Justia Bankruptcy Opinion Summaries

After plaintiff filed an employment discrimination case against US Steel, she filed a Chapter 7 bankruptcy petition that did not disclose the employment-discrimination claims. The Chapter 7 Trustee was treating the bankruptcy as a “no asset” case. U.S. Steel moved the district court for dismissal. An Eleventh Circuit panel initially affirmed the district court in holding that judicial estoppel required dismissal of the bankruptcy case. Upon rehearing en banc, the Eleventh Circuit overruled precedent “that permitted the inference that a plaintiff intended to make a mockery of the judicial system simply because he failed to disclose a civil claim” and remanded for a determination of whether a plaintiff’s inconsistent statements were calculated to make a mockery of the judicial system. When the plaintiff’s inconsistent statement is an omission in bankruptcy disclosures, the court may consider such factors as the plaintiff’s level of sophistication, whether and under what circumstances the plaintiff corrected the disclosures, whether the plaintiff told his bankruptcy attorney about the civil claims before filing the bankruptcy disclosures, whether the trustee or creditors were aware of the claims before the plaintiff amended the disclosures, whether the plaintiff identified other lawsuits to which he was party, any findings or actions by the bankruptcy court after the omission was discovered, and any other fact relevant to the intent inquiry.” View "Slater v. United States Steel Corp." on Justia Law

The Eleventh Circuit vacated the district court's dismissal of First National's deficiency claims and remanded for the district court to consider, in the first instance, whether the dismissal of defendant's Chapter 11 case without a discharge had any effect on First National's ability to pursue its deficiency claims. After the parties had filed their briefs in this appeal, defendant moved the bankruptcy court to dismiss his Chapter 11 case and the bankruptcy court granted the motion to dismiss. The court explained that, given the dismissal of defendant's underlying bankruptcy petition, none of defendant's debts or liabilities were discharged and the automatic stay was terminated. View "First National Bank of Oneida, N.A. v. Brandt" on Justia Law

At issue was whether a provision in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, 11 U.S.C. 526(a)(4), —on advice to incur debt to pay for a lawyer's bankruptcy-related representation—likewise entailed an invalid purpose requirement. The Eleventh Circuit held that a debt-relief agency (including a law firm) violates section 526(a)(4) if it advises a client to incur additional debt to pay for bankruptcy-related legal representation, without respect to whether the advice was given for some independently "invalid purpose"; plaintiff's allegation, in this case, that defendant law firm instructed him to pay his bankruptcy-related legal bills by credit card stated a viable claim under section 526(a)(4); and none of the constitutional arguments that the firm presented to the court warranted invalidating the statute on First Amendment grounds. View "Cadwell v. Kaufman, Englett & Lynd, PLLC" on Justia Law

The Bankruptcy Code did not forestall the automatic operation of Georgia's pawn statute. In this case, debtor entered into a pawn transaction in which he pledged his car in exchange for a loan, defaulted on the loan, and then, shortly before the expiration of the redemption period—during which he could pay off his debt (with interest) and thereby regain title to his car—filed a Chapter 13 bankruptcy petition. The Eleventh Circuit held that the car dropped out of the bankruptcy estate and vested in the pawnbroker when the prescribed redemption period lapsed. Accordingly, with respect to the car, 11 U.S.C. 1322(b)(2) had no field of operation. The court explained that following the expiration of the grace period, the pawnbroker did not have a mere "claim" on debtor's car, but rather had the car itself. View "Title Max v. Northington" on Justia Law

Section 362(k)(1) of the Bankruptcy Code specifically departs from the American Rule and authorizes costs and attorneys' fees incurred by the debtor in ending a willful violation of an automatic stay, prosecuting a damages violation, and defending those judgments on appeal. In this case, the Eleventh Circuit affirmed the district court's order awarding defendants attorneys' fees and costs that they incurred because of plaintiff's unsuccessful appeal of the damages award to defendants for her violation of the Bankruptcy Code's automatic stay provision. The court also granted defendants' motion for attorneys' fees incurred in this appeal. View "Mantiply v. Horne" on Justia Law

The M/V Deep Blue purchased fuel from a supplier, the supplier purchased the fuel from an affiliate, and the affiliate subcontracted with Radcliff. Radcliff subsequently asserted a maritime lien on the Deep Blue in a bid to recover directly from the ship, giving rise to this litigation. The Fifth Circuit affirmed the district court's determination that Radcliff did not have a lien on the Deep Blue. Instead, a lien had arisen in favor of the global fuel supplier, and was duly assigned to ING Bank, an intervenor in the suit. View "Barcliff, LLC v. M/V Deep Blue" on Justia Law

When a plaintiff takes inconsistent positions by pursuing in district court a civil claim that he failed to disclose as an asset in his bankruptcy proceedings, a district court may apply judicial estoppel to bar the plaintiff's civil claim if it finds that the plaintiff intended to make a mockery of the judicial system. When determining whether a plaintiff who failed to disclose a civil lawsuit in bankruptcy filings intended to make a mockery of the judicial system, a district court should consider all the facts and circumstances of the case. The Eleventh Circuit reasoned that the court should look to factors such as the plaintiff's level of sophistication, his explanation for the omission, whether he subsequently corrected the disclosures, and any action taken by the bankruptcy court concerning the nondisclosure. The court overruled portions of Barger v. City of Cartersville, 348 F.3d 1289 (11th Cir. 2003), and Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282 (11th Cir. 2002), that permit a district court to infer intent to misuse the courts without considering the individual plaintiff and the circumstances surrounding the nondisclosure. Accordingly, the court remanded for consideration of whether the district court abused its discretion in light of this new standard. View "Slater v. United Steel Corp." on Justia Law

Section 707(b) of the Bankruptcy Code, which allows a bankruptcy court to dismiss a petition filed under Chapter 7 if it determines that relief would be an "abuse" within the meaning of that section, applies to a petition that was initially filed under Chapter 13 but later converted to a petition under Chapter 7. The Eleventh Circuit explained that by excluding converted cases from section 707(b), the effect would be to read this important remedial provision out of the Code. Accordingly, the court affirmed the district court's decision to uphold the bankruptcy court's dismissal of the petition in this case. View "Pollitzer v. Gebhardt" on Justia Law