Heller Ehrman LLP v. Davis Wright Tremaine LLP

• Court: Court of Appeals for the Ninth Circuit
• Decided: March 27, 2018
• Docket: 14-16314
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION MAR 27 2018 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: HELLER EHRMAN LLP, No. 14-16314

Debtor, D.C. No. 3:14-cv-01236-CRB

------------------------------ MEMORANDUM* HELLER EHRMAN LLP, Liquidating Debtor,

Plaintiff-Appellant,

v.

DAVIS WRIGHT TREMAINE LLP,

Defendant-Appellee.

In re: HELLER EHRMAN LLP, No. 14-16315

Debtor, D.C. No. 3:14-cv-01237-CRB

------------------------------

HELLER EHRMAN LLP, Liquidating Debtor,

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. v.

JONES DAY,

Defendant -Appellee.

In re: HELLER EHRMAN LLP, No. 14-16317

Debtor, D.C. No. 3:14-cv-01238-CRB ______________________________

FOLEY & LARDNER LLP,

In re: HELLER EHRMAN LLP, No. 14-16318

Debtor, D.C. No. 3:14-cv-01239-CRB

2 ORRICK HERRINGTON & SUTCLIFFE LLP,

Appeal from the United States District Court for the Northern District of California Charles R. Breyer, District Judge, Presiding

Argued and Submitted June 13, 2016 Submission Vacated July 27, 2016 Resubmitted March 23, 2018 San Francisco, California

Before: CLIFTON and IKUTA, Circuit Judges, and LAMBERTH,** District Judge.

Before filing a petition for bankruptcy, Heller Ehrman LLP waived any

rights or claims it may have had to seek payment of legal fees generated from non-

contingency fee matters by former Heller shareholders after the date they departed

from the firm (referred to as a Jewel waiver, after the case of Jewel v. Boxer, 156

Cal. App. 3d 171 (1984)). Heller, through its trustee in bankruptcy, subsequently

argued that its Jewel waiver constituted a fraudulent transfer of its rights to such

legal fees. The district court rejected this claim, and Heller appealed. Because the

California law in this area was unsettled, we certified a question respecting this

** The Honorable Royce C. Lamberth, Senior United States District Judge for the District of Columbia, sitting by designation. 3 issue to the California Supreme Court, see In re Heller Ehrman LLP, 830 F.3d 964,

966 (9th Cir. 2016), which subsequently responded, see Heller Ehrman LLP v.

Davis Wright Tremaine LLP, No. S236208, 2018 WL 1146649 (Cal. Mar. 5,

2018). We have jurisdiction under 28 U.S.C. § 1291.

Applying the California Supreme Court’s ruling to the facts of this case, the

district court did not err in granting summary judgment to the defendants because

Heller Ehrman, as a dissolved law firm, “has no property interest in the fees or

profits associated with unfinished hourly fee matters.” Heller Ehrman LLP, 2018

WL 1146649, at *6. Accordingly, the Jewel waiver did not constitute a transfer of

Heller’s property interests to such fees or profits. See id. Because the trustee can

avoid a transfer only if “the debtor had an interest in property,” BFP v. Resolution

Tr. Corp., 511 U.S. 531, 535 (1994), the waiver was not a fraudulent transfer under

11 U.S.C. § 548(a)(1).

AFFIRMED.