In re Vastag (05 B 31035)

Issued July 24, 2006 by Judge Jack B. Schmetterer

Fed Survey (Beige Book)

FRB: Beige Book--Full report--July 26, 2006

Economy Growing but more Slowly

Economy Shows Signs of Slower Growth

In re marchFirst, Inc., et al. (01-24742 )

Issued: February 16, 2006 Judge: John D. Schwartz Ed. Note: It's more than a case -- I lived the adventure.

In re UAL v. U.S. Bank et al. (03 A 03927)

Issued 07/21/2006 Judge Eugene R. Wedoff Underlying Bankruptcy In re UAL Corp., 02 B 48191

In re Arguin, 04 B 40369

Issued July 24, 2006

Judge John H. Squires

Faster than a speeding bullet ... it's the case roundup!

5th Circuit US Trustee v. Cortez (07/20/06 - No. 05-10459) Bankruptcy court should consider post-petition events in deciding whether to dismiss a case for substantial abuse under sec. 707(b). 8th Circuit Miller v. NLVK, LLC (07/21/06 - No. 05-3651) The grant of debtor's request to set aside a property transfer resulting from a foreclosure auction is reversed and remanded for the District Court to determine whether fair value was paid for the property in the first place. 11th Circuit Bank of New York v. Sunshine-Jr. Stores, Inc. (07/18/06 - No. 04-16650, 04-16651, 05-10031) Sanctions imposed by bankruptcy court on plaintiff for repeatedly refusing to obey several orders the court issued for benefit of debtor are affirmed over claims that: 1) plaintiff was not holding debtor's funds as a fiduciary and thus had no obligation to pay interest on those funds; and 2) sanctions against plaintiff were inappropriate on several grounds. Eastman Kodak Co. v. Atlanta Retail, Inc. (07/18/06 - No. 05-12327) Bankruptcy court order enjoining plaintiff from continuing to seek relief against defendant for violations of state law in another federal district court is reversed where plaintiff, as a creditor, is not barred from later bringing an action against a co-creditor based upon state law claims if, during the pendency of a bankruptcy, plaintiff creditor failed to raise such claims. DC Circuit Constellation Energy v. Fed. Energy Regulatory Comm'n (07/18/06 - No. 02-1367, 03-1285, 05-1094, 05-1154) Petitions for review of orders of the Federal Energy Regulatory Commission (FERC) arising from the bankruptcy of the California Power Exchange Corporation are denied where the Commission acted reasonably in all respects.

check out the 7th circuit case -- ouch!

3rd Circuit

In re: Udell (07/10/06 - No. 05-2950)

Armed Forces code does not authorize discharge of educational obligation 5 years after debtor's departure from military service without a showing of "undue hardship" as defined in the Code.

7th Circuit

McCready v. eBay, Inc. (07/10/06 - No. 05-2450)

Dismissal of suit against eBay was affirmed and order to show cause was issued where: 1) plaintiff's claims were meritless; 2) plaintiff failed to state a claim for rescission; 3) court did not have jurisdiction over state law claims; and 4) plaintiff abused judicial process with frivolous litigation.

California Appellate Districts

Gottlieb v. Kest (07/10/06 - No. B178729)

Summary judgment for defendant based on judicial estoppel reversed where bankruptcy court did not adopt or accept the finding that the plaintiff failed to list certain claims as assets, eliminating any threat to judicial integrity. Judgment against plaintiff based on collateral estoppel is reversed where there was no privity, as plaintiff's interests in defending the cross-complaint differed significantly from the interests of his companies.

Rounding up, up, up!

6th Circuit Lowenbraun v. Canary (07/06/06 - No. 05-6032) In a suit alleging libel, slander, and related claims brought against defendant, counsel hired by a bankruptcy trustee to investigate certain transfers from a bankrupt husband to his wife pursuant to their legal separation, judgment for defendant is affirmed where: 1) there was no error in denying a motion to abstain; 2) plaintiff's failure to offer evidence supporting allegation that defendant's actions were prompted by improper motives was insufficient to undermine the application of the Barton doctrine; and 3) defendant was entitled to immunity for both his judicial and extrajudicial statements. 7th Circuit Cannon-Stokes v. Potter (07/05/06 - No. 05-4605) Summary judgment for defendant U.S. Postal Service in a suit under the Rehabilitation Act is affirmed where plaintiff's denial of an identical administrative claim in bankruptcy proceedings triggered judicial estoppel of the current suit. United Air Lines v. HSBC Bank USA (07/06/06 - No. 05-1459) Bankruptcy court ruling that an agreement between United Air Lines and the City of Denver for the financing and operation of newly constructed facilities at the Denver airport was not severable and constituted a lease is affirmed where: 1) the contract was an inherently integrated bargain on its face; and 2) United conceded that the indivisible whole of the agreement constituted a true lease.

More Rounding Up Found Here

In re Delta Air Lines, 2006 Bankr. LEXIS 554 (Bankr. S.D.N.Y. March. 23, 2006) Court denies setoff against prepetition claim From Weil, Gotshalk & Manges Bankruptcy Bulletin June 2006 HELD: lessor's claims against Delta (debtor) under 365(g) and 502(g) could not be offset against its obligations to the estate because under state law those credits were not a prepetition debt owed to the debtor -- and even if the credits could be considered a prepetition debt they still could not be offset against lessor's damage claim. the court concluded that the damage claim did not “arise before the commencement of the case under state law“ and therefore the code did not provide that it should be effective in bankruptcy. UPSHOT: the code does not create a right of setoff under state law but simply preserves setoff rights that already exist. ___________________ Ajaka v. Brooksamerica Mortgage Corp. (06/29/06 - No. 05-12105) (11th Cir.) Summary judgment for defendants in suit claiming violations of Truth in Lending Act is reversed where there is a question of material fact. Bracewell v. Kelley (06/30/06 - No. 05-11951) (11th Cir.) Exclusion of a federal payment for crop loss from a bankruptcy estate when the loss occurred before the creation of the estate, but the law creating the right to the payment was enacted afterwards, is affirmed where: 1) there was no legal or equitable right to the payment at the moment of creation; and 2) the assistance did not constitute proceeds from the property of the estate.

4th of July Round-up!

4th (of July) Circuit

Fairchild Dornier GMBH v. Official Comm. of Unsecured Creditors (06/27/06 - No. 05-1930)

The bankruptcy court's recharacterization of a sale of parts is affirmed where: 1) recharacterization of claims is within the broad powers of a bankruptcy court; 2) recharacterization exists separately from the court's disallowance and equitable subordination powers; and 3) the factual determinations were not clearly erroneous and supported the court's recharacterization.

7th Circuit

Summers v. UAL Corp. (06/28/06 - No. 05-4005)

Dismissal of class action against administrator of an Employee Stock Option Plan is affirmed: administrator did not act imprudently by failing to diversify in the face of the decline of UAL stock and the company's eventual bankruptcy.

8th Circuit

DeBold v. Case (06/26/06 - No. 05-3401)

In a bankruptcy case involving the allocation of settlement proceeds from a lawsuit between former partners of a failed joint venture, a decision adverse to a bankruptcy trustee is affirmed over claims that the BAP exceeded its scope of review by making findings of fact not found by the bankruptcy court and erred in its conclusions of law regarding an individual's entitlement to the settlement proceeds.

11th Circuit

Ajaka v. Brooksamerica Mortgage Corp. (06/29/06 - No. 05-12105)

Summary judgment for defendants in a suit claiming violations of the Truth in Lending Act is reversed where there is a question of material fact as to whether plaintiff had the motivation and intent to manipulate the judicial system such that judicial estoppel of his claims was appropriate.

Bracewell v. Kelley (06/30/06 - No. 05-11951)

Exclusion of a federal payment for crop loss from a bankruptcy estate when the loss occurred before the creation of the estate, but the law creating the right to the payment was enacted afterwards, is affirmed where: 1) there was no legal or equitable right to the payment at the moment of creation; and 2) the assistance did not constitute proceeds from the property of the estate.

Edgewater Medical Center v. Peter Rogan, et al. (04 A 2327)

Underlying Bankruptcy: In Re Edgewater Medical Center, 02 B 7378

Adversary Opinion Issued: June 29, 2006

Judge: Bruce W. Black