Justia Bankruptcy Opinion Summaries

The Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS) and the bankruptcy estate of Bernard L. Madoff, initiated adversary proceedings seeking to block the settlement of three lawsuits, none of which involved BLMIS or the Madoff estate as a party. The Trustee argued that the settlements in these cases would hinder his ability to recoup fraudulent transfers he alleged BLMIS made to the settling defendants. The court affirmed the district court's dismissal of the Trustee's claims because the Trustee was not entitled to declaratory and injunctive relief and the district court did not abuse its discretion in denying his requests for injunctive relief. View "Picard v. Fairfield Greenwich Ltd." on Justia Law

The United States Bankruptcy Court for the District of Nevada certified three questions of law to the Supreme Court regarding the mechanic’s lien priority law, specifically, the visible-commencement-of-construction aspect of the law, which states that a mechanic’s lien takes priority over other encumbrances on a property that are recorded after construction of a work of improvement visibly commences. The Supreme Court answered (1) the Court’s holding in J.E. Dunn Northwest, Inc. v. Corus Construction Venture, LLC does not preclude a trier of fact from finding that grading property for a work of improvement constitutes visible commencement of construction; (2) the contract dates and permit issuance dates are irrelevant to the visible-commencement-of-construction test, even in this case where dirt material was placed on a future project site before building permits were issued and the general contractor was hired; and (3) the Court declined to answer the third certified question because it asked the Court to make findings of fact that should be left to the bankruptcy court. View "Byrd Underground, LLC v. Angaur, LLC" on Justia Law

This appeal involves a dispute between the Trustee, appointed to protect public customers and creditors in the liquidation of LBI, and purchasers of LBI's assets over the entitlement to two sets of LBI assets: (1) the Margin Assets and (2) the Clearance Box Assets (CBAs). The district court held that Barclays was entitled to both the Margin Assets and the CBAs, and was conditionally entitled to the Rule 15c-3 Assets. The Trustee appealed from the Margin Assets and CBA rulings. Barclays cross-appealed from the Rule 15c3-3 Assets ruling but the settlement had disposed of that issue and cross-appeal. The court concluded that the transfer of the Margin Assets to Barclays was contemplated in the Asset Purchase Agreement and confirmed in the Clarification Letter. The court agreed with the district court that extrinsic evidence showed an intent to transfer the CBAs to Barclays. Accordingly, the court affirmed the judgment of the district court. View "In Re: Lehman Brothers Holdings Inc." on Justia Law

Pinpoint and Atlas filed federal court actions against each other based on a 2009 contract between them. Two months after answering and counterclaiming Pinpoint in the Virginia action, Atlas filed for bankruptcy under Chapter 7 of the Bankruptcy Code. Atlas's filing automatically stayed the Virginia and Puerto Rico actions. At issue was Pinpoint's appeal from the Bankruptcy Appellate Panel's judgment dismissing Pinpoint's challenge to the bankruptcy court's no-stay-relief order. The court rejected the blanket-rule approach and, like the Third Circuit, held that it was possible that in some cases an order denying stay relief may lack finality. Because the order denying stay relief in this case was not final, the court dismissed Pinpoint's appeal for lack of jurisdiction. View "Pinpoint IT Services, LLC v. Atlas IT Export, Corp." on Justia Law

The New York State Legislature amended N.Y. C.P.L.R. 5206 in 2005, increasing the state's homestead exemption from $10,000 to $50,000. At issue was whether the 2005 Amendment's increased homestead exemption applied to judgment liens perfected prior to the amendment's effective date and, if so, whether application of the law to pre-enactment judgment liens violates the Takings Clause of the Fifth Amendment. The court held that the 2005 Amendment applies to all creditors and all obligations, including pre-existing obligations, regardless of whether the debt was reduced to a judgment lien prior to the statute's enactment; and (2) that retroactive application of the exemption does not constitute an uncompensated taking of pre-enactment judgment liens in violation of the Takings Clause. Accordingly, the court affirmed the judgment of the district court affirming the bankruptcy court's conclusion that there was been no taking of claimant's property. View "1256 Hertel Avenue Associates v. Calloway" on Justia Law

Idearc, a corporation spun-off from its parent corporation, Verizon, filed for bankruptcy protection and the confirmed plan of reorganization created a litigation trust. In this case, the trustee filed suit against Verizon and others, alleging various federal and state law claims in connection with the spin-off. The court concluded that the trustee was not entitled to a jury trial where the trustee's fraudulent transfer claims against Verizon are integral to the restructuring of the debtor-creditor relationship through the bankruptcy court's equity jurisdiction; resolution of Verizon's proof of claim in the bankruptcy court would necessarily resolve the fraudulent transfer issue; and, therefore, the court affirmed the district court's order granting the motion to strike the jury. The court affirmed the district court's denial of reconsideration of its holding that Idearc was a wholly-owned subsidiary of Verizon because the request to reconsider was untimely, based entirely on evidence that was available at the summary judgment stage, and lacked merit. Finally, the court rejected the trustee's challenges to the district court's evidentiary rulings; affirmed the district court's finding that Idearc was worth at least $12 billion on the date of the spin-off; and affirmed the district court's conclusions of law. View "U.S. Bank Nat'l Assoc. v. Verizon Communications, Inc., et al." on Justia Law

Debtor filed for Chapter 7 bankruptcy and his former business associate, David Heide, challenged certain debts debtor owed to Heide as nondischargeable. The court reversed the BAP and reinstated the bankruptcy court's judgment that the debt was non dischargeable under 11 U.S.C. 523(a)(2)(A) because debtor obtained and lost more than $300,000 in loans by false representation. View "Heide v. Juve" on Justia Law

The Chapter 11 Litigation Trustee for the estate of Railworks sought to avoid and recover premium payments that Railworks transferred to CPG, which later transferred them to TIG. Railworks made the transfers within ninety days before Railworks filed for bankruptcy protection. The bankruptcy court granted summary judgment in favor of CPG, thus preventing the trustee from avoiding and recovering the premium payment transfers to CPG. The court held that the bankruptcy court's grant of CPG's summary motion was proper. While CPG had physical control over the transfers it received, it did not have the legal right to use them as it pleased. Instead, the General Agency Agreement mandated that CPG, the agent, hold the funds in trust for TIG, the principal. Consequently, the court reversed the district court's decision and remanded with instructions to reinstate the bankruptcy court's judgment. View "Railworks Corp. v. Construction Program Group" on Justia Law

Following the bankruptcy of BioBased Technologies, LLC, certain members of BioBased (Appellants) brought an action against other members, the members’ lawyers, and the managers of the corporation for fraud, breach of duty to disclose company information, conversion of membership interest, civil conspiracy, and breach of contract. The circuit court granted summary judgment on some claims, dismissed some claims, and found that the remainder of the claims were barred by collateral estoppel and res judicata. The Supreme Court reversed, holding (1) the circuit court erred in granting summary judgment on Appellants’ claims for fraud, breach of duty to disclose company information, and conversion of membership interest claims based on Appellants’ lack of standing, as Appellants had standing to assert their claims; (2) the circuit court erred in granting summary judgment on Appellants’ fraud claim against certain defendants on the basis that Appellants “failed to meet proof with proof” to show that the defendants made false representations of fact; (3) the circuit court erred in dismissing claims for lack of subject-matter jurisdiction; and (4) the circuit court erred in concluding that the bankruptcy proceeding had res judicata or collateral estoppel effect on Appellants’ state-law claims. Remanded.View "Muccio v. Hunt" on Justia Law

Bradley Ian Berger and his law firm filed suit against debtor and his law partner in state court for outstanding fees owed to plaintiffs under a referral agreement between the parties. Berger had difficulty proving the amount of fees owed because debtor's partnership failed to file certain documents with the State. The failure led to discovery sanctions and the parties eventually settled. Berger subsequently filed an adversary proceeding against debtor in the bankruptcy court, arguing that 11 U.S.C. 727(a)(3) prevented debtor from obtaining bankruptcy relief. The court concluded that Berger failed to show that the facts of this case fell within the scope of section 727(a)(3) and the court rejected Berger's contention that the court's ruling permits debtor to evade his "legal and ethical duties" where debtor had already been sanctioned by the state court for failure to keep legally required documents. Accordingly, the court affirmed the district court's affirmance of the bankruptcy court's grant of debtor's motion for summary judgment. View "Berger & Assocs. Attorneys, P.C. v. Kran" on Justia Law