Justia Bankruptcy Opinion Summaries

Debtors were eligible to participate in their employers' ERISA 401(k) qualified retirement plans, but were not making contributions to those plans when they filed Chapter 13 petitions, but were repaying 401(k) loans to the plans. Proposed Chapter 13 plans called for a five-year commitment period under 11 U.S.C. 1325 and for repayment of 401(k) loans before completion of the commitment periods. Rather than calling for an increase in plan payments to the Chapter 13 trustee for the benefit of unsecured creditors once that repayment was complete, the plans proposed that debtors begin making contributions to their 401(k) retirement plans. The trustee filed objections. The bankruptcy court held that because 11 U.S.C. 541(b)(7) excludes contributions to a 401(k) plan from property of the estate and disposable income, debtors were allowed to exclude proposed 401(k) contributions from disposable income. The Bankruptcy Appellate Panel ruled in favor of the Trustee. The Sixth Circuit affirmed. Post-petition income, available to debtors after 401(k) loans are fully repaid, is "projected disposable income" that must be turned over to the trustee for distribution to unsecured creditors under 11 U.S.C. 1325(b)(1)(B) and may not be used to fund voluntary 401(k) plans. View "Seafort v. Burden" on Justia Law

Debtor appealed the district court's decision affirming the bankruptcy court's determination that an Illinois judgment debt owed to the Bank was not dischargeable, pursuant to 11 U.S.C. 523(a)(4). The court held that the bankruptcy court's order must be affirmed under section 523(a)(4) as a debt arising from a defalcation while debtor was acting in a fiduciary capacity. The court also held that the district court correctly determined that the propriety of the Bank's actions was not a basis for finding that the Illinois judgment debt should be discharged. Instead, the court agreed with the district court that the issue was not properly before the court, but rather should be brought by debtor in an action in Illinois to consider the malfeasance of the trustee. Accordingly, the court affirmed the judgment of the bankruptcy court. View "Bullock v. BankChampaign NA" on Justia Law

In this bankruptcy case, SunTrust filed a proof of claim for repayment of a loan that it claimed was secured by a deed of trust on two contiguous parcels of debtor's real property in Orange County, North Carolina (Tract I and Tract II). The Trustee commenced this action under 11 U.S.C. 544(a)(3) to avoid the lien on Tract I because the deed of trust, while recorded on the official recordation index of Orange County as to Tract II, was not so recorded as to Tract I. SunTrust contended that even though the recordation was deficient, the Trustee was imputed with constructive knowledge of the lien on Tract I. The bankruptcy court rejected SunTrust's arguments and ordered its lien on Tract I avoided under section 544(a)(3), and the district court affirmed. Because the Trustee's status vis-a-vis the title of Tract I was, under section 544(a)(3), that of a bona fide purchaser under North Carolina law, the Trustee was only imputed with the notice that would be imputed to a bona fide purchaser of Tract I under North Carolina law. And North Carolina law allowed a purchaser to rely exclusively on the official recordation index of the county to discover liens, regardless of what other independent knowledge that purchaser might have. Therefore, the court affirmed the judgment. View "McCormick v. Northen" on Justia Law

Debtor, a former company officer, allegedly attempted to obtain one million dollars by falsely claiming an ownership interest in the company and threatening public exposure of alleged illegal activity. After the debtor lost an arbitration proceeding, he then filed for bankruptcy. At issue was whether the company's attorneys' fees for the arbitration represented a nondischargeable debt under 11 U.S.C. 523(a)(4) or (a)(6). The court reversed and remanded the summary judgment rendered against creditors because the debt may have arisen for willful and malicious injury and may therefore be excepted from discharge by section 523(a)(6). View "Rapid Settlements Ltd, et al. v. Shcolnik" on Justia Law

A trustee in Chapter 11 bankruptcy proceedings took possession of Appellant SK Foods, LP's documents, which it had deposited at the its office. Appellants claimed the trustee acted illegally; that the documents should be returned; and that the trustee and his counsel should be removed. The bankruptcy court denied such relief, and the district court affirmed. This appeal raised the issue whether such orders of the bankruptcy court, affirmed by the district court, are final appealable orders under 28 U.S.C. 158(d)(1). Upon review, the Ninth Circuit held that they are not. Accordingly, the Court dismissed the case for lack of jurisdiction. View "In re: SS Farms, LLC, et al v. Bradley Sharp" on Justia Law

Plaintiffs appealed a district court order dismissing several of their claims in a suit regarding conduct that occurred during bankruptcy proceedings. Plaintiffs were former officers of EBW Laser, a company that entered bankruptcy in 2005. After the case was converted to Chapter 7, the court appointed attorney Charles Ivey as trustee and Ivey subsequently retained his firm (IMGT) to serve as his counsel and to prosecute an adversary proceeding he had filed against plaintiffs. On appeal, plaintiffs argued that the district court erred in dismissing their claims against the IMGT defendants under the Barton doctrine. The Supreme Court established in Barton that before another court could obtain subject-matter jurisdiction over a suit filed against a receiver for acts committed in his official capacity, plaintiff must obtain leave of the court that appointed the receiver. The court held that the district court properly dismissed plaintiffs' claims and properly applied the Barton doctrine. Therefore, the court affirmed the district court's order. View "McDaniel, Jr. v. Blust" on Justia Law

Named Claimants filed "class proofs of claims" in these consolidated bankruptcy cases in which Circuit City and related entities are the debtors. Named Claimants alleged that they, together with unnamed claimants, were owed almost $150 million in unpaid overtime wages. The court affirmed the decisions of the bankruptcy court with a different procedural approach for allowing claimants to file class proofs of claim and to present Rule 9014 motions. With respect to the bankruptcy court's ruling that in the circumstances of this case, the bankruptcy process would provide a process superior to the class action process for resolving the claims of former employees, the court concluded that the court's ruling fell within its discretion. With respect to these Named Claimants' challenge to notice, the court concluded that the notice to them was not constitutionally deficient - a conclusion with which they agreed - and that, with respect to unnamed claimants, the Named Claimants lacked standing to challenge the notice. View "Gentry v. Circuit City Stores, Inc." on Justia Law

After Deutsche Bank National Trust Company (Deutsche Bank) brought a foreclosure action against the home owned by Appellants Mark and Jamileh Miller and obtained an Order Authorizing Sale (OAS) from a Colorado court, the Millers filed a Chapter 13 bankruptcy petition. Upon the filing of their petition, an automatic stay entered, halting the foreclosure proceedings. Deutsche Bank obtained an order from the bankruptcy court relieving it from the stay to permit the foreclosure to continue. The Tenth Circuit Bankruptcy Appellate Panel (BAP) affirmed the bankruptcy court’s order granting Deutsche Bank relief from the automatic stay. The Millers appealed the BAP’s order affirming relief from stay. The issue before the Tenth Circuit was whether Deutsche Bank established that it was a "party in interest" entitled to seek and obtain relief from the stay. Because the Court concluded that Deutsche Bank did not meet its burden of proof on this issue, the Court reversed the BAP’s order and remanded for further proceedings. View "Miller, et al v. Deutshce Bank National Trust" on Justia Law

Appellant appealed the district court's order of the bankruptcy court denying his motion to determine his claim against the chapter 11 estate of appellees. The court held that because the bankruptcy court lacked subject matter jurisdiction to hear appellant's motion to determine his claims under the Rooker-Feldman doctrine, the court affirmed the bankruptcy court's order denying appellant's motion. View "Cawley v. Celeste, et al." on Justia Law

In a bankruptcy adversary proceeding, Capco brought claims of fraud and various business torts against Ryder, Tana, TRT, and Tristone. The claims arose out of a transaction in which Capco purchased from Tana certain oil and gas reserves located in the Gulf of Mexico (the Properties). The bankruptcy court granted summary judgment in favor of Ryder, Tana, TRT, and Tristone and dismissed the claims. The court held that Capco failed to present evidence to demonstrate a genuine issue of material fact about whether Ryder was contracted to provide an independent reevaluation of the Properties and advice at the meeting regarding Capco's decision to close on the Properties. The court also held that because the purchase and sale agreement contained a clear intent to disclaim reliance, the lower courts correctly held that Capco was unable to claim fraudulent inducement based on the prior representations of Tana, TRT, and Tristone. Accordingly, the judgment was affirmed. View "Amco Energy, Inc., et al. v. Tana Exploration Co., et al." on Justia Law