New Cases For the Week of April 8, 2002 - April 12, 2002

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April 12, 2002

Case

Court

Holding

Arnold v. Garlock, Inc.
(DBN Subscription Required)
5th Cir. Section 362 does not does not divest all other courts of jurisdiction to hear every claim that is in any way related to the bankruptcy proceeding. Further, that district courts retain jurisdiction to determine the applicability of the stay to litigation pending before them, and to enter orders not inconsistent with the terms of the stay. 

Under Texas law, a contribution claim against a debtor is not an affirmative claim for relief independent of the plaintiff's claim, on which the co-liable party could recover benefits, compensation or relief, even though the plaintiff may abandon his cause of action or fail to establish it. Because no judgment had been entered in suits sought to be removed to bankruptcy court based upon "related to" contribution claims, the contribution claims were unsustainable under State  law, and thus insufficient to support "related to" jurisdiction.

April 10, 2002

Case

Court

Holding

In re Universal Seismic Associates, Inc.
(DBN Subscription Required)
5th Cir. Pursuant to 11 USC 502(b)(3), a tax lien assessed against a debtor's personal property attaches to all remaining personal property even after most of the property  is returned to a senior lender, but the amount of the lien cannot exceed the value of the remaining property.
In re Bassett
(DBN Subscription Required)
9th Cir. The BAP erred in finding that a provision in a reaffirmation agreement informing the debtor of her right to rescind within 60 days was not clear and conspicuous because it was not in capital letters. Lawyers who think their caps lock keys are instant "make conspicuous" buttons are deluded. In determining whether a term is conspicuous, a court examines more than formatting. A term that appears in capitals can still be inconspicuous if it is hidden on the back of a contract in small type. A sentence in capitals, buried deep within a long paragraph in capitals will probably not be deemed conspicuous. Conspicuousness ultimately turns on the likelihood that a reasonable person would actually see a term in an agreement. Thus, it is entirely possible for text to be conspicuous without being in capitals.
In re Stanton
(DBN Subscription Required)
9th Cir. The bankruptcy court erred in avoiding a lien on the house of individual debtors who had guaranteed the line of credit of their closely held corporation.  The court avoided the lien on the grounds that the increased debt secured by the lien (which arose from additional advances made during the period when the individual debtors were in bankruptcy but the corporation was not) was an invalid postpetition transfer.  However, since the lien included a future advances clause and predated the bankruptcy, it could not be avoided.

April 9, 2002

Case

Court

Holding

In re Reaves
(DBN Subscription Required)
9th Cir. A California debtor is nor prohibited from claiming one set of personal property exemptions before bankruptcy in response to enforced collection of a judgment, and another set of exemptions in her bankruptcy.
 
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