Justia Bankruptcy Opinion Summaries

Earl and Harold Van Sickle appealed, and Hallmark & Associates, Inc., Frank Celeste, William R. Austin, Phoenix Energy, Bobby Lankford, and Earskine Williams, and Missouri Breaks, LLC, cross-appealed an amended judgment that held Missouri Breaks liable to the Van Sickles for unpaid pre-bankruptcy confirmation royalties and awarding the Van Sickles interest and attorney's fees. Upon careful consideration of the trial court record, the Supreme Court concluded the court did not err in holding Missouri Breaks liable under state law for pre-bankruptcy confirmation royalties owed to the Van Sickles. Furthermore, the Court concluded the district court did not abuse its discretion in awarding the Van Sickles attorney's fees and did not err in awarding them simple interest under the statute. View "Van Sickle v. Hallmark & Assoc., Inc." on Justia Law

A judgment debtor challenged the superior court's denial of a Rule 60(b) motion to set aside an order permitting the sale of an airplane seized to execute on the judgment against him. At the time of seizure, the airplane was in the process of being reconstructed and did not have certain identifying information attached to it. Third parties claimed an interest in the seized airplane. After an evidentiary hearing the superior court determined that the judgment debtor had an interest in the airplane and permitted its sale. But at that point the underlying judgment was paid by one of the third parties, and the execution sale did not occur. The judgment debtor, joined by the third parties, filed a Rule 60(b) motion to set aside the order regarding ownership of the airplane. The superior court denied the Rule 60(b) motion and awarded attorney's fees to the judgment creditor and against the judgment debtor and the third-party claimants. Finding no error in the trial court's denial of the motion, the Supreme Court affirmed. View "Schweitzer v. Salamatof Air Park Subdivision Owners, Inc." on Justia Law

An unpaid employee of a closely-held corporation sued the corporation and its president for back wages. The day after the employee filed suit, the corporation filed for Chapter 11 bankruptcy. The bankruptcy court discharged the corporation's debts, and the superior court dismissed the corporation, but the superior court allowed trial to proceed against the president on a veil-piercing theory. A jury found that the corporation was a mere instrumentality of the president, and that the president owed the former employee wages under a bonus agreement. The president appealed the superior court's decision. Upon review, the Supreme Court concluded that the superior court did not err in holding the president liable, and affirmed the superior court's judgment.View "Brown v. Knowles" on Justia Law

Celotex Corporation manufactured and distributed products that contained asbestos. Thousands of asbestos-related claims were filed across the country against Celotex for bodily injury and property damage. In 1990, Celotex filed for Chapter 11 bankruptcy; the Celotex Asbestos Settlement Trust was formed thereafter to process the asbestos claims. As part of the bankruptcy case, Celotex sought a declaratory judgment that it was entitled to insurance coverage for all of the asbestos claims. The bankruptcy court determined that because some of Celotex's bodily injury and property damage excess insurers received inadequate notice of the claims, it barred Celotex from obtaining coverage. The Trust appealed, but the appellate court held that Celotex's duty to give notice to its insurers arose well before the company actually provided notice of the claims. The Trust filed proofs of claim with the Integrity Liquidator seeking coverage for future claims. The Liquidator denied the claims; a special master upheld the denial. The Appellate Division reversed, finding the trial court did not address future claims coverage. The appellate court found that the occurrences of asbestos injuries on which future claims were based were not known at the time of the bankruptcy, therefore, Celotex had no duty to provide reasonable notice. The Liquidator appealed that decision to the Supreme Court. The Supreme Court concluded that under collateral estoppel, the orders entered in the prior federal court proceedings finding one occurrence from which all pending a future claims derived (and that Celotex failed to notify its insurers) barred the proofs of claim filed by the Trust. View "IMO The Liquidation of Integrity Ins. Co. v. Celotex Asbestos Trust" on Justia Law

Wife filed for Chapter 7 bankruptcy relief. Husband did not join in the bankruptcy petition or file a separate petition for relief. Under bankruptcy law, the bankruptcy estate includes all of the marital community property. Wife claimed exemptions for two motor vehicles and property worth over $1,400, all of which was community property. The Trustee filed an objection on the grounds that a debtor spouse may exempt only a single vehicle and property worth no more than $1,000 under Nev. Rev. Stat. 21.090(1), and a non-debtor spouse has no right to claim any exemptions in a debtor spouse's bankruptcy. The U.S. Bankruptcy Court overruled the Trustee's objection, determining that Nevada law allows a debtor to claim motor vehicle and wildcard exemptions on behalf of a non-debtor spouse. The Trustee appealed to the Bankruptcy Appellate Panel, which certified a question to the Nevada Supreme Court. The Supreme Court held that, based on section 21.090(1)(f) and (z)'s plain language, Nevada law does not allow debtors to claim motor vehicle and wildcard exemptions on behalf of their non-debtor spouses, and therefore, a judgment debtor in Nevada is limited to one motor vehicle exemption an other personal property exemptions not to exceed $1,000. View " In re Fox" on Justia Law

This appeal arose from an action filed against the City of Lewiston by Tim Thompson, Janet Thompson, and Thompson's Auto Sales (collectively, Thompson). Thompson filed a claim under the Idaho Tort Claims Act (ITCA), alleging the City negligently designed and installed a storm water drain system on a city street adjacent to Thompson's property, which caused storm water runoff to flow onto Thompson's property and damage it. After suit was filed, Thompson entered bankruptcy proceedings and the bankruptcy trustee, C. Barry Zimmerman, was substituted as Plaintiff in the action. The City moved for summary judgment on the grounds of discretionary immunity and design immunity. The district court denied the motion as to design immunity, but granted the motion on the ground of discretionary immunity. Zimmerman appealed, arguing that the discretionary immunity exception to liability under the ITCA does not grant immunity from liability for damage caused by negligent design and, alternatively, that even if discretionary immunity was considered, it was inapplicable in this case because the City's actions were not discretionary within the meaning of the exception. Upon review, the Supreme Court reversed, finding that the City was not entitled to immunity from liability under any exception to the ITCA. View "Zimmerman v. City of Lewiston" on Justia Law

Fred and Nancy Eagerton petitioned the Supreme Court for a writ of mandamus to direct the Circuit Court to enter a judgment as a matter of law in their favor and against SE Property Holdings, LLC, consistent with the Court's mandate in "Eagerton v. Vision Bank," (99 So. 3d 299 (Ala. 2012)). SE Property Holdings, LLC, is the successor by merger to Vision Bank. The underlying suit arose from a loan that the Eagertons personally guaranteed, secured by a mortgage on property within the Rock Creek Tennis Club in Fairhope. The bank declared the original and second loans in default and accelerated balances due under both. The bank sued the primary obligor, and the Eagertons as person guarantors on one of the original loans. The primary obligor declared Chapter 11 bankruptcy. The reorganization plan consolidated the two loans. The obligor eventually defaulted on the terms of the reorganization plan. The bankruptcy was dismissed, the property foreclosed, and the money obtained in the foreclosure sale was applied to the consolidated loan. The Eagertons argued that the Chapter 11 reorganization of the debts of primary obligor (the consolidation of the original loan with the second loan), created a new indebtedness not encompassed by their guaranty contracts. The Eagertons therefore argued that the creation of this new indebtedness, without their knowledge or consent, operated to discharge them from any further obligations under their guaranty contracts. The bank, on the other hand, argued, among other things, that the consolidated loan was a replacement note contemplated by the guaranty contracts and that the Eagertons had waived the material-modification defense. The Supreme Court in "Eagerton v. Vision Bank" concluded that the Eagertons' guaranty contracts were unambiguous; that based on the language in the guaranty contracts the Eagertons did not intend to guarantee any indebtedness other than that indebtedness arising out of the original loan and any extensions, renewals, or replacements thereof; and that, once the Eagertons' original loan was modified pursuant to the Chapter 11 reorganization of Dotson 10s, the Eagertons were at that point discharged from any further obligations under their guaranty contracts. Because the circuit court did not follow the mandate in the Court's prior decision in "Vision Bank," the Supreme Court granted the Eagertons' petition and issued the writ.View "SE Property Holdings, LLC v. Eagerton" on Justia Law

Appellant purchased a home and fell behind on her mortgage payments. Despite the bank having agreed to postpone a foreclosure sale, it proceeded with the sale. After she threatened suit, the bank re-purchased the home and entered into settlement negotiations with appellant; the bank promised to re-convey the property to appellant so that she could proceed with a sale to a third party. The bank subsequently refused to perform and appellant sued both the bank and the bank's counsel for breach of the settlement agreement and fraudulent inducement. The superior court granted partial summary judgment to the woman on her breach of contract claim, finding that a binding settlement contract had been formed between appellant and the bank. Appellant then filed for bankruptcy. The bankruptcy trustee sold the property and the bankruptcy estate abandoned the present state court claim, placing the remaining balance from the sale of the property into the superior court registry. The superior court held a bench trial on the remaining fraud claim and on the parties' respective damages. At the conclusion of appellant's case, the court granted a directed verdict to the bank and the bank's counsel on the fraud claim. The superior court awarded the bank the unpaid loan balance as well as the fair rental value of the property for appellant's post-foreclosure occupancy of the property, and awarded the woman lost sale damages. The superior court also awarded the parties prejudgment interest, and later awarded the bank and its counsel attorney's fees. Appellant appealed the superior court's final judgment. Upon review, the Supreme Court concluded that the bank abandoned its claim for rental damages at trial. Accordingly, the Court reversed the superior court's award of rental damages and any accompanying award of prejudgment interest. Because any right to recover fees for work performed on behalf of the dismissed defendants was waived, because it was error to award attorney's fees to the bank's counsel in responding to the bankruptcy petition, and because the superior court did not properly calculate attorney's fees under Alaska Civil Rule 68, the case was remanded to recalculate attorney's fees. The superior court was affirmed in all other respects. View "Taylor v. Wells Fargo Home Mortgage" on Justia Law

In 2006, debtor Denise Codrington executed a security deed with appellant Wells Fargo that was recorded with the Clerk of the Superior Court of Fulton County on October 13, 2006. The deed provided: "[i]f one or more riders are executed by Borrower and recorded together with this Security Instrument, the covenants of each such rider shall be incorporated into ...this Security Instrument as if the rider(s) were a part of this Security Instrument." The security deed specifically identified the "ARM Rider" as being incorporated. The last page of the deed was signed by the debtor, the co-debtor (Alvina Codrington), and a notary, but the signature line for an "Unofficial Witness" was left blank. Contemporaneously recorded with the security deed were a number of other exhibits, including a "Waiver of Borrower's Rights." The waiver provided that "the provisions hereof are incorporated into and made a part of the security deed." The parties agreed that the waiver was signed by the debtor, the co-debtor, an unofficial witness, and a notary. In June 2008, the debtor filed for Chapter 7 bankruptcy. Appellee Neil Gordon, Trustee for the debtor's bankruptcy estate, commenced an adversary proceeding against Wells Fargo seeking to avoid Wells Fargo's interest in the property. Appellee asserted that because the security deed lacked the signature of an unofficial witness, it was not duly recorded and it did not provide constructive notice to a subsequent bona fide purchaser, rendering the security deed avoidable per 11 U.S.C. 544. Wells Fargo moved for summary judgment, the bankruptcy court denied the motion, and the bankruptcy court entered judgment in favor of appellee. Wells Fargo appealed to the Eleventh Circuit Court of Appeals which certified two questions to the Georgia Supreme Court: (1) whether a security deed that lacks the signature of an unofficial witness should be considered "duly filed, recorded, and indexed" as required by OCGA 44-14-33; and (2) if no, whether such a situation would nonetheless put a subsequent hypothetical bona fide purchaser on inquiry notice. Upon review, the Supreme Court answered both certified questions in the negative. View "Wells Fargo Bank, N.A. v. Gordon" on Justia Law

Lou Ann Cassell inherited $220,000 from a relative. After consulting with advisors, she used the inherited funds to purchase a single-premium fixed annuity from National Life Insurance Company. Cassell was 65 years old at the time she purchased the annuity. The annuity agreement provided monthly annuity payments of $1,389.14, and guaranteed payments for 10 years regardless of when Cassell died, naming her children as beneficiaries should she die within the guaranteed payment period. Cassell was not authorized to withdraw any funds from the annuity, cancel the annuity, or change the payment terms of the agreement. She was authorized to assign the right to the annuity payments and to change the name of her beneficiaries during the guaranteed period. In May 2010, Cassell filed a Chapter 7 bankruptcy petition in the Bankruptcy Court and included the annuity as an asset. However, she also listed the annuity as exempt property under OCGA 44-13-100 (a) (2) (E). The trustee objected, arguing the annuity payments did not meet two of the requirements necessary to qualify for the statutory exemption, specifically that the annuity was not funded by employment related wages or benefits and the payments due under the annuity were not "on account of age." The bankruptcy court disagreed and entered an order concluding that the two challenged requirements were met. It did not make a ruling with regard to the third requirement, that the payments be reasonably necessary for the support of the debtor or her dependents, because it concluded the parties had provided insufficient evidence pertaining to that issue. The United States District Court affirmed on appeal and remanded to the bankruptcy court for it to rule on the issue not addressed in its original order. Rather than litigate that issue in the bankruptcy court, the trustee conceded the annuity was reasonably necessary for the support of Cassell and appealed to the Eleventh Circuit Court of Appeals. After briefing and oral argument by the parties, the Eleventh Circuit recognized the absence of precedent on the dispositive issues of state law and certified its questions to the Georgia Supreme Court: (1) is a single-premium fixed annuity purchased with inherited funds an "annuity" for purposes of OCGA 44-13-100 (a) (2) (E); and (2) is a debtor's right to receive a payment from an annuity "on account of . . .age" for the purposes of OCGA 44-13-100 (a) (2) (E) if the annuity payments are subject to age-based federal tax treatment, if the annuitant purchased the annuity because of age, or if the annuity payments are calculated based on the age of the annuitant at the time the annuity was purchased. The Supreme Court found that a single-premium fixed annuity purchased with inherited funds may qualify as an exempt annuity under 44-13-100 (a) (2) (E) and that the determination of whether a right to receive payment from an annuity is "on account of" age for purposes of 44-13-100 (a) (2) (E) is not necessarily based on the existence of a single factor but requires consideration of a variety of factors pointing to the existence of a causal connection between the payee's age and the right to payment. View "Silliman v. Cassell" on Justia Law