Justia Bankruptcy Opinion Summaries

This appeal stemmed from RPD's purchase of a patent license from multiple debtors in bankruptcy sales of their estates. Tech Pharm alleged that RPD did not have rights under the license to Tech Pharm's patented invention. The bankruptcy court held that RPD did not have rights and the district court agreed.The Fifth Circuit affirmed the district court's judgment and held that the patent license was a rejected executory contract and could not have been transferred by the bankruptcy sales in question. In this case, because the license agreement was an executory contract deemed rejected by operation of law, RPD could not and did not acquire the license from any of the Grapevine, Western Pennsylvania, and Waco estates—and no bankruptcy court order held otherwise. Finally, the court held that the bankruptcy court did not exceed its authority in addressing RPD's rights through purchase of the OnSite machines, and did not err in reading the license agreement to require that third parties operate OnSite machines in the same locations where they were placed at the time of sale. View "RPD Holdings, LLC v. Tech Pharmacy Services" on Justia Law

The Bankruptcy Appellate Panel affirmed the bankruptcy court's judgment denying debtors' discharge under Bankruptcy Code 727(a). The panel held that debtors failed to maintain and preserve adequate records, and such failure made it impossible to ascertain their financial condition and material business transactions. Therefore, the trustee met his burden of proving that debtors' discharge should be denied under section 727(a)(3). View "Snyder v. Dykes" on Justia Law

The period in which a creditor may execute on a lien constitutes the continuation of the original action that resulted in the judgment and is thus tolled during the automatic stay. The Ninth Circuit affirmed the bankruptcy appellate panel's decision reversing the bankruptcy court's grant of summary judgment for the trustee in an adversary proceeding brought by a judgment creditor. Before debtor filed for bankruptcy, creditor obtained an Order of Appearance and Examination (ORAP) lien encumbering debtor's personal property under California law. In this case, the creditor was unable to execute on her lien and she failed to renew it under state law. View "Daff v. Good" on Justia Law

The Bankruptcy Appellate Panel affirmed the bankruptcy court's order dismissing plaintiffs' adversary complaint and an order denying their motion to reconsider the dismissal order. The panel held that plaintiffs failed to state a claim upon which relief can be granted under 11 U.S.C. 523(a)(19). In this case, a prior Consent Order requiring debtor to pay a fine and costs did not result in a debt owed to plaintiffs. Plaintiffs were not a party to or a signatory on the Consent Order and the debt to plaintiffs did not result from the Consent Order. View "Conway v. Heyl" on Justia Law

Ritzen Group contracted to buy a piece of property from Jackson Masonry. The sale never went through. Ritzen claimed Jackson breached by providing error-ridden documentation on the eve of the closing deadline, while Jackson claimed Ritzen breached by failing to secure funding by that deadline. After the deal failed, Ritzen sued Jackson for breach of contract in Tennessee state court. The case progressed for nearly a year-and-a-half until Jackson filed for bankruptcy. As a result of the bankruptcy, the litigation was automatically stayed. Ritzen moved to lift the stay, which the bankruptcy court denied. Ritzen did not appeal, instead, brought a claim against the bankruptcy estate. The bankruptcy court found that Ritzen, not Jackson, breached the contract. Ritzen subsequently filed two appeals to the district court. The first targeted the bankruptcy court’s order denying relief from the automatic stay. The second targeted the breach-of-contract determination. The district court found that the first appeal was untimely and rejected the second on the merits. Ritzen appealed again. Finding no reversible error in the district or bankruptcy courts' judgments, the Sixth Circuit affirmed. View "Ritzen Group, Inc. v. Jackson Masonry" on Justia Law

The Bankruptcy Appellate Panel affirmed the bankruptcy court's order disallowing debtor's claimed exemptions in his ex-wife's Wells Fargo 401K and an IRA account. The panel held that any interest debtor held in the accounts resulted from nothing more than a property settlement and thus they were not retirement funds that qualified as exempt under federal law. View "Lerbakken v. Sieloff and Associates, PA" on Justia Law

At issue in this bankruptcy case was whether a defaulting subcontractor who has no contractual right to compensation is nonetheless entitled to an equitable recovery if the general contractor has benefited at the subcontractor’s expense.Insite, a bankrupt subcontractor, filed an adversary proceeding against Walsh, a general contractor, in bankruptcy court claiming that Walsh improperly withheld payments belonging to its bankruptcy estate. The bankruptcy court found the doctrine announced in Pearlman v. Reliance Insurance Co., 371 U.S. 132, 141-42 (1962), prevented Insite from gaining a property interest in the funds withheld by Walsh. The district court affirmed. The First Circuit vacated the judgment below and remanded, holding (1) the Pearlman doctrine did not address the primary issue in this case; and (2) while Insite was not due funds under its contract with Walsh, the bankruptcy and district courts must consider whether Walsh was benefited by Insite’s post-default performance in such a way that Insite had an equitable claim under Puerto Rico law. View "Insite Corp. Inc. v. Walsh Construction Co. Puerto Rico" on Justia Law

The Bankruptcy Appellate Panel vacated the bankruptcy court's decision concerning injunctive and declaratory relief, holding that the bankruptcy court lacked jurisdiction to entertain the claim at issue. In this case, the bankruptcy court held that a debt to AY was not dischargeable due to debtor's fraud and defalcation while he was a director at AY. The panel explained that the outcome of AY's claim for injunctive and declaratory relief could have no effect on debtor or the bankruptcy estate; the relief for the contract claim only affected AY; and the claim involved distributions from two spendthrift trusts, which were not property of the estate. Therefore, the contract claims for injunctive and declaratory relief were neither core proceedings nor non-core related to proceedings. View "AY McDonald Industries Inc. v. McDonald" on Justia Law

The Eleventh Circuit affirmed the Bankruptcy Court's order dismissing a fraudulent conveyance claim by the trustee of the liquidating trust of Teltronics against Harris and RPX. The court held that the Bankruptcy Court made no material error in ruling on the admissibility of evidence, and there was no error in the conclusion that the trustee failed to prove that Teltronics was insolvent at the time of the transfer. In this case, having accepted that the value of the assets listed on the balance sheet, as presented by an expert who testified for the trustee, was incomplete without the inclusion of the value of the three maintenance contracts, the burden was on the trustee to prove that the value of those contracts was so small as to leave the expert's opinion as to insolvency unaffected. The trustee offered no such evidence. Therefore, the court did not reach the lower courts' decisions and dismissed the cross-appeals as moot. View "O'Halloran v. Harris Corp." on Justia Law

The Ninth Circuit affirmed the district court's decision affirming the bankruptcy court's summary judgment denying discharge of two individual Chapter 11 debtors' debt arising from a state-court judgment for fraud and misrepresentation. The panel held that the Chapter 11 plan provided for the liquidation of all or substantially all of the property of the bankruptcy estate under 11 U.S.C. 1141(d)(3)(A); debtors did not engage in business after consummation of the Chapter 11 plan, because they were simply employees in businesses owned or operated by others; and, assuming that section 1141(d)(3) does not require that the debtor engage in a pre-petition business, the statute was not satisfied by mere employment in someone else's business after consummation of a Chapter 11 plan. View "Hyun J. Um v. Spokane Rock I, LLC" on Justia Law