The U.S. Court of Appeals for the Second Circuit recently affirmed the dismissal of LIBOR-manipulation fraud claims brought by a group of hotel-related entities and their investor against a bank and two of its subsidiaries. In so ruling, the Second Circuit held that: (a) the borrower and related entities lacked standing to sue because they failed to list their potential claims in their bankruptcy case and the claims were barred by the doctrine of judicial estoppel; and (b) the claims of the investor and guarantors were untimely and barred by the law of the case. A copy of the opinion…
Posts tagged as “Bankruptcy”
In a 5-3 decision handed down on May 15, the Supreme Court of the United States held that the federal Fair Debt Collection Practices Act (FDCPA) is not violated when a debt collector files a proof of claim for a debt subject to the bar of an expired limitations period. The decision: held that the filing of such a proof of claim is not false, misleading, deceptive or unconscionable in violation of sections 1692e or f of the FDCPA; found that claims under the bankruptcy code need not be capable of being “enforceable” in a civil lawsuit; and, does not…
The U.S. Court of Appeals for the Ninth Circuit recently affirmed the Bankruptcy Appellate Panel’s determination that a creditor’s pre-bankruptcy, non-recourse lien on two debtors’ real property is extinguished following a non-judicial foreclosure sale. A copy of the opinion in In re: Salamon is available at: Link to Opinion. In April 2009, two debtors purchased real property. Rather than fund the purchase price and pay off the two existing liens on the real property, the debtors executed a wrap-around mortgage in favor of the property seller. The debtors then funded the balance of the purchase price with a note secured…
The U.S. Court of Appeals for the Eleventh Circuit recently affirmed the dismissal of a mortgage loan borrower’s federal Fair Debt Collection Practices Act and related state law claims because the defendant mortgagee was not a “debt collector” as defined by the FDCPA. In so ruling, the Court also rejected the borrower’s allegations that the monthly statements the mortgagee sent to the borrower after her bankruptcy discharge were impermissible implied assertions of a right to collect against her personally. A copy of the opinion in Helman v. Bank of America is available at: Link to Opinion. The borrower obtained a…
The U.S. Court of Appeals for the Ninth Circuit recently reversed a ruling that disallowed an unsecured creditor’s claim filed in a California bankruptcy court based on the forum state’s statute of limitations. In so ruling, the Ninth Circuit held that, although courts typically apply the forum state’s statute of limitations if the contract is silent on the issue, exceptional circumstances warranted the application of a longer statute of limitations here, because the creditor had no option but to enforce its claim in the forum based on where the bankruptcy petition was filed. A copy of the opinion in PNC…
Indiana Supreme Court Rejects Borrowers’ Argument Bankruptcy Discharge Wiped Out Mortgage Loan, Lien
Indiana Supreme Court Rejects Borrowers’ Argument Bankruptcy Discharge Wiped Out Mortgage Loan, Lien
The Supreme Court of Indiana recently confirmed a mortgagee’s ability to seek an in rem judgment against property for which there was an outstanding lien balance after the borrowers obtained a discharge of their Chapter 7 bankruptcy. In so ruling, the Court distinguished the difference between an in rem and in personam judgment, and rejected the borrowers’ unsupported argument that the debt was paid in full by the time the mortgagee initiated foreclosure proceedings against the borrowers. A copy of the opinion in McCullough v. CitiMortgage, Inc. is available at: Link to Opinion. The borrowers obtained a loan from the…
The Bankruptcy Appellate Panel for the Eighth Circuit recently held that a secured creditor obtained a valid lien on collateral because technical defects in the bill of sale did not invalidate a transfer of title to the collateral, and rejected the argument that the secured creditor should have inspected the bill of sale before advancing funds. A copy of the opinion in In re Leonard is available at: Link to Opinion. This was a dispute over the validity and priority of interest in collateral in goods. The seller sold the collateral to the debtor, a broker who delivered the collateral…
The U.S. Court of Appeals for the First Circuit recently affirmed a bankruptcy court’s ruling that a mortgagee did not violate the discharge injunction in 11 U.S.C. § 524(a) by sending IRS 1099-A forms to borrowers after their discharge, agreeing that the IRS forms were not objectively coercive attempts to collect a debt. A copy of the opinion in Bates v. CitiMortgage, Inc. is available at: Link to Opinion. The borrowers obtained a mortgage loan secured by their home. They filed bankruptcy under Chapter 7 in 2008 and received a discharge of their personal liability for the loan in 2009.…
The U.S. Court of Appeals for the Seventh Circuit recently held that a bank’s lawsuit against the husband of a debtor who had filed for bankruptcy did not violate the co-debtor stay because the husband’s credit card debts were not a consumer debt for which the debtor was personally liable. A copy of the opinion in Smith v. Capital One Bank (USA), NA is available at: Link to Opinion. A debtor filed for bankruptcy in 2011. During the course of the bankruptcy proceedings, a bank filed suit and obtained a judgment against the debtor’s husband on a credit card debt…
The U.S. Court of Appeals for the First Circuit recently rejected a bankruptcy trustee’s effort to avoid a mortgage on the basis that the acknowledgment signed by the borrowers’ attorney-in-fact was defective under Massachusetts law, holding that the acknowledgment was not materially defective because as a matter of agency law the attorney-in-fact’s signature was the borrowers’ “free act and deed.” A copy of the opinion in HSBC Bank USA, N.A. v. Lassman is available at: Link to Opinion. The borrowers purchased a parcel of “registered land” in 1994 in North Attleboro, Mass. (the “subject property”). “Registered land” is real property…
The U.S. Court of Appeals for the Eleventh Circuit recently held that the word “surrender” in the Bankruptcy Code, 11 U.S.C. § 521(a)(2), requires that debtors relinquish all of their rights to the collateral. In so ruling, the Court ordered the borrowers to “surrender” their house to the mortgagee in a foreclosure action, and held that the bankruptcy court had the authority to compel the borrowers to fulfill their mandatory duty under 11 U.S.C. § 521(a)(2) not to oppose a foreclosure action in state court. A copy of the opinion in David Failla, et al v. Citibank, N.A. is available at: …
The U.S. Court of Appeals for the Third Circuit recently held that the Bankruptcy Code does not preempt state law claims brought by non-debtors for damages related to the filing of an involuntary bankruptcy proceeding. A copy of the opinion in Rosenberg v. DVI Receivables XVII, LLC is available at: Link to Opinion. The creditors in this action initiated state court litigation against limited partnerships controlled by the debtor, alleging money owed under various leases. During the state court proceedings, the creditors filed an involuntary bankruptcy proceeding against the debtor and the debtor’s affiliated medical imaging companies, none of which were defendants in the…