IN RE: HELLER EHRMAN LLP (2018)

United States Court of Appeals, Ninth Circuit.

IN RE: HELLER EHRMAN LLP, Debtor, Heller Ehrman LLP, Liquidating Debtor, Plaintiff-Appellant, v. Davis Wright Tremaine LLP, Defendant-Appellee.
IN RE: Heller Ehrman LLP, Debtor, Heller Ehrman LLP, Liquidating Debtor, Plaintiff-Appellant, v. Jones Day, Defendant-Appellee.
IN RE: Heller Ehrman LLP, Debtor, Heller Ehrman LLP, Liquidating Debtor, Plaintiff-Appellant, v. Foley & Lardner LLP, Defendant-Appellee.
IN RE: Heller Ehrman LLP, Debtor, Heller Ehrman LLP, Liquidating Debtor, Plaintiff-Appellant, v. Orrick Herrington & Sutcliffe LLP, Defendant-Appellee.

No. 14-16314, No. 14-16315, No. 14-16317, No. 14-16318

Decided: March 27, 2018

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

Jeffrey T. Makoff, Attorney, Valle Makoff LLP., San Francisco, CA, Matthew Rutledge Schultz, Attorney, Trepel Greenfield Sullivan & Draa LLP, San Francisco, CA, Christopher Daniel Sullivan, Esquire, Attorney, Diamond McCarthy LLP, San Francisco, CA, for Plaintiff-Appellant Steven Paul Ragland, Esquire, Attorney, Steven A. Hirsch, Esquire, Attorney, Keker, Van Nest & Peters LLP, San Francisco, CA, Peter Meringolo, Attorney, PMRK Law, LLP, San Francisco, CA, for Defendant-Appellee Joshua R. Benson, Josh Benson, San Francisco, CA, for Amici Curiae San Francisco Bar Association, Los Angeles Bar Association William Coleman Hubbard, Nelson Mullins Riley & Scarborough LLP, Columbia, SC, for Amicus Curiae American Bar Association

MEMORANDUM **

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, 203 Cal.Rptr. 13 (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 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, 4 Cal.5th 467, 229 Cal.Rptr.3d 371, 411 P.3d 548 (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, 4 Cal.5th 467, 478, 229 Cal.Rptr.3d 371. 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, 114 S.Ct. 1757, 128 L.Ed.2d 556 (1994), the waiver was not a fraudulent transfer under 11 U.S.C. § 548(a)(1).

AFFIRMED.

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