Sgobba

Dissenting.

Red Line Research Laboratories, Inc. (“Red Line”) appeals the district court’s affirmance of the bankruptcy court’s judgment in favor of Respondent Michael Sgobba (“the Marshal”). Red Line asserts that the Marshal erred in releasing monies levied on by Red Line and delivered to the Marshal. The district court concluded that, because a third party held a senior interest to the levied funds at the time the Marshal erred, Red Line could not demonstrate “actual damages” and therefore could not recover from the Marshal. I agree and respectfully dissent.

FACTS AND PROCEEDINGS BELOW

On November 4, 1994, Appellant Red Line obtained a judgment in the Superior Court of California against Naki Electronics, Inc. (“Naki”) in the amount of $75,203.24. Soon after the Superior Court issued a Writ of Execution, Red Line levied on an account receivable owed to Naki by Wal-Mart Stores, Inc. In December 1994, Wal-Mart tendered a check for the full amount to Respondent, then-acting Marshal of San Diego County, who returned the check to Wal-Mart because it lacked proper identification; Wal-Mart issued another check to the Marshal in January 1995. In February 1995, Union Bank, holder of a…

MEMORANDUM *

Red Line Research Laboratories, Inc. (“Red Line”) appeals the district court’s affirmance of the bankruptcy court’s judgment in favor of Respondent Michael Sgobba (“the Marshal”). 1 Red Line was a judgment creditor of Naki Electronics, Inc. (“Naki”), and levied on an account receivable owed to Naki by Wal-Mart Stores, Inc. The funds were eventually tendered to the Marshal, who subsequently released them to Naki, which had recently filed for bankruptcy and was acting as debtor-in-possession. Red Line asserted that the Marshal erred in releasing the funds. In two different orders, separated by a remand to the bankruptcy court for a trial on factual issues, the district court concluded that Red Line could not demonstrate the “actual damages” required by California law because a third party, Union Bank, held a senior interest in the levied funds at the time the Marshal erred. As a result, the district court held, even though the Marshal had erred in releasing the funds, he was not liable to Red Line. We disagree and reverse.

We review de novo the district court’s decision on an appeal from a bankruptcy court. Onink v. Cardelucci (In re Cardelucci), 285 F.3d 1231, 1233…