Justia Bankruptcy Opinion Summaries

Debtors appeal the judgment of the bankruptcy court denying in part their motion under 11 U.S.C. 522(f)(1) to avoid certain liens held by the Estate of Leon Jerome Heimer. The court held that the amount the Heimer estate advanced to pay off the loans secured by the bank's lien against debtors' vehicles was not secured by a judicial lien. Accordingly, the court affirmed the bankruptcy court's judgment. View "Carter, et al. v. Estate of Leon J. Heimer" on Justia Law

This case arose when debtors inherited an IRA worth $170,000. When debtors filed for bankruptcy, they sought to exempt the inherited IRA from the bankruptcy estate pursuant to 11 U.S.C. 522(d)(12). The Chapter 7 trustee objected to the exemption, arguing that inherited IRAs did not qualify for exemption under section 522(d)(12). After the bankruptcy court ruled for the trustee, the district court reversed the bankruptcy court. Because the court held that inherited IRAs were exempt from the bankruptcy estate, upon de novo review, pursuant to section 522(d)(12), the court affirmed the district court's judgment. View "Chilton, et al. v. Moser" on Justia Law

Debtor appealed the order of the bankruptcy court approving the Chapter 7 Trustee's "Amended Final Report, Proposed Distribution, and Motion for Abandonment," over debtors' objection. The court found that the bankruptcy court did not abuse its discretion in interpreting its order to overrule debtors' objection and to approve the Trustee's Amended Final Report. Debtors waived their rights to settlement funds under the plain language of the order. Accordingly, the court affirmed the judgment. View "Boyher v. Radloff" on Justia Law

The bankruptcy trustee in the Chapter 13 bankruptcy estate of the debtor appealed a district court order affirming a bankruptcy court ruling that in calculating projected disposable income, the debtor could deduct the monthly payments that she would not in fact be required to make. The court concluded that the bankruptcy court erred in ruling that the determination of the debtor's projected disposable income could not take into account the debtor's intention to surrender her ATV vehicles. Accordingly, the judgment was reversed and remanded. View "Morris v. Quigley" on Justia Law

The Silar Parties and Counsel appealed the district court's order imposing sanctions on them pursuant to Rule 9011 of the Federal Rules of Bankruptcy Procedure and the district court's inherent powers. At issue was whether the district court's order was immediately appealable. The court held that the district court's sanctions order was not an appealable final order. Because appellants were unable to satisfy the threshold requirement of appellate jurisdiction, the court dismissed the appeal. View "Klestadt & Winters, LLP, et al. v. Leonard, et al.; Cave LLP, et al. v. Cangelosi, et al.; Silar Advisors, LP, et al. v. Cangelosi, et al." on Justia Law

The State of Nevada filed a parens patriae lawsuit against Bank of America in Clark County District Court, alleging that the Bank misled Nevada consumers about the terms and operation of its home mortgage modification and foreclosure processes, in violation of the Nevada Deceptive Trade Practices Act, Nev. Rev. Stat. 598.0903-.0999. Nevada also alleged that the Bank violated an existing consent judgment in a prior case between Nevada and several of the Bank's subsidiaries, entered in Clark County District Court. The Bank removed the action to federal district court, asserting federal subject matter jurisdiction as either a "class action" or "mass action" under the Class Action Fairness Act (CAFA), 28 U.S.C. 1332(d), and as arising under federal law, 28 U.S.C. 1331. Denying Nevada's motion to remand, the federal district court concluded that it had jurisdiction over the action as a CAFA "class action," but not as a "mass action," and that it also had federal question jurisdiction because resolving the state claims would require an interpretation of federal law. The court concluded that because parens patriae actions were not removable under CAFA, and the action did not otherwise satisfy CAFA's "mass action" requirements, the district court lacked jurisdiction under CAFA. The court also exercised its interlocutory appellate jurisdiction under 28 U.S.C. 1453(c) to review the district court's determination that it had federal question jurisdiction because the complaint referenced the federal Home Affordable Mortgage Program and the Fair Debt Collection Practices Act (FDCP), 15 U.S.C. 1692 et seq. The court concluded that the district court lacked federal question jurisdiction. Because there was no basis for federal subject matter jurisdiction, the case was remanded to Nevada state court. View "State of Nevada v. Bank of America Corp., et al." on Justia Law

The debtor filed a voluntary bankruptcy petition and her Chapter 13 plan. A few weeks later, she filed her Michigan state income tax return, showing that she owed $4,900 for the 2008 tax year. She did not make payment, but later filed a proof-of-claim on behalf of the Michigan Department of Treasury, which meant that the tax debt would be paid through her Chapter 13 plan. Treasury objected, arguing that this was a post-petition claim under 11 U.S.C. 1305, which gives only a creditor the option of filing; debtor responded that the claim was permitted under section 501(c). The bankruptcy court overruled the objection; the district court affirmed The Sixth Circuit affirmed. The tax debt is entitled to priority under section 507(a)(8), (i) and (iii), so the post-petition protective claim on behalf of Treasury is treated under section 502(i) as a prepetition claim. A debtor is permitted to file a prepetition claim on behalf of a creditor that fails to timely file.View "In re: Hight" on Justia Law

Statek appealed from an order of the district court affirming the order of the bankruptcy court, disallowing its claim against the bankruptcy estate of Coudert and affirming the denial of Statek's motion to reconsider the bankruptcy court's order. The court held that the bankruptcy court should have applied the choice of law rules of the State of Connecticut, where Statek's pre-bankruptcy action against Coudert had been commenced, and not the choice of law rules of New York State, where the bankruptcy court was located. Accordingly, the court vacated the judgment and remanded. View "In Re: Coudert Brothers LLP" on Justia Law

Debtor appealed from a district court order ruling that her debt from a fraudulent transfer judgment was nondischargeable in bankruptcy under 11 U.S.C. 523(a)(6). At issue was whether a fraudulent transfer of property by a co-conspirator constituted a willful and malicious injury under section 523(a)(6). The court held that the district court properly concluded that the fraudulent transfer was not dischargeable as part of the bankruptcy proceeding because plaintiff satisfied the elements of section 523(a)(6) by showing that debtor willfully and maliciously injured plaintiff's property. View "Maxfield v. Jenning" on Justia Law

A Chapter 7 debtor instituted an adversary proceeding against Sallie Mae, Inc. (11 U.S.C. 523(a)(8)) to determine the dischargeability of a student loan (about $25,000). The bankruptcy court entered a default judgment against Sallie Mae and later denied a motion to set aside the judgment. The Sixth Circuit affirmed, holding that the district court acted within its discretion in rejecting an argument of excusable neglect. It is unclear whether Sallie Mae had no reasonable policy in place to see that mail was delivered to appropriate personnel or simply failed to apprise the court of that policy.Sallie Mae was not entitled to notice of a hearing on the motion for default judgment. Service was proper; it was an internal decision to have Sallie Mae's chief operating officer work at a location other than its listed principal address. View "In re: Gourlay" on Justia Law