United States v. 2020-02-26 | 18-60062 | BARBRA WILLIAMSON V. PARS | nonprecedential | memorandum disposition |

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: BARBRA WILLIAMSON,

Debtor,

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

BARBRA WILLIAMSON,

Appellant,

v.

PARS,

Appellee.

No. 18-60062

BAP No. 17-1375

MEMORANDUM
*

Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Lafferty III, Spraker, and Faris, Bankruptcy Judges, Presiding

Argued and Submitted February 14, 2020
Pasadena, California

Before: SCHROEDER, BERZON, and R. NELSON, Circuit Judges.

Barbra Williamson appeals a decision by the bankruptcy court, affirmed by
the Bankruptcy Appellate Panel, concluding that PARS, the administrator of

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

FEB 26 2020

MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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Williamson’s pension plan, did not violate the automatic stay triggered by
Williamson’s chapter 13 bankruptcy. The court concluded that PARS’s post-
petition withholding of Williamson’s monthly pension payments to recoup pre-
petition overpayments constituted equitable recoupment, which is not subject to the
automatic stay. It denied Williamson’s motion for sanctions under 11 U.S.C.
§ 362(k) for violation of the stay. We affirm.
“We review de novo the scope or applicability of the automatic stay under
the Bankruptcy Code, 11 U.S.C. § 362, because it is a question of law.” In re
Palmdale Hills Prop., LLC, 654 F.3d 868, 875 (9th Cir. 2011).
1. Williamson’s argument that the doctrine of equitable recoupment is
invalid because it is a judicially created exception to 11 U.S.C. § 362, the statute
providing for the automatic stay, is foreclosed by binding precedent. The common
law doctrine of equitable recoupment is valid even though it “does not owe its
legitimacy to anything in the Bankruptcy Code.” See In re TLC Hosps., Inc., 224
F.3d 1008, 1011 (9th Cir. 2000). Use of recoupment in bankruptcy has been
approved by the Supreme Court and the Ninth Circuit. See, e.g., Reiter v. Cooper,
507 U.S. 258, 265 n.2 (1993) (observing that the use of recoupment is permitted in
bankruptcy cases); In re TLC Hosps., 224 F.3d at 1011; Newbery Corp. v.
Fireman’s Fund Ins. Co., 95 F.3d 1392, 1399 (9th Cir. 1996).
Binding precedent further makes clear that the equitable recoupment is not

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subject to the automatic stay. In re TLC Hospitals noted that “[a]s applied in
bankruptcy, recoupment is an equitable doctrine that ‘exempts a debt from the
automatic stay’” when it applies. 224 F.3d at 1011 (quoting United States v.
Consumer Health Servs. of Am., Inc., 108 F.3d 390, 395 (D.C. Cir. 1997)). In re
TLC Hospitals held that because the doctrine did apply, the party seeking
recoupment “may recoup its overpayments by applying them against its post-
petition underpayment liabilities to [debtor], without being affected by the
automatic stay.” Id. at 1014 (emphasis added). Bound by these decisions, we reject
Williamson’s argument that the doctrine of equitable recoupment is an invalid
exception to the automatic stay.
2. Equitable recoupment is permissible only where mutual debts arise
from “the same transaction,” and where “it would . . . be inequitable for the debtor
to enjoy the benefits of that transaction without meeting its obligations.” See
Newbery, 95 F.3d at 1399, 1403 (citations omitted). Williamson does not distinctly
contest in her brief that the test for equitable recoupment was met here, and
appears to have waived this point at oral argument.
In any event, the court here properly applied the logical relationship test
used in this circuit to determine whether the two claims arose from the same
transaction. See In re TLC Hosps., 224 F.3d at 1012; Newbery, 95 F.3d at 1402.
PARS’s obligation to pay Williamson pension benefits and Williamson’s debt for

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prior overpayments “logically relate to one another,” In re TLC Hosps., 224 F.3d at
1012, as they both “arise[] from the same aggregate set of operative facts,” see In
re Lazar, 237 F.3d 967, 979 (9th Cir. 2001) (internal citations omitted). Both debts
arise from Williamson’s pension plan; the errors in her signed enrollment packet
resulted in the miscalculation of her monthly benefit; and the subsequent correction
of that miscalculation demonstrated that Williamson had already received the
amount due each month by virtue of the earlier overpayment. The court also
properly concluded that the equities favor recoupment. Equitable recoupment is
thus appropriate.
AFFIRMED.