Westlaw Topical Highlights: Bankruptcy, July 29, 2013

July 29, 2013

BankruptcyWestlaw Topical Highlights for Bankruptcy provides summaries of significant federal and state judicial decisions and legislative and administrative activities affecting Bankruptcy law. A Westlaw subscription is required to access the documents linked from this page.

Avoidance: Chapter 7 debtors could not “strip off” second-priority mortgage on their residence.  Palomar v. First American Bank 2013 WL 3466884 (C.A.7 (Ill.)) The Chapter 7 debtors could not “strip off” a bank’s allegedly worthless second-priority mortgage on their residence, the Seventh Circuit ruled, agreeing with the decisions below. The only difference between this case and Dewsnup v. Timm, 502 U.S. 410, 112 S.Ct. 773, 116 L.Ed.2d 903 (1992), which held that 11 U.S.C.A. § 506(d) does not allow the bankruptcy court to squeeze down a fully valid lien to the current value of the property to which it is attached, is that the debtors here wanted to reduce the value of the lien to zero, the Court of Appeals reasoned. Although the debtors pointed out that liens on residential property can be stripped off in Chapter 13, the court explained that “[t]he strip-off right in Chapter 13 is a partial offset to the advantages that Chapter 13, relative to Chapter 7, grants creditors, such as access to a larger pool of assets because the debtor must commit all disposable income for three to five years to repaying his unsecured debts.” 2013 WL 3466884 (The full-text of the rest of the Topical Highlights are available within Westlaw Next, subscription required)

Judgment: Default judgment revoking Chapter 7 debtor’s discharge was properly entered.  In re Taylor 2013 WL 3786711 (10th Cir.BAP (Kan.))

Discharge: Creditor did not have to allege any personal benefit to debtor to state plausible “false representation” claim.  In re Speisman 2013 WL 3779366 (Bkrtcy.N.D.Ill.)

Plans: Debtors could not deduct second mortgage debt associated with mortgage lien subject to “strip off.”  In re Kramer 2013 WL 3712410 (Bkrtcy.D.Mass.)

Discharge: Pro se nondischargeability complainants would be allowed to amend their complaint.  In re Ankoanda 2013 WL 3776348 (Bkrtcy.N.D.Ga.)

Professionals: Retention of attorney who represented debtor prepetition was in best interests of estate.  In re Living Hope Southeast, LLC 2012 WL 8670115 (Bkrtcy.E.D.Ark.)

Jury: Trustee was bound by debtors’ waiver of right to jury trial in pursuing avoidance claims.  In re Pearlman 2013 WL 3725037 (Bkrtcy.M.D.Fla.)

Debtor Protections: Bank did not have to demonstrate colorable right in property in order to move for stay relief.  In re Yelverton 2013 WL 3761304 (Bkrtcy.D.Dist.Col.)

Attorney Fees: Attorney’s services in filing cases clearly subject to dismissal had no value. In re Alvarado 2013 WL 1809061 (N.D.Cal.)

Case Administration: Chapter 13 case could not be reinstated following dismissal on motion by trustee.  In re Lampman 2013 WL 3307225 (Bkrtcy.M.D.Pa.)

Bankruptcy Estate: Massachusetts provides two separate $2,500 exemptions in cash and depository accounts.  In re Sutherland 2013 WL 3760093 (Bkrtcy.D.Mass.)

Avoidance: Church was not “initial transferee” of $62,500 donation from debtors.  In re Engler 2013 WL 3755974 (Bkrtcy.M.D.Fla.)

Discharge: Debtor failed to provide sufficient explanation for record-keeping lapses.  In re Adler 2013 WL 3525101 (Bkrtcy.E.D.N.Y.)

Parties: Indefinite stay of avoidance proceedings on Fifth Amendment grounds was not warranted.  In re Shubh Hotels Pittsburgh, LLC 2013 WL 3490067 (Bkrtcy.W.D.Pa.)

Judgment: Using narrow interpretations of “mistake” and “inadvertence” under judicial estoppel doctrine was not warranted.  Ah Quin v. County of Kauai Dept. of Transp. 2013 WL 3814916 (C.A.9 (Hawai’i))

Bankruptcy Estate: Debtor’s health savings account (HSA) was not excluded from “property of the estate.”  In re Leitch 2013 WL 3722091 (8th Cir.BAP (Minn.))

Case Administration: Court could consider Social Security income in deciding whether to dismiss Chapter 7 case as abusive.  In re Riggs 2013 WL 3766914 (Bkrtcy.W.D.Va.)

Claims: Debtor was judicially estopped from disputing secured status of proof of claim previously used for strip off.  In re Foster 2013 WL 3766888 (Bkrtcy.N.D.Ga.)

Insurance: Section 108(b) did not toll grace period for payment of premium on debtor’s mother’s life insurance policy.  In re Maifeld 2013 WL 3757362 (Bkrtcy.D.Mass.)

Appeals: Order dismissing adversary proceeding was final, appealable order despite issuance of subsequent opinion.  In re Camacho 2013 WL 3340123 (E.D.Cal.)

Discovery: Complete resolution of claims of privilege depended on clear understanding of relationships of parties to communications.  In re Taylor, Bean & Whitaker Mortgage Corporation 2013 WL 3550651 (Bkrtcy.M.D.Fla.)

Debtor Protections: Crossclaims against two defendants, who sought bankruptcy protection, would be severed from claims against remaining defendants.  Federal Nat. Mortg. Ass’n v. Olympia Mortg. Corp. 2013 WL 3168586 (E.D.N.Y.)

Removal: Cross-district removal was improper and necessitated transfer.  In re Sunset Marine of Puerto Rico, Inc. 2013 WL 3816208 (Bkrtcy.D.Puerto Rico)