Jurisdiction

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Deadline for Revocation of Discharge Not Jurisdictional

The one-year deadline for seeking revocation of a discharge order is not jurisdictional and may therefore be waived. Weil v. Elliott (In re Elliott), No. 16-55359 (9th Cir. June 14, 2017).

When Edward Elliott filed his chapter 7 bankruptcy petition he failed to mention one important asset: his home. He received a discharge under section 727(a). Fifteen months later, when the trustee discovered the fraudulent nondisclosure, she filed an adversary complaint seeking an order vacating the discharge under section 727(d)(1). Section 727(e)(1) permits a trustee to seek revocation of discharge within one year of the discharge order. Mr. Elliott did not raise the issue of untimeliness in his response to the adversary complaint. The bankruptcy court revoked his discharge. The Bankruptcy Appellate Panel, however, found the one-year filing deadline to be jurisdictional and reversed. Elliott v. Weil (In re Elliott), 529 B.R. 747, 755 (B.A.P. 9th Cir. 2015). On remand, the bankruptcy court dismissed the adversary complaint for lack of jurisdiction. The trustee was permitted direct appeal to the Ninth Circuit. [Read more…] about Deadline for Revocation of Discharge Not Jurisdictional

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FDCPA and Discharge Injunction Not Incompatible

An FDCPA claim based on efforts to collect a debt discharged in bankruptcy is not precluded by the Code’s discharge injunction. Barnhill v. FirstPoint, Inc., No.15-892 (M.D. N.C. May 17, 2017).

Lara Barnhill filed a class action complaint in district court alleging that FirstPoint, Inc. and FirstPoint Collection Resources made efforts to collect a debt after her debt had been discharged in chapter 7 bankruptcy in violation of the FDCPA, North Carolina Collection Agency Act (NCCAA). The complaint also made a claim for injunctive relief. FirstPoint moved to dismiss under section 12(b)(1) and (6) for lack of subject matter jurisdiction and for failure to state a claim.

FirstPoint argued that the district court lacked subject matter jurisdiction over the FDCPA and NCCAA claims because both consumer protection laws are preempted by the Bankruptcy Code’s discharge injunction. FirstPoint further argued that Ms. Barnhill failed to allege injury-in-fact and therefore lacked Article III standing. [Read more…] about FDCPA and Discharge Injunction Not Incompatible

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Debtor/Plaintiffs Overcome Hurdle to Class Certification

Denying the creditor’s motion to dismiss, the bankruptcy court in the Southern District of Texas found that it could exercise jurisdiction over a nationwide class and that the claims, based on abuse of process, satisfied the “core proceeding” requirements of subject matter jurisdiction. Jones v. Atlas Acquisitions, LLC, No. 15-34818, Adv. Proc. No. 16-3235 (Bankr. S.D. Tex. May 19, 2017).

Atlas Acquisitions filed a proof of claim in Katrina Jones’s chapter 13 bankruptcy. It later withdrew the claim. Ms. Jones then filed an adversary complaint on behalf of herself and others similarly situated, alleging “abuse of the bankruptcy system by [Atlas’s] willful and intentional disregard for the requirements for filing legitimate claims in many Chapter 13 cases throughout the country.” Specifically, the complaint alleged that, in accordance with its business model, Atlas routinely filed deficient proofs of claim only to withdraw them when challenged. The First Amended Complaint added Natasha Hill, a chapter 13 debtor in the Bankruptcy Court for the Western District of Louisiana (case no. 15-3166) as a named plaintiff and sought certification as a class action. [Read more…] about Debtor/Plaintiffs Overcome Hurdle to Class Certification

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Order On Liability But Not Damages Is Interlocutory

Where the bankruptcy court granted partial summary judgment on the debtor’s complaint for willful violation of the automatic stay, but did not decide damages, the order was interlocutory and the Bankruptcy Appellate Panel lacked jurisdiction over the appeal. Lugo Ruiz v. FirstBank Puerto Rico, No. 17-7 (B.A.P. 1st Cir. April 14, 2017). [Read more…] about Order On Liability But Not Damages Is Interlocutory

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Improper Service Precludes Default Judgment

Notwithstanding actual knowledge of the adversary complaint, where the debtor failed to serve the “insured depository institution” by certified mail, the Bank was not obliged to respond, and the bankruptcy court erred in granting default judgment. Citizens Bank v. Decena, No. 16-1918 (E.D. N.Y. Nov. 29, 2016).

Lorelei Decena attended St. Christopher’s College of Medicine for three years. She funded her education from St. Christopher’s through five separate student loans from Citizens Bank. After completing her studies, she sought to sit for the medical boards in the United States and was told that she was not eligible because St. Christopher’s was not an accredited medical school. [Read more…] about Improper Service Precludes Default Judgment

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Mandamus Cannot Substitute for Untimely Appeal

Where the debtor failed to timely appeal the bankruptcy court’s holding that it lacked jurisdiction over his motion for damages based on violation of the automatic stay, the BAP did not have jurisdiction to rule on the debtor’s petition for writ of mandamus concerning that same holding. Ozenne v. Chase Manhattan Bank, No. 11-60039 (9th Cir. Nov. 9, 2016). [Read more…] about Mandamus Cannot Substitute for Untimely Appeal

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Mere Physical Possession Not Legally Cognizable Property Interest

The Ninth Circuit found that mere possession of property whose title had been fully adjudicated against the debtor in a state unlawful detainer action, was not a property interest protected by the automatic stay. Eden Place v. Perl, No. 14-60049 (9th Cir. Jan. 8, 2016). [Read more…] about Mere Physical Possession Not Legally Cognizable Property Interest

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District Court Has Original Jurisdiction over 362(k) Claim

A district court has subject matter jurisdiction over a claim under section 362(k) without regard to a standing order referring all bankruptcy-related cases to the bankruptcy courts, and dismissal under FRCP 12(b)(6) is inappropriate where the allegations in the complaint present a plausible explanation for the defendants’ conduct. Houck v. Substitute Trustee Services, No. 13-2326 (4th Cir. July 1, 2015). [Read more…] about District Court Has Original Jurisdiction over 362(k) Claim

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Order on Stay Violation Final despite Pending Issue as to Attorney Fee Award

Where the only issue left to be determined was whether the debtor had incurred attorney fees and costs in connection with the creditor’s stay violation, the order finding liability and determining actual damages was a final, appealable order. USDA v. Sexton (In re Sexton), No. 14-453 (W.D. Va. March 31, 2015). [Read more…] about Order on Stay Violation Final despite Pending Issue as to Attorney Fee Award