Justia Bankruptcy Opinion Summaries

This dispute arose when plaintiffs sought payment from defendant for a loan plaintiffs provided to defendant's company. On appeal, defendant challenged the district court's judgment affirming the bankruptcy court's order granting plaintiffs' motion for an extension of time to file a nondischargeability complaint. Under existing case law, the court concluded that the bankruptcy court erred by sua sponte extending the time for plaintiffs to file a nondischargeability complaint after the deadline had already passed and by doing so without either a showing or a finding of cause. Accordingly, the court reversed and remanded with instructions. View "Willms v. Sanderson" on Justia Law

Plaintiff filed suit alleging that her employer discriminated against her based upon her sex. While pursuing the discrimination action, plaintiff filed for Chapter 7 bankruptcy, failing to list the bankruptcy action in her bankruptcy schedules. The employer subsequently filed a motion for summary judgment in the discrimination action on the ground that judicial estoppel prohibited plaintiff from proceeding. The district court agreed and granted summary judgment in favor of the employer. However, the court vacated the judgment and remanded for further proceedings, holding that the district court applied the wrong legal standard in determining whether plaintiff's bankruptcy omission was "mistaken" or "inadvertent." View "Quin v. County of Kauai Dep't of Transp." on Justia Law

The Bank filed a motion for relief from an automatic stay and submitted a copy of the promissory note, which was a second-generation copy, as well as a declaration certifying that the original note was in the Bank's files. The trustee argued that a duplicate of a duplicate of the original was insufficient to establish prudential standing. The court concluded that a duplicate of a duplicate was a duplicate for purposes of Federal Rule of Evidence 1003 and concluded that the Bank established prudential standing to file the motion for relief from the stay. View "In re: Toni Griffin" on Justia Law

After filing for bankruptcy, plaintiff sought a discharge of his law student loans under 11 U.S.C. 523(a)(8). The bankruptcy court granted a partial discharge, but, on appeal, the district court reinstated the student loan debt in full as non-dischargeable. The district court ruled that plaintiff had not acted in good faith, which was one of the prerequisites for relief under section 523(a)(8). The court concluded that a good faith finding should be reviewed for clear error. The court also concluded that the district court's finding was not clearly erroneous where it relied on substantial evidence in the record and its factual inferences were permissible. Accordingly, the court reversed and remanded with directions. View "Hedlund v. The Educational Resources Inst." on Justia Law

Fitness Holdings, the debtor in this bankruptcy case, was a home fitness corporation. At issue was whether debtor's pre-bankruptcy transfer of funds to its sole shareholder, in repayment of a purported loan, could be a constructively fraudulent transfer under 11 U.S.C. 548(a)(1)(B). The court held that a court has the authority to determine whether a transaction created a debt if it created a right to payment under state law. Because the district court concluded that it lacked authority to make this determination, the court vacated the decision and remanded for further proceedings. View "In re: Fitness Holdings Int'l" on Justia Law

Debtors filed a Chapter 13 petition and the Trustee objected to debtors proposed bankruptcy plan on the ground that it was not proposed in good faith because of the "miniscule" payments to unsecured claims while debtors were living in a $400,000 home, making payments on various luxury and unnecessary items, and failing to commit one hundred percent of their disposable income to the plan. The bankruptcy court overruled the objection and the bankruptcy appellate panel (BAP) affirmed. The court concluded that Congress's adoption of the Bankruptcy Abuse Prevention and Consumer Protection Act, 11 U.S.C. 1325(a), foreclosed a court's consideration of a debtor's Social Security income or a debtor's payments to secured creditors as part of the inquiry into good faith under section 1325(a). Accordingly, the court affirmed the judgment of the BAP. View "In re: David Welsh, et al" on Justia Law

Debtor filed for Chapter 7 bankruptcy and claimed that her Mercedes was exempt from her bankruptcy estate under California Civil Procedure Code 703.140(b)(5) (the "wildcard" or "grubstake" exemption). The court held that a motor vehicle could fall within the wildcard exemption and that if an exempt vehicle was a tool of the debtor's trade and was secured by a nonpossessory, nonpurchase-money lien, the debtor could avoid the lien pursuant to 11 U.S.C. 522(f)(1)(B). The court affirmed the district court's ruling and remand of the case to the bankruptcy court to determine whether the Mercedes was in fact a tool of debtor's trade as a real estate agent. View "In re: Angie M. Garcia" on Justia Law

In this appeal, appellant principally argued that, because the judgments obtained by the Petitioning Creditors were on appeal when the involuntary petition was filed, the bankruptcy court should have dismissed the petition as not meeting the requirements of section 303(b)(1) of the Bankruptcy Code. First, the court held that the bankruptcy court did not err in denying appellant's motion to dismiss for defective service of process. The court then held that an unstayed non-default state judgment was not subject to bona fide dispute for purposes of section 303(b)(1). Therefore, the bankruptcy court did not err in finding that the Petitioning Creditors held claims meeting the requirements of section 303(b)(1). Finally, the bankruptcy court did not abuse its discretion in concluding that further discovery would have been unlikely to produce any evidence material to the pending summary judgment motions. Accordingly, the court affirmed the judgment. View "In re: Georges Marciano, et al v. Steven Chapnick, et al" on Justia Law

Debtors filed for bankruptcy protection under Chapter 13. At issue was whether debtors could exclude an annuity debtor received under the Railroad Retirement Act of 1974 (RRA), 45 U.S.C. 451m(a), when calculating their "projected disposable income," which determined the amount they must repay creditors to qualify for Chapter 13 relief. The court concluded that the Bankruptcy Appellate Panel's decision was reviewable. Applying a trust law understanding of the statute pursuant to Hisquierdo v. Hisquierdo, the court held that the RRA's anti-anticipation clause, which provided that the payment of an annuity shall not be "anticipated," referred to premature receipt of payment, and thus did not preclude the inclusion of the RRA annuity payments in Chapter 13 debtors' projected disposable income. View "In re: Robert Scholz & Carolyn Scholz" on Justia Law

Debtors proposed a three-year Chapter 13 plan of reorganization. The Trustee objected and argued that a five-year plan was required. At issue was whether, under 11 U.S.C. 1325(b), a debtor with no "projected disposable income" could confirm a plan that was shorter in duration than the "applicable commitment period" found in section 1325(b). The court concluded that the Trustee raised legitimate policy considerations as to why a mandated plan length might be desirable even though debtors have no projected disposable income. However, the court concluded that the bankruptcy court erred in disregarding the controlling precedent in Maney v. Kagenveama where Ninth Circuit precedent plainly allowed debtors to confirm a shorter plan under the facts of this case. View "Flores, et al. v. Danielson" on Justia Law