Midland Funding, LLC v. Johnson

(U.S. Sup. Ct. May 15, 2017)

The Supreme Court holds that a creditor did not violate the Fair Debt Collection Practices Act when it filed a proof of claim on a debt that was barred from collection by the applicable statute of limitations. The proof of claim made clear that the limitations period had passed. The decision resolves a split among the circuits on the question of whether such a filing constituted “false,” “deceptive,” “misleading,” “unconscionable,” or “unfair” conduct under the act. The court reasons that while the claim may not be enforceable, it is nevertheless a “claim” under the bankruptcy code. It is not a false or misleading statement, but it can be disallowed based on its unenforceability. Similarly, the court reasons that the filing was not unconscionable or unfair, as there are protections built into the bankruptcy process that minimize risk to the debtor. Opinion below.

Justice Breyer

2017-05-15 – in re midland funding

Author: Matt Lindblom

Zadeh v. Nelson (In re Nelson)

(Bankr. E.D. Ky. Nov. 15, 2016)

The Court grants the debtor’s motion to dismiss the nondischargeability action. The debtor’s ex-spouse sought to declare nondischargeable a state court judgment awarding him his overpayment of child support. However, he failed to timely serve the summons and complaint under Bankruptcy rule 7004(e), the statute of limitations barred the claim to the extent it sought relief under § 523(a)(2)(A), and the Rooker-Feldman doctrine prevented the bankruptcy court from ruling on the issue because multiple state courts had already done so. Opinion below.

Judge: Wise

Plaintiff and Defendant: Pro Se


Author: Matt Lindblom

Federal Insurance Company v. Woods (In re Woods)

(Bankr. W.D. Ky. Sep. 16, 2016)

The bankruptcy court grants in part the plaintiffs’ motion for summary judgment in this nondischargeability action. The court denies the motion as to the amount of damages. The debtor admitted to committing the fraud and embezzlement while employed by the plaintiff car dealer. Thus, the court finds that the elements in 11 U.S.C. 523(a)(6) are satisfied, as the undisputed facts established that the debt arose from the willful and malicious injury by the debtor. However, Kentucky’s statute of repose for fraud claims creates an issue as to how much of the loss can be attributed to acts committed within the ten-year repose period. Opinion below.

Judge: Stout

Attorney for plaintiffs: Stoll Keenon Ogden PLLC, Adam Mastin Back

Attorney for debtor: Lowen & Morris, Jan C. Morris

Author: Matt Lindblom


Tomlin v. The Bank of New York Mellon (In re Tomlin)

(Bankr. E.D. Ky. June 23, 2016)

The bankruptcy court applies Kentucky’s borrowing statute, KRS § 413.320, to determine the applicable statute of limitations for the debtor’s defamation, breach of contract, and fraud claims. The court analyzes where each claim accrued and dismisses some but not all of the debtor’s claims. Opinion below.

Judge: Wise

Attorney for Debtor: Dann Law Firm, Brian D. Flick

Attorney for Defendants: Christopher M. Hill, John R. Wirthlin, Frost Brown Todd LLC, Patricia K. Burgess, Stephanie Smiley

2016-06-23 – in re tomlin

Author: Matt Lindblom

Siragusa v. Collazo (In re Collazo)

(7th Cir. Apr. 5, 2016)

The Seventh Circuit affirms the decision of the bankruptcy court dismissing some of the creditors’ nondischargeability claims because the claims were based on alleged fraud occurring outside the applicable Illinois five-year limitations period. The court reverses the dismissal of one of the claims because it was not clear that the creditor had notice of the fraud to start the limitations period. The court also remands so that a money judgment can be entered, as the bankruptcy court’s concerns that it did not have jurisdiction to do so were addressed in the Supreme Court’s Wellness and Arkison decisions. Opinion below.

Judge: Posner

Attorney for Debtor: David Robert Herzog

Attorney for Creditors: Patrick Gerard Cooke

2016-04-05 – in re collazo

Author: Matt Lindblom

Knauer v. Kitchens (In re Eastern Livestock Co., LLC)

(Bankr. S.D. Ind. Mar. 18, 2016)

The bankruptcy court denies the defendant’s motion to dismiss based on Kentucky’s five-year statute of limitations for breach of an oral contract. The trustee brought the claim based on the defendant’s failure to properly care for the debtor’s cattle prior to the bankruptcy filing. The trustee argued that Indiana’s six-year statute applied. The court recognizes the circuit split on the issue of whether a bankruptcy court should apply the choice-of-law rules of the forum state or federal choice-of-law principles. The seventh circuit has not ruled on the issue. The bankruptcy court determines that, absent a significant federal policy or interest (which was absent in this case), a bankruptcy court should apply the choice-of-law rules of the state in which it states. Applying Indiana’s choice-of-law rules, the court determines that the six-year statute of limitations applies, and thus the motion to dismiss is denied. Opinion below.

Judge: Lorch

Attorneys for Trustee: Kroger, Gardis & Regas, LLP, Jay P. Kennedy, Amanda Dalton Stafford

Attorneys for Defendant: Bingham Greenbaum Doll LLP, Natalie Donahue Montell, Ivana B. Shallcross, April A. Wimberg

2016-03-18 – in re eastern livestock

Author: Matt Lindblom

In re Back

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

The bankruptcy court overrules the debtor’s objection to the claim based on a 1996 state court judgment. The debtor argued the claim was time-barred by the Kentucky 15-year statute of limitations for actions to enforce judgments. The creditor had filed a judgment lien on September 8, 1998 and did not take any other action with respect to the judgment until filing a motion to intervene in a foreclosure action against the debtor on September 2, 2013. The state court had allowed the intervening complaint by order entered September 26, 2013. The bankruptcy court holds that the motion to intervene constituted “execution” on the judgment under KRS 413.090(1), and thus the limitations period was restarted before expiring on September 8, 2013. Opinion below.

2015-08-03 – in re back

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

Stewart Title Guaranty Co. v. Cruz (In re Cruz)

(Bankr. W.D. Ky., Issued June 11, 2014)

Judge Lloyd denies the debtor’s motion to dismiss the adversary proceeding, in which the title company sought a judgment that its claim on a promissory note was non-dischargeable under Section 523 of the Bankruptcy Code. The debtor argued the complaint was time barred based on Kentucky’s five and ten-year limitations periods for claims based on fraud. The Court held that, while the debtor’s signature did not appear on the promissory note, the debtor’s signature on the mortgage—which contained a covenant that the debtor would pay the amount owed under the note—was sufficient to establish a claim upon a written agreement, which has a fifteen-year limitations period. The nondischargeability claim was also filed timely under the applicable bankruptcy rules. Opinion below.

2014-06-11 – stewart title v cruz