May 24, 2008
Circuit Court of Appeals Bankruptcy Cases Last Week
U.S. 3rd Circuit Court of Appeals, May 19, 2008
In re Krebs, --- F. 3d ---, 2008 WL 2079956 (3rd Cir 2008)
intervening Supreme Court decision implicitly overrules prior precedent, and thus the debtor's right to receive payments from her IRA may be exempt under section 522(d)(10)(E).
U.S. 6th Circuit Court of Appeals, May 19, 2008
Giant Eagle, Inc. v. Phar-Mor, Inc., --- F. 3d ---, 2008 WL 2078787 (6th Cir 2008)
calculation of damages for rejection of lease of personal property
U.S. 8th Circuit Court of Appeals, May 22, 2008
In re Zahn, --- F. 3d ---, 2008 WL 2130508 (8th Cir 2008)
Standing of debtor who objects to her own Chapter 13 plan
U.S. 10th Circuit Court of Appeals, May 19, 2008
In re Ballard, --- F. 3d ---, 2008 WL 2080852 (10th Cir 2008)
dealing with surrender of 910 vehicles in chapter 13 plan, secured creditor's right to a deficiency
May 23, 2008
Earle Hagen Memorial Writing Competition
The Law Offices of David A. Tilem and the Central District Consumer Bankruptcy Attorneys Association have established the Earle Hagen Memorial Writing Competition to encourage scholarship and expertise in the field of consumer bankruptcy law.
First Price: $1,500
A prize award of $1,500 will be given to the author of the entry determined by the judges which best meets the criteria set forth in these rules.
Second Prize: $500
If the judges, in their sole determination, conclude that there are more than five (5) serious entries, a second prize of $500 will also be awarded.
This competition is open only to full time law school students currently enrolled in a course of study leading to a JD Degree at the University of Southern California Gould School of Law, The University of California at Los Angeles School of Law, Southwestern Law School, Pepperdine University School of Law and Loyola Law School. Collaborative works are not permitted.
All submissions must be original and unpublished works which address one of the following two topics:
1) The Constitutionality of 11 U.S.C. §707(b)
2) The Constitutionality of 11 U.S.C. §1115(a)
Deadline for submission of materials: July 1, 2008. Announcement of winner: September 1, 2008 Presentation of award: November 7, 2008
For Style Requirements and the Registration Form, please contact Malissa Murgua at The Law
Offices of David A. Tilem, MalissaMurguia@TilemLaw.com.
May 21, 2008
Possible New Supreme Court Case
Tom Goldstein relates in his fabulous blog, scotusblog.com, that the Supreme Court might grant cert on a bankruptcy case at its conference on June 5, 2008. The case is Board of Trustees of the Ohio Carpenters’ Pension Fund v. Bucci. The 6th Circuit opinion and the Supreme Court briefs are posted on the blog dated May 21, 2008. The issue deals with the discharge of debts under Section 523(a)(4) relating to defalcation by a fiduciary. The debtor did not make payments to a pension fund and the fund argued that ERISA makes him a fiduciary and therefore there was a defalcation. The Petition for Cert argues that the circuits are all over the place on this issue and it should be straightened out. The brief opposing the petition has the better argument in my view - the debtor must be in possession of someone else's funds, there must be an express trust before there can be a defalcation and the circuits are not in disarray over that.
9th Circuit BAP Litigant's Manual
This 56 page manual published by the 9th Circuit BAP is great. Besides walking you through the various steps to get your appeal heard, it discusses motions, appealable orders, stays, leave-to-appeal requests, opt-out procedures, hints for your briefs. It cites the rules and gives case cites dealing with the various issues.
Only five circuits have BAPs, the 1st, 6th, 8th, 9th and 10th. The 9th Circuit BAP was formed in 1979 as soon as it was authorized.
May 20, 2008
1st Circuit BAP Rules on Avoidance of Unrecorded Mortgage
I'm not sure why the 1st Circuit BAP published this as it seems pretty clear cut.
Riley v. Sullivan (In re Sullivan) ---- B.R. ----, 2008 WL ------------ (1st Cir. BAP, May, 2008)
Issue: May the chapter 7 trustee avoid an unrecorded lien, preserve the lien for the benefit of the estate and at the same time, subordinate the homestead exemption to the rights of the estate even though the time to object to the exemption has expired?
The debtor purchased a home in 2000 and refinanced it with Ameriquest in 2004. Ameriquest failed to record the mortgage. The chapter 7 trustee filed a complaint to avoid the lien, preserve the lien for the benefit of the estate and subordinate the homestead exemption to the “estate’s interest in the property.” The trustee then settled with Ameriquest with Ameriquest conceding it was unsecured. The trustee then moved for summary judgment which the debtor opposed arguing that the “pleadings amounted to an untimely attempt to object to the homestead exemption.” He also argued that the estate could not preserve the lien because the settlement made the claim unsecured.
The court granted summary judgment to the trustee. The court said that the debtor was trying to undo the settlement to which he had not objected. It also said “that the Trustee was not objecting to the Debtor’s homestead claim, but was merely seeking to enforce the same rights against the Debtor that the mortgagee had, including the priority provisions of the Massachusetts homestead exemption statute with respect to a lien that predates the homestead declaration.”
The BAP affirmed. Section 544(a)(3) gives the trustee the rights of a bona fide purchaser “and allows the trustee to invalidate unperfected security interests.” “under § 551 of the Bankruptcy Code, ‘[a]ny transfer avoided. . . under section 544 . . . is preserved for the benefit of the estate.’” Under Massachusetts law, the unrecorded lien is enforceable against the debtor. Also under Massachusetts law, a homestead declaration recorded after a mortgage attaches to property is subordinate to the mortgage. “As the Trustee correctly noted during oral argument, if the Debtor’s homestead exemption were given priority over the estate’s interest in the property, general creditors would receive nothing. This would be an illogical result, considering that outside of bankruptcy, as between the mortgagee and mortgagor, American’s unrecorded mortgage would have been satisfied before the Debtor could have received any funds.”
May 19, 2008
California Supreme Court Rules 4-3 on Same-Sex Marriage
Entitled, In re Marriage Cases, the 121 page majority opinion (attached here) begins with the proposition that under California Law, domestic partners, i.e., those who register under the Domestic Partnership Act (Cal. Family Code Section 297 et seq) have almost (if not exactly) the same rights and responsibilities as those who marry and therefore, "[t]he question we must address is whether, under these circumstances, the failure to designate the official relationship of same-sex couples as marriage violates the California Constitution." The four person majority of course ruled that it does. The three dissenters essentially say that this is an issue that should be decided by the legislature or the people themselves, not the judicial Branch.
Sharper Image to Sell Remainder of Assets
On May 14, 2008, the Bankruptcy Court in Delaware approved the procedures requested by Sharper Image to sell the remainder of its assets to the highest bidder. It has found a stalking horse buyer who will pay $51 million and a hearing to approve the sale will be held on May 29, 2008. Sharper Image explained in the motion that the liquidation sales are going more poorly than they planned.
Btw, Sharper Image has filed its schedules. The schedules show assets of $165 million and liabilities of $103 million. The five page disclaimer which precedes the schedules advises the reader that the assets are listed at book value and not at current value as the form requires.
May 18, 2008
Circuit Court of Appeals Bankruptcy Cases Last Week
7th Circuit Court of Appeals, May 15, 2008
In re: Resource Tech. Corp., ---- F.3d ------, 2008 WL ------------ (7th Cir, 2008), bankruptcy court denial of a motion to compel chapter 7 trustee to assume and assign contract affirmed.
8th Circuit Court of Appeals, May 13, 2008
Tri-State Fin., LLC v. Lovald, ---- F.3d ------, 2008 WL ------------ (8th Cir, 2008), denial of motion seeking recusal of judge, and granting motion to approve settlement affirmed.
8th Circuit Court of Appeals, May 14, 2008
In re: M & S Grading, Inc.,, ---- F.3d ------, 2008 WL ------------ (8th Cir, 2008), order denying a motion to show cause was not a final appealable order and the order was not a "collateral order."