Appellate Law & Practice

CA1: file the notice of appeal right

In Re: High Voltage Engineering Corporation, No. 07-2589.  Selya kicks this decision off with a pithy saying.  Despite the bankruptcy issues, this is resolved on procedural grounds, i.e. that the notice of appeal to the district court was inadequate if it is filed into the bankruptcy petition.  Strangely, the bankruptcy court issued an order denying relief in another petition (and, I guess, the petitioners could have appealed from that order).  But, they didn’t.  Selya ends by saying that they were not consolidated and even if they were, in the First consolidated cases are distinct for appeal purposes. 

CA1: Patent Lawyers’ Common law lien question certified

In Re: Engage, No. 08-1257.  The First decides that the question of whether Massachusetts attorney's lien statute, chapter 221, section 50 of the Massachusetts General Laws, applies to patent prosecution work performed by attorneys is really important and there isn’t any law on the subject, so it certifies it to the Massachusetts Courts.

Seriously, considering that issues that poor people face in bankruptcy, is this really the issue that needs to be certified?  Or is it just a way of telling some firms that their feelings matter?  There is some language in here regarding the criteria for certification, but it doesn’t seem too precise or helpful to anyone but a court justify a political decision to certify or not certify.  In fact, the First seems to admit that the underlying question involves a “policy” judgment, which really means that the First thinks that this issues is a policy one.  So who says courts don’t write policy?

CA1: no implied crediting procedures in bankruptcy plan

Ameriquest Mortgage v. Nosek, 07-2173, 07-2174.  In an adversary proceeding, the bankruptcy court awarded the debtor “In an adversary proceeding, the bankruptcy court awarded appellee Jacalyn S. Nosek ("Nosek") $250,000 in emotional distress damages and $500,000 in punitive damages for appellant Ameriquest Mortgage Company's ("Ameriquest") violations of 11 U.S.C. § 1322(b).”  The underlying issue deals with whether the mortgage company was properly crediting less-than complete payments. 

The First Circuit holds that since the Ameriquest wasn’t really on notice of what it had to do under 11 U.S.C. § 1322(a), and 11 U.S.C. § 1322(a) wasn’t specific as to how to treat payments there was no underlying violations.  Instead, that section is a listing of elements that could be incorporated into a plan.  Instead, the First says that the bankruptcy court should have amended the plan to make clear how to credit the payments.   

The First concludes with some blabber about how they are “sympathetic” to the debtor’s predicament. Why bother?

CA1: costs in professional responsibility case not dischargeable

Richmond v. NH Supreme Court, No. 07-2671.  Cases with names like this are either very interesting, or very stupid.  But, this one is different.  It is a freakin’ Bankruptcy case.  Combined with a professional responsibility case.  We know where this is going.  It holds that under 11 U.S.C. § 523(a)(7) (2006), an assessment of costs by the Committee on Professional Conduct are non-dischargable in bankruptcy, because they are like a fine.  The First circuit explains how in New Hampshire these proceedings are neither civil, criminal, nor administrative.  The First says that because these fees are not awarded automatically make them more like penalties than attorney-fee shifting provisions and they really are punitive. 

CA1: First does a little too much in resolving BAPCPA appellate procedural question

In re Linda Lynn Weaver, No. 08-8046.  “The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"), Pub. L. No. 109-8, 119 Stat. 23, 202-03. That statute permits direct appeals to the court of appeals, with that court's permission, from bankruptcy court decisions under certain circumstances, including where the bankruptcy court certifies that the appeal satisfies the statutory criteria for permitting such a direct appeal” Alas, the petitioners failed to timely file a notice of appeal, as required by Interim Bankruptcy Rule 8001(f)(1) (for D. Mass), and “no authorization of the direct appeal was sought or obtained from this court, as required by 28 U.S.C. § 158(d)(2)(A).”  Okay, this seems pretty easy.

Unfortunately, the First has to take it a bit far and say that the “procedural requirements referenced [a show-cause order] are deemed to be jurisdictional or, rather, mere claims-processing rules... Under [Bowles v. Russell, 127 S. Ct. 2360, 2364-66 (2007)], that determination depends, in turn, on whether the requirements are based on statutes, in which case they are deemed jurisdictional, or merely on court-promulgated rules, in which case they are not.”  Problem is: Bowles didn’t say all statutory requirements were jurisdictional.  Urgh!

But, then, the First says “Without resolving that jurisdictional question, we exercise our discretion under section 158(d)(2)(A) to deny leave to appeal.”  The First then explains how the rules are going to eliminate all these problems.

CA1: due process issues in Bankruptcy reorganizations

Arch Wireless, Inc. v. Nationwide Paging, No. 07-1611 (7/23/08).  Arch went into Chapter 11.  It received a discharge.  Nationwide is a debtor seeking to enforce some clams against it.  Nationwide claims it wasn’t given adequate notice.  Arch says that Nationwide wasn’t a “known” creditor, and besides it knew of the bankruptcy proceedings, anyway.

The Bankruptcy Court said that Arch knew that Nationwide was about to sue them, as there was an ongoing dispute complete with specific written claims.  Nevertheless, the actual accounts of both companies didn’t reflect amounts owed in the way that Nationwide claims they are.

The First notes that the Bankruptcy Code doesn’t really provide the remedy for failing to inform a creditor of an impending reorganization.  So, the First looks to constitutional due process principles.  Applying New York v. New York, N.H. & H. R. Co., 344 U. S. 293 (1953), the First says that Nationwide should have been included on the list.

CA1: false start on law of bankruptcy intervention in professional malpractice cases

Costa v. Notinger, No. 07-1898 (unpublished).  This is a great bankruptcy procedure case that seems to be buried.  This case began as a Chapter 11 bankruptcy case.  The debtors hired Marotta Gund Budd & Dzera, LLC (a “crisis management firm”). Then the case was converted to a Chapter 7 petition.  The crisis management firm submitted a fee application.  Costa wasn’t happy about this, and he claimed that the crisis management firm had malpracticed upon him.  But, since he was a creditor, he couldn’t really prosecute the malpractice action (only the trustee could).  The best he could do was argue for denial or disgorgement of their fees. The bankruptcy court figured that because the disposition of the fee application would “bar a future malpractice action on res judicata grounds” the Bankruptcy Judge converted the matter into an adversary proceeding, and designed the trustee as the plaintiff.

Costa (the debtor) wasn’t happy.  Although he had a “limited” right of participation, he claimed that since he started the malpractice action, he should get to follow through on it.  He tried to intervene.  That motion was denied, and the denial was affirmed by the District Court.

Just as this case was getting interesting, we find out that Costa filed a pro se brief that incorporated by reference the arguments made by counsel below.  So, rather than find out about this kind of intervention, the First says that they are forfeit.  The First sort of lays out the law on intervention, and conducts a forfeiture analysis and concluded that because the trustee and the debtor are essentially aligned in interest, the Bankruptcy Court probably made the right decision as there is a rebuttable presumption that existing parties will represent the interests of an intervenor under In re Thompson, 965 F.2d 1136, 1142 (1st Cir. 1992).

CA1: dealing with a strained reading of claimed exemptions from a bankruptcy estate

In re Barroso-Herrans v. Lugo Mender, No. 07-1757.  This is actually a fairly interesting theoretical issue.  Government contractors got into a dispute with the commonwealth of Puerto Rico.  Then didn’t get paid.  So, the contractors sued the commonwealth and simultaneously filed for bankruptcy.  In their list of assets, they listed the lawsuits as an account receivable.  The bankruptcy court authorized Barraso’s lawyer to represent both Barrasco and the estate in prosecution of the suits.  But then Barrasco started asserting that the suits were not part of the estate anyway, and objected when the bankruptcy trustee “unilaterally negotiated a settlement” for about $100,000 on a $170,000 claim, which called for payment of the funds to the estate.  The bankruptcy court held that “...Barroso had exempted not the law suits but rather only a $4,000 partial interest in each suit, so the trustee could settle the suits and simply pay a total of $8,000 to the debtors.”  There was a suggestion of bad faith.  The First says that the determination of what has been claimed as being an exception (and not part of the estate) is really a factual matter of interpreting the schedules filed by the debtors, but a legal matter of “how a reasonable trustee would have understood the filings under the circumstances.”  So, looking at the schedules, the First says that Barrasco’s reading is implausible, it can’t figure out how the debtors discounted the contract disputes from well over $100,000 to $4,000, rather than listing the value as “unknown.” 

CA1: Puerto Rican insurance liquidation fight ends

MRCo, Inc. v. Juarbe-Jimenez , No. 07-1614.  The plaintiff sued Banco Popular and the insurance commissioner of Puerto Rico as “liquidator of the Plan de Salud de la Federación de Maestros de Puerto Rico.”  The plaintiff then settled with Banco Popular. The underlying facts are fairly complicated.  I find them interesting, but they would bore most people. But, what you need to know, is that there were proceedings in Puerto Rico’s “liquidation court” and “P.R. Law Ann. tit. 26, § 4021 precluded actions against the Commissioner during the pendency of the proceeding in the Liquidation Court.”  The District Court denied a motion for summary judgment, but granted a motion to dismiss under Puerto Rican law. 

A translation of the relevant statute reads:

Upon issuance of an order appointing a liquidator of a domestic insurer or of an alien insurer domiciled in Puerto Rico, no action at law shall be brought against the insurer or the liquidator, whether in Puerto Rico or elsewhere, nor shall an action of that nature be maintained or entered after issuance of such order.

The most important thing is that the plaintiff argues that the Puerto Rican statute attempts to divest a federal court of jurisdiction.  But the First say that the statute only impacts substantive rights and not actual jurisdiction. 

The First also reproduces the statute it in the original Spanish.  The first concludes that this statute bar equitable actions as well as legal ones (it discusses the meaning of “equity” in Spanish).  It also rejects the argument that since the plaintiff claims to be seeking monies from the liquidator (rather than the proceeding), that it claims are its own, this doesn’t apply.

CA1: the interaction of sentencing, bankruptcy, collateral consequences of a non-conviction , and criminal law

Larson v. Howell, No. 07-1925.  Two homestead exemption in a row.  This one is more interesting the previous one, because “as a matter of first impression, [requires the First] to determine whether the state crime of negligent vehicular homicide qualifies as a "criminal act" which would cap a debtor's homestead exemption to $125,000 under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"), Pub. L. No. 109-8, § 322(a), 119 Stat. 23, 97 (codified at 11 U.S.C. § 522(q)(1)(B)(iv)).”  While the debtor admitted facts in the above case, the case was continued for a year while a civil suit continued.  The debtor claimed the state-law-based homestead exemption of $500,000.

The First holds that after the debtor was convicted of “negligent homicide” in state court under Mass. Gen. Laws ch. 90, § 24G(b), the mental state implicit in admissions pursuant to that section trigger the cap.

People that hate America stop reading here.  Everyone else read on.