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May 3, 2008

New Study on Justice Scalia Statutory Interpretation

I found a great new article on Justice Scalia, thanks to Professor David Hricik's Statutory Construction Blog.  Written by Professor Miranda McGowen at the University of San Diego, it is entitled, "Do as I Do, not as I say: An Empirical Investigation of Justice Scalia's Ordinary Meaning Method of Statutory Interpretation."  Studying Scalia's dissents for the past twenty years she concludes,

"This study shows that Justice Scalia consults an eclectic set of extrinsic materials when he is construing statutes.  He in fact uses essentially the same broad set of materials that other justices use—except for legislative history.

"This also study found that Justice Scalia’s methodology is eclectic, too.  In a quarter of the issues in this sample, Justice Scalia abandoned textualism in favor of overtly common law methods.  When interpreting regular statutes, his presumption in favor of ordinary meaning did little work for him; in a majority of cases Justice Scalia construes words in statutes in light of their specialized, legal meanings or the meaning they have accrued in case law or in common law, not their ordinary meaning.

"Whatever Justice Scalia says about his interpretive theory, he is as purposivist of a judge as they come.  The data show that he interprets statutes in light of purpose as frequently as the rest of the Court.  Purpose rather than text sometimes drives his interpretation; if statutory purpose requires it, he will sometimes adopt second-best textual interpretations.

"The purposes he attributes to statutes do not come from his theory of interpretation, for he claims that purpose analysis is generally improper, unless the text indicates the statute’s purpose.  Nor do they come from the legislative materials, for he considers them too unreliable and too easily manipulated to provide judges with the proper amount of constraint.

"Sometimes Justice Scalia does infer statutory purpose from the text, and sometimes from agency regulations.  But frequently, his sense of a statute’s purpose comes from earlier Court decisions and lower court decisions.  Indeed, this is so often the case that his statutory interpretation practice bears an uncanny resemblance to the kind of common law interpretation of statutes he has decried in his theoretical writings."

May 3, 2008 in Article Reviews, Supreme Court | Permalink | Comments (0) | TrackBack

$670,000 in Sanctions Awarded Against New York and Florida Law Firms for Filing Improper Recusal Motion

In re Evergreen Security, Ltd, --- B.R. ----, 2008 WL 434644 (Bkrtcy.M.D.Fla. Jan 08)

In a 60 page opinion, Bankruptcy Judge Arthur B. Briskman granted $670,000 in sanctions against a New York law firm and a Florida law firm and various attorneys.  The New York attorney was barred from appearing before Judge Briskman for five years. 

In the sanctions motion, debtor's counsel requested "fees of $631,266.00 and costs of $40,251.69 [against two law firms and various lawyers] in defending the Recusal Motion, addressing the mandamus matters, and prosecuting the Sanctions Motions."  The basis for the recusal motion was that Judge Briskman was "being investigated" by the 11th Circuit Judicial Counsel.  There was apparently a complaint against the judge in an unrelated case but no evidence of any investigation.   

The firms, according to Judge Briskman, filed Affidavits [in their defense] which "asserted the Recusal Motion was filed in good faith, but did not set forth any facts supporting such assertion. The Affidavits did not articulate what specific events or facts led to the filing of the Recusal Motion, who was responsible for its drafting and filing, or what due diligence the Respondents conducted prior to filing the pleading. They primarily expressed [counsel's] profound regret over the results of the filing.  The Affidavits did not establish the Respondents' actions in connection with the Recusal Motion were made in good faith."

"The Respondents, displeased with adverse rulings and desiring to delay pending matters, particularly the Involuntary Cases, drafted the Recusal Motion making scandalous allegations against the undersigned and [opposing counsel].  The pleading is a conglomeration of gossip, intentional misrepresentations, and untruths.  It had no evidentiary or legal support at the time it was filed, or at any time.  Not a single claim has factual basis or legal merit."

"The Respondents conducted no reasonably thorough and objective investigation of the facts regarding the 'complaint' and 'investigation' allegations."

May 3, 2008 in Other Circuit Briefs | Permalink | Comments (0) | TrackBack

May 2, 2008

Reaffirmation Agreement Must be Approved Before Entry of the Discharge

Its scary what you don't know. 

In re Engles,  ---- B.R.  ----, 2008 WL 555009  (Bkrtcy M.D. Okla, Feb. 2008)

Issue:   Can the bankruptcy court “temporarily” vacate the discharge on the debtor’s motion for the purpose of permitting entry of an order approving a reaffirmation agreement?            

Holding:      No.      

Judge Terrence Michael

The debtors executed a reaffirmation of a debt on a vehicle.  They sent it to the lender, Regions Bank.  “For reasons unknown to the parties, the Agreement was apparently delayed in reaching its destination and was never filed with the Court.”  The discharge was entered and the car repo’ed.  The debtors then moved the court, under FRCP60(b), to vacate the discharge for the purpose of entering an order of reaffirmation.  The car had equity and the debtors, at all times, were current with the monthly payments.  The court denied the motion. 

“Because of the serious consequences associated with reaffirmation-that the debtor will remain liable for an otherwise dischargeable debt-strict compliance with the terms of § 524 is mandatory.  Based on the plain language of § 524(c)(1), which mandates that an agreement must be made before the granting of the discharge in order to be enforceable, the execution of a reaffirmation agreement after the granting of the discharge renders that agreement unenforceable as a matter of law.”

As to vacating the discharge, the court said that under Section 727(d) and (e), only “the trustee, a creditor, or the United States trustee” has the ability to revoke a debtor's discharge.  As to the equitable power of the court to vacate the discharge, “[A] bankruptcy court's supplementary equitable powers under [section 105] may not be exercised in a manner that is inconsistent with the other, more specific provisions of the Code.”

May 2, 2008 in Other Circuit Briefs | Permalink | Comments (1) | TrackBack

May 1, 2008

9th Circuit BAP Rules on "Applicable Commitment Period" When Debtor is Self-Employed

Drummond v. Weigand (In re Weigand),  --- B.R. ---  (9th Cir. BAP Apr, 2008)

Issue:   Is the “applicable commitment period” determined by a self-employed person’s gross income, i.e., gross receipts, or net income, i.e., net business income?         

Holding:      Gross income      

Judge Ralph Kirscher, Montana
Jury, Pappas, Dunn
Opinion by Jury

The debtor is self-employed.  His gross income makes him an “above-median” debtor.  When business expenses are deducted, he is below-median.  He proposed a three year chapter 13 plan and the trustee objected to the length.  The bankruptcy court confirmed the plan over the objection. 

The BAP reversed.  The code defines CMI as all income whether or not it is taxable.  CMI determines the applicable commitment period, i.e., the length of the plan.  As to disposable income, i.e., the amount of the plan payment, the code “provides that business deductions are taken from the debtor’s current monthly income to arrive at disposable income under § 1325(b)(2)[(B)].”  “We start with the plain meaning rule and examine the statutory language in §§ 101(10A) and 1325(b)(2).  If the statutory language is clear, we must apply it by its terms unless to do so would lead to absurd results.”  CMI includes all income and “If business expenses are deducted from gross receipts to determine a chapter 13 debtor’s current monthly income, then there would be no need for § 1325(b)(2)(B), which provides for the same deductions.  We conclude that § 1325(b)(2) plainly and unambiguously requires a debtor to deduct business expenses from current monthly income [when computing disposable income only].” 

Note:  The B22C form instructs the debtor to deduct business expenses from current monthly income or "above the line."  The BAP said that is wrong and the form will have to be changed. 

May 1, 2008 in 9th Circuit Briefs | Permalink | Comments (0) | TrackBack

April 30, 2008

New Student Loan Case in the 4th Circuit

Educational Credit Management Corp. v. Mosko (In re Mosko),  515 F.3d 319  (4th Cir. Feb. 2008)

Issue:   Did these debtors establish that they made a good faith effort to repay their student loans?           

Holding:      No.      

Appeal from the District Court

The debtors “lived in Mocksville, North Carolina, with their four-year-old son.  Robert’s and Brenda’s student loans as of July 15, 2005, equaled $63,417.06 and $57,156.41, respectively.”  They sought an order that the student loans were discharged as a hardship.  Both have bachelors degrees and Brenda has a master’s degree.  The three years before the bankruptcy they made jointly, $75,000, $78,000 and $64,000.  Robert’s employment is somewhat erratic because of medical problems.  The bankruptcy court granted the discharge and the District Court affirmed. 

The 4th Circuit Court of Appeals reversed finding that the debtors did not meet the third Brunner test, i.e., “a good faith effort to repay their loans.”  “The Moskos have not demonstrated a good-faith effort to obtain employment and maximize income.  Brenda does not work during the summer months because she wishes to spend time with her son and care for her mother.”  “The record does not show that [Robert’s] medical condition precludes him from all part-time employment, self employment, or other work from home.”  “In addition, the budget the Moskos presented to the bankruptcy court does not minimize their expenses.  Each month, the Moskos spend $75 for internet, $80 for cell phones, $60 for satellite television, $68 for a YMCA membership, and an undisclosed amount for cigarettes.”  “Furthermore, the Moskos’ actual expenditures do not demonstrate an effort to minimize expenses.  Between December 2, 2004 and March 1, 2005, the Moskos spent over $1,600 at Circuit City, Best Buy, Amazon.com, and Radio Shack; over $3,000 at Sam’s Club, Wal-mart, and Kmart; and over $800 on computer software related purchases. We conclude that their expenditures do not indicate a good faith effort to minimize expenses.  Furthermore, the Moskos’ failure to minimize expenses during a period when Robert was unemployed indicates that their own negligence contributed to their current financial situation.”  “Additionally, the payments the Moskos made on their student loans are insufficient to demonstrate good faith because they failed to make payments on their student loans during a time period when their income substantially exceeded their necessary expenses.”  “Finally, the Moskos failed to adequately pursue loan consolidation options.”  “Based on the Moskos’ adjusted gross income of $64,130 in 2004, their monthly payments under the income-contingent William D. Ford Direct Loan Consolidation Program would be approximately $319 per month.”

April 30, 2008 in Other Circuit Briefs | Permalink | Comments (0) | TrackBack

April 28, 2008

California Bankruptcy Forum 20th Annual Conference

The 20th Annual California Bankruptcy Conference can be found here.

May 16-18, 2008 • Hyatt Grand Champions, Indian Wells

April 28, 2008 in Programs | Permalink | Comments (0) | TrackBack