Justia Bankruptcy Opinion Summaries

Articles Posted in Supreme Court of Nevada
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In this homeowners' association (HOA) foreclosure case, the Supreme Court reversed the district court's grant of summary judgment to U.S. Bank, N.A. and remanded for entry of summary judgment for SFR Investments Pool 1, LLC, holding that the mere fact that a foreclosure sale was held in violation of a bankruptcy stay is not by itself evidence of unfairness. The homeowner filed for bankruptcy under Chapter 11, which imposed an automatic stay on actions against her real property. In violation of the stay, the HOA sold the property at a foreclosure sale. SFR, the purchaser, sought to quiet title. The bankruptcy court issued a limited order retroactively annulling the bankruptcy stay of the stay, which has the legal effect of validating the sale. The district court, however, set aside the sale and granted summary judgment for U.S. Bank finding that the HOA's foreclosure sale being conducted in violation of the bankruptcy stay was evidence of unfairness and that the sale price was inadequate. The Supreme Court reversed, holding that U.S. Bank failed to produce any evidence showing how the sale's violation of the automatic stay constituted unfairness and that SFR met its burden of showing that the HOA foreclosure sale complied with the procedures in Nev. Rev. Stat. Chapter 116. View "SFR Investments Pool 1 v. U.S. Bank, N.A." on Justia Law

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Certain real property was sold in violation of an automatic stay from the homeowners’ bankruptcy proceedings. Because the property was situated in Nevada, and the bankruptcy proceedings commenced in Texas, the Supreme Court was presented with a purported conflict of laws issue. Appellant sought to quiet title in the district court. Respondent disputed the validity of the sale by filing a complaint in intervention. The district court granted summary judgment for Respondent, concluding that the United States Court of Appeals for the Ninth Circuit applied, Respondent had standing as a creditor enforce the automatic stay in the homeowners’ bankruptcy, and the foreclosure sale was void due to the violation of the automatic stay. On appeal, Appellant argued that the United States Court of Appeals for the Fifth Circuit law applied. The Supreme Court affirmed, holding that summary judgment was proper because, under both the Ninth and Fifth Circuits, a sale conducted during an automatic stay in bankruptcy proceedings is invalid. View "LN Management LLC Series 5105 Portraits Place v. Green Tree Loan Servicing LLC" on Justia Law

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Appellant filed for Chapter 11 bankruptcy, which was later converted to a Chapter 7 bankruptcy. Prior to filing, Appellant was involved in two personal injury cases. As part of his bankruptcy proceedings, Appellant claimed two personal injury exemptions, one for the personal injury settlement stemming from a dog attack and another stemming from an automobile accident. The bankruptcy court certified to the Supreme Court the question of whether a debtor is entitled to more than one personal injury exemption under Nev. Rev. Stat. 21.090(1)(u) if the debtor has more than one personal injury accident. The Supreme Court held that section 21.090(1)(u) entitles a debtor to an exemption for each personal injury claim, on a per-claim basis. View "Kaplan v. Dutra" on Justia Law

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Tower Homes, LLC retained William Heaton and his law firm (collectively, Heaton) for legal guidance in developing a residential common ownership project. The project eventually failed, and Tower Homes entered Chapter 11 bankruptcy protection. The plan of reorganization and confirmation order stated that the trustee and bankruptcy estate retained all legal claims. The trustee subsequently entered into a stipulation with a group of creditors (collectively, the Creditors) permitting the Creditors to pursue any legal malpractice claims in the Tower Homes’ name. The bankruptcy court then entered an order authorizing the trustee to permit the Creditors to pursue Tower Homes’ legal malpractice claim in Tower Homes’ name. The Creditors subsequently filed a legal malpractice lawsuit against Heaton, naming Tower Homes as plaintiff. The district court granted summary judgment in favor of Heaton, concluding that the stipulation and order constituted an impermissible assignment of a legal malpractice claim to the Creditors. The Supreme Court affirmed, holding (1) the stipulation and order constituted an assignment, which is prohibited under Nevada law; and (2) the Creditors may bring a debtor’s legal malpractice claim pursuant to 11 U.S.C. 1123(b)(3)(B) when certain conditions are met, but those conditions were not met in this case. View "Tower Homes, LLC v. Heaton" on Justia Law

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Debtor filed a voluntary Chapter 7 bankruptcy petition. On his claimed exemption schedule, Debtor asserted that, pursuant to Nev. Rev. Stat. 21.090(1)(bb), his entire interest in two corporations’ stock was exempt from the bankruptcy estate. The bankruptcy court certified a question to the Supreme Court, asking whether section 21.090(1)(bb) allows a debtor to exempt his entire interest in a closely held corporation or whether the exemption is limited to the debtor’s noneconomic interest in the corporation. The Supreme Court answered that section 21.090(1)(bb)’s language exempting stock of a corporation described in subsection 2 of Nev. Rev. Stat. 78.746 “except as set forth in that section” means that a debtor can exempt stock in the corporations described in Nev. Rev. Stat. 78.746(2), but his economic interest in that stock can still be subject to the charging order remedy in section 78.746(1). View "Becker v. Becker" on Justia Law