There is a great website at www.nationalmortgagesettlement.com where you can find the original complaint filed by the feds and most of the states against a bunch of large banks and servicing companies. The website also has an executive summary of the settlements and copies of the actual settlement agreements. The complaint sure pulls no punches accusing banks of doing all sorts of fraudulent things and accusing them of doing these things on purpose. I hope there is not a whole new round of people who stop paying their mortgages so they can qualify for these new programs.
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Circuit Court of Appeals Cases from Last Week
United States Fourth Circuit, 02/09/2012
McDaniel v. Blust,
In a suit re conduct by members of trustee’s law firm and accountant during bankruptcy proceedings, plaintiffs must obtain leave of the bankruptcy court before filing suit as required by the Barton doctrine.
United States Fourth Circuit, 02/10/2012
In re McCormick,
Bank’s lien on one parcel avoided, where: 1) deed was unrecorded as to that parcel; 2) the bankruptcy trustee was only imputed with the notice of the deed that would be imputed to a bona fide purchaser under state law; and 2) North Carolina law allowed a purchaser to rely exclusively on the official recordation index of the county to discover liens, regardless of what other independent knowledge that purchaser might have.
United States Ninth Circuit, 02/09/2012
Matter of SK Foods, L.P.,
Appeal of denial of motion to remove the trustee and disqualify his counsel is dismissed for lack of jurisdiction where each of the orders was not a final, appealable order.
Thanks to Findlaw.com.
Actor William “Gary” Busey files Chapter 7
Actor Gary Busey filed Chapter 7 on February 8, 2012. The case was assigned to Judge Ahart at the Woodland Hills Bankruptcy Court. The Chapter 7 Trustee is David Gottleib.
William Busey 1:12-bk-11182-AA Case type: bk Chapter: 7 Asset: No Vol: v Judge: Alan M. Ahart Date filed: 02/07/2012 Date of last filing: 02/07/2012
It was an “emergency” or “face-sheet” filing so the information is limited: the “primarily consumer debts” box is checked; 1-49 creditors; – Value of assets is estimated to be under $50,000; – Liabilities are estimated to be from $500,000 to $1M.
Circuit Court of Appeals Cases from Last Week
United States Fourth Circuit, 02/02/2012
Gentry v. Siegel
Former employee cannot pursue class action for unpaid ovetime where: 1) no abuse of discretion ruling that the bankruptcy process was superior to the class action process for resolving the claims of former employees; 2) notice of the bankruptcy process to the named claimants was not constitutionally deficient; and 3) with respect to unnamed claimants, the named claimants lacked standing to challenge the notice.
United States Ninth Circuit, 01/30/2012
Matter of Thorpe Insulation Co.
Bankruptcy Court’s orders denying creditor’s motion to compel arbitration and disallowing its claim is affirmed, where: 1) the resolution of the creditor’s claim was a core matter in the bankruptcy; 2) no abuse of discretion in denying the creditor’s motion to compel arbitration; 3) no abuse of discretion by declining to give the creditor further opportunity for discovery; 4) the creditor’s claim was properly disallowed because the debtor’s covenants in a settlement agreement were purported prepetition waivers of the protections of the Bankruptcy Code, which need not be permitted.
Thanks to Findlaw.com
Judge Ted Albert Tentative Clarifies (Somewhat) Issues on Modification of Loan on Residence
8:11-20215 [debtor] Chapter 11
#10.00 Motion to Value Property of the Estate Pursuant to 11 U.S.C. Section 506(a)
Tentative Ruling:
The motion is for valuation of collateral known as 2xxx Santa Ana Ave., Costa Mesa (“property”) under §506, but the real question presented here is whether a Chapter 11 Plan can treat the junior trust deed claim of Citibank as only partially secured since the debtor contends there is only $287,000 in value to support two trust deeds of $202,410 and $510, 968. If the bifurcation can be done then the junior secured claim is only around $85,000. The impediment, if any, would be §1123(b)(5) which forbids modification of claims “secured only by a security interest in real property that is the debtor’s principal residence.” The property is apparently a duplex. While there is case law on both sides of the issue, and no definitive 9th Circuit authority, the majority of authority as represented by cases like the 3d Circuit in In re Scarborough, 461 F. 3d 406, 414 (3d Cir. 2006), suggest that since technically the lien is secured by something other than the residence (i.e. an adjoining income property) and therefore is not secured only by the residence, the statute does not apply. See also In re Boardman, 2011 WL 478987 (Bankr. N.D. Cal.).
Grant
Matthew E. Faler
17330 Brookhurst St., Ste 240
Fountain Valley, CA 92708
Public Counsel has Pro Bono Cases
Hi Jon & Roksana,
Hope you are doing well!
We have several people waiting to be placed with pro bono counsel. We would greatly appreciate your assistance by taking on a Chapter 7 pro bono case. Your pro bono assistance helps pro se debtors who have nowhere else to turn to for bankruptcy assistance and guidance.
If you are ready to take on a case, please let me know. I look forward to hearing from you.
Thank you in advance!
Maggie
Magdalena Reyes Bordeaux
Senior Staff Attorney
Public Counsel
Consumer Law Project & Debtor Assistance Project
Ph: 213.385.2977 ext. 105
Fx: 213.385.9089
Em: mbordeaux@publiccounsel.org
Maggie: Of course. Send them over.
Update Chapter 20 Lam Motions
Judge Catherine Bauer ruled today that a discharge is required for a successful Lam Motion.
NACBA filed an amicus brief on this issue for an appeal in the 7th Circuit District Court. See attached.
Appeal of Section 522(f) Issue Pending Before the 9th Circuit
From attorney Anerio V. Altman:
I have an appeal before the 9th Circuit court of Appeals with OCCU in regards to:
1. Can a Debtor utilize the Wildcard Exemption for the purpose of avoiding a non-possessory non-purchase money security interest in collateral they claim as a tool of the trade under 11 U.S.C. 522(f)?; and
2. Can a Debtor utilize 11 U.S.C. 522(f) for the purpose of avoiding a Non-PMSI lien in a vehicle they claim as a tool of the trade?
Debtor in this case is a realtor who claims that her vehicle is a tool of the trade. The vehicle is worth less than $6000 by all accounts. Debtor filed her own motion pro se, OCCU responded and we filed a chunky reply.
Judge Albert said you can’t do it. The District court said that we could. And now we’re before the ninth.
The case is IN RE: ANGIE GARCIA. 9th Appellate case number 11-56076 or District Court 10-00985.
We don’t have a hearing date yet but all papers have been filed.
Anerio V. Altman, Esq. #228445
Lake Forest Bankruptcy
What goes in the 109(e) bucket? Santos v. Dockery goes to the 9th Circuit Court of Appeals
When I explain Chapter 13 to clients, I usually describe the amount of general unsecured claims as being the size of the clients' “bucket” and I explain that their plan payments might fill 0% to 100% of the “bucket” during the plan, before the “b
ucket” is tossed out (discharged), with certain exceptions such as student loans, for example.
Section 109(e) provides a limit on the maximum size of the “bucket” for individuals and spouses. To be eligible for Chapter 13, debtor(s) must owe “on the date of the filing of the petition, noncontingent, liquidated, unsecured debts of less than $360,475…” This amount was set as of April 1, 2010 and is adjusted every three years. It applies uniformly accross the country, despite the significant variations in real estate values and amounts of home loans.
In depressed (or recessed) real estate markets, like now, it is common for debtors to use Chapter 13 to avoid junior undersecured home loans pursuant to 11 U.S.C. Sections 506(a) and (d). In states with relatively high real estate values, like California, junior home loans can be hundreds of thousands of dollars. If the avoided junior home loan increases the debtors' “bucket” size, then they often become ineligible for Chapter 13. As a practical matter, middle class consumer debtors are excluded from the more complicated and expensive Chapter 11 and must therefore surrender their homes.
Persuasive statutory and public policy arguments favor not counting undersecured junior home loans subject to 11 U.S.C. Section 506, in the 109(e) unsecured debt limit. Santos v. Dockery (In re Santos), Case Number 12-55145, is now pending before the 9th Circuit Court of Appeals seeking a ruling on this important consumer debtor issue.
On January 20, 2012 Santos appealed a District Court order affirming the Bankruptcy Court's order dismissing their case upon a finding that they were inelgible to be Chapter 13 debtors due to their unsecured debts being above the 109(e) unsecured debt limit. The Debtors had secured claims against their primary residence that were subject to 522(f) and 506 which were determined to put them over the limit. The Bankruptcy Court followed Smith v. Rojas, 435 B.R. 637, 649-650 (9th Cir. BAP 2010). The District Court read 109(e) as “noncontingent, liquidated and unsecured debts” rather than “noncontingent, liquidated, unsecured debts”, a subtle and significant difference from the plain language.
9th Circuit Rulings From Last Week
United States Ninth Circuit, 01/24/2012
In the Matter of Thorpe Insulation Co.,
Insurance companies that did not reach settlements with the debtors are allowed to challenge the Chapter 11 reorganization plan where: 1) the appeal was not equitably moot; 2) the appellants met statutory, constitutional, and prudential standing requirements; 3) the appellants had standing in bankruptcy court to object to confirmation of the plan; and 4) anti-assignment provisions contained in contracts between the appellants and debtors were preempted by federal bankruptcy law.
United States Ninth Circuit, 01/27/2012
Matter of Meruelo Maddux Properties, Inc.,
Debtor is a single asset case where: 1) the debtor existed solely to operate a 92-unit apartment complex; 2) the Code gives no basis for a “whole business enterprise” exception to single asset real estate debtor status that would allow the court to consider parent corporation and sister subsidiaries; and 3) relief from the automatic stay appropriate even though questions left about whether the debtor took timely corrective action to the bankruptcy court in the first instance.
California Court of Appeal, 01/25/2012
Flores v. Kmart Corp.,
In a wrongful death action brought against a corporation that had filed for Chapter 11 bankruptcy and confirmed a Plan, demurrer not appropriate where on the limited record of bankruptcy proceedings provided by the corporation, and consistent with due process principles, the corporation failed to demonstrate, at the demurrer stage, that the approval of the reorganization plan barred all of the plaintiffs’ claims.
Thanks to Findlaw.com
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