ConocoPhillips Co. and Alma Energy Corp. exchanged oil and gas interests under an exchange agreement in which each indemnified the other for any environmental claims related to the properties received. Alma later filed for protection under Chapter 11 of the Bankruptcy Code. Thereafter, Noble Energy Inc. agreed to by the properties Alma had received from Conoco under the exchange agreement. After the bankruptcy proceeding concluded, an environmental contamination suit was filed against Conoco, and Noble refused to indemnify Conoco under the exchange agreement. Conoco filed suit against Noble alleging breach of the exchange agreement and seeking to recover the $63 million it paid to settle the suit. The trial court granted summary judgment for Noble. The court of appeals reversed and entered summary judgment for Conoco, concluding that the exchange agreement was an executory contract that was assumed by Alma and assigned to Noble in the bankruptcy proceeding. The Supreme Court affirmed, holding that under the terms of the bankruptcy court order confirming the plan of reorganization and the agreement for sale of Alma’s assets, Noble was assigned an undisclosed contractual indemnity obligation of Alma. View "Noble Energy, Inc. v. Conocophillips Co." on Justia Law

Benjamin Ashmore appealed the district court's order dismissing him as the plaintiff in a whistleblower action under the Sarbanes-Oxley Act, 18 U.S.C. 1514A. Instead, the trustee of Ashmore's bankruptcy estate was substituted as plaintiff. The Second Circuit dismissed the appeal for lack of jurisdiction because the district court's dismissal of the case as to Ashmore and the substitution of the trustee as plaintiff were interlocutory orders that were not immediately appealable. The court vacated the temporary stay of the district court proceedings and denied Ashmore's pending motion to stay as moot. View "Ashmore v. CGI Group, Inc." on Justia Law

The Debtor owned nonresidential real estate that FNB sold in a pre-petition foreclosure sale. Before Debtor's bankruptcy filing, FNB obtained a deficiency judgment and filed two judicial liens. During her chapter 7 case, Debtor moved, under 11 U.S.C. 522(f)(1)(A), to avoid those liens as impairing Debtor’s Ohio homestead exemption in her residence. The bankruptcy court denied Debtor’s motion, ruling that section 522(f)(2)(C) specifically prohibits the avoidance of a deficiency judgment lien because it is a lien based on a judgment arising out of a mortgage foreclosure. The Sixth Circuit Bankruptcy Appellate Panel reversed, finding that section 522(f)(2)(C) is not ambiguous, so reference to either state law or legislative history is not required to interpret it. Section 522(f)(2)(C) does not preclude avoidance of mortgage deficiency judgment liens but “clarifi[es] that the entry of a foreclosure judgment does not convert the underlying consensual mortgage into a judicial lien which may be avoided.” The court noted that most courts hold that mortgage deficiency liens are not "judgments [that] aris[e] out of a mortgage foreclosure" and are therefore avoidable. View "In re: Pace" on Justia Law

Reid founded Capitol, which owned commmunity banks, and served as its chairman and CEO. His daughter and her husband served as president and general counsel. Capitol accepted Federal Reserve oversight in 2009. In 2012, Capitol sought Chapter 11 bankruptcy reorganization and became a “debtor in possession.” In 2013, Capitol decided to liquidate and submitted proposals that released its executives from liability. The creditors’ committee objected and unsuccessfully sought derivative standing to sue the Reids for breach of their fiduciary duties. The Reids and the creditors continued negotiation. In 2014, they agreed to a liquidation plan that required Capitol to assign its legal claims to a Liquidating Trust; the Reids would have no liability for any conduct after the bankruptcy filing and their pre-petition liability was limited to insurance recovery. Capitol had a management liability insurance policy, purchased about a year before it filed the bankruptcy petition. The liquidation plan required the Reids to sue the insurer if it denied coverage. The policy excluded from coverage “any claim made against an Insured . . . by, on behalf of, or in the name or right of, the Company or any Insured,” except for derivative suits by independent shareholders and employment claims (insured-versus-insured exclusion). The Liquidation Trustee sued the Reids for $18.8 million and notified the insurer. The Sixth Circuit affirmed a declaratory judgment that the insurer had no obligation with respect to the lawsuit, which fell within the insured-versus-insured exclusion. View "Indian Harbor Insurance Co. v. Zucker" on Justia Law

The Ninth Circuit affirmed the Bankruptcy Appellate Panel's affirmance of the bankruptcy court's grant of appellees' motion to dismiss Rosanna Mac Turner's and David Turner's Adversary Complaint without leave to amend. The panel held that the Turners' claims for wrongful foreclosure, breach of contract and the implied covenant of good faith and fair dealing under the Pooling and Servicing Agreement, and violation of the Unfair Competition Law were correctly dismissed without leave to amend because the Turners' lack of standing could not be cured by amendment. The panel also held that the district court correctly dismissed the Turners' claims for breach of contract and the implied covenant of good faith and fair dealing under the Deed of Trust (DOT) and violation of Cal. Civ. Code 2923.5 without leave to amend because any amendment would be futile. The panel explained that the DOT permitted the substitution of the Trustee, the Turners cannot allege that they suffered damages for the alleged breach of the implied covenant of good faith and fair dealing under the DOT, and appellees have complied with Section 2923.5, leaving the Turners no remedy. View "Turner v. Wells Fargo Bank NA" on Justia Law

Mello appealed the bankruptcy court's order confirming debtors' second amended plan without a hearing. The Bankruptcy Appellate Panel held that the bankruptcy court was in the best position to determine when an evidentiary hearing on the issue of good faith was necessary. The panel also held that the bankruptcy court did not err in overruling Mello's objections and confirming debtors' second amended plan. View "Mello v. Wojciechowski" on Justia Law

Agriprocessors wired funds covering overdrafts at Luana Savings Bank in the 90 days before the company filed for bankruptcy. After the bankruptcy court found that the bankruptcy trustee could recover some deposits, the trustee and the bank cross-appealed. The Eighth Circuit held that the true overdrafts were debt because the bank made an unsecured loan and/or extension of credit to Agriprocessors and thus Agriprocessors was legally obligated to the bank for the amount of the overdrafts. Therefore, the district court correctly found that the trustee could recover Agriprocessors' true-overdraft-covering deposits from the bank. Furthermore, the payments did not qualify as contemporaneous exchanges for new value, debts and transfers in the ordinary course of business, nor transfers creating security interests. The court affirmed the bankruptcy court's decision to base the bank's liability on the uncorrected balances; the bankruptcy court did not err in finding a netting agreement; and the transfer was not for or on account of an antecedent debt owed by the debtor before such transfer was made, and thus not voidable; View "Sarachek v. Luana Savings Bank" on Justia Law

The one-year filing deadline imposed by 11 U.S.C. 727(e)(1) was a non-jurisdictional claim-processing rule. Debtor filed a Chapter 7 bankruptcy petition that fraudulently omitted his home, a key asset. Because no one notice, debtor subsequently received a discharge of his debts under 11 U.S.C. 727(a). The panel held that a non-jurisdictional time bar was an affirmative defense that may be forfeited if not timely raised, and debtor forfeited the defense by failing to raise it in the bankruptcy court. On the merits, the bankruptcy court's determination that debtor fraudulently concealed his ownership interest in the home was plainly correct. Therefore, the panel reversed the bankruptcy court's judgment dismissing the trustee's request for relief under section 727(d)(1) and remanded with instructions. View "Weil v. Elliott" on Justia Law

General Mills filed an adversary proceeding to determine the dischargeability of a debt in debtor's Chapter 7 bankruptcy. Applying Minnesota law to its preclusion analysis, the Eighth Circuit affirmed the bankruptcy court's rejection of debtor's claim preclusion defense. In this case, because all claims between codefendants were dismissed without prejudice by stipulation, there was no final adjudication on the merits. Furthermore, because General Mills' adversary claim arose from its rights and remedies with respect to debtor's execution of a promissory note secured by the property at issue, there was no final adjudication of that issue. The court affirmed the bankruptcy court as to issue preclusion as well. The court rejected debtor's claim of judicial estoppel where General Mills did not take inconsistent positions. The court also held that General Mills' fraud claims were not barred by the statute of limitations; rejected debtor's challenges to the bankruptcy court's evidentiary rulings; and affirmed the bankruptcy court's finding that debtor's debt was not dischargeable. Accordingly, the court affirmed the judgment. View "Hernandez v. General Mills Federal Credit Union" on Justia Law

A group of hotel-related businesses, as well as investors and guarantors, filed suit alleging claims of fraud against the Royal Bank and two of its subsidiaries. The district court dismissed the claims because plaintiffs had failed to list their cause of action in a schedule of assets in their now-concluded bankruptcy proceeding, they lacked standing to bring the claim, and were barred by judicial estoppel. The claims of the investor and guarantors were dismissed as untimely and barred by the law of the case. The Second Circuit affirmed on the grounds of judicial estoppel and timeliness. The court held that, under Fifth Circuit law, the kind of LIBOR-fraud claim that BPP wanted to assert was "a known cause of action" at the time of confirmation, so that BPP's failure to list it in the schedule of assets was equivalent to a representation that none existed; the bankruptcy court "adopted" BPP's position; and BPP's assertion of the claims now would allow it to enjoy an unfair advantage at the expense of its former creditors. Furthermore, plaintiffs have not shown good cause for an untimely amendment, and the district court properly denied leave to amend. View "BPP Illinois v. Royal Bank of Scotland Group PLC" on Justia Law