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Bos v. Bd. of Trs.

United States Court of Appeals, Ninth Circuit

March 24, 2016

GREGORY BOS, Appellant,
v.
BOARD OF TRUSTEES, in their capacities as Trustees of the Carpenters Health and Welfare Fund of California; Carpenters Vacation-Holiday Trust Fund for Northern California; Carpenters Pension Trust Fund for Northern California; Carpenters Annuity Trust for Northern California; Carpenters Training Trust Fund for Northern California; Northern California Carpenters Regional Council, Appellee

          D.C. No. 2:12-cv-02026-MCE.

          SUMMARY[**]

         Bankruptcy / Attorney's Fees

         The panel denied a bankruptcy debtor's motion to recover attorney's fees after he prevailed on the merits on appeal in a nondischargeability proceeding.

         In its opinion on appeal from the district court's affirmance of the bankruptcy court, the panel held that the debtor was not a fiduciary under the Employee Retirement Income Security Act, and thus the Bankruptcy Code's " fiduciary" exception to discharge could not be applied to him. Accordingly, his judgment debt for failure to make payments to employee pension funds could be discharged in bankruptcy.

         Denying the debtor's motion for attorney's fees, the panel held that the debtor was not entitled to fees under the fee-shifting provision of California Civil Code § 1717, which makes reciprocal an otherwise unilateral contractual obligation to pay attorney's fees. Adopting the Bankruptcy Appellate Panel's construction of section 1717, the panel held that the dischargeability claim was not an action " on a contract," but rather was collateral to a contract.

         The panel held that the debtor also was not eligible to recover fees under ERISA because the nondischargeability proceeding did not meet the test for " arising under" jurisdiction set forth in 29 U.S.C. § 1132(e).

         For GREGORY BOS, Appellant: J. Russell Cunningham, Kristen Ditlevsen, Jeremy Luke Hendrix, Attorneys, Desmond Nolan Livaich & Cunningham, Sacramento, CA.

         For BOARD OF TRUSTEES, in their capacities as Trustees of the Carpenters Health and Welfare Fund of California; Carpenters Vacation-Holiday Trust Fund for Northern California; Carpenters Pension Trust Fund for Northern California; Carpenters Annuity Trust for Northern California; Carpenters Training Trust Fund for Northern California; Northern California Carpenters Regional Council, Appellee: Emily P. Rich, Tracy L. Mainguy, Blythe Mickelson, Roberta D. Perkins, Attorneys, Weinberg Roger & Rosenfeld, Alameda, CA.

         Before: Diarmuid F. O'Scannlain and Sandra S. Ikuta, Circuit Judges and Larry A. Burns,[*] District Judge.

         ORDER

         We consider Gregory Bos's motion to recover attorney's fees under California Civil Code § 1717, and the fee-shifting provisions of the Employee Retirement Income Security Act of 1974.

         I

         The facts giving rise to the present request for attorney's fees are more fully set forth in our underlying opinion on the merits. See Bos v. Bd. of Trs., 795 F.3d 1006 (9th Cir. 2015). We offer a brief summary here.

         Bos was an employer who was bound by a handful of Trust Agreements to make payments to certain employee pension Funds, which were administered by the Board of Trustees. Id. at 1007. Bos struggled to meet his obligation, and in March 2009 he signed a Promissory Note pledging to make monthly contributions and personally guaranteeing payment to the Funds of $359,592.09. He mostly fell short. In August 2009 the Board brought a grievance against Bos, and an arbitrator ruled that he had violated such obligations, awarding the Funds $504,282.59. A California Superior Court confirmed the Board's arbitration award and later entered a judgment against Bos in the same amount.[1]

         Around the same time, Bos filed for Chapter 7 bankruptcy. Id. at 1008. When Bos tried to discharge the half-million-dollar debt he owed the Funds, the Board objected, and brought an adversary proceeding in bankruptcy court in an effort to have Bos's debt declared nondischargeable under the Bankruptcy Code. Id. The Board sought relief under three different provisions of the Code. One of those provisions, 11 U.S.C. § 523(a)(4), provides that a debtor may not discharge a debt he incurred through " fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny."

         Bos conceded that the Trust Agreements and the Promissory Note were fully enforceable, conceded that he had breached them, and conceded that his debt to the Funds was valid. Bos argued, however, that the Bankruptcy ...


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