Recently in Bankruptcy Law Category

Int'l Dairy Foods Ass'n v. Boggs, 09-3515, concerned a challenge to the district court's grant of summary judgment in favor of the state of Ohio on all but one of plaintiffs' claims, in a suit brought by two separate dairy-processor trade organizations, challenging a regulation adopted by the Ohio Department of Agriculture (ODA), designed to regulate labeling of dairy products that reflect the nonuse of artificial hormones.

Wilson v. Rees, 09-6306, concerned a challenge to the district court's dismissal, as untimely, of an inmate's 42 U.S.C. section 1983 suit challenging Kentucky's lethal injection protocol under the Eighth and Fourteenth Amendments.  In affirming, the court held that Bowling v. Ky. Dept. of Corrections, 301 S.W.3d 478, (Ky. 2009), and its aftermath do not disrupt the district court's holding that defendant's complaint is barred by the statute of limitations.

White v. Wyndham Vacation Ownership, Inc., 09-5626, concerned a challenge to the district court's grant of summary judgment in favor of the defendants based on a claim of judicial estoppel, in plaintiff's sexual harassment suit against her former employers seeking $250,000 in compensatory damages and $1 million in punitive damages.  In affirming, the court held that plaintiff asserted a position before the bankruptcy court that was contrary to the position that she asserted before the district court as she did not disclose her sexual harassment claim against defendants in her initial bankruptcy filings.  The court also held that the plaintiff had a motive to conceal and knowledge of the factual basis of her harassment claim, and the evidence plaintiff presented of her attempts to advise the bankruptcy court and the trustee of her harassment claim does not excuse her initial omission.

US v. Allen, 09-5178, concerned a challenge to the district court's denial of defendant's motion to reduce and modify his sentence for his convictions for possession and intent to distribute over five grams of cocaine base and other related crimes.  In affirming the denial, the court held that the district court properly concluded that it lacked the authority in proceedings under section 3582(c)(2) to sentence the defendant below the bottom of the amended Guidelines range or to entertain a challenge under Booker to the court's calculation of the original Guideline range.

Merritt v. Int'l Ass'n of Machinists & Aerospace Workers, 09-1563, concerned a labor suit brought by Northwest Airlines Quality Service Agents (QSAs) against a labor organization and others, claiming that between 2000 and 2006 defendants breached their duty of fair representation relating to the negotiation and administration of contracts on behalf of QSA employees and in handling their dues-objector status requests.  In affirming the district court's grant of defendants' motion for summary judgment and an order issuing Rule 11 sanctions against the plaintiffs' counsel for failing to adequately investigate the law and facts before filing their complaint, the court held that the mere fact that the plaintiffs were a minority group within their union organization and were adversely affected by the actions of the union does not establish that the union acted with hostile or discriminatory intent.  Court also held that the plaintiffs have failed to submit any evidence that the defendant improperly handled the dues-objector status requests; and 3) Rule 11 sanctions were properly imposed.

In re: Darrohn, 09-5499, concerned the bankruptcy court's calculation of the debtors' projected disposable income in approving the proposed plan in Chapter 13 proceedings.  In reversing and remanding in light of the Supreme Court's recent decision in Hamilton v. Lanning, --S.Ct.---, 78 U.S.L.W. 4518, 2010 WL 2243704 (No. 08-998 June 7, 2010), the court held that the bankruptcy court erred when it determined that it was required to use the income calculated on Form B22C, which was derived from the six-month look-back formula, rather than debtors' current monthly income.  Court also held that the bankruptcy court erred in failing to account for the debtors' intent to surrender properties securing the mortgages in considering reasonable necessary monthly expenses.

Related Resources:

• Full text of US v. Allen
• Full text of Merritt v. Int'l Ass'n of Machinists & Aerospace Workers
• Full text of In re: Darrohn

In re Johnson, No. 08-5088, concerned a challenge to the Bankruptcy Appellate Panel's (BAP)judgment for the trustee and against the lender of the debtor's pick-up truck, in Chapter 7 proceedings.  In affirming the judgment of the BAP, the court held that the enabling loan exception of 11 U.S.C. section 547(c)(3) does not protect the lender's interest in the pick-up truck from avoidance as a preferential transfer because the perfection of the lender's security interest in the truck did not occur until March 7, 2005, when the security interest was actually noted on the certificate of title.

Related Resource:

• Full text of In re Johnson

Berhane v. Holder, No. 09-3153, concerned a challenge to the BIA's affirmance of IJ's denial of an application for asylum and related relief by a citizen and a native of Ethiopia, on the ground that throwing rocks at the Ethiopian police constituted a serious nonpolitical crime.  In vacating the denial, the court held that a decision committed to the Attorney General's discretion by regulation does not satisfy the prerequisite that Congress specify by statute the Attorney General's discretion over an issue.  Furthermore, the court held that the Board's determination that the criminal nature of petitioner's actions "outweighed their political components is without sufficient reasons. 

Swanson v. DeSantis, No. 09-1501, concerned habeas proceedings arising from a conviction for killing a pedestrian while driving under the influence.  In dismissing an appeal of the district court's grant of the petition in part in determining that defendant had failed to exhaust her jury instruction claim but had exhausted her Blakely claim,  the court held that it lacks jurisdiction as the district court's decision to grant or deny a stay of its own proceedings is not ordinarily a final decision for the purposes of section 1291. 

Gor v. Holder, No. 08-3859, concerned a petition for review of a removal order of an Indian citizen, entered on the ground that he is an alien convicted of child abandonment.  The court dismissed the matter as it lacked  jurisdiction to review the original BIA decision as well as the denial of the motion to reopen sua sponte. 

Bennett v. MIS Corp., No.08-2567, concerned a challenge to the district court's order dismissing the complaint for failure to state a claim in air traffic controllers' suit alleging personal injuries based on their exposure to toxic mold at the airport.  First, the court affirmed in part the judgment of the district court in concluding that the first mold remediation firm's section 1442(a)(1) removal was proper and the district court therefore possessed subject matter jurisdiction over plaintiffs' claims.  Next, the court held that the Fultz rule of law forecloses plaintiffs' claims against the consulting defendants as they did not assume the FAA's duty to provide a reasonably safe working environment when the FAA hired them to provide consulting services. 

However, the court reversed the part the judgment of the district court dismissing the second mold remediation firm in concluding that the firm's use of an allegedly unapproved biocide gave rise to a duty under Michigan law to foreseeable persons that was "separate and distinct" from its contract with the FAA.  Finally, the court held that the district court did not err when it denied plaintiffs' motion for leave to file an amended complaint with respect to their proposed common law fraud claim as futile. 

In re: Metro. Gov of Nashville, No. 09-5511, concerned a defendants' petition for a writ of mandamus, arising from plaintiffs' racial discrimination suit against their employer. First, the court dismissed defendant's appeal of the district court's grant of plaintiffs' motion for a new trial as such an order is generally not appealable as the order does not qualify as a "final decision" under 28 U.S.C section 1291.  In addition, the court rejected the defendant's contention that jurisdiction exists to consider its appeal by means of reviewing the district court's purported finding of alleged attorney misconduct.  Next, the court granted the petition in part to the extent of directing the district court to rule on the outstanding disparate-impact claims within 90 days from the filing of this opinion and denied remainder of the petition.

Nat'l Union Fire Ins. Co. v. VP Bldg., Inc., No. 08-4537, concerned a challenge to the district court's affirmance of the bankruptcy court's decision disallowing an insurer's petition for administrative expenses, on the ground that the claim was not "actual" and did not benefit the estate.  In affirming the decision, the court held that, pursuant to In re HNRC Dissolution Co., 371 B.R. 210, (E.D. Ky. 2007), the insurer's request for reimbursement is not an "actual" expense within the meaning of the bankruptcy code. 

White Oak Prop. Dev., LLC v. Washington Township, No. 09-3527, concerned a housing developer's suit against a town and its trustees, alleging various claims of constitutional violations. In affirming the district court's grant of defendants' motion for summary judgment, the court held that the plaintiff's attempt to void the Zoning Regulation for vagueness fails.  The court also held that the district court properly granted summary judgment to defendants on the FHA claim, and on the Equal Protection claim as plaintiff has failed to demonstrate the Zoning Regulation's prohibition against multiple-family dwellings, on its face, discriminates on the basis of race.  Lastly, the court held that plaintiff's substantive due process claim was properly dismissed as it did not have a protected property interest in developing its property in accordance with its development plan. 

Related Resources:

• Full text of Berhane v. Holder
• Full text of Swanson v. DeSantis
• Full text of Gor v. Holder
• Full text of Bennett v. MIS Corp
• Full text of In re: Metro. Gov of Nashville
• Full text of Nat'l Union Fire Ins. Co. v. VP Bldg., Inc
• Full text of White Oak Prop. Dev., LLC v. Washington Township

The Sixth Cirucit decided two criminal matters and a bankruptcy case involving the issue of whether portion of creditor's secured claim attributable to the payoff of negative equity qualifies for protection from cramdown.

In US v. Algee, No. 08-3196, the court faced a former postal employee's challenge to this conviction for making false oral and written statements in an investigation of irregularities with the amount of money and stamps in vending machines.  In affirming the conviction, the court rejected defendant's contention that there was insufficient evidence to support the conviction for making false statements and also rejected his evidentiary claims that admission of evidence regarding the circumstances of the "integrity test" was an abuse of discretion.  Lastly, although the court concluded that the district court violated Rule 30(b) when it provided jury instructions to the defense only seconds before prosecution's closing argument, the court held that defendant did not suffer prejudice sufficient to warrant a retrial.

In Miller v. Brunsman, No. 09-3151, the court dealt with defendant's request for habeas relief for his aggravated murder and robbery convictions.  In denying the petition, the court held that the evidence offered by the defendant in support of his claim that a third party committed the offenses failed to show sufficient nexus between that third party and the murder victim.  Furthermore, the state court's exclusion of this evidence was not an unreasonable application of clearly established federal law. 

In In Re: Westfall, No. 08-4530, the court addressed the issue of whether the protection from "cramdown" offered by the hanging paragraph of 11 U.S.C. section 1325(a) applies to the portion of a creditor's secured claim attributable to the payoff of negative equity in a trade-in-vehicle.  In answering that it does, the court reversed the decision of the district court in holding that the negative equity financing constitutes a purchase money obligation under the UCC and the associated security interest satisfies the UCC's definition of a purchase money security interest. 

Related Resources:

• Full text of US v. Algee
• Full text of Miller v. Brunsman
• Full text of In Re: Westfall

In Chapter 13 proceedings, the decision of the bankruptcy court in holding that plaintiff's purchase of a creditor's claim against the debtors was not valid is reversed where: 1) the bankruptcy court clearly erred in finding that the purchase agreement between the plaintiff and the intermediary did not contain representations about the validity of the claims purchased by plaintiff; and 2) the bankruptcy court abused its discretion in determining that plaintiff's actions violated Rule 9011(b) and were therefore sanctionable. 

Read B-Line, LLC v. Wingerter, No. 08-4455

Appellate Information

Argued: December 4, 2009

Decided and Filed: January 25, 2010

Judges

Opinion by Circuit Judge  Gilman

Counsel

For Appellant:  Linh K. Tran, Louis H. Treiger

For Appellee:   N/A

In Chapter 7 bankruptcy proceedings, the Bankruptcy Appellate Panel's (BAP) denial of plaintiff-creditor's motion to allow an informal proof of claim based on its prior filings as a putative secured creditor is affirmed as the BAP did not abuse its discretion in finding that: 1) plaintiff had ample notice of the likelihood that it would lose its status as a secured creditor, necessitating the filing of a proof of claim; 2) plaintiff's unexplained delay weighed against allowing plaintiff's informal proof of claim; and 3) the large dilution in the distribution to other creditors in this case was an appropriate consideration weighing against allowing plaintiff's claim. 

Read In re: Nowak, No. 08-3690

Appellate Information

Argued: October 13, 2009

Decided and Filed: November 13, 2009

Judges

Opinion by Circuit Judge Gilman

Counsel

For Appellant:  David A. Freeburg, McFadden & Freeburg Co., LPA., Cleveland, Ohio

For Appellee: Lydia Evelyn Spragin, Akron, Ohio

In an appeal from the Bankruptcy Court's order converting Debtor's bankruptcy case from Chapter 11 to Chapter 7 nunc pro tunc, the order is affirmed, where the equitable powers granted to the Bankruptcy Court under 11 U.S.C. section 105(a) include the power to enter such a conversion order.

Read Mitan v. Duval, No. 07-2111

Appellate Information

Submitted: December 4, 2008

Decided and Filed: July 17, 2009

Judges

Opinion by Judge Gibbons

Dissent by Judge Clay

Counsel

For Appellant:

Keith J. Mitan, Mitan & Associates, West Bloomfield, MI

For Appellees:

Mark R. Fox, Fraser Trebilcock Davis & Dunlap, P.C., Lansing, MI