Tara Twomey

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$2 Million Jury Verdict Against Mortgage Servicer

On Monday, Alena Hammer obtained a $2 million jury verdict against Residential Credit Solutions, Inc. (RCS), a national mortgage loan servicer, for its breach of contract, violations of the Real Estate Settlement Procedures Act (RESPA), and violations of the unfairness and deception provisions of the Illinois Consumer Fraud and Deceptive Business Practices Act. All of Hammer’s claims dealt with RCS’s misconduct in handling and servicing the mortgage loan on Hammer’s home in DuPage County, Illinois, where Hammer has resided for the last 27 years.

[Read more…] about $2 Million Jury Verdict Against Mortgage Servicer

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Cert. Denied in LVNV v. Crawford

The Supreme Court has declined to take up the issue of whether filing a stale proof of claim in a bankruptcy case violates the FDCPA.  Previously, the Eleventh Circuit found that a proof of claim to collect a stale debt in chapter 13 violates the Fair Debt Collection Practices Act.  In Crawford, however, the Eleventh Circuit side-stepped the issue of whether an irreconcilable conflicts exists between the Bankruptcy Code and the FDCPA, such that creditor’s conduct in bankruptcy would not be actionable under the FDCPA.

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Contrasting Cases on Undue Hardship and Summary Judgment

Speculation, begging the question, and the absence of countervailing evidence doomed the debtor’s defense to a motion for summary judgment on her student loan discharge action. Markwood v. U.S. Dept. of Educ. (In re Markwood), No. 13-1390, Adv. Proc. 14-4 (Bankr. N.D. W.Va. Oct. 31, 2014).

The court applied the three-part test developed in Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395, 396 (2nd Cir. 1987) (per curiam): “(1) that the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for herself and her dependents if forced to repay the loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans.” The court found the debtor failed the first two prongs of this test. [Read more…] about Contrasting Cases on Undue Hardship and Summary Judgment

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“Non-Routine” Fees for Objections to Late Claims Allowed

In two nearly identical cases, the bankruptcy court granted the debtors’ attorney’s supplemental fee motions seeking compensation for work performed opposing proofs of claim for debts that were unenforceable due to the lapse of the state statute of limitations. In re Swilling, No. 13-12583 (Bankr. E.D. Tenn. Oct. 23, 2014), In re Alexander, No. 13-13462 (Bankr. E.D. Tenn. Oct. 22, 2014) (debtor’s attorney filed motions in five other cases based on similar factual scenarios).The court noted, however, that since the 2012 changes to Fed. Bankr. R. 3001(c), objections to those claims would now be deemed “routine.” [Read more…] about “Non-Routine” Fees for Objections to Late Claims Allowed

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Not Even the IRS Approves of McCoy

The IRS has filed an amicus brief in the First Circuit taking the position that the Fifth Circuit erred in McCoy v. Miss. State Tax Comm’n, 666 F.3d 924 (5th Cir. 2012), when it held that a late-filed return can never be a “return” for dischargeability purposes unless filed under IRC section 6020(a). Wood v. Mass. Dept. of Rev., Nos. 14-9004, 14-9006 and Pendergast v. Mass. Dept. of Rev., 14-9005, 14-9007 (1st Cir.) (amicus brief filed Nov. 4, 2104). [Read more…] about Not Even the IRS Approves of McCoy

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Supreme Court to Hear Chapter 7 Lien Stripping Cases

The Supreme Court granted certiorari today in two of the three Chapter 7 lien-strip-off cases challenging the Eleventh Circuit decision in McNeal. Bank of Amer. v. Toledo-Cardona, No. 14-163 and Bank of Amer. v. Caulkett, No. 13-1421 (petition granted Nov. 17, 2014) (consolidated for argument) (Bank of Amer. v. Bello, No. 14-235 is still pending). In McNeal v. GMAC Mortg., 735 F.3d 1263 (11th Cir. 2012) pet. den. (May 20, 2014), the court bucked the trend to find that Dewsnup v. Timm, 502 U.S. 410 (1992), which held that a partially secured lien could not be stripped-down in chapter 7, did not apply to wholly unsecured liens. There are more than a dozen cases currently pending in the Eleventh Circuit challenging this decision, but, after an early abortive attempt to bring the issue before the Supreme Court (Bank of America v. Sinkfield, No. 13-700 (cert. denied, March 31, 2014)) the issue is now on track for final resolution. Briefing should be completed by March and argument is likely to be scheduled for the last week of March, with decision by June. The debtor is being represented by Stephanos Bibas, the Director of the Supreme Court Clinic at the University of Pennsylvania Law School.

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Arbitration Judgment Applies to Determination of Nondischargeability

The doctrine of collateral estoppel mandated that findings in a state court arbitration judgment applied to the determination of nondischargeability of a debt in chapter 7 bankruptcy. Margolis v. Hensley (In re Hensley), No. 12-42785, Adv. Pro. 12-4180 (Bankr. E.D. Tex. Oct. 1, 2014). [Read more…] about Arbitration Judgment Applies to Determination of Nondischargeability