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Attorney Boland was an expert witness and defense counsel in child pornography cases. To demonstrate that pornographic images may be altered to appear that minors were engaged in sexual conduct when they were not, Boland purchased innocent stock images of minors and "morphed" them into pornographic images for use in criminal proceedings. The issue of whether Boland committed a crime in creating and displaying these images of child pornography was raised and Boland eventually voluntarily entered into a Pretrial Diversion Agreement, explaining and apologizing for creating the images. Two of the minors, depicted in the images Boland created, won awards under 18 U.S.C. 2252A(f), which provides civil damages for victims of child pornography. Boland filed a Chapter 7 bankruptcy petition; the minors filed an unsuccessful adversary proceeding, asserting their awards were non-dischargeable debts for willful and malicious injury under 11 U.S.C. 523(a)(6). The Sixth Circuit Bankruptcy Appellate Panel remanded. Collateral estoppel did not apply on the issue of whether Boland intended to injure the minors since intent was not actually litigated or necessary to the outcome of the prior litigation, but stipulations made through Boland's Diversion Agreement and judicial decisions concerning his liability to the minors established that Boland knowingly created and possessed pornographic images involving images of real children. The bankruptcy court did not consider the legal injury suffered by the minors as a result of the invasion of their privacy and reputational interests. Boland acted without justification, maliciously injuring the minors under 11 U.S.C. 523(a)(6). View "In re Boland" on Justia Law

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The Supreme Court reversed in part the district court's judgment granting JLC Wyoming LLC a deficiency judgment against Stanley Thomas for the unpaid amount of a judgment against Fourth Quarter Properties 86 (FQP) and Thomas, holding that the district court did not credit Thomas with all payments made against an earlier judgment. FQP and Thomas obtained a $30 million loan from MetLife Insurance (MLIC) with a ranch as collateral, but when they could no longer make the payments, MLIC obtained a judgment against them for the outstanding balance plus interest (the judgment). Before the foreclosure sale, FQP filed for bankruptcy protection. MLIC purchased the ranch at a foreclosure sale. MLIC then sold its rights to the ranch and the remaining balance on the judgment to JLC. JLC obtained a deficiency judgment against Thomas for the unpaid amount of the judgment. The Supreme Court held (1) Thomas, a non-party to FQP’s bankruptcy case, was not entitled to the reduced amount FQP negotiated with MLIC in the bankruptcy case for the outstanding judgment; and (2) the district failed properly to credit Thomas for prior payments he and FQP made against the judgment. View "Thomas v. JLC Wyoming, LLC" on Justia Law

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The Bankruptcy Code does not bar a creditor from asserting an unsecured claim for attorneys' fees, if those fees are incurred after the filing of a bankruptcy petition but guaranteed by a pre-petition contract. The Fourth Circuit reversed the district court's determination to the contrary and remanded for further proceedings. In this case, the court held that neither 11 U.S.C. 502(b) or 506(b) expressly disallows a creditor like SummitBridge from asserting an unsecured claim for post-petition attorneys' fees based on a valid pre-petition contract. View "SummitBridge National Investments III, LLC v. Faison" on Justia Law

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The bankruptcy trustee invoked both equitable and statutory mootness to try and block an appeal of a bankruptcy court's approval of a sale of key estate assets, including a settlement necessary to facilitate the transaction. The Fifth Circuit held that equitable mootness was inappropriate, because the settlement and sale were not sufficiently complex. However, the court held that 11 U.S.C. 363(m) made the bankruptcy court's approval the final word on the subject when the objector did not obtain a stay of that ruling. In this case, the bankruptcy court noted that there was no way to sever the settlement from the sale and that they were mutually dependent. Accordingly, the court affirmed the district court's dismissal of the appeal. View "New Industries, Inc. v. Byman" on Justia Law

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The Fifth Circuit affirmed the district court's dismissal of Jeffrey Baron's bankruptcy adversary proceeding under Rule 12(b)(6) against the trustee responsible for administering the bankruptcy estate of Ondova Limited Company. The court held that the trustee was entitled to absolute immunity for all actions taken pursuant to a court order, and entitled to qualified immunity for all other acts within the scope of his trustee duties. Furthermore, claims against the trustee's attorneys also failed because the attorneys were covered by both derivative trustee immunity and independent attorney immunity; the breach of fiduciary duty claim failed because Baron did not plausibly plead gross negligence; and Baron failed to raise the new causes of action contained within his proposed amended complaint in his briefs or argue that the district court erred in finding these claims unsuccessful. View "Baron v. Sherman" on Justia Law

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The Eighth Circuit affirmed the Bankruptcy Appellate Panel's decision affirming the bankruptcy court's order holding that CRP has an unenforceable judicial lien against the real property of debtor and avoiding that lien under 11 U.S.C. 522(f)(1). The court held that, under Missouri law, CRP's notice of foreign judgment did not give rise to a lien on debtor's exempt homestead property because he owned it jointly with his spouse. The court held that the foreign judgment created a cloud on title under Missouri law sufficient to constitute a charge against or interest in debtor's property under the Bankruptcy Code. Therefore, the cloud on title created by CRP's recording of its judgment fastened an existing, but presently unenforceable lien on the property. Accordingly, the court held that application of section 522(f) would clear the cloud on title to debtor's property and thus the bankruptcy court properly granted debtor's motion to avoid the lien. View "CRP Holdings, A-1, LLC v. O'Sullivan" on Justia Law

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The Eighth Circuit affirmed the district court's judgment affirming a bankruptcy court order holding the Bank and its president in contempt and sanctioning them for violating a final bankruptcy discharge injunction. The court noted that it employed a flexible and pragmatic approach when assessing the preclusive effect of a court's order and held that the bankruptcy court did not issue a ruling that would have preclusive effect. The court held that, while post-discharge forbearance may serve as consideration for a new commitment to repay the present value of a lien, no cases suggested that a lienholder could leverage a security interest to obtain a larger repayment commitment, much less a larger commitment representing a discharged personal debt. Therefore, the district court did not err in finding that the Bank and its president were in contempt for violating a final bankruptcy discharge injunction. View "First State Bank of Roscoe v. Stabler" on Justia Law

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The Bankruptcy Appellate Panel affirmed the bankruptcy court's denial of debtor's motion to reconsider the order entered which indefinitely extended the deadlines for payment of the last two installments of her filing fee. The court held that debtor's briefs contained extensive and repetitive factual argument expressing frustration with the bankruptcy process but she failed to identify any clearly erroneous facts or an incorrect application of the law that would entitle her to relief under any of the circumstances identified in Rule 60(b). View "Curran v. Moon" on Justia Law

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The Fifth Circuit reversed the bankruptcy court's order requiring debtors, Ultra Petroleum, to pay certain creditors a contractual Make-Whole Amount and postpetition interest at a contractual default rate. In this case, debtors entered bankruptcy insolvent and now are solvent. At issue was whether the creditors were impaired by a plan that paid them everything allowed by the Bankruptcy Code. The court held that a creditor is not impaired by a reorganization plan simply because it incorporates the Bankruptcy Code's disallowance provisions. Because the bankruptcy court found otherwise, it did not address whether the Bankruptcy Code disallows the Make-Whole Amount or post-petition interest, and if not, how much debtors must pay the Class 4 Creditors. Therefore, the court reversed in part, vacated in part, and remanded for the bankruptcy court to answer these issues in the first instance. View "Ultra Petroleum Corp. v. Ad Hoc Committee of Unsecured Creditors of Ultra Resources, Inc." on Justia Law

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The Bankruptcy Appellate Panel dismissed debtor's appeal of the bankruptcy court's order granting a motion for relief from the automatic bankruptcy stay filed by Deutsche Bank. The panel held that a foreclosure and sale of the property at issue rendered the issues raised on appeal moot and therefore the panel lacked jurisdiction over the appeal. View "Marshall v. Deutsche Bank National Trust Co." on Justia Law