(United States Third Circuit) – In an involuntary bankruptcy action brought by a creditor seeking to recover a court judgment against debtor, the bankruptcy court’s dismissal of the petition as a bad faith filing is affirmed where: 1) an involuntary petition filed under 11 U.S.C. section 303 may be dismissed for bad faith; 2) bad faith determinations are made under the totality of the circumstances standard; and 3) the petition cannot be cured by adding a good faith creditor once the petition has been dismissed.
(United States Ninth Circuit) – In a bankruptcy action raising the question of attorney’s fees arising from debtor actions for damages when creditors violate the automatic stay on proceedings relating to pre-petition debts, as provided for in 11 U.S.C. section 362(k), the court reversed its holding in Sternberg v. Johnston, 595 F.3d 937 (9th Cir. 2010), and held that attorney’s fees are available for prosecuting an action for damages under the statute.
(United States Federal Circuit) – In a tax refund case for Federal Insurance Contribution Act (FICA) tax paid on certain deferred compensation, retirement benefits in this case, that plaintiff will never receive due to his employer’s bankruptcy, the Court of Federal Claims judgment denying a refund is affirmed where the Treasury regulation that defines “amount deferred” under 26 U.S.C. section 3121(v)(2)(A) (2000), definition prohibited any consideration of an employer’s financial condition (e.g., bankruptcy) in calculating the amount deferred, 26 C.F.R. section 31.3121(v)(2)-1(c)(2)(ii).
(United States Ninth Circuit) – In a bankruptcy action arising from debtors filing for Chapter 7 relief and Chapter 13 relief, the bankruptcy court’s order that debtors were entitled to the voidance of creditor HSBC’s lien under 11 U.S.C. section 506(d) is affirmed where 11 U.S.C. section 1328(f)’s bar on debtors receiving a Chapter 13 discharge within four years of a Chapter 7 discharge does not prevent the utilization of section 506(d)’s lien-voidance mechanism in the course of a Chapter 13 filing.
(United States Ninth Circuit) – In an action seeking to collect attorney’s fees incurred following a lender’s objection to debtor’s Chapter 13 bankruptcy plan under California’s reciprocal attorney fees law, Civil Code section 1717(a), the district court’s denial of the motion for attorney’s fees is reversed where the debtor’s successful defense against lender’s objection to her bankruptcy plan constitutes “prevailing on the contract” under section 1717(a) and entitles her to attorney fees under section 1717(a).
(United States Third Circuit) – In an appeal of the bankruptcy court’s sale order approving the debtor’s sale of its casino property free and clear of all liens and interests, the district court’s order denying appellant’s motion for stay of the sale order pending appeal is reversed where appellant has shown: 1) a likelihood of success on the merits; 2) a likelihood of suffering irreparable harm; 3) that the balance of harms favors a stay; and 4) that the public interest is served by granting a stay pending appeal.
(California Court of Appeal) – In an marriage dissolution proceeding involving the issue of whether one spouse is entitled to a greater share of the proceeds from the sale of a community property home due to her bankruptcy discharge, the trial court’s award of a larger share to the spouse who received the bankruptcy discharge, on grounds that doing otherwise would enforce a discharged debt against her and thereby violate federal bankruptcy law, is reversed where: 1) this case features a secured debt on an asset jointly owned by the parties, the sale of which resulted in substantial proceeds beyond the amount of secured debt; 2) although a secured lender’s potential right to a deficiency judgment (i.e., in personam liability) can be discharged in bankruptcy, the lender’s lien on real property (i.e., in rem liability) is unaffected by a discharge in bankruptcy; 3) here, the lien was extinguished at closing by payment of the current amount owed on the loan, a necessary condition to selling the property and thereby benefitting both parties; and 4) under state law, the parties were entitled to equal shares of the proceed.