Justia Bankruptcy Opinion Summaries

At the behest of the Oklahoma Department of Securities, Oklahoma courts found early investors in a Ponzi scheme carried out by a third party to have been unjustly enriched and required disgorgement. Judgments were entered against those investors. The issue before the Tenth Circuit was whether the judgments entered against Robert Mathews, Marvin Wilcox, and Pamela Wilcox qualified as a nondischargeable debt under 11 U.S.C. 523(a)(19). The bankruptcy court decided the debts were nondischargeable because they were in violation of securities laws. The district court affirmed. Upon review, the Tenth Circuit reversed and remanded: "the Department's position conveniently serves its ends (and in the abstract) a public good. But the language of the statute cannot reasonably be stretched that far." View "Oklahoma Dept. of Securites v. Wilcox, et al" on Justia Law

The three cases before before the Tenth Circuit on appeal arose from bankruptcy proceedings initiated by debtor Steve Paige in 2005. Search Market Direct, Inc. (SMDI) and ConsumerInfo.com (ConsumerInfo).both sought control of the internet domain name "freecreditscore.com" (the Domain Name), which once belonged to Paige. SMDI purchased the Domain Name from a third party shortly after Paige filed for bankruptcy. In May 2006, the estate's trustee Gary E. Jubber instituted an Adversary Proceeding (AP) to recover it. In December 2006, the bankruptcy court entered a Sale Order approving an Asset Purchase Agreement (APA) under which ConsumerInfo agreed to provide funds to repay the estate's creditors and litigate the AP in exchange for the estate's promise to give ConsumerInfo the Domain Name if it was recovered. The bankruptcy court resolved the Adversary Proceeding in the Liquidating Trustee's favor in 2009. The Liquidating Trustee transferred the Domain Name to ConsumerInfo and a Joint Plan was otherwise substantially consummated. Over objections from SMDI, the Trustee and his law firm received compensation for their work on behalf of the estate. Upon review, the Court rejected SMDI's arguments for reversing the bankruptcy court's confirmation of the Joint Plan, for depriving ConsumerInfo of the Domain Name, and for denying the Trustee and his firm certain fees. The Court reversed the district court's mootness ruling in the Adversary Appeal; in all other regards the Court affirmed the district court's decisions upholding the bankruptcy court's judgments in the Confirmation Appeal and Adversary Appeal. View "Search Market, et al v. Jubber, et al" on Justia Law

After Deutsche Bank National Trust Company (Deutsche Bank) brought a foreclosure action against the home owned by Appellants Mark and Jamileh Miller and obtained an Order Authorizing Sale (OAS) from a Colorado court, the Millers filed a Chapter 13 bankruptcy petition. Upon the filing of their petition, an automatic stay entered, halting the foreclosure proceedings. Deutsche Bank obtained an order from the bankruptcy court relieving it from the stay to permit the foreclosure to continue. The Tenth Circuit Bankruptcy Appellate Panel (BAP) affirmed the bankruptcy court’s order granting Deutsche Bank relief from the automatic stay. The Millers appealed the BAP’s order affirming relief from stay. The issue before the Tenth Circuit was whether Deutsche Bank established that it was a "party in interest" entitled to seek and obtain relief from the stay. Because the Court concluded that Deutsche Bank did not meet its burden of proof on this issue, the Court reversed the BAP’s order and remanded for further proceedings. View "Miller, et al v. Deutshce Bank National Trust" on Justia Law

Plaintiffs-Appellants George and Georgia Diamond filed an adversary proceeding against Chapter 7 debtor Scott Bakay alleging that Bakay fraudulently induced them to loan him money. The bankruptcy court entered summary judgment in favor of the Diamonds and declared the loan nondischargeable, but denied the Diamonds' postjudgment motion for prejudgment interest. The Diamonds appealed the latter decision, and the Bankruptcy Appellate Panel of the Tenth Circuit (BAP) affirmed the decision of the bankruptcy court. Finding no abuse of discretion in the bankruptcy court's decision, the Tenth Circuit affirmed the postjudgment motion for prejudgment interest. View "In re: Bakay" on Justia Law

Defendant-Appellant James Moser was convicted by a jury on several counts of bankruptcy fraud and sentenced to 121 months' imprisonment. He appealed to the Tenth Circuit, arguing that several counts of the indictment were multiplicitous, and that there was insufficient evidence to convict him on one of the counts. Defendant and his wife filed a voluntary Chapter 7 bankruptcy petition. He failed to disclose a lease agreement and the sale of certain tools and collectibles to third parties to the bankruptcy trustee. The attorney who worked with Defendant on his petition testified that at the time of the discharge of his debts, there continued to be confusion regarding Defendant's assets, "partially due to his unwillingness to be forthright." Finding that based on the evidence, a reasonable trier of fact could have found Defendant guilty of bankruptcy fraud, the Tenth Circuit affirmed Defendant's conviction and sentence. View "United States v. Moser" on Justia Law

After the district court reduced Defendant Lindsey Springer's tax assessment to judgment and ordered foreclosure on certain real property, persons who held a mortgage on the property and who had participated in the litigation moved for an award of attorney's fees and expenses against Mr. Springer. The magistrate judge recommended granting the motion in part and awarding to the Cross-Claimants $10,576.56 of the $35,416 requested in fees and expenses. Defendant objected but the district court affirmed. The Tenth Circuit declined to address three of the five issues Defendant raised on appeal as they were precluded by res judicata. However, the Court found one remaining issue persuasive: Defendant contended that the Cross-Claimants waited too long under the Federal Rules of Civil Procedure to seek their fee award. Upon review of the applicable legal authority, the Tenth Circuit concluded that the Cross-Claimants indeed filed their request too late, and the district court abused its discretion in granting even a partial fee award. Accordingly, the Court reversed the district court's judgment and the case was remanded for the district court to deny Cross-Claimants' award for attorney's fees and costs.

Carolina Internet Ltd. appealed the entry of default judgment against it in favor of TW Telecom Holdings Inc. for more than three million dollars. During the pendency of this appeal, Carolina Internet filed a voluntary Chapter 11 bankruptcy petition. The Tenth Circuit had previously interpreted the automatic stay provisions in section 362 of the Bankruptcy Code as not preventing a Chapter 11 debtor-in-possession (like Carolina Internet) from pursuing an appeal even f it was an appeal from a creditor's judgment against the debtor. Nine other circuit courts disagreed with the Tenth Circuit's interpretation, holding that a bankruptcy filing automatically stays all proceedings, even appellate proceedings where the debtor has filed an appeal from a judgment entered in a suit against the debtor. The Court overruled its prior interpretation of the automatic stay provisions in the Bankruptcy Code, which prevented it from proceeding with Carolina Internet's appeal of the default judgment against it. This case was stayed pending bankruptcy court proceedings.

Pro se Plaintiff Ronald Nagim appealed the grant of summary judgment in favor of Defendant Equifax Information Services, LLC, Experian Information Solutions, INc. and Transunion, LLC. In 2005, Plaintiff filed for bankruptcy, which discharged some of his credit accounts. Almost four years later, Plaintiff filed a complaint against Defendants, three credit reporting agencies (CRAs), alleging Defendants had violated the Fair Credit Reporting Act (FCRA) by including inaccurate information on Plaintiff’s credit report and improperly depressing his credit scores. This allegedly inaccurate information included an account that was discharged in Plaintiff’s bankruptcy and references to the bankruptcy in general. All three defendants moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure and a magistrate judge held that summary judgment was proper. After a thorough review of the record, the Tenth Circuit concluded Plaintiff "has provided absolutely no competent summary judgment evidence. Accordingly, we affirm the district court’s grant of summary judgment."

This appeal arose from a suit filed by the United States that asked the district court to reduce certain of Defendant-Appellant Jack Wilson’s tax liabilities to judgment, to set aside a fraudulent transfer of real property from Wilson to Defendant Joey Lee Dobbs-Wilson, and to enforce the government’s new liens, as well as one preexisting tax lien, against the real property by ordering a sale. Wilson appealed the district court’s order granting summary judgment to the United States. Wilson argued in his response to the government’s motion for summary judgment and in his cross-motion for summary judgment that Ms. Dobbs-Wilson was not his nominee when he transferred the property to her in 1998 and, as a result, a 1997 lien became invalid when the government mistakenly released it in 2003, after he no longer owned the property. Assuming the validity of Wilson's argument, and after supplemental briefing on the matter, the Tenth Circuit concluded that Wilson failed to demonstrate any injury to him that the Court could redress. Having determined that the Court lacked jurisdiction over his appeal, the case was dismissed.

In January 2009, Defendant-Appellant Robert Blechman and a codefendant, Itsik (Issac) Yass, were tried together in the District of Kansas on charges of mail fraud, aggravated identity theft, and conspiracy to commit mail fraud and aggravated identity theft. Evidence introduced at trial showed that Yass operated a business that he used to temporarily halt home foreclosures by "attaching" foreclosure properties to fraudulent bankruptcy cases in order to take advantage of the Bankruptcy Code’s automatic stay provision. After a two-week trial, the jury found Blechman and Yass guilty of all of the counts charged against them. The district court granted Blechman's motion for judgment of acquittal on the identity theft counts and ultimately sentenced Blechman to a total of eighteen months' imprisonment on the remaining counts. Blechman appealed, challenging the district court’s admission of an America Online (AOL) record that connected him to an e-mail address and three PACER records revealing that he accessed fraudulent bankruptcy cases in Tennessee that were similar to the Kansas bankruptcies identified in the indictment. Blechman argued that these records contained double hearsay and that the district court erroneously admitted them under the business records exception to the hearsay rule. Upon review, the Tenth Circuit held that the district court erred in admitting the challenged AOL and PACER records under Rule 803(6). Nevertheless, because the Court concluded that the error was harmless, it affirmed Blechman's convictions.