Justia Bankruptcy Opinion Summaries

Debtors claimed that the bankruptcy court erred by including an inheritance that postdated their Chapter 13 bankruptcy petition by more than 180 days as part of their bankruptcy estate. The court concluded that Bankruptcy Code Section 1306(a) extended the timeline for including "the kind" of property "specified in" Section 541 in Chapter 13 bankruptcy estates. Accordingly, the court affirmed the bankruptcy court's inclusion of the inheritance in debtors' Chapter 13 bankruptcy estate. View "Carroll v. Logan" on Justia Law

Plant, a California corporation that sold Fiberboard-manufactured asbestos-based insulation, filed for Chapter 11 bankruptcy. At issue on appeal was whether Plant's bankruptcy plan, which allegedly left a group of insurers paying more than their fair share on a large number of asbestos personal injury claims, complied with the Bankruptcy Code. The court concluded that the bankruptcy court erred in confirming the plan where the Trust, in connection with which the plan's injunctions were to be implemented, failed to satisfy the requirements of section 524(g). Accordingly, the court vacated the order of the bankruptcy court affirming Plant's Restated Second Amended Plan of Reorganization and remanded for further proceedings. View "In re: Plant Insulation Co." on Justia Law

Debtor filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code. At issue on appeal was whether debtor had standing under Bankruptcy Code 522(h) to bring his action under Bankruptcy Code 545(2). Section 522(b) permitted a debtor to use certain exemptions, and generally, a debtor could exempt property that was exempt under section 522(d). In this instance, the amount of the exemption claimed by debtor under section 522(d)(1) was within the statutory limit allowed under that section, and the parties stipulated that the property was debtor's homestead. Accordingly, debtor had standing to bring his adversary proceeding where there was no basis in the record upon which the property would have been disqualified from being exempt if the trustee had avoided the lien. View "McCarthy v. Brevik Law" on Justia Law

Debtor filed a Chapter 13 petition in the bankruptcy court identifying his interest in his primary residence located in Maryland. On appeal, debtor and his spouse argued that the bankruptcy court erred in refusing to strip off a lien on the ground that the spouse's property interest was not part of the bankruptcy estate. The lien was against the property that debtor owned with his non-debtor spouse as tenants by the entireties. The court concluded that the statutory provisions authorizing a strip off, and applicable Maryland property law, did not permit a bankruptcy court to alter a non-debtor's interest in property held in a tenancy by the entirety. The court held that the bankruptcy court correctly determined that it lacked authority to strip off debtor's valueless lien because only debtor's interest in the estate, rather than the complete entireties estate, was before the bankruptcy court. Accordingly, the court affirmed the judgment. View "Alvarez v. HSBC Bank" on Justia Law

Appellants appealed the district court's dismissal of all of their appeals concerning the purchase agreements to jointly-owned property and the underlying bankruptcy court orders. The property was owned by Sears Cattle and AFY, a debtor in bankruptcy. The court concluded that 11 U.S.C. 363(m) mooted the Tract 1 appeal. Appellants' failure to preserve their appeal of the district court's holding that Sears Cattle did not object to the motion to pay funds precluded the court from addressing Sears Cattle's appeal of the order to pay funds to the district court. Accordingly, the court affirmed the district court's holding that Sears Cattle could not appeal the order. Because the Sears could not assert a direct interest in the litigation, they lacked appellate standing for bankruptcy purposes under the shareholder standing rule. Accordingly, the district court did not err in finding the Sears lacked standing to appeal the order to pay funds. Because AFY was not a debtor-in-possession, the trustee had standing to move to convert. The court rejected the Sears' remaining arguments. Accordingly, the court affirmed the judgment of the district court. View "Sears, et al. v. Badami" on Justia Law

Appellees made claims on AFY's bankruptcy estate in connection with the sale of appellees' former interests of AFY. Appellants claimed to be the only present shareholders of AFY. On appeal, appellants challenged the bankruptcy court's denial of their objections to the claims. The court dismissed the appeal because appellants lacked standing to appeal the bankruptcy court's order where AFY was the only party directly and adversely affected by the order and any effect on appellants was indirect, based on their status as shareholders of AFY. View "Sears, et al. v. Sears, et al." on Justia Law

In 2009, Tyler had accumulated $1,041 of debt on his Chase credit card. DHC, assignee of the debt, filed suit in Kentucky, seeking collection of the debt, plus 21% interest, and attorney’s fees. The complaint had not been served when Tyler filed for Chapter 7 bankruptcy, three months after the suit was filed. Tyler did not list this suit as debt or his potential Fair Debt Collection Practices Act counterclaims as assets on the bankruptcy schedules. Tyler did list a debt owed on a Chase credit card, of “Unknown” amount. Chase did not participate and Tyler was granted a discharge. Eight days later, DHC served process on Tyler. DHC filed a voluntary Notice of Dismissal without prejudice after it learned of Tyler’s bankruptcy, but Tyler filed a purported federal class action, alleging violations of the FDCPA and Kentucky’s usury laws. The district court dismissed, finding that Tyler “elected to forego filing compulsory counterclaims” and that Tyler’s claims were “rooted in the allegations in DHC’s state court complaint” and thus part of the bankruptcy estate. The Sixth Circuit affirmed. While the claim was not barred under res judicata principles, the claim was based on a pre-petition violation and, thus, property of the bankruptcy estate.View "Tyler v. DH Capital Mgmt., Inc." on Justia Law

Buffets filed suit against U.S. Bank and BMO Harris Bank alleging, among other things, violations of the Uniform Fiduciaries Act (UFA), Minn. Stat. 520.01 et seq. The district court asserted jurisdiction on the ground that the action was related to a Title 11 bankruptcy proceeding, 28 U.S.C. 1334(b), and that abstention in favor of state-court litigation was not required under 28 U.S.C. 1334(c)(2). The court concluded that, although the question of "related to bankruptcy" jurisdiction was difficult and close, the answer ultimately did not affect the court's jurisdiction. Even if the district court lacked "related to" bankruptcy jurisdiction - because the banks could not pursue indemnification claims against LGI - the court had jurisdiction over the appeal under the rationale of Caterpillar Inc. v. Lewis. On the merits, the court concluded that Buffets has not established a genuine dispute as to whether either bank was indifferent to LGI's suspicious activity, such that its actions amounted to bad faith. Accordingly, the court affirmed the the district court's grant of summary judgment to the banks. View "Buffets, Inc., et al. v. BMO Harris Bank, et al." on Justia Law

Debtor filed a Chapter 13 bankruptcy petition and her case was converted to a Chapter 7 bankruptcy. On appeal, debtor challenged the bankruptcy court's order denying her motion to reopen her case to pursue an alleged violation of the discharge injunction. The bankruptcy appellate panel (BAP) affirmed the decision of the bankruptcy court where the bankruptcy court correctly concluded that debtor's allegations were without merit and, therefore, the bankruptcy court did not abuse its discretion in denying the motion to reopen her bankruptcy case. View "Pennington-Thurman v. Bank of America N.A." on Justia Law

Flugence filed for Chapter 13 bankruptcy protection in 2004 and a plan was confirmed. In 2007, she was injured in a car accident and hired an attorney. Weeks later an amended Chapter 13 plan was confirmed. In 2008 Flugence sued for personal injury. Months later, Flugence was discharged. She never disclosed to the bankruptcy court that she might prosecute a personal-injury claim. The personal-injury defendants discovered the non-disclosure and had the bankruptcy case reopened. The bankruptcy court declared that although Flugence was estopped from pursuing the claim on her own behalf, her bankruptcy trustee was not estopped and could pursue the claim for the benefit of creditors. The district court reversed with respect to estopping Flugence, stating that Flugence did not have a potential cause of action prior to her initial application for bankruptcy protection, and relied on her attorney’s advice concerning disclosure. The Fifth Circuit reinstated the bankruptcy court holding. There is a continuing duty to disclose in a Chapter 13 proceeding and Flugence met all elements of estoppel. Nothing requires that recovery be limited strictly to the amount owed creditors; after a claim is prosecuted and creditors and fees have been paid, any remaining recovery must be returned to the personal-injury defendants. View "Flugence v. Axis Surplus Ins. Co." on Justia Law