Case Summaries

Bankruptcy Law

[06/23] In re: Trout
In a bankruptcy trustee's appeal from a decision of the bankruptcy appellate panel affirming the bankruptcy court's determination that, having successfully avoided a preferential vehicle lien under 11 U.S.C. section 547, the trustee was not entitled to a money judgment equal to the value of the avoided liens under section 550(a), the order is affirmed where the bankruptcy estate had been sufficiently returned to its pre-transfer status by avoiding the preferential lien at issue and stepping into the lien priority of the avoided creditor under 11 U.S.C. section 551.

[06/23] In re McKinney
An appeal by a tax debt owner in Chapter 13 proceedings, arising from the bankruptcy court's denial of its objections to the debtor's proposed plan to pay off the tax debt with interest within five years, is dismissed for lack of jurisdiction as, although the issue that the tax debt owner cares about may have been resolved, its basic dispute with the bankruptcy estate has not been resolved and therefore the judgment of the bankruptcy court is not final.

[06/22] RLI Ins. Co. v. All Star Transp., Inc.
In an interpleader action by an insurance company to determine its obligations to pay truckers hired by its bankrupt insured under a surety bond, summary judgment for plaintiff-insurer is affirmed where Form BMC 84, which governed such bonds, plainly stated that the face value of the bond was the sum of $10,000 for all claims combined.

[06/22] In re: Delta Airlines, Inc.
In creditors' appeal from a bankruptcy court's order upholding debtor's objections to their claims under tax indemnification agreements, the order is vacated where: 1) the bankruptcy court's construction of "pay" as that term was used in an agreement at issue nullified debtor's obligation to pay the "Owner Participant" under the agreement upon the occurrence most likely to call its provisions into play ? the debtor's insolvency; and 2) the bankruptcy court effectively nullified the agreements by stripping them of their ability to protect the Owner Participant in the event of debtor's default.

[06/21] In re: Wilborn
In an interlocutory appeal from a bankruptcy court's certification of a class action in an adversary proceeding, the order is vacated where a bankruptcy judge may certify a class of debtors under appropriate circumstances but the proposed class in this case did not satisfy the requirements of Federal Rule of Civil Procedure 23 and Federal Bankruptcy Rule of Procedure 7023.

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Tax Law

[06/23] In re McKinney
An appeal by a tax debt owner in Chapter 13 proceedings, arising from the bankruptcy court's denial of its objections to the debtor's proposed plan to pay off the tax debt with interest within five years, is dismissed for lack of jurisdiction as, although the issue that the tax debt owner cares about may have been resolved, its basic dispute with the bankruptcy estate has not been resolved and therefore the judgment of the bankruptcy court is not final.

[06/22] In re: Delta Airlines, Inc.
In creditors' appeal from a bankruptcy court's order upholding debtor's objections to their claims under tax indemnification agreements, the order is vacated where: 1) the bankruptcy court's construction of "pay" as that term was used in an agreement at issue nullified debtor's obligation to pay the "Owner Participant" under the agreement upon the occurrence most likely to call its provisions into play ? the debtor's insolvency; and 2) the bankruptcy court effectively nullified the agreements by stripping them of their ability to protect the Owner Participant in the event of debtor's default.

[06/21] US v. Batson
In a prosecution for conspiracy to commit tax fraud, defendant's restitution order is affirmed in part where the district court was authorized to order restitution for a violation of Title 26 as a condition of supervised release by 18 U.S.C. section 3563(b)(2), which granted courts broad discretion to order restitution as a condition of probation, and 18 U.S.C. section 3583(d), which made that grant applicable to supervised release. However, the order is vacated in part where restitution so ordered must be limited to the offense of conviction when, as here, that offense does not involve an element of a "scheme, conspiracy, or pattern of criminal activity."

[06/17] Estate of Schneider v. Finmann
In a legal malpractice action alleging that defendants negligently advised decedent to transfer, or failed to advise decedent not to transfer, an insurance policy which resulted in an increased estate tax liability, the appellate division's affirmance of dismissal of the action is reversed where an attorney may be held liable for damages resulting from negligent representation in estate tax planning that causes enhanced estate tax liability.

[06/17] Estate of Charania v. Shulman
In a tax deficiency case, the judgment of the tax court is affirmed in part and reversed in part where: 1) the tax court's judgment that all of the Citigroup shares were the separate property of the decedent for federal estate tax purposes and, thus, were includable in his gross taxable estate is affirmed, as the rule of De Nicols is that a change in marital domicile does not, in itself, effect a change in the marital property regime governing the spouses' rights in personal property acquired throughout the course of the marriage; but 2) the tax court's approbation of the late-filing penalty was in error and is therefore reversed.

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Banking Law

[06/24] DDJ Mgmt., LLC v. Rhone Group L.L.C.
In an action claiming that defendants presented plaintiffs with corporate financial statements that were false and misleading, the appellate division's modification of the trial court's order dismissing plaintiffs' fraud claim is reversed where: 1) when a plaintiff has taken reasonable steps to protect itself against deception, it should not be denied recovery merely because hindsight suggested that it might have been possible to detect the fraud when it occurred; and 2) plaintiffs in this action for fraud have alleged facts from which a jury could find that they were justified in relying on the representations defendants made to them.

[06/22] Jay E. Hayden Found. v. First Neighbor Bank, NA
In a RICO suit against a bank, two law firms, and affiliated individuals, grant of defendants' motion to dismiss on the ground that the complaint itself showed that plaintiffs had missed the four-year deadline governing RICO suits is affirmed as, by the summer of 2003 at the latest, the plaintiffs knew that a lawyer had looted the estate and that bank's employees were trying to prevent further investigation of the lawyer.

[06/22] Export-Import Bank of the U.S. v. Asia Pulp & Paper Co.
In an action to collect a $144 million judgment against defendants pursuant to the Federal Debt Collection Procedures Act (FDCPA), the district court's order quashing plaintiff's writs of garnishment is affirmed where an electronic funds transfer (EFT) temporarily in the possession of an intermediary bank in New York may not be garnished under the FDCPA to satisfy judgment debts owed by the originator or intended beneficiary of that EFT.

[06/18] Harris v. Wachovia Mortgage, FSB
In a suit for breach of contract, breach of the implied covenant of good faith and fair dealing, and unfair business practices, trial court's order sustaining without leave to amend a demurrer to plaintiffs' first amended complaint is affirmed in part, reversed in part and remanded where: 1) the demurrer was properly sustained without leave to amend as to the unfair business practices claim as it was added without leave of court and exceeded the scope of the court's order granting leave to amend the original complaint; 2) the demurrer was properly sustained as to the breach of the covenant of good faith and fair dealing claim as plaintiffs have not pleaded a violation of any duty arising under tort law; 3) the demurrer was improperly sustained as to the breach of contract claim as the settlement agreement is not preempted by Home Owners' Loan Act (HOLA); and 4) the award of costs including attorney fees is reversed as a matter of law.

[06/17] US v. Peterson
In a prosecution of defendant for structuring transactions to evade reporting requirements set forth in 31 U.S.C. section 5313(a), district court's imposition of a two-level enhancement pursuant to section 2S1.3(b)(2) of the sentencing guidelines to defendant's sentence is affirmed as the district court did not err in determining that defendant's structuring offense was committed as part of a pattern of unlawful activity involving more than $100,000 in a twelve-month period, and as a result, the safe harbor of section 2S1.3(b) did not apply.

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Property Law & Real Estate

[06/25] Rathborne Land Co. v. Ascent Engy., Inc.
In an action for breach of defendant's obligations to reasonably develop and explore a leased parcel of oil, gas, and mineral land, judgment for plaintiff is affirmed in part where: 1) plaintiff's letter to defendant met the La. Rev. Stat. Ann. section 31:136 demand requirement; and 2) district court did not clearly err in concluding that plaintiff would have been able to lease the disputed acreage more than once if it had been able to seismically survey the parcel prior to 2006. However, the judgment is vacated in part where neither the district court nor plaintiff could show an adequate ground -- indeed, any relevant precedent -- for awarding consequential damages for lost leasing and seismic revenues on the entire parcel.

[06/25] Greenspan v. LADT, LLC
In a trust's suit for breach of contract and other claims against two affiliated companies and individuals, trial court's confirmation of an arbitrator's award against defendants in the amount of $6.34 million is affirmed where: 1) per the JAMS rules, the arbitrator, not a court, determines what issues are arbitrable, and here, the arbitrator determined that the issue of joint and several liability was arbitrable; 2) arbitrator's finding of joint and several liability was rationally related to the parties' contract; 3) as to the timeliness of the final award under JAMS rules, the arbitrator's interpretation and application of the rules cannot be judicially reviewed on the merits; and 4) the suit against the arbitrator was barred by arbitral immunity and would not have caused a reasonable person to doubt the arbitrator's impartiality.

[06/25] St. Marks Place Hous. Co. v. US Dept. of Hous. & Urb. Dev.
In a challenge to the Department of Housing and Urban Development's (HUD) decision, contending that HUD regulations prohibited HUD from requiring prepayment approval for a housing project's federally insured mortgage, dismissal of the complaint is affirmed where there was no basis for concluding that HUD's position was plainly erroneous or inconsistent with the operative regulation.

[06/25] Flava Works, Inc. v. City of Miami
In an action challenging the Miami Code Enforcement Board's final administrative ruling that plaintiffs were engaged in "adult entertainment" in an inappropriate zone and "illegally operating a business in a residential zone," judgment for plaintiffs is reversed where the activities taking place at the residence at issue were a clear violation of the prohibition against operating a business in a residential zone.

[06/24] Kaur v. N.Y. State Urb. Dev. Corp.
In a petition for review of the Empire State Development Corporation's (ESDC) taking of plaintiffs' property by eminent domain for the purposes of constructing a new Columbia University campus, a denial of the petition is affirmed where the condemnation of petitioners' property qualified as a "land use improvement project" was rationally based and entitled to deference.

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