Justia Bankruptcy Opinion Summaries

Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. On appeal, debtor challenged the bankruptcy court's order sustaining the Bank's objection to her claimed exemption in her 2000 Hyundai Tiburon, and ruling that debtor could avoid the Bank's lien under section 522(f) of Title 11 of the Bankruptcy Code. The bankruptcy appellate panel (BAP) agreed with the bankruptcy court that debtor could not claim an exemption under IOWA Code 627.6 where debtor had no equity and had no interest in the vehicle to exempt, and that the Bankruptcy Code provided for no such avoidance. Accordingly, the BAP affirmed the judgment of the bankruptcy court. View "Goben v. Corydon State Bank" on Justia Law

Debtor appealed from the order of the bankruptcy court finding his debt to Bank of America nondischargeable under 11 U.S.C. 523(a)(2) for fraud and section 523(a)(4) for embezzlement. Under section 523(a)(4), Southwest Bank established that debtor was not lawfully entitled to use the insurance proceeds at issue for the purposes for which he used them and debtor produced nothing to the contrary. Accordingly, the bankruptcy appellate panel (BAP) affirmed the bankruptcy court's finding under section 523(a)(4). Because the BAP concluded that the bankruptcy court did not err in finding the debt to be nondischargeable under 523(a)(4) for embezzlement, the court limited its analysis to that basis for nondischargeability and did not reach the section 523(a)(2) fraud issue. View "Bank of America, N.A. v. Armstrong" on Justia Law

The Government appealed the bankruptcy court's order denying its motion to approve its superpriority administrative expense claim under section 507(b) of Title 11 of the Bankruptcy Code; its motion for evidentiary hearing; and its motion to alter or amend the bankruptcy court's denial of its motion for a section 507(b) administrative expense claim. The bankruptcy appellate panel concluded that the bankruptcy court abused its discretion when it denied the Government the opportunity to conduct discovery and produce evidence. Accordingly, the court reversed and remanded for the bankruptcy court to determine the amount, if any, of the Government's section 507(b) claim. View "United States v. Lange, et al." on Justia Law

After defendants, Wendell O. Maness and Carolyn H. Maness, filed for bankruptcy, Legendary Stone sought a determination from the bankruptcy court that the indebtedness due from Top Shop, the company defendants owned, was nondischargeable under 11 U.S.C. 523(a)(2)(A), and that defendants were liable for such amounts under Missouri's lien fraud statute, Mo. Rev. Stat. 429.014. Two days before defendants filed for bankruptcy, Legendary Stone filed a criminal complaint against Wendell. Wendell was charged with theft under the lien fraud statute and subsequently was arrested, booked, and released on signature bond. The prosecutor eventually dismissed the charges against Wendell. Defendants then filed a counterclaim against Legendary Stone in the adversary proceeding asserting that Legendary Stone's actions in regards to the criminal complaint were attempts to collect a debt and willful violations of the automatic stay. The bankruptcy appellate panel affirmed the bankruptcy court's dismissal of defendants' counterclaim where Legendary Stone met its burden of presenting detailed evidence that its representatives were not attempting to use the criminal prosecution to collect a debt and where defendants failed to prove otherwise. View "Legendary Stone Arts, LLC v. Maness, et al." on Justia Law

In this case, the parties disagreed about the nature of their dissolution agreement after one of them experienced a change in circumstances. Patriot Coal and Heritage Coal sought declaratory relief under 28 U.S.C. 2201 and Fed. R. Civ. P. 57, and requested a declaration that Peabody Holding's obligations with respect to the healthcare benefits owed to the Assumed Retirees would not be affected by modification of the benefits of retirees of Heritage or Eastern Associated under 11 U.S.C. 1114. The bankruptcy court denied relief and Patriot and Heritage appealed. While Heritage's rejection of its collective bargaining agreement relieved it of its contractual obligation to pay benefits, it still has a statutory obligation to pay those same benefits, at least until all of the steps of section 1114 are complied with. Therefore, the bankruptcy appellate panel (BAP) held that upon rejection of the "me too" agreement under section 1113, absent modification under section 1114, Heritage was still required to comply with the terms of the individual employer plan and provide its retirees those plan defined benefits; neither Heritage or United Mine Workers of America requested a modification; Peabody Holding's obligation under the liabilities assumption agreement remains undisturbed upon grant of the sections 1113 and 1114 motion; and Peabody Holding's remaining arguments lacked merit. Accordingly, the BAP reversed the decision of the bankruptcy court. View "Patriot Coal Corp., et al. v. Peabody Holding Co., et al." on Justia Law

Plaintiff appealed the bankruptcy court's finding that her student loan obligations to NCT and its loan servicer were nondischargeable. The bankruptcy appellate panel (BAP) concluded that the record revealed that plaintiff's past, present, and reasonably reliable future resources were not sufficient to meet all of the monthly payment obligations to NCT while maintaining a minimum standard of living. Accordingly, the BAP concluded on de novo review that excepting all of the obligations to NCT from discharge would be an undue hardship on plaintiff and, therefore, the BAP reversed and remanded for further proceedings. View "Conway v. National Collegiate Trust, et al." on Justia Law

Debtor appealed the bankruptcy court's order allowing a claim filed by the DHHS as a priority debt in the nature of a domestic support obligation. The court affirmed the judgment, concluding that the debt owed to DHHS was a debt in the nature of support of a child under 11 U.S.C. 101(14A)(B). The court concluded that debtor's remaining arguments lacked merit. View "Hernandez v. Dept. of Health & Human Serv." on Justia Law

These consolidated appeals concerned a home previously owned by debtor. On appeal, the Trustee challenged the bankruptcy court's order holding that he recover nothing from defendants on his action to avoid a transfer which occurred when defendants perfected their liens on estate property postpetition. GMAC challenged the part of the order holding that the automatic stay was not violated and that GMAC lacked standing in the matter. The bankruptcy appellate panel (BAP) concluded that GMAC did not have standing to appeal any violation of the stay because, if GMAC was aggrieved, it was either by a wrongful foreclosure by U.S. Bank or by its own failure to protect its interests, not by the registration of the judgments or the order. Therefore, the court dismissed GMAC's appeal. In regards to the Trustee's claim, the BAP affirmed the bankruptcy court's awarding of nothing to the Trustee where the estate's interest had no value in and of itself, and the loss of a right to use some sort of "leverage" to get money to which the estate was not entitled was not the basis for a cause of action. View "Seaver v. New Buffalo Auto Sales, LLC, et al." on Justia Law

Trustee filed an adversary complaint against Scarlett & Gucciardo to avoid as a preferential transfer under 11 U.S.C. 547, and recover under 11 U.S.C. 550, the $65,000 payment Scarlett & Gucciardo had received from Debtor. Scarlett & Gucciardo received the payment on behalf of defendant in connection with the settlement of a lawsuit. Trustee then filed a motion to amend the complaint to join defendant and to have the amended complaint "relate back" to the date of the original complaint. The bankruptcy appellate panel (BAP) concluded that the district court did not abuse its discretion in allowing Trustee to amend his complaint and to allow Trustee's amended complaint to relate back to the date of Trustee's original complaint; the $65,000 payment was not a contemporaneous exchange within the meaning of section 547(c)(1); and the payment was not made in the ordinary course of business within the meaning of section 547(c)(2)(A). Accordingly, the BAP affirmed the judgment. View "Ries v. Calandrillo" on Justia Law

Plaintiff appealed the bankruptcy court's imposition of sanctions on her for making factually unsupported and harassing statements in documents filed with the court. The court concluded that Federal Rule of Bankruptcy Procedure 9011 did not authorize the sanctions imposed in this case; even if Rule 9011 was inapplicable, it did not mean that the bankruptcy court lacked authority to sanction plaintiff; the court had jurisdiction over the appeal where the penalty imposed was criminal in nature because the monetary penalty was punitive, payable to the court, and non-compensatory; plaintiff did not move for recusal or object to the judge's participation and she therefore forfeited any objection; the bankruptcy court did not commit an obvious error by failing to recuse sua sponte and there was no showing of prejudice or miscarriage of justice; there was no reasonable probability of a different outcome before a different judge where the evidence of plaintiff's contempt was undisputed and aggravated; and plaintiff's remaining claims about the contempt process were without merit. Accordingly, the court affirmed the judgment. View "Isaacson v. Manty" on Justia Law