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New Cases For the Week of September 4, 2000 - September
8, 2000
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September 8, 2000
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Case
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Court
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Holding
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| In
re Cybergenics Corp. |
3rd Cir. |
Although
a debtor in possession has the authority to pursue State law fraudulent
transfer claims for the collective benefit of the estate (see 11 USC
544(b)), such claims are not "assets" of the debtor.
Consequently, State law fraudulent transfer claims were not included in
a bankruptcy court sale of substantially all of a debtor's assets, even
though the sale order referred to "all assets." |
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September 7, 2000
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Case
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Court
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Holding
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| Janis
v. Associates Home Equity Service |
Tex. Crt. App. |
Where
a creditor mistakenly recorded a release of lien, and the debtor then
filed Chapter 7 bankruptcy and received a discharge, the creditor could
not pursue a postdischarge declaratory relief/equitable recission suit
to cancel the release of lien. Under applicable State law (Texas)
the creditor could have sued the debtor in damages for his refusal to
voluntarily cancel the inadvertent release of lien. Because
the creditor had a monetary remedy for the debtor's conduct, its rights
against the debtor constituted dischargeable claims, even though the
creditor may have also had equitable remedies in addition to its claim
for damages. |
| In
re Superior Stamp & Coin Co., Inc. |
9th Cir. |
Where
a debtor, during the preference period, borrows money on the condition
that the loan proceeds be used to pay a specific creditor the payment to
that creditor is earmarked and cannot be avoided as a preference.
Where a third party lends money to a debtor on the
condition that it be used to pay a specific debt, the fact that the
debtor requested the loan or that the funds were advanced to the debtor
rather than paid directly to the recipient creditor does not render the
transfer outside the scope of the earmarking doctrine. However, where a
debtor transfers a security interest to the new creditor in return for
the loan, the payment is voidable to the extent of the value of the
collateral transferred by the debtor. |
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September 4, 2000
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Case
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Court
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Holding
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| In
re Jones |
7th Cir. |
A
putative secured creditor whose mortgage is defective under State law is
not protected form preference recovery by the doctrine of issue
preclusion if the creditor judicially forecloses its mortgage within the
preference period. Despite the fact that the State court made
findings regarding the validity of the mortgage in the foreclosure
proceeding, a subsequent bankruptcy trustee is not barred form
challenging the creditor's "fully secured status," since the
debtors' other creditors were not the real parties in interest in the
foreclosure action, and privity, an essential element of issue
preclusion, was thus lacking. |
| Holywell
Corp. v. U.S. |
4th Cir. |
Generally,
court-approved settlements receive the same res judicata effect as
litigated judgments. A settlement approved by a bankruptcy court
is entitled to such effect.
A federal court which lacks subject matter
jurisdiction may nevertheless issue a preclusive judgment which cannot
be collaterally attacked.
The bankruptcy court's approval of a settlement
between a liquidating trustee and a taxing agency regarding a disputed
tax liability precluded the debtor from later seeking a refund of such
tax. |
| Plotner
v. AT&T |
10th Cir. |
For
purposes of calculating the 10-day period to file a notice of appeal,
and the 20-day extension of such period available under Fed. R. Bankr.
P. 8002, Rule 9006 (extending periods which end on a weekend or holiday)
should be applied twice, such that the initial 10-day period is extended
to the following Monday when it ends on a weekend, and the 20-day period
(when granted by the court) should also be extended to the
following Monday when it ends on a weekend.
When an appellate court dismisses an appeal of a
bankruptcy court sale order as moot, there is a general duty to vacate
the lower court judgment to prevent the appealing party from being bound
by the preclusive effects of a judgment, "review of which was
prevented through happenstance." However, vacature is not
automatic, the appellant must file a motion requesting such
relief. The failure of an appellant in such a situation to obtain
a vacature precludes the appellant (under the doctrine of res judicata)
from later challenging the bankruptcy court's sale order or the
propriety of the sale.
The 10th Circuit sides with the Ninth, Sixth and
Second Circuits (and disagrees with the Fifth and Seventh
Circuits) to hold that res judicata applies in both core and
non-core matters. |
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