Category Archives: 101

7th Cir. Opinions

7th Circuit Opinion Summaries courtesy of

United States v. Rogan

Bankruptcy, Criminal Law, Government, White Collar Crime

River Road Hotel Partners, LLC v. Amalgamated Bank


Bloomfield State Bank v. United States

Bankruptcy, Real Estate & Property Law, Tax Law

Costello v. Grundon

Bankruptcy, Commercial Law, Securities Law

CDX Liquidating Trust v. Venrock Assocs., et al

Bankruptcy, Business Law, Securities Law

Reedsburg Util. Comm’n v. Grede Foundries, Inc.

Bankruptcy, Utilities Law

Kimbrell v. Brown

Bankruptcy, Injury Law


Ransom v. FIA Card Services (U.S. S.Ct.)

Ransom v. FIA Card Services, N.A., f/k/a MBNA America Bank, N.A.
Certiorari from the U.S. Court of Appeals for the 9th Cir., Case 09–907
Argued October 4, 2010—Decided January 11, 2011

The Issue: Here the question was whether a Chapter 13 debtor could deduct the allowable auto payment from his monthly budget even though he did not have a car payment (i.e the vehicle was paid for). Put another way, is it fair for all debtors to be entitled to the maximum allowable deduction from their monthly disposable income, or must debtors establish what they actually pay?

The Answer: The Court ruled 8 to 1 (Scalia J. dissenting) that if a debtor makes more than the median income for his State then he must establish that he incurrs the amounts deducted from his monthly living expenses. No more automatic deductions if debtor cannot prove what he pays.

The Gist: To determine “disposable income” BAPCPA gave us the Means Test, which starts with gross monthly income then deducts living expenses – i.e. “amounts reasonably necessary for maintenance or support” of the debtor. In a Chapter 13 case the expenses considered “reasonably necessary” are identified in 11 U.S.C. §1325(b)(2)(A)(i) and include “applicable monthly expense amounts” as specified in National and Local IRS standards. Since BAPCPA was adopted, it has become common practice to include expenses at the maximum allowable level even if the debtor does not have, or pay for, that type of asset. This case appears to say that the party is over for Chapter 13 debtors.

See Also: this post from Chicago Attorney Steve Jacobowski on the Bankruptcy Litigation Blog regarding the Scalia dissent.


Apex Oil Co. v. U.S. (Supreme Court)

The U.S. Supreme Court denied certiorari with respect to U.S. v. Apex Oil Co., 579 F.3d 734 (C.A.7-Ill. 2009) in which the 7th Circuit held that an government injunction requiring Apex to clean up a contaminated site constituted a non-dischargeable debt as set out in the Bankruptcy Code.

By contrast, Apex argued that an injunction is not a “claim” under sec. 101(5)(B) because it is not a right to money damages arising from a breach of performance. Instead, claimed Apex, the injunctive claim was a demand on the Debtor barred by sec. 362, the Automatic Stay. In the alternative, said Apex,the claim was reducible to money damages and was therefore dischargeable. Finally, Apex argued that to consider an environmental clean-up order a nondischargeable claim would conflict with a line of Supreme Court cases starting with Ohio v. Kovacs, 469 U.S. 274, 105 S.Ct. 705, 83 L.Ed.2d 649 (1985).

The U.S. Supreme Court refused to hear the matter and the holding of the 7th Cir. Stands.

Enhanced by Zemanta

BoA, GMAC, Chase, and Others Delay Foreclosures

BoA joins a growing number of mortgage companies whose employees signed key documents in foreclosure cases without verifying that information. GMAC Mortgage and JPMorgan Chase have halted 10’s of thousands as well.

The 23 states in which BoA is delaying foreclosures include Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New JerseyNew Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South CarolinaSouth Dakota, Vermont and Wisconsin.
Read the entire article online by clicking here.

case updates – hometown, cir 3, cir 8

3rd cir

Windt v. Qwest Communications, 06-4662, 06-4808 [June 10, 2008]
In a lawsuit brought by bankruptcy trustees of a Dutch company asserting various claims against defendants who were allegedly responsible for the company’s insolvency, judgment dismissing trustee-plaintiff’s complaint on forum non-conveniens grounds is affirmed where the district court did not abuse its discretion in: 1) affording low deference to plaintiffs’ choice of forum in view of Netherlands’ substantial interest in resolving a dispute concerning alleged mismanagement of a Dutch company by board members and officers of that Dutch company; 2) concluding that avoiding problems in the application of foreign law favored dismissal; 3) balancing the public and private interest factors implicated in the case; and 4) determining that the convenience of litigating the dispute in New Jersey was outweighed by the oppressive or vexatious effect on defendants.


8th cir

US v. Mitchell, 07-3136 [June 10, 2008]
Conviction upon defendant’s retrial for knowingly and fraudulently making a false statement under penalty of perjury in a bankruptcy case is affirmed where the circuit court declines to revisit a double jeopardy issue, and there was sufficient evidence to sustain his conviction.


In re Weadley, 06-1854
Bibby Financial v. Weadley, 07-683
Issued June 11, 2008
Judge A. Benjamin Goldgar

household size and median income (IRS v. Census Bureau)

King Bankruptcy Media Courtesy of King Bankruptcy Media
In re Ellringer, 2007 WL 1976750 (Bkrtcy.D. Minn. 2007) (Robert J. Kressel, J.)
Chapter 7 debtor was married and lived with a 3rd person who was not a dependent. That person regularly contributed $600 to the household budget, most of which was used to pay for their own living expenses. Debtor compared their income to a household of 1, which resulted in an above-median income. Debtor excluded the $600 contributed by the 3rd person. Trustee argued that the 3rd person should not be included in the household count OR if counted then the $600 should be included in the debtor’s income. The UST advocated using the definition of “household” found in the Internal Revenue Manuel. Trouble was that the IRM does not actually define the term household and instead simply indicates that the number of persons allowed under the national standard expenses should generally be the same as the number of dependents on the taxpayer’s latest income tax return. See IRM § (2004). Court rejected this argument and held that

“The Census Bureau defines “household” as “all of the people, related and unrelated, who occupy a housing unit.” U.S. Census Bureau, Current Population Survey (2004). A housing unit is a house, apartment, group of rooms or single room that is intended for occupancy as a separate living quarters. Id. Households may be either family or nonfamily. Id. Family households include the householder and all the other people in the living quarters who are related to the householder by birth, marriage, or adoption. Id. A nonfamily household consists of a householder living alone, or a householder who shares the home exclusively with people to whom he or she is not related. Id. If Congress had intended to limit household size to only household members related by blood, marriage or adoption, it could have done so by saying “in the case of a debtor in a family of 2 . . . .”

The Court further held that the Code only requires to be included in the median income and means tests that portion of a non-filing household member’s income that is regularly contributed to the “ … household expenses of the debtor or the debtor’s dependents.” See §101(10A).


Legal Zoom