Good Faith Reliance on Advice of Counsel is a High Risk Defense Available to a Debtor who is Challenged on his or her Bankruptcy Filing

            San Francisco Attorney Michael Papuc represents debtors and creditors in bankruptcy proceedings. 

            A debtor’s goal in filing for bankruptcy is to obtain a discharge of his or her debts.  It is very important that the debtor be honest and forthright in completing bankruptcy papers, including the Petition, Schedules of Property Owned or Leased, Statement of Financial Affairs, including providing complete and accurate information of all Income and Expenses.  The Debtor will be questioned under oath at the meeting of creditors. Failure to provide honest answers to questions posed in writing or orally under oath may result in denial of discharge, and possible criminal prosecution.  Very often, the debtor will rely on his or her attorney’s advice in providing answers.  When doing so, the debtor must act in good faith in dealing with his or her attorney, by providing complete information to the attorney, so that the attorney may properly advise the debtor on how to answer anticipated questions.

            Under 11 U.S.C. § 727(a)(4), a debtor can be denied a discharge if it is proven by a preponderance of the evidence that the debtor made a false statement under penalty of perjury, that it was made knowingly and fraudulently, and that it was with respect to a material fact.

            Sometimes the debtor will rely on the defense of good faith reliance on advice of counsel, in an attempt to negate the claim that the debtor knowingly and fraudulently made false statement under penalty of perjury.  This is a high risk move, because the entire file of the debtor’s attorney, including all confidential communications between the attorney and client (debtor), becomes discoverable by the trustee or creditor bringing the adversarial proceeding.

            The case of In re Adeeb, 787 F.2d 1339, 1343 (9th Cir. 1986) states:“Generally, a debtor who acts in reliance on the advice of his attorney lacks the intent required to deny him a discharge . . . However, the debtor’s reliance must be in good faith.” 

            Thus, for a debtor to prevail on this defense, he or she must provide all information in debtor’s possession, custody or control which would be sufficient for the attorney to provide appropriate advice on what to write in the bankruptcy papers, or provide appropriate advice on what to testify to during the course of proceedings.  If the debtor fails to provide complete information to his attorney, the defense good faith reliance on advice of counsel will fail.  

Owner Move-In Evictions Under San Francisco Rent Control Laws

by Michael Papuc

Attorney at Law

44 Montgomery Street, Suite 2405

San Francisco, California 94104

415-773-1755

Michael.Papuc@gmail.com

San Francisco Attorney Michael Papuc represents landlords and tenants in eviction proceedings in San Francisco. The following is a summary of the owner-move eviction requirements:

San Francisco Administrative Code, sec. 37.9(a) (8) allows the landlord to evict under the following circumstances:

1. Landlord must seek to recover possession in good faith, without ulterior reasons and with honest intent;

2. The landlord, or landlord’s grandparents, grandchildren, parents, children, brother or sister, or the landlords spouse or the spouses of such relations, or domestic partner, shall reside in the unit for 36 continuous months as principal residence.

3. If a comparable unit becomes vacant and available before the recovery of possession, the landlord shall rescind the eviction and dismiss any action for recovery. If a non-comparable unit becomes available, the landlord shall offer it to the evicted tenant.

4. The landlord or relatives or spouses must live in the unit for 36 consecutive months, and must move in within three months after recovery of possession. If they do not, lack of good faith is rebuttably presumed.

5. Once the landlord recovers possession, no other unit in the building can be subject to owner move-in eviction. There are exceptions to this rule requiring landlord to file petition to Rent Board for approval, or if the landlord can prove hardship, disability or similar circumstances which prevents the landlord from occupying the unit he or she took possession of under owner move-in eviction.

The ordinance is very technical. Any landlord seeking to evict should seek an advice of an attorney with expertise in this area. Any tenant subject to landlord move-in eviction should also seek advice of attorney, and do whatever investigation he or she can for the 36 month period requirement.

San Francisco Attorney Michael Papuc represents Debtors and Creditors in Bankruptcy Proceedings seeking Denial of Discharge for False Statements under oath

by Michael Papuc

Attorney at Law

44 Montgomery St., Suite 2405

San Francisco, CA 94104

415-773-1755



San Francisco Attorney Michael Papuc has been practicing law in California since 1987. Michael Papuc represents debtors and creditors in bankruptcy matters, including adversarial proceedings seeking denial of discharge for false statements under oath

The statutory authority which would support an adversarial proceeding seeking denial of discharge in bankruptcy is 11 U.S.C., sec.1127 (a)(4), which provides in pertinent part as follows:

(a) The court shall grant the debtor a discharge, unless—
...
(4) the debtor knowingly and fraudulently, in or in connection with the case—
(A) made a false oath or account;
(B) presented or used a false claim;
(C) gave, offered, received, or attempted to obtain money, property, or advantage, or a promise of money, property, or advantage, for acting or forbearing to act; or
(D) withheld from an officer of the estate entitled to possession under this title, any recorded information, including books, documents, records, and papers, relating to the debtor’s property or financial affairs; ....

The term "in connection with the case" is very broad. Any false statement in the bankruptcy papers, at the meeting of creditors, in deposition, qualifies as being in connection with the case.


In order to deny a debtor’s discharge under section 1127 (a)(4), the plaintiff must prove by a preponderance of the evidence that the debtor made a false statement under penalty of perjury, that it was made knowingly and fraudulently, and that it was with respect to a material fact. Materiality is broadly interpreted under this statute:

"A false statement is material if it bears a relationship to the debtor’s business transactions or estate, or concerns the discovery of assets, business dealings, or the existence and disposition of the debtor’s property." (In re Wills, 243 B.R. 58, 62 (9th Cir. BAP 1999).)

The statute is intended to insure that "the trustee and creditors have accurate information without having to conduct costly investigations." (Cusano v. Klein, 264 F.3d 936, 946 (9th Cir. 2001).) The focus of the inquiry is not upon the value of the assets that are the subject of an omission or misrepresentation, but whether the false statement interferes with the trustee’s or creditors’ ability to fully investigate the debtor’s pre-bankruptcy financial condition or otherwise adversely affects the administration of the estate. (In re Wills, supra at 63.)

Although discharge provisions must be liberally construed in favor of the debtor and against the complaining party, that does not alter the preponderance of the evidence standard. "Rather, it has been held to mean that actual, rather than constructive, intent is required." (In re Khalil, CC-07-1164, 2007 WL 4302728, at *6 (9th Cir. BAP Nov. 28, 2007) For purposes of this statute, a debtor acts knowingly if he acts "deliberately and consciously." (Khalil, at *7.) A statement or omission is made fraudulently if the debtor knew it was false at the time it was made and he made the statement "with the intention and purpose of deceiving the creditors." (In re Roberts, 331 B.R. 876, 884 (9th Cir. BAP 2005), aff’d, 2007 WL 2089041 (9th Cir. 2007).) As is true of fraud in other contexts, "intent usually must be proven by circumstantial evidence or inferences drawn from the debtor’s course of conduct." (Khalil, at *9.) Although a pattern of recklessness alone will not suffice to establish fraud, recklessness combined with other circumstances (such as the "badges of fraud") can support an inference that the debtor acted knowingly and fraudulently. (Khalil, at *12.)

A discharge in bankruptcy is not a right. It is something which provides a debtor relief from debilitating debt, and provides the debtor with a fresh Fraud in the bankruptcy case will subject the debtor to denial of discharge, and very often criminal prosecution. The debtor must be very astute and careful with regard to every statement made in the bankruptcy papers, and all testimony provided. If the debtor does not know the answer to questions, he or she should say so, and undertake to find the best information possible to respond truthfully and accurately.

Insurer cannot Subrogate against Tenant who pays premiums for Landlord's insurance policy

by Michael Papuc
Attorney at Law
44 Montgomery Street
Suite 2405
San Francisco, California 94104
415-773-1755

San Francisco Attorney Michael Papuc represents policy holders in lawsuits against insurance companies.

Very often, a landlord will require in a lease that the tenant will pay insurance premiums for the Landlord to purchase insurance for the property the tenant occupies. When the tenant does this, the tenant becomes an implied co-insured with the landlord under the insurance policy. If a loss occurs to the property negligently caused by the tenant, the landlord’s insurer will pay for the loss. Typically the insurer would be entitled to subrogate against the person responsible for the loss. However, the landlord’s insurer will not be able to subrogate against the tenant, who paid the premiums on the policy, through payments required in the lease.

"No right of subrogation can arise in favor of an insurer against its own insured since, by definition, subrogation exists only with respect to rights of the insurer against third persons to whom the insurer owes no duty." (St. Paul Fire & Marine Ins. Co. v. Murray Plumbing & Heating Corp. (1976) 65 Cal.App.3d 66, 75.)

Where a loss is caused by the tenant's activities, no subrogation right exists against the tenant because the tenant be is treated as an implied in law co-insured. (Liberty Mutual Fire Ins. Co. v. Auto Spring Supply Co. (1976) 59 Cal.App.3d 860, 865.)

Even if not named in the policy, the tenant is treated as an implied in law coinsured: "It is quite obvious ... that the parties to the lease ... all intended that the proceeds of ... the fire insurance policy, maintained at [tenant's] expense, were to constitute the protection of all parties to the lease document ... It would also be inequitable to allow [insurance company] to transfer the risk wholly to [tenant]--the entity which paid [insurance company's] premiums ... to avoid this very risk." (Liberty Mut. Fire Ins. Co. v. Auto Spring Supply Co., supra, 59 CA3d at 865.)

Warriors beat Thunder

Warriors beat Thunder last night.  Clippers before that.  Two best teams in the league.  Hope Vurry and Lee make All Star game.

Wrongful firing of Employees in Violation of Public Policy

by Michael Papuc

Attorney at Law

44 Montgomery St., Suite 2405

San Francisco, CA 94104

415-773-1755

Michael.Papuc@gmail.com

San Francisco Attorney Michael Papuc represents employees in wrongful termination actions against employers.

Employment contracts are generally terminable at will (Lab.Code § 2922). California courts recognize a narrow exception to this rule: "(A)n employer's traditional broad authority to discharge an at-will employee may be limited by statute ... or by considerations of public policy." (Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 172)
"(W)hile an at-will employee may be terminated for no reason, or for an arbitrary or irrational reason, there can be no right to terminate for an unlawful reason or a purpose that contravenes fundamental public policy." (Gantt v. Sentry Ins. (1992) 1 Cal.4th 1083, 1094; Silo v. CHW Med. Found. (2002) 27 Cal.4th 1097, 1104.)
The employer's obligation to refrain from discharging an employee in violation of public reflects a duty imposed by law upon all employers. "As such, a wrongful discharge suit exhibits the classic elements of a tort cause of action." (Tameny v. Atlantic Richfield Co., supra, 27 Cal.3d at 176.)

To establish a claim for wrongful discharge in violation of public policy, each of the following must be proved:

(1) An employer-employee relationship

(2) Employer terminated plaintiff's employment (or took other adverse employment action;

(3) Termination of plaintiff's employment was a violation of public policy (or more accurately, a "nexus" exists between the termination and the employee's protected activity;

(4) The termination was a legal cause of plaintiff's damage; and

(5) The nature and the extent of plaintiff's damage. (See Holmes v. General Dynamics Corp. (1993) 17 Cal.App.4th 1418, 1426, fn. 8.)

Independent contractors are not employees, and therefore may not bring public policy claims. However, depending on the duties, work schedule, control employer has over independent contractor, among other factors, the independent contractor may be deemed an employee for purposes of bringing a public policy action.

Tameny claims extend to demotions, suspensions without pay, whistle blowing, and other adverse employer decisions for reasons which violate public policy, "even though the ultimate sanction of discharge has not been imposed." (Garcia v. Rockwell Int'l Corp. (1986) 187 Cal.App.3d 1556, 1562; see also Anderson v. Pacific Bell (1988) 204 Cal.App.3d 277, 283 (acknowledging possibility of public policy claim based upon suspension, but finding against plaintiff on facts of this case).)

The existence of a pertinent public policy is crucial to a Tameny claim. (Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 169 (employee claimed he was terminated because he refused to participate in illegal scheme to fix gasoline prices).)

A four-part test is utilized in determining whether a particular policy can support a common law wrongful discharge claim. The policy in question must be:

(1) Based on either a constitutional or statutory provision (or ethical rules or regulations enacted under statutory authority);

(2) "Public" in the sense that it "inures to the benefit of the public" rather than merely serving the interests of the individual;

(3) Well established at the time of discharge; and

(4) Substantial and fundamental.(Stevenson v. Sup.Ct. (Huntington Mem. Hosp.) (1997) 16 Cal.4th 880, 894; City of Moorpark v. Sup.Ct. (Dillon) (1998) 18 CAL.4th 1143, 1159,Silo v. CHW Med. Found. (2002) 27 Cal.4th 1097, 1104).)

Wrongful termination cases involving a Tameny cause of action are limited to "those claims finding support in an important public policy based on a statutory or constitutional provision." (Green v. Ralee Eng. Co. (1998) 19 Cal.4th 66, 79.) This includes claims based on state or federal law. (Green v. Ralee Eng. Co., supra, 19 Cal.4th at 87–88; Grant-Burton v. Covenant Care, Inc. (2002) 99 Cal.App.4th 1361, 1372.)

Tethering public policy to specific constitutional or statutory provisions avoids judicial policymaking. It also ensures that employers have adequate notice of the conduct that will subject them to tort liability for wrongful discharge. (Esberg v. Union Oil Co. (2002) 28 Cal.4th 262, 271.)

Because the employer's violation of a statute on a particular subject is also a violation of public policy, firing an employee for reporting the violation to appropriate authorities violates public policy. (Jie v. Liang Tai Knitwear Co. (2001) 89 Cal.App.4th 654, 660–661 (plaintiffs were allegedly fired for complaining to authorities that defendants were employing undocumented workers in violation of federal immigration laws.).)

The employee need not prove that the employer actually violated the law: "(I)t suffices if the employer fired him for reporting his ‘reasonably based suspicions' of illegal activity." (Green v. Ralee Eng. Co. (1998) 19 Cal.4th 66, 87, 78; see Barbosa v. Impco Tech., Inc. (2009) 179 Cal.App.4th 1116, 1123.)

The policy violated by the employment termination must be one inuring to the benefit of the public at large rather than to a particular employer or employee. Policies are not "public" when they are derived from statutes that "simply regulate conduct between private individuals, or impose requirements whose fulfillment does not implicate fundamental public policy concerns." Such policies do not give rise to Tameny claims. (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 669–670.)

The law surrounding the facts of each claim is complex and contains many subtleties. Damages in a case properly proven may include lost wages and benefits, emotional distress, punitive damages if malice, oppression or fraud can be proven. The employee may also be entitled to attorneys fees if the employee prevails.

The down-side is that the employee will have difficulty finding another job if he or she sues the former employer. Also, the employee cannot expect former co-employees to testify favorably for the employee, because their jobs will be at stake if they do so. It is good practice for the employee to obtain witness statements before the lawsuit is brought.

There are administrative requirements of timely filing a claim with the California Department of Fair Employment (DFEH) (one year) or Equal Employment Opportunity Commission (EEOC) (180 days from adverse employment determination), before bringing action. It is generally more favorable to sue in California state courts under DFEH, after receiving right to sue letter, as opposed to bringing federal claims (no right to sue letter required, but suit must be filed no earlier than 60 days after submission of charges to EEOC, and no later than 90 days after EEOC notifies claimant of results of investigation.)

Evictions of Section 8 Tenants in San Francisco for Nuisance

by Michael Papuc

Attorney at Law

44 Montgomery Street, Suite 2405

San Francisco, CA 94104

415-773-1755



Michael Papuc represents landlords and tenants in San Francisco eviction proceedings.

Landlords in San Francisco who enter agreements with the San Francisco Housing Authority to provide a tenancy to low income tenants have to go through specified procedures to evict the tenant for nuisance.

The landlord must serve a three day notice to quit, specifying the reasons for the eviction, provide a copy to the San Francisco Rent Control Board, and a copy to the San Francisco Housing Authority.

After the three day period following service, the Landlord must bring an unlawful detainer action against the tenant, and again serve the tenant with the lawsuit. The tenant has 5 days to respond to the Complaint. If tenant fails to timely respond, the landlord can obtain a default judgment for possession, and begin eviction proceedings with the Sheriff. If the tenant timely responds to the complaint, the landlord must submit a memorandum to set the case for trial, and trial is set within 20 days thereafter.

It is often less expensive and less risky for the landlord and tenant to settle the case, providing the tenant a specified time to move out, with the landlord being able to enforce the settlement agreement as a judgment if the tenant does not leave pursuant to time-table agreed upon.

San Francisco Administrative Code, sec, 37.9(a)(3) states:

(a) A landlord shall not endeavor to recover possession of a rental unit unless:
(3) The tenant is committing or permitting to exist a nuisance in, or is causing substantial damage to, the rental unit, or is creating a substantial interference with the comfort, safety or enjoyment of the landlord or tenants in the building, and the nature of such nuisance, damage or interference is specifically stated by the landlord in the writing as required by Section 37.9(c).

These cases will need to be proven with testimony from other tenants, police reports, testimony from police officers, and anyone with knowledge of the conduct of the tenant causing the nuisance. If the landlord cannot prove his or her case, the landlord can be subject to wrongful eviction proceedings under the San Francisco Rent Control Ordinance.