is not OJ. tr.losfe. of trust property to
whethl::r feder.ll bankruptcy law would recog:--.i==
- -cived payment of ;5Uch a selte-law st::ttutory trust. The coun hdd on J.
vidcd by the provisions ... third pOiny \o,;thin the meaning of § 283 of the m::llte. of fedl::ra.l law that funds in sLate-c~
~1.alemcnL SCltulory trusts we~ not property of the debtor
S &: S 01150 n:lies upon Selby v. Ford Moror Co.• under e 547(bl. Id. O1t 647. It also implicitf:.·
~90 F.2u 642 (6th Cir.1979,. But Selby did not held that. :J..S a matter of state lO1W. the ~
. ordinary principle:s of
1.tn"Olve money tr.:U'l.Sferred by the SUWtory truSt- paid to the subcontr:Jclo~ was property !.hal ~
moin trust funds even
~ 10 ;"l third p::lrt:.. Inste:td. the ClSe involved : :I contmcto. held in 01 stal~·law St01tu[Ory rrw.t.
;"lcnncdiOiry. citing lot:chiJ,{::In l>t01lUtc which Slated that ::II! money . The court did not consider whether the bc: ~t
First Amolcart p.:al(.J mtn ::l budding contr.3ct fund was to be held the money was ne.. · ei p01id directly to the suru:..>-
•. 74,012. 1991 tn InL~t for lhe owner of the building and the ry trustee deprived the funds of thei. St:ltu~·
[n both these" -..beOntr.lcto~. In Selby. the ~ontraetor trust srarw. unda the Michignn statutI:..
000134
290 5.1 FEDERAL REPORTER. 3d SERIES
intention to alter the common bw of trusts di'ltrict court erred in ~ting the motion to
wh~n doin~ ::'0 \vouJd not materially further dismiss.
the intere::H...'i llf the beneticiary ot' the statute.
)lur ~houlc.l we ~'\tenLl the hollling" in Begi- III

"r more broadly than is nt:::ee::osary to accom- [51 Tne also appeals the disaier
t:ru.ste€
pU::oh it.:; purpo:;e:;; \\'h~n tioin~ :-\0 necessarily court's cie~or the trustee's motlo:l lor par~
undermines the Bankruptcy C0de'::; core tial ~umm:.lr'Y judgment. Rather than ad~
principle of equality or distrihution among dre~s the IT:t:'r1ts of the; portion of the appeal.
l."redito~. In Bf'.fTit"r. the CuUrt found :::m S & S me",ly ar!!Ues that this court lacks
exception to the common la,,,' of tn1~t.."i was jUrl~diction to re\iew a denial of :3ummary
nece~sary to effectuate the con~::,siunal in- judgment.
tent tbt the IRS not be deprived ni fund,
thut hud heen opecifically withheld iram em· [6, 71 [n general. the denial at" a motion
ployees' pay for the e..'qJre::iS purpose of pay- for summ,1...ry judgment is not a final order
ment to the IRS. Had the tru.,t·fund taxes since the C'Jnsequence of the denial is that
been considered property nf the debtor in the case \\ill go to mal. Ordinarily, re\;e",,'
Bprrier. tho IRS would have been compelled of :mch a denial is sought through an inter-
to recei\'e p:rrtial rayment of the t:.L'\es rlue locutory :iF?€a.l. However. ·.\·hen interlocu-
like all the other creditor;;, However. \vhen tory app~~ ~ not taken. :l denial oi ~umm::l.I'Y
the bankrupt dehtar is u third party and the jucigment :...:: re\iewable upon entry of:l finaJ
employer remains :::olvent. the concerns of judgment. .Warnn P• •4elna Lije In•. Co..
Begir:-r dissolve. The ubility ai the IRS to 872 F.2d ':!96. :lOO-Dl 19th Cir.l989). WhUe
collect the ta.~es owed- by Taft's clients is We v.ill often decline to engage in the "'point-
~imply not implicated in this case. S & S less ac:J.der:'Jc exercise" of re\iemng :l de:nial
and Tuft's other clients remain liable to the ai sununary judgment ufter a trial on the
IRS and. us iar us we know. are financially merits. Lllm 1.'. City and COlLnty of HOTUJlu~
able to make the paymen ts. The IRS ",ill be 17" 963 F 2d 1167, 1169-70 19th Cir.1992),
able to collect the taxes owed to it regardless such :l C':::L-~ is not presented here. :~ _
of whether the trustee is able to avoid Taft's There are no disputed i55ues of mar.erial
last-minute payments on behalf of some of its fact. 6 \Ve have held as a matter of law that
creditors. :'vlare import;Ultly, the money re- if S & S =nsieITed its tru.;t·iund ca.,.. tv
turned to the esr.:u.e through the avoidance is Taft without requiring Tuit to hold. those
money that can be paid to the other creditor~ fund::; in tr.1.St. the trU:itee rna \. recorer from
emplo~. . ers and ll$~d to pay thf:!ir outstanding
S & S the funds p:tid to the IRS on its behalf
t:l.'( obligations.:i
during the preference period. 5 & S disa-
In sum, BefJier does not address the cir- \'O~"5 any attempt to show rklt tr"a!1Sfer ~ .
L1Jmstances of t.hi:; case. I n the ab:;ence of funds creared any common l.:l\V crust.. There- ~
any dear polley reason iar extending Begier. iare, par...al summary judgment should be ,
we apply the common lawai trusts and hold entered in iavar ai the trustee. holding that.)
that the iunds paid to the IRS on behalf ai S the funds paid to the IRS were the propertY 1 .~
& S were not held in statutory trust and. ai the deb",r under § 5.J7(b). -~i
thu.s, the parments are avaiduble under 11 The dLmie:t court's clli;rni=l uf the cotI>:~
...
..~~
~
U.S.C. !i 547(b). Therefore, we hold that plaint is REVERSED. Upon RE:.iAND,:

~
,. Nor does !.his C:lSe' involve an attempt by the some: other client's. were paid just before
lrU~tee to recover pa.vmem from Lhc: IRS. We: banlr.ruptey peti tion was fih:u. '?~
na:t.! not decide. I.hcn:fore. whether the: pulicy ,I .~.,.
·
••• ...,:11
c:onl:cm:<; anim:llin~ 8~xi~r would forbit.! the 6. 5 & 5 3SSl:1""tS in passing: that th~n:: may ~ ~
tr\1Stee from collecting the avoided pUyTnC:nl!l. a {actU2l d.i:sPUtt: about S OL 5'.1 ability. to a~>d
from thc: IRS rather thun from S ok S. lrutend. the fun.cb through Taft's accounU. Su::u:.e·:
we only need to decide whether 5 &. S i.:l to holding ~ not depend on whether nu:b
i
receive preferential Lrearmcnt .:limply beesUSC' of tr.1cing is pos.:lible or not. n.ny such facro.al db"
the fonuiwtU acddent that iu laXC:S. ralher thun pute ~ not material. .~}tk.1
00011_"
I'
u.s. v. VER.'lERS 291

Cite u.B F.Jd l'1 IIOth C1r. I~<j!l
:.b< .!i.<trict court shall enter partial summar)' 1. Criminal Law =1139, 11-1-1.13(3, 5, 6),
~ent in fnvor uf the trustee. 1159':!(j)
In determining sufficiency of evidence.
court re\ieW5 record de no"-o and asks onlY
,,-hether. taking evidence. both dire<:t and
Jpeals the distr'ct":ifr w'--__-"
~ ttr .,UloIDI. ;Y"iH~
circumSUlntial. together v.ith reasonable in-
'. motion (or n-..':'~'~: Q
,
~. -..$;. ferences to be dr::J.Vrl1 therefrom. in li~ht most
lther than ad-'':; favor::Ible to government. reasonable jury
-:1On of the appe:sJ. ~'-~
could find defendant guilty beyond re:!.Son-
[his L"OUrt ~ .:. able doubt.
aJ 0 f 5tlI1UlUry "-
~. Drugs and :"farcotics C=J73.1
C:\lTED STATES of America. To support coO\icdon ior posses.sion
--bl of a rn~ ~~
t a nnal ortler ...",
,. . Plaintiff-A ppell ee. \\ith intent, government mU.:it prove knO\\i.ng
pos.session of controlled :mb5tance \\;th intent
:ne rl°nial is thot ~ v
to distribute. although possession may be
Jrc .it~,
y t1:'r"ie'w;j;:.
4 constrUcti....e ratber than actual.
L'U'Uan F. VER:'ffiRS, Defendant-
'ttu,l£h an in~-~ ,\pP"1lan t.
':hen interlOCOoo -:-" 3. Drugs and :-<arcotics =73.1
ienial of ::.umrrwj '.'~ In order for indhidual constructively to
~ntr:,,, "r :1 fi:u.l ... l-:-;ITED STATES of America. po~sess property. he must knO\\indy hold
L iff! 11l:L Ca.. . I' Iaintiff-Appellee. power .:md ability r:o exercise dominion .:lnd
L 11'.19S91. 'W!liJo .. control over it.
v.
'he"point' ~ 4. Drugs and Narcotics =73.1
5 a dem.il GUeulinia VER~RS also known as
_ _ trial 0 n thii "?,, Goessinia Holland, Defendant- For purposes of co miction of possession
._~ of narcotics. "'constructive possession" is de-
Qll11ty of Honel ... :~ Appellant.
fined as appreciable ability to guide destiny
19th Cir.l99'.!l,·i
9-1-5029, 94-5030. of the drug. .
~~
:-; 0 ••
here.
3:::;ues of
- -'''''i
IDAt.e.riaI ~ Cniled S~tes Coun of Appeals,
See publication Words and Phr:lSe5
for other judicia.! constructions and def-
-~
Tenth Circuit. initions.
tel' of law ~~
.-fund taxe:! tI ...~ 6. Drugs and :'Iarcotics =107
.~
,t >'old thOOl'~
April 11, 1996.
Jury could reasonably inier that defen-
_.\\ .:over from--=~ dam: had constructive pos.5ession or cocaine
S on its beluIr'j! found in his former bedroom and kitchen.
IJU.
- ~,- '"
S & S~.~ l..}.!II!nd:,mt and his mother \\iere convict- despite testimony that he no longer .slept at.
that transfer rJ ""
..• """Ii
.n Lhc Cnited States District Coun for the
......:j
residence, in light of e\idence that he contin-
trus L Th~.:ji \"rtl:cm Di.<trict of Oklahoma, H. Dale ued to keep his posse::sions at residence. had
ent should ~~ ..., I ..... ,x.. J., 'JI \'::u-:ious drug olTenses, and they
dominion und control over bedroom, and had
'tee. holding thJt ~:U,-d. The Court of Appeals. McKay,
unfettered access to kir.ehen.
-e the propert1: ':'l'nUt .Judge, held that: (1) e'idence sup-
~ deiendant's conviction for possession 6. Drugs and Narcotics e=>123.2
..,u, mu,nt
to distribute; (2) evidence that Testimony that amount of cocaine recov-
b:Jlht-r' \I,'us aware of presence of dru~ in ered was in e."tcess of amount which might be
.... hame would support alcling and abetting possessed for personal use supported findlng
just """ictJo n hut did not show intent to distrib- intent w distribute, when coupled "ith pres-
J. ""': fa) e;idence did not show that mother ence of scales. razor blades. guns and ammu-
"""'to.ined home for purpose of drug manu- nition, large amounts of cash, and notebook
!>.-turinJ<. and r·l) mother was not entitled to in defendant's bedroom.
'"""'rom ce .
7. Drul:" and Narcotics =73.1
A!lIrmed in Part. reversed in part, and Defendant's mother could not be convict-
'""-Jed. ed of possession with intent to distribute
000136
Memonmdum
To SAC, SAN FRANCISCO (196A-SF-93255) 6/9/95
From ~f\14 I b 7 i:
=~: C ARfLSWONG, AKA CHIP ARMSTRONG;

J FORMER
Subject
i. _ OFFICERS OF
ON/TAFT, SAN FRANCISCO
ITSP, pEw (A); MAIL FRAUD
00 SlY
/
The purpose of this memo is to provide an update as to

the status of the above captioned lnvestigatlon. On June 1, 1995
captioned subjects appeared before USDJ Charles Legge for a
scheduled pretrial conference. The trial was to commence on June
26, 1995. At the conference, Armstrong requested a new attorney
and the Judge granted this motion.
The next court date is scheduled for July 6, 1995 and

the purpose of this appearance lS to set a trlal date. It is
antlcipated that the judge will set a trial date several months
from now In order to provide the new defense counsel wlth an
opportunity to prepare a defense. The Judge, in open court
suggested to the government counsel that they once again flle a
speedy trlal act memorandum with the court.
In the interim trial preparatlon is contlDulng More

specifically, pretrial wltness lntervlews are belng conducted for
vlctim companles around the country. This however lS being
accomplished 18 a unique manner. The maJority of the wltnesses
are belng lnterviewed Vla video conferencing Thls lS being done
at the Reglonal Offlce of the Internal Revenue Service (IRS) In
Oakland. The obvious advantage to the government and thus to the
San Franclsco travel budget lS one of cost savlngs.
It is expected that it will be necessary to travel to

Dallas wlth the AUSA handllng thls case to lntervlew a number of
witnesses. This will no doubt take place in the next sixty days.
LEAD· Wlll continue trlal preparatlon.
r ~.,-'
"1__ .1
,.' .-:c..'
.'t J ",
i.l--:""
•
__ ;
I,
1- 196A-SF-93255
~/dbC
Memorandum
To SAC, SAN FRANCISCO Date 8/9/95
Subject CONNIE CHIP STRONG,FORMER b7C

PRESIDENT, ILTON TAFT
SAN FRAN SCO CA'
~~~~~~~~~FORMEROFFICER HAMILTON TAFT
FBW (l\< ; MAIL FRAUD OO:SF
The purpose of this memo ~s to provide an update as to

the status of this case. On August 4, 1995 a status conference
was held in open court before USDJ Charles Legge. The result
being that Judge Legge granted another continuance to the
defendants unt~l September 5, 1995. On this date the case is
supposedly going to be set for trial. The prosecutors in this
matter antlcipate that the trial date wlll in all probability be
set for the first part of next year.
In the last several months we have continued to

lntervlew prosecution witnesses In this matter via
teleconferencing. The witnesses we have been concentrat~ng on are
the people who dealt with Ham~lton Taft representatives at the
various victlffi companies. Generally speaklng, this matter has met
with success and has resulted in sav~ngs to the government by
cutting back on the need for travel throughout the United States.
It is ant~c~pated that further teleconferencing of our

witnesses will commence once again in September when the trial
schedule of AUSA George Hardy has been completed.
~)196A-SF-93255
YKM/dbc
Memorandum
To SAC, SAN FRANCISCO D,te 8/9/95
From ?~I,--__-:---_
Subject CONNIE CHIP STRONG,FORMER
PRESIDENT, ILTON TAFT
SAN FRAN SCO CA·
~~~~~~~~-1FORMEROFFICER HAMILTON TAFT
FBW (1'. ; MAIL FRAUD 00: SF
The purpose of this memo ~s to provide an update as to

the status of this case. On August 4, 1995 a status conference
was held in open court before USDJ Charles Legge. The result
being that Judge Legge granted another continuance to the
defendants unt~l September 5, 1995. On this date the case is
supposedly going to be set for trial. The prosecutors in this
matter ant~cipate that the trial date w~ll in all probability be
set for the first part of next year.
In the last several months we have continued to

lntervlew prosecution witnesses In this matter via
teleconferencing. The witnesses we have been concentrat~ng on are
the people who dealt with Ham~lton Taft representatives at the
various victlID companies. Generally speaklng, this matter has met
with success and has resulted in sav~ngs to the government by
cutting back on the need for travel throughout the United States.
It is ant~c~pated that further teleconferencing of our
witnesses will commence once again in September when the trial
schedule of AUSA George Hardy has been completed.
~)196A-SF-93255
YKM/dbc
.. :Ifl;1,
, ..
IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
No. 93-15455
IN RE: HAMILTON TAFT & COMPANY,

,
Debtor
FREDERICK S. WYLE, TRUSTEE,
Appellant
v.
S & S CREDIT COMPANY,
Appellee
ON APPEAL FROM THE JUDGMENT OF THE

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
BRIEF OF THE UNITED STATES AS AMICUS CURIAE

ON PETITION FOR REHEARING
On May 23, 1995, this Court invited the Government to file
an amicus brief "addressing whether the opinion filed in this
case, In re Hamilton Taft & Co., No. 93-15355 [sic], slip op.
filed May 2, 1995, adversely affects in any way the interests of

the IRS in collecting federal taxes." The following brief is
sUbmitted in response to that invitation.
STATEMENT
The case is an appeal from a District Court judgment
~ffirming a Bankruptcy Court's refusal to treat a payment of
federal taxes as a voidable preference under Bankruptcy Code (11
000154
- 15 - ,
CONCLUSION
For the above stated reasons, this Court should grant the
petition for rehearing and affirm the jUdgment of the District
Court affirming the Bankruptcy Court's jUdgment insofar as it
refuses to treat payments made by debtor for S & S's trust fund
tax liabilities as voidable preferences.
Respectfully submitted,
LORETTA C. ARGRETT
Assistant Attorne General
L
c:::c.. <1. (oJ I) (L[LLtLA',c,J
GARY R~ ALLEN 1 (202) 514-3361
GARY D. GRAY (202) 514~3005
PAULA K. SPECK (202) 514-4329
Attorneys
Tax Division
Department of Justice
Post Office Box 502
Washington, D.C. 20044
Of Counsel:
MICHAEL JOSEPH YAMAGUCHI

United States Attorney
AUGUST 1995
000155
J
Page 3
68 F.3d 337 printed in FULL format.
IN RE: HAMILTON TAFT & CO., Debtor. FREDERICK S. WYLE, Trustee in Bankruptcy of Hamilton
Taft & Co., Plaintiff-Appellant, v. S & S CREDIT CO., Defendant-Appellee.
No. 93-15455
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
68 F.3d 337; 1995 U.S. App. LEXIS 28742; Bankr. L. Rep. (CCH) P76,492; 95 Cal. Daily Op. Service
8031; 95 Daily Journal DAR 13763
October 12, 1995, Filed
PRIOR HISTORY: [~1] nc. No. CV-92"()2996-CAL. OPINION: ORDER

The Court is advised tbat tbe case has been settled.
Original Opinion of May 2, 1995, Previously Reported
Accordingly, the appeal is dismissed as moot and the
at: 1995 US. App. LEXlS 9848.
decision filed May 2, 1995, appearing at 53 F.3d 285,
is vacated.
JUDGES: Before: William A. Norris, David R.
Thompson, and-Stephen S. Trott; Circuit Judges.
000137
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Document Links:
Start of Document
CASE SUMMARY
PROCEDURAL POSTURE:
OVERVIEW:
OUTCOME:
CORE TERMS:
LexisNexislRl Headnotes
COUNSEL:
JUDGES:
OPINION BY:
OPINION:
SHEPARD'S®
196 B.R. 532, *; 1995 U.S. D/st. LEXIS 15576, **
IN RE: HAMILTON TAFT & COMPANY, Debtor. FREDERICK S. WYLE, Trustee for Hamilton Taft & Co., Plaintiff/Appellant,
v. HOWARD, WElL, LABOUISSE FRIEDRICHS INC., a Louisiana corporation; HOWARD WElL FINANCIAL
CORPORATION, a Louisiana corporation; LEGG MASON, a Maryland corporation, Defendants/Appellees.
No. C 95-1612-SI
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA
196 B.R. 532; 1995 U,S. Dist. LEXIS 15576
October 12, 1995, Decided

October 12, 1995, FILED; October 19, 1995, ENTERED
CASE SUMMARY
PROCEDURAL POSTURE: Appellant trustee challenged the order of the United States Banli.ruptcy Court for the
Northern District of California, which granted summary jUdgment to appellee, in an adversary proceeding
against a securities brokerage company arising out of debtor's involuntary bankruptcy proceeding.
OVERVIEVV: Debtor company collected funds from clients and paid payroll taxes when due. Debtor was placed
in involuntary Chapter 11 bankruptcy when its principal absconded with funds. Debtor wired funds to
appellee, who used funds to purchase a treasury bill. Debtor sold the treasury bill to appellee based on a
"reverse repurchase" agreement. Appellant trustee brought suit c.£.!.lf-~!}.bng,,"9~frb9f,,'c,;;;,,.,,~,Ec:l:,I1~f~_:,~,,~,,2~11,:;~~~,p.
Appellant contended, inter alia, that the transaction rendered debtor insolvent~ -ann sought Eo·"te'cDver"THe
value of the treasury bill. Appellant further contended that 11 U.S_C_S_ § 546 (e) was inapplicable to the
transaction. Appellee moved for summary judgment, which the bankruptcy court granted, finding the
transaction was a "reverse repurchase" governed by an objective standard and statutorily protected.
Appellant challenged the bankruptcy court's decision. On appeal, the court affirmed summary judgment
because it found bankruptcy court had correctly interpreted 11 U.S.C.S. § 546 (e) and there remained no
genuine issues of material fact.
OUTCOME; The court affirmed summary judgment in favor of defendant appellee because the bankruptcy court
correctly found transaction was a "reverse repurchase" governed by an objective standard and statutorily
protected, and correctly determined that there were no genuine issues of material fact to be resolved.
CORE TERMS: repo, settlement payment, summary judgment, stockbroker, correctly, treasury, le9islative history,
nonmoving party, issues of fact, analyzed, genuine, entity, stock, repurchase agreement, genuine issue, set forth,
commencement, mar9in, fraudulent conveyance, bankruptcy petition, repurchase, clarify, lawsuit, wired
LexisNexis(R) Headnotes " Hide Headnotes
Bankruptcy Law> Practice & Proceedings> Appeals> Standards of Review> Clear Error Review
Civil Procedure> Summary Judgment> Appellate Review> General Overview
Civil Procedure> Appeals> Standards of Review> Clearly Erroneous Review
HNl In reviewing summary judgment, the court accepts the bankruptcy court's factual findings unless they
+- are clearly erroneous.
n.;'
Bankruptcy Law> Practice & Proceedings> Appeals> General Overview
lof? 9/18/200611:39 AM
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Civil Procedure> Appeals> Standards of Review> De Novo Review

HN2The appellate court must determine de novo whether facts support summary judgment.
±
Civil Procedure> Discovery> General Overview
Civil Procedure> Summary Judgment> Standards> Materiality
Civil Procedure> Summary Judgment> Supporting Materials> Affidavits
HN3Fed. R. Civ. P. 56(e) provides for summary adjudication when the pleadings, depositions, answers to
+ interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
h& genuine issue as to any material fact and that the party is entitled to a judgment as a matter of law.
Civil Procedure> Summary Judgment> Bundens of Production & Proof> General Overview
HN4In a motion for summary judgment, if the party moving for summary judgment meets its initial burden of
t identifying for the court those portions of the materials on file that it believes demonstrate the
"''''' absence of any genuine issues of material fact, the burden of production then shifts so that the
nonmoving party must set forth, by affidavit or as otherwise provided in Fed. R. Civ. P., specific
facts showing that there is a genuine issue for trial.
Civil Procedure> Summary Judgment> Bundens of Production & Proof> General Overview
HNSA moving party who will not have the burden of proof at trial need only point to the insufficiency of
t the other side's evidence, thereby shifting to the nonmoving party the burden of raising genuine
kM issues of fact by substantial evidence.
Civil Procedure> Summary Judgment> Burdens of Production & Proof> General Overview
Civil Procedure> Summary Judgment> Evidence
Evidence> Inferences & Presumptions> General Overview
HN6In judging evidence at the summary judgment stage, the court does not make credibility determinations
t or weigh conflicting evidence, and draws all inferences in the light most favorable to the nonmoving
u, party.
Governments> Legislation> Effect & Operation> General Overview
HN7 See 11 U.S.C.S. § 546 (e) .
±
Governments> Legislation> Interpretation
HNBTrue reverse repurchases are covered by 11 U.S.C.S. § 546(e).
±,
Bankruptcy Law> Estate Property> Contractual Rights
HN9Whether or not a transaction is a reverse repurchase is analyzed under an objective test.
y
;J,.."
HN1011 U.S.C.S. § 546 (e) covers a broad range of securities transactions.
±
HNllA treasury bill is clearly a security, and hence the transaction is a "securities transaction" under
± 11 U.S.C.S. § 5641e) .
HN12 See 11 U.S.C.S. § 546 (f) .
±
HN13See 11 U.S.C.S. § 101 (46).
±
20f7 9/18/2006 t t :39 AM

LexisNexis by Credit Card -- Document http://web.JeXls.com/xcnange/searcOIOlspaoc.asp!_q,=,umg-o"tlUJu 1...
HN1411 U.s.C.S. § 546 (e) applies to a specific class of financial entities including commodity broker I
... forward contract merchant, stockbroker, financial institution, or securities clearing agency .
."'..Iii
HN1511 U.S.C.S. § 546 (f) applies more generally to other "participants" in the repurchase market.
~
HN16Where one of the parties to a transaction is a stockbroker, the specificity of language would support
! application of 11 U.S.C.S. § 546 (e) over 11 U.S.CS. § 546 (fl.
HN1711 U.S.C.S. § 546 (e) / by its terms, clearly applies to repurchase of treasury bills; the alternative
i, section, 11 U.S.C.S. § 546 (f), will not be applied absent clear indication that the alternative was
a~ intended to be exclusive. Based on the language of the two sections and the cited legislative
history / 11 U.S.C.S. § 546 (f) does not narrow the scope of 11 U.S.C.S. § 546 (e) and nothing suggests that it
was intended to be exclusive.
Civil Procedure> Settlements> Settlement Agreements> General Overview
HN18"Settlement payment" is to be defined broadly. A settlement payment clearly includes a transfer of
t securities that completes a securities transaction. More specifically, a settlement payment includes
M a transfer of cash or securities going toward completion of a securities transaction. Thus, under 11
U.S.C.S.§546(el, repurchase of a treasury bill is a settlement payment and cannot be avoided.
HN19 Any "LBO exception" in 11 U.S.C.S. § 546 (e) is inapplicable to stockbrokers.
t,
For FREDERICK S. WYLE, Trustee, trustee of Hamilton Tall & Co., Plaintiff: Abram S. Feuerstein, L. J. Martiniak, Feldman
Waldman & Kline, San Francisco, CA.
For HOWARD, WElL, LABOUISSE, FREIDRICHS, INC., HOWARD WElL FINANCIAL CORP., LEGG MASON, INC.,
Defendants: J. Michael Keliy, Robert L. Eisenbach, III, Cooley Godward Castro Huddelson & Tatum, San Francisco, CA.
JUDGES: SUSAN ILLSTON, United States District Judge
OPINION BY: SUSAN ILLSTON
OPINION: [*533] ORDER AFFIRMING SUMMARY JUDGMENT
On September 29, 1995, the Court heard argument on plaintiff/appellant Frederick Wyle's appeal from the granting of
summary [*534] judgment to defendanVappellee, Howard, Weil, Labouisse, Friedrichs, Inc. ("Howard Well") by the
Bankruptcy Court for the Northern District of California. Having considered the arguments of counsel and the papers
submitted, the Court hereby AFFIRMS the Bankruptcy Court's decision.
STANDARD OF REVIEW
HN1tln reviewing summary judgment, the court accepts the bankruptcy court's factual finding unless they are clearly
erroneous but HN2tmust determine de novo whether these facts support summary judgment. In re Siragusa, 27 F.3d 406
(9th Clf. 1994): In re Weisman, 5 F.3d 417, 419 (9th Cif. 1993).
FACTUAL BACKGROUND
Debtor Hamilton Tall & Co. was a company ""hich collected payroll tax funds from its clients and then paid over the payroll
, .••..•••.•••...•. < .••.•., -.- _-.... -
3 of? 9/18/200611:39 AM
LeXISJ''leXJS oy L-reUll L-uru ~- UUl".;wut;m
taxes for them when due, relieving the clients of the administrative burdens of tax computation and filing, 'illsLt,,~lQg
aQ.,@]t"ge,ofthe,time,yalue of moQeyJoe"miDlere§LqQJbejYQd§.YnliLth.eJa~\m<JmentRefgIe!be!;'l~e.§lf(ere,due,
ri
[ 2]
Hamilton Taft was placed in involuntary bankruptcy by its creditors in March of 1991, after it failed to make the tax payments
then due for many of its major clients,
It was later determined that Mr. Connie C, "Chip" Armstrong, Jr., who had obtained control of Hamilton Taft in approximately
1989, had invested the entrusted furdsin a variety of speculative and unsound investments, had spent a good deal of it on
himself and, as a gen"ral proposition, had lost the money which was supposed to be paid over to the taxing authorities, See
Hamilton Taft & Company v, Federal Express (91-03518-JPV N,D, CaL)
The bankruptcy proceedings have spanned many years and many lawsuits, The one involved here, brought by the trustee in
March, 1993, against a securities brokerage company in Louisiana, invoived transactions which occurred in late 1987 and
early 1988, before Mr. Armstrong's involvement with Hamilton Taft led it to the bankruptcy courts, The trustee challenges
financial transactions engaged in by prior owners of the company, in connection with their transfers of ownership, before Mr.
Armstrong acquired his ownership interest in the firm,
As found by the bankruptcy judge, the undisputed [r i 3] facts involved in the instant lawsuit are as follows: On December 3D,
1987, MaxPharma, Inc, paid $ 500,000 for an option to buy the stock of Hamilton Taft & Company from its then-owner,
Connecticut General Corporation ("CIGNA"), The option had to be exercise by January 29, 1988 and the $ 500,000 would
be applied toward the $ 4,100,000 purchase price, MaxPharma was unable to arrange financing for the stock purchase
using the stock as collateral. Howard Weil, however, was willing to finance the transaction based on a reverse repurchase
("reverse repo") of a treasury bill.
On January 28, 1988, Hamilton Taft wired $ 5,000,000 to Howard WeiL On January 29,1988, Howard Weil used
approximately $ 4,900,000 of those funds to purchase a 90-day treasury bill having the face value of$ 5,000,000 ("the
T-bill"), Also on January 29, Hamilton Taft sold the T-bill back to Howard Weil for $ 4,100,000 based on a "reverse repo"
agreement under which Hamilton Taft would repurchase the T-bill in 90 days for the sale price plus interest.
Wyle, the bankruptcy trustee for Hamilton Taft, claims that the $ 4,100,000 Was transferred directly to MaxPharma upon sale
of the T-bilL Howard Weil claims that the [r i4] $ 4,100,000 was credited to Hamilton Taft's account and that the money was
subsequently wired to MaxPharma. For the purpose of the summary judgment motion, the bankruptcy court accepted Wyle's
position.
Hamilton Taft rolled the T-bill over into new treasury bills and eventually into treasury notes, In January 1989, Hamilton Taft
directed Howard Weil to sell the treasury notes and use the proceeds to satisfy its obligations under the reverse repo
agreement.
On March 20, 1991, creditors filled an involuntary chapter eleven bankruptcy petition against Hamilton Taft, Wyle was
appointed trustee on March 26, 1991 and filed this action in bankruptcy court on March 26. 1993, Wyle argued that the
transaction was, [*535] in reality, a leveraged buyout ("LBO") in which MaxPharma used Hamilton Taft's funds to purchase
CIGNA's stock in Hamilton Taft, Wyle also contended that the transaction rendered Hamilton Taft insolvent and was a
fraudulent conveyance, Wyle sought to recover the value of the T-bill or the $ 4,100,000 proceeds from the sale of the T-bilL
PROCEDURAL HISTORY
On January 19, 1995, the United States Bankruptcy Court for the Northem District of California issued an opinion
granting r5] summary judgment to defendant Howard WeiL n1 Wyle then filed this appeal to the district court,
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n1 Defendants Howard Weil Financial Corp" Legg Mason, Inc" CIGNA, and CIGNA Holdings, Inc., were named in the
bankruptcy court action but dismissed before summary judgment was entered,
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
LEGAL STANDARD
HN3+The Federal Rules of Civil Procedure provide for summary adjudication when "the pleadings, depositions. answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genUine issue as to any
material fact and that the party is entitled to a judgment as a matter of law," FRC.P, 56(e).
HN4+ln a motion for summary judgment, "if the party moving for summary jUdgment meets its initial burden of identifying for
the court those portions of the materials on file that it believes demonstrate the absence of any genUine issues of material
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fact," the burden of production then shifts so that "the nonmoving party must set forth, by affidavit or as otherwise provided
in Rule 56, '[**6] specific facts showing that there is a genuine issue for trial.'" T.W. Elec. Service, Inc. v. Pacific Elec.
Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987) (citing Ceiotex Corp. v. Catrett, 477 U.S. 317. 91 L. Ed. 2d 265,106 S.
Ct. 2548 (1986)); Kaiser Cement Corp. v. Fischbach & Moore. Inc.. 793 F.2d 1100, 1103-04 (9th Cir.), cert. denied, HN5t
479 U.S. 949, 93 L. Ed. 2d 384, 107 S. Ct. 435 (1986).
A moving party who will not have the burden of proof at trial need only point to the insufficiency of the other side's evidence,
thereby shifting to the nonmoving party the burden of raising genuine issues of fact by substantial evidence. T. W. Electric,
809 F.2d at 630 citing HN6¥' Celotex. 477 U.S. at 323; Kaiser Cement. 793 F.2d at 1103-04.
In judging evidence at the summary judgment stage, the Court does not make credibility determinations or weigh conflicting
evidence, and draws all inferences in the light most favorable to the nonmoving party. T.W. Electric, 809 F.2d at 630-31
(citing Matsushita Elec. Indus. Co.. Ltd. v. Zenith Radio Corp.. 475 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986)); Ting
v. United States, 927 F.2d 1504, 1509 (9th [**7] Cir. 1991).
DISCUSSION
Plaintiff/appellant Wyle contends that the bankruptcy court erred in four respects:
1) He contends that Banl<ruptcy Code Section 546(e) (11 U.S.C. § 546(e)) is inapplicable to this transaction because section
546(1) specifically addresses the avoidance of "settlement payments" in reverse repo transactions and, hence, takes
precedence over section 546(e);
2) He contends that the transfer of the T-bill did not constitute a "settlement payment" under either 546(e) or 546(1);
3) He contends that Section 546(e) contains an "LBO exception" allowing Wyle to avoid the transaction; and
4) He contends that a triable issue of fact existed as to whether or not the transaction was a genuine l1reverse repo"
transaction.
1. Section 546(e) versus Section 546(1)
The bankruptcy court found that section 546(e) rather than 546(1) applied to this transaction, and that under 546(e), the
transaction cannot be avoided by Wyle. Section 546(e) states in relevant part:
... the trustee may not avoid a transfer that is a margin payment ... or settlement payment ... made by or to a
... stockbroker ... that is made before the [*536] commencement of the case ... [**8] HNTt 11 U.S.C. §
546(e).
Under Ninth Circuit case law, HN8ttrue reverse repos are covered by section 546(e). See In re Comark. 971 F.2d 322, 325
(9th Cir. 1992) ("Comark I"); In re Comark, 145 Bankr. 47, 52-53 (Bankr. 9th Cir. 1992) ("Comark II"). Despite Wyle's
contentions to the contrary, HN9twhether or not a transaction is a reverse repo is analyzed under an objective test. Id. at
53. The transaction at issue meets the objective definition of a reverse repo because a security was sold with an agreement
to repurchase it with interest. Id. n2
- -- - -- - - -- -- - - Footnotes -- - -- - --- - -- ---
n2 Comark II set forth additional objective factors to be considered in determining whether a transaction was a reverse repo.
147 Bankr. at 53.
- - - - - -- -- -- - End Footnotes- - -- -- - - -- - -- -
In addition, even if the transaction was not a conventional reverse repo, section HN10t546(e) covers a broad range of
securities transactions. Id. at 52 (§ 546(e) "includes a transfer of securities that completes any securities transaction"). Here,
the transaction involved Hamilton Taft buying the T-bill from Howard [**9] Weil and then selling it back to Howard Weil.
HNlltA T-bill is clearly a security, and hence the transaction is a "securities transaction" under 564(e). In re Kaiser Steel
Corp., 952 F.2d 1230, 1238-40 (10th Cir.1990), cert. denied, 505 U.S. 1213, 112 S. Ct. 3015,120 L. Ed. 2d 887 (1992).
Wyle argues that the transaction must be anaiyzed under section 546(1) and that under 546(1) the transaction may be
avoided. Section 546(1) states in reievant part:
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... the trustee may not avoid a transfer that is a margin payment ... or settlement payment ... made by or to a
repo participant in connection with a repurchase agreement and that is made before the commencement of the
HN12v~
case. . . .. 11 U.S.C. § 546(1).
"Repo participant" is defined as:
... an entity that. on any day during the period beginning gO days before the date of the filing of the petition. has
an outstanding repurchase agreement with the debtor ... HN13t 11 U.S.C. § 101 (46).
Wyle argues that 546(1) is more specific than section 546(e) and thus should apply to this transaction. He contends that
Howard Wei! would not be protected under 546(1) because the reverse repo transaction closed more than 90 [-1 OJ days
before the bankruptcy petition was filed. This court agrees with the bankruptcy judge that. based on the statutory language
and legislative history of section 546(1), Wyle's argument is incorrect.
HN14tSection 546(e) applies to a specific class of financial entities including "commodity broker, forward contract
merchant, stockbroker, financial institution, or securities clearing agency" (emphasis supplied). It is uncontroverted that the
defendant in this case is a stockbroker and thus a member of the specific class of entities covered by this section. HN15t
Section 546(1) applies more generally to other "participants" in the repo market. See Comark II, 145 Bankr. at 52-53. Thus,
HN16tthe specificity of language would support application of 546(e) to this transaction over 546(1), because one of the
parties to the transaction was a stockbroker.
In addition, the legislative history of section 546(1) indicates that 546(1) was enacted to clarify section 546(e), not to modify it:
On balance, the legislative history of section 564(1) refiects that the enactment of section 546(1) was intended to
clarify rather than change earlier law. Id.; see also S.Rep. No. 65, 98th Cong., 1st [-11] Sess. 45, 49 (1983).
HNITtsection 546(e), by its terms, clearly applies to this transaction; the alternative section will not be applied absent clear
indication that the alternative Was intended to be exclusive. Based on the language of the two sections and the cited
legislative history, 546(1) does not narrow the scope of 546(e) and nothing suggests that it was intended to be exclusive.
Thus, Wyle's position that the transaction must be analyzed under 546(1) is unpersuasive.
2. Settlement Payment
Wyle argues that the transaction was not a "settlement payment" under section [*537] 546(e). In Comark I, the Ninth Circuit
joined the Third and the Tenth Circuits in determining that "settlement HN18tpayment" is to be defined broadly. 971 F.2d at
326. The Comark I court stated, "[a] settlement payment clearly includes a transfer of securities that completes a securities
transaction." Comark I, 971 F.2d at 326 (citation omitted).
More specifically, Comark I and Comark II both held that a settlement payment includes a transfer of cash or securities
going toward completion of a securities transaction. 971 F.2d at 326; 145 Bankr. at 52. n3 Thus, under section 546(e), the
transaction [-12] was a settlement payment and cannot be avoided by Wyie.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n3 In addition, the bankruptcy court found, as a matter of undisputed fact, that Hamilton Tafl directed Howard Weil to pay
the funds to MaxPharma. Thus Wyle's argument that the transfer was not a settlement payment because it was made to a
third party is meritless.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
3. The "LBO Exception"
Next, Wyle argues that there is an exception for LBO transactions in section 546(e). Wyle relies extensively on Wieboldt
Stores Inc. v. Schottenstein. 131 Bankr. 655 (N.D. III, 1991). In Wiedboldt, the court found that section 546(e) did not
prevent a trustee from avoiding a fraudulent conveyance from shareholders Whose shares were purchased in an LBO. In the
present case, Wyle seeks to avoid a transfer involving a stockbroker. The Wiedboldt court noted that stockbrokers were
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specifically protected from such actions by bankruptcy trustees under section 546(e).
Wyle also relies on Lippi v. City Bank. 955 F.2d 599 (9th Cir. 1992) and Kendall v. [**13J Sorani, 151 Bankr. 1012 (Bankr.
N.D. Cal. 1993). However, neither of these cases even mentions section 546(e) and, hence, add little weight to Wyle's
argument.
The bankruptcy court correctly determined HN19+that any "LBO exception" in section 546(e) is inapplicable to
stockbrokers.
4. Factual Issues
Finally, because the bankruptcy court correctly found that the transaction was a reverse repo; that reverse repos are
governed by an objective standard; and that reverse repos are protected under section 546(e), the bankruptcy court
correctly determined there are no issues of fact that must be resolved by a finder of fact.
CONCLUSION
The bankruptcy court correctly interpreted section 546(e) and correctly determined that no material issues of fact existed.
Accordingly, the bankruptcy court's granting of summary judgment is AFFIRMED.
The clerk shall close the file.
IT IS SO ORDERED.
Dated: October 12,1995.
SUSAN ILLSTON
United States District Judge

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Westlaw;
l> 11 U.S.C.A. s 548

s 548. Fraudulent transfers and obligations
Effective: [See Notes]
11 U.S.C.A. § 548
United States Code Annotated Currentness

Title 11. Bankruptcy (Refs & Annos)
Chapter 5. Creditors, The Debtor, and the Estate (Refs & Annos)
SUbchapter III. The Estate (Refs & Annos)
...§ 548. Fraudulent transfers and obligations
(a)(l) The trustee may avoid any transfer (including any transfer to or for the benefit of an insider under
an employment contract) of an interest of the debtor in property, or any obligation (Including any
obligation to or for the benefit of an insider under an employment contract) incurred by the debtor, that
was made or incurred on or within 2 years before the date of the filing of the petition, if the debtor
voluntarily or involuntarily--
(A) made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any
entity to which the debtor was or became, on or after the date that such transfer was made or such
obligation was incurred, indebted; or
( (8)(i) received less than a reasonably equivalent value in exchange for such transfer or obligation; and
< (11)(1) was insolvent on the date that such transfer was made or such obligation was Incurred, or
became Insolvent as a result of such transfer or obligation;
(II) was engaged In business or a transaction, or was about to engage In business or a transaction, for
which any property remaining with the debtor was an unreasonably small capital;
(III) Intended to Incur, or believed that the debtor wouid incur, debts that would be beyond the debtor's
ability to pay as such debts matured; or
(IV) made such transfer to or for the benefit of an Insider, or incurred such obligation to or for the
~enefit of an insider, under an employment contract and not in the ordinary course of business.
(2) A transfer of a charitable contribution to a qualified religious or charltabie entity or organization shall
not be considered to be a transfer covered under paragraph (l)(B) In any case in which.--
(A) the amount of that contribution does not exceed 15 percent of the gross annual income of the
debtor for the year in which the transfer of the contribution Is made; or
(8) the contribution made by a debtor exceeded the percentage amount of gross annual income
specified in subparagraph (A), if the transfer was consistent with the practices of the debtor in making
charitable contributions.
(b) The trustee of a partnership debtor may avoid any transfer of an interest of the debtor in property, or
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any obligation incurred by the debtor, that was made or incurred on or within 2 years before the date of
the filing of the petition, to a general partner in the debtor, if the debtor was insolvent on the date such
transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or
obligation.
(e) Except to the extent that a transfer or obligation voidabie under this section is voidable under section
544, 545, or 547 of this title, a transferee or obligee of such a transfer or obligation that takes for value
and in good faith has a lien on or may retain any interest transferred or may enforce any obligation
incurred, as the case may be, to the extent that such transferee or obligee gave value to the debtor in
exchange for such transfer or obligation.
(d)(l) For the purposes of this section, a transfer is made when such transfer is so perfected that a bona
fide purchaser from the debtor against whom applicable law permits such transfer to be perfected cannot
acquire an interest in the property transferred that is superior to the interest in such property of the
transferee, but if such transfer is not so perfected before the commencement of the case, such transfer is
made immediately before the date of the filing of the petition.
(2) In this section--
(A) "value" means property, or satisfaction or securing of a present or antecedent debt of the debtor,
but does not include an unperformed promise to furnish support to the debtor or to a relative of the
debtor;
(B) a commodity broker, forward contract merchant, stockbroker, financial institution, financial
participant, or securities clearing agency that receives a margin payment, as defined in section 101,
741, or 761 of this title, or settlement payment, as defined in section 101 or 741 of this title, takes for
value to the extent of such payment;
(e) a repo participant or financial participant that receives a margin payment, as defined in section 741
or 761 of this title, or settlement payment, as defined in section 741 of this title, in connection with a
repurchase agreement, takes for value to the extent of such payment;
(D) a swap participant or financial participant that receives a transfer in connection with a swap
agreement takes for value to the extent of such transfer; and
(E) a master netting agreement participant that receives a transfer in connection with a master netting
agreement or any individual contract covered thereby takes for value to the extent of such transfer,
except that, with respect to a transfer under any individual contract covered thereby, to the extent that
such master netting agreement participant otherwise did not take (or is otherwise not deemed to have
taken) such transfer for value.
(3) In this section, the term "charitable contribution" means a charitable contribution, as that term' is
defined in section 170(c) of the Internal Revenue Code of 1986, if that contribution--
(A) is made by a natural person; and
(B) consists of.--
(i) a financial instrument (as that term is defined in section 731(c)(2)(C) of the Internal Revenue Code
of 1986); or
(ii) cash.
(4) In this section, the term "qualified religious or charitable entity or organization" means--
(A) an entity described in section 170(c)(1) of the Internal Revenue Code of 1986; or
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(8) an entity Dr DrganizatiDn described in sectiDn 170(c)(2) Df the Internal Revenue CDde Df 1986.
(e)(l) In additiDn tD any transfer that the trustee may Dtherwise aVDid, the trustee may aVDid any
transfer Df an interest Df the debtDr in prDperty that was made Dn Dr within 10 years befDre the date Df the
fiiing Df the petitiDn, if--
(A) such transfer was made tD a self-settled trust Dr similar device;
(8) such transfer was by the debtDr;
(e) the debtDr is a beneficiary Df such trust Dr similar device; and
(D) the debtDr made such transfer with actual intent tD hinder, delay, Dr defraud any entity tD which the
debtDr was Dr became, Dn Dr after the date that such transfer was made, indebted.
(2) FDr the purpDses Df this subsectiDn, a transfer includes a transfer made in anticipatiDn Df any mDney
judgment, settlement, civil penalty, equitable Drder, Dr criminal fine incurred by, Dr which the debtDr
believed wDuld be incurred by--
(A) any viDlatiDn Df the securities laws (as defined in sectiDn 3(a)(47) Df the Securities Exchange Act Df
1934 (15 U.S.c. 78c(a)(47))), any State securities laws, Dr any reguiatiDn Dr Drder issued under Federal
securities laws Dr State securities laws; Dr
(8) fraud, deceit, Dr manipulatiDn in a fiduciary capacity Dr in cDnnectiDn with the purchase Dr sale Df
any security registered under sectiDn 12 Dr 15(d) Df the Securities Exchange Act Df 1934 (15 U.S.C. 781
and 78D(d» Dr under sectiDn 6 Df the Securities Act Df 1933 (15 U.S.c. 77f).
CREDIT(S)
(Pub.L. 95-598, NDv. 6, 1978, 92 Stat. 2600; Pub.L. 97-222, § 5, July 27, 1982, 96 Stat. 236; Pub.L.
98-353, Title Ill, §§ 394,463, July 10, 1984, 98 Stat. 365, 378; Pub.L. 99-554, Title II, § 283(n), Oct.
27, 1986, 100 Stat. 3117; Pub.L. 101-311, Title I, § 104, Title II, § 204, June 25, 1990, 104 Stat. 268,
269; Pub.L. 103-394, Title V, § 501(b)(5), Oct. 22, 1994,108 Stat. 4142; Pub.L. 105-183, §§ 2, 3(a),
June 19, 1998, 112 Stat. 517; Pub.L. 109-8, Title IX, § 907(f), (D)(4) tD (6), Title XIV, § 1402, Apr. 20,
2005,119 Stat. 177, 182, 214.)
HISTORJCAL AND STATUTORY NOTES
RevisiDn NDtes and Legislative RepDrts
1978 Acts. This sectiDn is derived in large part frDm sectiDn 67d Df the Bankruptcy Act [sectiDn 107(d) Df
fDrmer Title 11]. It permits the trustee tD aVDid transfers by the debtDr in fraud Df his creditDrs. Its histDry
dates frDm the statute Df 13 Eliz. c. 5 (1570).
The trustee may aVDid fraudulent transfers Dr DbligatiDns if made with actual intent tD hinder, delay, Dr
defraud a past Dr future creditDr. Transfers made fDr less than a reasDnably equivalent cDnsideratiDn are
alsD vulnerable if the debtDr was Dr thereby becDmes insDlvent, was engaged in business with an
unreasDnably small capital, Dr intended tD incur debts that wDuld be beyDnd his ability tD repay.
The trustee Df a partnership debtDr may aVDid any transfer Df partnership prDperty tD a partner in the
debtDr if the debtDr was Dr thereby became insDlvent.
If a transferee's Dnly liability tD the trustee is under this sectiDn, and if he takes fDr value and in gDDd
faith, then subsectiDn (c) grants him a lien Dn the prDperty transferred, Dr Dther similar prDtectiDn.
SubsectiDn (d) specifies that fDr the purpDses Df fraudulent transfer sectiDn, a transfer is made when it is
valid against a subsequent bDna fide purchaser. If nDt made befDre the CDmmencement Df the case, it is
3 Df33 9/14/2006 10:57 AM

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•
Aulo-Cile(R)Citation Service, (c)2006 LEXiS-NEXIS. All n"ghls reserved.
in re Hamiilon Taft 53 F3D 285
Wyle v. S & S Credit Co. (In re Hamilton Taft & Co.), 53 F.3d 285, 1995
U.S. ADD. LEXIS 9848, 95 C.D.O.S. 3260, 95 Daily Journal DAR. 5613,
27 Bankr. C!. Dec. (CRR) 249, 33 Collier Bankr. Cas. 2d (MB) 716, Bankr.
L. ReD. (CCH) P 76492, 75 A.F.T.R.2d (RIA) 2002, 95 T.N.T. 91-16 (9th
Cir. Cal. 1995)
vacated, appeal settled and dismissed, Wyle v. S & S Credit Co. (In re
Hamilton Taft & Co.), 68 F.3d 337, 1995 U.S. ADD. LEXIS 28742, illL
C.D.O.S. 8031, 95 Daily Journal DAR. 13763, Bankr. L. ReD. (CCH) P
76492 (9th Cir. 1995)
and related proceeding, Stop & Shop Cos. v. Federal Ins. Co., 946 F.
SUDD' 99, 1996 U.S. Dis!. LEXIS 18434 (D. Mass. 1996)
rev'd, Slop & Shop Cos. v. Federal Ins. Co., 136 F.3d 71, 1998 U.S.
ADD. LEXIS 2028 (1 st Cir. Mass..1998)
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Westlaw:

History
Direct History
IIIIIIn re Hamilton Taft &. Co., 176 B.R. 895,32 Collier Bankr.Cas.2d 1727,26 Bankr.Ct.Dec. 665
Affirmed by
H In re Hamilton Taft & Co., 196 B.R. 532 (N.D. Cal. Oct 12, 1995) (NO. C 95-1612-51)
Pin re Hamilton Taft & Co., 114 F.3d 991, 30 Bankr.Ct.Dec. 1236, Bankr. L. Rep. P 77,405,97 Cal. Daily
Op. Servo 4410, 97 Daily Journal D.A.R. 7369 (9th Cir.(Ca1.) Jun 11, 1997) (NO. 95-17058)
Court Documents
C.A.9 Appellate Briefs

Plaintiff-Appellant, V. HOWARD, Howard Wei I, Labouisse, Friedrichs Incorporated, a Louisiana corporation;
corporation, Defendants-Appellees., 1996 WL 33489911 (Appellate Brief) (C.A.9 Feb. 20, 1996) Opening
Plaintiff-Appellant v. HOWARD, Weil, Labouisse, Friedrichs Incorporated, a Louisiana corporation, Howard
WL 33489913 (Appellate Brief) (C.A.9 Mar. 21, 1996) Original Brief of Defendant-Appellee Howard,
Weil, Labouisse, Friendrichs, Inc. (NO. 95-17058)
Plaintiff-Appellant, V. Howard, Howard WElL, Labouisse, Friedrichs Incorporated, a Louisiana corporation;
corporation, Defendants-Appellees., 1996 WL 33489912 (Appellate Brief) (C.A.9 Apr. OS, 1996) Reply
Negative Only I Citing References
(C) 2006 West I Accessibility Information THOMSON
WEST '"
I of I 9/14/2006 I0:51 AM
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Westlavv.
KevCite - 176 B.R. 895

Citing References
Positive Cases (U.S.A.)

Discussed
11III1. In re Hamilton Taft & Co., 114 F.3d 991, 992+, 30 Bankr.Ct.Dec. 1236, 1236+, Bankr. L. Rep. P
77,405,77405+,97 Cal. Daily Op. Servo 4410,4410+,97 Daily Journal D.A.R. 7369, 7369+ (9th
Cir.(CaL) Jun 11, 1997) (NO. 95-17058) .. HN: 1,2,4 (B.R.)
Cited
P2. In re Gandy, 299 F.3d 489, 496, 48 Collier Bankr.Cas.2d 895, 895, Bankr. L. Rep. P 78,709,78709
(5th Cir.(Tex.) Jul 22, 2002) (NO. 02-50185)
3. In re Mark Industries, Inc., 110 F.3d 69, 69 (9th Cir.(CaL) Mar 20, 1997) (Table, text in WESTLAW, NO.
95-55712)
P4. Forum Ins. Co. v. Devere Ltd., 151 F.Supp.2d 1145, 1149 (C.D.CaL Jan 02, 2001) (NO. CV 97-9386
NM RCX) HN: 8 (B.R.)
P5. In re Hechinger Investment Co. of Delaware, 274 B.R. 71, 98 (D.DeL Feb 20,2002) (NO. 99-2283,
CIV.A.00-840-RRM) .. HN: 5 (B.R.)
H 6. In re National Forge Co., 344 B.R. 340, 371 (W.D.Pa. Jun 09, 2006) (NO. CIV.A. 04-21 ERIE) •• HN:
1 (B.R.)
C 7. In re Lucas Dallas, Inc., 185 B.R. 801, 805, 34 Collier Bankr.Cas.2d 1095, 1095, 27 Bankr.Ct.Dec.
955,955,95 Daily Journal DAR. 12,382, 12382 (9th Cir.BAP (CaL) Aug 17, 1995) (NO.
NC-94-2055-HVR, 93-4562 AN, NC-94-2116-HVR, 91-46079 IN) .. HN: 8 (B.R.)
8. In re Sia, 2006 WL 2472995, *12 (Bankr.D.Hawai'i Aug 25, 2006) (NO. 98-04912, ADV. 00-00102)

H 9. Right of creditor to recover damages for conspiracy to defraud him of claim, 11 A.L.R.4th 345, §10+
(1982) HN: 4 (B.R.)
10. s 6:12. Fraudulent conveyance attacks -- Cases, SECACQMERG s 6:12, s 6:12+ (2006) HN: 1,5
(B.R.)
11. Bankruptcy Service Lawyers Edition s 31:254, s 31:254. Leveraged buyouts (2006) HN: 6 (B.R.)
12. Bankruptcy Service Lawyers Edition s 32:208, s 32:208. Generally (2006) HN: 1,4,5 (B.R.)
13. Bankruptcy Service Lawyers Edition s 32:210, s 32:210. Congressional intent (2006) HN: 1,5 (B.R.)
14. Bankruptcy Service Lawyers Edition s 32:213, s 32:213. What constitutes "settlement payment" --
Particular determinations -- Reverse repo's (2006) HN: 1,5 (B.R.)
C 15. CJS Conspiracy s 49, s 49. Defrauding creditors (2006) HN: 7 (B.R.)
COLLATERAL IS?, 39 Ariz. L. Rev. 949, 1001 (1997)
1 of 4 9/14/2006 10:52 AM
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l: 17. LEVERAGED BUYOUTS AND FRAUDULENT CONVEYANCES: YET ANOTHER UPDATE, 7 J. Bankr. L. &
Prac. 315, 333 (1998) HN: 6 (B.R.)
l: 18. FORWARD CONTRACTS, BANKRUPTCY SAFE HARBORS AND THE ELECTRICITY INDUSTRY, 51 Wayne
L. Rev. 49, 106 (2005) HN: 3 (B.R.)
19. ACQUISITION FINANCING, 754 PU/Comm 3B5, 449 (1997) HN: 1,5 (B.R.)
20. ACQUISITION FINANCING, 739 PU/Comm 367, 427 (1996) HN: 1,5 (B.R.)
21. SPECIAL BANKRUPTCY CODE PROTECTIONS FOR DERIVATIVE AND OTHER CAPITAL MARKET
TRANSACTIONS, 721 PLI/Comm 95, 114 (1995) HN: 1,5,6 (B.R.)
22. SECURITIES, FORWARD AND COMMODITY CONTRACTS AND REPURCHASE AND SWAP AGREEMENTS
UNDER U.S. INSOLVENCY LAWS, 721 PLI/Comm 401, 410+ (1995) HN: 1,2,4 (B.R.)
Court Documents
Appellate Petitions, Motions and Filings

23. Wyatt R. HASKELL, Petitioner, v. PWS HOLDING CORPORATION, Bruno's Inc., Foodmax of Mississippi,
Inc., A.F. Stores Inc., Br Air, Inc., Foodmax of Geor9ia, Inc., Foodmax of Tennessee, Inc., Foodmax Inc.,
Lakeshore Foods, Inc., Bruno's Food Stores, Inc., Georgia Sales Company, SSS Enterprise, Inc.,
Respondents., 2003 WL 2169B60B, *2169B60B+ (Appellate Petition, Motion and Filing) (U.S. Jan 29,
2003) Petition for Writ of Certiorari (NO. 02-1134) HN: 6 (B.R.)
Appellate Briefs
24. In reo PWS HOLDING CORPORATION, BRUNO'S, INC., Food Max of Mississippi, Inc., A. F. Stores, Inc.,
Br Air, Inc., Food Max of Georgia, Inc., Food Max of Tennessee, Inc., Food Max, Inc., Lakeshore Foods,
Inc., Bruno's Food Stores, Inc., Georgia Sales Company, and 555 Enterprise, Inc., Debtors, Wyatt R.
HASKELL, Appellant., 2001 WL 34095042, *34095042+ (Appellate Brief) (3rd Cir. Aug 2B, 2001) Brief of
Appellant (NO. 01-1462) HN: 6 (B.R.)
25. In The Matter Of: Joe Alvin ANDREWS, Sr., Debtor. CADLE COMPANY, Appellant, v. WHATABURGER OF
AUCE, INC.; M. Louise Andrews; Kathy A. Reese; George P. Braun; Herbert E. Pounds, Jr.; Joe Alvin
Andrews, Jr.; Michael Boudloche; Joe Alvin Andrews, Sr., Appellees., 2001 WL 34353904, *34353904+
(Appellate Brief) (5th Cir. Nov 07,2001) Appellant's Brief (NO. 01-40B07) 11IIII11IIII HN: 3 (B.R.)
26. THE CADLE COMPANY, Plaintiff-Appellant, v. WHATABURGER OF ALICE, INC.; M. Louise Andrews;
Kathy A. Reese; Herbert E. Pounds, Jr.; George P. Braun; and Joe Alvin Andrews, Jr.,
Defendants-Appellees., 199B WL 341145B2, *341145B2+ (Appellate Brief) (5th Cir. Jul 09, 1998) Brief of
Appellant (NO. 9B-5036B) HN: 6 (B.R.)
27. FORUM INSURANCE COMPANY, Plaintiff/Appellant, v. DEVERE UMITED; Harrington Trust Limited, As
Jerome Eglin; Ayk, Inc.; Otw Investments; and Jeja Investments, Defendants/Appellees., 2002 WL
**
32120536, *32120536+ (Appellate Brief) (9th Cir. Aug 20, 2002) Reply Brief of Appellant Forum
Insurance Company (NO. 02-55053)
2B. FORUM INSURANCE COMPANY, Petitioner/Appellant, v. DEVERE LIMITED; Harrington Trust Limited, As
Trustee for the Ogaps Trust; Ephraim P. Kranitz; Thomas Comparet; Kranitz Comparet & Sarrow, P.C.;
32120535, *32120535+ (Appellate Brief) (9th Cir. Jul 20, 2002) Brief of Appellee Jerome Eglin (NO.
02-55053)
29. FORUM INSURANCE COMPANY, Plaintiff/Appellant, v. DEVERE UMITED; Harrington Trust Limited, As
20f4 9/1412006 10:52 AM

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*
32120534, *32120534+ (Appellate Brief) (9th Cir. Jun 11, 2002) Brief of Appellant Forum Insurance
Company (NO. 02-55053)
30. Robert B. BURNS, Plaintiff-Appellant, v. James BALDWIN, et al., Defendants-Appellees., 2002 WL

32116680, *32116680+ (Appellate Brief) (9th Cir. May 30, 2002) Appellant's Opening Brief (NO.
02-55116) .. 11I11I HN: 6,7 (B.R.)
31. In re THRIFTY OIL CO., a California Corporation; Golden West Refining Company, a California
Corporation; ClUj Distribution Company, a California, Corporation; Benzin Supply Company, a California
Corporation; and Goiden West Distribution Company, a California Corporation, Debtors, THRIFTY OIL CO.,
Appellant, v. BANK OF AMERICA NATIONAL TRUST & Savings Association, Appellee., 2000 WL 33981185,
*33981185+ (Appellate Brief) (9th Cir. Dec 18, 2000) Appellant's Reply Brief (NO. 00-56159)
HN: 2,4 (B.R.)
32. In re: THRIFTY OIL CO., a California corporation; Golden West Refining Company, a California
corporation; ClUj Distribution Company, a California corporation; Benzin Supply Company, a corporation;
*33978038+ (Appellate Brief) (9th Cir. Nov 15, 2000) Appellee's Brief (NO. 00-56159) ..
2,4,5 (B.R.)
HN:*
*34017800+ (Appellate Brief) (9th Cir. Nov 14, 2000) Appellee's Brief (NO. 00-56159) .. *
HN: 1,2,5 (B.R.)
34. IN RE HAMILTON TAFT & COMPANY, Debtor. Frederick S. Wyle, Trustee of Hamilton Taft & Company,
Plaintiff-Appellant v. HOWARD, Weil, Labouisse, Friedrichs Incorporated, a Louisiana corporation, Howard
Defendant-Appellee Howard, ... (NO. 95-17058) .. *

WL 33489913, *33489913+ (Appellate Brief) (9th Cir. Mar 21, 1996) Original Brief of
HN: 4 (B.R.)

35. Diane MANN, as Trustee for the Estate of LeapSource, Inc.; Christine V. Kirk; Thomas F. Gilman; Indu
Gupta; Kimberly C. Hartmann; Julie B. McCollum; Kelly A. Powers; Bobby D. Scott; and Patricie E. Walker,
Plaintiffs, v. GTCR GOLDER RAUNER, L.L.C.; a Delaware limited liability company; GTCR Fund VI, L.P., a
Delaware limited partnership; GTCR VI Executive Fund, L.P. a Delaware limited partnership; GTCR
Associates VI, a Delaware general partnership; Michael Makings;, 2006 WL 1183016, *1183016 (Trial
Motion, Memorandum and Affidavit) (D.Ariz. Mar 10, 2006) Motion for Summary Judgment on (1)
Contract ... (NO. CIV-02-2099-PHX-RCB) '*
36. Robert B. BURNS, Plaintiff, v. James P. BALDWIN, et aI., Defendants., 2000 WL 34631826,
**
*34631826+ (Trial Motion, Memorandum and AffidaVit) (C.D.Cal. Sep 11, 2000) Plaintiff's
Memorandum of Points and Authorities ... (NO. SACVOO-0249AHS, ANX)
37. IN RE: 3DFX INTERACTIVE, INC., a California corporation, Debtor, Ein: 77-0390421 Carlyle Fortran
Trust, a Maryland reai estate investment trust, Plaintiff, v. NVIDIA CORPORATION, a Delaware
corporation; Nvidia Us Investment Company, f/k/a Titan Acquisition Corp. No.2, a Delaware corporation;
3dfx Interactive, Inc., a California corporation, Jen-Hsun Huang, an individual; James C. Gaither, an
individual; A. Brooke Seawell, an individual; William J. Miller" 2005 WL 2868911, *2868911+ (Trial
Motion, Memorandum and Affidavit) (N.D.Cal. Oct 17,2005) Opposition of Carlyle Fortran Trust to
3dfx ... (NO. 05-00427JW) 11I11I
38. In reo P.R.T.C., INC., Braunstein International Corporation, Debtors, Gregory A. Akers, Trustee, and
Harold S. Taxel, Trustee, Plaintiffs, v. David Troy Braunstein, Christina Braunstein, Braunstein De MeXico,
30f4 9/14/2006 10:52 AM

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S.A. De C.V., BIC Technologies, Inc., Solution Technology Group, LLC, Solution Technology De Mexico,
Almacen De Computadoras, Rosenbaum & Diehl, a Professional Corporation, Keith A. Rosenbaum, Duckor,
Spradling, & Metzger, a Professional Corporation, and, 2002 WL 32955064, *32955064 (Trial Motion,
*
Memorandum and Affidavit) (S.D.Cal. Jan 02, 2002) Memorandum of Points and Authorities in
Support ••• (NO. 00CV2307-H, JFS)
39. In Re: ENRON CORP., et aI., Debtors. Enron Corp., Piaintiff, v. J.P. Morgan Securities, Inc., et aI.,
Defendants. Enron Corp., Plaintiff, v. Mass Mutual Life Insurance Co., et aI., Defendants., 2005 WL
303BB36, *303BB36+ (Trial Motion, Memorandum and Affidavit) (S.D. N.Y. Aug 01, 2005) Memorandum
of Law in Support of Lehman's Motion ... (NO. 01-16034, AJG) HN: 1,3 (B.R.)
40. GREAT AMERICAN LIFE INSURANCE COMPANY, Plaintiff, v. Katharine Shaw Wallace THOMPSON,
**
Defendant., 2006 WL 1442021, *1442021 (Trial Motion, Memorandum and Affidavit) (S.D.Ohio Apr 25,
2006) Reply in Support of Plaintiff's Emergency Motion ••• (NO. 104CVB15)
41. In reo John SASSER, Debtor; In re Mayflower Transit, LLC, Plaintiff, v. John Sasser, Defendant., 2002
*
WL 329315B7, *329315B7 (Trial Motion, Memorandum and Affidavit) (Bankr.E.D.Cal. Jun 03, 2002) Reply
to Opposition of Chapter 7 Trustee's ... (NO. 02-10300A-ll)
Full History I Negative Only
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V\kstlaw:

History
(Showing 3 of 6 documents)
Direct History
1III1n re Hamilton Taft &. Co., 176 B.R. 895, 32 Collier Bankr.Cas.2d 1727, 26 Bankr.Ct.Dec. 665
Affirmed by
Ii In re Hamilton Taft & Co., 196 B.R. 532 (N.D.Cal. Oct 12, 1995) (NO. C 95-1612-51)
[>In re Hamilton Taft & Co., 114 F.3d 991, 30 Bankr.Ct.Dec. 1236, Bankr. L. Rep. P 77,405, 97 Cal. Daily
Op. Servo 4410, 97 Daily Journai DAR. 7369 (9th Cir.(Cal.) Jun 11, 1997) (NO. 95-17058)
Full History I Citing References
THOMSON
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K.eycne,KesUit lIlll-';/ fl,;[ CUlll,,;i1l U. Wl;::::ilIU W .I,,;Ul1lf 1\,.l;::Yl,;lll;::/ Ul;::IUUIl. W I
Westlavv.
KeyCite - 114 F.3d 991 - Limited

Citing References: limited to Headnotes = 1 (F.3d), selected document types
(Showing 45 of 5B documents)

1. s 6:12. Fraudulent conveyance attacks -- Cases, SECACQMERG s 6:12, s 6:12+ (2006) HN: 1,3 (F.3d)
2. Bankruptcy Law Manual s B:0.50, s B:0.50. Introduction to the avoiding powers of a trustee or debtor in
possession (2006) HN: 1,3 (F.3d)
3. Bankruptcy Service Lawyers Edition s 31:254, s 31:254. Leveraged buyouts (2006) HN: 1,3 (F.3d)
4. Bankruptcy Service Lawyers Edition s 32:20B, s 32:20B. Generally (2006) HN: 1,2,3 (F.3d)
5. Bankruptcy Service Lawyers Edition s 32: 209, s 32:209. Scope and applicability (2006) HN: 1,2,3
(F.3d)
6. Bankruptcy Service Lawyers Edition s 32:210, s 32:210. Congressional intent (2006) HN: 1,2,3 (F.3d)
7. Bankruptcy Service Lawyers Edition s 32: 212, s 32: 212. What constitutes "settlement payment" --
Particular determinations (2006) HN: 1,2,3 (F.3d)
B. Bankruptcy Service Lawyers Edition s 32:213, s 32:213. What constitutes "settlement payment" --
Particular determinations -- Reverse repo's (2006) HN: 1,2,3 (F.3d)
9. Bankruptcy Service Lawyers Edition s 32:215, s 32:215. What constitutes "repurchase agreement"
(2006) HN: 1,2,3 (F.3d)
10. Bankruptcy Service Lawyers Edition s 32:216, s 32:216. other particular applications (2006) HN:
1,2,3 (F.3d)
11. Creditors' Rights In Bankruptcy s 14:4, s 14:4. limitations on the avoiding powers (2006) HN: 1,3
(F.3d)
12. Norton Bankruptcy Law and Practice 2d s 56:6, s 56:6. Margin payments, repurchase agreements,
swap agreements, and netting agreements (2006) HN: 1,2 (F.3d)
13. Norton Bankruptcy Law and Practice 2d 11 USC s 546, s 546. Limitations on avoiding powers (2006)
HN: 1,2,3 (F.3d)
C 14. FINANCIAL CONTRACTS AND THE NEW BANKRUPTCY CODE: INSULATING MARKETS FROM
BANKRUPT DEBTORS AND BANKRUPTCY JUDGES, 13 Am. Bankr. Inst. L. Rev. 641, 664+ (2005) HN: 1
(F.3d)
COLLATERAL IS?, 39 Ariz. L. Rev. 949, 1001 (1997) HN: 1,3 (F.3d)
e 16. DERIVATIVES IN BANKRUPTCY, 60 Bus. Law. 1507, 1546+ (2005) HN: 1 (F.3d)
e 17. LEVERAGED BUYOUTS AND FRAUDULENT CONVEYANCES: YET ANOTHER UPDATE, 7 J. Bankr. L. &
Prac. 315, 333 (199B) HN: 1 (F.3d)
C lB. FORWARD CONTRACTS, BANKRUPTCY SAFE HARBORS AND THE ELECTRICITY INDUSTRY, 51 Wayne
L. Rev. 49, 106 (2005) HN: 1,3 (F.3d)
10D 9/14/2006 11 :27 AM

l\..eycne,KeSUII lIUP:/Il:1 I;Ulll:i:tIU. WI;~lIi:tW.l:UlIII KI;Yl>llI;/UI;Ii:tUI1. WI
19. (RE1CHARACTERIZATION IN BANKRUPTCY, SK092 ALI-ABA 237, 244 (2005) HN: 1 (F.3d)
20. (RE1CHARACTER17ATION IN BANKRUPTCY OF TRANSACTIONS AFFECTING THE PUBLIC MARKETS: THE

TREATMENT OF REPURCHASE, SJ082 ALI-ABA 103, 110 (2004) HN: 1 (F.3d)
21. FRAUDULENT TRANSFERS, 887 PLIjComm 183, 265+ (2006) HN: 1,3 (F.3d)
22. PREFERENCES AND FRAUDULENT TRANSFERS, 887 PLIjComm 479, 666+ (2006) HN: 1,2 (F.3d)
23. FRAUDULENT TRANSFERS, 880 PLIjComm 357, 436+ (2005) HN: 1,2,3 (F.3d)
24. FRAUDULENT TRANSFERS, 876 PLIjComm 511, 598 (2005) HN: 1,2,3 (F.3d)
27. FRADULENT TRANSFERS, 861 PLIjComm 567, 619 (2004) HN: 1,2,3 (F.3d)
29. AVOIDANCE POWERS, 855 PLIjComm 331, 442 (2003) HN: 1,2,3 (F.3d)
32. AVOIDANCE POWERS, 842 PLIjComm 321, 431 (2002) HN: 1,2,3 (F.3d)
33. 837 PLI/Comm 881, 931 (2002) HN: 1,2,3 (F.3d)
34.837 PLIjComm 947, 1135+ (2002) HN: 1,2 (F.3d)
Court Documents
Appellate Briefs
41. In re GRAFTON PARTNERS, L.P., a California Limited Partnership, and its Affiliates, Debtors; Circle
Trust, F.B.O. Michele Montano, NjKjA Circle Trust, Trustee for the Stable Value Plus Fund, Appellant, v.
Cir. Sep 07, 2005) Appellant Circle Trust's Opening Brief (NO. 05-55485)"
(F.3d)
***
Richard M. Kipperman, Chapter 7 Trustee, Appellee., 2005 WL 3227165, *3227165+ (Appellate Brief) (9th
HN: 1,2,3
42. In re: THRIFTY OIL CO., a California corporation; Golden West Refining Company, a California
corporation; Cluj Distribution Company, a California corporation; Benzin Supply Company, a corporation;
*33978038+ (Appellate Brief) (9th Cir. Nov 15, 2000) Appellee's Brief (NO. 00-56159) -jr: HN:
200 9/14/2006 ii :27 AM

KeyCJte ,Result http://credItCard.weStlaw.com/keyc Jtel detauJt.WI
1,2,3 (F.3d)
*34017800+ (Appellate Brief) (9th Cir. Nov 14, 2000) Appellee's Brief (NO. 00-56159)
(F.3d)
*
HN: 1,3
44. In re WORLD AUXILIARY POWER COMPANY, World Aerotechnology Corporation, Air Refrigeration
Systems, Inc., Debtors. AEROCON ENGINEERING INC., Appellant, v. SILICON VALLEY BANK, Advanced
Aerospace LLC, Airweld, Inc., Michael Gilsen, and Merritt Widen, Respondents., 2000 WL 34004509,
*34004509 (Appellate Brief) (9th Cir. Oct 05,2000) Appellant's Opening Brief (NO. 00-16550) *
HN: 1,2,3 (F.3d)

45. In re COUNTY OF ORANGE, a political subdivision of the State of California, Debtor. COUNTY OF
ORANGE, a political subdivision of the State of California, and John M.W. Moorlach, in his official capacity
as Treasurer-Tax Collector of the County of Orange, Plaintiffs, v. MERRILL LYNCH & CO., INC., et ai.,
Defendants., 1998 WL 34192312, *34192312+ (Trial Motion, Memorandum and Affidavit) (C.D.Cai. Feb
17,1998) Memorandum of Points and Authorities of the Bond ... (NO. SACV95-0037-GLT,
BANKRSA94-22272JR) HN: 1,3 (F.3d)
Negative Only I Citing References
i~L2006 West I Accessibility Informatlol! THOMSON
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KevCite - 114 F.3d 991

History
(ShoWing 2 of 7 documents)
Direct History
IIiIIIn re Hamilton Taft &. Co., 114 F.3d 991, 30 Bankr.Ct.Dec. 1236, Bankr. L. Rep. P 77,405,97 Cal.
Daily Op. Servo 4410, 97 Daily Journal DAR. 7369 (9th Cir.(Cal.) Jun 11, 1997) (NO. 95-17058)
Negative Citing References (U.S.A.)

Distinguished by
Ern re Grafton Partners, 321 B.R. 527, 53 Collier Bankr.Cas.2d 1589, 44 Bankr.Ct.Dec. 115 (9th Cir.BAP
(Cal.) Feb 17, 2005) (NO. SC-04-1028-KNOS, 01-10606-H702-90555)
Full History I Citing References
THOMSON
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1 of 1 9/14/200611:28AM

CCA Selected 1995 Documents

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EVENTS AND TIME FRAME OF YAMAGUCHI

,ql~ GRADUATED COLLEGE WITH B.A. AND DEGREE IN LAW

WENT TO WORK AS ASSISTANT U.S. ATTORNEY

WORKED FOR 13 YEARS, UNTIL 1993 AS AN ASSISTANT U.S. ATTORNEY

1993 APPOINTED BY CLINTON U.S. ATTORNEY FOR NORTHERN CALIFORNIA

176 BR. 895, "; 1995 Bankr. LEX/S 45, ";

Chapter 11, No. 91-3-1077-TC, Adv. No. 93-3-121-TC

UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

January 18, 1995, Decided

LexlsNexis(R) Headnotes • Hide Headnotes

Civil Procedure> Summary JUdgment> Standards> Legal Entillement

1 of9 9/18/2006 I i :00 AM

Civil Procedure> Summary Judgment> Standards> Materiality

20f9 9/t 8/2006 11 :00 AM

Bankruptcy Law> Bankruptcy Crimes

Bankruptcy Law> Bankruptcy Crimes

JUDGES: Thomas E. Carlson, United States Bankruptcy Judge

OPINION BY: Thomas E. Carlson

OPINION: ["897] OPINION

Thomas E. Carlson, Bankruptcy JUdge.

Standard for Summary Judgment

Section 546(e) Defense

A. Whether Transaction a True Repo

40f9 9118/2006 II :00 AM

Comark I, 971 F.2d at 323 (footnote omitted), Accord 11 U,S.C. § 101(47).

S, Whether Transfer a "Settlement Payment"

5 of9 9/18/2006 11 :00 AM

--- - - - -- - - - -- - Footnotes - - - - -- - - - - - ----

C. Must Defendant Satisfy Section 546(1)1

11 U.S.C, § 546(1). Section 101(46) defines "repo participant" as follows:

6 of9 9/18/2006 11 :00 AM

['901] D. Is there an LBO Exception to Section 546(e)?

7019 9/18/2006 11:00 AM

Aiding And Abetting

United States Bankruptcy Judge

Fastcase Home I Contact Info I Help and Support I Logol

Search I Results I Document I Options I Help Jurisdiction: IAll Jurisdictions

In re Hamilton Taft & c1:?l\"ffs.~9~95 (N.D. Cal., 1995)

Bankruptcy No. 91-3-1077-TC.

Adv. No. 93-3-121-TC.

United States Bankruptcy Court, N.D. California.

January 19, 1995.

COPYRIGHT MATERIAL OMITIED

J. Michael Kelly, Cooley Godward Castro, San Francisco, CA (Thomas K.

KeyCite - 176 B.R. 895

C.A.9 Appellate Briefs

Neqative Only I Citino References

\f:, 2005 West I Accesslbllitv Information THOMSON

KeVCite - 176 B.R. 895

Positive Cases (U.S.A.)

Secondary Sources (U.S.A.)

Appellate Petitions, Motions and Filings

2003) Petition for Writ of Certiorari (NO. 02-1134) **

Appellant (NO. 01-1462) **

2 of4 9/14/2006 10:52 AM

Defendant-Appellee Howard, '" (NO. 95-17058) .. * '* *

Trial Court Documents (U.S.A.)

Trial Motions, Memoranda and Affidavits

Full History I Negative Only

1"£1 2005 West I ACcesslbilitv Informatlon THOMSON

Fastcase Home I Contact Info I Help and Support I LOgOL

Search I Results I Document I Options I Help Jurisdiction: IAll Jurisdictions

In re Hamilton Taft & d,9,~~aRa.~~~32 (N,D. Cal., 1995)

In re Hamilton Taft & d,9,aRa.~32 (N,D. Cal., 1995)