The Bankruptcy Law Firm, Prof. Corp.
In re BMT-NW Acquisition, LLC, 582 B.R. 846 (Bankr. D. Del.2018)
A bankruptcy court in Delaware has held that a trustee’s constructive fraudulent transfer claims stemming from a failed leveraged buyout were not subject to the newly heightened pleading standards articulated by the Supreme Court. [In re BMT-NW Acquisition, LLC, 582 B.R. 846 (Bankr. D. Del.2018).] Cites to and distinguishes the US supreme court cases, Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), which hold that fraud must be pleaded with particularly, in a Complaint that alleges fraud. In In…
Lamar, Archer & Cofrin, LLP v. Appling, 16-1215 (Sup. Ct. June 4, 2018)
Lamar, Archer & Cofrin, LLP v. Appling, 16-1215 (Sup. Ct. June 4, 2018): US Supreme Court rules, on 6/4/18, that a bankruptcy debtor’s False Statement About One Asset Isn’t Grounds for holding a debt nondischargeable. This US Supreme Court decision resolves a circuit split on Section 523(a)(2)(B) and the meaning of “financial condition.” The Supreme Court resolved a split of circuits today by holding that a false statement about one asset must be in writing to provide grounds for rendering a debt nondischargeable under Section 523(a)(2). The 15-page opinion by Justice Sonia Sotomayor focused primarily on the plain language of…
Ninth and Fourth Circuits Issue Important Rulings on Sanctions and Exemptions
Ninth Circuit opinion is prime for Supreme Court review regarding the extent of a bankruptcy court’s contempt powers. The Ninth Circuit refused to rehear an appeal, setting up an opportunity for the Supreme Court to decide whether bankruptcy judges have constitutional power to impose sanctions as robust as Article III judges. Meanwhile, the Fourth Circuit aligned itself with the Fifth by holding that events after a chapter 7 filing cannot undermine a homestead exemption. In the Ninth Circuit case, a debtor defied a turnover order by refusing to cough up $1.4 million belonging to the estate. The bankruptcy judge imposed…
Lorenzen v. Taggart (In re Taggart), ___F.3d ___ (9th Cir. April 23, 2018) appeal #16-35402
Violation of Discharge Is Now Difficult to Prove in the Ninth Circuit An unreasonable but good faith, subjective belief that there is no injunction bars a finding of contempt in the Ninth Circuit. A creditor’s subjective, good faith belief that its action does not violate the discharge injunction precludes finding the creditor in contempt, even if the discharge injunction did apply and the creditor’s belief was “unreasonable,” the Ninth Circuit ruled in an April 23 opinion. The opinion appears to mean that a creditor can act in good faith even if the creditor’s belief is unreasonable. In other words, litigation…
Phillips v. Gilman (In re Gilman), ___F.3d___ (9th Cir. April 13, 2018), case 16-55436
Order granting or Denying a Homestead Exemption Remains a Final Order in the Ninth Circuit. US Supreme Court case Bullard v. Blue Hills Bank, 135 S. Ct. 1686, 191 L. Ed. 2d 621, 83 U.S.L.W. 4288 (2015) did not undermine the automatic appealability of orders granting or denying homestead exemptions. Is an order granting or denying a homestead exemption a final, appealable order? The Ninth Circuit concluded that Bullard did not undermine the circuit’s existing precedent and ruled that an order upholding a homestead exemption is appealable automatically. In Bullard, the Supreme Court held that an order denying confirmation of…
In re Cresta Technology Corp. ___BR___, (B.A.P. 9th Cir. April 6, 2018), BAP case number 17-1186
9th circuit BAP rules that a post-petition transfer occurs when an ordinary check is honored, not when it is delivered, in light of US Supreme Court case Barnhill An unauthorized post-petition transfer occurs when an ordinary check is honored by the bank, not when the check is delivered, the Ninth Circuit Bankruptcy Appellate Panel said in the course of overruling its own precedent in view of later Supreme Court authority. In Barnhill v. Johnson, 503 U.S. 393 (1992), the Supreme Court ruled that the date of honor of an ordinary check is the date of transfer with regard to preferences…
In re Bianchi, ___BR___ (Bankr. D. Id. March 20, 2018, case #12-221)
Bankruptcy Judge Papas, D. Idaho rules: ‘Snarky’ or Factually Incorrect Emails Are Not Grounds for Rule 9011 Sanctions Neither oral statements nor emails are sanctionable under Rule 9011, Judge Pappas says. “Snarky and unprofessional” emails written by a debtor’s counsel to a chapter 13 trustee are not grounds for sanctions under Rule 9011 because they were not contained in pleadings presented to the court, according to Bankruptcy Judge Jim D. Pappas of Boise, Idaho. The March 20 opinion by Judge Pappas is a story about a lawyer behaving badly. Although the facts suggest that the debtor’s lawyer was acting unprofessionally,…
Arellano vs. Clark County Collection Service, LLC, ___F3d___, 2017 Westlaw 5505117 (9th Cir.2017)
The Ninth Circuit has held that a debt collector cannot effectively destroy a consumer’s FDCPA claim by acquiring it at an execution sale following a default judgment, because the FDCPA impliedly preempts that strategy. A collection agency obtained a default judgment in state court against a consumer for roughly $800. She filed a separate suit in federal court against the collection agency, claiming that its practices had violated the Fair Debt Collection Practices Act (“FDCPA”). The collection agency then requested the state court to issue a writ of execution against the consumer in the hope of executing on her FDCPA…
Split Among Us Circuit Courts Involving Licensees of a Trademarks
Split among US Circuit Courts of 4th, 7th, 1st Circuit, and maybe 3rd Circuit, as to whether or not the licensee of a trademark has a right to keep using the trademark, when the licensor of the trademark files bankruptcy, and rejects the trademark license contract, pursuant to 11 USC 365. Compare: Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F2d 1043 (4th Cir. 1985) (debtor’s rejection of trademark licenses stops non-debtor licensee from continuing to use trademark); In re Sunbeam Products, Inv. v. Chicago American Manufacturing, LLC, 686 F.3d 372 (7th Cir. 2012) (rejection does NOT stop trademark…
U.S. Bank NA v. The Village at Lakeridge LLC, 15-1509 (US Supreme court, decided March 5, 2018)
U.S. Bank NA v. The Village at Lakeridge LLC, 15-1509 (US Supreme court, decided March 5, 2018)-bankruptcy decision, held that insider status was reviewed for clear error on appeal, because mainly a factual issue. Rather than clarifying standard of review on appeal, this US Supreme Court decision muddies the water regarding standard of review when a fact/law mixed question is reviewed on appeal. Because usually, fact/law mixed questions are reviewed de novo. But here there was a fact law mixed question reviewed for clear error, which is the standard of review for fact decisions below, NOT the standard of review…