Justia Bankruptcy Opinion Summaries

Debtor appealed the bankruptcy court's order denying her Motion to Set Aside Compromise. The bankruptcy appellate panel affirmed the judgment of the bankruptcy court, concluding that debtor failed to meet her burden to show a pecuniary interest to establish her standing to object to the trustee's Motion to Compromise or to pursue this appeal. View "Peoples v. Radloff" on Justia Law

Debtor appealed the district court's denial of the confirmation of his proposed Chapter 13 plan on the grounds that it did not accurately reflect his disposable income and that it was unfeasible if debtor's Social Security income was excluded from his "projected disposable income." The court vacated and remanded, holding that the plain language of the Bankruptcy Code excluded Social Security income from the calculation of "projected disposable income," but that such income nevertheless must be considered in the evaluation of a plan's feasibility. View "Ranta v. Gorman" on Justia Law

A bankruptcy court ordered that the Laurel Avenue house be vacated and authorized U.S. Marshals to physically remove plaintiff, the debtor's son, from the home. On appeal, plaintiff challenged the dismissal of his suit, which alleged, inter alia, that his constitutional rights were violated when the house, its contents, and his person were searched and seized. The court found no error in the dismissal of plaintiff's 42 U.S.C. 1983 claim against the federal defendants where he did not allege a Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics action in the amended complaint, nor did he seek to amend to add the claim; plaintiff's section 1983 claim failed against the city and the city's officers where plaintiff failed to set forth sufficient facts to show a direct causal link between the city's policy or custom and the alleged violation of his constitutional rights; the district court did not err in dismissing his tort claims against the trustees under the doctrine established in Barton v. Barbour, which established that an equity receiver could not be sued without leave of the court that appointed him; and because the dismissal of plaintiff's federal claims was proper, the court found no abuse of discretion in the district court's decision to decline supplemental jurisdiction over the remaining state law claims. Accordingly, the court affirmed the judgment. View "Alexander v. Hedback, et al." on Justia Law

The Weixels filed a Chapter 7 petition; they were not eligible for relief under Chapter 13 due to the amount of their debt. The bankruptcy court dismissed, 11 U.S.C. 707(b)(1), (2) and (3), after considering bank statements, showing that when the Weixels’ bank account had been repeatedly overdrawn, they continued to spend money on entertainment and the trustee’s conclusion that the Weixels, with budget adjustments, had monthly disposable income of $2,308. The, Bankruptcy Appellate Panel affirmed, rejecting arguments that the bankruptcy court failed to consider the Weixels’ scheduled priority tax debt and their household’s future housing expense. View "In re: Weixel" on Justia Law

Plaintiff voluntarily filed for Chapter 7 bankruptcy seeking to discharge debts he identified as primarily business related. On appeal, plaintiff challenged the district court's order affirming the bankruptcy court's dismissal of his petition for bad faith under 11 U.S.C. 707(a). The court concluded that, based on the ordinary meaning of the statutory language and relevant principles of statutory construction, the power to dismiss "for cause" in section 707(a) included the power to involuntarily dismiss a Chapter 7 case based on prepetition bad faith. Under the totality of the circumstances, the bankruptcy court did not clearly err in finding that plaintiff filed his Chapter 7 petition in bad faith. Accordingly, the court affirmed the judgment, concluding that the bankruptcy court did not abuse its discretion in dismissing the petition. View "Piazza v. Nueterra Healthcare Physical Therapy, LLC" on Justia Law

The Bank filed a motion for relief from an automatic stay and submitted a copy of the promissory note, which was a second-generation copy, as well as a declaration certifying that the original note was in the Bank's files. The trustee argued that a duplicate of a duplicate of the original was insufficient to establish prudential standing. The court concluded that a duplicate of a duplicate was a duplicate for purposes of Federal Rule of Evidence 1003 and concluded that the Bank established prudential standing to file the motion for relief from the stay. View "In re: Toni Griffin" on Justia Law

Pro-Pac, a packaging business, filed for Chapter 11 bankruptcy in 2006, then filed an adversary proceeding against WOW, a logistics service provider, for aiding and abetting a Pro-Pac employee’s breach of fiduciary duty. The bankruptcy court found that WOW had aided and abetted the Pro-Pac employee, but based its award on an independent unjust enrichment claim. The district court ordered the bankruptcy court to dismiss, reasoning that the unjust-enrichment argument had been introduced too late in the case. The Seventh Circuit reversed and remanded, finding that the district court erred in dismissing the case, but that the bankruptcy court erred in assessing Pro-Pac’s damages. On remand, the bankruptcy court must reexamine issues relating to WOW’s tort liability. If the bankruptcy court wants to award punitive damages, it must first award compensatory damages based on the harm Pro-Pac suffered. View "Pro-Pac Inc. v. WOW Logistics Inc." on Justia Law

Spehar, hired by CMGT to assist in finding financing for its business, sued CMGT over a dispute related to this agreement and obtained a $17 million default judgment against CMGT, which had no assets. Spehar Capital devised a plan to: force CMGT into bankruptcy; convince the bankruptcy trustee to bring a malpractice action against CMGT’s law firm on the theory that but for the firm’s negligence, Spehar would not have obtained the default judgment; win the malpractice action or force a settlement; obtain a share of the payment to the bankruptcy estate. The bankruptcy trustee sued CMGT’s law firm, Mayer Brown. The district court granted Mayer Brown summary judgment, reasoning that the doctrine of judicial estoppel barred the inconsistencies in the suit, based on undisputed facts. The Seventh Circuit affirmed. If the trustee were to prevail, there would be a clear impression that a court was misled. It would be “absurd” for Spehar to recover when proving the causation element of malpractice would require the trustee to prove that Spehar was not entitled to prevail in the earlier suit. View "Grochocinski v. Mayer, Brown, Rowe & Maw, LLP" on Justia Law

Daley opened an IRA with Merrill Lynch, rolling over $64,646 from another financial institution. He signed a contract with a "liens" provision that pledged the IRA as security for any future debts to Merrill Lynch. No such debts ever arose. Daley never withdrew money from his IRA, borrowed from it or used it as collateral. Two years later, Daley filed a Chapter 7 bankruptcy petition and sought protection for the IRAs, 11 U.S.C. 522(b)(3)(C). The trustee objected, contending that the IRA lost its exempt status when Daley signed the lien agreement. The bankruptcy court and the district court ruled in favor of the trustee. The Sixth Circuit reversed. An IRA loses its tax-exempt status if the owner "engages in any transaction prohibited by section 4975 of the tax code. There are six such transactions, including “any direct or indirect” “lending of money or other extension of credit” between the IRA and its owner, 26 U.S.C. 4975(c)(1)(B). Daley never borrowed from the IRA, and Merrill Lynch never extended credit to Daley based on the existence of the IRA. View "Daley v. Mostoller" on Justia Law

Defendant, a lawyer, deposited lucre in his law firm's bank accounts after he was convicted of criminal activity, where it was commingled with the firm's receipts from legitimate clients. At issue was whether the money in the bank accounts at the time defendant was charged was subject to forfeiture. The sheer volume of financial information available and required to separate tainted from untainted monies in this case lead the court to apply the Third Circuit's rule in United States v. Voigt; in this case, the district court erred in ordering forfeiture of the funds as proceeds; consequently, all proceedings the court held subsequent to the imposition of defendant's sentence must be vacated; the court's conclusion did not foreclose the Government's attempt to forfeit a property interest held by defendant individually; and, after addressing the parties' remaining arguments, the court reversed and remanded the judgment of the district court. View "United States v. Rothstein" on Justia Law