CA11 -- 11/30

Sorry for my tardiness in reporting these, but none of them appear earthshaking.  I'll have a couple of much more important Eleventh Circuit matters to mention later today.

In Musolino v. Sinnreich, the court held, in a case of first impression in the circuit, that "property owned by a Chapter 13 bankruptcy debtor as tenancy by the entireties with a non-debtor under Florida law is not part of the bankruptcy estate and cannot be reached by creditors." The court's reasoning was that (a) a debtor's interest in property is defined by state law; and (b) under Florida law, entireties property is not separately divisible; so (c) because the debtor doesn't have an individual interest in the property, the creditor cannot go after it to satisfy an individual obligation.

In Shinn v. Comm'r of Social Security, the court reversed a district court's upholding an ALJ's decision denying social security benefits to a four-year-old girl with sickle cell disease. The court provides a discussion of the process for getting benefits for a young child, and then outlines at length the factual and procedural background. The ALJ said the medical evidence wasn't sufficient to support a disability finding, but did not consider evidence from the child's mother of the kid's illness. The Eleventh Circuit said that the regulations are unclear, but the general import is that the ALJ should consider all available evidence, and not just medical evidence, in making the determination. (This is a split from the Eighth Circuit, although Judge Tjoflat said that the Eighth did not provide much basis for its conclusion and so he didn't feel very persuaded by it.) So, the court remanded the case for consideration of the mother's evidence. I'm not a social security expert, so I will have to leave it to people in that field to say whether this is a big deal or not. But there probably aren't a lot of cases this expansive on disability decisions for four-year-olds, so it might be helpful for folks facing that scenario.

Finally, Florida v. T.H. Orlando, Ltd., a case involving both tax and bankruptcy. I think I would cry if I were the clerk who had to write that one. Here's my summary, and I'll leave it to our resident tax guru(s) to help me if I'm leaving anything out. T.H. Orlando, a resort hotelier, declared bankruptcy. It tried to get a loan to satisfy its mortgage-lender's settlement. A company called Berkshire agreed to loan T.H. the money only if Kissimmee Lodge, a non-debtor who had a resort next to T.H.'s, agreed to refinance through Berkshire as well. Kissimmee went along with it. In the reorganization plan, the parties stated that the Kissimmee refinancing wasn't subject to Florida taxes because it fell under a tax exemption for documentary or stamp taxes relating to transfer instruments under a reorganization plan (sec. 1146(c) if you know this stuff). The bankruptcy court denied the exemption and Kissimmee paid the taxes on its mortgage refinancing. Then Kissimmee sued to recover that money, and the bankruptcy court found that the refinancing was essential to the reorganization and should fall under the exemption. The district court reversed because Kissimmee was a non-debtor and, as a matter of law, could not benefit from the exemption. On appeal, the Eleventh Circuit reversed. To get the exemption, (1) there must be a tax (2) imposed on the making or delivery of an instrument or transfer (3) "under" a confirmed Chapter 11 plan. The question was whether this transaction was "under" the plan. The court held that it was, because it was a necessary condition on Berkshire loaning T.H. the money. For the court, "under" meant "authorized by a confirmed plan," and the plan authorizes any tranfer necessary for its completion. Here, the Berkshire-to-Kissimmee refinancing was necessary for Berkshire to go ahead with the Berkshire-to-T.H. financing, so the exemption could apply. There is some language in the opinion turning away the State's assertion that this went beyond the statutory jurisdiction of the bankruptcy court. And the court likewise refused to get into the policy arguments (it's good to encourage those like Berkshire to extend financing to debtors versus it's bad to read tax exemption so broadly) because it concluded the language of the exemption statute wasn't ambiguous. End result: district court reversed; Kissimme gets its tax money back.