Justia Bankruptcy Opinion Summaries

Debtor appealed the bankruptcy court's judgment excepting a debt owed to CFG from debtor's discharge under 11 U.S.C. 523(a)(2)(A). The court concluded that the bankruptcy court did not clearly err by finding that debtor made a misrepresentation to CFG regarding how the proceeds of the loan would be used and that CFG justifiably relied on the misrepresentation. The court concluded that the misrepresentation was made with the requisite knowledge and intent to deceive where the bankruptcy court found that the debtor knew the representation was false. Accordingly, the court affirmed the judgment of the bankruptcy court.View "Community Finance Group, Inc. v. Field" on Justia Law

The bankruptcy court held that real property transferred in error to the debtor by his father pre-petition was impressed with a constructive trust as a matter of law, and that the bankruptcy estate had no interest in the real property. The Sixth Circuit Bankruptcy Appellate Panel affirmed.View "In re: Thomas III" on Justia Law

The bankruptcy court voided the transfer of $74,102.60 to 1st National Cash Refund pursuant to 11 U.S.C. 549 and ordered recovery of transferred property from 1st National Cash Refund and Woodford pursuant to 11 U.S.C. 550. The Sixth Circuit Bankruptcy Appellate Panel affirmed, upholding determinations that the statutes of limitation found in sections 549 and 550 were equitably tolled and that the trustee had power to avoid and recover the transferred property. View "In re: Anderson" on Justia Law

Appellant-property owner filed a Chapter 13 petition for bankruptcy and subsequently filed a third amended reorganization plan proposing to bifurcate Appellee-mortgagee’s claim into secured and unsecured portions. The bankruptcy court denied confirmation of the plan and ordered Appellant to file an amended plan. Appellant appealed and also filed a motion for leave to appeal the bankruptcy court’s interlocutory order. The Bankruptcy Appellate Panel (BAP) granted the motion and affirmed the bankruptcy court’s denial of confirmation. Appellant subsequently filed a notice of appeal and motion for certification of the appeal, which the BAP denied. The First Circuit Court of Appeals issued an order to show cause why the case should not be dismissed for lack of jurisdiction because the BAP’s order affirming the denial of the confirmation did not appear to be a final order. The First Circuit dismissed Appellant’s appeal, holding (1) an intermediate appellate court’s affirmance of a bankruptcy court’s denial of confirmation of a reorganization plan is not a final order if the debtor may still propose an amended plan; and (2) therefore, the Court lacked jurisdiction to hear this appeal.View "Bullard v. Hyde Park Savings Bank" on Justia Law

Ice House manufactures ice-vending machines. Cardin’s machines generated about $264,000 in income in 2012. In 2004, Cardin also agreed to be the exclusive distributor of Ice House’s machines in Tennessee. Four years later Ice House sued for breach, obtaining judgments totaling $1,301,900, without interest. Cardin filed for bankruptcy as an individual debtor under Chapter 11. A Chapter 11 plan of reorganization must identify any claims it will “impair,” 11 U.S.C. 1123(a)(3). The bankruptcy court generally cannot confirm a plan if any impaired creditor votes to reject it. Section 1129(b) permits confirmation of nonconsensual plans (cramdown plan) if the plan is fair and equitable with respect to each class of claims or interests that is impaired and has not accepted the plan. To be “fair and equitable” a plan must satisfy the absolute-priority rule, which provides that every unsecured creditor must be paid in full before the debtor can retain “any property.” The rule was not satisfied with respect to Cardin. Cardin’s plan allowed him to retain several assets after paying off loans they secured, to make a single payment of $124,000 towards Ice House’s unsecured claim of $1.545 million, and to “remit” to Ice House any disposable income that he earns during the five years following confirmation. The bankruptcy court confirmed the plan, construing the 2005 Bankruptcy Code amendments to eliminate the absolute-priority rule for individual debtors. The Sixth Circuit reversed, agreeing with other circuits that the absolute priority rule continues to apply to pre-petition property of individual debtors in Chapter 11 cases.View "Ice House Am., LLC v. Cardin" on Justia Law

Plaintiffs filed suit against McCalla and Kondaur, claiming that they violated the automatic stay in plaintiff Kenneth Lodge's bankruptcy under 11 U.S.C. 362, and the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692 et seq. On appeal, plaintiffs challenged the district court's grant of summary judgment for defendants. Because plaintiffs failed to show an emotional injury sufficient to support a recovery of actual damages under section 362(k), the court concluded that the district court did not err in granting summary judgment as to the automatic stay claim. The court also affirmed the grant of summary judgment as to the FDCPA claim where plaintiffs failed to demonstrate that defendants were "debt collectors" because the district court was not required to take judicial notice of defendants' websites and the district court also did not abuse its discretion in declining to consider a document that listed foreclosure advertisements for properties unrelated to plaintiffs' properties. Accordingly, the court affirmed the judgment of the district court.View "Lodge, et al. v. Kondaur Capital Corp., et al." on Justia Law

These appeals concerned a suit filed under the False Claims Act (FCA), 31 U.S.C. 3729 et seq., and two bankruptcy proceedings. The district court concluded that the bankruptcy trustee had exclusive standing to assert the FCA claims at issue because those claims belonged to the bankruptcy estate. The court agreed with the district court that only the trustee had standing to prosecute the FCA lawsuit; affirmed the district court's dismissal under Rule 12(b)(6); and concluded that the district court did not abuse its discretion in denying the motion for reconsideration. View "Westbrook Navigator L.L.C., et al v. Navistar, Inc., et al." on Justia Law

Pontiac has experienced significant economic difficulties. In 2011 Michigan’s Governor appointed Schimmel as Pontiac’s emergency manager under then-existing law (Public Act 4), in 2011, Schimmel modified the collective bargaining agreements of retired city employees and severance benefits, including pension benefits, for retirees not covered by collective bargaining agreements. Retired employees sued under the Contracts Clause, the Due Process Clause, and the Bankruptcy Clause. The district court denied an injunction. In 2013, the Sixth Circuit vacated and remanded for expedited consideration of state law issues. Michigan voters later rejected Public Act 4 by referendum. Following rehearing, en banc, the Sixth Circuit again vacated and remanded for consideration of whether, under section 903(1) of the Bankruptcy Code, Public Act 4 prescribed a method of composition of indebtedness that binds the retirees without their consent and, if so, whether principles of state sovereignty preclude application of section 903(1) in this case; whether the emergency manager’s orders were legislative acts under the Contract Clause; whether the reductions and eliminations of health care benefits were “necessary and reasonable” under the Contract Clause; whether the retirees’ procedural due process claim is viable; and, assuming the Due Process Clause’s procedural protections apply, whether the collective bargaining agreements, considered in their entireties, establish protected property rights.View "City of Pontiac Retired Emps. Ass'n v. Schimmel" on Justia Law

Mark Fisher and Reece Boudreaux were limited partners of Nighthawk Oilfield Services, Ltd. (“Nighthawk”), which acquired Richey Oilfield Construction, Inc. (“Richey Oil”) from Mike Richey. The business did not go well, and Nighthawk and Richey Oil filed for bankruptcy. Richey sued Fisher and Boudreaux in Wise County where Richey resided, alleging claims for, inter alia, breach of fiduciary duty, common law fraud, statutory fraud and violations of the Texas Security Act. Fisher and Boudreaux responded by moving to transfer venue to Tarrant County or dismiss the suit pursuant to the mandatory venue selection clauses in the acquisition documents. The trial court denied the motions. Fisher and Boudreaux sought mandamus relief from the court of appeals, which denied relief. The Supreme Court conditionally granted relief, holding that the trial court abused its discretion by failing to enforce the venue selection clauses in the acquisition documents.View "In re Fisher" on Justia Law

Plaintiffs refinanced their home in a mortgage loan transaction with Summit Mortgage. The mortgage was later assigned to Defendant, SunTrust Mortgage, Inc. Facing foreclosure, Plaintiffs filed for Chapter 13 bankruptcy. Plaintiffs filed an adversary proceeding against SunTrust in the pending bankruptcy case, seeking rescission of the loan transaction and damages. SunTrust filed a motion for summary judgment, arguing that because Plaintiffs filed their adversary complaint more than four years after the mortgage loan transaction, the defensive rescission-by-way-of-recoupment claim was barred by section 10(f) of the Massachusetts Consumer Credit Cost Disclosure Act (“MCCCDA”). In response, Plaintiffs asserted that the four-year statute of limitations did apply to their action because section 10(i)(3) of the MCCCDA allows for recoupment claims at any time. The United States Bankruptcy Court for the District of Massachusetts certified a question of law to the Massachusetts Supreme Judicial Court, which answered by holding that a borrower who grants a mortgage in a consumer credit transaction may not rescind the transaction under the MCCCDA defensively by way of common law recoupment after the expiration of the statute of limitations set forth in section 10(f) of the MCCCDA.View "May v. Suntrust Mortgage, Inc." on Justia Law