Justia Bankruptcy Opinion Summaries

In this case, the Supreme Court of Montana reversed and remanded a decision of the Thirteenth Judicial District Court, Yellowstone County. The case involved Saddlebrook Investments (Saddlebrook), assignee of Stuart Simonsen, and Krohne Fund, L.P. (Krohne Fund). Saddlebrook appealed against the district court’s order granting summary judgment in favor of Krohne Fund on Saddlebrook’s claims of malicious prosecution and abuse of process.The Supreme Court found that the district court had erred in applying the doctrine of judicial estoppel to bar Saddlebrook from pursuing its claims. The court noted that a party is not judicially estopped from asserting a cause of action not raised in a reorganization plan or otherwise mentioned in the debtor’s schedules or disclosure statements. However, this does not apply when the bankruptcy trustee is pursuing the action for the benefit of creditors. Once substituted, a bankruptcy trustee is free to pursue the debtor’s nondisclosed claim.In this case, the Trustee had knowledge of Simonsen’s claims and authorized the state court suit. The Supreme Court concluded that because the Trustee had control of Simonsen’s abuse of process claim through the bankruptcy estate, the District Court erred when it estopped Saddlebrook from pursuing that claim. Therefore, Saddlebrook is not judicially estopped from pursuing its malicious prosecution and abuse of process claims against Krohne Fund. View "Saddlebrook Investments v. Krohne Fund" on Justia Law

The Supreme Court of the State of Montana affirmed a lower court decision that granted Dr. Gregory S. Tierney's motion to dismiss a medical malpractice lawsuit filed by Janice M. Dodds for insufficient service of process. Dodds initially filed the suit against Dr. Tierney and Benefis Health System in 2013, alleging medical malpractice related to a knee replacement surgery. She failed to serve the defendants in time. Dr. Tierney later filed for bankruptcy, which invoked an automatic stay, halting the lawsuit. After his bankruptcy discharge, Dodds attempted to serve Dr. Tierney but failed to do so within the required 30-day timeframe following the discharge.Dodds further sought to join Dr. Tierney's malpractice insurance company as the real party in interest, but the court denied the motion. Upon review, the Supreme Court found that Dodds had not proven Dr. Tierney's liability, thus the insurer had no duty to indemnify him. The court also rejected Dodds' argument that Dr. Tierney lacked standing after his Chapter 7 discharge. The court held that Dr. Tierney maintained a personal stake in demonstrating he was not liable for medical malpractice and that his insurer would only have a duty to indemnify him once Dodds proved her malpractice claims. View "Dodds v. Tierney" on Justia Law

The Supreme Court reversed the order of the district court granting Burlington Northern and Santa Fe Railway Company’s (BNSF) motion for summary judgment on Kelly Watson’s asbestos-related disease claim, brought under the Federal Employers’ Liability Act, holding that the bankruptcy court’s order enjoining claims against W.R. Grace and other “affiliated entities,” including BNSF, tolled the statute of limitations on Watson’s claim. Thus, the district court erred in concluding that the bankruptcy court’s order expanding a previous injunction barring the commencement or filing of new claims to include BNSF as a nondebtor affiliate did not bar the commencement of new actions against BNSF. View "Watson v. BNSF Railway Co." on Justia Law

Under Montana law, a debtor may claim an exemption for a health savings account (HSA) within the constraints imposed by Mont. Code Ann. 25-13-608(1)(d) or (f).Debtor in this case filed a Chapter 11 bankruptcy petition. Debtor claimed his HSA exempt in the amount of $14,319.61 pursuant to section 25-13-608(1)(d) or (f). Debtor’s withdrawal of funds from the HSA was applied exclusively to qualified medical expenses. The trustee filed an objection to the claim of exemption. The bankruptcy court certified a question on the issue to the Supreme Court. The Supreme Court held that a debtor may claim an exemption for an HSA to the extent that it is “used or will be used to pay for the care” described in section 25-13-608(1)(f). View "In re John Charles Giacometto" on Justia Law

Debtor filed for Chapter 7 Bankruptcy. Debtor claimed an Individual Retirement Account (IRA) he inherited from his mother upon her death as exempt property from the bankruptcy estate. The Trustee of the case objected to Debtor’s claim of exemption. The United States Bankruptcy Court for the District of Montana certified a question to the Supreme Court regarding whether a Debtor may claim an exemption in an IRA pursuant to Mont. Code Ann. 25-13-608(1)(e). The Supreme Court answered the question in the negative, holding that, under Montana’s liberal construction of exemptions, a debtor may not claim an exemption to an inherited IRA under section 25-13-608(1)(e). View "In re Golz" on Justia Law