Justia Bankruptcy Opinion Summaries

The Simons filed for Chapter 7 bankruptcy protection, identifying a nonpriority credit-card debt to FIA. FIA retained Weinstein, which sent the Simons a letter and notice through their bankruptcy counsel, stating that FIA was an adversary proceeding under 11 U.S.C. 523 to challenge dischargeability, but offering to forego the proceeding if the Simons stipulated that the debt was nondischargeable or agreed to a reduced amount. The letter stated that a Rule 2004 examination had been scheduled, but that Weinstein was open to settlement; it mentioned the possibility of rescheduling and set out information about challenging the debt. The subpoena certificate, signed by a Weinstein attorney, stated that a copy was mailed to the Simons’ home and their attorney’s office. The Simons allege that Weinstein did not actually send it to their home. Their counsel received copies. The Simons moved to quash, alleging violations of Bankruptcy Rule 9016 and Civil Rule 45 subpoena requirements, and filed an adversary proceeding asserting Fair Debt Collection Practices Act claims based on the letter. The Bankruptcy Court quashed the notices, but ruled that it lacked jurisdiction over the FDCPA claims. The Simons then sued FIA and Weinstein in the district court, which dismissed. The Third Circuit affirmed dismissal of 15 U.S.C 1692e(5) and (13) claims for allegedly failing to identify the recording method in the Rule 2004 examination and by issuing the subpoenas from a district other than where the examinations were to be held. The court also affirmed dismissal of a 1692e(11) claim because its mini-Miranda requirement conflicts with the Bankruptcy Code automatic stay. The court reversed dismissal of claims based failing to serve the subpoenas directly on the individuals and failing to include the text of Civil Rule 45(c)–(d) in the subpoenas. View "Simon v. FIA Card Servs., NA" on Justia Law

Debtor was married to Plaintiff’s son, John. Plaintiff and John had an extensive model train collection. After John died, Plaintiff sued, seeking $25,000 for Debtor’s alleged conversion of the collection. Debtor was appointed administratrix of John’s probate estate. After completion of an inventory, Plaintiff and Debtor, individually and as administratrix, entered into a settlement resolving the state court litigation and matters in Probate Court, identifying parts of the collection as belonging to Plaintiff and requiring Debtor to surrender possession of those parts. The remainder of the collection was to be sold at auction and the proceeds were to be split. The court subsequently entered multiple orders directing Debtor to turn over certain trains and accessories to Plaintiff and imposed penalty of $100.00 per day. Finally, the court entered judgment in the amount of $32,186.90 plus interest based on Debtor’s “willful contempt.” Debtor then filed a bankruptcy petition and Plaintiff sought to except from discharge the entire debt owed to him pursuant to 11 U.S.C. 523(a)(2)(A) and (a)(7). The bankruptcy court held that the entire amount ($32,186), not just $9,386.90, was nondischargeable under 523(a)(2)(A). The bankruptcy appellate panel affirmed. View "In re: Nicodemus" on Justia Law

Appellant appealed the judgment of the district court affirming the final judgment entered by the bankruptcy court on certain state-law counterclaims that appellant filed against appellees, attorneys who were authorized by the bankruptcy court to represent appellant in a separate lawsuit. The court concluded that the bankruptcy court was within its authority to enter a final judgment on appellant's state-law counterclaims for malpractice and breach of fiduciary duty, as these claims were necessarily resolved in the course of ruling on appellees' fee applications; the court agreed with the bankruptcy court that these claims failed on the merits; the court upheld the final judgment on the fee applications; the court held that the bankruptcy court erred in entering a final judgment on appellant's Texas Deceptive Trade Practices Act state-law counterclaim because it was not necessary to resolve it in the course of ruling on the attorneys' fee applications. Accordingly, the court affirmed in part, reversed in part, and remanded for further proceedings. View "Frazin v. Haynes & Boone, L.L.P., et al." on Justia Law

Debtor purchased a car from TCL Auto Sales and financed the purchase through Acorn. Debtor then filed for bankruptcy on July 21, 2010. Acorn did not perfect its security interest in the vehicle until July 27, 2010. The court concluded that, where, as here, a Chapter 13 trustee was aware of defects in a creditor's security interest well before confirmation, and chose not to object to the creditor's claim, and affirmatively recommended to the bankruptcy court that it confirm a proposed plan in which the creditor is given a secured position, the bankruptcy court's confirmation of the plan binds the trustee and precluded a post-confirmation avoidance action against the creditor. Accordingly, the court affirmed the decision of the bankruptcy court and the district court granting summary judgment in favor of Acorn. View "Hope v. Acorn Financial Inc" on Justia Law

Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. On appeal, debtor challenged the bankruptcy court's order sustaining the Bank's objection to her claimed exemption in her 2000 Hyundai Tiburon, and ruling that debtor could avoid the Bank's lien under section 522(f) of Title 11 of the Bankruptcy Code. The bankruptcy appellate panel (BAP) agreed with the bankruptcy court that debtor could not claim an exemption under IOWA Code 627.6 where debtor had no equity and had no interest in the vehicle to exempt, and that the Bankruptcy Code provided for no such avoidance. Accordingly, the BAP affirmed the judgment of the bankruptcy court. View "Goben v. Corydon State Bank" on Justia Law

Debtor-Appellant Market Center East Retail Property, Inc. appealed the Bankruptcy Appellate Panel's affirming of the bankruptcy court's award of attorney's fees to Appellees Barak Lurie and his firm, Lurie & Park. Lurie was Market Center’s attorney in completing the sale of a retail shopping center to Lowe’s Home Center. Market Center argued: (1) the bankruptcy court erred in calculating the amount of attorney’s fees because the bankruptcy court should have used the lodestar approach in its calculations; (2) that the 11 U.S.C. 330(a)(3) factors were an exhaustive list of factors that the bankruptcy court was required to consider; and (3) that Congress intended 11 U.S.C. 330(a) to be construed consistently with case law for awarding attorney's fees under federal fee-shifting statutes such as 42 U.S.C. 1988. While the Tenth Circuit did not agree with Market Center in all regards, the Court nonetheless reversed and remanded for reconsideration of the fees. View "Market Center East Retail Prop, et al v. Lurie, et al" on Justia Law

Debtor appealed from the order of the bankruptcy court finding his debt to Bank of America nondischargeable under 11 U.S.C. 523(a)(2) for fraud and section 523(a)(4) for embezzlement. Under section 523(a)(4), Southwest Bank established that debtor was not lawfully entitled to use the insurance proceeds at issue for the purposes for which he used them and debtor produced nothing to the contrary. Accordingly, the bankruptcy appellate panel (BAP) affirmed the bankruptcy court's finding under section 523(a)(4). Because the BAP concluded that the bankruptcy court did not err in finding the debt to be nondischargeable under 523(a)(4) for embezzlement, the court limited its analysis to that basis for nondischargeability and did not reach the section 523(a)(2) fraud issue. View "Bank of America, N.A. v. Armstrong" on Justia Law

Chapter 7 debtor appealed the district court's reversal of the bankruptcy court's order denying relief from the automatic stay to the Disciplinary Board. Debtor was disbarred from the practice of law and the Disciplinary Board later filed a complaint in state court seeking to enjoin debtor from the unlawful practice of law and to appoint a conservator to take possession of debtor's client files and take other steps to protect his clients. At issue in this appeal was whether a debt's dischargeability in bankruptcy proceedings - standing alone - constituted "cause" sufficient for a bankruptcy court to provide relief from the automatic stay provisions of 11 U.S.C. 362(a). The court affirmed in part and reversed in part, concluding that the debt was nondischargeable but, in this instance, the district court erroneously relied solely on the debt's dischargeability status in its ruling on the "cause" issue. Accordingly, the court vacated and remanded in part for further proceedings. View "Disciplinary Bd. of the Supreme Court of PA v. Feingold" on Justia Law

The Millers retained Ettinger in 2008 to represent them in a landlord/tenant dispute. Over 23 months, Ettinger billed $43,000. The dispute settled for $9,500. The Millers paid Ettinger $20,000, but even before the landlord-tenant matter settled, Ettinger sought relief in Pennsylvania state court to accelerate the speed at which he was paid. He petitioned to withdraw as a counsel, first based on alleged failure to pay and then due to professed “lack of cooperation.” Both petitions were rejected, though the Millers were ordered to make “good faith” payments. Despite their continued payments, Ettinger sued the Millers, who filed for Chapter 7 bankruptcy protection the following month. Ettinger filed an adversary proceeding in the Bankruptcy Court to prevent discharge of the Millers’ remaining debt to him, alleging fraud. The Bankruptcy Court rejected the complaint and imposed a $20,000 sanction against Ettinger jointly with his attorney. The district court vacated on the ground that the sanctions violated the “safe harbor” requirements of Fed. R. Bankr. P. 9011, which requires 21 days between serving and filing a sanctions motion, during which period the challenged conduct may be remedied, but refused to remand for further consideration. The Third Circuit remanded with instructions to permit the Bankruptcy Court to consider alternative avenues to impose sanctions. View "In re: Miller" on Justia Law

After the Underhills received their discharge under a voluntary Chapter 7 petition in May 2010, Golf Chic, an LLC in which Beth Underhill was the sole member, filed a claim for tortious interference against several entities in October 2010. The lawsuit was settled and $80,000 was awarded to the LLC, but the settlement check was made payable to Beth Underhill and her attorney, rather than to the LLC. Huntington Bank successfully moved to reopen the case so that the settlement proceeds could be administered as an asset of the bankruptcy estate. The Bankruptcy Appellate Panel affirmed. The settlement proceeds received after the discharge were sufficiently rooted in the debtors’ pre-bankruptcy past to be property of the estate, 11 U.S.C. 541(a)(1) and the claims were not abandoned by the trustee when the bankruptcy case was closed. The claim was known to Beth Underhill and affected the value of her membership interest. Placing a value of zero on the membership interest with that knowledge constituted failure to disclose the asset and warrants reopening and a determination by the bankruptcy court of the value of the interest in the LLC. View "In re: Underhill" on Justia Law