Justia Bankruptcy Opinion Summaries

Plaintiff-Appellant Lesa Kensmoe appealed a district court order granting F/S Manufacturing a renewal by affidavit of its 1998 judgment against her. In 1998, F/S Manufacturing obtained a default judgment in the amount of $450,894.78 against Appellant. In 2008, F/S Manufacturing's judgment against Plaintiff was cancelled of record. On March 8, 2010, almost two years after the 1998 judgment was cancelled, F/S Manufacturing filed an affidavit attempting to renew the judgment. After being informed the judgment could not be renewed because it had expired, F/S Manufacturing filed a motion requesting that the district court order the clerk of court to renew the judgment by affidavit. Upon review of the applicable legal authority, the Supreme Court reversed the district court's order, finding that North Dakota law did not permit a cancelled judgment's renewal after the prescribed statute of limitations.View "F/S Manufacturing v. Kensmoe" on Justia Law

Petitioner Monica Ware appealed a summary judgment in favor of Respondent Deutsche Bank National Trust Company, the trustee for HSI Asset Securitization Corporation. The Bank foreclosed on Petitioner and published notice of the foreclosure in a local Birmingham newspaper. The court entered summary judgment against her. Petitioner then filed a motion to amend or vacate the judgment and requested a hearing. The trial court refused to rule on Petitioner’s motion or hold a hearing. The motion was deemed denied by operation of law. On appeal to the Supreme Court, Petitioner challenged the timing and propriety of the summary judgment and its refusal to rule on her motion to amend or vacate. In affirming the trial court’s judgment, the Supreme Court "searched [Petitioner’s] briefs in vain for the argument that she actually made in the trial court, namely, that the foreclosure was "null and void. . . .[A] remand . . . would serve no purpose other than to afford her a 'second bite at the apple.'" The Court affirmed the lower court’s decision.View "Ware v. Deutsche Bank National Trust Co." on Justia Law

EB Investments, LLC and Pavilion Development, LLC filed separate appeals to challenge an a court order that held Pavilion was entitled to redeem certain property in Madison County in which EB Investments, and multiple other parties, held legal interests. In 1997, Pavilion sought to redeem nineteen acres of land purchased by JBJ Partnership at a foreclosure sale. The land was purchased from a development project that went bankrupt. In 1995, the bankruptcy trustee supervised a settlement agreement through which the developer would make payments on the development to its creditors. When the developer defaulted on the settlement agreement, the property was foreclosed and sold. Over the following months and years, a host of counterclaims, cross-claims, and separate lawsuits were filed by various parties who had interests in the property. At issue in this particular case was which party is entitled to redeem the disputed property. The trial court determined that Pavilion was entitled to redeem the property. In its order, the court specified how Pavilion should perfect its redemption. If Pavilion failed to pay all sums required by the court's order, it would waive its right to redeem the property. The court denied the remaining post-judgment motions and certified its judgment as final. EB Investments and Pavilion both appealed that judgment. Though they took opposing sides on most issues in the case, both EB Investments and Pavilions challenged whether the trial court's order was indeed final. They argued that the judgment did not address all other pending issues before the court. JBJ and other parties responded and essentially asked the Court to end this long-running dispute. Upon careful review of the sixteen-year history of the case, the Supreme Court concluded that the trial court's attempt to end it was ultimately insufficient. The Court found that the trial court exceeded its discretion by certifying its judgment as final. Accordingly, the Court reversed the trial court's order, and remanded the case for further proceedings. View "EB Investments, L.L.C. v. Pavilion Development, L.L.C." on Justia Law

Elgene Phillips was driving his truck when the truck hydroplaned, ran off the road, and rolled over. Phillips died as a result of the accident. As administratrix of the decedent's estate, petitioner Shelia Haynes filed a wrongful death action, alleging that the seatbelt in the decedent's trunk was defective. Chrysler, the manufacturer of the decedent's truck, and Autoliv, the manufacturer of the seatbelt, were named as defendants. The parties settled for $150,000, but the agreement did not contain an apportionment between the two defendants regarding who was responsible for that amount. After Chrysler declared bankruptcy, petitioner filed a motion to sever claims against Chrysler and a motion to compel Autoliv to pay the entire amount of the settlement. The circuit court denied petitioner's motions, and as a result petitioner received only $65,000 in settlement proceeds. The Supreme Court reversed, holding that (1) the terms of the contract were unambiguous, and Autolive was bound by the underlying agreement; and (2) by cashing Autolive's check for $65,000, the petitioner and Autolive did not reach an accord and satisfaction under the facts of the case.View "Haynes v. DaimlerChrysler Corp." on Justia Law

Barabara Rutter filed a wrongful death action in June 2000 against Oakwood, a living center, Prism Rehab, a company providing physical therapy services, and the president and employee of Prism Rehab. Dixon and Prism Rehab filed a notice of bankruptcy stay, and in October 2000 the circuit court entered a bankruptcy stay order. At issue was whether the order dismissed the action or only removed the action from the circuit court's docket. Oakwood argued the order served to discontinue Rutter's action in October 2003 pursuant to Va. Code Ann. 8.01-335(B) because, as of that date, the action had been inactive for three years. The circuit court entered an order in 2009 stating that because Rutter had not re-filed her action before 2003, the case was dismissed. The Supreme Court disagreed, holding that the statute does not allow the prospective discontinuance of an action and that the 2000 order merely removed Rutter's action from the docket. However, because the 2009 order only adjudicated Rutter's claim against Oakwood, that order was not final for purposes of the appeal. The Court held it had no jurisdiction over the appeal, and dismissed the case without prejudice.View "Rutter v. Oakwood Living Centers" on Justia Law

In 2004, Campbell was involved in a motor vehicle collision with Kocher. In 2005, Campbell filed for bankruptcy and received a notice of discharge a year later. In 2006, Campbell filed two personal injury actions against Kocher and took nonsuits on both of them. In 2008, Campbell filed his third complaint on the same cause of action. Earlier in 2008 the bankruptcy court reopened Campbell's bankruptcy case, and in the proceeding Campbell listed the personal injury claim as an asset and claimed it as exempt property. In 2009 the court held the cause of action to be exempt. During trial for the personal injury action, Kocher filed a motion for summary judgment, asserting lack of standing and the statute of limitations. The circuit court denied the motion. The Supreme Court reversed and dismissed, holding that (1) Campbell's cause of action became a part of the bankruptcy estate in 2005 and remained an asset of the estate until it was exempted in 2009, and therefore all three complaints were filed when Campbell lacked standing; and (2) because the complaints were legal nullities, they had no tolling effect on the two-year statute of limitation. View "Kocher v. Campbell" on Justia Law

Debtors obtained a secured loan from an investment fund, for which the Bank served as trustee. Debtors ultimately became insolvent, seeking relief under 11 U.S.C. 1129(b)(2)(A), where debtors sought to confirm a "cramdown" bankruptcy plan over the Bank's objection. The Bankruptcy Court denied debtors' request, concluding that the auction procedures did not comply with section 1129(b)(2)(A)'s requirements for cramdown plans and the Seventh Circuit affirmed. The Court held that debtors could not obtain confirmation of a Chapter 11 cramdown plan that provided for the sale of collateral free and clear of the Bank's lien, but did not permit the Bank to credit-bid at the sale. Accordingly, the Court affirmed the judgment of the Court of Appeals.View "RadLAX Gateway Hotel, LLC v. Amalgamated Bank" on Justia Law

This case arose when petitioners filed for Chapter 12 bankruptcy and then sold their farm. Under Chapter 12 of the Bankruptcy Code, farmer debtors could treat certain claims owed to a governmental unit resulting from the disposition of farm assets as dischargeable, unsecured liabilities. 11 U.S.C. 1222(a). The Court held that federal income tax liability resulting from petitioners' post-petition farm sale was not "incurred by the estate" under 11 U.S.C. 503(b) of the Bankruptcy Code and thus was neither collectible nor dischargeable in the Chapter 12 plan. Therefore, the Court affirmed the judgment of the Ninth Circuit.View "Hall v. United States" on Justia Law

This case stemmed from the long-running dispute between Vickie Lynn Marshall and E. Pierce Marshall over the fortune of J. Howard Marshall II, a man believed to have been one of the richest people in Texas. Vickie married J. Howard, Pierce's father, approximately a year before his death. Shortly before J. Howard died, Vickie filed a suit against Pierce in Texas state court asserting that J. Howard meant to provide for Vickie through a trust, and Pierce tortiously interfered with that gift. The litigation worked its way through state and federal courts in Louisiana, Texas, and California, and two of those courts, a Texas state probate court and the Bankruptcy Court for the Central District of California, reached contrary decisions on its merits. The Court of Appeals subsequently held that the Texas state decision controlled after concluding that the Bankruptcy Court lacked the authority to enter final judgment on a counterclaim that Vickie brought against Pierce in her bankruptcy proceeding. At issue was whether the Bankruptcy Court Judge, who did not enjoy tenure and salary protections pursuant to Article III of the Constitution, had the statutory authority under 28 U.S.C. 157(b) to issue a final judgment on Vickie's counterclaims and, if so, whether conferring that authority on the Bankruptcy Court was constitutional. The Court held that the Bankruptcy Court had the statutory authority to enter judgment on Vickie's counterclaim as a core proceeding under section 157(b)(2)(C). The Court held, however, that the Bankruptcy Court lacked the constitutional authority under Article III to enter final judgment on a state law counterclaim that was not resolved in the process of ruling on a creditor's proof claim. Accordingly, the judgment of the Court of Appeals was affirmed.View "Stern v. Marshall" on Justia Law

When petitioners filed for Chapter 7 bankruptcy, they sought to exclude $300,000 in an inherited individual retirement account (IRA) from the bankruptcy estate using the “retirement funds” exemption, 11 U.S.C. 522(b)(3)(C). The Bankruptcy Court concluded that an inherited IRA does not share the same characteristics as a traditional IRA and disallowed the exemption. The district court reversed. The Seventh Circuit reversed the district court. The Supreme Court affirmed, holding that funds in inherited IRAs are not “retirement funds” within the meaning of the code, based on three characteristics. The holder of an inherited IRA may never invest additional money in the account; is required to withdraw money from the account, no matter how far the holder is from retirement; and may withdraw the entire account at any time and use it for any purpose without penalty. Allowing debtors to protect funds in traditional and Roth IRAs ensures that debtors will be able to meet their basic needs during their retirement, but nothing about an inherited IRA’s legal characteristics prevent or discourage an individual from using the entire balance immediately after bankruptcy for purposes of current consumption. The “retirement funds” exemption should not be read to create a “free pass,” The possibility that an account holder can leave an inherited IRA intact until retirement and take only the required minimum distributions does not mean that an inherited IRA bears the legal characteristics of retirement funds. View "Clark v. Rameker" on Justia Law