Justia Bankruptcy Opinion Summaries

Filing a bankruptcy proof of claim that is obviously time-barred is not a false, deceptive, misleading, unfair, or unconscionable practice under the Fair Debt Collection Practices Act (FDCPA).Midland filed a proof of claim in Johnson’s Chapter 13 bankruptcy case, asserting a credit-card debt and noting that the last time any charge appeared on Johnson’s account was more than 10 years ago. The Alabama limitations period is six years. The Bankruptcy Court disallowed the claim. Johnson filed suit under the FDCPA, 15 U.S.C. 1692. The Supreme Court reversed the Eleventh Circuit. The Bankruptcy Code defines “claim” as a “right to payment,” 11 U.S.C. 101(5)(A); state law usually determines whether a person has such a right. Alabama law provides that a creditor has the right to payment of a debt even after the limitations period has expired. The word “enforceable” does not appear in the Code’s definition. The law treats unenforceability of a claim due to the expiration of the limitations period as an affirmative defense. There is nothing misleading or deceptive in filing a proof of claim that follows the Code’s similar system. Concerns that a consumer might unwittingly repay a time-barred debt have diminished force in a Chapter 13 bankruptcy, where: the consumer initiates the proceeding; a knowledgeable trustee is available; procedural rules guide evaluation of claims; and the claims resolution process is “less unnerving” than facing a collection lawsuit. View "Midland Funding, LLC v. Johnson" on Justia Law

After the bankruptcy court granted Plaintiff a discharge of her debts, Plaintiff filed this action against the named defendants, alleging misuse of funds of a trust established by her mother. Plaintiff subsequently filed a motion to substitute the bankruptcy trustee as the proper plaintiff. The trial court denied the motion, concluding that Plaintiff failed to show that she had brought the action in her own name due to a mistake. The court then dismissed the action for lack of subject matter jurisdiction. While Plaintiff’s appeal was pending, the bankruptcy court granted the bankruptcy trustee’s motion to abandon the underlying cause of action. The Appellate Court affirmed. The Supreme Court dismissed Plaintiff’s appeal as moot, holding that because the bankruptcy trustee abandoned the underlying action and Plaintiff no longer was seeking to substitute the trustee as party plaintiff, resolution of this claim would afford Plaintiff no practical relief. View "Gladstein v. Goldfield" on Justia Law

The Fifth Circuit affirmed the bankruptcy court's holding that a promissory note debtor gave to appellee was a nondischargeable debt under 11 U.S.C. 523(a)(2)(A). Appellee had retained debtor to represent her in bringing a malpractice claim against another attorney. Debtor failed to properly file the malpractice suit and the case was ultimately dismissed. The Fifth Circuit held that the promissory note that debtor executed had its intended effect of giving him more time to pay back appellee, and therefore debtor received an extension of credit from appellee when she agreed to accept the promissory note. The Fifth Circuit also held that debtor obtained the extension of credit from appellee by actual fraud because debtor made a false representation, intended to deceive appellee, and appellee sustained loss as a proximate result of debtor's false representation. View "Selenberg v. Bates" on Justia Law

The Bankruptcy Appellate Panel affirmed the bankruptcy court's opinion and order abstaining from hearing Roberts Broadcasting's malpractice claim against Danna McKitrick pursuant to 28 U.S.C. 1331(c)(1). McKitrick represented Roberts Broadcasting in its chapter 11 case. The Panel explained that the bankruptcy court considered and addressed each of the listed criteria, and it considered and addressed only the listed criteria. Therefore, the bankruptcy court did not abuse its discretion either by failing to consider a relevant factor that should have been given significant weight or by considering and giving significant weight to an irrelevant or improper factor. View "Roberts Broadcasting Company v. DeWoskin" on Justia Law

The Bankruptcy Appellate Panel affirmed the bankruptcy court's grant of summary judgment to the Iowa Department of Revenue and dismissal of the adversary proceeding. The Panel held that the bankruptcy court did not abuse its discretion in denying debtor's motion to file newly discovered evidence where the motion did not deal with newly discovered evidence at all, but was just an attempt to make more arguments for why the Iowa income statute was void for vagueness; the bankruptcy court did not err when it gave res judicata effect to debtor's claim that the Iowa income tax statute is unconstitutional; the bankruptcy court did not err when it applied collateral estoppel to debtor's claim regarding the constitutionality of Iowa's income statute; debtor's void for vagueness argument lacked merit and the Rooker-Feldman doctrine prevented the bankruptcy court and the Panel from reviewing the state supreme court's decision; and Iowa is a state. Debtor's remaining arguments were frivolous and rejected by the Panel. View "Yuska v. Iowa Department of Revenue" on Justia Law

IRS Form 1040, filed after the IRS made an assessment of the taxpayer’s liability, did not constitute “returns” for purposes of determining the dischargeability in bankruptcy of tax debts under 11 U.S.C. 523(a)(1)(B). Giacchi filed his tax returns on time for the years 2000, 2001, and 2002 years after they were due and after the IRS had assessed a liability against him. In 2010, Giacchi filed for Chapter 7 bankruptcy; in 2012 he filed a Chapter 13 petition and brought an adversary proceeding seeking a judgment that his tax liability for the years in question had been discharged in the Chapter 7 proceeding. The district court and Third Circuit affirmed the bankruptcy court’s order denying the discharge. The tax debt was nondischargeable under 11 U.S.C. 523(a)(1)(B) because Giacchi had failed to file tax returns for 2000, 2001, and 2002, and Giacchi’s belatedly filed documents were not “returns” within the meaning of section 523(a)(1)(B) and other applicable law. View "Giacchi v. United States" on Justia Law

The Bankruptcy Appellate Panel affirmed the bankruptcy court's order sustaining the objection of the Trustee and holding that monthly payments due to debtor under a single premium annuity were not exempt under Mo. Rev. Stat. 513.430.1(10)(e). In this case, it was clear that the Annuity payments were not on account of illness, disability or length of service. The Panel explained that the payments to debtor under the Annuity were not triggered by her husband's death, but by her choice to begin receiving payments within 30 days of payment of the premium. The right to receive payments was two steps removed from her husband's death, namely sale of the house and her choice of when to begin receiving payments. View "Helming v. Reed" on Justia Law

Debtor-landlord did not retain sufficient rights in rents assigned to lender for those rents to be included in landlord's bankruptcy estate. Town Center owns a 53-unit Shelby Township residential complex; its construction was financed by a $5.3 million loan owned by ECP. The mortgage included an assignment of rents to the creditor in the event of default. Rents from the complex are Town Center’s only income. Town Center defaulted. ECP sent notice to tenants in compliance with the agreement and with Mich. Comp. Laws 554.231, which allows creditors to collect rents directly from tenants of certain mortgaged properties. ECP recorded the notice documents as required by the statute. ECP filed a foreclosure complaint. A week later, Town Center filed for Chapter 11 bankruptcy relief, then owing ECP $5,329,329 plus fees and costs. The parties reached an agreement to allow Town Center to collect rents, with $15,000 per month to pay down the debt to ECP and the remainder for authorized expenses. Town Center’s bankruptcy petition resulted in an automatic stay on the state-court case, 11 U.S.C. 362(a). ECP unsuccessfully moved to prohibit Town Center from using rents collected after the petition was filed. The district vacated. The Sixth Circuit reversed; Town Center did not retain sufficient rights in the assigned rents under Michigan law for those rents to be included in the bankruptcy estate. View "In re: Town Center Flats, LLC" on Justia Law

The Sixth Circuit affirmed the Bankruptcy Court’s order in Conco’s Chapter 11 bankruptcy, interpreting Conco’s Confirmed Plan to prohibit the sale of the Employee Stock Ownership Plan (ESOP)-held Conco stock (Equity Interests) and enjoining any such sale through December 31, 2018. The creditor’s committee had agreed to support the Plan, which provided both defined distributions and contingent distributions, to be funded by the operation of the Conco’s business, to continue through December 31, 2018. The Plan guaranteed the creditors a higher recovery than if the business were sold. ESOP participants sued Conco, its Board of Directors, the ESOP, and ESOP Trustees (ERISA Litigation) claiming breach of fiduciary duties by not evaluating and responding to offers by to purchase the Equity Security Interests. The Bankruptcy Court found, and the Sixth Circuit agreed, that the four corners of the Confirmed Plan, and the creditors’ abandonment of an objection under the absolute priority rule of 11 U.S.C. 1129(b)1 to the ESOP’s retention of the Equity Interests, evidenced an intent for the Equity Interests not to be sold through December 31, 2018. View "In re: Conco, Inc." on Justia Law

Creditor challenged the bankruptcy court's order confirming debtor's Chapter 13 plan. In this case, Creditor did not provide the panel with a transcript of the relevant bankruptcy proceedings, specifically the confirmation hearing. The panel concluded that, because the bankruptcy court stated her findings of fact and conclusions of law on the record and the panel has no transcript of the bankruptcy court's statements made during the portion of the hearing during which she did so, there was no basis upon which the panel could say that the bankruptcy court erred. Accordingly, the panel affirmed the bankruptcy court's decision. View "Situm v. Coppess" on Justia Law