Justia Bankruptcy Opinion Summaries

Collection Associates garnished a total of $858.98 in wages Brandon earned during six pay periods. Brandon’s employer sent the first four garnishments, $562.78, to the state court that issued the garnishment order. That court delivered the payments to Collection Associates, under Neb. Rev. Stat. 25-1056(2). Brandon and his wife filed a bankruptcy petition and notified the state court they had done so. When the state court received the final two garnishments, totaling $296.20, instead of delivering those funds to Collection Associates, it returned the money to Brandon’s employer, which refunded the money to Brandon. The debtors then sought to avoid and recover the funds garnished during the preference period. The bankruptcy court found the preference action barred by the defense for consumer debtor payments under $600. The Bankruptcy Appellate Panel affirmed. The Eighth Circuit agreed that the defense applies because the Pierces sought to avoid the transfer of less than $600. View "Pierce v. Collection Assocs., Inc." on Justia Law

Five individuals (collectively, “Plaintiffs”) each filed a petition for individual bankruptcy under Chapter 13 in the Bankruptcy Court for the District of Maryland. LVNV Funding, LLC and its affiliated companies (collectively, “Defendants”) filed a proof of unsecured claim based on defaulted debts it had acquired against each plaintiff. Each Chapter 13 plan was approved. Defendants’ claims were allowed, and they received payments from the Chapter 13 trustees on these claims. Plaintiffs subsequently filed this putative class action lawsuit in the District of Maryland alleging that Defendants violated the federal Fair Debt Collection Practices Act (FDCPA) and various Maryland laws by filing proofs of claim without a Maryland debt collection license. The district court dismissed the action, concluding (1) the state common law claims were barred by res judicata, and (2) the federal and state statutory claims failed to state a claim. The Fourth Circuit affirmed but on res judicata grounds, holding (1) Plaintiffs’ claims were based on the same cause of action as Defendants’ claims in the confirmed bankruptcy plans and were thus barred by res judicata; and (2) Plaintiffs’ statutory claims were subject to the normal principles of res judicata and were thus precluded by the confirmation of the Chapter 13 plans. View "Covert v. LVNV Funding, LLC" on Justia Law

In this bankruptcy case, Bank of America obtained a junior foreclosure judgment and received the Debtor’s equity of redemption for a senior mortgage. Bank of America did not sell this interest within the specified time period, nor did it appear in the senior foreclosure to assert its interest in redeeming the senior mortgage within the redemption period. Peoples United Bank, the holder of the senior mortgage, then filed a foreclosure complaint. Bank of America and the Debtor failed to appear in the action and were defaulted. Thereafter, Peoples United was granted a foreclosure judgment. Bank of America was not named as a distributee in the resulting judgment. Bank of America subsequently purchased Peoples United’s interest in the Debtor’s senior mortgage debt, and Peoples United postponed the foreclosure sale. Bank of America successfully moved to substitute itself in place of Peoples United as the plaintiff in the senior foreclosure. The Trustee then moved to sell the premises free of liens, interests, and encumbrances. Bank of America objected. The bankruptcy court entered judgment in favor of Bank of America. The federal district court disagreed with the bankruptcy court and certified an unsettled state law question to the Maine Supreme Court. The Court answered that Bank of America, who failed to appear in the senior foreclosure and was not named as a distributee in the resulting judgment, did not have any rights to the excess proceeds from that foreclosure sale. View "Bankruptcy Estate of Everest v. Bank of Am., N.A." on Justia Law

As part of a redevelopment project partially financed by Sioux City, Iowa, Civic borrowed from Northwest Bank to build a movie theater complex. Main Street leased the space in 2004. Main Street did not fully pay its rent and Civic did not fully make its loan payments. After mediation, Civic and Main Street agreed on an amended lease that substantially lowered the rent. Eventually, Civic filed for Chapter 11 bankruptcy, arguing that the court should subordinate the interests of Northwest and the city because they had defrauded Civic into accepting the amended lease. The bankruptcy court issued orders deciding that the amended lease applied. Civic appealed the lease orders; the Bankruptcy Appellate Panel ruled that Civic’s appeal was improperly interlocutory and dismissed for lack of jurisdiction. Civic filed a second plan, which restated the fraud argument. The bankruptcy court denied confirmation and rejected the fraud argument, but did not dismiss the bankruptcy petition. Civic appealed the new order and, again, the three earlier orders. The BAP again dismissed. Civic appealed all four orders. The Eighth Circuit dismissed for lack of jurisdiction; a determination of the BAP is not final unless the underlying order of the bankruptcy court is final. View "Civic Partners Sioux City, LLC v. Main Street Theaters, Inc." on Justia Law

Debtor, a New York City tenant, filed for Chapter 7 bankruptcy and listed the value of her apartment lease on Schedule B as personal property exempt from the bankruptcy estate as a "local public assistance benefit." At issue was whether the value inherent in debtor's rent-stabilized lease as a consequence of the protections afforded by New York's Rent Stabilization Code, N.Y. Comp. Code R. & Regs. tit. 9, 2520.1, made the lease, or some portion of its value, exempt from debtor's bankruptcy estate as a "local public assistance benefit" within the meaning of New York Debtor and Creditor Law 282(2). The court certified this unsettled issue to the New York Court of Appeals, which held that a rent‐stabilized lease qualified as a local public assistance benefit. Rejecting the Trustee’s argument that “benefits” should be limited to cash payments, the court noted that the rent‐stabilization program had “all of the characteristics of a local 10 public assistance benefit” under the statute and that an exemption was consistent with the purpose of protecting a debtor’s essential needs, including housing. The Second Circuit then reversed and remanded to allow Debtor to claim the exemption from her bankruptcy estate. View "Santiago-Monteverde v. Pereira" on Justia Law

DVI Receivables XIV, LLC; DVI Receivables XVI, LLC; DVI Receivables XVII, LLC; DVI Receivables XVIII, LLC; DVI Receivables XIX, LLC; DVI Funding, LLC (collectively, the "DVI Entities"); Lyon Financial Services, Inc. d/b/a U.S. Bank Portfolio Services ("Lyon"); and U.S. Bank, N.A. ("USB") (collectively, "Appellants") appealed a district court decision to affirm a bankruptcy court's final order awarding appellee Maury Rosenberg attorney's fees and costs. The DVI Entities filed an involuntary bankruptcy petition against appellee Rosenberg. After the bankruptcy court dismissed the petition, the court awarded attorney's fees and costs to appellee Rosenberg. The bankruptcy court granted Rosenberg's motion and dismissed the involuntary petition with prejudice. The bankruptcy court found, inter alia, that the DVI Entities were not eligible creditors of Rosenberg because his 2005 guaranty did not run to the DVI Entities. The DVI Entities therefore lacked standing as a matter of law to file an involuntary petition against Rosenberg. In his adversary complaint, Rosenberg asserted federal claims to recover attorney's fees, costs, and damages he incurred because of the filing of the involuntary petition, which the bankruptcy court had dismissed. After careful review of the record and the parties' briefs, and following oral argument, the Eleventh Circuit affirmed in part, vacated in part, and remanded for further proceedings. The Court affirmed the district court's affirmance of the bankruptcy court's award of the following three categories of attorney's fees and costs: (1) fees to obtain the dismissal, (2) appellate fees, and (3) fees on fees. The Eleventh Circuit vacated the district court's affirmance of the bankruptcy court's award of the fourth category of fees and costs, those incurred to prosecute Rosenberg's bad-faith claims for damages, as prematurely entered. The case was remanded back to the district court: (1) to deduct from the total award the limited amount of fees and costs that were incurred solely for the legal work done to prosecute Rosenberg's bad-faith claims for damages; and (2) to reconsider that deducted fee and cost amount along with the motion to supplement. View "DVI Receivables XIV, LLC, et al. v. Rosenberg" on Justia Law

In these consolidated appeals, the Redmond Group and Zeltser Group dispute over ownership of, and control over, three involuntary debtors: Fisher Island, Little Rest, and Mutual Benefits (collectively, the "Alleged Debtors"). Litigation of the ownership issue in three bankruptcy cases produced five consolidated appeals of four district court orders. After careful review of the record and the parties' briefs, the court found no reversible error and affirmed all four orders: the district court's denial of Zeltser Group's motion to withdraw reference of the ownership issue; the district court's affirmance of the bankruptcy court's summary judgment order in favor of the Redmond Group in the Fisher Island and Little Rest cases; the district court's order dismissing, for lack of standing, certain non-party appeals from the bankruptcy court's summary judgment order; and the district court's affirmance of the bankruptcy court's final judgment in favor of the Redmond Group in the Mutual Benefits case. View "Fisher Island Ltd. v. Solby+Westbrae Partners" on Justia Law

In 2001, N.D. Laws 53-06.2-10.1 was amended to authorize “account wagering,” a form of parimutuel wagering in which an individual deposits money in an account and, through a licensed simulcast service provider authorized to operate a simulcast parimutuel wagering system, uses the balance to pay for parimutuel wagers. The legislature did not make corresponding changes to section 53-06.2-11 or otherwise alter the statutory takeout formulas to authorize a tax on account wagering until 2007. Racing Services (RSI), formerly a state-licensed horse racing simulcast service provider, filed bankruptcy. PW Enterprises, its largest non-governmental creditor filed suit on behalf of all creditors to recover money the state collected from RSI as taxes on parimutuel account wagering. The district court held that the money must be returned to the bankruptcy estate because North Dakota law did not authorize the state to collect taxes on account wagering before 2007. The Eighth Circuit affirmed. Though some members of the legislature may have understood account wagering would be taxed similarly to existing forms of parimutuel wagering, that belief does not make the statute as written ambiguous or require a court to strain to infer a legislative intent that is entirely absent from the statutory language. View "PW Enters., Inc. v. North Dakota" on Justia Law

In 1988 Sutherland received breast implants in North Carolina. She filed suit in North Carolina five years later, after learning that the silicone in her implants could be causing a variety of serious medical problems. The Silicone’s manufacturer, Dow Corning, filed for bankruptcy in Michigan, and Sutherland’s suit was transferred there. In 2012, 24 years after Sutherland received the implants, the district court concluded that Sutherland’s claim was barred by Michigan’s statute of limitations and granted summary judgment to the defendant. The Sixth Circuit reversed, reasoning that the district court should have applied North Carolina’s law instead of Michigan’s, and should have concluded that there was a genuine factual issue as to whether Sutherland’s claim was timely-filed under North Carolina law. View "Sutherland v. DCC Litig. Facility, Inc." on Justia Law

The four debtors involved in these bankruptcy appeals all failed to timely file their Massachusetts income tax returns and failed to pay their taxes. Each debtor eventually filed his late tax returns but still failed to pay the taxes that were due. Each debtor eventually filed for Chapter 7 bankruptcy and sought a ruling that their obligation to pay the unpaid taxes was dischargeable. The Massachusetts Department of Revenue argued that unpaid taxes for which no return was timely filed by the Commonwealth’s statutory deadline fit within an exception to discharge under 11 U.S.C. 532(a)(1)(B)(i). The bankruptcy courts split three to one in favor of the debtors. In the two cases appealed to the Bankruptcy Appellate Panel (BAP), the BAP sided with the debtors. In the two cases appealed to the district court, the court granted summary judgment to the Department. The First Circuit affirmed the district court’s judgment in favor of the Department and reversed the BAP’s grant of judgment for the debtors, holding that a Massachusetts state income tax return filed after the date by which Massachusetts requires such returns to be filed does not constitute a “return” under 11 U.S.C. 523(a) such that unpaid taxes due under the return can be discharged in bankruptcy. View "Fahey v. Mass. Dep’t of Revenue" on Justia Law