New Cases For the Week of January 22, 2001 - January 26, 2001

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January 26, 2001

Case

Court

Holding

In re Betacom of Phoenix, Inc. (DBN Subscription Required) 9th Cir. Mandatory subordination under 111 USC 510(b) is not limited to securities fraud claims, but can be applied to any claims for damages surrounding the sale or purchase of a security of the debtor.

The fact that a merger did not close and the claimants were therefore never owners of the debtor's securities did not take the claimants' cause of action for damages out of the scope of 11 USC 510(b).

In re James (DBN Subscription Required) 8th Cir. BAP Contempt is not an appropriate remedy for violation of the automatic stay.  Contempt is available only for violation of a court order, not a statutory provision.
In re Fellner (DBN Subscription Required) 8th Cir. BAP In performing a balancing test under 11 USC 523(a0(15), the bankruptcy court did not err in finding that the monthly $311 payment on the debtor's truck was excessive, since the debtor bore the burden of proof regarding reasonableness of his expenses, and he presented no evidence that he could not obtain cheaper transporation.

January 24, 2001

Case

Court

Holding

In re Jercich (DBN Subscription Required) 9th Cir. Although 11 USC 523(a)(6) generally applies to torts rather than to contracts, an intentional breach of contract can give rise to a nondischargeable liability under 11 USC 523(a)(6) if the breach is accompanied by tortious conduct which results in willful and malicious injury.

The BAP erred in holding that nondischargeability under section 523(a)(6) involving a breach of contract could not exist unless the subject conduct would be tortious even if a contract between the parties did not exist.

Since California law imposes a duty on an employer to pay a departing employee's compensation, the employer's failure to do so when he had the ability to do so constitutes a tort under applicable law.

January 23, 2001

Case

Court

Holding

In re Andrews (DBN Subscription Required) 5th Cir. When a judgment creditor of a bankrupt is itself a judgment debtor to a third party, the judgment creditor of the bankrupt has standing to appeal actions taken by the bankruptcy court, even where the State court has order the bankruptcy claim of the creditor sold at execution to satisfy the claim of the third party creditor.
 
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