Recent Cases
Benjamin v. U.S. (In re Benjamin), ___F.3d___ (5th Cir. May 10, 2019), case18-20185
This case is described as being part of a growing split among federal Circuit Courts, on whether bankruptcy courts have jurisdicition to hear disputes over social security disputes, and over Medicare disputes: American Bankruptcy Institute [5/14/19 e-newsletter] reports that, in In re Benjamin, the Fifth Circuit Court of Appeals rejects the ‘recodification canon’ to divest bankruptcy courts of jurisdiction over Social Security suits. Deepening an existing split of circuits, the Fifth Circuit held that the recodification canon does not divest the bankruptcy court of subject matter jurisdiction to hear Social Security claims. In the May 10 opinion by Circuit Judge…
Wells Fargo Bank NA v. Weidenbenner (In re Weidenbenner), ___BR___ (Bankruptcy Court S.D.N.Y. April 25, 2019) case number 15-244 Freezing a Chapter 7 Debtor’s Bank Account Doesn’t Violate the Automatic Stay
SDNY opinion seems to mean that a bank may freeze a debtor’s entire bank account at filing, without violating the automatic stay. Persuaded by a Ninth Circuit opinion, a district judge in New York held that a bank does not violate the automatic stay by imposing a temporary freeze on the account of an individual who files a chapter 7 petition. The bank had an internal policy of allowing chapter 7 debtors to continue drawing funds from their accounts if the accounts held an aggregate of less than $5,000 on the date of filing. On the other hand, the bank…
Jung v. Internal Revenue Serv. (In re Jung) (Bankr. W.D. Wis., 2019)
Jung v. Internal Revenue Serv. (In re Jung) (Bankr. W.D. Wis., 2019) holds Bankruptcy court has jurisdiction to adjudicate both dischargeability as well as liability of prepetition taxes owed to IRS: After filing chapter 7 the debtors filed an adversary action in bankruptcy court requesting a ruling of discharge for income taxes and penalties. “The IRS moved to dismiss this adversary on the ground of lack of subject-matter jurisdiction under Federal Rules of Civil Procedure 12(b)(1) and 12(h)(3). The IRS asserts the adversary should be dismissed because the decision will not affect creditors given that the case is a no…
FTC v. Federal Check Processing, Inc., ___F.3d ___(2nd Cir. 2019)
The US Court of Appeals for the Second Circuit held that Individual Owners Of Debt Collector Companies Personally Liable For Companies’ FDCPA And FTCA Violations The Second Circuit recently held that it was proper to find two individual co-owners and co-directors of several corporate debt collector entities personally liable for $10,852,396 after such entities violated the Federal Trade Commission Act (FTCA) and the Federal Fair Debt Collection Practices Act (FDCPA). In FTC v. Federal Check Processing, Inc., the FTC brought suit against thirteen corporate debt collector entities and the two co-owners and co-directors of such entities, alleging that the defendants’…
Federal Trade Commission vs. AMG Capital Management, LLC
Federal Trade Commission vs. AMG Capital Management, LLC, ___F.3d___, 2018 Westlaw 6273036 (9th Cir.): The Ninth Circuit Court of Appeals holds that a trial court correctly ordered equitable restitution of $1.27 billion due to a payday lender’s deceptive practices. Comment: seems unlikely that 1.27 billion can be collected from a payday lender, regardless of the amount stated in the judgment against the payday lender.
Williams vs. American Honda Finance Corp.
Williams vs. American Honda Finance Corp., 907 F.3d 83 (1st Cir. 2018): The federal court of appeals for the First Circuit recently decided a case regarding whether, when a car borrower defaults on paying, and the car lender repossesses and sells the car at auction, is the “deficiency” that the car borrow owes calculated as amount owed minus fair market value of car, or as amount owed minus auction price car sold for at a wholesale auction. NOT a 9th Circuit case, NOT on CA law, but still could have effect in how 9th Circuit would rule on this issue,…
In re Maust Transport, Inc., 2018 Westlaw 4488712 (Bankr. W.D. Wash.)
A bankruptcy court in Washington has held that when a creditor assisted a bankruptcy trustee’s prosecution of a fraudulent transfer claim against a bank, the creditor was entitled to seek an award of administrative expenses for its “substantial contributions” to the Chapter 7 estate. FACTS: Following the filing of an involuntary Chapter 7 petition, one of the petitioning creditors suspected that the debtor’s secured lender had received a fraudulent transfer. The Chapter 7 trustee had no funds to pursue the case and could not locate contingent fee counsel to handle the matter. The petitioning creditor then assembled some evidence and…
Obduskey v. McCarthy & Holthus LLP, U.S. Supreme Court case No. 17-1307: Meaning of the Term ‘Debt Collector’ in Foreclosure Protections Case Debated in Supreme Court Oral Argument
On 1/7/19, the US Supreme Court heard oral argument in Obduskey v. McCarthy & Holthus LLP, U.S. Supreme Court case No. 17-1307. A decision is expected to be issued by the US Supreme Court by June 2019. According to CNBC.com, depending what the US Supreme Court rules, the case may resolve a legal question that could have broad ramifications on hundreds of thousands of Americans who are foreclosed on without a judicial process each year. A key issue in the matter is who or what can be considered a “debt collector.” The case centers on Dennis Obduskey, a Colorado man…
In re OGA Charters, LLC, 2018 Westlaw 4057525 (5th Cir.)
In re OGA Charters, LLC, 2018 Westlaw 4057525 (5th Cir.): The Fifth Circuit Court of Appeals recently held that when a bankruptcy estate is subject to mass tort claims, the estate has an equitable interest in the insurance proceeds, thus precluding extrajudicial settlements by the tort victims. FACTS: A thinly-capitalized bus charter company owned an insurance policy providing $5 million in liability coverage. One of the company’s two buses suffered an accident, killing nine passengers and injuring 40 others. The passengers filed claims against the bus company. Some of the passengers quickly entered into settlements with the insurance carrier, which…
Geltzer v. Oberlin College (In re Sterman), 18-01015 (Bankr. S.D.N.Y. Dec. 4, 2018): Bankruptcy Judge in SDNY holds
Tuition Payments for Adult Children Squarely Held to Be Constructively Fraudulent, where parents were INSOLVENT at the time the parents paid the tuition for the parent’s child who was NOT a minor at time the parents paid the “child’s” tuition. However, case also holds parents paying tuition for a MINOR child is NOT a fraudulent transfer, even if the parents were INSOLVENT at the time the parents paid the tuition for the minor child: On an issue dividing the lower courts, Bankruptcy Judge Martin Glenn of New York squarely held that educational expenses paid for a child over the age…