Justia U.S. 11th Circuit Court of Appeals Opinion Summaries

Joseph and Jo-Lynn Jenkins Parrott filed for Chapter 13 bankruptcy in 2018, committing to a payment plan. After several amendments to their plan, the bankruptcy trustee moved to dismiss the case due to missed payments. The bankruptcy court ordered the Parrotts to catch up on payments or face dismissal. Despite extensions, the Parrotts failed to comply, leading to a dismissal order on January 29, 2020, effective February 13, 2020. The Parrotts filed a pro se notice of appeal on February 5, 2020, which was struck for lacking their attorney’s signature. They filed a second notice on February 18, 2020, after their attorney withdrew.The United States District Court for the Middle District of Florida dismissed the Parrotts' appeal, ruling it untimely and citing their failure to comply with procedural rules. The court noted the Parrotts' noncompliance with local rules and their inadequate response to an order to show cause regarding jurisdiction. The district court concluded it lacked jurisdiction and, alternatively, dismissed the case as a sanction for procedural noncompliance.The United States Court of Appeals for the Eleventh Circuit reviewed the case. It held that the Parrotts' initial notice of appeal, though defective, was timely and that the second notice cured the defect, thus conferring jurisdiction on the district court. The appellate court also found that the district court abused its discretion by dismissing the case as a sanction, noting that dismissal is a last resort and should only be used in extreme circumstances, which were not present here. The Eleventh Circuit vacated the district court's dismissal and remanded the case for consideration on the merits. View "Parrott v. Neway" on Justia Law

George Wagner III filed for Chapter 7 bankruptcy, omitting a show horse he had purchased for his daughter from his bankruptcy petition. Wagner claimed he believed the horse belonged to his daughter, as it was registered under her name with the United States Equestrian Federation. The bankruptcy court held a bench trial and found Wagner, his wife, and his daughter credible in their belief that the horse was the daughter’s property. Consequently, the bankruptcy court granted Wagner a discharge of his debts.The United States District Court for the Southern District of Florida vacated the bankruptcy court’s order, concluding that Wagner knowingly and fraudulently omitted the horse from his bankruptcy case. The district court pointed to Wagner’s email communications during his divorce proceedings, the timing of the insurance policy transfer, and the handling of lease proceeds as evidence of fraudulent intent. The district court remanded the case to the bankruptcy court to enter judgment denying discharge.The United States Court of Appeals for the Eleventh Circuit reviewed the case and reversed the district court’s order. The appellate court emphasized the need to defer to the bankruptcy court’s credibility determinations, which were supported by the testimony and documentary evidence. The appellate court found that the bankruptcy court did not clearly err in concluding that Wagner did not possess fraudulent intent in omitting the horse from his bankruptcy case. Therefore, the appellate court affirmed the bankruptcy court’s order of discharge. View "OHI Asset (VA) Martinsville SNF, LLC v. Wagner" on Justia Law

The case involves the valuation of a bitcoin mining property owned by Michael Oken, who had invested millions in infrastructure upgrades to support bitcoin mining. The property, located in College Park, Georgia, included a Power Sales Agreement with the city for low-cost electricity, which was crucial for the mining operation. After Oken's death in 2019, his businesses filed for Chapter 11 bankruptcy, and the property was sold along with an adjacent data center for $4.9 million. The deeds indicated a $2.45 million value for each property based on transfer taxes. Two creditors, Thomas Switch Holding and Bay Point Capital, sought to recover on liens against the property.The bankruptcy court held a bench trial to determine the property's value. Switch's appraiser, Michael Easterwood, valued the property at $830,000 using the cost approach, considering the infrastructure improvements. Bay Point's appraiser, Jeff Miller, valued it at $48,000 using the sales comparison approach, comparing it to other light industrial properties. The bankruptcy court adopted Easterwood's valuation, finding the property to be a special purpose property with bitcoin mining as its highest and best use. The court valued the property at over $700,000, awarding the full escrow amount to Switch.The United States District Court for the Northern District of Georgia affirmed the bankruptcy court's decision. On appeal, the United States Court of Appeals for the Eleventh Circuit reviewed the case. The appellate court upheld the bankruptcy court's findings, agreeing that the property was a special purpose property with bitcoin mining as its highest and best use. The court also affirmed the use of the cost approach for valuation and found no clear error in considering the tax stamp value as supporting evidence. The judgment of the lower courts was affirmed. View "In re: VIRTUAL CITADEL, INC." on Justia Law

Patricia Lee, a debtor, defaulted on her mortgage held by U.S. Bank on a 43-acre property in Georgia, which she used as her principal residence and also leased to a farming company. In an attempt to restructure her debts, Lee filed a voluntary bankruptcy petition under Chapter 11 of the Bankruptcy Code. She proposed a reorganization plan that included payments to U.S. Bank. However, U.S. Bank moved for relief from the automatic stay that had been triggered by Lee's bankruptcy filing, arguing that the anti-modification provision in Chapter 11 prevented the bankruptcy court from approving a plan that modified U.S. Bank's claim.The bankruptcy court agreed with U.S. Bank, concluding that the anti-modification provision applied because the property was Lee's principal residence, regardless of its additional use as farmland. The court granted U.S. Bank's motion for relief from the automatic stay, effectively allowing the bank to foreclose on Lee's property. Lee appealed this decision to the district court, which affirmed the bankruptcy court's order.The United States Court of Appeals for the Eleventh Circuit affirmed the lower courts' decisions. The appellate court held that the anti-modification provision in Chapter 11 has three requirements: the security interest must be in real property; the real property must be the only security for the debt; and the real property must be the debtor's principal residence. The court found that all three requirements were met in this case, as U.S. Bank's claim was secured by Lee's real property, which was the only security for the debt and was used by Lee as her principal residence. The court rejected Lee's argument that the property's additional use as farmland should exempt it from the anti-modification provision. View "Lee v. U.S. Bank National Association" on Justia Law

The case involved an appeal from the United States District Court for the Middle District of Florida by Talal Qais Abdulmunem Al Zawawi, a citizen of Oman. Al Zawawi was seeking to overturn the bankruptcy court's decision that recognized foreign proceedings in a Chapter 15 bankruptcy case. The main question was whether 11 U.S.C. § 109(a), which limits the class of persons and entities that could constitute a “debtor,” applied to cases brought under Chapter 15 of the Bankruptcy Code.The United States Court of Appeals for the Eleventh Circuit, in reviewing the case, found that a plain reading of the Bankruptcy Code indicated that § 109(a) did apply to Chapter 15 cases. However, the Court was bound by prior precedent that stated that Chapter 1’s debtor eligibility language did not apply to cases ancillary to a foreign proceeding.The Court found that the former § 304 and Chapter 15 had sufficiently similar purposes such that their decision in a previous case, In re Goerg, controlled their analysis in this case. Based on this reasoning, the Court held that debtor eligibility under Chapter 1 was not a prerequisite for the recognition of a foreign proceeding under Chapter 15. The Court therefore affirmed the bankruptcy court's decision to recognize the foreign proceeding. View "Al Zawawi v. Diss" on Justia Law

Creditors obtained a $1.6 million default judgment against Rodney Dorand and sought to satisfy the judgment with funds from Dorand's individual retirement account, held by Morgan Stanley. An Alabama court approved the transfer of funds, but before the transfer occurred, Dorand filed for Chapter 7 bankruptcy, asserting that the retirement account was exempt property of his bankruptcy estate. The bankruptcy court agreed with Dorand. The United States Court of Appeals for the Eleventh Circuit affirmed this decision, stating that the Alabama judgment did not extinguish Dorand’s interest in his account before he filed his bankruptcy petition.Rodney Dorand had been sued by creditors for damages arising from a failed condominium development. After the state court issued a writ of garnishment to Morgan Stanley, Dorand argued that the retirement account was exempt from garnishment, but the state court rejected this argument. However, before the funds were transferred, Dorand filed for bankruptcy. The bankruptcy court determined that the retirement account was Dorand’s exempt property and that the Alabama judgment against garnishee Morgan Stanley “does not affect the [retirement account’s] exempt status.”The Alabama judgment did not terminate all of Dorand's interests in his property. While the judgment had given Morgan Stanley a limited right to transfer Dorand’s funds, it had not exercised that right before Dorand filed for bankruptcy. The Court of Appeals affirmed that the retirement account was part of Dorand’s bankruptcy estate, as Dorand had an interest in the retirement account when he filed for bankruptcy. View "The Alabama Creditors v. Dorand" on Justia Law

In this case heard by the United States Court of Appeals for the Eleventh Circuit, the appellant, Kai Hansjurgens, contested the revival of a bankruptcy judgment against him in favor of Donald Bailey. More than a decade earlier, Bailey had obtained a bankruptcy judgment against Hansjurgens for tortious interference with a contract, which Hansjurgens had not paid. To prevent the judgment from expiring under Georgia law, Bailey filed a motion to revive the judgment, which was granted by the bankruptcy court. Hansjurgens argued that the revival proceedings violated his due process rights and did not strictly comply with Georgia's scire facias procedures, which are used to revive dormant judgments.The court found that the Federal Rules of Civil Procedure, specifically Rule 69(a), only require the revival proceedings to "accord with" or substantially comply with state procedures, rather than strictly comply. The court further noted that the purpose of scire facias, providing notice to the party and an opportunity to present objections, had been served through mailed notices to Hansjurgens at several addresses. The court also observed that Georgia's scire facias procedures did not fit squarely within the federal court system, and requiring strict compliance would be impractical.Therefore, the court held that the bankruptcy court had properly revived the judgment and that the proceedings did not violate due process. It affirmed the district court's revival order. View "Hansjurgens v. Bailey" on Justia Law

In this case, the United States Court of Appeals for the Eleventh Circuit dealt with the question of when an order finding contempt becomes a final, appealable order. The case arose from a dispute between Robert A. Sweetapple and Asset Enhancement, Inc., in which Sweetapple was found in contempt by a bankruptcy court for violating an automatic stay. The bankruptcy court awarded Asset Enhancement attorney's fees and costs for filing and prosecuting its motion for contempt, but did not specify the amount. The amount was later determined in a subsequent order. Sweetapple appealed the contempt order to the district court, but the district court dismissed his appeal as untimely, reasoning that the contempt order was a final, appealable order when it was issued, not when the amount of the attorney's fees was later determined. Sweetapple then appealed to the Eleventh Circuit.The Eleventh Circuit held that the contempt order did not become a final, appealable order until the bankruptcy court issued the later order setting the amount of attorney's fees to be awarded. The court reasoned that this rule avoided the risk of disrupting ongoing proceedings and was consistent with its precedent. Accordingly, since Sweetapple filed his appeal within fourteen days of the bankruptcy court's issuance of the later order, his appeal of the contempt order was timely and the district court had jurisdiction over the appeal. The court vacated the district court's dismissal of Sweetapple's appeal and remanded the case to the district court for further proceedings. View "Sweetapple v. Asset Enhancement, Inc." on Justia Law

Defendant, petitioned for Chapter 7 bankruptcy and listed PRN Real Estate & Investments, Ltd. (“PRN”) as his primary creditor. PRN sought to exempt debts that Defendant owes PRN from being discharged. The bankruptcy court granted judgment for Defendant on all of PRN’s claims and fully discharged Defendant’s debt. The district court affirmed.   The Eleventh Circuit affirmed in part and reversed the bankruptcy court’s rulings and remanded for further proceedings. The court explained that it agrees with each of the bankruptcy court’s rulings except one: that PRN pleaded a viable discharge exception in Count 3. The court explained that Congress gave PRN the right to request an exception of COLP’s contribution debt, if PRN can prove that Defendant fraudulently obtained COLP’s money and, as a result, became responsible for COLP’s contribution debt. PRN has pleaded facts that, if proven, meet these requirements. The Trustee’s action to avoid the same fraudulent transfer does not preempt PRN’s right to seek a discharge exception. Because the bankruptcy court dismissed PRN’s claim based on non-viability and lack of standing, the bankruptcy court did not rule on the merits of Defendant’s motion for summary judgment. Thus, the court remanded the case for the bankruptcy court to determine in the first instance whether any facts material to Count 3 are genuinely disputed and, if not, whether Defendant is entitled to judgment on Count 3. See Fed. R. Civ. P. 56(a). View "PRN Real Estate & Investments, Ltd. v. William W. Cole, Jr." on Justia Law

The bankruptcy proceeding underlying this case was initiated by Wilkes & McHugh, P.A. (“Wilkes”), for relief against Fundamental Long Term Care, Inc. (“FLTCI”) on behalf of the Estate of Juanita Jackson. The Jackson Estate had obtained judgments of $55 million against Trans Health, Inc. (“THI”) and Trans Health Management, Inc. (“THMI”). The trustee of the Debtor’s estate (the “Trustee”) employed Steven M. Berman and Shumaker, Loop & Kendrick, LLP (“Shumaker”) as special litigation counsel. According to Wilkes, when the Trustee employed Shumaker it was not disinterested as required by Section 327(a). On remand, the Bankruptcy Court held that Berman’s omissions did not warrant sanctions under Rule 2014. The Probate Estates appealed the District Court’s decision.   The Eleventh Circuit affirmed. The court wrote that Wilkes, in representing the Probate Estates, sought huge sums in the form of damages in state court against the companies affiliated with the decedents’ nursing homes. After having received one multimillion-dollar judgment in Jackson, Wilkes realized that the powers that be in the THI corporate structure had executed a bust-out scheme to separate THMI’s liabilities from its assets and to hide those assets to avoid paying the Jackson judgment. Once the Bankruptcy Court appointed a trustee for FLTCI, Wilkes could then use the Trustee and the Trustee’s strongarm power to enhance its own discovery and pursue causes of action that it would not be able to pursue alone, attempting to get at THMI’s assets through FLTCI. The court wrote that it is clear that the idea that Shumaker had a bias against Wilkes and the Probate Estates is baseless. View "Estate of Arlene Townsend, et al v. Steven Berman, et al" on Justia Law