Justia Civil Procedure Opinion Summaries

Appellant obtained a judgment against his employer after the employer made also accusations that Appellant committed embezzlement and forgery. Shortly thereafter, Appellant's employer filed for Chapter 7 Bankruptcy, both individually and on behalf of his business. Appellant appealed the bankruptcy court's ruling, arguing that he received an insufficient amount as an unsecured creditor.The court explained that "the doctrine of equitable mootness has no place in Chapter 7 liquidations." View "Said Taleb v. Wendy Lewis" on Justia Law

The Ninth Circuit reversed the district court’s judgment reversing the bankruptcy court’s order requiring a standing Chapter 13 trustee to return her percentage fee when the case was dismissed prior to confirmation. Joining the Tenth Circuit, the panel held that the trustee was not entitled to a percentage fee of plan payments as compensation for her work in the Chapter 13 case. 28 U.S.C. Section 586(e)(2) provides that the trustee shall “collect” the percentage fee from “payments . . . under plans” that she receives. 11 U.S.C. Section 1326(a)(1) provides for the debtor to make payments in the amount “proposed by the plan to the trustee.” Section 1326(a)(2) provides that the trustee shall retain these payments “until confirmation or denial of confirmation.” This section further provides that if a plan is not confirmed, the trustee shall return to the debtor any payments not previously paid to creditors and not yet due and owing to them. Section 1326(b) provides that, before or at the time of each payment to creditors under the plan, the trustee shall be paid the percentage fee under Section 586(e)(2).   The panel held that, reading these statutes together, “payments . . . under plans” in § 586 refers only to payments under confirmed plans. Prior to confirmation a trustee does not “collect” or “collect and hold” fees under Section 586 but instead “retains” payments “proposed by the plan” pursuant to Section 1326(a)(2). If a plan is not confirmed, then Section 1326(a)(2) requires a return to the debtor of payments “proposed by the plan.” View "IN RE: ROGER EVANS, ET AL V. KATHLEEN MCCALLISTER" on Justia Law

Ritchie Capital Management, LLC fell victim to a massive Ponzi scheme. Ritchie sought recovery outside the receivership. But settlement agreements and bar orders prevent recovery. The district court approved the receivership’s final accounting and a previous bar order. Claiming abuses of discretion, Ritchie appealed.   The Eighth Circuit affirmed. The court explained that the district court ordered the receiver to prepare and file a final accounting. The district court established the requirements that, in its sound discretion, the receiver satisfied in the final accounting. Ritchie fails to identify a clear abuse of discretion in the district court’s approval of the final accounting and, regardless, waived its right to do so. Further, the court held that because bankruptcy-standing doctrine independently prevents Ritchie from bringing claims related to the bankruptcy estate, and because Ritchie can still pursue personal claims against JPMorgan, Ritchie cannot identify a protected right that is deprived here. View "United States v. Ritchie Capital Management, L.L.C." on Justia Law

On emerging from Chapter 11 reorganization effective February 9, 2021, Chesapeake Energy Corporation tested the limits of the bankruptcy court’s post-confirmation jurisdiction by asking it to settle two prebankruptcy purported class actions covering approximately 23,000 Pennsylvania oil and gas leases. The Fifth Circuit consolidated the Proof of Claim Lessors’ appeal from the preliminary approval order with the appeal from the final approval order. At issue is whether the bankruptcy and district courts had jurisdiction under 28 U.S.C. Section 1334 to hear and decide these “class” claims.   The Fifth Circuit vacated and remanded the bankruptcy and district court judgments with instructions to dismiss. The court explained that no proofs of claim were filed for class members, and every feature of the settlements conflicts with Chesapeake’s Plan and Disclosure Statement. Handling these forward-looking cases within the bankruptcy court, predicated on 28 U.S.C. Section 1334(a) or (b), rather than in the court where they originated, exceeds federal bankruptcy post-confirmation jurisdiction. View "Sarnosky v. Chesapeake" on Justia Law

Debtor filed a petition under Chapter 13 of the United States Bankruptcy Code. Debtor’s recent history of prior bankruptcy filings implicated 11 U.S.C. Section 362(c)(4)(A)(i), which provides that—by operation of law— the automatic stay shall not go into effect upon the filing of a bankruptcy case if a debtor had two or more bankruptcy cases that were pending but dismissed in the previous year. Debtor timely filed a motion to impose the stay in accordance with Section 362(c)(4)(B), which the standing trustee opposed and which the bankruptcy court denied. Debtor timely appealed. While the appeal was pending, Debtor’s bankruptcy case was dismissed.   The Bankruptcy Appellate Panel of the Eighth Circuit dismissed the appeal for lack of jurisdiction. The court explained that an appeal is considered constitutionally moot where there is no longer any live case or controversy to be decided. In ordinary parlance, an appeal is considered equitably moot and will be dismissed if implementation of the judgment or order that is the subject of the appeal renders it impossible or inequitable for the appellate court to give effective relief to an appellant. With the dismissal of Debtor’s bankruptcy case, this appeal is constitutionally moot. View "Timothy Davies v. Diana S. Daugherty" on Justia Law

Appellant petitioned for bankruptcy relief under Chapter 13 of the Bankruptcy Code on August 19, 2020. She valued her residence at $130,000 at the time, and the parties stipulated that she claimed a $15,000 homestead exemption under section 513.475 of the Missouri Revised Statutes. The bankruptcy court granted Appellant’s motion to convert from a Chapter 13 case to a Chapter 7 case. The parties stipulated that sale of Appellant’s residence would result in more than $62,000 in proceeds after satisfying the mortgage lien and paying the $15,000 homestead exemption and costs of sale. Prompted by indications that the Trustee planned to sell her residence, Goetz filed a Motion to Compel Trustee to Abandon Real Property of Debtor. The bankruptcy court denied the motion.   The Bankruptcy Appellate Panel for the Eighth Circuit affirmed. The court held that the bankruptcy court correctly concluded that postpetition preconversion nonexempt equity resulting from market appreciation and payments toward a mortgage lien accrue for the benefit of the bankruptcy estate upon conversion from a Chapter 13 case to a Chapter 7 case. Further, the court rejected Appellant’s claim that she benefits from the increase in equity in her residence because her residence was removed from the bankruptcy estate. The court explained the parties stipulated that sale of Appellant’s residence would result in more than $62,000 in proceeds after satisfying the mortgage lien and paying the $15,000 homestead exemption and costs of sale. The bankruptcy court’s determination that this sum is “of more than inconsequential value and benefit to the estate” was not an abuse of discretion. View "Machele L. Goetz v. Victor F. Weber" on Justia Law

Appellants appealed from a district court’s order reversing an order of the United States Bankruptcy Court confirming a Chapter 11 plan that included nonconsensual third-party releases of direct claims against non-debtors.   The Second Circuit reversed the district court’s order holding that the Bankruptcy Code does not permit nonconsensual third-party releases against non-debtors, affirmed the bankruptcy court’s approval of the Plan, and remanded the case to the district court for such further proceedings as may be required. The court also affirmed the district court’s denial of the Canadian Creditors’ cross-appeal. The court held that nonconsensual third-party releases of such direct claims are statutorily permitted under 11 U.S.C. 10 Sections 105(a) and 1123(b)(6) of the Bankruptcy Code. The court further concluded that the court’s case law also allows for nonconsensual third-party claim releases in specific circumstances, such as those presented in this appeal. View "In re: Purdue Pharma L.P." on Justia Law

Clifton Capital Group (“Clifton”) was chair of an official committee of unsecured creditors appointed by the Office of the United States Trustee to monitor the activities of debtor East Coast Foods, Inc., manager of Roscoe’s House of Chicken & Waffles. The bankruptcy court appointed Bradley D. Sharp as Chapter 11 trustee. Clifton objected to Sharp’s fee application, but the bankruptcy court awarded the statutory maximum fee. Clifton appealed. The district court concluded that Clifton had standing to appeal, and it remanded. On remand, the bankruptcy court again awarded the statutory maximum. Clifton again appealed, and the bankruptcy court, this time, affirmed.   The Ninth Circuit reversed l reversed the district court’s order affirming the bankruptcy court’s enhanced fee award to the trustee. the panel wrote that the Ninth Circuit historically bypassed the Article III inquiry in the bankruptcy context, instead analyzing whether a party is a “person aggrieved” as a principle of prudential standing. The court, however, has returned emphasis to Article III standing following Susan B. Anthony List v. Driehaus, 573 U.S. 149 (2014), in which the Supreme Court questioned prudential standing. The panel held that Clifton lacked Article III standing to appeal the fee award because it failed to show that the enhanced fee award would diminish its payment under the bankruptcy plan, and thus it failed to establish an “injury in fact.” The panel also concluded that Clifton did not suffer injury to the timing of its payment because Clifton’s alleged harms were conjectural, and it remained possible that Clifton would be paid within the plan’s initial estimated window. View "IN RE: CLIFTON CAPITAL GROUP, LLC, ET AL V. BRADLEY SHARP" on Justia Law

Appellant Texxon Petrochemicals, LLC (“Texxon”) filed for bankruptcy. In that proceeding, Texxon filed a motion to assume executory contract, alleging that it entered into a contract with Getty Leasing in 2018 to purchase the property. Getty Leasing objected to the motion. After an evidentiary hearing, the bankruptcy court denied the motion on the grounds that, for multiple reasons, there was no valid contract to assume. The district court affirmed, finding there was insufficient evidence to show that, as required under Texas law, the alleged contract was sufficient as to the property identity or comprised an unequivocal offer or acceptance. Texxon appealed. Getty Leasing primarily contends that the appeal is mooted by the dismissal of the underlying bankruptcy proceeding.   The Fifth Circuit affirmed. The court held that the brief email exchange did not demonstrate an offer or acceptance, as required for a contract to be binding under Texas law. Texxon fails to show that the email exchange satisfied any of the three required elements of an offer. A statement that a party is “interested” in selling a property is not an offer to sell that property—it is an offer to begin discussions about a sale. Nor were the terms of the offer clear or definite. Finally, the alleged offer failed to identify the property to be conveyed. For these reasons, Texxon is unable to show the existence of a binding contract. View "Texxon v. Getty Leasing" on Justia Law

Defendants challenged the civil division’s order granting plaintiff Sharond Hill’s request to vacate its previous order dismissing her complaint. In February 2019, plaintiff filed a complaint against defendants Springfield Hospital (Springfield) and Emergency Services of New England, Inc. (Emergency Services) alleging that defendants were negligent in failing to timely diagnose her with appendicitis when she went to the Springfield emergency department in April 2016. Both defendants filed answers denying plaintiff’s claims. In July 2019, Springfield notified the civil division and the parties that it had filed a voluntary petition of bankruptcy in the U.S. Bankruptcy Court and that pursuant to § 362(a) of the Bankruptcy Code, plaintiff’s claims against it were automatically stayed. In response, the civil division issued an order dismissing plaintiff’s case without prejudice. The civil division held a status conference in September 2020; plaintiff’s counsel indicated at the conference that Springfield Hospital may have emerged from bankruptcy and, if not, he might seek relief from the bankruptcy stay. The bankruptcy court issued an order closing Springfield’s bankruptcy case in July 2021. In October 2021, plaintiff moved to vacate the dismissal and reopen her malpractice case. In her motion, plaintiff asserted that none of the conditions set forth in the dismissal order had technically occurred. Alternatively, plaintiff argued that even if one of the conditions had occurred, she should be excused for failing to file her motion to reopen within thirty days because she did not receive timely notice of the occurrence from defense counsel. Finally, she argued that her claim against Emergency Services should never have been dismissed because Emergency Services was not part of the bankruptcy proceeding. In March 2022, the civil division granted plaintiff’s motion, stating that it was “persuaded that there was no legal or equitable basis to dismiss the action simply because one of the two defendants filed a bankruptcy petition.” The court stated that it had intended to simply stay the action and that dismissal would be unjust. "The record is clear that plaintiff’s own lack of diligence, not the 2019 dismissal order or defendants’ conduct, is the reason for her situation." The Vermont Supreme Court agreed with defendants that there was no legal basis for the court to grant such relief, and therefore reversed. View "Hill v. Springfield Hospital, et al." on Justia Law