Justia Bankruptcy Opinion Summaries

This case arose from a bankruptcy filing by Thomas Crow, who owned substantial property and investment accounts in Wyoming. His bankruptcy petition sought an exemption for approximately $2 million contained in a Fidelity account, which he claimed was jointly held with his wife (who did not file for bankruptcy) and therefore was shielded from creditors under Wyoming law. The Trustee and a creditor, Radiance Capital Receivables Nineteen, L.L.C., objected to the claimed exemption. After a hearing, the bankruptcy court upheld the exemption, and a Bankruptcy Appellate Panel (BAP) affirmed. On appeal, Radiance appealed the BAP’s affirmance. Crow argued the Tenth Circuit lacked jurisdiction over this appeal because the BAP’s affirmance of the bankruptcy court’s ruling on the claimed exemption was not “final” within the meaning of 28 U.S.C. 158(d)(1). Radiance also challenged the BAP’s affirmance of the bankruptcy court’s ruling that an adversary proceeding was required to determine the amount of joint debt held by the Crows before any portion of the Fidelity account must be turned over to the Trustee. Finding it had jurisdiction, and deciding on the merits, the Tenth Circuit Court of Appeals affirmed. Applying Wyoming law, Court concluded the Crows jointly held the Fidelity account with a right of survivorship (“tenancy by the entirety” at common law) and was therefore exempt from the bankrupt estate. Furthermore, the tenancy by the entirety was not severed by the Crows’ subsequent conduct. The Court determined Radiance lacked standing to challenge that portion of the BAP’s ruling with regard to the adversary proceeding, and therefore dismissed that aspect of its appeal. View "Radiance Capital v. Crow" on Justia Law

Crocs's Design Patent 789, titled “Footwear,” has a single claim for the “ornamental design for footwear.” Crocs sued Dawgs for infringement, Dawgs sought inter partes reexamination (IPE) under 35 U.S.C. 311. The district court stayed its proceedings. The examiner rejected the claim as anticipated, 35 U.S.C. 102(b). While an appeal to the Patent Trial and Appeal Board was pending, Dawgs filed for Chapter 11 bankruptcy. The bankruptcy court approved the sale of all of its assets to a new entity, Holdings, “not free and clear of any Claims Crocs . . . may hold for patent infringement occurring post-Closing Date by any person ... or any defenses Crocs may have in respect of any litigation claims that are sold.” The bankruptcy court authorized the distribution of the net sale proceeds and dismissed Dawgs’s bankruptcy case. Holdings assigned all rights, including explicitly the claims asserted by Dawgs in the infringement action and the IPE, to Mojave. Dawgs dissolved but continued to exist for limited purposes, including “prosecuting and defending suits" and "claims of any kind.”The Board declined to change the real-party-in-interest from the IPE requestor to Mojave, then reversed the examiner’s rejection of the patent’s claim. The Federal Circuit granted the motion to substitute. The assignments indicate that Mojave is Dawgs's successor-in-interest; as such, Mojave has standing. If the Board precludes substitution on the basis of a transfer in interest because of a late filing, it would defeat the important interest in having the proper party before the Board. View "Mojave Desert Holdings, LLC v. Crocs, Inc." on Justia Law

The Eighth Circuit took this opportunity to clarify its jurisprudence about exceptions to discharge under 11 U.S.C. 523(a)(6) and concluded that a judgment for an intentional tort is not necessary to find judgment debt for a breach of contract nondischargeable. The willfulness requirement is met when the bankruptcy court finds facts showing that the debtor's conduct accompanying the breach of contract amounted to an intentional tort against the creditor. The court perceived that this aligns with the core of the analyses performed by the Ninth and Fifth Circuits.In this case, debtor sought to discharge hundreds of thousands of dollars in judgment debt in bankruptcy after a breach of contract lawsuit indebted him to his former employer. The court affirmed the bankruptcy court's determination that the debt resulted from his infliction of a willful and malicious injury on his former employer and so was non-dischargeable under 11 U.S.C. 523(a)(6). In this case, debtor's conduct amounted to an intentional tort under Missouri law. View "Luebbert v. Global Control Systems, Inc." on Justia Law

Texas and Oklahoma oil and gas producers challenge the bankruptcy court's grant in part and denial in part of Deutsche Bank's motion for partial summary judgment in a lien priority dispute. The competing security interests arose out of proceeds from the sale of oil that debtor purchased from appellants before declaring bankruptcy.The Fifth Circuit affirmed the bankruptcy court's order, holding that the bankruptcy court did not err in holding that the warranty of title did not waive the Producers' rights to assert a lien under either Texas UCC 9.343 or the Oklahoma Lien Act; because the warranties did not waive Producers' claims to proceeds in the hands of debtor, the Bank's reliance is misplaced on cases where producers attempted to collect from purchasers downstream of the first purchasers; and following Fishback Nursery, Inc. v. PNC Bank, N.A., 920 F.3d 932, 939-40 (5th Cir. 2019), Delaware law governs the competing priorities under either Texas choice of law or the federal independent judgment test. The court affirmed the bankruptcy court's conclusion that the Bank's interests in the disputed collateral prime any interests held by the Texas Producers. Furthermore, the bankruptcy court correctly dismissed the Producers' affirmative defenses of estoppel, unclean hands, and waiver. View "Deutsche Bank Trust Co. v. U.S. Energy Development Corp." on Justia Law

Coal companies (last signatory operators) must provide health and retiree benefits through individual employer plans (IEPs), 26 U.S.C. 9711(a), (b); the 1992 Plan provides benefits for retirees who do not receive benefits through a company’s IEP, section. Last signatory operators fund and provide security for the 1992 Plan. If the 1992 Plan assumes responsibility for IEP benefits, the Plan may assert that a prior employer must pay the benefits.A CONSOL entity sold mining operations to Debtors in 2013. Debtors provided healthcare and retiree benefits to about 2,200 Beneficiaries under an IEP. Debtors filed chapter 11 petitions in 2019, having negotiated agreements that compelled Debtors to minimize their liabilities to the Beneficiaries. To address the Coal Act obligations, the Trustee appointed a committee to represent Debtors’ retirees. Debtors and the Retiree Committee ultimately agreed that the parties would cooperate to transition the Beneficiaries from the IEP to the 1992 Plan to assure no coverage gap. The 1992 Plan would receive $12.5 million from the posted security. Debtors would cooperate in the Plan’s efforts to hold CONSOL responsible as the last signatory operator for those Beneficiaries who transferred to Debtors in 2013.The bankruptcy court approved the Settlement over CONSOL’s objection and confirmed Debtors’ Chapter 11 Plan. The order reserved CONSOL’s right to dispute its potential Coal Act liability for the Benefits, stating that its approval of the Settlement "in no way constitutes a finding that CONSOL is the last signatory operator.”The Sixth Circuit Bankruptcy Appellate Panel dismissed an appeal, finding that CONSOL lacks standing. Whether an order directly and adversely affects an appellant’s pecuniary interests is interpreted narrowly; “person aggrieved” standing does not arise from concerns about separate litigation unrelated to an interest protected by the Bankruptcy Code. View "In re Murray Energy Holdings Co." on Justia Law

The Bankruptcy Appellate Panel affirmed the bankruptcy court's entry of summary judgment in favor of Flesner Wentzel, debtor's ex-wife's attorney, and confirmation of debtor's Sixth Amendment Chapter 13 plan.On de novo review, the panel identified no error in the bankruptcy court's conclusion that the attorney fees imposed on debtor by the state court are domestic support obligations under the bankruptcy code and are therefore not dischargeable pursuant to 11 U.S.C. 523(a)(5). In this case, the bankruptcy court engaged in a specific and detailed analysis of the undisputed facts and legal authority. Therefore, confirmation of debtor's Sixth Amended Plan that provided for priority treatment of Flesner's attorney fee claims as domestic support obligations was appropriate. View "Carpenter v. Amos" on Justia Law

In 2008, the Blasingames met with attorneys Fullen and Grusin to discuss their financial situation and signed engagement agreements. The Blasingames filed a Chapter 7 bankruptcy petition with Fullen as the attorney of record. Fullen constructed the bankruptcy schedules, obtaining the Blasingames’ financial information from Grusin. The Blasingames claimed less than $6,000 in assets. The bankruptcy court later found the Blasingames failed to disclose millions of dollars in assets that they controlled through a complex web of family trusts, shell companies, and shifting “clearing accounts.”In 2011, the bankruptcy court granted the Trustee summary judgment, denying the Blasingames’ discharge and disqualified the attorneys from further representation of the Blasingames. Although the Blasingames’ new counsel was able to obtain relief from the summary judgment order, their discharge was again denied in 2015. The Bankruptcy Appellate Panel (BAP) affirmed.A major creditor, CJV1, obtained derivative standing from the bankruptcy court to file a malpractice claim against the filing attorneys on behalf of the estate. CJV, in the bankruptcy court, and the Blasingames, in Tennessee state court, filed malpractice complaints. The bankruptcy court refused to approve the Blasingames’ settlement with the attorneys; the BAP and Sixth Circuit dismissed the Blasingame’s appeal for lack of jurisdiction. CJV asserted that the malpractice claims are property of the bankruptcy estate. The bankruptcy court, the BAP, and the Sixth Circuit ruled in favor of the Blasingames. Under Tennessee law, the legal malpractice claims accrued arose post-petition. View "Church Joint Venture, L.P. v. Blasingame" on Justia Law

Bullock petitioned for Chapter 13 bankruptcy but failed to disclose on his Schedule B list of assets a pending workers’ compensation claim. On his Schedule C list of exemptions, he failed to declare an exemption for the claim. Bullock proposed a 60-month plan of reorganization to pay $148 per month plus possible tax refunds. The bankruptcy court confirmed the plan in October 2014. In 2017, Bullock received a workers’ compensation settlement award for $92,430.84. The trustee moved to compel Bullock to disclose it. Bullock then listed the settlement proceeds as personal property on Schedule B and declared the proceeds exempt on Schedule C under 820 ILCS 305/21; 735 ILCS. 5/12-1001(b). The trustee successfully moved to compel Bullock to file an amended plan under 11 U.S.C. 1329(a) that would provide for the turnover of Bullock’s workers’ compensation award for distributions to general unsecured creditors. Bullock had already spent the award proceeds. The bankruptcy court confirmed Bullock’s amended plan, requiring Bullock to pay a lump-sum of approximately $15,000 before the plan’s expiration. Bullock failed to make the final payment under the plan. An appeal from the dismissal of the bankruptcy case is pending. The Seventh Circuit affirmed the district court’s dismissal of the adversary proceeding on mootness grounds. That issue is mooted because he complied with the very order requiring the reorganization plan’s amendment that he now seeks to challenge and because his underlying bankruptcy case was dismissed. View "Bullock v. Simon" on Justia Law

After debtor filed for Chapter 13 bankruptcy, his bankruptcy plan proposed retention of his GMC Sierra, "cram down" of the loan for the purchase of the Sierra, and surrender of the Toyota Camry as collateral for the purchase of the Camry. The bankruptcy court approved the plan, but the district court reversed.The Fifth Circuit affirmed the district court's judgment. The court explained that the text of 11 U.S.C. 1325(a)(5) does allow debtors to select a different option "with respect to each allowed secured claim." However, allowing a debtor to select a different section 1325(a)(5) option for each claim is different from allowing a debtor to select different options for different collateral securing the same claim. While section 1325(a)(5) allows the former, it does not allow the latter: its use of the conjunction "or" between the options provided in subsection (A), (B), and (C) makes it clear that debtors may choose only one of those three options for each claim. The court stated that a plan violates that requirement when it selects different options for different collateral securing the same claim. Furthermore, Williams v. Tower Loan of Mississippi, 168 F.3d 845 (5th Cir. 1999), which held that debtors must select the same section 1325(a)(5) option for all of the collateral securing a single claim, supports the court's decision. In this case, for the plan to be approvable under section 1325(a)(5), the plan must select the same section 1325(a)(5) option for both items of collateral securing the Camry Loan—the Camry and the Sierra. View "Evolve Federal Credit Union v. Barragan-Flores" on Justia Law

The Eighth Circuit affirmed the bankruptcy court's order denying relief requested by debtor for wrongful foreclosure in equity, holding that the record supports the bankruptcy court's conclusion that debtor could not have been lulled by the Bank into a false sense of security regarding the foreclosure sale. In this case, debtor stipulated that "KeyBank advised Plaintiff that she had to contact KeyBank's foreclosure counsel to obtain a written payoff statement that included legal costs and fees;" the notes from the Bank's telephone records, a stipulated exhibit, indicate that debtor was so advised and nowhere in debtor's briefing does she dispute that; the call notes also establish that debtor called the Bank's foreclosure department as instructed; and while there is no evidence proving debtor's receipt of the Reinstatement Notice, there is evidence that the Bank advised her that the correct amount would be forthcoming in a letter. Therefore, the court found that the bankruptcy court's conclusion that debtor was advised by the Bank about the inaccuracy of the notification statement was not clearly erroneous. View "Courtney v. KeyBank N.A." on Justia Law