The website SCOTUSBLOG has posted its Annual Supreme Court Stat Pack for the 2014 Term. You can access the whole thing here. 52 pages of stats!
Here are a few stats that jumped out at me.
There were 16 cases from the 9th Circuit – out of 74 total. The Supremes affirmed the 9th Circuit six times and reversed 10 times.
Nineteen cases out of 74 were decided 5-4. That’s 26% of the cases.
Total cases decided in 1990 was 150. Throughout the 2000s, the total has been right around 75.
Today, in Bank of America v. Caulkett (and Bank of America v. Toledo-Cardona), the Supreme Court reversed the Eleventh Circuit and held that a debtor may not strip off a wholly underwater mortgage in a Chapter 7 case. The Court noted that the respondents had not asked it to overrule Dewsnup. The meaning given by Dewsnup to the term “allowed secured claim” in section 506(d) is controlling; that meaning does not involve the existence of any value backing up the claim. The opinion is here: http://www.supremecourt.gov/opinions/14pdf/13-1421_p8k0.pdf.
A few of us (maybe only a very few) think Dewsnup was correctly decided. I think it was. It’s particularly difficult to understand how section 722 would retain meaning (and how its limits would be respected) if the Court had decided Dewsnup the other way. Justice Scalia’s attempted response to this point in his Dewsnup dissent is unpersuasive.
Justice Thomas’s opinion for the Court includes several rather obvious digs at the Court’s Dewsnup decision. (Note that Justice Thomas didn’t participate in Dewsnup; I think he would have joined Justice Scalia’s dissent if he had participated.)
Prof. Dan Bussell from UCLA has posted some thoughtful comments about Wellness International Network v. Sharif on the SCOTUSBLOG site. His comments are here. The Wellness opinion is here.
The Pregnancy Discrimination Act added new language to the definitions subsection of Title VII of the Civil Rights Act of 1964. The first clause of the Pregnancy Discrimination Act specifies that Title VII’s prohibition against sex discrimination applies to discrimination “because of or on the basis of pregnancy, childbirth, or related medical conditions.”
The Act’s second clause says that employers must treat “women affected by pregnancy . . . the same for all employment-related purposes . . . as other persons not so affected but similar in their ability or inability to work.”
On December 21, 2014, I wrote for the NACTT Academy:
“This seems like a no-brainer to me. Bankruptcy courts, at least in the Central District of California, deny chapter 13 plans all day giving debtors a chance to sharpen their pencils. If every one of those could be appealed, the system would certainly go tilt. Plus, the appeals would often become moot when a new plan is confirmed assuming the bankruptcy court would not allow the case to sit during the pendency of the appeal. If the case is ultimately dismissed during the appeal, there would be new facts to put before the court of appeals which would be in the middle of reviewing the old facts. A conundrum for sure.”
I’ll tell you more about the 9-0 ruling this afternoon.
From Sara Randazzo of the Wall Street Journal
The Supreme Court appeared open Wednesday to clarifying the powers of nearly 1,000 judges in the federal court system, a group whose constitutional authority has come into question since a 2011 high-court decision involving the late Playboy playmate Anna Nicole Smith.
Depending on how the court rules in a case argued Wednesday, the bankruptcy-court system could remain mired in confusion over when it has the power to offer final judgments on certain issues. By extension, the ruling could also curtail the ability of the federal magistrate system to handle some of the work of district-court judges.
“This case is enormously important for the workload of the federal district courts,” said Erwin Chemerinsky, a constitutional scholar and dean of the law school at the University of California, Irvine.
Today, January 14, 2015, the Supreme Court is scheduled to hear oral arguments in the latest case before the Court regarding the bankruptcy court’s jurisdictional powers — Wellness International Network, Limited v. Sharif. The Court was not too interested in delving into this issue since the case was on the list of cases to be considered by the Justices at five separate conferences. Regardless, the Court finally granted certiorari to the Seventh Circuit’s decision on July 1, 2014.
The Court will address the following two issues:
(1) Whether the presence of a subsidiary state property law issue in an 11 U.S.C. § 541 action brought against a debtor to determine whether property in the debtor’s possession is property of the bankruptcy estate means that such action does not “stem[] from the bankruptcy itself” and therefore, that a bankruptcy court does not have the constitutional authority to enter a final order deciding that action; and
(2) whether Article III permits the exercise of the judicial powers of the U.S. by the bankruptcy courts on the basis of litigant consent, and if so, whether implied consent based on a litigant’s conduct is sufficient to satisfy Article III.
For more information: www.scotusblog.com/case-files/cases/wellness-international-network-limited-v-sharif/
The Supreme Court has accepted cert in Bank of America, N.A. v. Caulkett agreeing to review the right of a chapter 7 debtor to strip off an entirely unsecured lien. In Los Angeles we call them “Lam Motions.” I expect oral argument some time in April, 2015 and I expect to be there. Nearly every court in the country has held that the Supreme Court case of Dewsnup requires denial of the strip off in chapter 7. My briefs of the cases follow.
Bank of America, N.A. v. Caulkett, (unpublished) (11th Cir., May, 2014)
Issue: May a chapter 7 strip off a wholly unsecured lien pursuant to sections 506(a) and 506(d)?
Holding: Yes.
The bankruptcy court here “void[ed] a wholly unsecured second priority lien on residential property owned by a Chapter 7 debtor. The issue on appeal is whether a Chapter 7 debtor is allowed to ‘strip off’ a second priority lien on his home, pursuant to 11 U.S.C. § 506(a) and (d), when the first priority lien exceeds the value of the property.” The district court affirmed.
The 11th Circuit affirmed in a very short opinion saying only that it is bound by its prior ruling in McNeal v. GMAC Mortg., LLC (In re McNeal), 735 F.3d 1263 (11th Cir. 2012).
McNeal v. GMAC Mortg., LLC (In re McNeal), 735 F.3d 1263 (11th Cir. 2012)
Issue: May a chapter 7 strip off a wholly unsecured lien pursuant to sections 506(a) and 506(d)?
Holding: Yes.
Per curiam
The debtor here filed chapter 7. “In her petition, McNeal reported that her home was subject to two mortgage liens: a first priority lien in the amount of $176,413 held by HSBC and a second priority lien in the amount of $44,444 held by Homecomings Financial, LLC, a subsidiary of GMAC Mortgage, LLC (collectively, “GMAC”). McNeal also reported that her home’s fair market value was $141,416. The parties do not dispute these factual allegations.” “McNeal then sought to ‘strip off’ GMAC’s second priority lien, pursuant to sections 506(a) and 506(d).” The bankruptcy court denied the request and the district court affirmed.
The 11th Circuit reversed also in a very short opinion. “That GMAC’s junior lien is both ‘allowed’ under 11 U.S.C. § 502 and wholly unsecured pursuant to section 506(a) is undisputed. To determine whether such an allowed—but wholly unsecured—claim is voidable, we must then look to section 506(d), which provides that ‘[t]o the extent that a lien secures a claim against a debtor that is not an allowed secured claim, such lien is void.’” The court distinguished Dewsnup saying, “[b]ecause Dewsnup disallowed only a ‘strip down’ of a partially secured mortgage lien and did not address a ‘strip off’ of a wholly unsecured lien, it is not [determinative of] the facts at issue in this appeal.”
The Supreme Court has set oral argument in the Wellness case for Wednesday January 14, 2015. Wellness is the followup to Bellingham. The court will resolve the issue, hopefully of whether parties can consent to have the bankruptcy court enter final judgment in a Stern type case. A Stern type case is one where congress has designated the issue to be core but the Supremes have determined that it is “unconsitutionally core,” in other words a dispute where final judgment can be entered only be an Article III court.
In Wellness the Stern type claim is the issue of whether the debtor is the alter ego of a corporate type entity, thereby making the corporate property, property of the individual’s estate. The 7th Circuit ruled that only an Article III court can issue a final judgment on that issue and that that cannot be waived.
I will not be able to attend as I will be in trial here in Los Angeles. I had pretty much decided not to go anyway as I would rather attend the Lam Motion cases which will likely be set for oral argument in April, 2015.
The appellant argues, “…of 320,000 Chapter 13 cases filed each year, 60,000 are later converted to Chapter 7″. But where should the funds held by the Chapter 13 Trustee go when Debtor converts the case: back to the debtor or to the creditors? Harris v. Viegelahn, No. 14-400, petition for cert. filed (U.S. Oct. 6, 2014).
Because of a circuit split, the appellant has asked the Supreme Court to resolve this issue. The appellant reminds us that our 9th Circuit B.A.P. requires the return post-Chapter 7, undistributed funds to the debtor.
Please find the full article below from Westlaw Journal Bankruptcy at Debtor Wants Supreme Court to Resolve Where Post-Petition Funds Go After Conversion, 11 Westlaw Journal Bankruptcy 2 (2014).
