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New Cases For the Week of November 13, 2000 - November
17, 2000
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November 17,
2000
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Case
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Court
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Holding
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| FDIC v. Barton |
5th Cir. |
In
a cause of action for "wrongful bankruptcy" (i.e., a breach of
fiduciary duty or ordinary duty accomplished through aiding and abetting
the filing of a bankruptcy when the filing violated the rights of the
plaintiff), the plaintiff, when seeking to recover the attorneys' fees
it incurred to contest the wrongful bankruptcy, need not prove that
bankruptcy would result in lower recoveries than other scenarios.
Plaintiff's recovery is based on the legal expense incurred in
recovering the right to control to liquidation of the debtor, not on the
actual liquidation dividend obtained.
Although attorneys' fees are not normally awarded
under the American Rule, legal fees incurred in other litigation
can be awarded as an element of damage despite the Rule.
The court erred in granting summary judgment in favor
of defendants alleged to have aided and abetted the filing of wrongful
bankruptcies resulting in the need for plaintiff to incur $13 million in
legal fees to recover control of the bankrupt debtors. |
| In re Boswell |
4th Cir. |
The
bankruptcy court erred in finding that a prepetition unlawful detainer
action in which the debtor defended by challenging the propriety of a
foreclosure was preclusive as to debtor's bankruptcy court challenge to
the foreclosure. Under applicable State law (Virginia) a judgment
of possession in an unlawful detainer action is a determination only of
the right to immediate possession of the property; it does not determine
title to the property or any other issue in controversy with respect to
the property. |
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November 16,
2000
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Case
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Court
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Holding
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| U.S. v. Shaltry |
9th Cir. |
Although
a debtor's parent's irrevocable election to waive NOL carrybacks
reported in a consolidated return can, under appropriate circumstances,
be avoided as a fraudulent transfer, the bankruptcy trustee's effort to
avoid the debtor's parent's waiver during the gap period was barred by
the statute of limitations applicable to 11 USC 549. While the statute
of limitations for a tax refund is longer than the limitations period
under section 549 (and would have rendered the trustee's action timely
had it applied), the trustee's refund action depended conceptually on
avoidance of the debtor's parent's waiver. Since the limitations period
under section 549 had expired before the trustee filed her suit, her
action was barred. |
| In re Short |
9th Cir. |
A
bankruptcy court can consider both incomes of a debtor and his or her
economically interdependent live-in companion in determining a debtor's
ability to pay a debt incurred in a judgment of dissolution pursuant to
the "relative harm" test in 11 USC 523(a)(15)(A) |
In
re Sullivan
(requires Adobe Acrobat Reader to view) |
Bankr. N.J |
Under
New Jersey law, a State tax lien is a "statutory lien" for
bankruptcy purposes.
Although a New Jersey taxing agency can choose to
enforce its statutory lien by filing a certificate of debt, which, upon
registration is deemed to be equivalent to a judgment, an agency which
does so does not thereby transform the statutory lien to a
"judgment lien" for bankruptcy purposes. Consequently, a
Chapter 7 trustee cannot avoid a statutory State tax lien where the
State filed a certificate of debt prepetition, but did not levy on the
encumbered assets before the petition date. |
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November 15,
2000
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Case
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Court
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Holding
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| Renfrow v. Draper |
9th Cir. |
There
is no general right to recover attorney's fees under the Bankruptcy
Code. However, because state law necessarily controls an action on
a contract, a party to such an action is entitled to an award of fees if
the contract provides for an award and state law authorizes fee shifting
agreements.
A bankruptcy court lacks authority to award a party
attorney's fees for litigating federal law issues in a bankruptcy court
dischargeability case whenever state law is "integral" to
determining dischargeability. Instead, attorney's fees should be awarded
solely to the extent they were incurred in litigating state law issues.
If a divorce decree provides for the payment of
attorney's fees, and state law issues are litigated in the bankruptcy
proceedings, attorney's fees are available, but only to the extent that
they were incurred litigating the state law issues. |
| Clark v. Trailiner |
10th Cir. |
A
court presiding over a postdischarge lawsuit in which a former debtor is
a plaintiff must dismiss the action if the debtor failed to list the
claim as an asset in his bankruptcy. Standing is determined at the
time of the filing of the action. The debtor cannot retroactively
"cure" standing by attempting to reopen his bankruptcy so that
he can try to convince his bankruptcy trustee to abandon the claims at
issue in the postdischarge lawsuit. |
| In re Holstein, Mack & Klein |
7th Cir. |
When
a partner in a debtor/law firm entered into a forbearance agreement and
fee sharing agreement with the debtor's lender, and gave the lender a
security interest in the receivables of partner's new firm, the bank was
entitled to the entire fee received by the partner's new firm following
the expiration of the forbearance agreement. |
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November 14,
2000
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Case
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Court
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Holding
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In
re Continental Airlines
(requires Adobe Acrobat reader to view) |
Bankr. Court -
Delaware |
A
claim for the breach of labor protective provisions (requiring the debtor airline to
integrate pilots of another, merged airline into the debtor's pilot
seniority/compensation structure) under a collective bargaining
agreement was a claim convertible to monetary damages upon rejection of
the agreement, and thus was a claim dischargeable in bankruptcy.
Since the rejected collective bargaining agreement was
an "employment contract" within the meaning of 11 USC
502(b)(7), the amount of the claim arising from the debtor's rejection
of the agreement (including the damages attributable to the breach of
the labor protective provisions) was limited by the cap in section
502(b)(7). |
| In re Wilcox |
6th Cir. |
An
anti-alienation clause contained in a retirement plan established under
a municipal charter is an enforceable nonbankruptcy restriction of
alienation despite: (i) the fact that the debtor's rights in the plan
were entirely on account of the debtor's voluntary contributions
of his own funds and (ii) the fact that the plan and the city charter
contained no explicit statutory right of action to "enforce"
the plan provisions. |
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November 13,
2000
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Case
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Court
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Holding
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