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New Cases For the Week of August 21, 2000 - August 25, 2000
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August 25, 2000
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Case
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Court
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Holding
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| In
re Labrum & Doak |
E.D. Pa. |
By
accepting the benefits of certain lease-related tax benefits, the
present and former partners in a law firm which filed bankruptcy were
parties to an implied in fact contract to ratably share any later tax
liabilities arising from recapture of such benefits. Consequently, the
bankruptcy court did not err in allocating such tax liabilities to each
present and former partner. |
| Texas-Ohio
Gas, Inc. v. John Mecom |
Tex. Crt. of
Appeals |
When
a creditor's claims against nondebtor insiders arise from specific
misrepresentations made to such creditor (as opposed to fraud which
harmed the debtor generally), such claims are not affected by the
automatic stay. |
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August 24, 2000
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Case
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Court
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Holding
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| Regions
Bank of Louisiana v. Rivet |
5th Cir. |
When
a bankruptcy court issues a sale order authorizing sale of an estate
asset free and clear of liens, the validity of any liens as continuing
encumbrances against the subject property has been "actually
litigated" for purposes of the relitigation exception to the
Anti-Injunction Act, such that subsequent transferees of such property
are entitled to a federal injunction prohibiting the owner of the lien
from pursuing State court litigation to enforce the lien against the
property.
Section 363 of the Bankruptcy Code is self
enabling. A transferee of a property sold free and clear of
encumbrances is not required to take additional steps that may be
required by applicable State law to obtain title to the subject property
free and clear.
Under principles of comity and federalism, federal
court should not issue injunction prohibiting lien holder from seeking
to enforce post-closing default judgments that were clearly directly at
odds with sale free and clear of lien holder's interest where
proceedings were pending in State court to reverse such judgments. |
| In
re Old Naples Securities, Inc. |
11th Cir. |
For
purposes of SIPA, whether a putative "customer claimant" has
deposited cash with a broker/debtor does not depend solely on to whom
the claimant handed her cash or made her check payable, or even where
the funds were initially deposited. Instead, the question is whether
there was actual receipt, acquisition or possession of the property of a
claimant by the brokerage firm under liquidation.
Brokerage claimants who deposit cash with a broker for
investment in the brokerage (rather than for purchase of securities) are
not covered by SIPA. However, claimants who think their money is going
to be used to purchase securities are covered by SIPA if a fraudulent
broker instead fails to buy securities and diverts their funds into the
operating expenses of the brokerage and personal expenses.
Loans to brokerages are not covered by SIPA.
Although a promise of a fixed rate of return is often
indicative of a loan, in this case the debtor/broker assured the
putative customer/claimants that their funds would be used to purchase
bonds. |
| Eastern
Minerals and Chemicals v. Mahan |
3rd |
Despite
creditor's "active and aggressive" participation in a debtor's
bankruptcy case, and creditor's postpetition - preconfirmation
circulation of a draft equitable subordination complaint against
debtor's insider/owner, creditor was not barred form pursuing
postconfirmation alter ego claim against insider.
Claim preclusion only bars claims arising from the
same cause of action previously raised, not every conceivable claim that
could have been brought in the context of a bankruptcy case over which
the court would have had jurisdiction.
Claim preclusion doctrine must be properly tailored to
the unique circumstances that arise when the previous litigation took
place in the context of a bankruptcy case.
A claim should not be barred unless the factual
underpinnings, theory of the case, and relief sought against the parties
to the proceeding are so close to a claim actually litigated in the
bankruptcy that it would be unreasonable not to have brought them both
at the same time in the bankruptcy forum.
One does not get a second bite at the proverbial apple
simply because the first bite was taken in a bankruptcy case. However,
care must be taken in determining whether the first bite was actually
taken such that it would preclude the second. |
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August 23, 2000
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Case
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Court
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Holding
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| Federated
Management v. Latham & Watkins |
Court of Appeals -
Ohio |
Confirmation
of a bankruptcy plan of reorganization acts as a res judicata bar to
securities fraud claims by one creditor or party in interest against
another creditor or party in interest.
The defendant/creditor contended that the alleged
false financial information originated from the debtor, thereby creating
a potential contribution claim by defendant/creditor against
debtor if securities fraud liability was established. This
contribution claim could have been (but was not) raised in the
bankruptcy proceeding, thus creating "related to" jurisdiction
in the bankruptcy court, and satisfying the res judicata requirement
that the contribution claim (and the correlative securities fraud
claims) "should have been raised" in connection with
confirmation of the debtor's plan. |
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August 22, 2000
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Case
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Court
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Holding
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In
re Clark
(requires Adobe Acrobat Reader plug-in to view) |
8th Cir. |
By
seeking to collect a flat fee for services he knew had been performed by
his non-attorney (paralegal) employee, a Chapter 13 debtor's attorney
was attempting to collect excessive payments, warranting full denial and
disgorgement of fees in the six subject cases.
The bankruptcy court has inherent authority under 11
USC 105 to impose civil sanctions against counsel for abuse of the
bankruptcy process. |
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August 21, 2000
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Case
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Court
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Holding
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| In
re Fillbach |
9th Cir. |
District
court has authority to dismiss bankruptcy petition filed by debtor whom
bankruptcy court had declared a vexatious litigant. |
In
re Shearin
(Opinion 1)
In
re Shearin
(Opinion 2) |
4th Cir. |
Chapter
7 debtor/attorney's law firm capital account and portion of year-end
profits attributable to pre-petition work constituted property of the
estate and had to be turned over to bankruptcy trustee.
A person in possession of property of the estate on
the petition date who subsequently disposes of such property before
commencement of a turnover proceeding must nevertheless account for the
property and return the property, or its value, to the bankruptcy
estate.
Bankruptcy trustee may have authority to sell
debtor/attorney's partnership interest in law firm pursuant to 11 USC
365(h). - Opinion 2.
The interest of a bankruptcy trustee is a debtor's
partnership interest is similar to that of a creditor with a charging
order. |
| In
re Custom Distribution Services |
3rd Cir. |
11
USC 505(a) (authorizing a bankruptcy court to adjudicate tax
liabilities, refunds and offsets except where the liabilities have
previously been adjudicated or the debtor has not requested a refund
from the taxing agency) is a jurisdictional statute.
If a debtor has failed to timely request a refund or
challenge a valuation (as determined by the nonbankruptcy law applicable
to the taxing agency), the bankruptcy court lacks jurisdiction to
adjudicate a debtor's claim for refund raised for the first time in the
bankruptcy court.
An offset against a tax claim is not the same as a
request for refund. However, in order to request bankruptcy court
adjudication of such an offset a debtor must have timely asserted the
offset against the taxing agency within the periods required by
applicable tax law. |
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