Justia Bankruptcy Opinion Summaries

Debtor filed a voluntary chapter 7 bankruptcy petition and listed Dennison, Ohio as the mailing address on the petition, but listed Debtor’s residence as 2035 First Street, Dock 9, Sandusky, Ohio. This location is the dock slip where Debtor kept his boat. Debtor listed the boat on Schedule B as “residential boat 46 foot 1988 SeaRayBoat.” On schedule C, Debtor claimed the boat exempt pursuant to Ohio’s homestead exemption. In July 2012, Debtor’s 38-year marriage ended. As part of the dissolution, Debtor transferred real property to his ex-wife, including their former marital home. Debtor asserts that after the dissolution of his marriage3 he moved into his boat and began using it as his full-time residence. The mailing address on the petition is Debtor’s former marital home, now belonging to and occupied by his ex-wife. The Trustee timely filed an objection and sought turnover of the boat. The bankruptcy court held that “the Chapter 7 Trustee has met his burden of proving by a preponderance of the evidence that the Sea Ray boat was not Debtor’s residence at the time of filing. The Sixth Circuit Bankruptcy Appellate Panel agreed that the Ohio homestead exemption cannot be claimed on the vessel and ordered turnover of the boat. View "In re: Aubiel" on Justia Law

Debtor, a billing services technology company, is a limited liability business and its sole member is Joli, Inc. Heverly owns 75 percent of Joli. A printing company holds the single largest claim against Debtor and the Debtor’s CEO, Heverly’s husband, for $9,359,630.91, arising from a judgment. Debtor filed a voluntary Chapter 11 petition. Debtor’s unsecured claims, not including the printing claim, total less than $1.3 million. Debtor filed a Fourth Amended Plan of Reorganization, under which a third-party, One2One (Plan Sponsor) would acquire a membership interest in Debtor. A Plan Support Agreement provided the Plan Sponsor with the exclusive right to purchase 100% of Debtor’s equity for $200,000. Neither the Plan Sponsor nor any third-party was to contribute any additional capital. The Plan incorporated the terms of the Committee Agreement concerning distributions and the waiver of preference actions against unsecured creditors. Over the objection of the printing company, the bankruptcy judge entered a Confirmation Order. The district court affirmed. The Third Circuit declined to overrule its 1996 adoption of the doctrine of equitable mootness, but concluded that the district court abused its discretion under that precedent and remanded for consideration of the merits of the printing company appeal. View "In re: One2One Communications" on Justia Law

Taylor’s brother died in an accident. Caiarelli, the decedent’s ex-spouse and guardian of their minor child, obtained a state court declaration that the child was entitled to assets distributed to Taylor ($1.4 million). The estate assigned the judgment to Caiarelli. Taylor sought a probate court declaration that the assignment was void. Before resolution, Taylor filed for Chapter 11 bankruptcy, triggering the automatic stay. Caiarelli initiated an adversary proceeding, objecting to discharge of the judgment. The bankruptcy court dismissed, finding that Caiarelli failed to establish standing. The judgment was discharged, and Taylor’s creditors enjoined from collecting, 11 U.S.C. 524(a)(2). Caiarelli returned to probate court, which ratified the assignment. Taylor claimed that Caiarelli and her attorneys violated the discharge and plan injunctions. The bankruptcy court entered a civil contempt order and issued a damages order and judgment for $165,662.36 in attorney’s fees. While appeal was pending, Taylor notified the district court that he reached a settlement with the legal malpractice insurance carrier for Caarelli’s attorneys. The attorneys denied that a full settlement had been reached. The bankruptcy court indcated that vacatur would be approved if the parties returned to the court, so the district court denied Taylor’s motion to dismiss but reversed the contempt order, damages order, and judgment, finding no violation of the statutory discharge or plan injunctions. The Seventh Circuit affirmed, finding that the appeal was not moot. View "Taylor v. Caiarelli" on Justia Law

The court previously affirmed the district court’s affirmance of the bankruptcy court’s order granting debtor’s motion to strip Bank of America’s junior mortgage lien. The Supreme Court vacated the opinion and remanded the case for consideration in light of Bank of America, N.A. v. Caulkett. In Caulkett, the Supreme Court held “a debtor in a Chapter 7 bankruptcy proceeding may not void a junior mortgage lien under 11 U.S.C. 506(d) when the debt owed on a senior mortgage lien exceeds the current value of the collateral.” Consequently, in light of Caulkett, the court's own holding in In re McNeal and Folendore v. United States Small Business Administration are overruled. Accordingly, the district court erred in affirming the bankruptcy court’s grant of debtor’s motion to strip off Bank of America’s junior lien. The court denied Bank of America’s motion for summary reversal, vacated the district court’s judgment affirming the bankruptcy court, and remanded for further proceedings. View "Bank of America v. Waits" on Justia Law

Robb filed a Chapter 7 petition. Harder, the trustee, discovered a defect in the deed of trust securing the debt on Robb’s home. Robb converted her case to Chapter 13. Harder filed proof of claim ($450), describing an unsecured priority claim for “time spent by trustee in examining documents regarding avoidance of lien, preparing objection to homestead exemption, and filing objection to conversion to Chapter 13 case, and tracking debtors’ [sic] conversion to chapter 13.” Robb objected, arguing that trustee compensation is subject to 11 U.S.C. 326 and, because Harder did not disburse any moneys before conversion, she was not entitled to payment. The bankruptcy court allowed the claim, holding that section 326(a) is not the only method of trustee compensation and that allowing the claim when no money was distributed encourages trustees to be diligent in looking for assets and discourages debtors from concealing assets. The Eighth Circuit Bankruptcy Appellate Panel dismissed for lack standing. Robb did not plead any facts establishing that the order diminished her property, increased her burdens, or impaired her rights. If she had shown that all creditors would be paid in full and the length of the plan could have been shortened, it is possible that she would have been an aggrieved party. View "Robb v. Harder" on Justia Law

The Debtors sought Chapter 7 bankruptcy relief. On their schedules, they listed the IRS as an unsecured creditor holding a claim in the amount of $249,085. They received a discharge in October 2009. Following the close of their Chapter 7 case, several IRS employees issued IRS levies and filed Notices of Federal Tax Liens with respect to the Debtors’ federal tax debt. The Debtors filed an adversary proceeding, naming each IRS employee as a defendant, alleging that the IRS employees violated 26 U.S.C. 7433 by issuing levies and filing the Notices of Federal Tax Liens, and seeking actual and punitive damages. The Bankruptcy Court entered an order substituting the United States as the sole defendant, denying the Debtors’ request for default judgment, and dismissing the Debtors’ complaint. The Eighth Circuit Bankruptcy Appellate Panel affirmed. The Debtors did not file an administrative claim for damages with the IRS and, therefore, may not bring an action for damages under section 7433. If the Debtors wish to sue the government for violations of the bankruptcy discharge under 11 U.S.C. 524, they must first exhaust their administrative remedies. View "Broos v. United States" on Justia Law

The Creditors filed suit to recover losses incurred when subsidiaries of Hellas defaulted on notes valued at 1.3 billion euros. On appeal, the Creditors challenged the district court's affirmance of the bankruptcy court dismissing the Chapter 7 involuntary bankruptcy petitions filed by the Creditors against the Troy Entities; denying the Creditors’ motion to withdraw the reference to bankruptcy court; and affirming the July 18, 2013 opinion by the same bankruptcy court awarding the Troy Entities $513,427.16 in attorneys’ fees and costs pursuant to 11 U.S.C. 15 303(i)(1). Determining that the court had jurisdiction, the court concluded that the Creditors knowingly and voluntarily consented to the bankruptcy court exercising its jurisdiction to award attorneys' fees and costs; the court rejected the Creditors' arguments challenging the bankruptcy court's conclusion that there is a bona fide dispute requiring dismissal of the involuntary petitions solely for the purpose of deciding whether there was a basis for the award of attorneys’ fees and costs; and the bankruptcy court did not abuse its discretion in awarding fees here. Accordingly, the court affirmed the judgment. View "Crest One SpA v. TPG Troy" on Justia Law

Plaintiffs in this case alleged their former bankruptcy trustee breached professional duties due them because of conflicting obligations the trustee owed the bankruptcy estate. Plaintiffs sought recovery under state law. However, plaintiffs filed suit in federal court against the trustee alleging diversity jurisdiction and the right to have the case resolved in an Article III court. The trustee maintained the case should have been heard in an Article I bankruptcy court because the alleged-breached professional duties arose from the bankruptcy proceedings. The district court concluded the case should have been heard in the Article I court, and certified its decision for immediate appeal. The Tenth Circuit concluded that an Article III court had jurisdiction, and reversed the district court's order. View "Loveridge v. Hall" on Justia Law

Riverbend filed a Proof of Claim in the bankruptcy proceeding of debtor, owner of a condominium in Riverbend. Debtor filed a Motion to Avoid Riverbend's Lien on the grounds that after deducting the balance of the first mortgage and the Louisiana homestead exemption, there was only $8,000 left to which Riverbend's lien could attach. The bankruptcy court held that the privilege created by La. Rev. Stat. 9:1123.115(1) on a Louisiana condominium for all unpaid sums assessed by the condominium association against the condominium owner is a statutory lien (as distinguished from a security interest) and is therefore subject to bifurcation under 11 U.S.C. 1322(b)(2). Riverbend appealed the bankruptcy court's decision. The court affirmed the district court’s affirmance of the bankruptcy court’s order. View "Riverbend Condo. Ass'n v. Green" on Justia Law

ASARCO appealed the district court's grant of summary judgment for CNA in ASARCO's suit for contribution under section 113(f)(3)(B) of the Comprehensive Environmental Response,Compensation, and Liability Act (CERCLA), 42 U.S.C. 9613(f)(3)(B). The district court dismissed the complaint. The court held that a judicially approved settlement agreement between private parties to a CERCLA cost-recovery suit starts the clock on the three-year statute of limitations in section 113(g)(3)(B), and that a later bankruptcy settlement that fixes the costs of such a cost recovery settlement agreement does not revive a contribution claim that has otherwise expired. The court's holding that a later bankruptcy settlement with the government cannot revive an otherwise expired contribution claim ensures that a party does not receive a benefit that it had not paid for in the bankruptcy settlement. In this case, the court concluded that ASARCO's time to file contribution claims pursuant to the Wickland Agreement has expired, and that the Wickland Agreement covered all response costs at the Selby Site and the 2008 bankruptcy settlement merely fixed costs. Accordingly, the court affirmed the judgment. View "ASARCO v. Celanese Chem. Co." on Justia Law