Ninth Circuit Came To The Same Result, Even Under An Objective Standard Although SCOTUS Sent The Case Back Based On Denying Contempt Fees Under A Less Stringent Good Faith Belief Standard.
On April 28, 2020, we posted on In re Taggart, a Ninth Circuit decision where two ex-partners in state court litigation against a debtor obtaining a discharge injunction were not hit with contempt fees when they took certain actions with a good faith belief that the debtor had re-entered into the state court fray—with the federal appeals court reversing a contrary lower court ruling. SCOTUS, in Taggart v. Lorenzen, 139 S.Ct. 1795, 1799 (2019), vacated that prior Ninth Circuit decision and remanded after determining that an objective, rather than subjective, standard is more appropriate in determining whether the ex-partner creditors could be held in civil contempt for violating the bankruptcy discharge injunction. On remand, in Taggart v. Lorenzen, No. 16-35402 (9th Cir. Nov. 24, 2020) (published), the Ninth Circuit came to the same result based on applying the higher objective standard to the creditors’ conduct and knowledge of events.