Articles Posted in U.S. 4th Circuit Court of Appeals

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The trustee in this case requested a trustee's fee of $17,254.61. At issue was whether, in light of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), 11 U.S.C. 330, a bankruptcy court is required, absent extraordinary circumstances, to compensate Chapter 7 trustees on a commission basis. Also at issue was whether the court should remand the case to the bankruptcy court with instructions to apply the correct legal standard after an evidentiary hearing. The court held that, absent extraordinary circumstances, Chapter 7 trustees must be paid on a commission basis, as required by section 330(a)(7). The court reversed the district court's decision affirming the bankruptcy court's non-commission-based fee award and remanded with instructions to vacate the trustee's fee award and remanded the matter to the bankruptcy court so that it could determine the proper commission-based fee. View "In Re: H. Jason Gold" on Justia Law

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Debtor transferred her interest in real property to AGC, a corporation wholly owned by her husband. Seven months later, debtor declared bankruptcy and the bankruptcy court concluded that the conveyance was constructively fraudulent. The bankruptcy court found AGC did not prove by clear and convincing evidence that it paid for the property or intended to pay for it on the date of the property's purchase. The bankruptcy court also found that, at the time of the purchase, the parties intended that AGC would serve as the property's tenant, not the property's owner. AGC also did not prove that it intended to own the property on the date of acquisition. Therefore, the bankruptcy court found no justification for a resulting trust. The district court found no fault in the bankruptcy court's findings of fact, but nonetheless reversed. The court reversed the district court insofar as it found a resulting trust to sever debtor's legal and equitable interests in the property. Accordingly, the court vacated the judgment of the district court and remanded for further proceedings. View "Anderson v. Architectural Glass Construction" on Justia Law

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Debtors filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code. At issue was whether above-median-income debtors with negative disposable income were obligated to maintain Chapter 13 bankruptcy plans that last for five years when their unsecured creditors have not been paid in full. The court held that a plain reading of the Bankruptcy Code, and Section 1325 in particular, mandates that an above-median-income debtor maintain a bankruptcy plan for five years unless all unsecured creditor claims are paid in full and irrespective of projected disposable income. Debtors, as above-median-income debtors, were obligated to maintain a five-year plan. The bankruptcy court therefore did not err in deeming the early termination language in debtors' proposed plan void as a matter of law and in extending the duration of debtors' proposed plan. The court affirmed the bankruptcy court's order but remanded in order for debtors to have an opportunity to present evidence regarding the feasibility of their monthly payments. View "Pliler v. Browning" on Justia Law

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The trustee filed an action to avoid and recover certain payments made by FMI to First Tennessee. The trustee alleged that the payments were fraudulent transfers under 11 U.S.C. 548, and were part of a fraudulent scheme. The court concluded that the bankruptcy court and the district court correctly applied the objective good-faith standard in determining that the bank employees' testimony provided competent objective evidence that satisfied the bank's burden of proving its affirmative defense under section 548(c). The court also concluded that the bankruptcy court did not clearly err in holding that the bank accepted the payments from FMI in good faith. Accordingly, the court affirmed the judgment of the district court. View "Taneja v. First Tennessee Bank NA" on Justia Law

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Qimonda, a German corporation that manufactured semiconductor devices, filed for insolvency in Munich, Germany. Plaintiff, the insolvency administratort, filed an application in the United States Bankruptcy Court under Chapter 15 of the Bankruptcy Code, petitioning the U.S. court to recognize the German insolvency proceeding as a "foreign main proceeding" in order to obtain privileges available under Chapter 15. At issue before the court was how to mediate between the United States' interests in recognizing and cooperating with the foreign insolvency proceeding and its interests in protecting creditors of Qimonda with respect to U.S. assets, as provided by 11 U.S.C. 1521 and 1522. The court concluded that the bankruptcy court properly recognized that plaintiff's request for discretionary relief under section 1521(a) required it to consider the interest of the creditors and other interested parties, including the debtor under section 1522(a) and that it properly construed section 1522(a) as requiring the application of a balancing test. The court also concluded that the bankruptcy court reasonably exercised its discretion in balancing the interest of the licensees against the interests of the debtor and finding that application of 11 U.S.C. 365(n) was necessary to ensure the licensees under Qimonda's U.S. patents were sufficiently protected. Accordingly, the court affirmed the judgment of the district court. View "Dr. Michael Jaffe v. Samsung Electronics Co." on Justia Law

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Debtors claimed that the bankruptcy court erred by including an inheritance that postdated their Chapter 13 bankruptcy petition by more than 180 days as part of their bankruptcy estate. The court concluded that Bankruptcy Code Section 1306(a) extended the timeline for including "the kind" of property "specified in" Section 541 in Chapter 13 bankruptcy estates. Accordingly, the court affirmed the bankruptcy court's inclusion of the inheritance in debtors' Chapter 13 bankruptcy estate. View "Carroll v. Logan" on Justia Law

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Debtor filed a Chapter 13 petition in the bankruptcy court identifying his interest in his primary residence located in Maryland. On appeal, debtor and his spouse argued that the bankruptcy court erred in refusing to strip off a lien on the ground that the spouse's property interest was not part of the bankruptcy estate. The lien was against the property that debtor owned with his non-debtor spouse as tenants by the entireties. The court concluded that the statutory provisions authorizing a strip off, and applicable Maryland property law, did not permit a bankruptcy court to alter a non-debtor's interest in property held in a tenancy by the entirety. The court held that the bankruptcy court correctly determined that it lacked authority to strip off debtor's valueless lien because only debtor's interest in the estate, rather than the complete entireties estate, was before the bankruptcy court. Accordingly, the court affirmed the judgment. View "Alvarez v. HSBC Bank" on Justia Law

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Debtor appealed the district court's denial of the confirmation of his proposed Chapter 13 plan on the grounds that it did not accurately reflect his disposable income and that it was unfeasible if debtor's Social Security income was excluded from his "projected disposable income." The court vacated and remanded, holding that the plain language of the Bankruptcy Code excluded Social Security income from the calculation of "projected disposable income," but that such income nevertheless must be considered in the evaluation of a plan's feasibility. View "Ranta v. Gorman" on Justia Law

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Defendant appealed from the district court's order affirming the bankruptcy court's finding of fraud and entry of a nondischargeable judgment for SG Homes. The court concluded that SG Homes justifiably relied on defendant's fraudulent misrepresentations and thereby suffered proven damages. Therefore, the bankruptcy court's finding of fraud on the basis of justifiable reliance was not clearly erroneous. Further, the award of damages for SG Homes was not clearly erroneous and the bankruptcy court did not err in determining that the judgment debt was nondischargeable under 11 U.S.C. 523(a)(2)(A). Accordingly, the court affirmed the judgment. View "SG Homes Associates, LP v. Marinucci" on Justia Law

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This is an adversary proceeding arising out of the bankruptcy of debtor (Derivium). Plaintiff (Grayson), assignee of the Chapter 7 bankruptcy trustee, appealed from a district court judgment affirming the bankruptcy court's decision to grant summary judgment for defendants (Wachovia). The court concluded that the district court did not err in affirming the grant of summary judgment for Wachovia on Grayson's Customer Transfers claim; summary judgment for Wachovia on Grayson's Cash Transfers claim; the bankruptcy court's determinations that the stockbroker defense applied to commissions; and the bankruptcy court's ruling that in pari delicto barred Grayson's tort claims against Wachovia. View "Grayson Consulting, Inc. v. Wachovia Securities, LLC" on Justia Law