Justia U.S. 5th Circuit Court of Appeals Opinion Summaries

Debtor filed for bankruptcy under Chapter 13. After Debtor filed her petition and plan, the Trustee objected to confirmation of the plan, asserting that Debtor's petition and plan were not filed in good faith and that the amount of attorney's fees sought by Debtor was unreasonable. The bankruptcy court overruled the Trustee's objection and approved Debtor's Chapter 13 petition and plan and the requested legal fees and advanced legal costs. The district court reversed, finding that Debtor's plan was filed in bad faith. The Fifth Circuit Court of Appeals reversed the district court and affirmed the bankruptcy court, holding (1) it was not clearly erroneous for the bankruptcy court to find Debtor's plan was not an attempt to abuse Chapter 13 but rather a responsible decision given her particular circumstances, and thus, the district court erred when it reversed the bankruptcy court on the ground that Debtor's plan was filed in bad faith; and (2) the bankruptcy court did not abuse its discretion when it awarded $2,800 in attorney fees to Debtor's counsel. View "Sikes v. Crager" on Justia Law

At issue in this case was whether the Supreme Court's decision in Perdue v. Kenny A. ex rel Winn, which curtailed the authority of district courts to award fee enhancements in federal fee-shifting cases, unequivocally overruled the Fifth Circuit Court of Appeals' precedent in the bankruptcy arena. Here Debtors filed for chapter 11 bankruptcy protection. Debtors retained Appellee to assist in their restructuring process. After Debtors' bankruptcy plan was confirmed by the bankruptcy court, Appellee requested approval of a $1 million fee enhancement. The bankruptcy court denied the request because Appellee failed to satisfy the strict requirements of the Supreme Court's holding in Perdue. The district court reversed, holding that the bankruptcy court erred in treating the federal fee-shifting decision in Perdue as binding authority in a bankruptcy proceeding. On remand, the bankruptcy court awarded Appellee the $1 million fee enhancement. The Fifth Circuit Court of Appeals affirmed, holding that Perdue did not unequivocally, sub silentio overrule the Fifth Circuit's prior precedent. View "CRG Partners Group, LLC v. Neary" on Justia Law

The bankruptcy Trustee of MBS Management Services, Inc. (MBS), a management company for dozens of apartment complexes, appealed judgments rejecting his claim that payments made by the debtor to MXEnergy Electric, Inc (MX) to reimburse MX for supplying electricity to the complexes were avoidable preferences. The bankruptcy court and district court found that the payments were made on a "forward contract" expressly exempt from the Bankruptcy Code's preference provision. The Fifth Circuit Court of Appeals affirmed, holding that because the agreement was a forward contract within the meaning of 11 U.S.C. 546(e), and because expert testimony from the President and CEO of MX was admissible, the bankruptcy and district court's correctly rejected the Trustee's avoidance action. View "Lightfoot v. MXenergy Elec., Inc. " on Justia Law

Local telephone companies initiated twenty separate suits against Halo before ten state public utility commissions (PUCs) and Halo filed for bankruptcy as a result of this collective action. The telephone companies requested that the bankruptcy court determine that the various PUC actions were not subject to the automatic stay provided by the Bankruptcy Code at 11 U.S.C. 362(a), because they were excepted under section 362(b)(4), or that the bankruptcy court modify the automatic stay for cause, pursuant to section 362(d)(1). The court agreed with the bankruptcy court's holding that the exception to the automatic stay in section 362(b)(4) applied to the state commission proceedings, allowing the telephone companies to proceed with their litigation in the PUCs, but holding that the state adjudicative bodies could not issue any ruling or order to liquidate the amount of any claim against Halo, and that the bodies could not take any action that affected the debtor-creditor relationship between Halo and any creditor or potential creditor. View "Halo Wireless, Inc. v. Alenco Communications, Inc., et al." on Justia Law

Appellee commenced adversary proceedings against debtors, alleging that the debts owed to him were non-dischargeable pursuant to 11 U.S.C. 523(a)(2)(A) and (a)(2)(B). At issue was the proper construction of the phrase "respecting the debtor's...financial condition" as it appeared in sections 523(a)(2)(A) and (a)(2)(B). Because the court agreed with the bankruptcy court's interpretation and found no clear error in that court's determination that the debtors obtained an advance of money through actual fraud, the court affirmed the judgment. View "Bandi, et al. v. Becnel" on Justia Law

Plaintiff asserted federal claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e et seq., and under 42 U.S.C. 1981, as well as a state-law claim for intentional infliction of emotional distress, asserting that his employer subjected him to racial discrimination. At the time plaintiff filed both his EEOC charge and his complaint initiating the instant case, plaintiff was a debtor in a Chapter 13 proceeding, having filed a petition for bankruptcy. The employer subsequently moved for summary judgment, arguing that plaintiff should be judicially estopped from pursuing his claims against the employer because he failed to disclose those claims to the bankruptcy court. The district court granted the motion, dismissing plaintiff's case, and plaintiff appealed. The court held that the district court did not abuse its discretion in applying judicial estoppel to plaintiff's claims after finding that plaintiff failed to create a fact issue regarding his purported inadvertence. Accordingly, the court affirmed the judgment. View "Love v. Tyson Foods, Inc." on Justia Law

This was an adversary proceeding arising out of a Chapter 11 bankruptcy of debtors. The trustee filed suit against A&R, the former debtors' counsel, seeking disgorgement of the attorney's fees awarded during the bankruptcy. The bankruptcy court ordered a sanction for A&R's failure to adequately disclose various connections it had to the debtors and creditors, but found that A&R did not have a disqualifying adverse interest. The trustee appealed, arguing that A&R was not disinterested and that all legal fees should have been disgorged. The court held that, under the totality of the circumstances, A&R did not have a disqualifying interest; given the bankruptcy court's factual findings were reasonable based on the record, the court concluded that the bankruptcy court did not commit clear error in ordering disgorgement of only a portion of the retainer; and the bankruptcy's court's decision to deny the amendment was not an abuse of discretion. Accordingly, the court affirmed the judgment. View "Waldron v. Adams & Reese, L.L.P." on Justia Law

This case arose when Mirant, an energy company, sought to expand its European operations by acquiring nine power islands from General Electric. When the power island deal fell through, Mirant made payments pursuant to a guaranty and soon thereafter sought bankruptcy protection. Mirant, as debtor-in-possession, sued Commerzbank and other lenders in bankruptcy court to avoid the guaranty and to recover the funds Mirant paid pursuant to the guaranty. After Mirant's bankruptcy plan was confirmed MCAR, plaintiff, substituted into the case for Mirant. Commerzbank and other lenders, defendants, filed a motion to dismiss based on Rules 12(b)(1) and 12(b)(6). The district court subsequently denied defendants' motion to dismiss based on plaintiff's alleged lack of standing. Thereafter, the district court granted summary judgment for defendants. Both sides appealed. While the court agreed that the district court correctly determined that there was standing to bring the avoidance claim, the court vacated the judgment of dismissal because the district court erroneously applied Georgia state law rather than New York state law to the avoidance claim. View "MC Asset Recovery LLC v. Commerzbank A.G., et al." on Justia Law

This case arose when debtors inherited an IRA worth $170,000. When debtors filed for bankruptcy, they sought to exempt the inherited IRA from the bankruptcy estate pursuant to 11 U.S.C. 522(d)(12). The Chapter 7 trustee objected to the exemption, arguing that inherited IRAs did not qualify for exemption under section 522(d)(12). After the bankruptcy court ruled for the trustee, the district court reversed the bankruptcy court. Because the court held that inherited IRAs were exempt from the bankruptcy estate, upon de novo review, pursuant to section 522(d)(12), the court affirmed the district court's judgment.

Debtor, a former company officer, allegedly attempted to obtain one million dollars by falsely claiming an ownership interest in the company and threatening public exposure of alleged illegal activity. After the debtor lost an arbitration proceeding, he then filed for bankruptcy. At issue was whether the company's attorneys' fees for the arbitration represented a nondischargeable debt under 11 U.S.C. 523(a)(4) or (a)(6). The court reversed and remanded the summary judgment rendered against creditors because the debt may have arisen for willful and malicious injury and may therefore be excepted from discharge by section 523(a)(6).