Justia Bankruptcy Opinion Summaries

In entertaining defendants' Fed. R. Civ. P. 50(b) motion for judgment as a matter of law after a jury trial, the district court applied the filing deadline found in the Federal Civil Rules and thus found the motion timely. The court disagreed and held that when trying a case arising under title 11 of the United States Code, a district court (just like a bankruptcy court) must apply the filing deadline found in the Federal Rules of Bankruptcy Procedure when addressing a Rule 50(b) motion. The court vacated the district court's order granting defendants relief and remanded with instructions to reinstate the jury's award because, under the Federal Bankruptcy Rules, defendants' Rule 50(b) post-trial motion was untimely. Fed. R. Bankr. P. 9015 requires that such motions be filed no later than 14 days after entry of judgment. In this case, defendants filed their renewed motion 28 days after the entry of judgment. View "Rosenberg v. DVI Receivables XIV, LLC" on Justia Law

Collazo, a real estate developer, bought apartments for conversion to condominiums and formed LLCs to hold title to the properties. In 2002, Collazo's employee, Julie Siragusa, introduced the developer to her father. The Siragusas began making loans for the developments. Collazo obtained additional financing by transferring properties among the LLCs. According to the Siragusas, the financial institutions did not realize that Collazo was indebted to them. The Siragusas accepted Collazo’s explanations for delays in repayment for many years. In 2012 Collazo petitioned for bankruptcy, seeking to discharge his debts to Siragusa (a physician), Siragusa’s employee benefit trust, and Siragusa’s three adult children. The Siragusas filed an adversary action in the bankruptcy proceeding, contending that Collazo was not entitled to a discharge of his debts to them. The bankruptcy judge and district judge allowed discharge except for Collazo’s debt to Dana and Robert Siragusa, concerning $1 million borrowed for an Arizona development project. The Seventh Circuit remanded Dana’s claim that the transfer of unsold Chicago units to new LLCs was fraudulent, and Dana’s and Robert's claim for a money judgment, but agreed that other claims were time-barred. View "Siragusa v. Collazo" on Justia Law

Debtor declared bankruptcy in 2011 and sought to discharge his federal income tax liability for tax years 2000 through 2003. Debtor had filed Forms 1040 for those tax years many years late, and only after the IRS had issued notices of deficiency and had assessed the amount of taxes he owed. The bankruptcy court determined that debtor's tax debts were nondischargeable and granted the government's motion for summary judgment. The court assumed, without deciding, that Congress did not intend to include filing deadlines when it required, in the hanging paragraph, that tax returns comply with “applicable filing requirements.” Even making that assumption, however, the court held that debtor's late-filed Forms 1040 do not qualify as tax returns under the Beard test because they do not evince an honest and reasonable effort to comply with the tax law. Consequently, debtor's tax debts for tax years 2000 through 2003 are debts for tax obligations with respect to which no return was filed, and they are not dischargeable in bankruptcy pursuant to 11 U.S.C. 23(a)(1)(B)(i). Accordingly, the court affirmed the judgment. View "Justice v. United States" on Justia Law

Appellant filed for Chapter 13 bankruptcy protection, and the bankruptcy court set July 19, 2012 as the deadline for creditors to file unsecured claims. The case was dismissed on June 13, 2012 and reinstated on August 1, 2012. On August 7, 2012, Appellee, Appellant’s creditor, sought leave to file an untimely unsecured claim, explaining that it had assumed the July 19 deadline was no longer operative after the case’s dismissal. The bankruptcy court reset the filing deadline to September 6, 2012 and accepted Appellee’s claim. The district court affirmed. The First Circuit affirmed, holding that because the initial statutory ninety-day deadline for Appellee to file an unsecured claim fell in a period between the case’s dismissal and subsequent reinstatement, the claim was timely. View "Gil-De La Madrid v. Bowles Custom Pools & Spa" on Justia Law

Appellant filed for Chapter 13 bankruptcy protection, and the bankruptcy court set July 19, 2012 as the deadline for creditors to file unsecured claims. The case was dismissed on June 13, 2012 and reinstated on August 1, 2012. On August 7, 2012, Appellee, Appellant’s creditor, sought leave to file an untimely unsecured claim, explaining that it had assumed the July 19 deadline was no longer operative after the case’s dismissal. The bankruptcy court reset the filing deadline to September 6, 2012 and accepted Appellee’s claim. The district court affirmed. The First Circuit affirmed, holding that because the initial statutory ninety-day deadline for Appellee to file an unsecured claim fell in a period between the case’s dismissal and subsequent reinstatement, the claim was timely. View "Gil-De La Madrid v. Bowles Custom Pools & Spa" on Justia Law

Debtor appealed the bankruptcy appellate panel's (BAP) denial of his petition for a writ of mandamus. The court overruled In re Salter and held that the BAP is not a court established by Act of Congress under subsection (a) of the All Writs Act, 28 U.S.C. 1651(a), so it does not have jurisdiction to entertain a mandamus petition. Accordingly, the court vacated the decision of the BAP and remanded with instructions to dismiss the petition for lack of jurisdiction. View "Ozenne v. Chase Manhattan Bank" on Justia Law

Appellants, representatives of certain unsecured creditors of the Chapter 11 debtor Tribune Company, appealed the grant of a motion to dismiss their state law, constructive fraudulent conveyance claims brought against Tribune’s former shareholders. The court held that appellants are not barred by the Bankruptcy Code’s automatic stay because they have been freed from its restrictions by orders of the bankruptcy court and by the debtors’ confirmed reorganization plan. The court also held that appellants’ claims are preempted by Bankruptcy Code Section 546(e), where that section shields from avoidance proceedings brought by a bankruptcy trustee transfers by or to financial intermediaries effectuating settlement payments in securities transactions or made in connection with a securities contract, except through an intentional fraudulent conveyance claim. Accordingly, the court affirmed the judgment. View "In re: Tribune Co. Fraudulent Conveyance Litig." on Justia Law

Appellants, representatives of certain unsecured creditors of the Chapter 11 debtor Tribune Company, appealed the grant of a motion to dismiss their state law, constructive fraudulent conveyance claims brought against Tribune’s former shareholders. The court held that appellants are not barred by the Bankruptcy Code’s automatic stay because they have been freed from its restrictions by orders of the bankruptcy court and by the debtors’ confirmed reorganization plan. The court also held that appellants’ claims are preempted by Bankruptcy Code Section 546(e), where that section shields from avoidance proceedings brought by a bankruptcy trustee transfers by or to financial intermediaries effectuating settlement payments in securities transactions or made in connection with a securities contract, except through an intentional fraudulent conveyance claim. Accordingly, the court affirmed the judgment. View "In re: Tribune Co. Fraudulent Conveyance Litig." on Justia Law

Jepson executed a note and mortgage on Illinois property, listing America’s Wholesale Lender as the lender and Mortgage Electronics Registration Systems (MERS) as its nominee. Jepson’s note was endorsed in blank by Countrywide, “doing business as America’s Wholesale Lender” and transferred to CWABS, a residential mortgage trust that pools loans and sells certificates backed by the mortgages to investors. CWABS was formed and governed by a Pooling and Service Agreement (PSA). BNYM, trustee for CWABS, now possesses Jepson’s note. MERS assigned Jepson’s mortgage to BNYM. Jepson defaulted. BNYM filed a foreclosure complaint. Jepson filed a Chapter 7 bankruptcy petition. BNYM sought to lift the automatic stay. Jepson filed an adversary complaint, seeking a declaration that BNYM had no interest in her mortgage because the note did not include a complete chain of intervening endorsements and was endorsed after the closing date in the PSA and that America’s is a fictitious entity, so that the note was void and not negotiable under Illinois law. The bankruptcy court held that, under governing New York law, Jepson lacked standing to challenge alleged violations of the PSA, dismissed the adversary complaint, and modified the automatic stay to allow BNYM to proceed with its Illinois foreclosure action. The district court affirmed. The Seventh Circuit agreed that Jepson lacks standing to raise challenges based on the PSA, but remanded for consideration of her other claims. View "Jepson v. Bank of NY Mellon" on Justia Law

Jepson executed a note and mortgage on Illinois property, listing America’s Wholesale Lender as the lender and Mortgage Electronics Registration Systems (MERS) as its nominee. Jepson’s note was endorsed in blank by Countrywide, “doing business as America’s Wholesale Lender” and transferred to CWABS, a residential mortgage trust that pools loans and sells certificates backed by the mortgages to investors. CWABS was formed and governed by a Pooling and Service Agreement (PSA). BNYM, trustee for CWABS, now possesses Jepson’s note. MERS assigned Jepson’s mortgage to BNYM. Jepson defaulted. BNYM filed a foreclosure complaint. Jepson filed a Chapter 7 bankruptcy petition. BNYM sought to lift the automatic stay. Jepson filed an adversary complaint, seeking a declaration that BNYM had no interest in her mortgage because the note did not include a complete chain of intervening endorsements and was endorsed after the closing date in the PSA and that America’s is a fictitious entity, so that the note was void and not negotiable under Illinois law. The bankruptcy court held that, under governing New York law, Jepson lacked standing to challenge alleged violations of the PSA, dismissed the adversary complaint, and modified the automatic stay to allow BNYM to proceed with its Illinois foreclosure action. The district court affirmed. The Seventh Circuit agreed that Jepson lacks standing to raise challenges based on the PSA, but remanded for consideration of her other claims. View "Jepson v. Bank of NY Mellon" on Justia Law