Recent Cases
ISL Loan Trust v. Millennium Lab Holdings II, 19-1152 (Sup. Ct.)
ISL Loan Trust v. Millennium Lab Holdings II, 19-1152 (Sup. Ct.): US Supreme Court Denied Petition for Certiorari, in an appeal in a Chapter 11 bankruptcy case, which asked US Supreme Court to decide issues of Equitable Mootness and Third-Party Releases. Denied on 5/26/20. The US Supreme Court said it denied the petition for certioraria because the case from the Third Circuit was not a good vehicle for granting certiorari on either issue, even though there is a circuit split on nonconsensual, third-party releases. The US Supreme Court declined to the case, even though the decision on appeal from the…
Bird v. Hart, ___BR___ (US District Ct, District of Utah May 19, 2020) case number in District Court 19-54
Bird v. Hart, ___BR___ (US District Ct, District of Utah May 19, 2020) case number in District Court 19-54: US District Court, hearing bankruptcy appeal, affirms bankruptcy court decision that asset is automatically abandoned back to the chapter 7 bankruptcy debtor, from the bankruptcy debtor’s chapter 7 “bankruptcy estate”, by the bankruptcy case being closed, IF debtor listed that asset anywhere in the debtor’s bankruptcy documents. This is a more “debtor friendly” decision than the more narrow rule, which is that an asset is automatically abandoned back to the chapter 7 bankruptcy debtor, from the bankruptcy debtor’s chapter 7 “bankruptcy…
In re Thu Thi Dao, ___BR___ (Bankr. E.D. Cal. May 11, 2020, docket number 20-20742)
In re Thu Thi Dao, ___BR___ (Bankr. E.D. Cal. May 11, 2020, docket number 20-20742): Bankruptcy Judge Christopher Klein Takes Sides on a Circuit Spilt Coming to the US Supreme Court, regarding whether automatic stay that expires per 11 USC 362( c )(3)(A)—stay expires 30 days into second case ongoing for debtor within a 1 year period–expires only as to debtor’s property, or also expires as to property of the debtor’s “bankruptcy estate” American Bankruptcy Institute says Judge Klein’s opinion reads like an amicus brief urging the Supreme Court to grant ‘cert’ and resolve a circuit split by taking sides…
Pillars v. General Motors LLC (In re Motors Liquidation Co.), 18-1954 (US Court of Appeals for the Second Circuit, May 6, 2020)
A mistake by a lawyer isn’t “deliberate” and therefore can’t be a judicial admission. Joining three other circuits, the Second Circuit held that a lawyer’s mistake in a pleading doesn’t amount to a judicial admission making the client liable when the client would have been free from liability had the lawyer quoted the correct document. The opinion is a hornbook explication of what is or is not a judicial admission. Among other things, a judicial admission must be “deliberate.” Evidently, a lawyer’s mistake is not “deliberate,” thus extricating the lawyer from the specter of malpractice. The appeal arose in the…
State Bank of Southern Utah v. Beal (In re Beal), 19-2043 (Bankr. D. Utah March 31, 2020)
Warning that attorneys must file bankruptcy adversary proceedings before the deadline for doing so runs, lack of expertise using Court e-filing system (CM/ECF) is not an excuse for missing deadline: State Bank of Southern Utah v. Beal (In re Beal), 19-2043 (Bankr. D. Utah March 31, 2020) Bankruptcy Judge R. Kimball Mosier of Salt Lake City dismissed an adversary proceeding complaint that was 16 minutes late because the plaintiff’s lawyer waited to file until the last minute and then encountered problems in navigating the Court e-filing system. The plaintiff’s lawyer made his appearance in a consumer’s chapter 7 case. He…
Lariat Companies, Inc. v. Wigley (In re Wigley), 951 F.3d 967 (8th Cir. 3/9/20)
The Eighth Circuit Court of Appeals reversed the Eighth Circuit Bankruptcy Appellate Panel. The 8th Circuit held that husband’s discharge of a Minnesota state court Judgment for fraudulent transfer, against husband and wife, did not extinguish the wife’s joint and several liability for a fraudulent transfer judgment against the husband and wife. Though husband had discharged husband’s liability on the state court judgment, creditor Lariat still held a claim against wife (Mrs. Wigley) based on Bankruptcy Code 11 USC §524(e), which provides that “discharge of a debt of the debtor does not affect the liability of any other entity on,…
Mass. Dept. of Revenue v. Shek (In re Shek), ___ F3d ___ (11th Cir. Jan. 23, 2020), appeal case number 18-14992, widens the Circuit Split over whether Income Taxes can ever be discharged in bankruptcy, where the tax return for those taxes was filed even one day late
Widening an existing split of circuits, the Eleventh Circuit rejected the one-day-late rule adopted by three circuits and held that a tax debt can be discharged even if the return was filed late. The Atlanta-based circuit aligned itself with the Third, Fourth, Sixth, Seventh, Eighth and Eleventh Circuits, which employ the four-part Beard test, named for a 1984 Tax Court decision. Beard v. Commissioner of IRS, 82 T.C. 766 (1984), aff’d, 793 F.2d 139 (6th Cir. 1986). Following Beard, it’s possible — but not automatic — to discharge the debt on a late-filed tax return. The First, Fifth and Tenth…
United States Dep’t of Agriculture v. Hopper (In re Colusa Reg’l Med. Ctr.)
In United States Dep’t of Agriculture v. Hopper (In re Colusa Reg’l Med. Ctr.), 604 B.R. 839 (9th Cir. BAP 2019), the U.S. Bankruptcy Appellate Panel of the Ninth Circuit vacated a bankruptcy court’s order surcharging a secured creditor for a substantial portion of the Trustee’s attorneys’ fees, and the entire statutory fee, of a chapter 7 trustee. The basis for the decision was that the bankruptcy court failed to correctly apply either the objective test for surcharge adopted by the Ninth Circuit (that the funds were expended directly, specifically and primarily for the benefit of the secured creditor) or…
In re Palladino, 942 F.3d 55 (1st Cir. Court of Appeals 2019)
In re Palladino, 942 F.3d 55 (1st Cir. Court of Appeals 2019): Bankruptcy Trustee recovered—as constituting fraudulent transfers–the tuition payments that parents made to college, to pay college tuition for parent’s daughter. Whether paying the college tuition for daughter was a fraudulent transfer had to be analyzed from the point of view of the creditors of parents. Creditors of the parents did not receive any benefit from parents paying the daughter’s college tuition. Note: These were not sympathetic debtors, they had been found liable for running a Ponzi scheme. The First Circuit reversed a bankruptcy court order, that had granted…
In re Golan, ___BR___ (Bankr. E.D.N.Y. Dec. 19, 2019), E.D.N.Y case #19-75598
In re Golan, ___BR___ (Bankr. E.D.N.Y. Dec. 19, 2019), E.D.N.Y case #19-75598: Bankruptcy Court decision holds that it did not violate the bankruptcy automatic stay for the state court to hold a contempt hearing, in a divorce suit, after the debtor filed bankruptcy, because the bankruptcy debtor failed to pay a $20,000 sanction to wife’s attorney, in divorce suit, which the state court had ordered the bankruptcy debtor to pay to wife’s divorce attorney. There was no stay violation for the state court to hold the contempt hearing, because the contempt hearing was criminal contempt, and 11 USC 362(b)(1) stay…