NORTHERN DISTRICT OF CALIFORNIA
SIDDARTH S. SHAH, No. 92-11051
After review of the debtor's brief, the court is unconvinced that any basis exists for deviation
from the general rule that a Chapter 11 discharge does not bar a creditor from raising a prepetition claim
as a setoff against an action brought by the debtor. In re De Laurentis Entertainment Group, Inc.
F.2d 1269, 1276-7 (9th
Cir. 1992). See also In re Buckenmaier
, 127 B.R. 233 (9th
Nor is the court convinced that the debts are not mutual. Both the claims to be set off and the
debtor's claim for indemnity arise out of known prepetition environmental problems. The view that a
claim for indemnity arises when it is made, and not when the underlying situation occurred, is a minority
position rejected by most circuits, including the ninth. See California Dept. of Health Services v.
, 995 F.2d 925, 928 (9th
Cir.1993). If the situation was reversed, and it was Fluor Corporation
that was seeking indemnification from Shah, the correct ruling would be that the obligation was
discharged. In re Manville Forest Products Corp.
, 225 B.R. 862, 866 (Bkrtcy.S.D.N.Y. 1998).
Accordingly, the debts are mutual and Fluor has validly raised its prepetition claims against Shah as a
defense to Shah's indemnification action.
For the foregoing reasons, Shah's motion to enforce his discharge will be denied. No sanctions
are appropriate. Counsel for Fluor shall submit an appropriate form of order.
Dated: May 31, 2000 ___________________________