The U.S. Court of Appeals for the Seventh Circuit recently held that a mortgagee’s failure to take a deficiency judgment against a borrower who filed bankruptcy in a concluded state foreclosure action precluded the mortgagee from making a deficiency claim in the borrower’s bankruptcy proceeding. A copy of the opinion in BMO Harris Bank N.A. v. Anderson is available at: Link to Opinion. Two borrowers received a loan secured by a mortgage. They defaulted on the loan and the mortgagee filed a two-count complaint in Illinois state court seeking relief under the mortgage and the note. One of the borrowers and his wife later filed…
Posts published in “Bankruptcy”
The U.S. Court of Appeals for the Eighth Circuit recently affirmed a trial court judgment holding a bank and its principal in contempt and sanctioning them for violating a bankruptcy discharge injunction, based on the findings in a parallel state court proceeding. In so ruling, the Eighth Circuit held that the state court judgment did not preclude the bankruptcy court’s ability to enforce its own orders. A copy of the opinion in First State Bank of Roscoe v. Stabler is available at: Link to Opinion. A bank issued a loan to husband and wife borrowers for their business. After the business failed,…
In a case of first impression, the U.S. Court of Appeals for the Ninth Circuit recently held that a debtor who successfully challenges — as opposed to a debtor who defends — an award of attorney’s fees and costs for violations of the automatic stay under § 362(k) of the Bankruptcy Code is entitled to an award of appellate fees and costs. In so ruling, the Court reversed the trial court’s order denying the debtor’s motion for appellate attorney’s fees and costs, and remanded the matter to the trial court with instructions to remand to the bankruptcy court to calculate…
The Supreme Court of Ohio recently held that a mortgagee may enforce a mortgage against a mortgagor who signed, initialed, and acknowledged the mortgage even though the body of the mortgage agreement does not identify the mortgagor by name. In so ruling, the Supreme Court of Ohio allowed a mortgagee to use parole evidence to determine the mortgage signatory’s intent where there is an ambiguity. A copy of the decision in Bank of New York Mellon v. Rhiel is available at: Link to Opinion. A bank issued a mortgage loan to husband and wife borrowers. Only the husband executed the note. Both…
The U.S. Court of Appeals for the Eleventh Circuit recently held that a mortgage loan with a post-plan maturity date was not discharged in a Chapter 13 bankruptcy because the plan did not “provide for” the debt and modify the repayment terms of the mortgage. The Eleventh Circuit also held that the debt was not discharged because discharge would violate 11 U.S.C. § 1322(b)(2)’s anti-modification provision for mortgages secured by the debtor’s principal residence. A copy of the opinion in Mildred M. Dukes v. Suncoast Credit Union is available at: Link to Opinion. The debtor had two mortgage loans on her…
The U.S. Court of Appeals for the Fifth Circuit recently held that a mortgagee’s foreclosure action did not violate an automatic stay imposed during one of the plaintiff’s chapter 13 bankruptcy schedules, where the debtor failed to amend his bankruptcy schedules to disclose his recent acquisition of the subject property from his son. In so ruling, the Fifth Circuit affirmed the trial court’s judgment in favor of the mortgagee because father and son plaintiffs were judicially estopped from claiming a stay violation. A copy of the opinion in Fornesa v. Fifth Third Mortgage Company is available at: Link to Opinion. A…
The U.S. Court of Appeals for the Sixth Circuit recently held that a debtor’s claim seeking to use a bankruptcy trustee’s § 544(a) strong-arm power to avoid a mortgage on the ground that it was never perfected did not require appellate review of the state court foreclosure judgment, and therefore was not barred by the Rooker-Feldman doctrine. A copy of the opinion in In re Isaacs is available at: Link to Opinion. In 2003, the debtor and her husband took out a home-equity loan secured by a mortgage on their home in Kentucky. The original mortgagee did not immediately record…
The U.S. Bankruptcy Appellate Panel for the Eighth Circuit recently applied the “conceivable effect” test in holding that a bankruptcy court lacked jurisdiction over a state law fraud claim raised by a third party regarding the validity of a lender’s lien, and therefore, declined to consider the issue on appeal. In so ruling, the Panel ruled that the state law fraud claim did not invoke “arising under” or “arising in” jurisdiction of the bankruptcy court because the state law fraud claim was not created or determined by the Bankruptcy Code, and could exist outside of bankruptcy. A copy of the…
The U.S. Court of Appeals for the Ninth Circuit held that a party with a pecuniary interest affected by a bankruptcy court order satisfies the “person aggrieved” requirement for appellate standing even where the party fails to appear and object in the bankruptcy proceeding. Accordingly, the Ninth Circuit reversed the district court’s dismissal of the appeal for lack of standing and remanded the case. A copy of the opinion in In re Point Center Financial is available at: Link to Opinion. The debtor in this action was an originator and servicer of residential mortgage loans (“lender”). The lender obtained funding…
The U.S. Court of Appeals for the Eleventh Circuit recently vacated a trial court’s dismissal of a mortgagee’s deficiency claims and remanded to the trial court to determine whether the voluntary dismissal of a bankrupt debtor’s Chapter 11 case without a discharge had any effect on the mortgagee’s right to pursue its pre-petition deficiency claims. A copy of the opinion in First National Bank of Oneida, N.A. v. Brandt is available at: Link to Opinion. The debtor, a real estate investor and developer, filed a Chapter 11 bankruptcy case in July 2009 after he defaulted on a series of real estate loans. The…
In an action against a Florida consumer plaintiffs’ firm that also functions as consumer bankruptcy debtors’ counsel, the U.S. Court of Appeals for the Eleventh Circuit recently held that a bankruptcy attorney violates section 526(a)(4) of the Bankruptcy Code if he instructs a client to pay his legal fees using a credit card. In so ruling, the Court held that there is no requirement under the statute that the advice be given for an invalid purpose designed to manipulate the bankruptcy process. A copy of the opinion in Loyd P. Cadwell v. Kaufman, Englett & Lynd, PLLC is available at: Link…
The U.S. Court of Appeals for the Fourth Circuit recently held that a completely unsecured lien may be stripped off in a Chapter 13 bankruptcy proceeding under 11 U.S.C. § 1322(b) even though a proof of claim has not been filed. A copy of the opinion in Edwin Burkhart v. Nancy Spencer Grigsby is available at: Link to Opinion. Debtors filed a Chapter 13 bankruptcy petition in 2012. At the time, the debtors’ principal residence was valued at $435,000 and encumbered by four liens. Creditor 1 held the mortgage lien with the highest priority in the amount due of $609,500. Creditor 2’s two…