Hyun J. Um; Thomas W. Price; Patricia A. Price, Appellants,
Spokane Rock I, LLC, Appellee.
and Submitted May 17, 2018 Seattle, Washington
from the United States District Court No. 3:15-cv-05787-BHS
for the Western District of Washington Benjamin H. Settle,
District Judge, Presiding
Todd Tracy (argued) and Steven J. Reilly, The Tracy Law Group
PLLC, Seattle, Washington, for Defendants-Appellants.
Charles R. Ekberg (argued), Ryan P. McBride, and Laura
Marquez-Garrett, Lane Powell PC, Seattle, Washington, for
Before: Marsha S. Berzon and Andrew D. Hurwitz, Circuit
Judges, and Raymond J. Dearie, [*] District Judge.
panel affirmed the district court's affirmance of the
bankruptcy court's summary judgment denying discharge,
under 11 U.S.C. § 1141(d)(3), of two individual Chapter
11 debtors' debt arising from a state-court judgment for
fraud and misrepresentation.
panel affirmed, albeit on somewhat different grounds, the
district court and bankruptcy court's conclusion that the
debtors, co-founders of several real-estate management
companies, were not entitled to discharge of the debt. The
panel concluded that the Chapter 11 plan provided for the
liquidation of all or substantially all of the property of
the bankruptcy estate under § 1141(d)(3)(A). The panel
also concluded that the debtors did not engage in business
after consummation of the Chapter 11 plan, under §
1141(d)(3)(B), because they were simply employees in
businesses owned or operated by others. The panel held that,
assuming § 1141(d)(3) does not require that the debtor
engage in a pre-petition business, the statute is not
satisfied by mere employment in someone else's business
after consummation of a Chapter 11 plan.
HURWITZ, CIRCUIT JUDGE.
of a Chapter 11 plan of reorganization generally discharges a
petitioner from pre-confirmation debts. 11 U.S.C. §
1141(d)(1)(A). But, under 11 U.S.C. § 1141(d)(3), a debt
is not discharged if:
(A) the plan provides for the liquidation of all or
substantially all of the property of the estate;
(B) the debtor does not engage in business after consummation
of the plan; and
(C) the debtor would be denied a discharge under section
727(a) of [the Bankruptcy Code] if the case were a case under