Bankruptcy docket roundup – November 29, 2021

Yes BK court really is in the post office.

Since it’s my blog and my jurisdiction, let’s start with the Ninth Circuit Court of Appeal. Got two appeals from lower court appeals, which is to say, the appellants already had a shot at appeal, whether it was with a district court or the 9th Circuit Bankruptcy Appellate Panel (BAP).

Let’s start with the appeal from the 9th Cir. BAP. Ninth Circuit rejects an appeal from the bankruptcy appellate panel as to whether an advance on an inheritance is a loan that can be discharged in bankruptcy. The BAP and this court rule that it cannot. Mellem v. Mellem (21-60020) Judges Schroeder, Fletcher, and Miller.

Second, the Ninth Circuit summarily affirmed the district court’s ruling from a pro se appeal from a bankruptcy court. Roughly, the appellant failed to follow the rules correctly, including FRBP 8003. Brugnara v. Brugnara (19-17267) Judges Owen, Bade, and Lee.

We have some more appellate court action as well, albeit pretty lightweight like the Ninth. The Fourth Circuit Court of Appeal summarily denied a petition to appeal from the lower district court because the underlying bankruptcy case was dismissed, so… no jurisdiction. Holmes v. Haynsworth (21-153)

Returning to the 90 or so bankruptcy trial courts, starting in Atlanta in the Northern District of Georgia, ruling on summary judgment arising out of disputes between the debtor and her mortgage servicer. Servicer wins most of the summary judgment points; however, trial will proceed on allegations of discharge and stay injunction violations. White-Lett v. Bank of NY Mellon (20-6278-BEM), Judge Ellis-Monro.

Moving up to the Southern District of New York, objection to pilots’ proofs of claims because of technicalities in collective-bargaining agreements is sustained. Interesting issues related to the confluence of collective bargaining contracts and “flow through” agreements intersecting with the POCs. In re: AMR Corp. (11-15463), Judge Lane.

In the Eastern District of Michigan, an adversary proceeding based on a fraudulent investment scheme to create software for healthcare organizations is ongoing. Today’s opinion arises out of a motion for summary judgment where Judge Randon concludes that “by a fine margin” there are sufficient facts in dispute to proceed to trial. Bojkovic v Kutsomarkos (20-04348), Judge Randon.

Up near Gerry Spence territory in the District of Montana, summary judgment on an undue hardship student loan case is denied (go debtor!). She owes $160k on a salary of $40k. I know the facts are, generally, rooted in cold, hard numbers, but summary judgement seems like it would super dangerous for a sympathetic debtor like this. Luckily, her case lives (I’m partial to student loan plaintiffs). Bonus for readers: interesting discussion of key nuances of the Brunner test in the Ninth Circuit as well. Box v. Granite State Mgmt. & Res. (21-9004-BPH), Judge Hursh.

And another student loan case! Returning to the Northern District of Georgia, post-trial judgment and opinion that debtors’ student loans are not an undue hardship (ugh) where co-signor debtors were caring for their adult child. Think I got the facts right on this, will review. Clark v. Wells Fargo (18-4012), Judge Ellis-Monro.

Seeing as how I have a pending student loan adversary, I think Box and Clark are next up for the podcast (Apple Podcasts link)!

See you tomorrow bankruptcy geeks!

Disclaimer: on these posts, I do not necessarily read the entire case. Often I don’t, in fact. I usually skim them briefly, so if you see anything I got really wrong or an important nuance I missed… please let me know by sending me an email! michael@michaelricelaw.com


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Not so fast debtor!

Not so fast individual Chapter 11 debtor’s counsel! You might need a few days before reopening the case and discharging an individual chapter 11 debtor.

Before I start, you should know this is the kind of case only a civil and bankruptcy procedure nerd would love, which is precisely the category I fall in. And it’s definitely of interest to a small percentage of the bankruptcy bar. 

Today’s post and podcast is about In re Hill out of Southern District of Florida, Fort Lauderdale Division, 13-18344-PDR, filed yesterday on November 23. It’s an individual Chapter 11 case, which are pretty rare, although I got a unique opportunity to get exposed to them when I was clerking in bankruptcy in Arizona during the Great Recession.

As is fairly common, the case was temporarily closed while the debtor was making payments. This is a fairly common practice to avoid hefty quarterly United States Trustee payments.

Bankruptcy courts have routinely approved the practice in confirmed individual chapter 11 cases of administratively closing the case while the debtor makes payments under the plan progressing towards earning a discharge. This practice, approved by the United States Trustee, benefits the estate because the debtor need not bear the expense of filing operating reports or paying quarterly UST fees. In this case, after having made all plan payments, the Debtor seeks to simultaneously reopen the case, have his final report approved, obtain a discharge, and close the case all on the same date and in doing so avoid having to file operating reports and paying the associated UST fees. 

The debtor in this case got to the end of the payments, so he moved to reopen the case and obtain a discharge. 

The catch in this case is that he was trying to get all the relief on the same day: reopen the case and get a discharge. 

The US trustee objected because the creditors couldn’t object while the case was closed. 

The court agreed and ruled the case could be reopened but that the discharge hearing would have to wait until the creditors had thirty days to object. 


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Bankruptcy docket round up – November 23, 2021

Lobby of Bankruptcy Judges Kwan and Russell in the Central District of California

Got up early this morning on the hunt for a case or two to cover in my new podcast series. As always, even with bankruptcy cases at historic lows, there’s a lot going on!

In a new published case out of the Ninth Circuit BAP, Judges Lafferty, Faris, and Spraker affirmed trial court’s dismissal of an adversary proceeding against the debtor. Plaintiff failed to perfect its lien under California law. This court published because it wanted to clarify that 108(c) doesn’t toll filing notices under 546(b). Philmont Management v. 450 S. Western Ave. (2:20-bk-10264-ER).

Turning to the trial courts, there were two opinions out of the Eastern District of Michigan. A subchapter V case was dismissed for failing to file a plan. In re Back To Life Properties. In a different case, Judge Opperman granted summary judgment for a 523(a)(4) complaint over a construction dispute. Miller v. Safford.

Heading south to Kansas, Judge Somers wrote a fairly long and complex opinion regarding Summary judgment in a chapter 12 case regard a 363 sale. In re Parsons.

In a District of Nebraska court, a chapter 11 plan was denied because of concerns over a 1111(b) election. Those elections always confused the daylights out of me, so I think I’ll skip it for today’s podcast! In re Topp’s Mechanical.

Over in Delaware, the court denied cram down on a debtor’s primary residence. Pedicone v. Ajax Mortgage.

Nearby, in the District of Columbia, summary judgment was granted in dispute over the sale of a house and fraud claims under 523(a)(2). Johnson v Johnson.

In South Carolina, a “frequent” pro se litigant’s chapter 7 was dismissed. In re France.

In the case I’ll probably cover in the podcast, a Southern District of Florida court issued a decision about temporarily closing an individual chapter 11 case to avoid administrative fees. In re Hill.

Let’s head back West! Next door to California, in Arizona, Judge Collins who recently paneled an interesting conversation at the ABI’s Consumer Bankruptcy Extravaganza and who’s court I observed in person once, issued an amusing opinion about objections to proofs of claim under the Affordable Care Act. In re Vallejo.

Disclaimer: on these posts, I do not necessarily read the entire case. Often I don’t, in fact. I usually skim them briefly, so if you see anything I got really wrong or an important nuance I missed… please let me know by sending me an email! michael@michaelricelaw.com


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Bankruptcy docket roundup – November 22, 2021

View of a bankruptcy courtroom in Chicago, Illinois

This might be a fun project to do… round up bankruptcy cases from the day before. Let’s go!

In the storied Southern District of New York, there’s an involuntary case proceeding against a law firm where $8 million in escrow accounts went missing. The managing partner of the firm is facing criminal charges, and now Judge Jones is threatening jail time for misconduct in the bankruptcy case. Pretty interesting because it implicates a conflict between the debtor’s Fifth Amendment rights and bankruptcy court power. In re Kossoff PLLC (21-10699).

Fewer fireworks, but possibly more interesting to Western District of Virginia practitioners, Judge Connelly overruled the chapter 7 trustee’s objection to debtor’s claimed $10,000 in farming equipment. In re Ross (20-50885).

Returning to the Northeast, in New Hampshire Judge Harwood denied a motion to avoid what looks to be a judicial lien against the debtor’s house. In re Delong (20-10837-BAH).

Finally, in the Eastern District of Michigan, Judge Opperman denied a liquidating trustee’s motion against the State of Michigan. In my podcast, I talk about bringing you into the bankruptcy conversation, but this case looks more likely to be a long-running dispute that would be summarize in just a few moments. In re Boyce Hydro, LLC (20-21214-dob).

Disclaimer: on these posts, I do not necessarily read the entire case. Often I don’t, in fact. I usually skim them briefly, so if you see anything I got really wrong or an important nuance I missed… please let me know by sending me an email! michael@michaelricelaw.com


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Just because you don’t pay ordered attorney fees doesn’t mean you’re in contempt of court, necessarily

New case out of the Central District of California Bankruptcy Court—Judge Robles’s court.

First a little background. For the past two years or so, the parties have been litigating in bankruptcy court. Not sure what the nature of the litigation was, but it doesn’t matter much for this opinion. Back in late 2019 (pre-pandemic era!), plaintiff won a $1.8 million dollar verdict (including attorney fees and costs of $600k). 

Defendant appealed the verdict to the 9th Circuit Bankruptcy Appellate Panel, but lost there too. When the matter came back to to the trial court, as the losing party on appeal, Judge Robles awarded $153k in additional attorneys’ fees (ouch) to be paid within 45 days. Defendant apparently did not make that payment.

The current case. Which brings us to the recent opinion. Because defendant didn’t pay the $153k in fees, plaintiff filed for an application for an order to show cause why the defendant should not be held in contempt and set a hearing on the application. Put a simpler way, the plaintiff wanted the judge to sanction the defendant for not paying the fees by calling it “contempt of court.” And they set a hearing.

Judge Robles, instead of holding the hearing on the application, issued an order denying the application and striking the hearing. He explained that the court would first have to grant the application and issue an order to show cause, which he had not done. He also explained that one cannot have a hearing about sanctions until the court issues that OSC order, which, again, did not happen.

Finally, he explained that using the court’s sanction power to enforce the attorney fee award was inappropriate because the fee award only made the plaintiff a judgment creditor.  Sanctions would only be appropriate if there had been some kind of misconduct, as the opinion reasons. 

For local practitioners, Judge Robles pointed to Local Bankruptcy Rule 9020-1 as the correct procedure to seek an order to show cause.

JL AM Plus v. MBN Real Estate Investments (Oct. 12, 2021).