Justia Bankruptcy Opinion Summaries

The bankruptcy court held that a district court judgment entered against the Debtor was nondischargeable under 11 U.S.C. 523(a)(6). The Sixth Circuit Bankruptcy Appellate Panel affirmed, holding that the bankruptcy court properly gave the district court’s findings preclusive effect as to whether the judgment was the result of the Debtor’s willful and malicious injury. View "In re: Barlow" on Justia Law

Creditor appealed from the orders of the bankruptcy court denying his requests for relief from the automatic stay and for abstention and remand. The court held that the bankruptcy court properly denied creditor's request for stay relief where there was no purpose for granting the stay since creditor's state court malpractice and negligence actions against debtor were dischargeable debts and his fraud claim was discharged when creditor failed to timely file an adversary proceeding. Further, there was no basis for an order of abstention and remand. Accordingly, the court affirmed the judgment of the bankruptcy court. View "Chae v. Bennett" on Justia Law

BPRE filed for Chapter 11 bankruptcy relief and then filed an adversary complaint in the bankruptcy court alleging various state-law tort and contract claims against RML. The bankruptcy court entered a final judgment denying relief and the district court affirmed. In Stern v. Marshall, the Supreme Court determined that the bankruptcy court lacked the constitutional authority to enter final judgment on the debtor's state-law counterclaim even thought the statute conferred such authority. Although the strict holding in Stern limited bankruptcy-court authority in one isolated respect and the question presented was a narrow one, its sweeping reasoning was broad and logically must be applied to BPRE's claims here. Therefore, the court vacated the district court's judgment and remanded, concluding that the bankruptcy court lacked Article III standing to enter final judgment on BPRE's claims. View "BP RE, L.P. v. RML Waxahachie Dodge, L.L.C., et al." on Justia Law

In 2004, Lampe won a $25,000 judgment against Kash. Kash could not pay his debts and sought bankruptcy protection in 2012. When he submitted a list of creditors, under Bankruptcy Rule 1007(a) Kash omitted Lampe’s residential address, listing her in care of the law firm that represented her eight years earlier. The firm stopped working for Lampe in 2004, and the notice never reached Lampe, who did not participate in the bankruptcy case, which discharged the judgment debt. After the discharge, Lampe returned to the district court, seeking to revive her judgment. The district court rejected her claim. The Sixth Circuit reversed. A debt is a creditor’s property, and the Due Process Clause entitles her to service of notice “reasonably calculated” to reach her before she is deprived of that property. Notification to a former attorney provides little assurance that the notice will reach the creditor. Lawyers have “no general continuing obligation” to pass information along to people they no longer represent. Nothing in the record suggested that the search for Lampe’s address would have imposed an unreasonable burden on Kash; without further investigation, any belief that the firm still worked for Lampe in 2012 was unreasonable. View "Lampe v. Kash" on Justia Law

Beginning in 2004, 1st Source Bank entered into secured transactions with the debtors for the sale or lease of tractors and trailers. The agreements granted 1st Source a security interest in the tractors and/or trailers, accounts, and in proceeds from that collateral. 1st Source filed financing statements that identified the collateral as including the specified tractors/and or trailers, and “all proceeds thereof, including rental and/or lease receipts.” The financing statements did not refer to “accounts,” “accounts receivable,” or any similar language. Later, defendant banks also entered into secured transactions with the debtors and filed financing statements that specifically referred to a security interest in “all accounts receivable now outstanding or hereafter arising.” In 2009, the debtors defaulted. 1st Source undertook repossession of the collateral securing the agreements and attempted to claim a perfected security interest and first priority in debtors’ accounts, arguing that the term “and all proceeds thereof” included accounts receivable. The district court granted defendants summary judgment, finding that 1st Source’s financing statements were not sufficient to put defendants on notice that 1st Source claimed a security interest in accounts receivable, and holding, as a matter of Tennessee law, that “proceeds,” as used in a company’s financing statement, does not include its accounts receivable. The Sixth Circuit affirmed. View "1st Source Bank v. Wilson Bank & Trust" on Justia Law

After South Louisiana Ethanol filed for bankruptcy, CHS filed suit contending that South Louisiana Ethanol's option contract with Plaquemines constituted the assignment of a litigious right under Louisiana law, entitling CHS to redeem the litigious right by reimbursing Plaquemines for the cost of the option contract plus interest. The district court granted Plaquemines's motion to dismiss. The court concluded that the sale fit within the statutory judicial-sale exception to redemption, as described by Bluefields S.S. Co. v. Lala Ferreras Cangelosi S.S. Co. and its predecessors. Accordingly, the court affirmed the judgment of the district court, holding that the law at issue did not apply to judicial sales. View "CHS, Inc. v. Plaquemines Holdings, L.L.C." on Justia Law

Debtor filed Chapter 7 bankruptcy and claimed an annuity as exempt under 11 U.S.C. 522(b)(3)(C). The court agreed with the bankruptcy court's holding that the annuity owned by debtor qualified as an "individual retirement annuity" under section 408(b) of the Internal Revenue Code and was, therefore, exempt under section 522(b)(3)(C) of the Bankruptcy Code. View "Running v. Miller" on Justia Law

Debtors appealed the bankruptcy court's dismissal of their adversary proceeding. Citimortgage, a secured creditor, held a lien on debtors' primary residence and filed a claim and then debtors filed an objection urging disallowance of the claim as untimely. The parties agreed to the entry of an order disallowing the claim and debtors subsequently initiated an adversary proceeding seeking the avoidance of Citimortgage's lien. Relying on the plain language of 11 U.S.C. 506(d), debtors argued that disallowance of Citimortgage's claim necessarily voided Citimortgage's corresponding lien. Joining the Fourth and Seventh Circuits, the court rejected debtors' argument and agreed with the bankruptcy court that a secured creditor's lien was not void due solely to the fact that the secured creditor filed an untimely claim. View "Shelton, et al. v. Citimortgage" on Justia Law

Brookfield owns a shopping center that is subject to a first mortgage of $8,900,000, held by a trust, and a second mortgage for $2,539,375 that has been transferred to ValStone, which also serves as attorney in fact for the trust. Outside of bankruptcy, state law would allow ValStone to foreclose upon default on the second mortgage; ValStone could bid on the property at auction or receive proceeds from its sale. The second mortgage is a nonrecourse loan; if the proceeds of sale were not enough to repay the first mortgage or repay the second mortgage in full, ValStone could not pursue a deficiency claim for the outstanding debt. ValStone did not initiate foreclosure. Brookfield filed a Chapter 11 bankruptcy petition. Under its reorganization plan, Brookfield elected to retain ownership of the property, requiring the bankruptcy court to establish a judicial value by means of independent appraisals. The value is expected to be less than the amount of the first mortgage, which will leave the second mortgage unsecured by any equity. ValStone argued that 11 U.S.C. 1111(b)(1)(A) treats the claim as if it had recourse, so that its unsecured deficiency claim should be allowed. Brookfield argued that the claim should be disallowed because neither state law nor 11 U.S.C. 1111(b) give ValStone a deficiency claim against Brookfield. The bankruptcy court and the district court held that the claim was valid. The Seventh Circuit affirmed. View "B.R. Brookfield Commons No. 1 v. Valstone Asset Mgmt,, LLC" on Justia Law

Defendant appealed from orders of the bankruptcy court awarding judgments against him for intentional conversion of property, for costs of suit, and determining that the judgments were not discharged under 11 U.S.C. 523(a)(6). The bankruptcy appellate panel concluded that the bankruptcy court did not err in granting preclusive effect to the Minnesota state court's order regarding ownership of the assets at issue and defendant did not raise any other assignments of error. Accordingly, the panel affirmed the decision of the bankruptcy panel. View "Phillips, et al. v. Phillips" on Justia Law