Justia Bankruptcy Opinion Summaries

DWS Properties (DWS) owned rental property. The sole member of DWS was Dustin Shore. After a pipe burst at the property causing substantial damage, Shore executed contracts with Performance Adjusting Public Insurance Adjusters (Performance) and Multi-State Restoration (Multi-State), in which Performance agreed to provide public adjusting service relative to the loss, and Multi-State agreed to perform emergency clean-up work at the property. Performance and Multi-State (Plaintiffs) were never paid for the services they provided, and after Shore filed for personal bankruptcy, Shore's debts to Plaintiffs were discharged. Plaintiffs subsequently filed suit against DWS, seeking damages for book account, breach of contract, quasi-contract, and unjust enrichment. DWS filed a motion to dismiss, which the hearing justice converted into a motion for summary judgment and granted, reasoning that Shore had signed the contracts in an individual capacity without making any reference to DWS. The Supreme Court vacated the judgment of the superior court and remanded, holding (1) summary judgment was inappropriate on Plaintiffs' contract claims; and (2) the fact that DWS was not explicitly named on the contracts did not entitle it to judgment as a matter of law on Plaintiffs' equitable claims. View "Multi-State Restoration, Inc. v. DWS Props., LLC" on Justia Law

Tamara Lucas and her husband James brought a legal malpractice claim against attorney Mat Stevenson after they hired Stevenson to defend James against criminal charges and to represent them in a civil suit against the city police department, the city, and individual police officers that arrested James for disturbing the peace and felony assault on a peace officer. However, Stevenson later learned that the Lucases had previously filed for bankruptcy. The civil suit was determined to an asset of the bankruptcy estate, and Stevenson was reassigned to pursue the case on behalf of the bankruptcy estate. After a settlement agreement was reached, the Lucases brought this action against Stevenson. The district court granted summary judgment in favor of Stevenson. The Supreme Court affirmed, holding that the district court correctly determined (1) the Lucases' civil claims were properly determined to be an asset of the bankruptcy estate; and (2) Stevenson did not represent the Lucases at the time the claims were settled, and therefore, the Lucases had no standing to bring a legal malpractice claim against him. View "Lucas v. Stevenson" on Justia Law

In 2008, the Public Utilities Commission approved a merger between FairPoint Communications-NNE (FairPoint) and Verizon Maine (Verizon). The merger order committed FairPoint to expanding DSL availability in Maine to certain percentages within certain periods of time. The merger order incorporated an amended stipulation presented by FairPoint and other parties. Approximately twenty months later, FairPoint filed for Chapter 11 bankruptcy. The Commission agreed to reduce FairPoint's ultimate broadband buildout obligations from ninety percent addressability to eighty-seven percent. Fairpoint subsequently notified the Commission that it had expanded broadband buildout to the level of eighty-three percent. The Commission disagreed, concluding that FairPoint had used the wrong measure of addressability and therefore overstated its results. At issue on appeal was how "addressability" would be measured when calculating FairPoint's broadband buildout commitments in Maine. The Supreme Court affirmed, holding (1) the merger order was an order of the Commission and not a consent decree, and therefore, the Commission did not err by failing to interpret the merger order in a manner consistent with the intent and understanding of the parties to the stipulation; and (2) the Commission did not err in its definition of "addressability."View "N. New England Tel. Operations LLC v. Pub. Utils. Comm'n" on Justia Law

In a matter of first impression, the issue before the Supreme Court was whether proceedings in aid of execution or judgment collection pursued within an action under the Uniform Fraudulent Transfers Act (UFTA) must be preceded by registration of a foreign judgment in the county of the district court from which execution issued. In 2002, the United States Bankruptcy Court for the Western District of Oklahoma entered summary judgment against Debtors and denied a discharge of the debt to Bank based on Debtors' fraudulent concealment of assets. The Bank initiated various collection procedures against Debtors including garnishment and a hearing on assets in an attempt to satisfy the two judgments. The bankruptcy judgments were registered in Payne County, the location of Debtors' homestead, in July, 2002. Meanwhile, the UFTA action continued to proceed in Oklahoma County against Debtors' relatives. In September, 2007, the trial court entered an order in the UFTA action which determined that a portion of Debtors' income had been fraudulently diverted to a sham corporation for the purpose of avoiding garnishment of that income. However, it was not until November, 2007, that Bank's second amended petition in the UFTA action added Debtors and the corporation as defendants. In December, 2009, a contempt trial against Debtors generated an order filed 2010. That order expressly withdrew and superseded the September, 2007, order. It found one of the Debtors guilty of contempt for failure to obey the 2007 order. In April, 2011, Bank sought contempt to enforce the 2010 order. On August 18, 2011, Bank registered one of the bankruptcy judgments, and one for costs and attorney fees, in Oklahoma County. On March 15, 2012, a trial judge entered an order on Bank's motion to enforce the 2010 contempt order. The trial court found open and wilful violations of the withdrawn 2007 order as well as the 2010 order. The trial court acknowledged that Bank had failed to comply with the statutory requirements of registration of foreign judgments in the county of the court which issued execution, but it determined that those requirements did not apply in a UFTA action. Debtors brought then brought this original proceeding asserting the trial court's lack of jurisdiction to impose the relief granted to Bank. Upon review, the Supreme Court concluded that the belated registration of the foreign judgment in 2011 did not authorize the trial court to retroactively enforce orders which were void for lack of jurisdiction. "When a judgment was registered in Oklahoma County in 2011, the trial court did not retroactively acquire jurisdiction to enforce the provisions of the 2007 and 2010 orders that granted remedies in the nature of execution, including contempt, and threatened incarceration for failure to pay the judgments. The 2011 judgment registration did not make the void portions of the prior orders any less so." Furthermore, the Court held that a trial court may not take judicial notice of findings of fact and conclusions of law encompassed within a void judgment. New findings of fact and conclusions of law regarding any attempt to enforce the bankruptcy judgments are required.View "Vaughn v. Graves" on Justia Law

Appellee claimed an exemption in bankruptcy for seventy-five percent of wages that he earned prior to filing his bankruptcy petition but that were either paid to or still owing to Appellee after the date of the petition. Appellee based his claim on section 1673 of the federal Consumer Credit Protection Act and, alternatively, on section 103 of the Utah Consumer Credit Code. The trustee of Appellee's bankruptcy estate (Trustee) opposed the claimed exemption. The bankruptcy court permitted the exemption, the district court summarily affirmed, and the Trustee appealed. The Tenth Circuit Court of Appeals held that section 1673 did not permit Appellee's claimed exemption. To resolve the state law question presented under section 103, the appeals court certified a question of law to the Utah Supreme Court. The Court answered that Appellee could not rely on section 103 to assert an exemption in bankruptcy, as section 103 does not create an exemption in bankruptcy and, instead, limits garnishment of a debtor's disposable earnings under narrow circumstances. View "Gladwell v. Reinhart" on Justia Law

Respondent Martin Mason appealed a circuit court order which found that his wife Robin's obligation to pay 50% of his federal income taxes was automatically discharged in her proceedings for bankruptcy under Chapter 7 of the United States Bankruptcy Code. On appeal, Martin argued that the trial court erred as a matter of law when it found that Robin's obligation to pay 50% of his 2006 federal income taxes had been discharged in bankruptcy because he failed to make a showing before the bankruptcy court that her obligation was non-dischargeable. Martin also argued that the trial court erred as a matter of law and unsustainably exercised its discretion when it declined to award him attorney's fees and costs. Upon review, the Supreme Court found that the trial court erred as a matter of law when it found that Robin's obligation to pay Martin's 2006 federal income taxes had been discharged in bankruptcy. In light of the Court's reversal of the trial court's order on the merits, Martin became the prevailing party and, therefore, may be entitled to recover costs. Accordingly, the Court remanded the case to the trial court to address this issue. View "In the Matter of Robin Mason & Martin Mason" on Justia Law

This case concerned a dispute between a Netherlands holding company and an Italian businessman. The businessman made a loan to the holding company for a joint venture. The joint venture eventually went into bankruptcy and defaulted on its loan obligations, including the loan from the businessman. The businessman filed this action alleging, among other things, that the holding company induced him to make the loan by representing that it would support and continue to back the joint venture. The holding company denied making those representations or having any obligations to the businessman. The holding company moved for summary judgment on multiple grounds. The Court of Chancery (1) found the businessman's claims were not barred for lack of standing; (2) denied summary judgment on the ground of laches; (3) denied summary judgment on the holding company's English statute of frauds defense; (4) granted summary judgment in the holding company's favor on the businessman's Italian law claim for breach of implied or oral contract and his Dutch law claim; and (5) granted the holding company's motion for summary judgment regarding the businessman's claim for unjust enrichment.View "Vichi v. Koninklijke Philips Elecs., N.V." on Justia Law

Vicksburg Chemical Company (VCC) filed for bankruptcy in 2002. Included in its bankruptcy estate was over 500 acres of real property, a portion of which was contaminated. Pursuant to an agreed order, the bankruptcy court allowed VCC to abandon the property and allowed the Mississippi Department of Environmental Quality (MDEQ) to choose the purchaser. Without the aid of any guidelines or statutory law regarding this process, MDEQ, at the suggestion of the Attorney General's Office (AG), published a Request for Proposals (RFP) to identify interested parties capable of removing the contamination. The plaintiff, Pacific Chlorine, Inc. (PCI), was one of several companies to submit a proposal. MDEQ did not select PCI's proposal, but instead selected Harcros Chemicals, Inc. (Harcros), a company which worked closely with the City of Vicksburg (the City) on its proposal. Aggrieved, PCI sued MDEQ and the City. PCI settled with the City. Following a bench trial, the trial court rendered a judgment against MDEQ. MDEQ appealed to the Supreme Court, raising six assignments of error that fall into three categories: whether PCI is required to exhaust its administrative remedies, whether the trial court erred by denying MDEQ's motion to dismiss/motion for summary judgment, and whether MDEQ is immune from suit under the Mississippi Tort Claims Act (MTCA). This case presented an issue of first impression, the issue being whether MDEQ acted within the scope of its authority when assisting a bankruptcy court with finding a purchaser for contaminated land. The Court found that it was. View "Mississippi Department of Environmental Quality v. Pacific Chlorine, Inc." on Justia Law

This case arose when debtor Fontainebleau Las Vegas Holdings, LLC filed for bankruptcy while seeking to construct and develop and $2.8 billion hotel-casino resort. The U.S. Bankruptcy Court certified questions to the Nevada Supreme Court relating to the viability of equitable subrogation and the enforceability of contractual subordination against mechanic's lien claimants under Nevada's mechanic's and materialman's lien statutes. The Supreme Court answered (1) the doctrine of equitable subrogation does not apply against mechanic's lien claimants, such that a mortgage incurred after the commencement of work on a project will not succeed to the senior priority position of a preexisting lien satisfied by the mortgagee if intervening mechanics' liens exist; and (2) contractual subordination agreements executed by mechanic's lien claimants purporting to subordinate mechanic's liens prospectively are not enforceable, but mechanic's lien claimants may waive their statutorily protected rights when the precise requirements of Nev. Rev. Stat. 108.2457 are met. View "In re Fontainebleau Las Vegas Holdings, LLC" on Justia Law

Pielet Brothers Scrap Iron and Metal, was founded Arthur Pielet and his brothers shortly after World War II. Arthur sold his interest to his sons in 1986 through an agreement providing for a lifetime payment to him of a “consulting” fee, and, on his death, for a lifetime fee payment to his wife, Dorothy. The agreement was binding on successors and assigns. In 1994, the then- successor company, P.B.S., dissolved, but payments to Arthur continued until 1998, when its successor, MM, had financial difficulties. It filed for bankruptcy in 1999. Litigation began. The trial court awarded Dorothy almost $2 million. In the appellate court, P.B.S. argued the traditional rule that a cause of action that accrued (1998) after dissolution (1994) cannot be brought against a dissolved corporation. The appellate court rejected the argument, holding that Dorothy’s claim could survive, but remanded for determination of whether the companies could be relieved of liability for the fee under a theory of novation. The Supreme Court reversed in part, holding that the claim of breach of contract against P.B.S. could not survive the corporate dissolution. The issue of novation is relevant as to two other successor corporations and required remand.View "Pielet v. Pielet" on Justia Law