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New Cases For the Week of September 11, 2000 - September
15, 2000
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September 15, 2000
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Case
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Court
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Holding
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| In
re New Haven Projects Ltd. |
2d Cir. |
The
exercise of jurisdiction under 11 USC 505 is discretionary.
Even though it may have jurisdiction and power to
review prepetition State law property tax assessments a bankruptcy court
has discretion to decline to exercise such jurisdiction where the
debtor's unsecured creditors are de minimis and reduction of the tax
assessments would primarily benefit an insider secured creditor of the
debtor. |
| Mullin
v. Orthwein |
Fla. Crt of App. -
4th Dist |
Disagreeing
with Circuit Court authority which, on preemption grounds, precludes
State court malicious prosecution claims for events occurring in
bankruptcy court, the court holds that under Florida law, after the
dismissal of an involuntary bankruptcy a debtor has the choice of
pursuing in state court a malicious prosecution claim based on the
creditor's bad faith filing of the petition or seeking relief in the
federal forum under section 303 of the Bankruptcy code. |
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September 14, 2000
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Case
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Court
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Holding
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| In
re Grovatt |
Bankr. E.D. Pa. |
A
Chapter 13 debtor's commitment to pay for his child's college education,
embodied in a divorce decree, was a nondischargeable/priority claim,
rendering the debtor's plan unconfirmable because it failed to treat the
debtor's child's $26,000/year college expense as a priority claim to be
paid in full. |
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September 13, 2000
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Case
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Court
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Holding
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| In
re TLC Hospitals, Inc. |
9th Cir. |
Because
Medicare incorporates specialized and continuous system of estimated
payments and subsequent adjustments, Medicare can recoup prepetition
overpayments in one fiscal year from underpayments in a different fiscal
year. |
In
re Marlar
(requires Adobe Acrobat Reader to view) |
8th Cir. BAP |
Despite
the fact that a creditor litigated and lost a fraudulent transfer claim
before the order for relief, the bankruptcy trustee had standing to
pursue section 544(b) fraudulent transfer claims regarding the same
transfers. Other unsecured creditors of the debtor whose claims existed
at the time of the alleged fraudulent transfer were not in privity with
the creditor who lost the prepetition claim. Therefore, they were
not barred by res judicata or collateral estoppel from challenging the
transfer, and the trustee was entitled to step into their shoes to avoid
the transfer for the benefit of the entire estate pursuant to 11 USC
544(b). |
| In
re Top Grade Sausage, Inc. |
3rd Cir. |
Disagreeing
with the 5th and 11th Circuits, the 3rd Circuit holds that despite the
1994 amendments to the Bankruptcy Code debtors' attorneys are still
eligible to receive compensation for fees and expenses reasonably likely
to benefit the estate.
The services provided do not necessarily have to have
benefited the estate, but they must have been reasonably likely to
benefit the estate at the time provided.
In a Chapter 11 case where a trustee is appointed,
debtors' attorneys must bring something unique to the negotiations in
order to receive compensation from the estate. Services performed by
debtor's counsel that were, or could have been, performed by the trustee
or his staff are generally not compensable from the estate.
The fact that debtor's counsel's employment (to
represent debtor) was specifically approved by the bankruptcy court
after appointment of a Ch. 11 trustee does not conclusively establish
that debtor's counsel's services were reasonably likely to benefit the
estate. |
| In
re Montgomery |
10th Cir. |
The
portion of an earned income credit allocable to the prepetition portion
of the tax year in which a bankruptcy petition is filed is property of
the bankruptcy estate. |
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September 12, 2000
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Case
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Court
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Holding
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| In
re Mizuno |
9th Cir. |
Even
though a court allowed a creditor who has filed an involuntary petition
to act as a debtor, debtor in possession or de facto trustee, the
statute of limitations on avoidance actions commenced when an actual
trustee was appointed and not when the quasi-DIP began his role. |
| In
re Lundell |
9th Cir. |
A
proof of claim is deemed allowed unless a party in interest objects
under 11 U.S.C. S 502(a) and constitutes "prima facie evidence of
the validity and amount of the claim" pursuant to Bankruptcy Rule
3001(f).
Upon objection, the proof of claim provides "some
evidence as to its validity and amount" and is "strong enough
to carry over a mere formal objection without more. To defeat the
claim, the objector must come forward with sufficient evidence and
"show facts tending to defeat the claim by probative force equal to
that of the allegations of the proofs of claim themselves. If the
objector produces sufficient evidence to negate one or more of the sworn
facts in the proof of claim, the burden reverts to the claimant to prove
the validity of the claim by a preponderance of the evidence.
The debtor failed to meet his initial burden of
producing sufficient evidence to negate one or more elements (in this
case, whether debtor was a general partner in a failed venture) of the
challenged proofs of claim. The debtor's own testimony denying
that he was a partner was insufficient to negate the terms of an
unambiguous written partnership agreement. |
| In
re Wilson |
8th Cir. BAP |
A
debtor/accused who pleads guilty of a felony and is sentenced to
deferred adjudication, probation and restitution has incurred a debt
which is nondischargeable under Chapter 13, even though no traditional,
formal "conviction" has occurred. |
| In
re Engelhart |
10th Cir. |
For
purposes of 11 USC 523(a)(6), an act is intentional if the debtor
subjectively desires to cause injury, or . . . believes that injury is
substantially certain to result.
In applying the substantial certainty test, the debtor
must subjectively believe that injury is substantially certain to occur
as a result of his behavior. The mere fact that the debtor should have
known his decisions and actions put the creditor at risk is insufficient
to establish a willful and malicious injury, and expert testimony that
injury was substantially certain to arise from debtor's conduct is
insufficient to prove the requisite malicious intent. (adopting the
position of the Sixth Circuit and rejecting the position of the Fifth
Circuit).
The mere proof that a creditor had a property interest
in diverted funds is insufficient to establish nondischargeability under
11 USC 523(a)(6).
Unsophisticated, confused, stressed debtor who used
insurance proceeds that should have been sent to hospital/creditor to
pay personal bills lacked the requisite intent to injure creditor and
lacked the subjective belief that her actions were substantially certain
to injure creditor. |
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September 11, 2000
- No Cases Today
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Case
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Court
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Holding
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