Justia Bankruptcy Opinion Summaries

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The Eleventh Circuit affirmed the bankruptcy court's denial of debtor's second motion for sanctions against Nationstar. Debtor alleged that Nationstar's conduct of sending a monthly statement to Roth to collect discharged mortgage debt was in violation of the bankruptcy code. The court held that the Informational Statement sent by Nationstar was not an improper attempt at debt collection in violation of 11 U.S.C. 524(a)(2), because there were several bases to conclude that the objective effect of the statement was not to pressure debtor to repay a discharged debt. Therefore, sanctions were not appropriate under 11 U.S.C. 105. The court noted that, even if there was a section 524 violation, sanctions under section 105 were unavailable under the Supreme Court's recent decision in Taggart v. Lorenzen, 139 S. Ct. 1795, 1801 (2019), because there was more than a fair ground of doubt as to whether the discharge order barred Nationstar's conduct. Finally, the court held that the bankruptcy court did not err by failing to hold an evidentiary hearing. View "Roth v. Nationstar Mortgage, LLC" on Justia Law

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After Double Eagle filed for Chapter 11 bankruptcy, it filed suit against MarkWest and Ohio Gathering on a contract claim in Louisiana federal court. Double Eagle then assigned its claim against defendants to one of its creditors. The Fifth Circuit vacated the district court's judgment and held that the district court erred by failing to apply the time-of-filing rule to 28 U.S.C. 1334(b) in this lawsuit that was related to a bankruptcy when filed, but then the bankruptcy connection was later dissolved. The court explained that this longstanding rule promoted efficiency and thus it would be wasteful if post-filing changes in the facts determining jurisdiction required dismissal of a case to which the parties and court had already devoted resources. In this case, the related-to-bankruptcy jurisdiction that existed at the outset of this case never went away. The court also held that failing to focus on the time of filing also infected the district court’s personal jurisdiction analysis, and the section 1334(b) jurisdiction that existed when this case was filed thus means there is both subject matter and personal jurisdiction. The court rejected defendants' remaining claims and remanded for further proceedings. View "Double Eagle Energy Services, LLC v. MarkWest Utica EMG, LLC" on Justia Law

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The United States Bankruptcy Court for the District of North Dakota certified a question of law to the North Dakota Supreme Court, asking whether a married debtor was entitled to an exemption up to $100,000 for his undivided one-half interest in homestead property jointly owned with a nondebtor. The Supreme Court answered the certified question “yes.” View "In re Anderson" on Justia Law

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The Bankruptcy Appellate Panel reversed the bankruptcy court's grant of the Banks' motion for summary judgment challenging the validity of the other parties' liens and asserting the priority of its own lien in debtor's 2017 crops. In this case, it was difficult to determine from the record precisely what the bankruptcy court considered in reaching its conclusion that no genuine issues of material fact existed which would preclude it from granting the Bank's motion for summary judgment, or the analysis the bankruptcy court undertook. Accordingly, the panel remanded for further findings pursuant to Federal Rule of Civil Procedure 56(a)'s directive to specify the reasons for its ruling, or in the alternative, to reconsider the issue on the existence of the Solberg Farms partnership. View "Zaitz Trust, LLC v. Bremer Bank, NA" on Justia Law

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Sterling owed Southlake Health Club outstanding fees ($250). In 2001, Southlake's counsel, Austgen, instituted a state court collection action. A federal bankruptcy court discharged Sterling’s debt to Southlake in 2010. Although Sterling notified Southlake of the discharge, no one notified Austgen or the Indiana court. Sterling failed to appear in the state-court collection proceedings; that court issued a warrant for her arrest. A year later, Sterling was arrested and jailed for two days. Southlake and Austgen dropped pursuit of the debt. Sterling instituted adversary proceedings in bankruptcy court, seeking to have Southlake and Austgen held in contempt for continuing to collect a debt that had been discharged, 11 U.S.C. 524. The bankruptcy court and the district court ruled against Sterling. The Seventh Circuit affirmed in part; Austgen’s lack of knowledge of the discharge prevents it from being held in contempt. Southlake, however, must be held liable for the actions taken by counsel on its behalf. Southlake, a sophisticated party, had knowledge of the discharge yet turned a blind eye to the progress of Sterling’s case. Holding otherwise “would create a loophole in the law through which creditors could avoid liability simply by remaining ignorant of their agents’ actions or by failing to notify their agents of debtors’ bankruptcy proceedings.” View "In re: Sterling" on Justia Law

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After entering a settlement that released certain tort claims, plaintiff filed for Chapter 7 bankruptcy. When her debts were discharged and the bankruptcy proceedings closed, she filed suit seeking to rescind her settlement agreement as fraudulently induced and to pursue a tort action. The district court entered judgment in favor of defendants. The Fourth Circuit held that the district court's standing determination conflates Article III requirements with the distinct real-party-in-interest analysis. Rather, plaintiff has both Article III standing and the legal entitlement to pursue tort claims on her own behalf. In regard to judicial estoppel, the court also held that the district court relied on an improper presumption of bad faith, and therefore reached its conclusion without fully engaging in the necessary inquiry. Therefore, the court remanded to the district court for it to evaluate the appropriateness of judicial estoppel in light of all facts and circumstances without recourse to a presumption of bad faith. View "Martineau v. Wier" on Justia Law

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Two federal district courts certified questions of law to the Alaska Supreme Court involving the state’s “mineral dump lien” statute. In 1910, the United States Congress passed Alaska’s first mineral dump lien statute, granting laborers a lien against a “dump or mass” of hard-rock minerals for their work creating the dump. The mineral dump lien statute remained substantively unchanged since, and rarely have issues involving the statute arisen. The Supreme Court accepted certified questions from both the United States District Court and the United States Bankruptcy Court regarding the scope of the mineral dump lien statute as applied to natural gas development. Cook Inlet Energy, LLC operated oil and gas wells in southcentral Alaska. In November 2014, Cook Inlet contracted with All American Oilfield, LLC to “drill, complete, engineer and/or explore three wells” on Cook Inlet’s oil and gas leaseholds. All American began work soon thereafter, including drilling rig operations, digging holes, casing, and completing the gas wells. When All American concluded its work the following summer, Cook Inlet was unable to pay. In June 2015 All American recorded liens against Cook Inlet, including a mine lien under AS 34.35.125 and a mineral dump lien under AS 34.35.140. In October, after its creditors filed an involuntary petition for relief, Cook Inlet consented to Chapter 11 bankruptcy proceedings. In January 2016 All American filed an adversary proceeding in the bankruptcy court “to determine the validity and priority of its secured claims.” The bankruptcy court found that All American has a valid mine lien against the three wells. But the court denied All American’s asserted mineral dump lien against unextracted gas remaining in natural reservoirs. The court also concluded that All American’s mine lien was subordinate to Cook Inlet’s secured creditors’ prior liens, which would have consumed all of Cook Inlet’s assets and leave All American with nothing. All American appealed to the federal district court, which, in turn, certified questions regarding the Alaska mineral dump lien statute. The Alaska Supreme Court concluded the statutory definition of “dump or mass” reflected that a mineral dump lien could extend only to gas extracted from its natural reservoir, that the lien may cover produced gas contained in a pipeline if certain conditions are met, and that to obtain a dump lien laborers must demonstrate that their work aided, broadly, in gas production. View "In re: Cook Inlet Energy, LLC, Gebhardt, v. Inman" on Justia Law

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The Bankruptcy Appellate Panel affirmed the district court's dismissal of the Committee's appeal of the bankruptcy court's confirmation of debtors' voluntary reorganization plan. The panel held that the bankruptcy court did not err in determining that debtors' plan satisfied the equal-treatment rule and was proposed in good faith. In this case, the right to participate in the private placement was not "treatment for" a claim under 11 U.S.C. 1123(a)(4); the right to participate in the private placement was consideration for valuable new commitments; and thus the plan did not violate the equal-treatment rule. The panel also held that, despite any reservation the panel might have regarding the good faith question, it has not been left with a definite and firm conviction that a mistake has been committed. View "Ad Hoc Committee of Non-Consenting Creditors v. Peabody Energy Corp." on Justia Law

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A 401k plan that a debtor, like the one in this case, creates and controls with the avowed purpose of protecting his assets from creditors is not a plan principally designed and used for retirement purposes, thereby rendering the funds in that plan fully exempt from levy. The Court of Appeal held that debtor's transferred funds to that 401(k) plan did not negate the partially exempt status those funds previously held while in the individual retirement accounts. Accordingly, the court reversed the trial court's ruling declaring that the funds were fully exempt from levy and remanded for the trial court to assess the extent of the partial exemption. View "O'Brien v. AMBS Diagnostics, LLC" on Justia Law

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The Bankruptcy Appellate Panel affirmed the bankruptcy court's entry of summary judgment in favor of the bankruptcy trustee. The Bank challenged whether the terms of the judgment were fulfilled in transferring debtor's ex-wife's interest to debtor. The panel held that there was no genuine issue of fact regarding debtor's divorce which resulted in the trustee's ability to rely upon the judgment as a purchaser for value. Even if the bank was successful on this point, it would not serve to repair the defect in its mortgage. In this case, the state court determined that debtor would retain the real estate that was already titled in his name, and the only interest the ex-wife held was her marital interest which vested upon dissolution of the marriage. View "Kunkel v. CUSB Bank" on Justia Law