Checkmate Staffing, Inc. v. Diversified Paratransit, Inc.

MEMORANDUM

Diversified Paratransit, Inc., (“DPI”) timely appeals from a decision of the Ninth Circuit Bankruptcy Appellate Panel (“BAP”) affirming the judgment of the bankruptcy court after trial of an adversary proceeding prosecuted by appellee Checkmate Staffing, Inc. (“Checkmate”), a Chapter 11 debtor. In the adversary proceeding, Checkmate obtained a money judgment of $467,500, which was the full amount due on open invoices for staff leasing services Checkmate performed for DPI pursuant to a written Service Agreement between the filing of the bankruptcy petition on December 29, 2003, and the expiration of the Service Agreement in April 2004.

DPI and its subsidiaries, Paul’s Yellow Cab, Inc. and Inland Express, Inc., provide bus and taxi services to the public. DPI contends that the bankruptcy court abused its discretion by refusing to allow it to proceed under equitable theories of restitution or unjust enrichment to establish a claim for recoupment of amounts DPI paid to Checkmate pursuant to the Service Agreement to purchase workers’ compensation and employer liability insurance policies covering the “employees” of Checkmate who were “leased back” to DPI— insurance…