Christopher Hamilton v. Elite of Los Angeles, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: March 2, 2020
• Docket: 19-55441
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION MAR 2 2020 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: CHRISTOPHER JOHN No. 19-55441 HAMILTON; ELIZABETH LEIGH TESOLIN, D.C. No. 3:18-cv-02341-GPC-NLS Debtors, ______________________________ MEMORANDUM* CHRISTOPHER JOHN HAMILTON; ELIZABETH LEIGH TESOLIN,

Appellants,

v.

ELITE OF LOS ANGELES, INC.; SAN DIEGO TESTING SERVICES, INC.,

Appellees.

Appeal from the United States District Court for the Southern District of California Gonzalo P. Curiel, District Judge, Presiding

Argued and Submitted February 6, 2020 Pasadena, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: BOGGS,** IKUTA, and CHRISTEN, Circuit Judges.

Appellant Christopher Hamilton appeals from a district court order affirming

a bankruptcy court’s ruling that the automatic stay in his Chapter 11 proceeding

did not apply to a state-court action filed by appellees Elite of Los Angeles, Inc.

and San Diego Testing Services, Inc. (Elite) against third-party Hamilton College

Consulting (HCC). See Hamilton v. Elite of L.A., Inc., No.

18-CV-2341-GPC-NLS, 2019 WL 1259164 (S.D. Cal. Mar. 19, 2019). We have

jurisdiction pursuant to 28 U.S.C. § 158(d)(1), and we affirm.1

The automatic stay arising from 11 U.S.C. § 362(a) generally protects only

the debtor, the property of the debtor, and the property of the estate. Chugach

Timber Corp. v. N. Stevedoring & Handling Corp. (In re Chugach Forest Prods.,

Inc.), 23 F.3d 241, 246 (9th Cir. 1994)). It does not apply to “actions against

guarantors, sureties, corporate affiliates, or other non-debtor parties liable on the

debts of the debtor.” Id. (quoting Advanced Ribbons and Office Prods., Inc. v. U.S.

Interstate Distrib., Inc. (In re Advanced Ribbons & Office Prods.), 125 B.R. 259,

263 (B.A.P. 9th Cir. 1991)).

** The Honorable Danny J. Boggs, United States Circuit Judge for the U.S. Court of Appeals for the Sixth Circuit, sitting by designation. 1 Because the parties are familiar with the factual and procedural history of this case, we recount it only as is necessary to explain our disposition. 2 The parties do not dispute that Hamilton is liable to Elite for a prepetition

judgment that the bankruptcy court determined was nondischargeable in Chapter

11, see In re Hamilton, 785 F. App’x 438, 439 (9th Cir. 2019), nor that HCC

entered into an indemnity agreement with Hamilton for the nondischargeable

judgment.

Elite argues that HCC’s indemnity agreements with Hamilton make it

contractually liable for the judgment. See generally Cal. Civ. Code § 2778(1).

Elite did not name Hamilton as a defendant in the state-court action, but instead

seeks to recover directly from HCC pursuant to a state law that authorizes creditor

actions against third parties indebted to a judgment debtor. See Cal. Civ. Code

Proc. § 708.210.

Hamilton contends that Chugach does not apply because indemnity differs

from surety or guaranty, the types of non-debtor liability we specifically identified

in that case. See Chugach, 23 F.3d at 246. He argues that because HCC’s liability

for the nondischargeable judgment arises, if at all, pursuant to the indemnity

agreements, HCC is liable solely to Hamilton, and any payment HCC owes is

property of the estate subject to the automatic stay.

We are unpersuaded that the distinct nature of indemnity overcomes our

holding in Chugach that the automatic stay does not apply to actions against “non-

3 debtor parties liable on the debts of the debtor.” Id. (quoting Advanced Ribbons,

125 B.R. at 263); see also Cal. Civ. Code § 2778(1) (providing rule of contract

interpretation that “[u]pon an indemnity against liability . . . the person indemnified

is entitled to recover upon becoming liable”). The bankruptcy court did not err by

concluding that the automatic stay did not extend to Elite’s state-court action

against HCC.

AFFIRMED.