Justia Civil Procedure Opinion Summaries

The Davises took out a mortgage on their residence in 2005. After they defaulted on the loan and filed for bankruptcy, Jerome Davis, a licensed attorney who represented himself, received a bankruptcy discharge. The bankruptcy court later held that the discharge did not extend to the debt Davis owed CitiMortgage. Rather than appeal, Davis first attempted to remove CitiMortgage’s foreclosure action to federal court, alleging that CitiMortgage’s efforts to obtain a personal deficiency judgment contravened his bankruptcy discharge. He then filed a separate suit alleging unfair debt collection practices against CitiMortgage. Davis lost in each of those proceedings. CitiMortgage was awarded attorney fees and costs, 28 U.S.C. 1447(c) when the court remanded the foreclosure proceeding for lack of federal question jurisdiction.The Seventh Circuit dismissed Davis’s appeal, stating that it lacked jurisdiction to review the remand order. Davis waived his arguments challenging the attorney fees and costs award. The court upheld the dismissal of Davis’s suit against CitiMortgage; all of Davis’s claims center on his contention that the debt owed CitiMortgage was subject to his 2018 discharge. The court took judicial notice that the bankruptcy court had held the opposite in Davis’s adversary proceeding. View "Davis v. CitiMortgage, Inc." on Justia Law

Dean filed a Chapter 7 voluntary petition. The trustee for the estate did not have sufficient unencumbered funds to retain counsel to pursue claims for the estate. Reticulum, a creditor, agreed to fund the trustee’s litigation in exchange for a share of any of litigation proceeds. The bankruptcy court approved the agreement. The district court affirmed. Dean appealed, contending that the agreement undermined the statutory ranking system for distribution of the estate’s property by allowing Reticulum to move ahead of other creditors.The Fifth Circuit dismissed the appeal for lack of standing. Bankruptcy standing may be addressed even when it was not raised below. The court employed the “person aggrieved” test, a “more exacting standard than traditional constitutional standing.” The appellant must show that he is “directly, adversely, and financially impacted by” the exact order being appealed as opposed to the proceedings more generally. In a Chapter 7 bankruptcy, the debtor-out-of-possession typically has no concrete interest in how the bankruptcy court divides up the estate. A debtor may retain bankruptcy standing by showing that defeat of the order on appeal would affect his bankruptcy discharge. The approval of the litigation funding agreement did not affect whether Dean’s debts will be discharged. View "Dean v. Seidel" on Justia Law

In 1999, Kristina drugged her sons and put them, and herself, in a running car in a closed garage. Matthew died; Adam and Kristina survived. Kristina was convicted of second-degree murder and remained in prison until 2016. In 1999, Kristina had State Farm automobile and homeowners insurance policies. In 2001, Matthew’s estate, Adam, and their father (the Rotells) sued Kristina for wrongful death and bodily injury.Kristina tendered her defense to State Farm, which filed state court declaratory judgment actions, seeking determinations that her policies did not cover the incident. The Rotells allege that State Farm rejected a settlement offer even though Kristina wished to accept it. The state court then held that the policies did not cover the incident. State Farm withdrew from the wrongful-death lawsuit. The state court entered a default judgment against Kristina; a jury entered a $505 million verdict. Kristina was insolvent, so the Rotells petitioned for involuntary Chapter 7 bankruptcy. The bankruptcy court entered an order subjecting Kristina’s assets (claims against State Farm for bad faith and malpractice) to its control and appointed Carapella as trustee. The verdict is Kristina’s only liability. Carapella sued State Farm in Florida state court. State Farm then sought to intervene, post-judgment, in the wrongful-death action and moved to vacate the judgment, arguing that the Rotells’ fifth amended complaint was untimely and that the default judgment was void.The district court and the Eleventh Circuit affirmed the denial of the motion. The Bankruptcy Code’s “automatic stay” provision, 11 U.S.C. 362(a), precluded State Farm’s motion to intervene. View "State Farm Florida Insurance Co. v. Carapella" on Justia Law

Big Shoulders sued the railroads (SLRG), with federal jurisdiction ostensibly based on diversity of citizenship, and requested that the district court appoint a receiver to handle SLRG’s assets. That court did so, which brought the case to the attention of several creditors. One of them, Sandton, intervened and challenged the appointment of the receiver and the district court’s jurisdiction. Sandton alleged that Big Shoulders failed to join necessary parties who, if added, would destroy diversity of citizenship. Meanwhile, other creditors (Petitioning Creditors) filed an involuntary bankruptcy petition on behalf of SLRG in federal bankruptcy court in Colorado. The receiver objected. Because the judicially approved receivership agreement contained an anti-litigation injunction, the district court initially concluded that the bankruptcy petition was void. On reconsideration, however, the district court determined that it did not have the authority to enjoin the bankruptcy. The bankruptcy continued. After Big Shoulders refused to continue to fund the receivership, the district court approved its termination.The Seventh Circuit consolidated several appeals, each of which involved questions of standing or mootness. The court concluded that those justiciability questions required the dismissal of all but Sandton’s appeal. As for Sandton’s argument that diversity jurisdiction is lacking, the court remanded to the district court for an application in the first instance of the “nerve center test” to determine if SLRG and Mt. Hood are citizens of Illinois. View "Sandton Rail Company LLC v. San Luis & Rio Grande Railroad, Inc." on Justia Law

This appeal arose because debtor-appellant Margaret Kinney failed to make some of the required mortgage payments within her Chapter 13 bankruptcy plan’s five-year period. Shortly after the five-year period ended, however, she made the back payments and requested a discharge. The bankruptcy court denied the request and dismissed the case. The issue on appeal was whether the bankruptcy court could grant a discharge, and the answer turned on how the Tenth Circuit characterized Kinney’s late payments. She characterized them as a cure for her earlier default; HSBC Bank characterized them as an impermissible effort to modify the plan. The Tenth Circuit agreed with the bank and affirmed dismissal. View "Kinney v. HSBC Bank USA" on Justia Law

In 1998, Old Ben Coal Company conveyed its rights to the methane gas in various coal reserves to Illinois Methane. A “Delay Rental Obligation” required the owner of the coal estate to pay Methane rent while it mined coal in areas that Methane had not yet exploited. A deed, including the Delay Rental Obligation was recorded. A few years later, Old Ben filed for bankruptcy and purported to sell its coal interests “free and clear of any and all Encumbrances” to Alliance. Old Ben did not notify Methane before the bankruptcy sale but merely circulated notice by publication in several newspapers. Alliance later sought a permit to mine coal. Methane eventually sought to collect rent in Illinois state court. Alliance argued that Old Ben’s “free and clear” sale had extinguished Methane’s interest.The bankruptcy court held that Alliance was not entitled to an injunction. The district court and Sixth Circuit affirmed. The deed indicates that the Delay Rental Obligation runs with the land and binds successors; it “is not simply a personal financial obligation between” Old Ben and Methane. The covenant directly affects the value of the coal and methane estates. Methane was a known party with a known, present, and vested interest in real property, entitled to more than publication notice. View "Alliance WOR Properties, LLC v. Illinois Methane, LLC" on Justia Law

In 2007, plaintiffs-respondents Jason Rubin and Cira Ross, as cotrustees of the Cira Ross Qualified Domestic Trust (judgment creditors) obtained a civil judgment against defendant-appellant David Ross (judgment debtor). In 2009, Ross filed for voluntary Chapter 7 bankruptcy. In April 2019, following an order denying judgment debtor a discharge in bankruptcy, judgment creditors filed for renewal of their judgment pursuant to Code of Civil Procedure sections 683.120 and 683.130. Ross moved to vacate the judgment on the ground that judgment creditors failed to seek renewal within the 10-year time period proscribed in Code of Civil Procedure section 683.130. The trial court denied the motion, concluding that judgment creditor’s renewal was timely because title 11 United States Code section 108(c) provided for an extension of time within which to seek renewal. Ross appealed, arguing that judgment creditors were not precluded from seeking renewal by his bankruptcy proceeding and, therefore, section 108(c) 2 did not apply to provide an extension of time to seek renewal of their judgment. The Court of Appeal agreed that judgment creditors were not barred from seeking statutory renewal of their judgment during the pendency of judgment debtor’s bankruptcy proceeding, but concluded that the extension provided for in section 108(c) applied regardless. Thus, the Court affirmed the trial court’s order. View "Rubin v. Ross" on Justia Law

Appellee Highpointe Energy filed a quiet title action in Oklahoma against appellants the Viersens, and others. The disputed property concerned mineral interests from two different chains of title: one chain stemmed from a bankruptcy proceeding, while the other chain arose from a mortgage foreclosure proceeding and subsequent sheriff's sale. The trial court determined that the chain resulting from the foreclosure/sheriff's sale was superior to the bankruptcy chain. The Viersens appealed. The Oklahoma Supreme Court held that because the bankruptcy purchasers could secure no greater rights in the disputed property than the bankruptcy trustee held, the purchasers from the mortgage foreclosure proceeding held the superior title. View "Highpointe Energy v. Viersen" on Justia Law

The United States Court of Appeals for the Eleventh Circuit certified to three questions of law to the Georgia Supreme Court relating to a lawsuit brought in federal district court by Fife Whiteside, the trustee of the bankruptcy estate of Bonnie Winslett. Whiteside sued GEICO to recover the value of Winslett’s failure-to-settle tort claim against GEICO so that the bankruptcy estate could pay creditor Terry Guthrie, who was injured in an accident caused by Winslett. The certified questions certified asked the Supreme Court to analyze how Georgia law applied to an unusual set of circumstances that implicated both Winslett’s duty to give GEICO notice of suit and GEICO’s duty to settle the claim brought against Winslett. The Supreme Court was unable to give unqualified “yes” or “no” answers to two of the certified questions as they were posed; rather, the Court answered the questions only in the context of the circumstances of this particular case. "Winslett remains liable to Guthrie, even if her bankruptcy trustee succeeds on the failure-to-settle claim against GEICO; therefore, if the bankruptcy estate does not recover enough from GEICO to satisfy Guthrie’s judgment, the estate would not be fully compensated for Winslett’s damages, and GEICO would escape responsibility for breaching its settlement duty to Winslett. Such an outcome would deny Winslett the full measure of compensatory damages allowed under Georgia law." View "GEICO Indemnity Co. v. Whiteside" on Justia Law

Earl Schwartz Company and the co-personal representatives of the Estate of Earl N. Schwartz (amongst others, together “ESCO”) and SunBehm Gas, Inc. appealed a judgment quieting title to oil and gas interests in Great Plains Royalty Corporation. Great Plains cross appealed, arguing the district court erred when it denied its claims for damages. Great Plains’ creditors filed an involuntary petition for bankruptcy under Chapter 11 of the Bankruptcy Code in 1968. The case was converted to a Chapter 7 liquidation proceeding. The bankruptcy trustee prepared an inventory and published a notice of sale that listed various assets, including oil and gas interests. Earl Schwartz was the highest bidder. Schwartz entered into an agreement with SunBehm to sell certain interests described in the notice, and the district court order approved the transfer of those interests directly from the bankruptcy estate to SunBehm. The bankruptcy case was closed in 1974. Great Plains’ creditors were not initially paid in full; the bankruptcy case was reopened in 2013, Great Plains’ creditors were paid in full with interest, and adversary proceedings were brought to determine ownership of various oil and gas interests, to which ESCO was a party. ESCO argued the bankruptcy sale transferred all of the interests owned by Great Plains, regardless of whether they were listed in the notice of sale. The bankruptcy court rejected ESCO’s argument and determined title to various properties (not the subject of the present appeal). Then in 2016, Great Plains brought this quiet title action against ESCO and SunBehm; ESCO and SunBehm brought quiet title cross claims. The district court held a bench trial and found the bankruptcy trustee intended to sell “100%” of all of the oil and gas interests Great Plains owned at the time of the bankruptcy. But the North Dakota Supreme Court reversed, finding the district court erred when it determined the bankruptcy trustee intended to sell all of Great Plains’ interests, including those not listed in the notice of sale. On remand, ESCO and SunBehm claimed they held equitable title to oil and gas interests in various tracts identified in the notice of sale, interest which were confirmed by the bankruptcy court. The Supreme Court reversed the district court’s ruling on collateral estoppel as a misapplication of the law, and vacated the court’s title determination and its denial of Great Plains’ conversion claim. The case was remanded for the court to determine whether ownership of any interests in the tracts identified in the notice of sale passed to ESCO or SunBehm by virtue of the bankruptcy sale and confirmation order. View "Great Plains Royalty Corp. v. Earl Schwartz Co., et al." on Justia Law