In Re: James Keenan v. Thomas Curtin ( 2023 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAY 15 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: JAMES W. KEENAN, No. 22-60007
Debtor, BAP No. 21-1021
------------------------------
MEMORANDUM*
JAMES W. KEENAN,
Appellant,
v.
THOMAS L. CURTIN,
Appellee.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Lafferty III, Spraker, and Faris, Bankruptcy Judges, Presiding
Submitted May 9, 2023**
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: HURWITZ and R. NELSON, Circuit Judges, and KANE,*** District Judge.
James Keenan appeals a decision of the Bankruptcy Appellate Panel (“BAP”)
affirming an order of the bankruptcy court denying his motion to enforce the
discharge provision of his Chapter 11 plan and to void a state court judgment. We
have jurisdiction under 28 U.S.C. § 158(d) and affirm.
1. This case concerns a commercial property in Oceanside, California (the
“Property”) owned by a partnership that has no written partnership agreement.
Keenan claims an 85.007% interest in the Property, consistent with the title on record
in 1996, when his Chapter 11 petition was filed. Appellee Thomas Curtin, however,
claims that the partners orally agreed to reduce Keenan’s partnership interest to 55%
in 1995. Keenan consistently treated his partnership interest as 55% in the
Chapter 11 proceedings. After the Chapter 11 plan was confirmed, however,
Keenan filed an amended property schedule B asserting the larger interest; he
reasserted that position when the liquidating trustee filed a motion to approve an
interim distribution based on the 55% amount.
The bankruptcy court rejected Keenan’s post-confirmation assertions. Curtin
then filed a state court action seeking reformation of the recorded deed to reflect the
adjusted amounts. The state court entered judgment in favor of Curtin in 2017.
***
The Honorable Yvette Kane, United States District Judge for the
Middle District of Pennsylvania, sitting by designation.
2
Keenan’s appeal was dismissed for lack of prosecution.
Keenan returned to the bankruptcy court, seeking to void the state court
judgment as inconsistent with the discharge provision of the Chapter 11 plan. The
bankruptcy court denied the motion because “1) The Plan discharge only applied to
Keenan’s personal liability and not Curtin’s equitable rights to the Partnership,
2) Keenan’s breach of the Partnership Agreement occurred after the discharge
became effective, and 3) Keenan is precluded from challenging the Partnership . . .
as a matter of judicial admission and estoppel.” The BAP affirmed, holding that
“the state court litigation involved a property interest rather than a claim that could
be discharged in bankruptcy.” We agree.
1. The state court litigation involved an alleged partnership interest, and a
“partnership interest is not a claim.” Estes & Hoyt v. Crake (In re Riverside-Linden
Inv. Co.), 925 F.2d 320, 323 (9th Cir. 1991) (per curiam). Under the Bankruptcy
Code, a “claim” is a “right to payment” or a “right to an equitable remedy for breach
of performance if such breach gives rise to a right to payment.” 11 U.S.C. § 101(5).
The state court judgment granted only equitable relief and afforded Curtin no right
to a monetary remedy. See Irizarry v. Schmidt (In re Irizarry), 171 B.R. 874, 878–
79 (B.A.P. 9th Cir. 1994).
2. The confirmed plan did not discharge Curtin’s equitable claim. Only the
55% interest in the partnership that Keenan claimed in his schedules in the Chapter
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11 proceedings became the property of the estate. See California v. Farmers
Markets, Inc. (In re Farmers Markets, Inc.), 792 F.2d 1400, 1402 (9th Cir. 1986).
The plan discharged only pre-petition claims, see Cool Fuel, Inc. v. Bd. of
Equalization (In re Cool Fuel, Inc.), 210 F.3d 999, 1007 (9th Cir. 2000), and Keenan
did not assert a larger interest in the Property until after the plan was confirmed.
3. The plan’s Partnership Adversary Proceeding provision does not address
Curtin’s equitable claim. That provision applies to disputes between the trustee and
the partners, not to those between partners in the partnership.
4. Keenan also argues that Curtin’s claim could only have been resolved
through an adversary proceeding in the bankruptcy court. However, when Curtin
filed an adversary complaint proceeding in 2005, Keenan correctly argued that the
court lacked subject matter jurisdiction because the action did not concern property
of the estate.
AFFIRMED.1
1
We deny Keenan’s motions to augment the record. Dkts. 16, 53 & 57. We
grant Keenan’s motion to file corrected Excerpts of Record and briefs. Dkt. 42.
4