The bankruptcy court denies the defendants’ motion to dismiss, with the exception of one claim for equitable subordination against one of the defendants. The complaint filed by the trustee asserted counts for veil piercing, fraud and fraudulent transfer, preference avoidance, breach of fiduciary duty, and a demand for accounting and turnover. Opinion below.
Judge: Moberly
Attorney for Trustee: Mark A. Warsco
Attorneys for Defendants: Alerding Castor Hewitt LLP, Michael J. Alerding, Julia E. Dimick, Mitchell Alan Greene, Anthony Frederick Roach; Abraham Murphy
(6th Cir. June 6, 2016)
The Sixth Circuit affirms the B.A.P. and dismisses the appeal for lack of jurisdiction. Following the principal creditor’s objection, the bankruptcy court denied the trustee and debtors’ motion to approve a settlement of a legal malpractice claim held by the estate. The debtors appealed. The court finds that the appealed order was not a final order that could be appealed because the debtors were free to propose a new settlement for approval. Opinion below.
Judge: Kethledge
Irvin v. Faller (In re Faller)
(Bankr. W.D. Ky. Mar. 17, 2016)
(Bankr. S.D. Ind. Feb. 24, 2017)
The bankruptcy court denies the plaintiff’s motion for summary judgment in this nondischargeability action under 11 U.S.C. §§ 523(a)(2), (4), and (6). The plaintiff argued that a state court judgment collaterally estopped the debtor from defending against the claims. The court holds that the findings in the state court judgment are insufficient to prevent the debtor from asserting a defense in this action. Opinion below.
Judge: Carr
Attorney for Plaintiff: Mulvey Law LLC, Joseph L. Mulvey
(Bankr. E.D. Ky. June 6, 2016)
(7th Cir. Mar. 11, 2016)
(Bankr. S.D. Ind. Feb. 2, 2017)
The bankruptcy court makes additional findings of fact following the appeal and remand. The court’s original judgment stands, as the court concludes again that the plaintiff failed to prove that the debtor should have known of the fraud committed with his accounts. Opinion below
Prior opinion summary: click here
Judge: Carr
(6th Cir. B.A.P. June 1, 2016)
The Sixth Circuit B.A.P. reverses the bankruptcy court’s sua sponte granting of summary judgment in favor of the trustee. The trustee brought the action to avoid the appellants’ liens in the debtor’s aircraft. The bankruptcy court abused its discretion in granting summary judgment because its decision was not based on undisputed facts. Instead, the bankruptcy court based its decision on assumptions derived from the appellants’ inability to produce sufficient documentation. Opinion below.
Judge: Harrison
(Bankr. W.D. Ky. Mar. 8, 2016)
The bankruptcy court sustains the debtors’ objection to the creditor’s claim. The court determines that the creditor failed to establish that the transaction with the debtors was intended as a loan. Instead, the parties had formed a partnership with the creditor making capital contributions, rather than loans. Opinion below.
(Bankr. W.D. Ky. Feb. 1, 2017)
The bankruptcy court denies the creditor’s request for default rate interest on the secured claim. The value of the real property securing the claim was in excess of the claim amount. Case law establishes that there is a presumption in favor of the contractual rate of interest, but it is subject to rebuttal when evidence establishes the default rate is significantly higher without justification. Here, the default rate doubled the non-default rate and the court finds there was no justification under the evidence presented. Opinion below.