News
U.S. Supreme Court to Hear Case on Inherited IRAs in Bankruptcy
The U.S. Supreme Court will hear a dispute in the bankruptcy of a small-town pizza shop owner, taking on a case that could dictate how inherited individual retirement accounts are treated in bankruptcy, Reuters reported yesterday. The Supreme Court said yesterday that it would hear arguments in Clark v. Rameker in a fight over whether Heidi Heffron-Clark and her husband, Brandon Clark, can keep creditors from going after $300,000 in an IRA inherited from Heffron-Clark’s late mother. The Clarks declared bankruptcy in 2010 after the pizza shop they opened in their home town of Soughton, Wis., fell victim to economic…
Bellingham Oral Argument Recap: Bankruptcy and the Slippery Slope
The Supreme Court’s recent strong record of confining bankruptcy judges within a tight sphere of power seemed a bit shaky on Tuesday, but mainly because the Court spent significant time looking beyond bankruptcy law, according to a SCOTUSBlog analysis of Tuesday’s oral argument in Executive Benefits Insurance Agency v. Arkison (In re Bellingham) currently before the Supreme Court. Concerns about the impact that a decision in a chapter 7 case may have on the ranks of federal magistrate judges, and even on arbitrators who keep a lot of private disputes out of courts, were evident during the argument on In…
US Supreme Court to hear and decide 2 appeals in two different bankruptcy cases
The United States Supreme Court has granted “certiorari” on two bankruptcy cases, meaning that the United States Supreme Court will hear and decide the the appeals of the following 2 bankruptcy cases, in the Court’s 2013-2014 session The two cases are the appeals of (1) Law v. Siegel, which questions whether the court may use its general equitable authority under §105 of the Bankruptcy Code to surcharge a debtor’s exempt assets, and (2) Executive Benefits Insurance Agency v. Arkison (In re Bellingham), which will address the bankruptcy court’s authority to adjudicate Article III matters. Whenever the US Supreme Court rules…
Beware of Breadth of Attorneys Fees Clauses in Contracts
Maynard vs. BTI Group, Inc., 2013 Westlaw 2322608 (California Court of Appeals 2013): Facts: An individual owned a retail business and retained a broker to help her sell it. Although the business was sold, the purchaser soon filed a bankruptcy petition, leaving a portion of the purchase price unpaid. Supposedly, the broker failed to obtain security from the purchaser, despite the seller’s instructions to do so. Following the purchaser’s default, the seller brought suit against the broker, asserting claims for breach of contract and negligence. She prevailed on her negligence claim but not on her contract claim. The trial court…
Recent 9th Circuit Court of Appeals Decision re Judicial Estoppel
Recent 9th Circuit Court of Appeals Decision re Judicial Estoppel: Usually, where a debtor fails to list (schedule) a claim/cause of action/lawsuit in which debtor is plaintiff, and in which other persons/entities are defendants, the punishment is that the debtor is NOT allowed to pursue that claim, after the bankruptcy case is over (debtor is estopped to pursue claim after bankruptcy, because debtor failed to schedule the existence of the claim, in debtor’s bankruptcy schedules. However, in Ah Quin v. County of HI, F.3d, 2013 DAR 9634 (9th Cir. 7/25/13), the 9th Circuit Court of Appeals held that the Debtor/plaintiff…
Anti-Deficiency Protection, on Purchase Money DOT Residential Loans, Expanded by new CA statute signed into law on 7/11/13 by governor, to Include Short Sale Done with DOT Lender Consent, not Just Non-Judicial Foreclosure Sale by Lender
SUMMARY On July 11, 2013 Governor Brown signed into law SB 426 which expands the anti-deficiency language in Code of Civil Procedure ("C.C.P.") sections 580b and 580d by expressly prohibiting not only: (i) a deficiency judgment against the borrower in connection with either a "purchase money" deed of trust covered under C.C.P. §580b or following a non-judicial foreclosure of a deed of trust covered under C.C.P. §580d, but now also (ii) any liability for any deficiency in the foregoing situations. However, SB 426 expressly recognizes the right of a lender to collect any such deficiency from any additional collateral held…
Creditors–DON’T BE LATE
Creditors–DON’T BE LATE–Creditor Being a Few MINUTES Late in Filing Creditor’s Nondischargeability Adversary Proceeding against Debtor, in Debtor’s Bankruptcy Case, Resulted in Complaint being Thrown Out, as AFTER DEADLINE. In Anwar v. Johnson, ___ F.3d.___, 2013 DJDAR 8725 (9th Cir. 7/3/2013). Same reasoning would apply to cause Bankruptcy Court to have to throw out a creditor’s, trustee’s, or US Trustee’s Complaint seeking to deny the debtor any discharge, if filed after the deadline that the Bankruptcy Code sets for filing “nondischargeability” or “denial of discharge” complaints. There are certain excuses that may excuse untimely filing of Complaint, but none of…
US Supreme Court decision, Bullock v. BankChampaign
Bullock v. BankChampaign (United States Supreme Court, decided 5/13/13), decision on nondischargeability of debt pursuant to 11 USC 523(a)(4), which is nondischargeability of debt based on debt arising from debtor committing “fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny”. Unanimous United States Supreme Court decision, holding that "defalcation" under 11 USC 523(a)(4) of the Bankruptcy Code requires that the debtor, at time of the debtor’s defalcation, had “scienter”. “Scienter” element requires knowledge of, or gross recklessness in respect to, the improper nature of the fiduciary behavior. Bullock was decided in the context of a proceeding commenced…
The U.S. Bankruptcy Appellate Panel of the Ninth Circuit (BAP) has held that a recorded abstract of judgment attached to the proceeds from the sale of a debtor’s residence even though the abstract was recorded after the debtor’s fraudulent transfer of her interest in the residence to her daughter. Daff v. Wallace (In re Cass), BAP No. CC-12-1513-KiPaTa (9th Cir. BAP, Apr. 11, 2013)(unpublished).
Facts and Procedural Background Creditors sued the Debtor for nuisance and defamation. To prevent the potential seizure of her half million dollar home, the Debtor transferred her residence to her daughter for no consideration and reserved a life estate therein. The Debtor and her daughter then entered into a separate agreement where the daughter promised to reconvey the home ("Residence") back to the Debtor upon the Debtor’s request (the "Fraudulent Transfer"). The Fraudulent Transfer gave rise to further litigation, as Creditors then filed a second action alleging that the Debtor fraudulent transferred the Residence to her daughter. Creditors obtained a…
Quasi-judicial Immunity of Bankruptcy Trustees
Quasi-judicial Immunity of Bankruptcy Trustees: A bankruptcy court in Eastern District of Tennessee has held that a chapter 7 trustee and his auctioneer enjoy quasi-judicial immunity against allegations of theft, embezzlement, conversion and fraud when selling property pursuant to a court order. Lunan v. Jones (In re Lunan), In re Lunan, 2012 WL 77491912 (Bankr. E.D. Tenn. Mar. 22, 2013). Factual Background and Procedural History The chapter 7 trustee ("Trustee") moved to sell the debtor’s million dollar home, luxury vehicles and artwork. Insisting that the sale price was too low, the debtor opposed the sale motion. After losing in the…