Justia Bankruptcy Opinion SummariesArticles Posted in U.S. 11th Circuit Court of Appeals
Santander Consumer USA Inc. v. Brown
Santander appealed the district court's affirmance of the bankruptcy court's order overruling Santander's objection to the confirmation of debtor's plan under Chapter 13. The bankruptcy court proposed that petitioner surrender his vehicle under 11 U.S.C. 1325(a)(5)(C) to satisfy Santander's claim. The bankruptcy court held that 11 U.S.C. 506(a)(1) and (a)(2) determined the vehicle's value and hence the amount of Santander's secured claim, which would be satisfied by debtor's surrender of the vehicle. The court held that section 506(a)(2)'s valuation standard applied when a Chapter 13 debtor surrendered his vehicle under section 1325(a)(5)(C). Accordingly, the court affirmed the district court's order affirming the bankruptcy court's judgment. View "Santander Consumer USA Inc. v. Brown" on Justia Law
Heatherwood Holdings, LLC v. HGC, Inc.
Heatherwood and FCB appealed the district court's affirmance of a final amended judgment entered by the bankruptcy court. The bankruptcy court determined that there was an implied restrictive covenant limiting the use of real property at issue to a golf course. As a preliminary matter, the court concluded that, because FCB satisfied the person-aggrieved doctrine, FCB also met Article III standing requirements. On the merits, the court concluded that the bankruptcy court did not err when it held that FCB and Heatherwood had actual, constructive and inquiry notice of the implied restrictive covenant; the bankruptcy court did not err in finding that most, if not all, of the homeowners within the Heatherwood subdivision bought their home with the expectation that the golf course property would remain a golf course; the bankruptcy court did not err in holding that the doctrine of estoppel by deed precluded the enforcement of the covenant; with respect to FCB and Heatherwood's argument that the doctrine of integration in the Agreement between HGC and Heatherwood served to destroy an implied covenant, the bankruptcy court did not err in finding integration did not apply under the facts of the case; in considering the doctrine of changed circumstances, the bankruptcy court relied on various factual findings in determining that the homeowners' benefit from the continued existence of the covenant outweighed the detriment borne by FCB and Heatherwood; and the court rejected FCB and Heatherwood's argument that HGC had no standing to enforce the implied restrictive covenant because HGC owned no property. Accordingly, the court affirmed the judgment of the district court. View "Heatherwood Holdings, LLC v. HGC, Inc." on Justia Law
Menotte v. United States
Plaintiff, trustee for the estate of debtor, attempted to avoid eight transfers made by debtor to the IRS as payment for the income tax liability of debtor's principal. The bankruptcy court ruled in favor of the United States as to the first seven transfers. The bankruptcy court concluded that plaintiff succeeded in proving constructive fraud and ruled that the IRS was an initial transferee from whom plaintiff could seek recovery. The district court affirmed with regard to the first seven transfers but reversed as to the eighth. The district court concluded that the IRS could not be held liable as an initial transferee because it qualified for the mere conduit exception. The court affirmed, viewing the transaction as sufficiently similar to the deposit of funds into a bank account to conclude that the IRS acted as a mere conduit. View "Menotte v. United States" on Justia Law
Brown v. Gore
Debtor filed a Chapter 13 petition, instead of a Chapter 7 petition, only so that his attorney could be paid in installments through the proposed Chapter 13 plan. The bankruptcy court found that debtor had not filed his petition or his proposed plan in "good faith," as required by 11 U.S.C. 1325(a)(3) and (a)(7). There was no evidence in this particular record revealing unique circumstances that would lead to the conclusion that it was in debtor's best interest to file under Chapter 13. After reviewing the record and the totality of the circumstances, the court could not say that the bankruptcy court's findings were clearly erroneous. Accordingly, the court affirmed the bankruptcy court's denial of confirmation of debtor's Chapter 13 bankruptcy plan. View "Brown v. Gore" on Justia Law
Durango-Georgia Paper Co., et al. v. H.G. Estate, LLC, et al.
The PAPER COMPANY's creditors successfully petitioned the Bankruptcy Court for relief under Chapter 7 of the Bankruptcy Code. The Bankruptcy Court then granted the PAPER COMPANY's motion to transform the Chapter 7 case into a Chapter 11 proceeding. While the Chapter 11 case was pending, the PBGC brought an action against the PAPER COMPANY. At issue on appeal was whether, under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., the trustee of a corporation that is a contributing sponsor and is in bankruptcy can maintain an action for the benefit of the bankruptcy estate and the estate's unsecured creditors against the corporation's former owner (as a former member of the controlled group) for liabilities arising from the termination of a pension plan. The court held that the answer is no. The court concluded that ERISA's funding requirements were put in place for the benefit of plan beneficiaries, not for the protection of a bankrupt plan sponsor's unsecured creditors. The trustee's complaint failed to state a claim for relief because it was brought for the benefit of the bankrupt's unsecured creditors. View "Durango-Georgia Paper Co., et al. v. H.G. Estate, LLC, et al." on Justia Law
In Re: Kulakowski
After debtor filed for Chapter 7 bankruptcy, the bankruptcy court ruled that all of the income and expenses of debtor's husband should be considered in determining the ability of debtor to pay her debts. The district court affirmed. Given the nature of debtor's debt and the financial relationship between her and her husband, the court held that the bankruptcy court did not abuse its discretion in applying the totality of the circumstances test. Accordingly, the court affirmed the bankruptcy court's dismissal of debtor's Chapter 7 bankruptcy petition. View "In Re: Kulakowski" on Justia Law
Hope v. Acorn Financial Inc
Debtor purchased a car from TCL Auto Sales and financed the purchase through Acorn. Debtor then filed for bankruptcy on July 21, 2010. Acorn did not perfect its security interest in the vehicle until July 27, 2010. The court concluded that, where, as here, a Chapter 13 trustee was aware of defects in a creditor's security interest well before confirmation, and chose not to object to the creditor's claim, and affirmatively recommended to the bankruptcy court that it confirm a proposed plan in which the creditor is given a secured position, the bankruptcy court's confirmation of the plan binds the trustee and precluded a post-confirmation avoidance action against the creditor. Accordingly, the court affirmed the decision of the bankruptcy court and the district court granting summary judgment in favor of Acorn. View "Hope v. Acorn Financial Inc" on Justia Law
Disciplinary Bd. of the Supreme Court of PA v. Feingold
Chapter 7 debtor appealed the district court's reversal of the bankruptcy court's order denying relief from the automatic stay to the Disciplinary Board. Debtor was disbarred from the practice of law and the Disciplinary Board later filed a complaint in state court seeking to enjoin debtor from the unlawful practice of law and to appoint a conservator to take possession of debtor's client files and take other steps to protect his clients. At issue in this appeal was whether a debt's dischargeability in bankruptcy proceedings - standing alone - constituted "cause" sufficient for a bankruptcy court to provide relief from the automatic stay provisions of 11 U.S.C. 362(a). The court affirmed in part and reversed in part, concluding that the debt was nondischargeable but, in this instance, the district court erroneously relied solely on the debt's dischargeability status in its ruling on the "cause" issue. Accordingly, the court vacated and remanded in part for further proceedings. View "Disciplinary Bd. of the Supreme Court of PA v. Feingold" on Justia Law
Torrens, et al. v. Hood, Jr.
The bankruptcy court held that appellants violated 11 U.S.C. 527 and 528(a)(1), Florida Rules of Professional Conduct 4-3.3(a)(1), and 4-8.4(c), and possibly 18 U.S.C. 157(3) by helping appellee file an "ostensibly pro se [Voluntary Chapter 13] bankruptcy petition in bad faith to stall a foreclosure sale." The bankruptcy court held that appellants prepared the Chapter 13 petition as ghostwriters and consequently made false and fraudulent representations to the court. The court concluded that the bankruptcy court erred in its determination that appellants committed fraud when they contracted with appellee to provide foreclosure defense services, took appellee's money, had appellee sign documents, and then filed an ostensibly "pro se," bad faith bankruptcy petition on appellee's behalf. At bottom, the court concluded that appellants did not "draft" a document within the scope of Rule 4-1.2(c) and did not commit fraud in violation of the Florida Rules of Professional Conduct or 18 U.S.C. 157(3). Accordingly, the court reversed and remanded. View "Torrens, et al. v. Hood, Jr." on Justia Law
Zucker, et al. v. FDIC
This case involved the allocation of tax refunds pursuant to a Tax Sharing Agreement (TSA) between two members of a Consolidated Group, the parent corporation (the Holding Company), and one of its subsidiaries (the Bank), the principal operating entity for the Consolidated Group. At issue on appeal was whether the Bankruptcy Court erred in declaring the tax refunds an asset of the bankruptcy estate. The court concluded that the relationship between the Holding Company and the Bank is not a debtor-creditor relationship; when the Holding Company received the tax refunds it held the funds intact - as if in escrow - for the benefit of the Bank and thus the remaining members of the Consolidated Group; the parties intended that the Holding Company would promptly forward the refunds to the Bank so that the Bank could, in turn, forward them on to the Group's members; and in the Bank's hands, the tax refunds occupied the same status as they did in the Holding Company's hands - they were tax refunds for distribution in accordance with the TSA. Accordingly, the court reversed the Bankruptcy Court's judgment and directed that court to vacate it decision declaring the tax refunds the property of the bankruptcy estate and to instruct the Holding Company to forward the funds held in escrow to the FDIC, as receiver, for distribution to the members of the Group in accordance with the TSA. View "Zucker, et al. v. FDIC" on Justia Law