New Cases - Week of July 14, 2008

New Cases For the Week of July 14, 2008 - July 18, 2008

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July 18, 2008
Case	Court	Holding

Phar-Mor Inc v. McKesson Corp (DBN Subscription Required)	6th Cir.	A vendor’s administrative-expense priority on its reclamation claim is not effectively extinguished when the goods subject to reclamation are sold and the proceeds used to satisfy a secured creditor’s superior claim.

July 17, 2008
Case	Court	Holding

In re U.S. Medical, Inc.
(DBN Subscription Required)

10th Cir.

Not every creditor-debtor relationship attended by a degree of personal interaction between the parties rises to the level of an insider relationship.

The relationship between a debtor and a non-statutory insider must be not only close, but also at less than arm's length.

July 16, 2008
Case	Court	Holding

Kane v. Nat'l Union Fire Ins. Co. (DBN Subscription Required)	5th Cir.	In a personal injury suit, summary judgment for defendants finding plaintiffs were judicially estopped based on their failure to include the personal injury action in their Chapter 7 bankruptcy schedules, as well as a denial of the trustee's motion to be substituted in that action as moot, are reversed and the case remanded where: 1) the personal injury claim became an asset of the bankruptcy estate upon filing of the Chapter 7 petition; 2) the trustee was the real party in interest and never abandoned his interest; 3) plaintiffs only stand to benefit in the event there is a surplus after all the debts of the estate are paid; and 4) a prior circuit court case did not control the outcome of this case, and the district court abused its discretion in concluding as a matter of law that it did.
In re Bethlehem Steel Corp. (DBN Subscription Required)	Bankr. S.D. N.Y.	Avoidance actions brought pursuant to the Bankruptcy Code never belonged to the Debtor, but rather were creditor claims that could only be brought by a trustee or debtor in possession, or, as in this case, by the Liquidating Trust by assignment under a confirmed plan. While the prepetition Debtor was a party to the arbitration agreements, the creditors (or their representatives) were not parties to any arbitration agreement. Thus, the avoidance actions are not subject to arbitration agreements between the Debtor and the creditor/defendants

July 14, 2008
Case	Court	Holding

In re Chase (DBN Subscription Required)	Bankr. E.D. LA	"The Triumph of Computer Logic Over Human Logic" Because the debtor's mortgage loan service was negligent in its practices and took insufficient remedial action, it is required to pay damages in the amount of $10,000.00, plus $12,350.00 in legal fees, for the abusive imposition of unwarranted fees and charges (late fees and inspection costs); the illegal imposition of fees disguised as costs (BPO charges); the negligent imposition of fees and costs not due (legal charges and deposits reimbursed); the improper calculation of escrow payments; the misapplication of payments contrary to the terms of the Note and Mortgage; the failure to notify Debtor of fees and charges on her account; and the improper payment of unnoticed fees and charges during pending bankruptcies. In addition, the servicer is required to audit every proof of claim it has filed in the District in any case pending on or filed after April 13, 2007, and to provide a complete loan history on every account. For every debtor with a case still pending in the District, the servicer is required to file the loan histories into the claims register and is ordered to amend, where necessary, the proofs of claim already on file to comply with the principles established in the Court's rulings. For closed cases, the servicer is ordered to deliver to Debtor, Debtor's counsel and Trustee a copy of the accounting.
In Re Enron Corp. Sec., Derivative & ERISA Litig. (DBN Subscription Required)	5th Cir.	In a series of cases arising from the Enron collapse, dismissal of plaintiffs' claims under the Securities Litigation Uniform Standards Act is affirmed where: 1) the district court had bankruptcy jurisdiction over plaintiffs' claims at the time it issued its decision dismissing the claims with prejudice; and 2) the cases fell within the definition of a "covered class action" and SLUSA preempts the claims.
Dahlgren v. First Nat'l Bank of Holdrege (DBN Subscription Required)	8th Cir.	In various claims brought under RICO and for fraud and negligent misrepresentation under state law after plaintiffs were allegedly mislead into doing business with a company which was ultimately placed in involuntary receivership and Chapter 7 bankruptcy, denial of judgment as a matter of law for defendant-bank is reversed and jury verdict for plaintiffs on fraud claims is reversed in part where: 1) plaintiffs failed to establish that defendant directed the operations or management of the bankrupt company during the time they were allegedly injured by defendant's pattern of racketeering activity; and 2) the jury failed to consider that transactions entered into with bankrupt company occurred after defendant ended its customer and lending relationship.