Justia Bankruptcy Opinion Summaries

Debtors filed for bankruptcy and the Trust subsequently filed an Adversary Complaint against debtors, claiming that they owed nondischargeable debt to the Trust under 11 U.S.C. 523. The bankruptcy court granted summary judgment to the Trust and the Bankruptcy Appellate Panel (BAP) reversed, holding that the Trust was not entitled to judgment as a matter of law because the Trust could not meet the statutory requirements of section 523. The court held that debtors did not obtain money, property, or services from the Trust, and the Trust did not rely on debtors' misrepresentations when it guaranteed certain obligations. Accordingly, the court affirmed the BAP's ruling, vacated the award of summary judgment to the Trust, and directed judgment to debtors. View "Samuel J. Temperato Trust v. Unterreiner, et al" on Justia Law

In 2000-2001Alioto spent several hundred thousand dollars of his own money on expenses relating to a new business (BRT) involving use of “celebrity talent” to create internet advertising. Alioto became involved in BRT after being approached by the actor, John Ratzenberger, and claims that he believed he would be reimbursed by Ratzenberger for funds expended on behalf of the business, but was never fully repaid. Alioto filed a Chapter 7 bankruptcy petition, listing $341,363 outstanding loans owed to him from BRT as part of his assets. Alioto sought to deduct the unreimbursed funds as losses for tax year 2005 and to carry forward some of these losses as deductions for tax years 2006 and 2007. The IRS denied the deductions and issued notices of deficiency. The Tax Court agreed. The Sixth Circuit affirmed, upholding determinations that any business losses occurred prior to 2005, 26 U.S.C. 165(a) and that the losses did not amount to theft under section 165 (e). View "Alioto v. Comm'r of Internal Revenue" on Justia Law

This appeal arose out of a bankruptcy court proceeding involving the Asbestos Settlement Trust, which was created in bankruptcy court in 1996 to pay asbestos mass tort claims for both bodily injury and property damage against Celotex Corporation and Carey Canada, Inc. Because neither the district court nor the bankruptcy court order was a final judgment or order and because neither order fell within any of the exceptions to this circuit's final judgment rule, the court lacked jurisdiction to review these orders. Accordingly, the court dismissed the appeal. View "Michigan State University, et al v. Abestos Settlement Trust" on Justia Law

Debtor appealed from a bankruptcy court order sustaining the trustee's Objection to Debtor's Claim of Exemptions and granting trustee's Motion to Compel Turnover. The Bankruptcy Appellate Panel affirmed the bankruptcy court's ruling that debtor's exemption for three unrelated children living in his house did not fall within the ambit of Missouri Revised Statute 513.440 and that an amount to be calculated and agreed upon by the parties based on the sustained objection was property of the estate and must be turned over to the trustee. View "Turpen v. Rouse" on Justia Law

Iowa Student Loan appealed the bankruptcy court's judgment determining that the educational loan debts that debtor owed were discharged. Having reviewed de novo the bankruptcy court's conclusion that excepting debtor's student loan debts from discharge would constitute an undue hardship and having reviewed for clear error the findings of fact on which the bankruptcy court based its conclusion, the bankruptcy appellate panel affirmed the judgment. View "Shaffer v. Iowa Student Loan Liquidity" on Justia Law

Al-Mansoob filed a lawsuit concerning a traffic accident in July 2009. When he instituted Chapter 7 bankruptcy proceedings two months later, he did not list his claims against Malloy and Wilburn Archer Trucking, Inc. (Defendants), among his assets, but did list a suit against State Farm, arising out of the same accident. Upon learning of the omission, Defendants sought summary judgment, arguing that Al-Mansoob was judicially estopped from pursuing the claims. Relying on a Sixth Circuit case decided a few days before Al-Mansoob filed his response, the district court granted the motion. The Sixth Circuit reversed, reasoning that judicial estoppel should not apply to the trustee, who had been substituted as real party in interest, and that Al-Mansoob’s failure to disclose the case was inadvertent in any event. View "Al-Mansoob v. Malloy" on Justia Law

Michael filed a Chapter 13 voluntary petition and the Bankruptcy Court confirmed his reorganization plan, providing that Michael would pay $277 monthly to the trustee, for 53 months; the trustee would direct the monies to creditors, including GMAC, which held a mortgage on Michael‘s residence. Michael would make regular mortgage payments to GMAC outside of the Plan. To the extent funds were available, unsecured creditors would be paid pro rata. Michael’s wages were attached and paid directly to the trustee. Michael was unable to make mortgage payments outside of the Plan. The Bankruptcy Court granted GMAC relief from the automatic stay to allow foreclosure. Because Michael did not move to amend the Plan or modify the wage attachment, the trustee continued to receive payments. GMAC refused to accept payments to avoid an estoppel or waiver defense to its mortgage foreclosure. The funds accumulated until Michael converted his case to Chapter 7 and moved for return of the $9,181.62. The trustee objected, arguing that the funds should be distributed to unsecured creditors. The bankruptcy and district courts, noting that the Code does not clearly address the issue, concluded that the funds must be returned to Michael. The Third Circuit affirmed.View "In Re: Michael" on Justia Law

Stone owned STM, which owed Fifth Third about $1 million, secured by liens on business assets and on Stone’s house. Stone’s attorney, Atherton, introduced Stone to Waldman, a potential investor. Stone did not know that Atherton was indebted to Waldman and had given Waldman STM’s proprietary business data. Atherton filed STM’s Chapter 11 bankruptcy petition to preserve assets so that Waldman could acquire them. Atherton allowed the automatic stay to expire. Fifth Third foreclosed, obtaining judgments and a lien on Stone’s house. Waldman paid Fifth Third $900,000 for the bank’s rights. Waldman and Atherton offered to pay off Stone’s debts and employ him in exchange for STM’s assets and told Stone to sign documents without reading them, to meet a filing deadline. The documents actually transferred all STM assets exchange for a job. Ultimately, Waldman owned all STM assets and Stone’s indebtedness, with no obligation to forgive it. Waldman filed garnishment actions; Stone filed a Chapter 11 bankruptcy petition, alleging that Waldman had fraudulently acquired debts and assets. Atherton was disbarred. The bankruptcy court found that Waldman and Atherton had perpetrated “egregious frauds,” invalidated Stone’s obligations, and awarded Stone $1,191,374 in compensatory and $2,000,000 in punitive damages. The district court affirmed. The Sixth Circuit affirmed the discharge, but vacated the award of damages as unauthorized. View "Waldman v. Stone" on Justia Law

Debtor Peter Woodman filed two timely notices of appeal from an adverse decision by the bankruptcy court. One appeal was heard by the bankruptcy appellate panel (BAP), which dismissed the appeal a month later for failure to prosecute. The other was heard by the district court, which decided to consider the matter despite the prior BAP ruling but ruled against Mr. Woodman on the merits. He appealed the district court's judgment. Finding that the district court lacked jurisdiction to hear his appeal, the Tenth Circuit Court of Appeals vacated the district court's judgment. View "Woodman v. Aspen Hills Properties, et al" on Justia Law

In 2008, Auday, age 47, started work at a Wet Seal store. In 2009, Wet Seal fired her. She claimed that the termination was unlawful and discriminatory. Days later, Auday filed for Chapter 7 bankruptcy, listing $510,725 in liabilities and $204,370 in assets, without mention of the age-discrimination claim, required by 11 U.S.C. 521(a)(1)(B)(i). Three months later, her lawyer (Pinchak) asked the trustee how to be hired to pursue the claim. Neither the trustee nor Pinchak informed the bankruptcy court, which discharged Auday in January 2010. In February, the trustee applied for authority to hire, Pinchak to pursue the claim against Wet Seal. The court granted the application, but the trustee did not hire Pinchak nor was the schedule amended. Auday later sued Wet Seal, seeking $500,000 in damages. The district court granted Wet Seal judgment, holding that failure to list a potential claim on her bankruptcy petition barred her from bringing the claim. The Sixth Circuit vacated and remanded. When Auday filed for bankruptcy, her estate became the owner of all of her property, including tort claims that accrued before filing, 11 U.S.C. 541(a)(1) The trustee may bring the claim or abandon it, returning it to Auday, which would require notice to creditors View "Auday v. Wet Seal Retail, Inc." on Justia Law