5th Circuit Bankruptcy Law News - U.S. Fifth Circuit
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Homestead exceptions are a nice public policy "plus" of bankruptcy law. They attempt to ensure that those filing for bankruptcy will have somewhere to go and lick their financial wounds after the case is finished.

But can the proceeds from selling your home be protected permanently from bankruptcy? The Fifth Circuit says no.

Fifth Circuit: Social Security Benefits Aren't Disposable Income

Social Security benefits are not disposable income that must be disclosed in a Chapter 13 petition, according to a Fifth Circuit Court of Appeals decision on Monday.

The New Orleans-based appellate court rejected a trustee's challenge to a Chapter 13 plan this week, finding that a debtor is not statutorily-required to include Social Security income (SSI) in his projected disposable income calculation.

Fifth Circuit Rules for Debt Collector in FDCPA Appeal

We rarely hear about debt collectors winning Fair Debt Collection Practices Act (FDCPA) cases at the appellate level. Perhaps that's because a debtor prevailing over the big, bad bank is a fitting end to a quixotic mission, whereas the debt collector winning is just ... boring.

But debt collectors love need lawyers, too. If you're one of the ones paying your bills with debt collector revenues, keep reading because the Fifth Circuit Court of Appeals actually ruled that a debt collection letter didn't violate the FDCPA this week.

Lien on Me? Not Without a Sworn Affidavit

Today’s cautionary tale from the Fifth Circuit Court of Appeals should remind lawyers of the most important lesson in the law: Words have meaning.

That means that if you’re going to file a lien on property in a bankruptcy proceeding, your affidavit better include the right language.

Easy enough, right?

In re: Kizzee-Jordan, No. 09-20777

Reversal of Confirmation of Chapter 13 Plan

In In re: Kizzee-Jordan, No. 09-20777, the court reversed the bankruptcy court's order confirming a Chapter 13 plan, holding that a third-party lender who pays a debtor's ad valorem taxes and receives a transfer of the local taxing authority's tax lien under Texas law holds a tax claim protected from modification by 11 U.S.C. section 511 of the Bankruptcy Code.


In re: SCOPAC, No. 09-40307

Bankruptcy Court Erred in Denying "Superpriority" Claim

In In re: SCOPAC, No. 09-40307, creditors' appeal from the district court's dismissal of their appeal for lack of subject matter jurisdiction, where that appeal alleged that the bankruptcy court erred in denying their "superpriority" administrative claim on the bankruptcy estate, the court vacated where the bankruptcy court undervalued the noteholders' priority administrative section 507(b) claim by $29.7 million, and the court erred in not crediting their interest with timber sales proceeds that were received during the bankruptcy, on which they had a lien and priority interest arising from the court's many cash collateral orders.


In re: Kleibrink, No. 07-11190

In In re: Kleibrink, No. 07-11190, a debtor's appeal from a district court's affirmance of a bankruptcy court's ruling that a creditor held an enforceable security interest in a property of his, despite his having received a discharge in an earlier bankruptcy proceeding, the court affirmed the order where the notice given to the creditor did not satisfy the due process standard for notice set forth in Mullane.

Discharge of Debts Denied Based on Fraud, and Criminal Matters

In Reed v. City of Arlington, No. 08-11098, a Chapter 7 bankruptcy case in which debtors omitted a pending $1 million-plus judgment from their sworn statements and bankruptcy filings, the discharge of the debtor's debts is reversed where, to protect the integrity of judicial processes, judicial estoppel barred the trustee from collecting the judgment.

In re: Northlake Dev. L.L.C., No. 09-60743

In re: Northlake Dev. L.L.C., No. 09-60743, a creditor's appeal from the district court's affirmance of the bankruptcy court's decision that certain deeds the creditor held were legal nullities, the court certified the following questions to the Supreme Court of Mississippi:  When a minority member of a Mississippi limited liability company prepares and executes, on behalf of the LLC, a deed to substantially all of the LLC's real estate, in favor of another LLC of which the same individual is the sole owner, without authority to do so under the first LLC's operating agreement, is the transfer of real property pursuant to the deed: (i) voidable, such that it is subject to the intervening rights of a subsequent bonafide purchaser for value and without notice, or (ii) void ab initio, i.e., a legal nullity?


Onoh v. Northwest Airlines, Inc., No. 09-10971, involved a state-law breach-of-contract and intentional-infliction-of-emotional-distress action against an airline.  The court of appeals affirmed the dismissal of the complaint on the grounds that plaintiff's conversation with an airline agent, in which the agent allegedly stated that "the U.S. State Department would not permit [her] to travel . . . .", was sufficiently related to defendant's provision of "services" under the Airline Deregulation Act to trigger preemption.

Saenz v. Harlingen Med. Ctr., L.P., No. 09-40887, concerned a Family and Medical Leave Act (FMLA) action based on plaintiff's alleged termination due to her epilepsy.  The court reversed summary judgment for defendant, holding that the district court erred when it held plaintiff to defendant's heightened in-house procedure, and further, plaintiff provided the minimum required notice under FMLA's default requirements.

Spotts v. US, No. 09-41039, involved an action by present and former inmates of the Federal Correctional Complex, United States Penitentiary, in Beaumont, Texas, in connection with the decision made by the Regional Director of the South Central Region of the Federal Bureau of Prisons, not to evacuate the Penitentiary in the aftermath of Hurricane Rita.  The court affirmed the dismissal of the action on the grounds that 1) plaintiffs did not plead, and never argued to the district court, that the Eighth Amendment precluded the application of the discretionary function exception to the Federal Tort Claims Act; 2) plaintiffs' contention that the Safe Drinking Water Act imposed nondiscretionary duties that were contravened by the decision not to evacuate lacked merit; and 3) defendants' decision was the type of policy decision protected by the discretionary function exception and therefore meets the second prong of the Berkovitz test.

In re: Mirant Corp., No. 09-10451, involved a fraudulent transfer adversary proceeding initiated by some of a debtor's affiliates in connection with a bankruptcy petition.  The court affirmed the denial of defendant's motion to compel arbitration on the grounds that 1) defendant moved to compel arbitration only after the district court had partially denied its third motion to dismiss, despite being fully aware of its right to compel arbitration from the outset; and 2) the eighteen-month delay between the filing of defendant's original answer and its motion to compel arbitration wasted judicial resources and disadvantaged plaintiff.

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