Justia Bankruptcy Opinion Summaries

Plaintiff filed charges of discrimination with the EEOC against his employer, Dollar General, alleging that Dollar General failed to provide reasonable accommodation for his disability in violation of the Americans with Disabilities Act of 1990 (ADA), 42 U.S.C. 12101-12213. While awaiting the EEOC's notice of his right to sue, plaintiff filed for Chapter 13 bankruptcy. Then plaintiff filed the present suit in district court. Dollar General moved for summary judgment, arguing that the filing of plaintiff's Chapter 13 bankruptcy petition deprived plaintiff of standing to maintain his ADA claim. The court agreed with its sister circuits and concluded that because of the powers vested in the Chapter 13 debtor and trustee, a Chapter 13 debtor could retain standing to bring his pre-bankruptcy petition claims. The court also concluded that because plaintiff was unable to show that he could perform the essential functions of his position with a reasonable accommodation, the district court properly granted summary judgment in Dollar General's favor. Accordingly, the court affirmed the judgment of the district court. View " Wilson v. Dollar General Corp." on Justia Law

Petitioner’s father established a trust for the benefit of petitioner and his siblings, and made petitioner the nonprofessional trustee. The trust’s sole asset was the father’s life insurance policy. Petitioner borrowed funds from the trust three times; all borrowed funds were repaid with interest. His siblings obtained a state court judgment for breach of fiduciary duty, though the court found no apparent malicious motive. The court imposed constructive trusts on petitioner’s interests, including his interest in the original trust, to secure payment of the judgment, with respondent serving as trustee for all of the trusts. Petitioner filed for bankruptcy. Respondent opposed discharge of debts to the trust. The Bankruptcy Court held that petitioner’s debts were not dischargeable under 11 U. S. C. 523(a)(4), which provides that an individual cannot obtain a bankruptcy discharge from a debt “for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.” The district court and the Eleventh Circuit affirmed. The Supreme Court vacated. The term “defalcation” in the Bankruptcy Code includes a culpable state of mind requirement involving knowledge of, or gross recklessness in respect to, the improper nature of the fiduciary behavior. The Court previously interpreted the term “fraud” in the exceptions to mean “positive fraud, or fraud in fact, involving moral turpitude or intentional wrong.” The term “defalcation” should be treated similarly. Where the conduct does not involve bad faith, moral turpitude, or other immoral conduct, “defalcation” requires an intentional wrong. An intentional wrong includes not only conduct that the fiduciary knows is improper but also reckless conduct of the kind that the criminal law often treats as the equivalent. Where actual knowledge of wrongdoing is lacking, conduct is considered as equivalent if, as set forth in the Model Penal Code, the fiduciary “consciously disregards,” or is willfully blind to, “a substantial and unjustifiable risk” that his conduct will violate a fiduciary duty. View "Bullock v. BankChampaign, N. A." on Justia Law

Debtors filed a Chapter 7 bankruptcy petition and sought to discharge their unsecured debt, strip down liens on their primary residence and a rental property, and obtain a loan modification to address mortgage arrears on the properties. The Trustee subsequently challenged confirmation orders entered by the bankruptcy court and affirmed by the district court, stripping off junior liens against debtors' residences. The Trustee argued that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 created a per se rule barring lien-stripping in so-called "Chapter 20" cases. The Act, however, dd not bar the orders entered by the bankruptcy court, and the stripping off of valueless liens - liens secured by collateral without a single penny of value to support it - was otherwise consistent with the Bankruptcy Code. Accordingly, the court affirmed the judgment. View "Branigan v. Davis" on Justia Law

Appellant, a creditor of the debtor corporation, appealed a decision of the Bankruptcy Appellate Panel (BAP) affirming the bankruptcy court's denial of his motion to determine claims. The bankruptcy court granted appellant's subsequent motion to reopen the case, agreeing with the state court that appellant's claims were precluded and denied his motion to determine claims. The BAP affirmed the bankruptcy court on a different ground, reasoning that the bankruptcy court lacked subject-matter jurisdiction to consider appellant's motion. Because the court must accord the state court's judgment preclusive effect under 28 U.S.C. 1738, the court affirmed the decision of the bankruptcy court. View "Cawley v. Celeste, et al" on Justia Law

SEFCU, a lender, appealed from the district court's reversal of an order of the bankruptcy court and remanding the case to the bankruptcy court for further proceedings. The district court concluded that SEFCU violated the automatic stay provision of the Bankruptcy Code, 11 U.S.C. 362, when, after lawfully repossessing a vehicle belonging to debtor, it failed to deliver the vehicle to him notwithstanding its knowledge of debtor's pending petition under Chapter 13 of the Bankruptcy Code. The court concluded that SEFCU "exercised control" over "property" of debtor's bankruptcy estate in contravention of section 362 when it failed to relinquish the vehicle promptly after it learned that a Chapter 13 petition was filed. Consequently, under section 362(k), SEFCU was liable for debtor's actual damages resulting from the wrongful retention, costs, and attorneys' fees. Accordingly, the court affirmed the judgment. View "Weber v. SEFCU" on Justia Law

This was an appeal of the bankruptcy court's order granting debtor's motion to dismiss an adversary proceeding as untimely. Prior to debtor's bankruptcy filing, plaintiffs filed a complaint against debtor asserting various state law claims including intentional torts. The Bankruptcy Appellate Panel (BAP) concluded that since there was no deadline to file a complaint under 11 U.S.C. 523(a)(3)(B), plaintiffs had the right to proceed with their complaint to try to prove that they held a debt of a kind described in section 523(a)(6). Therefore, the BAP reversed the bankruptcy court's order granting the motion to dismiss. View "Hathorn, et al v. Petty" on Justia Law

This appeal arose from a dispute regarding the existence, validity, and priority of liens of three lenders on a piece of equipment that was owned by the debtor, and the proceeds from the sale in bankruptcy of that equipment. The Bankruptcy Appellate Panel (BAP) concluded that the bankruptcy court correctly held that BOW held a senior security interest in the equipment and the grant of summary judgment to BOW to NBKC's claims for equitable relief based on mutual mistake was proper. Accordingly, the BAP affirmed the judgment of the bankruptcy court. View "Bank of the West v. National Bank of Kansas City" on Justia Law

The bankruptcy trustee of Northlake, a Georgia corporation, filed suit against defendant, a shareholder of Northlake, alleging that a 2006 Transfer was fraudulent. The facts raised in the complaint and its exhibits, taken as true, were sufficient to conclude that Northlake's benefits under the Shareholders Agreement were reasonably equivalent exchange for the 2006 Transfer. Because the complaint contained no allegations indicating why these benefits did not constitute a reasonably equivalent exchange for the 2006 Transfer, the court had no ground to conclude that they did not. Accordingly, the court affirmed the judgment of the district court. View "Crumpton v. Stephen" on Justia Law

Claimant, pro se, appealed from the order of the bankruptcy court denying his motion for reconsideration of a claim. The gist of claimant's appeal was that he wanted the bankruptcy court to enter an order simply requiring that his "restitution" claim be paid from some source. To the extent that claimant was requesting that the bankruptcy court deviate from the Bankruptcy Code and order that his claim be paid from some source not authorized by the Code, the bankruptcy court was without the authority to grant the relief he requested. Because the bankruptcy court could not grant claimant the relief he requested, the Bankruptcy Appellate Panel affirmed the bankruptcy court's order denying his motion for reconsideration. View "Lynd v. Ries" on Justia Law

Fitness Holdings, the debtor in this bankruptcy case, was a home fitness corporation. At issue was whether debtor's pre-bankruptcy transfer of funds to its sole shareholder, in repayment of a purported loan, could be a constructively fraudulent transfer under 11 U.S.C. 548(a)(1)(B). The court held that a court has the authority to determine whether a transaction created a debt if it created a right to payment under state law. Because the district court concluded that it lacked authority to make this determination, the court vacated the decision and remanded for further proceedings. View "In re: Fitness Holdings Int'l" on Justia Law