BankruptcyProf Blog

Discharge in Chapter 7 Denied for Failure to Comply with Chapter 13 Confirmation Order

Standiferd v. United States Trustee, --- F.3d ----, D. Ct. No. 1:09-CV-00083-RB-RLP (10^th Cir., April, 2011)

Issue:               Is denial of the discharge appropriate based on chapter 7 debtor’s pre-conversion failure to obey the Chapter 13 confirmation order.

Holding:          Yes under these facts.   

Appeal from District Court

Ronald and Betty Standifer, filed Chapter 13, obtained confirmation of their Chapter 13 plan, and then violated the confirmation order by failing to update the trustee of their post-petition monthly income report and tax return, as required under their Chapter 13 confirmation order.  The trustee filed a motion to dismiss and the debtors voluntarily converted their case to Chapter 7.  The Chapter 7 trustee then filed a complaint to deny the discharge based on the failure to follow the confirmation order.  The bankruptcy court agreed and denied the discharge.  The District Court affirmed.  

The 10th Circuit affirmed.  Under section 727 (a)(6)(A), the court may deny discharge of a debt if the debtor willfully failed “in this case” to follow any “lawful order of the court.” The debtors argued a confirmation order is not a “lawful order of the court” and cannot require a debtor to do anything because under section 1307(a) and (b), a Chapter 13 debtor has an unwaivable right to either convert his case to a Chapter 7 at any time, or dismiss the Chapter 13 case completely.  In applying the “plain meaning” doctrine to interpret the statue, and attempting to preserve legislative intent, the court held that for the purposes of § 727 (a)(6)(A) a Chapter 13 Confirmation Order is a “lawful order of the court”.  Although the code may permit a Chapter 13 to convert or dismiss his case, and stop complying with the provisions of a confirmation order, “as long as the debtor remains under Chapter 13, however, he must comply with the terms of the bankruptcy court’s confirmation order.”

The debtors further argued that section 727 (a)(6)(A) is only applicable in a case proceeding under Chapter 7 and should not apply because the refusal to obey the confirmation order occurred before the case was converted to Chapter 7 and not “in this case” as required under the statute.”  The debtors relied on section 348(f) in their claim that it is Congress’ intent for the two phases of a bankruptcy case be treated as separate and distinct, upon conversion from Chapter 13 to Chapter 7.  The court held that at the time the discharge was denied under section 727 (a)(6)(A), the case was proceeding under Chapter 7.  Further, rather than applying section 348(f) which focuses on the composition of a converted bankruptcy estate, the court applied section 348(a) stating “the conversion of a case from one chapter to another… does not affect the date of the filing of the petition, the commencement of the case, or the order for relief.”  For purposes of section 727 (a)(6)(A) ““this case” includes proceedings occurring both before and after conversion.”

The court found the denial of discharge to be a proper remedy against this debtor for misconduct. Under the Chapter 13 plan, the debtors proposed to pay 100% of the allowed unsecured which began at upwards of $400,000.  By the time of conversion to Chapter 7, the debtors had nearly tripled their debt.  Instead of the debtor “committing the fruit of his good fortune to his creditors” the court found the debtors’ disregard toward their obligations by spending their increased income on home improvements wrongful and warranting the court’s denial of their discharge.  In this case, the court found the debtors were not entitled to the “extraordinary benefit of discharge” as it should only be available for “the honest but unfortunate debtor”.

By: Carolyn Afari 

Circuit Court of Appeals Cases from Last Week

United States Second Circuit, 02/07/2011
DISH Network Corp. v. DBSD N. Am., Inc., No. 10-1175
Chapter 11 plan confirmed and designation of votes of DISH Network Corporation as "not in good faith" under section 1126(e) where: 1) bankruptcy court's decision to designate DISH's vote as not having been cast in good faith and its treatment of its class's vote is appropriate; but 2) Sprint has standing to appeal the denial of its objection to the confirmation of the reorganization plan and the bankruptcy court erred in confirming the plan of reorganization.

United States Second Circuit, 02/08/2011
In re Adelphia Recovery Trust, No. 09-0799
Bankruptcy Court affirmed in part and reversed in part barring the Adelphia Recovery Trust from pursuing fraudulent conveyance claims against the appellee banks on res judicata and estoppel grounds.

United States Ninth Circuit, 02/10/2011
Barrientos v. Wells Fargo Bank, N.A., No. 09-55810
In an action alleging violation of section 524 must be brought by motion, not via an adversary proceeding.

Thanks to Findlaw.com. 

More Problems for MERS

From: "Steve Smith" <sesmithesq@aol.com>
To: cdcbaa@yahoogroups.com
Sent: Tuesday, February 15, 2011 9:31:58 AM
Subject: [cdcbaa] Re: Big MERS decision

This is a follow-up piece on the decision, from the Wall Street Journal: http://blogs.wsj.com/developments/2011/02/14/us-bankruptcy-judge-questions-legal-claims-of-mers/
The actual holding of the case granted the MFR in favor of the movant, on the grounds that the prior judicial foreclosure ruling the party was trying to enforce was res judicata; the exciting part of the decision comes when the judge holds that not withstanding the ruling, in future cases where a party appears in court with a claim based on an assignment from MERS, they will be out of luck...this is the actual ruling: http://www.nyeb.uscourts.gov/opinions/reg/334499_41_opinion.pdf

Court of Appeals Cases from Last Week

United States First Circuit, 11/02/2010
In re Net-Valazquez, --- F.3d --- (1st Cir. 2010) 
Creditor's garnishment of funds affirmed as preference: 1) because the creditor neglected to squarely raise its arguments before the bankruptcy court, it has waived them; and 2) the equities do not heavily preponderate in favor of allowing the new arguments.

Court of Appeals of New York, 11/04/2010
Kirschner v. KPMG LLP, No. 151
In a derivative action against accounting firms by the litigation trustee for allegedly aiding and abetting fraud, in response to questions certified by the Second Circuit, the court declined to alter its precedent relating to in pari delicto, and imputation and the adverse interest exception, as it would have to do to bring about the expansion of third-party liability sought by plaintiffs here.

Circuit Court of Appeals Cases from Last Week

United States First Circuit, 10/22/2010
In re Handy, --- F.3d --- (1st Cir. 2010)
Motion for relief from stay against a debtor to bring action under the Uniform Fraudulent Transfer Act (UFTA) denied where: 1) plaintiff has not stated a claim in rem; 2) plaintiff's claim that he may purse his fraudulent conveyance claim post-discharge is rejected; and 3) that plaintiff was obliged to object to debtor's claim of a homestead exemption is not properly before the court.

United States Fifth Circuit, 10/20/2010
In re SCOPAC, --- F.3d --- (5th Cir. 2010) 
Bankruptcy court erred in denying creditor's "superpriority" administrative claim

United States Seventh Circuit, 10/18/2010
Costello v. Grundon, --- F.3d --- (7th Cir. 2010) 
1) district court's grant of summary judgment in favor of the trustee affirmed where borrowers' lacked standing to assert the alleged violations of Regulations G and U as affirmative defenses; 2) district court's grant of trustee's MSJ vacated with respect to the affirmative defenses of illegality under section 10(b) and SEC Rule 10b-5, illegality under section 17(a) of the Securities Act of 1933, set off for fraud, set-off for negligent misrepresentation, and excuse-of-nonperformance; and 3) given the disposition of the appeals from the grants of summary judgment, the appeals from the Amended Judgments are dismissed as moot.

United States Seventh Circuit, 10/20/2010
Redmond v. Fifth Third Bank, --- F.3d --- (7th Cir. 2010) 
Debtor's motion to reopen his bankruptcy case, claiming that a bank's foreclosure suit was in violation of the bankruptcy court's ordersdenied where: 1) the motion to reopen was untimely; 2) the state court was an appropriate forum to litigate debtor's potential claims, and his bankruptcy arguments were, in any event, meritless; and 3) the debtor was not denied a fair hearing.

United States Ninth Circuit, 10/21/2010
Ahcom, Ltd. v. Smeding, --- F.3d --- (9th Cir. 2010) 
Creditor of a corporation in bankruptcy has standing to assert a claim against the corporation's sole shareholders on an alter ego theory.

Thanks to Findlaw.com

Circuit Court of Appeals Cases from Sept

United States First Circuit, 09/08/2010
In re Paolo, --- F.3d ----- (1st Cir 2010) 
Appeal of a district court's decision to abstain from a tax dispute dismissed as the appeal is barred by section 1334(d)

United States Fifth Circuit, 09/17/2010
Reed v. City of Arlington, --- F.3d ----- (5th Cir 2010)  
In Chapter 7 where debtors omitted a pending $1 million-plus judgment from their sworn statements and bankruptcy filings, debtors' discharge denied, to protect the integrity of judicial processes, judicial estoppel barred the trustee from collecting the judgment.

United States Sixth Circuit, 09/15/2010
Deutsche Bank Nat'l Trust v. Tucker, --- F.3d ----- (6th Cir 2010)  
In Chapter 13, bank's fees and advances, which were allowed under the parties' agreement and applicable nonbankruptcy law, must be included in the cure amount.

United States Ninth Circuit, 09/14/2010
In re Gebhart, --- F.3d ----- (9th Cir 2010)  
Debtors' homes may be sold by trustee even thought the property had no equity when the case was filed but had increased in value during the pendancy of the case

United States Tenth Circuit, 09/14/2010
In re Dittmar, --- F.3d ----- (10th Cir 2010)  
Debtors' stock appreciation rights (SARs) are part of debtors' estates under section 541 where: 1) while the value of the SARs may have been de minimis, debtors still have a property interest; and 2) the SARs created by the collective bargaining agreement at issue were more akin to contingent pre-petition property rights than mere expectancies based on discretionary bonuses

Circuit Court of Appeals Cases from Last Week

United States First Circuit, 10/01/2010
Perry v. Blum, --- F.3d --- (1st Cir. 2010) 
Suit for an accounting of foreclosure proceeds and all rents collected.

United States Second Circuit, 10/05/2010
Simmons v. Roundup Funding, LLC, --- F.3d --- (2nd Cir. 2010) 
Proof of claim filed in bankruptcy court cannot form the basis for a claim under the Fair Debt Collection Practices Act.

United States Fifth Circuit, 09/28/2010
In re Kleibrink, --- F.3d --- (5th Cir. 2010)
Court's ruling that a creditor held an enforceable security interest in property, despite having received a discharge in an earlier bankruptcy proceeding, affirmed where the notice given to the creditor did not satisfy the due process standard for notice set forth in Mullane.

United States Sixth Circuit, 09/30/2010
In re NM Holdings Co., LLC, --- F.3d --- (6th Cir. 2010) 
In trustee's suit against debtor-company's former auditor, claiming negligence and aiding and abetting CEO's breach of his fiduciary duty to the company, summary judgment is affirmed where: 1)complaint does not allege reliance by the company or by the company's fairness committee, and the alleged reliance by the company's creditors cannot support a claim brought by the trustee on behalf of the company; and 2) statute of limitations applied to the trustee's aiding-and-abetting claim. 

United States Seventh Circuit, 10/01/2010
In re Res. Tech. Corp. --- F.3d --- (7th Cir. 2010)
Bankruptcy court's rejection of the chapter 7 trustee's proposed assignments of the debtor's contracts with four Illinois landfills, and an order requiring a company, managed by the debtor's key officers, to pay the debtor's Chapter 7 operating expenses in exchange for the assignment of certain contracts, affirmed.  

Circuit Court of Appeals Cases from Last Week

Still catching up!

Third Circuit, 07/13/2010
In re Visteon Corp.
Debtor-employer may not terminate provision of retiree health and life insurance benefits without complying with section 1114. 

Sixth Circuit, 07/22/2010
In re: Darrohn
Bankruptcy court's confirmation of chapter 13 plan reversed in light of the Supreme Court's recent decision in Hamilton v. Lanning where: 1) the bankruptcy court erred when it determined that it was required to use the income calculated on Form B22C, which was derived from the six-month look-back formula, rather than debtors' current monthly income; and 2) the bankruptcy court erred in failing to account for the debtors' intent to surrender properties securing the mortgages in considering reasonable necessary monthly expenses.

Ninth Circuit, 07/16/2010
In re Penrod
Creditor does not have a purchase money security interest in the "negative equity" arising from a vehicle traded in at the time of a new vehicle purchase. (Note: I filed an Amicus Brief in this case)

Tenth Circuit, 07/20/2010
In re Roser 
Chapter 7 trustee cannot avoid a creditor's lien, where Colorado Certificate of Title Act (CCTA) did not supersede Colorado UCC section 4-9-317(e) because the provision did not govern the manner or timing of the perfection of liens, and governed only the priority of a lien and was not inconsistent with the CCTA.
 
Eleventh Circuit, 07/19/2010
In re Tennyson
Above median income debtor, with negative disposable income, may not confirm Chapter 13 bankruptcy plan to last for less than five years when the debtor's unsecured creditors have not been paid in full. 

Thanks to Findlaw.com.   

Court of Appeals Cases from Last Week

Fifth Circuit, 07/07/2010
In re Texas Pig Stands, Inc.
Trustee liable for a tax deficiency incurred in running the debtor's business, where the trustee exceeded his authority, violated the plan, and committed willful misconduct, and therefore the Trust Agreement did not limit his liability.

Seventh Circuit, 07/09/2010
In the Matter of Solis
Under the terms of the contingent fee agreement, the attorney is entitled to a percentage of only the money he actually recovered from other parties, not a percentage of the money the debtor had received earlier. 

Eighth Circuit, 07/09/2010
In re Polaroid Corp.
In a creditor's appeal of the bankruptcy court's approval of a debtor's sale, free and clear of any liens, of its assets, the appeal is dismissed where no party obtained a stay of the sale pending appeal, and thus the appeal was moot.

Ninth Circuit, 07/07/2010
Ta Chong Bank Ltd. v. Hitachi High Techs. Am., Inc.
Complaint dismissed where claims were based solely on plaintiff's interest in the third party's accounts receivable, which the bankruptcy court had determined to be property of the third party's bankruptcy estate. 

Eleventh Circuit, 07/09/2010
In re Mouzon Enters., Inc.
Order resolving a claim that has been objected to, but not litigated, does not constitute an order "entered without a contest" for the purposes of Fed. R. Bankr. P. 9024.

Circuit Court of Appeals Cases from Last Week

Third Circuit, 06/29/2010
In re Goody's Family Clothing Inc.
"Stub rent" is administrative expense here, section 365(d)(3) does not supplant section 503(b). 

Sixth Circuit, 07/02/2010
In re Johnson
perfection of lender's security interest in truck did not occur until March 7, 2005, when the security interest was actually noted on the certificate of title. 

Eighth Circuit, 06/28/2010
US v. Mitchell
fraud sentence is affirmed where, in a complicated proceeding such as this, the district court must reasonably approximate the value of the assets that the defendant fraudulently sought to preserve.

Tenth Circuit, 06/29/2010
In re Graves
section 542 does not empower a trustee to demand turnover from a debtor in this case, where debtors' interest in a 2006 tax refund was irrevocably applied pre-petition to 2007 taxes

Thanks to Findlaw.com 

Circuit Court of Appeals Cases from Last Week

Catching up.

2nd Circuit Court of Appeals, June 22, 2010
In re Delta Airlines, Inc., --- F.3d --- (2nd Cir. 2010)(sustaining of objections to claims under tax indemnification agreements reversed where: 1) court's construction of "pay" in agreement in error; and 2) the bankruptcy court effectively nullified the agreements by stripping them of their ability to protect the Owner Participant in the event of debtor's default)

5th Circuit Court of Appeals, June 21, 2010
In re Wilborn, --- F.3d --- 5th Cir. 2010)(proposed class in this case did not satisfy the requirements of FRCP 23 and FRBP 7023)

7th Circuit Court of Appeals, June 23, 2010
In re McKinney, --- F.3d --- (7th Cir. 2010)(appeal dismissed for lack of jurisdiction as, although the issue that the tax debt owner cares about may have been resolved, its basic dispute with the bankruptcy estate has not been resolved and therefore the judgment of the bankruptcy court is not final)

10th Circuit Court of Appeals, June 23, 2010
In re Trout, --- F.3d --- (10th Cir. 2010)(trustee, having successfully avoided a preferential vehicle lien under section 547, the trustee was not entitled to a money judgment equal to the value of the avoided liens under section 550(a), where the bankruptcy estate had been sufficiently returned to its pre-transfer status by avoiding the preferential lien at issue and stepping into the lien priority of the avoided creditor under section 551)

Thanks to Findlaw.com

Circuit Court of Appeals Cases from Last Week

U.S. Supreme Court, June 17, 2010
Schwab v. Reilly, --- US --- (2010)(debtor gave “the value of [her] claimed exemption[s]” on Schedule C dollar amounts within the range the Code allows for what it defines as the “property claimed as exempt,” the trustee was not required to object to the exemptions in order to preserve the estate’s right to retain any value in the equipment beyond the value of the exempt interest)

1st Circuit Court of Appeals, June 15, 2010
In re Nosek, --- F.3d --- (1st Cir. 2010)(In a creditor's appeal from a $250,000 sanction issued sua sponte by the bankruptcy court, the sanction is reduced to $5,000 where: 1)creditor's claim that it was the holder of the mortgage at issue was not a deliberate falsehood or intended in any way to mislead the court or debtor or achieve anything for creditor; and 2) the bankruptcy court did not identify any actual prejudice from the inaccurate claim of holder status)(Note:  David Souter sat on the panel in this appeal)

2nd Circuit Court of Appeals, June 15, 2010
SEC v. Byers, --- F.3d --- (2nd Cir 2010)(In nonparties' appeal from the district court's order holding that its jurisdiction in rem and its equitable powers provided it with sufficient authority to issue an injunction barring non-parties from filing involuntary bankruptcy petitions against any of the defendants, the order is affirmed where, while it should be sparsely exercised, district courts possess the authority and discretion to enter anti-litigation orders, including those that bar the filing of involuntary bankruptcy petitions absent the district court's permission)

9th Circuit Court of Appeals, June 09, 2010
In re Southern Cal. Sunbelt Developers, --- F.3d --- (9th Cir. 2010)(In actions seeking damages for filing of involuntary bankruptcy petitions against two alleged debtors, judgment for damages is affirmed in part where: 1) 11 U.S.C. section 303(i) permits an award of attorney's fees for a section 303 action as a whole, including fees incurred to litigate claims for fees and damages under section 303(i)(1) and (2); 2) section 303(i) permits an award of punitive damages under section 303(i)(2)(B) in the absence of an award of actual damages under section 303(i)(2)(A); and 3) award against two individual appellants jointly and severally liable for the costs and attorney's fees the debtors incurred in obtaining dismissal of the involuntary petitions is proper. However, the judgment is reversed in part where the bankruptcy court erred by holding the individual appellants liable for the debtors' costs and fees incurred on the section 303(i) motions themselves)

Thanks to Findlaw.com  

Circuit Court of Appeals Cases from Last Week

U.S. Supreme Court, June 07, 2010
Hamilton v. Lanning, --- U.S. ---- (2010)(Supreme Court approves "forward looking approach" for computing chapter 13 plans by above-median debtors, i.e. the court may account for changes in the debtor’s income or expenses that are known or virtually certain at the time of confirmation)

9th Circuit Court of Appeals, June 09, 2010
In re Southern Cal. Sunbelt Developers, --- F.3d --- (9th Cir 2010)( 1) bankruptcy court properly concluded that 11 U.S.C. section 303(i) permitted an award of attorney's fees for a section 303 action as a whole, including fees incurred to litigate claims for fees and damages under section 303(i)(1) and (2); 2) section 303(i) permitted an award of punitive damages under section 303(i)(2)(B) in the absence of an award of actual damages under section 303(i)(2)(A); and 3) the bankruptcy court properly held two individual appellants jointly and severally liable for the costs and attorney's fees the debtors incurred in obtaining dismissal of the involuntary petitions. However, the judgment is reversed in part where the bankruptcy court erred by holding the individual appellants liable for the debtors' costs and fees incurred! on the section 303(i) motions themselves)

Thanks to Findlaw.com

3rd Circuit Overrules Frenville

In re Grossman’s,  --- F.3d --- (3rd Cir. June, 2010)

Issue:   Should the 3rd Circuit overrule In re Frenville re when a claim arises?  If so, when does a claim arise?  
   
Holding:    Yes.    A claim arises when a person is exposed to the product or conduct which “gives rise to an injury.” 

In Banc ruling.  Note:  the 3rd Circuit is Pennsylvania, New Jersey and Delaware.   

“In 1977, Appellee Mary Van Brunt, who was remodeling her home, purchased products that allegedly contained asbestos.”  Grossman’s filed chapter 11 in 1997.  “It was only in 2006, almost ten years later, that Ms. Van Brunt began to manifest symptoms of mesothelioma, a cancer linked to asbestos exposure.  She was diagnosed with the disease in March 2007.”  She died in 2008.  The bankruptcy court ruled that the claim was postpetition and therefore not discharged because it arose after the plan was confirmed.   The basis for the ruling was In re Frenville, 744 F.2d 332 (3d Cir. 1984).  The district court affirmed.

The 3rd Circuit reversed and specifically overruled Frenville.  “According to Frenville, the claims arose for bankruptcy purposes when the underlying state law cause of action accrued.  The New York tort cause of action accrued in 2006 when Ms. Van Brunt manifested symptoms of mesothelioma.  The claims were therefore post-petition under Frenville.”  “The question remains, however, whether we should continue to follow Frenville and its accrual test.”  “Frenville has proved a remarkably unpopular decision and no other Circuit Court of Appeals has followed it.’  At least one bankruptcy court has stated that Frenville ‘may be fairly characterized as one of the most criticized and least followed precedents decided under the current Bankruptcy Code.’”  “We are persuaded that the widespread criticism of Frenville’s accrual test is justified, as it imposes too narrow an interpretation of a ‘claim’ under the Bankruptcy Code.  Accordingly, the Frenville accrual test should be and now is overruled.”

The opinion then goes on to state the rule which will now replace Frenville in the 3rd Circuit at least. 

“Irrespective of the title used, there seems to be something approaching a consensus among the courts that a prerequisite for recognizing a ‘claim’ is that the claimant’s exposure to a product giving rise to the ‘claim’ occurred pre-petition, even though the injury manifested after the reorganization.  We agree and hold that a ‘claim’ arises when an individual is exposed prepetition to a product or other conduct giving rise to an injury, which underlies a ‘right to payment’ under the Bankruptcy Code. See 11 U.S.C. § 101(5).  Applied to the Van Brunts, it means that their claims arose sometime in 1977, the date Mary Van Brunt alleged that Grossman’s product exposed her to asbestos.”

The 3rd Circuit remanded for further findings re whether Van Brundt received adequate notice of the bankruptcy proceeding, the bar date etc and therefore whether the discharge injunction applied to her or whether the plan otherwise adequately provided for the claim which would require her to make a claim under the plan. 

Circuit Court of Appeals Cases from Last Week

3rd Circuit Court of Appeals, June 01, 2010
In re Exide Technologies, --- F.3d --- (3rd Cir 2010)(agreement to sell substantially all of its industrial battery business is not an executory contract because it does not contain at least one ongoing material obligation for the other party and therefore cannot be rejected)

3rd Circuit Court of Appeals, June 02, 2010
In re Grossman's Inc., --- F.3d --- (3rd Cir 2010)(In Chapter 11 proceedings, plaintiffs' tort claims, arising from exposure to asbestos contained in home improvement products sold by the debtor, are "claims" where: 1) the Frenville accrual test is overruled as it imposes too narrow an interpretation of a "claim" under the Bankruptcy Code; 2) a "claim" arises when an individual is exposed pre-petition to a product or other conduct giving rise to an injury, which underlies a "right to payment" under the Bankruptcy Code, and here, plaintiffs' claims arose sometime in 1977, the date the plaintiff alleged that debtor's product exposed her to asbestos; and 3) on remand, whether a particular claim has been discharged by a plan of reorganization depends on factors applicable to the particular case and is best determined by the appropriate bankruptcy court or the district court)

5th Circuit Court of Appeals, June 03, 2010
In re Velocita Worldwide Logistics Inc., --- F.3d --- (5th Cir 2010)(no implied right of contribution among defendants who agreed to be jointly and individually liable for a payment as part of the settlement agreement for a state tort action where the obligations in the instant settlement agreement were not analogous to the obligations in surety and guaranty agreements, the contractual arrangements in which Texas courts had allowed contribution claims against co-obligors)

5th Circuit Court of Appeals, June 03, 2010
In re Moore, --- F.3d --- (5th Cir 2010)(bankruptcy court's approval of a settlement of estate claims over creditor's objection and despite its offer to purchase the claims for higher value is reversed where the claims at issue could be sold as well as compromised, and the bankruptcy court's failure to consider the effect of such a sale was an abuse of discretion)

6th Circuit Court of Appeals, June 04, 2010
Nat'l Union Fire Ins. Co. v. VP Bldg., Inc., --- F.3d --- (6th Cir 2010)(insurer's petition for administrative expenses dissallowed on the ground that the claim was not "actual" and did not benefit the estate, the insurer's request for reimbursement is not an "actual" expense within the meaning of the bankruptcy code)

D.C. Circuit Court of Appeals, June 01, 2010
Moses v. Howard Univ. Hosp., --- F.3d --- (D.C.Cir 2010)(In an action against a hospital claiming retaliation in violation of the Civil Rights Act, summary judgment for defendant is affirmed where, even after he had filed for bankruptcy, plaintiff continued to hold himself out before the district court as a valid plaintiff, a position "clearly inconsistent" with his pursuit of relief in bankruptcy)

Thanks to Findlaw.com

Circuit Court of Appeals Cases from Last Week

2nd Circuit Court of Appeals, May 18, 2010
Adams v. Zelotes, --- F.3d ---, 2010 WL --------- (2nd Cir. 2010)(attack on the constitutionality of section 526(a)(4), re debt relief agencies advising clients to incur additional debt in contemplation of bankruptcy reversed based on Milavetz)

2nd Circuit Court of Appeals, May 18, 2010
AmeriCredit Fin. Servs. v. Tompkins, --- F.3d ---, 2010 WL --------- (2nd Cir. 2010)(creditor has an unsecured deficiency judgment under both state law and the contract of the parties)

7th Circuit Court of Appeals, May 19, 2010
In re South Beach Sec., Inc., --- F.3d ---, 2010 WL --------- (7th Cir. 2010)(chapter 11 dismissed where: 1) debtor's argument that the U.S. Trustee lacks standing because he is not a party in interest is rejected; 2) reorganization plan had not been proposed in good faith as the debtor's disclosure statement suggests no purpose other than to beat taxes; and 3) debtors and the lawyers that appeared for them are order to show cause why they should not be sanctioned for their conduct in their frivolous appeal)

10th Circuit Court of Appeals, May 20, 2010
In re Latture, --- F.3d ---, 2010 WL --------- (10th Cir. 2010)(appeal untimely where: 1) debtor's failure to timely file the appeal deprived the BAP of jurisdiction to hear his appeal; 2) Fed. R. App. P. 6 did not govern an appeal taken from bankruptcy court to a bankruptcy appellate panel; and 3) even assuming debtor did not receive the court's judgment, the BAP could not extend the time to file a notice of appeal)

California Appellate Districts, May 20, 2010
Boyajian v. Ordoubadi, --- Cal.App. ---, 2010 WL --------- (plaintiff's claim for equitable indemnity was discharged in a bankruptcy proceeding in 1994 as bankruptcy law allows for discharges of contingent claims, including claims against the debtor for indemnity before the time the indemnity claim against the debtor can be precisely measured)

Circuit Court of Appeals Cases from Last Week

2nd Circuit Court of Appeals, May 14, 2010
In re Baker, --- F.3d ---, 2010 WL ----------- (2nd Cir 2010)(proceeds of an annuity exempt under New York Debtor and Creditor Law section 282 and New York Insurance Law section 3212 where New York law permitted the debtor to exempt the annuity payments, and he gave consideration for the contract when he released a wrongful death claim)

4th Circuit Court of Appeals, May 11, 2010
US v. Boulware, --- F.3d ---, 2010 WL ----------- (4th Cir 2010)(15-month sentence affirmed for fraudulently making a declaration under penalty of perjury in a bankruptcy case is affirmed)

5th Circuit Court of Appeals, May 14, 2010
In the Matter of Tex. Comm. Energy, --- F.3d ---, 2010 WL ----------- (5th Cir 2010)(draw down a letter of credit in violation of a bankruptcy court order not violated)

8th Circuit Court of Appeals, May 10, 2010
In re Freier, --- F.3d ---, 2010 WL ----------- (8th Cir 2010)(defendant personally liable for a state-court money judgment rendered against a corporation wholly owned by defendant, where: 1) defendant's material promise to repay the debt in the future, made with the intent to defraud and without the intent to perform constituted actionable fraud; and 2) the evidence supported the bankruptcy court's finding that plaintiff relied on defendant's representation about taking draws)

11th Circuit Court of Appeals, May 12, 2010
In re Managed Care Litig., --- F.3d ---, 2010 WL ----------- (11th Cir 2010)(prior class action settlement agreement did not release the claim plaintiff pursued against defendant in the bankruptcy adversary action)

11th Circuit Court of Appeals, May 04, 2010
Old West Annuity & Life Ins. Co. v. Apollo Grp., --- F.3d ---, 2010 WL ----------- (11th Cir 2010)(allocation of surplus proceeds from the sale of real property in a foreclosure action under Florida and bankruptcy law)

Thanks to Findlaw.com

Circuit Court of Appeals Cases from Last Week

1st Circuit Court of Appeals, April 21, 2010
In re Sherman, --- F.3d ---, 2010 WL ----------- (1st Cir. 2010)($983,000 debt non-dischargeable as embezzlement, bankruptcy judge did not make an express finding that debtor knew the action being taken was unauthorized, but judge's conclusion leaves no doubt that he did so find)

1st Circuit Court of Appeals, April 30, 2010
In re Hundley, --- F.3d ---, 2010 WL ----------- (1st Cir. 2010)(question of whether a non-debtor spouse is entitled to a portion of a prepetition tax refund, where the parties filed a joint return and the non-debtor spouse earned no income for the tax year for which the return was filed, is certified to the Massachusetts Supreme Judicial Court)

Thanks to Findlaw.com

Circuit Court of Appeals Cases from Last Week

7th Circuit Court of Appeals, April 15, 2010
In the Matter of Altheimer & Gray, --- F.3d ---, 2010 WL ----------------- (7th Cir 2010)(In a law firm chapter 11, partner's claim not paid as the reorganization plan subordinated partners' claim to those of other creditors, and here, petitioner is a non-unit partner under the plan)

8th Circuit Court of Appeals, April 13, 2010
Bremer Bank, N.A. v. John Hancock Life Ins. Co., --- F.3d ---, 2010 WL ----------------- (8th Cir 2010)(plaintiff's equity in an aircraft and lease was not improperly extinguished by a bank, acting on defendant's instructions, where: 1) the bank properly informed plaintiff that the lease of the aircraft was in default, as required by the lease agreement; 2) given the lease's expansive language, it was reasonable to consider as a remedy the 11 U.S.C. section 1110(b) stipulations requiring the airline to maintain the aircraft and to make monthly payments despite the bankruptcy stay)

9th Circuit Court of Appeals, April 13, 2010
In re Sabban, --- F.3d ---, 2010 WL ----------------- (9th Cir 2010)(monetary award under California's unlicensed contractor statute, Cal. Bus. & Prof. Code section 7031(b), was dischargeable, since under section 523(a)(2)(A) it was not premised on either fraud or actual harm)

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Circuit Court of Appeals Cases from Last Week

2nd Circuit Court of Appeals, April 08, 2010
In re Kalikow, --- F.3d --- (2nd Cir. 2010)(Motion to reopen chapter 11 affirmed where: 1) service on creditors' law firm constituted proper service on them; and 2) creditors violated sections 1141 and 524 and the express terms of the Plan and Confirmation Order. However, the order is reversed where creditors were not holders of pre-confirmation claims discharged in bankruptcy who would normally be bound by the provisions of the Plan, and thus the sanctions awarded against them were improper)

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