The Bankruptcy Law Firm, Prof. Corp.
adrozny vs. Bank of New York Mellon
Zadrozny vs. Bank of New York Mellon, 2013 Westlaw – – (9th Cir. 2013): Applying Arizona law, the Ninth Circuit has held that a foreclosing creditor need not produce the original promissory note before pursuing nonjudicial foreclosure. [See immediately below]. Facts: A married couple executed a note and deed of trust in favor of a lender. The deed of trust authorized the lender to transfer the note and authorized MERS (Mortgage Electronic Registration Systems, Inc.) to act as the nominee on behalf of the lender. MERS ultimately transferred the rights to the note and trust deed to an assignee. The…
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…
Wellness International n Network, Ltd. v. Sharif, ___F.3d___, 2013 Westlaw 4441926 (7th Circuit 2013)
SUMMARY: In Wellness International n Network, Ltd. v. Sharif, ___F.3d___, 2013 Westlaw 4441926 (7th Circuit 2013) , disagreeing with the Ninth Circuit, the Seventh Circuit has held that a debtor’s objection to a bankruptcy court’s constitutional authority to enter a final judgment cannot be waived. Facts: After a creditor obtained a judgment against a debtor, the debtor filed a Chapter 7 bankruptcy petition. The creditor then brought an adversary complaint seeking to block his discharge and seeking a declaratory judgment that a trust administered by the debtor was actually his alter ego. As the result of discovery violations, the 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…
In re Stockton municipal bankruptcy case, 4/1/13 Ruling of Bankruptcy Judge Christopher Klein, ruling that City of Stockton Is Eligible to be in Chapter 9 (Municipal) Bankruptcy
On Monday, April 1, 2013, U.S. Bankruptcy Judge Christopher Klein of the Eastern District of California ruled the City of Stockton to be eligible for chapter 9 bankruptcy protection and issued the Order for Relief necessary for the case to proceed pursuant to Bankruptcy Code §921(d). The decision came nine months after the city initially filed for bankruptcy and followed a three-day evidentiary hearing pitting the city against the Capital Markets Creditors who represent the holders of tens of millions of dollars in municipal bonds. The bondholders had argued, among other things, that the city was not eligible for bankruptcy…