Credit Managers Ass'n v. Countrywide Home Loans, Inc.

In this case, we must decide whether the United States Bankruptcy Code preempts Code of Civil Procedure section 1800, recovery of preferences. In Sherwood Partners, Inc. v. Lycos, Inc. (9th Cir. 2005) 394 F.3d 1198 (Sherwood), Judge Alex Kozinski of the Ninth Circuit Court of Appeals wrote for the majority and held the Bankruptcy Code preempted section 1800. In Haberbush v. Charles & Dorothy Cummins Family Limited Partnership (2006) 139 Cal.App.4th 1630, 1633 [ 43 Cal.Rptr.3d 814 ] (Haberbush), the Second District Court of Appeal, citing to Judge Dorothy Nelson’s dissent in Sherwood, held it did not.

Credit Managers Association of California (CMAC) argues the trial court erroneously relied on Sherwood, which is nonbinding federal authority, to find the Bankruptcy Code preempts section 1800. Countrywide recognizes Sherwood is not binding on this court, but contends its reasoning is persuasive and we should rely on it to affirm the trial court’s judgment. By “Supplemental Citation,” CMAC suggests we rely on Haberbush to reverse the trial court’s judgment. As we explain below, we find Haberbush persuasive and conclude the Bankruptcy Code does not preempt section…