Justia Bankruptcy Opinion Summaries

Plaintiff filed suit against defendants, asserting a claim to quiet title and separately seeking a declaratory judgment that the statute of limitations had expired on defendants' power to foreclose on certain real property. Defendants counterclaimed for judicial foreclosure. The district court denied plaintiff's motion for summary judgment, granted summary judgment for defendants, and entered a final judgment and order of foreclosure.The Fifth Circuit affirmed, holding that 11 U.S.C. 362(c)(3)(A) terminates the automatic stay only with respect to the debtor; it does not terminate the stay with respect to the property of the bankruptcy estate. The court also held that Texas's statute of limitations does not bar defendants' claim for judicial foreclosure. Under the interpretation of section 362(c)(3)(A) that the court adopted, plaintiff's successive filings did not terminate the action with respect to the property of the bankruptcy estate. Therefore, the court held that the stay with respect to the property at issue in this case lasted the duration of the bankruptcy proceedings (269 days), and the statute of limitations was tolled for at least the same. Accordingly, defendants' counterclaim for judicial foreclosure was filed within the 269-day tolling period. View "Rose v. Select Portfolio Servicing, Inc." on Justia Law

Appellant attempted to appeal two bankruptcy court orders to the district court by filing a single notice of appeal. The district court struck the notice of appeal as violating the local bankruptcy court rule.The Eighth Circuit held that, although Local Bankruptcy Rule 8001(A) was valid, the district court erred by treating the rule as a jurisdictional requirement without providing appellant an opportunity to cure the defect by filing separate notices of appeal for each order and paying the accompanying fees. Accordingly, the court reversed and remanded for further proceedings. View "Briggs v. Rendlen" on Justia Law

Around 2009, Saccameno defaulted on her mortgage. U.S. Bank began foreclosure proceedings. She began a Chapter 13 bankruptcy plan under which she was to cure her default over 42 months while maintaining her monthly mortgage payments, 11 U.S.C. 1322(b)(5). In 2011, Ocwen acquired her previous servicer. Ocwen, inexplicably, informed her that she owed $16,000 immediately. Saccameno continued making payments based on her plan. Her statements continued to fluctuate. In 2013, the bankruptcy court issued a notice that Saccameno had completed her payments. Ocwen never responded; the court entered a discharge order. Within days an Ocwen employee mistakenly treated the discharge as a dismissal and reactivated the foreclosure. For about twp years, Saccameno and her attorney faxed her documents many times and spoke to many Ocwen employees. The foreclosure protocol remained open. Ocewen eventually began rejecting her payments. Saccameno sued, citing breach of contract; the Fair Debt Collection Practices Act; the Real Estate Settlement Procedures Act; and the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFDBPA), citing consent decrees that Ocwen previously had entered with regulatory bodies, concerning inadequate recordkeeping, misapplication of payments, and poor customer service. The jury awarded $500,000 for the breach of contract, FDCPA, and RESPA claims, plus, under ICFDBPA, $12,000 in economic, $70,000 in non-economic, and $3,000,000 in punitive damages. The Seventh Circuit remanded. While the jury was within its rights to punish Ocwen, the amount of the award is excessive. View "Saccameno v. U.S. Bank National Association" on Justia Law

The Fifth Circuit treated the appellees' and the intervenors' joint petition for rehearing en banc as a petition for panel rehearing, granted the petition, withdrew its prior opinion, and substituted the following opinion.The court held that a creditor is not impaired by a reorganization plan simply because it incorporates the Bankruptcy Code's disallowance provisions. Because the bankruptcy court found otherwise and never reached the issue of whether the Bankruptcy Code disallows the creditors' claims for the Make-Whole Amount and the creditors' request for post-petition interest at the contractual default rates specified in the Note Agreement and the Revolving Credit Facility, the court remanded for the bankruptcy court to consider these issues. View "Ultra Petroleum Corp. v. Ad Hoc Committee of Unsecured Creditors of Ultra Resources, Inc." on Justia Law

A claim is subject to a bona fide dispute as to amount within the meaning of 11 U.S.C. 303(b)(1) even if a portion of that claim is undisputed. The Ninth Circuit affirmed the bankruptcy and district court's decisions holding that the MDOR lacked standing to file the involuntary Chapter 7 bankruptcy petition against debtor. Section 303(b)(1) states that petitioning creditor's claims must not be contingent or the subject of a bona fide dispute as to liability or amount. In this case, the MDOR's claim for the 2004 tax year was subject to a bona fide dispute as to amount notwithstanding debtor's concession that the deduction challenged in Audit Issue 4 was improper. However, because all other petitioning creditors have withdrawn from the proceedings, the panel remanded to the bankruptcy court to determine whether this case should be dismissed under section 303(j)(3). View "State of Montana Department of Revenue v. Blixseth" on Justia Law

The bankruptcy appellate panel affirmed the bankruptcy court's orders granting a motion to dismiss an adversary proceeding; denying a motion for an extension of time to file a motion to reconsider and for rehearing; and denying a motion to declare that plaintiffs have a right to appeal as a right or to extend the time to appeal.The panel held that plaintiffs failed to show excusable neglect under Bankruptcy Rule 8002(d)(1)(B), and thus the bankruptcy court did not abuse its discretion in denying the motion to appeal out of time. The panel also held that, because plaintiffs did not file a motion of the type listed in Rule 8002(b)(1), nor a motion for extension of time in which to file a notice of appeal under Rule 8002(d)(1)(A), the period for appealing the dismissal order expired without a timely appeal being filed. Finally, the court held that the bankruptcy court did not abuse its discretion in denying the motion to declare that plaintiffs appeal was timely. View "Conway v. Heyl" on Justia Law

After the trustee discovered that debtor had withdrawn over $30,000 from an account more than one year prior to entering bankruptcy and had placed the cash in a home safe, the trustee objected to debtor's amendment of his schedules to reflect the cash as exempt. The bankruptcy court overruled the objection and held that the Bankruptcy Code did not grant the court the authority to bar an amendment to claimed exemptions based on bad faith. The bankruptcy appellate panel affirmed.The Eight Circuit affirmed and held that Law v. Siegel -- which held that bankruptcy courts could use neither statutory nor inherent sources of broad, general authority to contravene specific statutory provisions -- abrogated Kaelin v. Bassett -- which held that the bankruptcy court has the discretion to deny the amendment of exemptions if the amendment is proposed in bad faith or would prejudice creditors. Therefore, Law precluded the denial of an amendment to a schedule of claimed exemptions based on debtor's bad faith. View "Rucker v. Belew" on Justia Law

Fireman’s Fund issued insurance covering property damage at Stephens's warehouse. Three days after the policy became effective, Stephens discovered that burglars stripped the property of all electrical and conductive material. Stephens filed an insurance coverage suit, retaining attorney O’Reilly who had a first lien to assure payment of fees. The trial court entered judgment NOV, awarding Stephens nothing. O’Reilly withdrew from the case and was the subject of an involuntary bankruptcy petition. Following a remand, Stephens and Fund settled for $5.8 million. The bankruptcy estate claimed 40% of the settlement. Danko, the largest creditor, bought the claim and obtained the Stephens's files from the trustee. Based on O’Reilly’s failure to sign the retainer agreement, Stephens sent Danko a letter voiding the retainer agreement and sought declaratory relief. The court ordered Danko to return Stephens’s client file and granted a special motion to strike (anti-SLAPP) a claim for breach of trust against Fund based on the theory that Fund breached a fiduciary duty to O’Reilly and/or the bankruptcy estate by failing to advise the bankruptcy court of the Stephens-Fund settlement and “secretly disbursing” the proceeds and a claim for interference with prospective business advantage against Fund based on the same acts. The court of appeal affirmed the trial court’s denial of Stephens’s motion to disqualify the Danko from representing the corporate entity to which Danko assigned the claim; a protective discovery order regarding Stephens’s client file; and the anti-SLAPP order. View "O&C Creditors Group, LLC v. Stephens & Stephens XII, LLC" on Justia Law

In March 2017, Debtor purchased a vehicle with Creditor-provided financing. In July 2018, Debtors filed a chapter 13 bankruptcy petition and proposed plan. The proposed plan did not treat any claims in Section 3.2 (Request for valuation of security, payment of fully secured claims, and modification of under-secured claims), but treated Creditor’s “910” claim (a claim relating to a vehicle loan initiated less than 910 days earlier) in Section 3.3 (Secured claims excluded from 11 U.S.C. 506). The plan listed the claim as secured by the vehicle, valued it at $10,000, and provided for monthly plan payments to Creditor. Unlike Section 3.2, Section 3.3 does not discuss lien retention for claims. The plan did not have a nonstandard plan provision in Section 8.1 concerning the retention of Creditor’s lien. Creditor filed its Claim and objected to the confirmation of Debtors’ proposed plan, contending that it did not provide that Creditor would retain its lien on the vehicle until Debtors either paid their debt in full under nonbankruptcy law or received their discharge under section 1328. The bankruptcy court overruled the objection. The Sixth Circuit Bankruptcy Appellate Panel reversed. An objection to confirmation must be sustained when a chapter 13 plan fails to provide that the holder of a 910 claim retains the lien securing its claim until the earlier of payment of the underlying debt determined under nonbankruptcy law or discharge under section 1328. View "In re Donnadio" on Justia Law

The Court of Appeals affirmed the Appellate Division's order affirming Supreme Court's dismissal of Plaintiff's action brought under N.Y. Real Prop. Acts. Law 1504(1) to discharge a mortgage on grounds that the statute of limitations on Defendant's foreclosure claim had expired, holding that Defendant's claims were not time barred.Under N.Y. C.P.L.R. 204(a), New York law tolls the statute of limitations where the "commencement of an action has been stayed by a court or by statutory prohibition." At issue was whether the bankruptcy stay of any judicial proceedings against a debtor upon the filing of a bankruptcy petition qualifies as a "statutory prohibition" under section 204(a). Defendant filed two foreclosure actions against Plaintiff, Plaintiff filed two bankruptcy petitions, and automatic bankruptcy stays were imposed. Plaintiff brought this action asserting that the statute of limitations on Defendant's foreclosure claim had expired. Defendant moved to dismiss, arguing that the statute of limitations had not expired because it was tolled while the bankruptcy stay was in effect. Supreme Court dismissed, and the Appellate Division affirmed. The Court of Appeals affirmed, holding (1) the bankruptcy stay is a "statutory prohibition" within the ambit of the New York tolling statute; and (2) Defendant's claims were not time barred when Supreme Court granted Defendant's motion to dismiss. View "Lubonty v. U.S. Bank National Ass'n" on Justia Law