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

Twenty-one months after plaintiff filed an employment discrimination case against US Steel, she filed a Chapter 7 bankruptcy petition. When U.S. Steel learned of the bankruptcy case - that plaintiff's Chapter 7 petition had not disclosed the employment-discrimination claims she was pursuing and that the Chapter 7 Trustee was treating the bankruptcy as a “no asset” case and had filed a Report of No Distribution with the bankruptcy court - it moved the district court alternatively to dismiss the case or for summary judgment. The district court concluded that the doctrine of judicial estoppel as formulated in Burnes v. Pemco Aeroplex, Inc., and Robinson v. Tyson Foods, Inc., controlled its decision. The court concluded that New Hampshire v. Maine did not govern the district court's application of judicial estoppel in this case. Therefore, the court rejected plaintiff's argument that the district court erred in failing to give the New Hampshire factors appropriate weight and concluded that the district court did not abuse its discretion in barring her claims on the basis of judicial estoppel. Further, the court concluded that the district court did not err in applying Eleventh Circuit precedent, namely Burnes and Robinson, where the bankruptcy court in those cases accepted the debtor's failure to disclose as property of the bankruptcy estate claims the debtor was litigating in federal district court. Accordingly, the court affirmed the judgment. View "Slater v. US Steel Corp." on Justia Law

This appeal concerns whether a Georgia statute exempts the assets in a health savings account (HSA) from inclusion in a bankruptcy estate. The court certified the following questions to the Supreme Court of Georgia: (1) Does a debtor’s health savings account constitute a right to receive a “disability, illness, or unemployment benefit” for the purposes of O.C.G.A. 44-13-100(a)(2)(C)? (2) Does a debtor’s health savings account constitute a right to receive a “payment under a pension, annuity, or similar plan or contract” for the purposes of O.C.G.A. 44-13-100(a)(2)(E)? (3) Is a debtor’s right to receive a payment from a health savings account “on account of illness [or] disability” for the purposes of O.C.G.A. 44-13-100(a)(2)(E)? View "Mooney v. Webster" on Justia Law

This case stems from claims arising out of a dispute over the limited assets that remain from a tilapia farm investment in Nicaragua. Nica, the debtor in the underlying bankruptcy, held stock in Nicanor, the Nicaraguan fish farm. Plaintiff and a Norwegian firm, Biotec, owned the remaining shares of Nicanor. Defendant was the assignee for Nica's Assignment for the Benefit of Creditors (ABC). Defendant filed a voluntary Chapter 7 bankruptcy petition on Nica's behalf and plaintiff opposed the bankruptcy. Plaintiff's Adversary Proceeding against defendant was taken over by the Trustee and settled. Defendant removed plaintiff's state court action to Bankruptcy Court; the Trustee claimed the Adversary Proceeding as an asset of the estate and intervened as sole plaintiff; and the Trustee moved to settle it. In this appeal, the court rejected the equitable mootness argument because the court found that relief is still possible. However, the court concluded that absent explicit and plain authorization by the assignor, a Florida ABC assignee cannot initiate Chapter 7 bankruptcy proceedings. In this case, Nica deliberately selected an ABC as its preferred mode of liquidation and executed an agreement manifesting that intent, consistent with Florida law. Defendant had no authority to terminate the ABC by purporting to send Nica into bankruptcy. Accordingly, the court reversed and remanded. View "Ullrich v. Welt" on Justia Law

Green Tree appealed the district court's judgment concerning an adversary proceeding that debtors filed against Green Tree in the bankruptcy court. The district court affirmed the bankruptcy court’s ruling that Green Tree violated the discharge injunction under 11 U.S.C. 524(a)(2) by filing a proof of claim in debtors’ instant bankruptcy proceeding to collect a debt that was discharged in their previous bankruptcy proceeding. The order also affirmed the bankruptcy court’s award of both compensatory and non-compensatory sanctions to debtors. Determining that it has jurisdiction over the appeal, the court held that section 524(a)(2) prohibits filing a proof of claim for a discharged debt where the objective effect of the claim is to pressure the debtor to repay the debt. In this case, the bankruptcy court correctly concluded that Green Tree violated the discharge injunction. The court vacated both monetary awards and remanded to the district court with instructions to vacate and remand to the district court. The court concluded that the non-compensatory sanctions were punitive and must be vacated because there is no indication on the record that the bankruptcy court employed the procedural protections owed to an alleged criminal contemnor. The court vacated the compensatory sanctions and directed the district court to instruct the bankruptcy court, upon remand, to reconsider debtors' request for compensatory relief in light of Lodge v. Kondaur Capital Corp. View "Green Point Credit v. McLean" on Justia Law

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