Justia Bankruptcy Opinion Summaries

William Satterfield brought suit against Patrick J. Malloy III, the court-appointed trustee of Satterfield's Chapter 7 bankruptcy estate. The district court concluded that the suit was barred because Satterfield's claims were based on actions Malloy took as trustee and Satterfield did not first obtain permission from the bankruptcy court. Satterfield contended that the controlling case law did not apply because Malloy's actions were ultra vires. Upon review, the Tenth Circuit rejected this contention; because Malloy's allegedly wrongful actions were conducted as part of Malloy's duties as trustee. Furthermore, the Court held that Satterfield's action was not authorized by 28 U.S.C. 959 because Malloy was not carrying on the business of the estate, but simply administering its liquidation. View "Satterfield v. Malloy" on Justia Law

The bankruptcy court held that fees owed to a court-appointed guardian ad litem constitute a “domestic support obligation” under Section 101(14A) of the Bankruptcy Code and are, therefore, a nondischargeable debt under Section 523(a)(5) of the Code. The Sixth Circuit Bankruptcy Appellate Panel affirmed. View "In re: Kassicieh" on Justia Law

The nursing care facility faced financial difficulties and ceased to admit new patients; it filed a Chapter 11 bankruptcy petition in 2005. The Bankruptcy Court appointed a Committee of Unsecured Creditors, approved closure, and authorized the Committee to commence adversary proceedings against officers and directors. The Committee did so, alleging breach of fiduciary duties of care and loyalty. The district court granted defendants summary judgment, based on the business judgment rule and the doctrine of in pari delicto. On remand, the court scheduled a jury trial. Before pretrial conference, the parties identified 400 proposed exhibits. The Committee intended to call up to 51 witnesses; defendants intended to call up to 34 witnesses. Descriptions of intended testimony were similar. Frustrated with the failure to “streamline [the] case,” the court limited each side’s witness testimony to 7.5 hours and limited opening and closing statements. Defendants sought to appeal under 28 U.S.C. 1292(b) and a writ of mandamus. The Third Circuit dismissed the appeal because the district court did not certify that the time-limit order “involve[d] a controlling question of law as to which there is substantial ground for difference of opinion” and denied mandamus, holding that direct appeal was an adequate means of challenge. View "In Re: Baldwin" on Justia Law

Chapter 11 debtor Redondo Construction Corporation brought an adversary proceeding against the Puerto Rico Highway and Transportation Authority (Authority) in the United States Bankruptcy Court for the District of Puerto Rico, claiming amounts due for work performed on five construction projects. Following a lengthy trial, the bankruptcy court awarded Redondo a total of nearly $10,250,000 in damages, plus interest at six percent per annum from the "payment due" date for each project. The district court affirmed the judgment in all respects. The Authority appealed the award of interest. The First Circuit Court of Appeals vacated the district court's judgment primarily with regard to the interest and (1) remanded for assessment of postjudgment interest for the period between the entry of judgment and the date of deposit; (2) vacated the award of prejudgment interest and remanded for a determination of whether an award of prejudgment interest was appropriate; and (3) remanded for modification of the judgment awarding Redondo an excess amount for one claim. View "Redondo Constr. Corp. v. P.R. Highway and Transp." on Justia Law

Debtors appealed from the order of the bankruptcy court confirming their amended Chapter 13 plan. At issue was whether the bankruptcy court erred when it confirmed debtors' plan that did not provide for payment of unsecured non-priority tax claims and tax preparation fees ahead of other non-priority unsecured creditors. Because a plan proposed by debtors providing for special treatment of the tax claims would unfairly discriminate against other unsecured non-priority creditors, the Bankruptcy Appellate Panel held that the bankruptcy court's confirmation of the plan was proper. View "Copeland, et al v. Fink" on Justia Law

Debtors filed for bankruptcy protection under Chapter 13. At issue was whether debtors could exclude an annuity debtor received under the Railroad Retirement Act of 1974 (RRA), 45 U.S.C. 451m(a), when calculating their "projected disposable income," which determined the amount they must repay creditors to qualify for Chapter 13 relief. The court concluded that the Bankruptcy Appellate Panel's decision was reviewable. Applying a trust law understanding of the statute pursuant to Hisquierdo v. Hisquierdo, the court held that the RRA's anti-anticipation clause, which provided that the payment of an annuity shall not be "anticipated," referred to premature receipt of payment, and thus did not preclude the inclusion of the RRA annuity payments in Chapter 13 debtors' projected disposable income. View "In re: Robert Scholz & Carolyn Scholz" on Justia Law

This was a direct appeal from the bankruptcy court involving a dispute with contract vendors. The court held that the reservation language in the Reorganization Plan was sufficiently specific and unequivocal under In re United Operating, LLC. The court could not find, however, that the Litigation Trustee had standing to sue each of the appellees here. The Reservation Plan specifically carved out released claims. Accordingly, the Litigation Trustee lacked standing to bring, and the bankruptcy court was without jurisdiction to hear, any such claims. Therefore, the court vacated the bankruptcy court's order and remanded for further proceedings. View "Compton v. Aker Pusnes AS, et al" on Justia Law

In consolidated appeals, defendants appealed the bankruptcy court's judgments against them under 11 U.S.C. 547(b) for payments they received from debtors in the 90 days prior to the bankruptcy petition date. The Bankruptcy Appellate Panel (BAP) affirmed the bankruptcy court's decision with regard to its determination that the payments defendants received from debtors were voidable under section 547(b), but the BAP reversed on the bankruptcy court's calculation of defendants new value credits. View "Stoebner v. San Diego Gas & Electric Co." on Justia Law

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