Ch7 while contract in progress
Posted: Mon Oct 11, 2004 9:33 am
Client files Ch7 while he's performing a remodeling construction.
He doesn't stop work until month into Ch7, furthermore, writes an
additional work order signed by both parties just after filing Ch7
and also got paid $3500.
Homeowner is not included in the creditors list, but verbally gets a
notice which they firmly deny. Anyways, Homeowner sues in State Ct
for B of K, Fraud and BP 17200.
I attacked by raising Beezley for unlisted creditor, Houtman & In re
Marriage of Williams for subject matter jurisdiction for Fraud, and
finally Matheww Cadillac(90 Cal.App.3d 393) for Permanent Injunction
under state law.
I though this was plenty for planitiff to handle, but they argue
this by saying since the contractor did not stop work until after
the Ch7 filing; contractor signed an additional work order; and
plaintiff didn't know about the BK; the claim did not arise per 11
USC 101(5)(A)-plaintiff did not have a right to payment and 11 USC
101(5)(B)-because defendants were still performing their duties
I think plaintiff in plain English is saying (1) since defendant
signed some new memorandum after Ch7 filing, he's still liable
regardless of BK, (2) the obligation by defendant did not occur on
the inception of original contract but rather when default occured.
Can anyone help me how I may overcome this "Claim" issue? Also, for
17200, if there is any defense to it?
Thanks
Sun N. Han,
Attorney at Law
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