Justia Bankruptcy Opinion Summaries

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

This case arose from the liquidation proceedings of Reliance Insurance Company. One of Reliance's policyholders, Warrantech Consumer Products Services, Inc., submitted various proofs of claim seeking reimbursement under two insurance policies in which Reliance agreed to indemnify Warrantech for all future liabilities arising under certain warranty/service contracts Warrantech entered during the applicable policy period. The Commonwealth Court denied Warrantech's claims, holding that 40 P.S. 221.21 of the Insurance Department Act applied to terminate coverage for all "risks in effect" under a policy of insurance no later than thirty days after the respective insurer enters liquidation, notwithstanding that the relevant policies of insurance were cancelled prior to the date of liquidation. Finding no reversible error, the Supreme Court affirmed the Commonwealth Court's judgment. View "Warrantech v. Reliance Ins Co." on Justia Law

The bankruptcy court required Travelers to pay over $500 million to asbestos plaintiffs based on Travelers' obligations under certain settlement agreements. On appeal, plaintiffs challenged the district court's reversal of the bankruptcy court's judgment, holding that conditions precedent to payment under the agreements were never met and that Travelers' obligation to pay never matured. The court vacated the district court's order because the relevant conditions precedent were satisfied and the court remanded with instructions to reinstate the bankruptcy court's final judgment; Travelers' arguments regarding the Agreements' conditions that the movants either execute a specific number of releases and deliver them into escrow or dismiss their claims with prejudice were waived because Travelers did not timely raise its arguments; and the court held that the bankruptcy court correctly applied prejudgment interest to the amount owed and that it correctly calculated the total payment due from the appropriate date. View "In Re: Johns-Manville Corp." on Justia Law

Plaintiff executed a promissory note secured by a mortgage on his property. After Plaintiff defaulted on the loan, foreclosure proceedings commenced. Plaintiff subsequently filed a Chapter 7 bankruptcy petition. Then then-holder of the mortgage sought relief from the automatic stay imposed by bankruptcy law. Relief from the stay was given in two bankruptcy cases filed by Plaintiff, the second of which was initiated after a foreclosure sale had been completed. Plaintiff then filed an action seeking a declaration that the foreclosure deed was void and that he owned the property in fee simple absolute. The superior court granted summary judgment against Plaintiff based on the doctrine of res judicata. The Supreme Court affirmed, holding that Plaintiff was precluded from raising issues regarding the foreclosure again in the superior court after the propriety of the foreclosure was examined by the bankruptcy court and the foreclosure sale was declared valid.View "Reynolds v. First NLC Fin. Servs., LLC" on Justia Law

Circuit affirmed. When real estate taxes are not paid, a tax lien attaches to the property, annually, including interest, penalties, and fees accrued until paid, O.R.C. 323.11. Summit and other Ohio counties sell tax lien certificates that entitle the certificate holder to the first lien on the property. Property owners may redeem and remove the lien by paying the holder the purchase price plus interest, penalties, and costs, O.R.C. 5721.32. The certificate holder may initiate foreclosure proceedings after one year. Plymouth Park purchased Certificate 1, showing a purchase price of $4,083.73 with a negotiated interest rate of 0.25%, and Certificate 2, showing a purchase price of $2,045.44 with a negotiated interest rate of 18.00%. Summit County filed a foreclosure complaint following a request by Plymouth Park. The complaint stated that “as provided by Section 5721.38(b) of the Ohio Revised Code” the “redemption price” calculated was $10,585.82. A month later, the Debtors filed their Chapter 13 plan and petition; they did not file any notice to “redeem” their property during the bankruptcy action. The Chapter 13 payment plan (11 U.S.C. 1321) proposed to pay the interest rates listed on the certificates. , Plymouth Park filed a proof of claim based on both certificates for $10,521.46, including $2,120.00 in fees and the principal balance of $7,781.19 plus 18% interest. The Bankruptcy Court agreed that Plymouth Park’s claim was a tax claim under 11 U.S.C. 511 and that state law governed the interest rate, but rejected a claim that the 18% statutory rate, rather than the negotiated rate, should apply. The Bankruptcy Appellate Panel and Sixth View "Plymouth Park Tax Servs, LLC v. Bowers" on Justia Law

Plaintiffs commenced this action against their attorney and his law firm in state court for legal malpractice, alleging that the attorney was negligent in the performance of his duties as counsel to the unsecured creditors' committee. At issue was whether the bankruptcy court properly exercised jurisdiction over the malpractice action for the committee and correctly dismissed the claim. The court concluded that the district court properly concluded that the bankruptcy court had jurisdiction over the removed legal malpractice action because it was a core proceeding. In this case, the employment of the attorney was approved by the bankruptcy court and was governed by 11 U.S.C. 1103; the attorney's duties pertained solely to the administration of the bankruptcy estate; and the claim asserted by plaintiffs was based solely on acts that occurred in the administration of the estate. The court also concluded that the district court correctly concluded that the bankruptcy court did not err in dismissing the complaint because the attorney did not owe an individual duty of care. Therefore, the court affirmed the district court's dismissal of the case on the merits. View "Schultze, et al. v. Chandler, Sr., et al." on Justia Law

Willard and Christi Pankonin owned real property in Logan County, which was mortgaged with Dakota Heritage Bank. The Bank brought a foreclosure action and a judgment was entered. Before the Pankonins' redemption period expired, Willard Pankonin filed for bankruptcy protection in federal court, his interest in the property was transferred to his bankruptcy estate and Michael Iaccone was appointed bankruptcy trustee. Pankonin and Iaccone (defendants), on behalf of Willard Pankonin's bankruptcy estate, moved for relief from the judgment. Attorney Timothy Lamb represented the defendants. The district court denied the motion for relief and awarded the Bank costs and disbursements without prejudice to any subsequent claim for attorney's fees. Christi Pankonin appealed award of attorney's fees to the Bank. Finding no abuse of the district court's discretion, the Supreme Court affirmed. View "Dakota Heritage Bank v. Pankonin" on Justia Law

B&N, a law firm, represented debtor in his Chapter 11 bankruptcy. The bankruptcy court converted the case to Chapter 7 and B&N's services were terminated. B&N then filed an application for fees in excess of $130,000. The bankruptcy court allowed approximately $20,000 and disallowed the remainder. The district court affirmed. Based on the court's review of the statutory framework and the court's decision in In re Pro-Snax Distribs., Inc., the court concluded that the bankruptcy court did not apply the wrong standard in making its ruling on the fee application and thus did not abuse its discretion. The bankruptcy court did not err in finding that B&N was entitled to only a small subset of the fees requested. Accordingly, the court affirmed the judgment of the district court. View "Barron & Newburger, P.C. v. Texas Skyline, Ltd., et al." on Justia Law