Justia Bankruptcy Opinion Summaries

Cohen entered into a work-for-hire agreement with SLP, a special purpose entity formed by TWC to make the film, Silver Linings Playbook. Cohen was to receive $250,000 in fixed initial compensation and contingent future compensation of roughly 5% of the movie’s net profits. The movie was released to critical acclaim in 2012. TWC purports to own all the rights pertaining to the movie, including the Cohen Agreement.In 2017, following a flood of sexual misconduct allegations against its co-founder, Harvey Weinstein, TWC filed for Chapter 11 bankruptcy. The bankruptcy court approved TWC’s Asset Purchase Agreement with Spyglass, 11 U.S.C. 363. Spyglass sought a declaratory judgment that the Cohen Agreement and had been sold to Spyglass. If the Cohen Agreement were an executory contract, assumed and assigned under section 365, Spyglass would be responsible for approximately $400,000 in previously unpaid contingent compensation. If Spyglass instead purchased the Cohen Agreement as a non-executory contract, Spyglass would be responsible only for obligations on a go-forward basis. Other writers, producers, and actors with similar works-made-for-hire contracts made similar arguments.The bankruptcy court granted Spyglass summary judgment. The district court and Third Circuit affirmed. Cohen’s remaining obligations under the Agreement are not material and the parties did not clearly avoid New York’s substantial performance rule; the Cohen Agreement is not an executory contract. View "The Weinstein Co. Holdings, LLC v. Spyglass Media Group, LLC." on Justia Law

In March 2018, following sexual misconduct allegations against TWC’s co-founder Harvey Weinstein, TWC sought bankruptcy protection. TWC and Spyglass signed the Asset Purchase Agreement (APA). The sale closed in July 2018. Spyglass paid $287 million. Spyglass agreed to assume all liabilities associated with the Purchased Assets, including some “Contracts.” The APA identifies “Assumed Contracts,” as those Contracts that Spyglass would designate in writing, by November 2018.In May 2018, TWC filed an Assumed Contracts Schedule, with a disclaimer that the inclusion of a contract did not constitute an admission that such contract is executory or unexpired. A June 2018 Contract Notice, listed eight Investment Agreements as “non-executory contracts that are being removed from the Assumed Contracts Schedule.” The Investment Agreements, between TWC and Investors, had provided funding for TWC films in exchange for shares of future profits. Spyglass’s November 2018 Contract Notice listed nine Investment Agreements as “Excluded Contracts,”In January 2019, the Investors requested payments from Spyglass--their asserted share of a film’s profits. The Bankruptcy Court rejected the Investors’ claim that Spyglass bought all the Investment Agreements under the APA. The district court and Third Circuit affirmed. The Investment Agreements are not “Purchased Assets” and the associated obligations are not “Assumed Liabilities.” The Investment Agreements are not executory contracts under the Bankruptcy Code. View "The Weinstein Co. Holdings, LLC v. Y Movie, LLC" on Justia Law

Excellent Home filed a claim against appellee in bankruptcy, arguing that its claim is excepted from discharge, as well as alleging three state law theories: fraudulent misrepresentation, negligent misrepresentation, and civil conspiracy.The Eighth Circuit affirmed the district court's decision upholding the bankruptcy court's finding in favor of appellee, and concluded that Excellent Home, in submitting the full-credit bid, did not justifiably rely on appellee's misrepresentations, so its claim is not excepted from discharge. The court explained that Missouri fraudulent misrepresentation, negligent misrepresentation, and derivative civil conspiracy each require a plaintiff justifiably rely on defendant's actions. In this case, based on the findings of fact, Excellent Home's reliance was unjustifiable and its state law claims were thus properly dismissed. View "Excellent Home Properties, Inc. v. Kinard" on Justia Law

The First Circuit held that the district court correctly denied the Commonwealth of Puerto Rico's motions for reconsideration at issue in this appeal insofar as they might be construed as motions to apply an automatic stay under the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) to either dismiss a 42 U.S.C. 1983 action or a settlement agreement that had not yet been enforced, holding that the circuit court did not err.This case stemmed from a settlement following a section 1983 suit against a Commonwealth officer in the officer's individual capacity. After the settlement agreement was filed under seal and the district court had dismissed the case with prejudice, and before the first installment of the agreed settlement payments was due, the Financial Oversight and Management Board filed a petition for bankruptcy relief on behalf of the Commonwealth under Title III of PROMESA. Appellant filed a motion in opposition, arguing that the automatic stay was not applicable in his case. The district court granted the opposition. The Commonwealth filed a motions for reconsideration, which the district court denied. The First Circuit affirmed, holding that the district court did not err in denying the Commonwealth's motions for reconsideration insofar as they may be construed as motions to apply PROMESA's automatic stay to either the dismiss section 1983 action or the settlement agreement. View "Diaz-Morales v. Rubio-Paredes" on Justia Law

The First Circuit vacated the order of the district court requiring immediate payment of a $10,000 settlement sum by Defendant, the Secretary of Corrections to Puerto Rico, and remanded with instructions to stay Plaintiff's effort to recover on the settlement, holding that the automatic stay provision of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) applied.Plaintiff brought this suit under 42 U.S.C. 1983 against Defendant and others, alleging that the defendants had been deliberately indifferent to his medical needs while he was an inmate at the Baymon Correctional Facility. The parties eventually settled for $50,000. At issue was who was responsible to pay the remaining $10,000 of that sum. The district court ordered Defendant, and not the Commonwealth, to pay the balance of the settlement amount. Defendant appealed, arguing that Plaintiff's effort to collect the $10,000 should have been stayed under the automatic stay provision of PROMESA. The First Circuit agreed, holding that, given the manner in which Plaintiff styled his effort to recover, the automatic stay properly applied. View "Colon-Torres v. Negron-Fernandez" on Justia Law

After the Circuit City Trustee sought a ruling in 2019 on his liability for quarterly fees assessed under a 2017 Amendment to the bankruptcy fees provisions of the United States Code (28 U.S.C. 1930(a)(6)(B)), the Bankruptcy Court for the Eastern District of Virginia ruled that the fees aspect of the 2017 Amendment is unconstitutional. The U.S. Trustee appealed and the Circuit City Trustee cross-appealed, jointly certifying these appeals to the Fourth Circuit, which the court granted and consolidated.The Fourth Circuit ruled in favor of the U.S. Trustee in both appeals, reversing the Bankruptcy Opinion's uniformity decision challenged by the U.S. Trustee, and affirming the Opinion's retroactivity decision challenged by the Circuit City Trustee. The court concluded that the 2017 Amendment does not contravene the uniformity mandate of either the Uniformity Clause or the Bankruptcy Clause. The court also concluded that Congress clearly intended for the 2017 Amendment to apply to all disbursements made after its effective date, and it intended for the Amendment to be prospective. Accordingly, the court remanded to the bankruptcy court for further proceedings. View "Siegel v. Fitzgerald" on Justia Law

The First Circuit affirmed the decision of the Bankruptcy Appellate Panel for the First Circuit (BAP) affirming the judgment of the bankruptcy court finding that Debtor defaulted on his obligation and refusing to grant him a discharge, holding that Debtor's assignments of error were unavailing.Debtor filed a petition for Chapter 13 bankruptcy in the District of Massachusetts. The case was subsequently converted to a Chapter 7 case. After Debtor failed to file any of the documents mandated by court orders the court entered a further order requiring Debtor to file the overdue documents by a certain date. Debtor did not heed the order. After a show cause hearing, the bankruptcy court denied Debtor a discharge and dismissed his petition for failing to ignore the court's orders. The BAP affirmed. The First Circuit affirmed, holding that Debtor received the constitutional protections to which he was entitled and that, due to Debtor's conduct, the bankruptcy court's denial of a discharge was within its discretion. View "Francis v. Desmond" on Justia Law

The United States Court of Appeals for the Eleventh Circuit certified to three questions of law to the Georgia Supreme Court relating to a lawsuit brought in federal district court by Fife Whiteside, the trustee of the bankruptcy estate of Bonnie Winslett. Whiteside sued GEICO to recover the value of Winslett’s failure-to-settle tort claim against GEICO so that the bankruptcy estate could pay creditor Terry Guthrie, who was injured in an accident caused by Winslett. The certified questions certified asked the Supreme Court to analyze how Georgia law applied to an unusual set of circumstances that implicated both Winslett’s duty to give GEICO notice of suit and GEICO’s duty to settle the claim brought against Winslett. The Supreme Court was unable to give unqualified “yes” or “no” answers to two of the certified questions as they were posed; rather, the Court answered the questions only in the context of the circumstances of this particular case. "Winslett remains liable to Guthrie, even if her bankruptcy trustee succeeds on the failure-to-settle claim against GEICO; therefore, if the bankruptcy estate does not recover enough from GEICO to satisfy Guthrie’s judgment, the estate would not be fully compensated for Winslett’s damages, and GEICO would escape responsibility for breaching its settlement duty to Winslett. Such an outcome would deny Winslett the full measure of compensatory damages allowed under Georgia law." View "GEICO Indemnity Co. v. Whiteside" on Justia Law

Debtors' claims relate to matters stemming from the 2018 foreclosure sale of their home. Mila Homes, represented by its counsel, purchased the property at the foreclosure sale.The Bankruptcy Appellate Panel affirmed the bankruptcy court's orders denying debtors' motions for sanctions against Mila's counsel; to alter or amend the order denying the request for sanctions and for additional findings of fact and conclusions of law; and seeking to disqualify the bankruptcy judge. The panel concluded that the bankruptcy court did not err by denying debtors' sanctions request based on counsel's statements on behalf of Mila Homes in the Mila Stay Motion. In this case, the bankruptcy court provided debtors with a hearing, listened patiently to their arguments, read methodically through the Bankruptcy Sanctions Motion, and addressed in detail why nothing in the Mila Stay Motion violated Rule 9011. Finally, the panel denied debtors' requests for judicial notice and awarded Mila's counsel $3,000 in sanctions from debtors. The panel concluded that the bankruptcy court did not err in denying debtors' fifth motion for disqualification of recusal and that debtors' appeal is frivolous. View "Scott v. Anderson" on Justia Law

This appeal arose from a final order entered by the bankruptcy court denying debtor's motion for "Revised and Corrected Motion for Relief From Judgment or Order and/or Reopen the Case, Motion for Evidentiary Hearing/Appointment of Counsel." The Bankruptcy Appellate Panel dismissed the appeal as untimely and concluded that debtor's notice of appeal was not timely filed pursuant to Federal Rule of Bankruptcy Procedure 8002(a)(a). In this case, debtor recognized that his appeal was beyond the 14-day limit and debtor did not seek an extension of time to file his appeal from the bankruptcy court pursuant to Rule 8002(d). The panel noted that, to the extent debtor is raising an issue involving service of the order, and any related time period for appeal, it is properly addressed in the first instance by the bankruptcy court not in the Notice of Appeal. View "Reichel v. Snyder" on Justia Law