2 petitions ask Supreme Court to resolve bankruptcy fraud circuit split

From Westlaw Journal Bankruptcy: Federal circuit courts are clearly divided on the question of whether debtors in Chapter 7 and Chapter 13 cases can have their debts discharged when they transfer assets to keep them away from creditors without directly misleading the creditors, according to two certiorari petitions filed days apart.

The petitions involve creditors who invoked Section 523(a)(2)(A) of the Bankruptcy Code in efforts to bar debtors from discharging their debts.  That section prevents a debtor from discharging any monetary debt obtained by “false pretenses, a false representation or actual fraud.”

(WestlawNext users: Click here for the 10 most recent stories from Westlaw Journals.)

(more…)

Bankrupt couple should be able to pursue claim against chair maker, state argues

From Westlaw Journal Bankruptcy: In a case with a “unique” factual scenario, the state of Louisiana is asking a federal appeals court to allow a couple to pursue a product liability suit against the manufacturer of an allegedly defective chair that collapsed and injured the wife, a state employee, in the course of her work.

At this point, the product liability suit filed by the employee, Helen Allen, and her husband Robert is the only way the state will ever be able to recoup any of the nearly $270,000 in medical expenses and other benefits it paid under its workers’ compensation program, the state said in an amicus brief in the 5th U.S. Circuit Court of Appeals.

(WestlawNext users: Click here for the 10 most recent stories from Westlaw Journals.)

(more…)

Milwaukee archdiocese seeks to protect cemetery maintenance funds

From Westlaw Journal Bankruptcy: The Archdiocese of Milwaukee is asking the U.S. Supreme Court to rule that a federal law meant to strengthen religious rights bars a creditors’ committee in the church’s Chapter 11 case from accessing millions of dollars in cemetery maintenance funds set aside in a separate trust.

Earlier this year, the 7th U.S. Circuit Court of Appeals ordered the archdiocese to turn the money over to the bankruptcy estate so it can be available to compensate victims who were sexually abused by the clergy.  The turnover would not violate the archdiocese’s rights under the Religious Freedom Restoration Act of 1993, 42 U.S.C. § 2000bb-1, the appeals court said.  Listecki v. Official Comm. of Unsecured Creditors, 780 F.3d 731 (7th Cir. 2015).

(WestlawNext users: Click here for the 10 most recent stories from Westlaw Journals.)

(more…)

Florida appeals court strikes down med-mal cap for personal injury cases

From Westlaw Journal Medical Malpractice: Florida’s cap on pain-and-suffering damages in medical malpractice cases is unconstitutional with respect to personal injury actions, a state appeals court has ruled, citing a state Supreme Court decision that invalidated the cap in wrongful-death cases.

The damages cap violates the Florida Constitution’s guarantee of equal protection under the law because it prevents people with dire injuries from being fully compensated, while people who sustain less severe injuries can recover the full extent of their losses, the 4th District Court of Appeal said, noting the question was one of first impression.

(WestlawNext users: Click here for the 10 most recent stories from Westlaw Journals.)

(more…)

DOT rule is music to some fliers’ ears

From Westlaw Journal Aviation: U.S. air carriers must treat musical instruments the same way as other carry-on and checked baggage under a final rule the U.S. Department of Transportation issued Dec. 30.

The rule is designed to prevent incidents such as the one last spring in which US Airways refused to allow a professional violinist to fly from North Carolina to Arkansas unless he checked his $250,000 violin.

(Westlaw users: Click here for the 10 most recent stories from Westlaw Journals.) (more…)

Lawyer, professional services provider sue new consumer agency over bankruptcy data demand

The Consumer Financial Protection Bureau is being accused in a federal lawsuit of extreme overreaching by demanding privileged personal information in bankruptcy cases from a law firm software provider.

The agency, created two years ago pursuant to the Dodd-Frank Act, announced in May that it was undertaking a “comprehensive effort to prevent consumer harm in the debt-relief industry,” according to the complaint filed in the U.S. District Court for the District of Columbia.

(Westlaw users: Click here for more stories from Westlaw Journal Bankruptcy.)
(more…)

Oregon sues Texas debt relief company over unregistered services

A Texas-based debt relief provider has been sued by the state of Oregon for allegedly charging resident customers excessive fees and claiming inaccurately that it had state-licensed attorneys on staff handling cases.

Swift Rock Financial Inc., which conducts business through World Law Debt and other affiliate companies, allegedly took in more than $1.5 million from over 300 Oregon clients, but paid only slightly more than $275,000 to their creditors, keeping over $960,000 in fees, according to a complaint filed in the Multnomah County Circuit Court.

(Westlaw users: Click here for more stories from Westlaw Journal Bankruptcy.)

(more…)

DOJ seeks Supreme Court review of severance payment tax

The U.S. Department of Justice is asking the nation’s highest court to review a federal appellate panel’s split-creating decision that severance payments made to employees following their involuntary termination are not taxable under the Federal Insurance Contributions Act.

The ruling last September by a three-judge panel of the 6th U.S. Circuit Court of Appeals conflicts with a 2008 decision by the Federal Circuit.

(Westlaw users: Click here for more articles from Westlaw Journal Bankruptcy.) (more…)

7th Circuit creates split over exemption for inherited IRAs

A split has emerged between two federal appeals courts over whether a bankruptcy debtor who inherits funds from a non-spouse’s individual retirement account can protect them from the reach of creditors.

The Bankruptcy Code exempts funds in an IRA that a person sets aside for his or her own retirement.

(Westlaw users: Click here for more stories from Westlaw Journal Bankruptcy.) (more…)

Fancy cars exempt under California’s ‘wildcard’ exemption, 9th Circuit rules

California’s “wildcard” exemption, which permits bankruptcy debtors to exempt up to $18,350 in “any property” from their bankruptcy estates, applies even to the value of “fancy” cars, the U.S. 9th Circuit Court of Appeals has ruled.

A federal Bankruptcy Court judge had ruled that the exemption could not be applied because other portions of California’s exemption statutes explicitly deal with vehicles.

(Westlaw users: Click here for more stories from Westlaw Journal Bankruptcy.) (more…)