In re Mackinder-Manous

(Bankr. E.D. Ky. Feb. 24, 2015)

The bankruptcy court sustains the chapter 13 trustee’s objection to the government’s late-filed tax claim. The court follows its prior precedent in holding that even if the creditor had no notice of the bankruptcy, a late-filed claim cannot be allowed in a chapter 13 case. Such a claim is not discharged, and thus equitable tolling does not apply, and the creditor’s fundamental fairness argument fails. Opinion below.

2015-02-24 – in re mackinder-manous

Author: Matt Lindblom

Sutherland v. DCC Litigation Facility, Inc. (In re Dow Corning Corporation)

(Sixth Circuit Feb. 20, 2015)

The Sixth Circuit reverses the district court’s dismissal of the plaintiff’s claims based on a Michigan statute of limitations. The plaintiff’s claims were originally filed in federal court in North Carolina, and was then transferred to an Alabama federal court to join a multidistrict litigation panel (Dow Corning silicone breast implant litigation). The plaintiff opted out of the class settlement, and her claims were then transferred to Michigan when Dow Corning filed bankruptcy there, pursuant to 28 U.S.C. § 157(b)(5). When her claims were eventually set for trial, the defendant filed a motion to dismiss the claims under Michigan’s statute of limitations, because the plaintiff had failed to file the original case within three years of her surgery. The district court granted that motion and dismissed the claims. The Sixth Circuit holds that the venue transfer should not alter which state law applies, and North Carolina’s statute of limitations arguably was satisfied. While an issue of first impression in the Sixth Circuit, the court relies on a Second Circuit opinion with a similar holding—a transfer of venue should not change the applicable state law, whether the transfer is of a case filed pursuant to diversity jurisdiction or resting on “related to” bankruptcy jurisdiction. Opinion below.

2015-02-20 – sutherland v dcc litigation facility

Author: Matt Lindblom

Roach v. Barcus (In re Bolen)

(N.D. Ind. Feb. 18, 2015)

The district court denies the request to withdraw the reference to the bankruptcy court. The defendants requested a jury trial in the bankruptcy court and then received an adverse ruling on their motion to dismiss. Then the defendants requested that the reference be withdrawn. The court denies the request based on the request being untimely and to discourage the apparent forum shopping. A motion to withdraw the reference should be made at the time of the jury demand. Opinion below.

2015-02-18 – roach v barcus

Author: Matt Lindblom

Cunningham v. Kentucky Department of Revenue (In re Cunningham)

(Bankr. E.D. Ky. Feb. 12, 2015)

The bankruptcy court grants the debtor’s motion for summary judgment, declaring taxes owed to the department of revenue dischargeable. The court finds that the debtor’s tax obligations did not fit within the framework of 11 U.S.C. § 523(a)(1) and thus were dischargeable. The opinion provides a succinct outline for discharging certain tax obligations. Opinion below.

2015-02-12 – cunningham v ky dept of revenue

Author: Matt Lindblom

Rinaldi v. HSBC Bank USA, N.A. (In re Rinaldi)

(7th Cir. Feb. 11, 2015)

The Seventh Circuit affirms the bankruptcy court’s dismissal of the debtors’ adversary claims against the mortgage holder and the bankruptcy court’s order sanctioning the debtor’s attorney for frivolous court filings. The debtors asserted fraud, breach of contract, tortious interference, and related claims against the mortgage holder, all of which were dismissed by the bankruptcy court. The debtors appealed, and the district court affirmed. The debtors appealed to the circuit court and then dismissed their bankruptcy case, stating they intended to now bring the dismissed claims in state court. The attorney filed numerous motions that the district court held were frivolous, rambling, and not compliant with court rules. The court entered an order holding that any further frivolous filings would result in an award of sanctions. The attorney then filed a motion to withdraw as counsel and intervene as a party in the case. The court allowed the withdraw but held she had no standing to intervene, and then entered the sanctions order. The Seventh Circuit holds that it will not dismiss the appeal for mootness but instead affirms the orders below, including the award of sanctions. Opinion below.

2015-02-11 – in re rinaldi

A second opinion was issued on the same day, sanctioning the same attorney for behavior in a foreclosure case. That opinion can be found here:

2015-02-11 – in re nora

Author: Matt Lindblom

In re Royal Manor Management, Inc.

(6th Cir B.A.P. Feb. 5, 2015)

The Sixth Circuit B.A.P. affirms the bankruptcy court’s orders sanctioning an attorney and denying that attorney’s motion seeking recusal of the bankruptcy judge. The bankruptcy court ordered the attorney to pay over $200,000 in fees and costs incurred by the trustee in disallowing the attorney’s client’s claim, because the attorney presented arguments without merit. In this sixty-page opinion, the court addresses the bankruptcy court’s authority to enter the sanctions order and determines that the arguments presented in support of the claim were frivolous. The bankruptcy court did not err in denying the recusal motion. Opinion below.

2015-02-05 – in re royal manor management

Author: Matt Lindblom

In re Peterson

(Bankr. S.D. Ind. Feb. 4, 2015)

The bankruptcy court denies the creditor’s motion to dismiss or convert the chapter 7 case. The creditor had obtained a judgment against the debtor and her employer for the debtor’s unlawful accessing and dissemination of the creditor’s medical information. The creditor sought dismissal of the case under § 707(b) (failure of means test), but the court determined the debtor’s debts were not primarily consumer debts and thus that section did not apply. While the judgment was not a business debt, that did not necessarily mean it was a consumer debt. The creditor also sought dismissal for cause under § 707(a). The court recognized that seeking to pay a large debt of one creditor is a factor in favor of dismissal, but that alone did not warrant dismissal for cause. There was no evidence of the debtor’s ability to pay the large judgment. Finally, the creditor alternatively sought to convert the case to chapter 11, but the court denied the request, finding no credible evidence of the debtor’s ability to pay the debt or that chapter 11 would benefit creditors more than chapter 7 (in part because the creditor could collect the judgment from the debtor’s employer). Opinion below.

2015-02-04 – in re peterson

Author: Matt Lindblom

MB Financial Bank NA v. T-L Conyers, LLC

(N.D. Ind. Feb. 4, 2015)

In this consolidated appeal of four single asset real estate chapter 11 cases, the district court affirms the bankruptcy court’s denial of the secured creditor’s motion for stay relief. The debtors had proposed plans that consolidated claims against the separate debtors into a single class of claims. The bankruptcy court held the plans were unconfirmable with such a provision, although it was an issue of first impression. The debtor then appealed, proposed new plans without the consolidation provision, then dismissed the appeal. The creditor sought stay relief under § 362(d)(3), arguing that the debtor had not proposed a plan with a reasonable possibility of being confirmed within the timeframe of § 362(d)(3). The court holds that the debtor satisfied the requirements and stay relief was appropriately denied. The first proposed plan had a reasonable possibility of being confirmed following appeal, and the debtors’ decision to file new plans outside the timeframe actually expedited the reorganization process. Opinion below.

2015-02-04 – mb financial bank v t-l conyers llc

Author: Matt Lindblom

Kentucky Employees Retirement System v. Seven Counties Services, Inc.

(W.D. Ky. Feb. 4, 2015)

The district court denies the appellants’ motion to stay the bankruptcy court’s orders confirming the debtor’s chapter 11 plan until appeals are concluded. The court holds that the appellant failed to show likelihood of success on its appeal of the issue of whether an executory contract existed between the appellant and the debtor. Further, the appellants failed to show certain and immediate harm would result if the confirmation orders are not stayed. Opinion below.

2015-02-04 – kers v seven counties services

Author: Matt Lindblom

In re Morgan

(Bankr. E.D. Ky. Feb. 3, 2015)

The bankruptcy court grants the secured creditor’s motion for stay relief with respect to real property owned by the debtor and his daughter. The court finds that the debtor has no equity in the property and, because he claimed his principal residence was elsewhere (although the property was his principal residence only weeks before filing the chapter 13 petition), the property was not necessary to an effective reorganization. Opinion below.

2015-02-03 – in re morgan

Author: Matt Lindblom