Supreme Court Grants ‘Cert’ to Decide Whether Good Faith Is a Defense to Contempt

January 9, 2019

On Jan. 4, 2019, the Supreme Court granted certiorari in Taggart v. Lorenzen, 18-489 (Sup. Ct.), to decide whether good faith is a defense to a violation of the discharge injunction. The grant of certiorari means that the Supreme Court again will have at least three bankruptcy cases on the calendar this term.

The high court agreed to review Lorenzen v. Taggart (In re Taggart), 888 F.3d 438 (9th Cir. April 23, 2018, rehearing denied Sept. 7, 2018), where the Ninth Circuit held that a subjective, good faith belief that an action does not violate the discharge injunction absolves the creditor of contempt, even if the belief is “unreasonable.” To read some of ABI’s coverage of Taggartclick here.

Taggart will resolve a split of circuits. Five weeks after Taggart, the First Circuit held in IRS v. Murphy, 892 F.3d 29 (1st Cir. June 7, 2018), that good faith is not a defense to contempt of the discharge injunction. To read ABI’s discussion of Murphyclick here.

In the first bankruptcy case this term, the Supreme Court is hearing oral argument today in Obduskey v. McCarthy & Holthus LLP, 17-1307 (Sup. Ct.), also to resolve a circuit split and decide whether the federal Fair Debt Collection Practices Act applies to nonjudicial foreclosures. ABI will report on oral argument.

In late October, the Supreme Court granted certiorari in Mission Product Holdings Inc. v. Tempnology LLC, 17-1657 (Sup. Ct.), to resolve a split of circuits and decide whether rejection of a trademark license bars the licensee from continuing to use the mark. Oral argument in Mission Product is scheduled for February 20. To read some of ABI’s coverage of Mission Productclick here.

In both Obduskey and Taggart, Daniel L. Geyser of Dallas will argue in the Supreme Court on behalf of the debtors. The trademark licensee is being represented in Mission Product by Danielle Spinelli of Wilmer Cutler Pickering Hale & Dorr LLP. Ms. Spinelli is a former Supreme Court clerk who argued on the winning side in two recent bankruptcy cases, Czyzewski v. Jevic Holding Corp., 137 S. Ct. 973 (2017), and Clark v. Rameker, 134 S. Ct. 2242 (2014).

Oral argument in Taggart will be held before the end of April, allowing the justices to issue a ruling before the Court’s term ends in late June.

The stay-violation case in the Supreme Court is Taggart v. Lorenzen, 18-489 (Sup. Ct.).

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