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

The court previously affirmed the district court’s affirmance of the bankruptcy court’s order granting debtor’s motion to strip Bank of America’s junior mortgage lien. The Supreme Court vacated the opinion and remanded the case for consideration in light of Bank of America, N.A. v. Caulkett. In Caulkett, the Supreme Court held “a debtor in a Chapter 7 bankruptcy proceeding may not void a junior mortgage lien under 11 U.S.C. 506(d) when the debt owed on a senior mortgage lien exceeds the current value of the collateral.” Consequently, in light of Caulkett, the court's own holding in In re McNeal and Folendore v. United States Small Business Administration are overruled. Accordingly, the district court erred in affirming the bankruptcy court’s grant of debtor’s motion to strip off Bank of America’s junior lien. The court denied Bank of America’s motion for summary reversal, vacated the district court’s judgment affirming the bankruptcy court, and remanded for further proceedings. View "Bank of America v. Waits" on Justia Law

Debtor filed for bankruptcy in 2011 and claimed numerous exemptions. At issue are debtor's requests for exemption for: (1) an annuity worth well over $150,000; and (2) the nearly $15,000 cash surrender value of a whole life insurance policy. The court affirmed the denial of both exemptions, concluding that Georgia Code 44-13-100(a)(9) does not violate equal protection where it is rationally related to the purpose of bankruptcy legislation and where Section 44-13-100(a)(9) does not violate the Bankruptcy Clause. A plain reading of 11 U.S.C. 522 does not, as debtor alleges, allow a bankruptcy debtor to use a state exemption statute where the state itself has rendered the statute inapplicable. Rather, very near the opposite is true; states have been authorized to define and restrict the applicability of their bankruptcy exemptions. View "McFarland v. Wallace" on Justia Law

The Valones were Florida residents who filed jointly for bankruptcy under Chapter 13 of the Bankruptcy Code. In their petition, they claimed exemptions for personal property (known as the "wildcard" exemption). The issue this case presented for the Eleventh Circuit's review centered on a district court order affirming a bankruptcy court’s disallowance of an exemption claimed by the Valones in their bankruptcy petition. The Chapter 13 trustee, Jon Waage, objected to their personal property exemption, arguing that, as homeowners filing under Chapter 13 of the Bankruptcy Code, the Valones were ineligible for the exemption. The bankruptcy and district courts agreed. The Eleventh Circuit reversed the district court and remanded with instructions to remand to the bankruptcy court for further proceedings. View "Valone v. Waage" on Justia Law

George Russell Curtis, Betty Curtis, and the George Russell Curtis, Sr., Living Trust, who are the defendants in this adversarial proceeding, appeal the bankruptcy court’s judgment, which allowed the bankruptcy trustee to avoid a $200,000 transfer from the debtor, International Management Associates (IMA), to the defendants. Kirk Wright ran IMA and its affiliates, which he claimed was a hedge fund but which looked like a Ponzi scheme. The defendants invested $500,000 with IMA from 2002 to 2006. Over that same period, they received $621,000 in disbursements from IMA. The last of those disbursements took place on January 10, 2006, when IMA transferred $200,000 to the defendants. On March 16, 2006, the bankruptcy trustee, whom a Georgia state court had appointed as IMA’s receiver,1 filed a voluntary petition to place IMA in bankruptcy. As part of that bankruptcy action, the trustee filed a series of adversary proceedings against IMA’s investors, including the defendants. In those proceedings, he sought to avoid transfers that IMA had made to those investors shortly before being placed in bankruptcy. Based on the evidence presented at that consolidated hearing, the bankruptcy court found that IMA was a Ponzi scheme. Finding no reversible error, the Eleventh Circuit affirmed. View "George Russell Curtis, Sr. Living Trust v. Perkins" on Justia Law

SE Property Holdings, LLC, and affiliated entity Vision-Park Properties, LLC, (collectively “Vision”) appealed a district court’s order upholding decisions in the bankruptcy restructuring proceedings of Seaside Engineering and Surveying, LLC. Seaside was a civil engineering and surveying firm whose principal shareholders prior to all bankruptcy litigation were John Gustin, James Mainor, Ross Binkley, James Barton, and Timothy Spears. The principals branched out from their work as engineers and entered the real estate development business, forming Inlet Heights, LLC, and Costa Carina, LLC. These wholly separate entities borrowed money from Vision with personal guaranties from the principals. Inlet Heights and Costa Carina defaulted on the loans, and Vision filed suit to recover amounts under the guaranties. Gustin filed for Chapter 7 bankruptcy protection for himself. Mainor and Binkley followed suit. All were appointed Chapter 7 trustees. Gustin, Mainor, and Binkley listed their Seaside stock as non-exempt personal property in their required filings. The Chapter 7 trustee in the Gustin case conducted an action to sell Gustin’s shares of Seaside stock. Gustin bid $95,500.00, and Vision defeated the bid with a purchase price of $100,000.00. Seaside attempted to block sale of Gustin’s stock to Vision, but the bankruptcy court confirmed the sale. Following the sale of Gustin’s stock, Seaside filed for Chapter 11 bankruptcy protection. Seaside proposed to reorganize and continue operations as the entity Gulf Atlantic, LLC (“Gulf”), an entity managed by Gustin, Mainor, Binkley, and Bowden, and owned by four members, the respective irrevocable family trust of each manager. The outside equity holders would receive promissory notes with interest accruing at a rate of 4.25% in exchange for their interest in Seaside and thus be excluded from ownership in Gulf. The bankruptcy court approved the Second Amended Plan of Reorganization over Vision's objection. The district court affirmed the bankruptcy court. After careful review of the record, the Eleventh Circuit affirmed. View "SE Property Holdings, LLC v. Seaside Engineering & Surveying, Inc." on Justia Law

DVI Receivables XIV, LLC; DVI Receivables XVI, LLC; DVI Receivables XVII, LLC; DVI Receivables XVIII, LLC; DVI Receivables XIX, LLC; DVI Funding, LLC (collectively, the "DVI Entities"); Lyon Financial Services, Inc. d/b/a U.S. Bank Portfolio Services ("Lyon"); and U.S. Bank, N.A. ("USB") (collectively, "Appellants") appealed a district court decision to affirm a bankruptcy court's final order awarding appellee Maury Rosenberg attorney's fees and costs. The DVI Entities filed an involuntary bankruptcy petition against appellee Rosenberg. After the bankruptcy court dismissed the petition, the court awarded attorney's fees and costs to appellee Rosenberg. The bankruptcy court granted Rosenberg's motion and dismissed the involuntary petition with prejudice. The bankruptcy court found, inter alia, that the DVI Entities were not eligible creditors of Rosenberg because his 2005 guaranty did not run to the DVI Entities. The DVI Entities therefore lacked standing as a matter of law to file an involuntary petition against Rosenberg. In his adversary complaint, Rosenberg asserted federal claims to recover attorney's fees, costs, and damages he incurred because of the filing of the involuntary petition, which the bankruptcy court had dismissed. After careful review of the record and the parties' briefs, and following oral argument, the Eleventh Circuit affirmed in part, vacated in part, and remanded for further proceedings. The Court affirmed the district court's affirmance of the bankruptcy court's award of the following three categories of attorney's fees and costs: (1) fees to obtain the dismissal, (2) appellate fees, and (3) fees on fees. The Eleventh Circuit vacated the district court's affirmance of the bankruptcy court's award of the fourth category of fees and costs, those incurred to prosecute Rosenberg's bad-faith claims for damages, as prematurely entered. The case was remanded back to the district court: (1) to deduct from the total award the limited amount of fees and costs that were incurred solely for the legal work done to prosecute Rosenberg's bad-faith claims for damages; and (2) to reconsider that deducted fee and cost amount along with the motion to supplement. View "DVI Receivables XIV, LLC, et al. v. Rosenberg" on Justia Law

In these consolidated appeals, the Redmond Group and Zeltser Group dispute over ownership of, and control over, three involuntary debtors: Fisher Island, Little Rest, and Mutual Benefits (collectively, the "Alleged Debtors"). Litigation of the ownership issue in three bankruptcy cases produced five consolidated appeals of four district court orders. After careful review of the record and the parties' briefs, the court found no reversible error and affirmed all four orders: the district court's denial of Zeltser Group's motion to withdraw reference of the ownership issue; the district court's affirmance of the bankruptcy court's summary judgment order in favor of the Redmond Group in the Fisher Island and Little Rest cases; the district court's order dismissing, for lack of standing, certain non-party appeals from the bankruptcy court's summary judgment order; and the district court's affirmance of the bankruptcy court's final judgment in favor of the Redmond Group in the Mutual Benefits case. View "Fisher Island Ltd. v. Solby+Westbrae Partners" on Justia Law

Iberiabank appealed the district court's decision affirming the bankruptcy court's order that Iberiabank's claims against Bradford Geisen, president and 100% shareholder of FFS, were released. The court concluded that section 8.13 of the bankruptcy reorganization plan of FFS is a general release of all claims against Geisen which include claims arising out of his personal guaranty of the loan at issue. The court rejected Iberiabank's request for the court to follow cases from the Fifth Circuit to conclude that the release in section 8.13 is not sufficiently specific to have res judicata effect. The court concluded that under principles of contract interpretation, the confirmed plan contained a "general release" that released claims based on Geisen's guaranty of the loan. As in In re Optical, this case is not truly about res judicata, but, rather, the interpretation of a reorganization plan. Even if the court were to apply the Fifth Circuit's test, the court would conclude that the release was sufficiently specific to release Geisen. Accordingly, the court affirmed the judgment of the district court. View "Iberiabank v. Geisen" on Justia Law

Plaintiff appealed the district court's affirmance of the bankruptcy court's orders granting debtor's motion to modify its Second Amended and Restated Chapter 11 Plan and confirming debtor's Third Amended Plan of Reorganization. The court affirmed because plaintiff failed to satisfy the person aggrieved standard where plaintiff's interest in avoiding liability is not an interest protected or regulated by the Bankruptcy Code.View "Atkinson v. Ernie Haire Ford, Inc." on Justia Law

Joseph G. Wortley, interested party, appealed the district court's affirmance of the bankruptcy court's summary denial of his motion for relief from judgment under Rule 60(b). Wortley and two others shared ownership in Global Energies before its bankruptcy. The court concluded that the bankruptcy court abused its discretion by clearly erring in its application of Rule 60(b)(2) under the facts of this case. The court remanded with instructions to grant Wortley's Rule 60(b)(2) motion and vacated its order approving the sale of Global assets to Chrispus.View "Wortley v. Chrispus Venture Capital, LLC" on Justia Law