Justia Bankruptcy Opinion Summaries

Henry filed a Chapter 13 Bankruptcy Petition, without counsel. The Trustee objected to confirmation of his plan, arguing that the repayment period exceeded five years and was too speculative; there was no evidence Henry would be able to meet the required payments. Henry agreed to have his original plan denied and was allowed to remedy errors by filing an amended plan by January 22, 2015. Henry maintains that an amended plan was mailed to the Bankruptcy Court on January 22, 2015. The Court never received an amended plan, nor did the Trustee. The Trustee submitted an order for dismissal, which was entered on February 4. Henry received the order on February 9, and immediately went to the Bankruptcy Court and filed amended schedules and an appeal. The Bankruptcy Appellate Panel for the Sixth Circuit affirmed. The Trustee was extremely thorough in explaining what was expected and what to file; Henry was receiving communications from the Bankruptcy Court through traditional mail. If there was any doubt that the documents would arrive through the mail, he should have made arrangements to present the documents physically to the Court. Filing requirements and deadlines are necessary to an orderly bankruptcy process. View "In re: Henry" on Justia Law

In this Chapter 7 bankruptcy proceeding, Appellants filed a complaint in a Puerto Rico superior court against the Trustee in bankruptcy and other defendants. The Trustee removed the state case to the bankruptcy court. Thereafter, Appellants filed a motion for a jury trial and a motion requesting remand to state court. The bankruptcy denied both motions. Appellants appealed. The district court dismissed the appeal on the grounds that the bankruptcy court’s orders were not final. The First Circuit dismissed Appellants’ subsequent appeal, holding that it lacked jurisdiction over the district court’s dismissal of Appellants’ appeal of the bankruptcy court orders because the bankruptcy court’s orders were not final. View "Sitka Enters., Inc. v. Segarra Miranda" on Justia Law

Bulk, a gasoline distributor with gas stations in Kentucky, Indiana, and Tennessee, leases stations and equipment to tenant-operators. Bulk receives monthly rent plus payment for gasoline. The Kentucky Department of Revenue (KDOR) revoked Bulk’s license as a gasoline and special fuels dealer after it asked Bulk to post additional security and Bulk failed to do so. The change affected only the way in which Kentucky collected its fuel tax. Bulk kept track of the separate line-item for the tax in the invoices it received from its suppliers (Marathon and BP) and sought refunds from KDOR for those payments. A KDOR employee emailed Bulk that “only a licensed dealer is allowed to purchase product without the Kentucky tax for export. If your license is reinstated and all outstanding tax liabilities are satisfied, consideration will be given to your refund request.” Bulk regained its license, then sought Chapter 11 bankruptcy protection. Bulk filed an adversary proceeding, seeking refund of the taxes. Kentucky filed a proof of claim. The bankruptcy court ruled in favor of Bulk, finding that Bulk had paid the taxes, which were not appropriately collected for gasoline that was consigned to destinations outside Kentucky. The district court disagreed, concluding that Bulk just paid a higher price to its suppliers. The Seventh Circuit reinstated the decision in favor of Bulk. View "Bulk Petroleum Corp. v. Ky. Dep't of Revenue" on Justia Law

Appellants filed a promissory note that was secured by a deed of trust on their property. At the time that Appellants defaulted, Respondent was the holder of the note and Mortgage Electronic Registration Systems, Inc. (MERS) was the beneficiary of the deed of trust securing the note. After Appellants filed for bankruptcy, MERS assigned its interest in the deed of trust to Respondent. Before the assignment was recorded, Respondent filed a proof of claim in Appellants’ bankruptcy claiming that it was a secured creditor. Respondent then filed a motion for relief from the automatic bankruptcy stay so that it could foreclose on Appellants’ property. Appellants argued that Respondent was not a secured creditor because it did not have a unified note and deed of trust when the bankruptcy petition was filed. The United States Bankruptcy Court certified two questions of law to the Supreme Court concerning the legal effect on a foreclosure when the promissory note and deed of trust are split at the time of foreclosure. The Supreme Court concluded (1) when the promissory note is held by a principal and the beneficiary under the deed of trust is the principal’s agent at the time of foreclosure, reunification of the note and the deed of trust is not required to foreclose; and (2) as a matter of law, the recording of an assignment of a deed of trust is a ministerial act. View "In re Montierth" on Justia Law

After Gregory Bos and his spouse filed a joint petition for Chapter 7 bankruptcy, the Board filed a complaint against Bos and his spouse contesting the dischargeability of a $504,282.59 debt. An arbitrator had awarded the Board the $504,282.59 against Bos, individually and as doing business as BEI, and BEI to recover the outstanding amounts owed to trust funds governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. The bankruptcy court entered judgment, concluding that Bos had committed defalcation while acting as a fiduciary of the Funds and that the $504,282.59 debt to the Funds was therefore nondischargeable. The district court affirmed. At issue on appeal was whether an employer’s contractual requirement to contribute to an employee benefits trust fund makes it a fiduciary of unpaid contributions. The court joined the Sixth and Tenth Circuits, holding that Bos was not a fiduciary under section 523(a)(4). Consistent with the court's general rule that unpaid contributions to employee benefit funds are not plan assets, Bos did not engage in defalcation for purposes of section 523(a)(4). Therefore, the court reversed the district court's judgment because Bos did not act as a fiduciary under 11 U.S.C. 523(a)(4), and because the bankruptcy court and district court expressly found that Bos’s debt did not fall under any of the other nondischargeability exceptions put forth by the Board. The court remanded to the bankruptcy court with instructions to discharge the debt. View "Bos v. Board of Trustees" on Justia Law

Green Tree appealed the district court's judgment concerning an adversary proceeding that debtors filed against Green Tree in the bankruptcy court. The district court affirmed the bankruptcy court’s ruling that Green Tree violated the discharge injunction under 11 U.S.C. 524(a)(2) by filing a proof of claim in debtors’ instant bankruptcy proceeding to collect a debt that was discharged in their previous bankruptcy proceeding. The order also affirmed the bankruptcy court’s award of both compensatory and non-compensatory sanctions to debtors. Determining that it has jurisdiction over the appeal, the court held that section 524(a)(2) prohibits filing a proof of claim for a discharged debt where the objective effect of the claim is to pressure the debtor to repay the debt. In this case, the bankruptcy court correctly concluded that Green Tree violated the discharge injunction. The court vacated both monetary awards and remanded to the district court with instructions to vacate and remand to the district court. The court concluded that the non-compensatory sanctions were punitive and must be vacated because there is no indication on the record that the bankruptcy court employed the procedural protections owed to an alleged criminal contemnor. The court vacated the compensatory sanctions and directed the district court to instruct the bankruptcy court, upon remand, to reconsider debtors' request for compensatory relief in light of Lodge v. Kondaur Capital Corp. View "Green Point Credit v. McLean" on Justia Law

Green Tree appealed the district court's judgment concerning an adversary proceeding that debtors filed against Green Tree in the bankruptcy court. The district court affirmed the bankruptcy court’s ruling that Green Tree violated the discharge injunction under 11 U.S.C. 524(a)(2) by filing a proof of claim in debtors’ instant bankruptcy proceeding to collect a debt that was discharged in their previous bankruptcy proceeding. The order also affirmed the bankruptcy court’s award of both compensatory and non-compensatory sanctions to debtors. Determining that it has jurisdiction over the appeal, the court held that section 524(a)(2) prohibits filing a proof of claim for a discharged debt where the objective effect of the claim is to pressure the debtor to repay the debt. In this case, the bankruptcy court correctly concluded that Green Tree violated the discharge injunction. The court vacated both monetary awards and remanded to the district court with instructions to vacate and remand to the district court. The court concluded that the non-compensatory sanctions were punitive and must be vacated because there is no indication on the record that the bankruptcy court employed the procedural protections owed to an alleged criminal contemnor. The court vacated the compensatory sanctions and directed the district court to instruct the bankruptcy court, upon remand, to reconsider debtors' request for compensatory relief in light of Lodge v. Kondaur Capital Corp. View "Green Point Credit v. McLean" on Justia Law

In 1996, Bocchino, a stockbroker, learned from a superior that Traderz “might go public” and that the endeavor was supported by “some commitment” from a popular fashion model. Based solely on that, and without any independent investigation into the quality of the entity, Bocchino immediately sought investment from clients. Bocchino received over $40,000 in commissions from Traderz sales. The second involved Fargo. The source of Bocchino’s information regarding Fargo is unclear. Bocchino only obtained cursory documentation about the entity before soliciting sales. He did not conduct any independent investigation, despite awareness that Fargo’s principal’s “full-time ‘job’ was law student.” Bocchino received $14,000 in commissions for his clients’ stock purchases in Fargo. Traderz and Fargo turned out to be fraudulent ventures. The principals of each entity were criminally convicted, and the anticipated value of the investments vanished. The Securities and Exchange Commission brought civil law enforcement actions against those who sold investments in the entities. The bankruptcy court held that those civil judgments against Bocchino were nondischargeable, 11 U.S.C. 523(a)(2)(A). The district court and Third Circuit affirmed, finding that collapse of the private placements was neither abnormal nor extraordinary given Bocchino’s lack of due diligence. View "In Re: Bocchino" on Justia Law

Appian was created by the Enea brothers, who were its only shareholders and officers. Appian managed real estate development projects, including Monticello, of which Appian was a General Partner, and Monterrosa, of which Appian was the Managing Member. Double Bogey invested approximately $4 million in Monticello as its Limited Partner, and $1 million in Monterrosa as a non-managing member. Double Bogey never recovered any of its investment in Monterrosa and did not receive profits from either investment. After Appian failed to provide an accounting of its investments, Double Bogey filed suit. The Eneas and Appian separately filed for Chapter 7 bankruptcy. Double Bogey brought an adversary proceeding, claiming that: Appian was Double Bogey’s fiduciary with respect to the investments; Appian was liable for lost principal and profits; the liabilities were created by Appian’s “defalcation;” and the Eneas were also liable for such non-dischargeable debt either because of their own defalcation or as alter egos of Appian. Liabilities created by a fiduciary’s defalcation are not dischargeable in bankruptcy under Bankruptcy Code Section 523(a)(4). The bankruptcy court rejected the claims. The Ninth Circuit affirmed, agreeing that merely finding the Eneas were alter egos of Appian under California law was insufficient to hold that they were Double Bogey's “fiduciaries” under Section 523(a)(4). View "Double Bogey LP v. Enea" on Justia Law

Tetzlaff, age 56, lives with his mother, is unemployed, and owes approximately $260,000 in student loan debt, which is guaranteed by Educational Credit Management Corporation. When Tetzlaff filed for Chapter 7 bankruptcy in 2012, he sought to have this debt discharged, claiming that repayment constituted an “undue hardship” under 11 U.S.C. 523(a)(8). The bankruptcy court held that Tetzlaff’s student debt could not be discharged. The district court and Seventh Circuit affirmed, noting that the bankruptcy court found that Tetzlaff’s financial situation has the ability to improve given that “he has an MBA, is a good writer, is intelligent, and family issues are largely over” and that “Tetzlaff is not mentally ill and is able to earn a living.” The courts rejected an argument that the bankruptcy court erred in refusing to consider Tetzlaff’s payments to Florida Coastal Law School (which were not included in the discharge action) in concluding that he had not made a good faith effort to repay the debt held by Educational Credit. View "Tetzlaff v. Educ. Credit Mgmt. Corp." on Justia Law