Justia Civil Procedure Opinion Summaries

This case arose out of an alleged power of attorney agreement between appellant and KSRP, which was signed by appellee, an officer and 50% owner of PYK, the general partner of KSRP. On appeal, appellant challenged the district court's order and judgment dismissing his claims against appellee, arguing that the bankruptcy court and district court lacked "related to" jurisdiction under 28 U.S.C. 1331 because appellee's cross-claims for indemnity and contribution against KSRP had no possibility of succeeding. The court concluded that the pleadings are sufficient to support "related to" jurisdiction. In this case, appellee's allegations in his notice of removal and the facts alleged in appellant's pleadings in state court sufficiently show that appellee's contractual indemnity claim against KSRP was not immaterial and made solely for the purpose of obtaining jurisdiction or wholly insubstantial and frivolous. Accordingly, the court affirmed the judgment. View "Collins v. Sidharthan" on Justia Law

In 2008 the Seymours filed a Chapter 13 bankruptcy petition. In 2010 the Seymours filed a personal injury action, based on a 2010 automobile accident that occurred while Seymour was being transported in an ambulance. A 2010 plan modification entailed a reduction in the Seymours’s monthly payment amount based on an allegation that Seymour was unable to work and was only receiving workers’ compensation payments. The Seymours never apprised the bankruptcy court that their circumstances had changed after the 2010 modification. Defendants in the injury action successfully obtained summary judgment, based on estoppel because the Seymours failed to disclose their personal injury action in the bankruptcy proceeding. The Illinois Supreme Court reversed,The fact that the Seymours had a legal duty to disclose this suit and failed to do so does not establish intent to deceive or manipulate the bankruptcy court. The 2010 motion to modify the bankruptcy plan did not evince their awareness of the need to disclose the personal injury cause of action. View "Seymour v. Collins" on Justia Law

Henry filed a Chapter 13 Bankruptcy Petition, without counsel. The Trustee objected to confirmation of his plan, arguing that the repayment period exceeded five years and was too speculative; there was no evidence Henry would be able to meet the required payments. Henry agreed to have his original plan denied and was allowed to remedy errors by filing an amended plan by January 22, 2015. Henry maintains that an amended plan was mailed to the Bankruptcy Court on January 22, 2015. The Court never received an amended plan, nor did the Trustee. The Trustee submitted an order for dismissal, which was entered on February 4. Henry received the order on February 9, and immediately went to the Bankruptcy Court and filed amended schedules and an appeal. The Bankruptcy Appellate Panel for the Sixth Circuit affirmed. The Trustee was extremely thorough in explaining what was expected and what to file; Henry was receiving communications from the Bankruptcy Court through traditional mail. If there was any doubt that the documents would arrive through the mail, he should have made arrangements to present the documents physically to the Court. Filing requirements and deadlines are necessary to an orderly bankruptcy process. View "In re: Henry" on Justia Law

Debtor, a billing services technology company, is a limited liability business and its sole member is Joli, Inc. Heverly owns 75 percent of Joli. A printing company holds the single largest claim against Debtor and the Debtor’s CEO, Heverly’s husband, for $9,359,630.91, arising from a judgment. Debtor filed a voluntary Chapter 11 petition. Debtor’s unsecured claims, not including the printing claim, total less than $1.3 million. Debtor filed a Fourth Amended Plan of Reorganization, under which a third-party, One2One (Plan Sponsor) would acquire a membership interest in Debtor. A Plan Support Agreement provided the Plan Sponsor with the exclusive right to purchase 100% of Debtor’s equity for $200,000. Neither the Plan Sponsor nor any third-party was to contribute any additional capital. The Plan incorporated the terms of the Committee Agreement concerning distributions and the waiver of preference actions against unsecured creditors. Over the objection of the printing company, the bankruptcy judge entered a Confirmation Order. The district court affirmed. The Third Circuit declined to overrule its 1996 adoption of the doctrine of equitable mootness, but concluded that the district court abused its discretion under that precedent and remanded for consideration of the merits of the printing company appeal. View "In re: One2One Communications" on Justia Law

Taylor’s brother died in an accident. Caiarelli, the decedent’s ex-spouse and guardian of their minor child, obtained a state court declaration that the child was entitled to assets distributed to Taylor ($1.4 million). The estate assigned the judgment to Caiarelli. Taylor sought a probate court declaration that the assignment was void. Before resolution, Taylor filed for Chapter 11 bankruptcy, triggering the automatic stay. Caiarelli initiated an adversary proceeding, objecting to discharge of the judgment. The bankruptcy court dismissed, finding that Caiarelli failed to establish standing. The judgment was discharged, and Taylor’s creditors enjoined from collecting, 11 U.S.C. 524(a)(2). Caiarelli returned to probate court, which ratified the assignment. Taylor claimed that Caiarelli and her attorneys violated the discharge and plan injunctions. The bankruptcy court entered a civil contempt order and issued a damages order and judgment for $165,662.36 in attorney’s fees. While appeal was pending, Taylor notified the district court that he reached a settlement with the legal malpractice insurance carrier for Caarelli’s attorneys. The attorneys denied that a full settlement had been reached. The bankruptcy court indcated that vacatur would be approved if the parties returned to the court, so the district court denied Taylor’s motion to dismiss but reversed the contempt order, damages order, and judgment, finding no violation of the statutory discharge or plan injunctions. The Seventh Circuit affirmed, finding that the appeal was not moot. View "Taylor v. Caiarelli" on Justia Law

Plaintiffs in this case alleged their former bankruptcy trustee breached professional duties due them because of conflicting obligations the trustee owed the bankruptcy estate. Plaintiffs sought recovery under state law. However, plaintiffs filed suit in federal court against the trustee alleging diversity jurisdiction and the right to have the case resolved in an Article III court. The trustee maintained the case should have been heard in an Article I bankruptcy court because the alleged-breached professional duties arose from the bankruptcy proceedings. The district court concluded the case should have been heard in the Article I court, and certified its decision for immediate appeal. The Tenth Circuit concluded that an Article III court had jurisdiction, and reversed the district court's order. View "Loveridge v. Hall" on Justia Law

Debtors filed a Chapter 13 bankruptcy petition. CP Medical’s collection agent timely filed a proof of claim. The Chapter 13 plan, proposing monthly payments of $124.00 over 36 months and pro rata distribution to unsecured creditors, was confirmed. Debtors fell behind on payments and converted to a Chapter 7. After confirmation, but during the Chapter 13 case, Debtors filed an adversary proceeding against CP, seeking damages For violation of the Fair Debt Collection Practices Act, 15 U.S.C. 1692. The complaint indicated that CP's proof of claim was for medical services provided in February 2011, that the bankruptcy and proof of claim filings were beyond Arkansas’ two-year statute of limitations for medical debt collection, and that by filing a claim on a debt that is time-barred, CP engaged in a “false, deceptive, misleading, unfair and unconscionable” debt collection practice. The bankruptcy court granted CP summary judgment, holding that no FDCPA violation occurs when a debt collector attempts to collect a potentially time-barred debt that is otherwise valid unless there is actual litigation or the threat of litigation. The Eighth Circuit Bankruptcy Appellate panel affirmed. CP's proof of claim was a simple attempt to share in any distribution made to listed creditors in bankruptcy, not actual or threatened litigation. View "Gatewood v. CP Medical, LLC" on Justia Law

Utica’s subsidiary, Republic, hired Sheppard’s law firm to pursue a subrogation action. Settlement proceeds totaling $145,000.00 were entrusted to the law firm; Sheppard was the managing partner. Republic was entitled to $130,740.03; that award was not distributed. Republic retained the Lewis, law firm to recover the money. The parties reached a settlement agreement; $60,000.00, was due in November 2013 and $70,740.03, was to be paid in December 2013. Payments were to be made to the Utica Atlanta regional office, which had originally worked with Sheppard and handles claims relating to member companies, including Republic. Sheppard’s portion, $30,000.00, was not received. In February 2014, Sheppard filed Chapter 7 bankruptcy. UTICA is listed as a creditor,with the address of its New York home office. The Bankruptcy Court mailed notice to all creditors of the May 30, 2014 date by which creditors had to file a complaint or challenge the dischargeability of certain debts. No notice was sent to Lewis or Republic. On May 21, 2014 Lewis sued Sheppard in Tennessee State Court, unaware of the pending bankruptcy. Lewis received notice of the bankruptcy on May 28, and, on May 29, filed a timely motion to extend the deadline. The Bankruptcy Appellate Panel reversed denial of the motion, finding sufficient “cause” to justify extension under Fed. R. Bankr. P. 4004 and 4007(c). View "In re: Sheppard" on Justia Law

ASARCO hired the law firms to assist it in carrying out its duties as a Chapter 11 debtor in possession, 11 U.S.C. 327(a). When ASARCO emerged from bankruptcy, the law firms filed fee applications requesting fees under section 330(a)(1), which permits bankruptcy courts to “award . . . reasonable compensation for actual, necessary services rendered by” professionals. The Bankruptcy Court rejected ASARCO’s objections and awarded fees for time spent defending the applications. The district court held that the firms could be awarded fees for defending their fee applications. The Fifth Circuit reversed. The Supreme Court affirmed. Section330(a)(1) does not permit bankruptcy courts to award fees to section 327(a) professionals for defending fee applications. The American Rule provides the basic point of reference for attorney’s fees: Each litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise. Congress did not depart from the American Rule in section 330(a)(1) for fee-defense litigation. The phrase “reasonable compensation for services rendered” necessarily implies “loyal and disinterested service in the interest of” a client, Time spent litigating a fee application against the bankruptcy estate’s administrator cannot be fairly described as “labor performed for”—let alone “disinterested service to”—that administrator. Requiring bankruptcy attorneys to bear the costs of their fee-defense litigation under section 330(a)(1) creates no disincentive to bankruptcy practice. View "Baker Botts L.L.P. v. ASARCO LLC" on Justia Law

Plaintiffs filed suit against Abide, alleging that Abide violated their Fourth Amendment rights while serving as the bankruptcy trustee for plaintiffs’ bankrupt estate and the bankrupt estate of their closely held corporation. The district court dismissed the complaint for lack of subject-matter jurisdiction. The court held that when a bankruptcy trustee acts pursuant to an order by the district court, and the trustee’s actions pursuant to that order are the basis of the claim, the district court has jurisdiction to entertain a suit with respect to that conduct. Because the court held that the district court should not have dismissed plaintiffs’ complaint, the district court may consider Abide’s 12(b)(6) motion in the first instance. The court vacated and remanded for further proceedings. View "Carroll, Jr. v. Abide" on Justia Law