Bankruptcy/Sanctions: Contempt Sanctions Against Creditor For Knowingly Violating Discharge Injunction Could Not Stand Based On Creditor’s Subjective Good Faith Belief, Even If Unreasonable

Ninth Circuit Clarified Some Reasoning In Zilog Decision.

            In In re Taggart, Case No. 16-35402 (9^th Cir. Apr. 23, 2018) (published), the Ninth Circuit clarified some prior reasoning in In re Zilog, 450 F.3d 996, 1009 n.14 (9^th Cir. 2006) to reinforce that contempt sanctions cannot be assessed against a creditor for knowingly violating a discharge injunction based on creditor’s good faith belief, even if unreasonable in nature.  The bankruptcy judge found the creditor’s subjective intent was irrelevant, an erroneous determination resulting in the BAP’s prior decision to reverse the bankruptcy judge ruling—with the Ninth Circuit affirming the BAP’s reversal.