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Death of the Bob Richards Rule?Supreme Court Limits Federal Common Law ( Rodrigues v. Fed. Deposit Ins. Corp.)

February 25, 2020

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When can a Federal Court employ a federal common law rule to make its decision in the case?  Justice Gorsuch answer this in Rodriguez v. Fed. Deposit Ins. Corp., U.S., No. 18-1269, 2/25/20.[1]  The answer . . . less often than you might think.

Leave it to a bankruptcy case to stir up Supreme Court worthy controversy over who exactly reaps the benefit of a whopping $35,351,690 operating loss.  In this instance, that controversy resolved a circuit split and gives us clear guidance on when federal common law can be employed and when a court should stick to state law.

The controversy arose between Simon Rodriguez (Trustee), the court appointed Chapter 7 Trustee for United Western Bancorp, Inc. (UWBI), which was a bank holding company, and the Federal Deposit Insurance Corporation (FDIC), the receiver for United Western Bank (the subsidiary Bank) over a $4,846,625 tax refund.[2] 

Taggart v. Lorenzen, The State Of Bankruptcy Contempt Power Eight Months Later

So you (allegedly) violated a bankruptcy court order. Whether the debtor alleges you violated the terms of a confirmed plan, failed to provide certain notices required by the bankruptcy rules, violated the discharge injunction, or any other court order, you may be wondering what potential redress the debtor may seek. Although many violations of bankruptcy court orders and rules do not provide for a private right of action, many debtors seek to have their rights vindicated (in the form of the greatest vindicator, cash) through an action for contempt. These civil and criminal contempt actions allow debtors to collect their damages caused by a violation of a court order, provide courts the means to coerce compliance with their orders, and allow courts to punish violators

SCOTUS Clarifies What Happens When a Trademark Licensor Files Bankruptcy

Trademark licensors and licensees, as well as their stakeholders (including lenders), should heed the U.S. Supreme Court’s decision in Mission Product Holdings, Inc. v. Tempnology, LLC n/k/a Old Cold, LLC, No. 17-1657.  The Justices resolved a long-standing question arising from the intersection of bankruptcy and trademark law: whether a debtor/licensor’s rejection of a trademark license terminates the licensee’s right to use a trademark after rejection.  In an 8-1 decision, the Justices answered: “no,” rejection simply creates a breach, but not rescission.  If the license or applicable law grant continuing rights to the licensee upon a breach by the licensor, rejection under the Bankruptcy Code does not alter or terminate such continuing rights.

Section 365(a) of the Bankruptcy Code (11 U.S.C. § 365) is the starting point of the analysis (but critically, not the ending point as discussed below).  Section 365(a) permits debtors in bankruptcy to “assume

SCOTUS Protects Lawyers Pursuing Non-Judicial Foreclosure As Not the Actions of a “Debt Collector” under the FDCPA

Editor’s Note:  BCLP’s consumer financial services team is a group of specialized lawyers from around the U.S., adept in state court rumbles, courthouse steps foreclosures, and bankruptcy court interludes.  They are also deep thinkers in consumer law, and were waiting for this ruling today.  If you have a portfolio of consumer loans and want some efficient, value-maximizing handling, give us a call.  Here’s the take from Zina Gabsi, from our Miami CFS practice.  

 

Earlier today, the U.S. Supreme Court issued its long-awaited opinion on whether law firms pursing non-judicial foreclosures are “debt collectors” as defined by the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §1692 et seq.[1]  In its Obdusky ruling, The Court held that a business engaged in no more than a non-judicial foreclosure is not a debt collector under the FDCPA. (Business lawyers around the US breathed a collective sigh of relief.) 

SCOTUS Reminds Us To Get It In Writing When Dealing with Someone that Owes You Money

The recent decision from the United States Supreme Court in Lamar, Archer & Cofrin, LLP v. Appling (“Lamar”), further restricts a creditor’s ability to pursue future recovery on its debt through a nondischargeability action in a debtor’s bankruptcy.  On June 4, 2018, the Court ruled in Lamar that a debtor’s false statement about a single asset must be in writing before the creditor’s debt can be excepted as nondischargeable in bankruptcy.

The Supreme Court’s full opinion can be viewed here: Lamar Opinion 2018 . The Court’s decision in Lamar resolved a circuit split and provides for consistent interpretation of the Bankruptcy Code which did not previously exist.  The issue before the Court was whether a false oral statement about a single asset can render a specific obligation nondischargeable,

Clear Error They Say! Supreme Court Opines On Standard Of Review For Determining Non-Statutory Insider Status

Pictured:  Reno Nevada’s The Villages at Lakeridge, a great investment for non-statutory insiders, or for anyone else!!

 

Last April, we updated you that the Supreme Court had granted review of In re The Village at Lakeridge, LLC, 814 F.3d 993 (9th Cir. 2016). Our most recent post is here.

On March 5, 2018, the Supreme Court held a clear-error standard of review should apply to a review of a determination of non-statutory insider status. U.S. Bank Nat. Ass’n v. Vill. at Lakeridge, LLC, No. 15-1509, ___ S. Ct. ___2018 WL 1143822, at *2 (U.S. Mar. 5, 2018).

As a refresher, in Village at Lakeridge, in exchange for $5,000, an insider (Bartlett) transferred a $2.76 million claim against the debtor to an individual (Rabkin) who was not a statutory insider. 

The Jevic Files Continue: Pioneer-ing the Post-Jevic Era, and Wondering if Jevic Altered Critical Vendor Theory After All?

"Obsolete nautical chart with a compass and a coiled rope. Copy space on the nautical chart.N.B. the chart background used in this image is obsolete. To see more of my compass images, click the link below."

Editors’ Note:  The Supreme Court’s Jevic ruling last spring remains a treasure trove of bankruptcy theory, suitable for the novice bankruptcy student and highly instructional for those of us who have practiced in chapter 11 for years.  We at The Bankruptcy Cave like it so much that we will be offering a few more posts in upcoming weeks on the lower courts’ interpretation of Jevic since the spring, the continued efforts in Delaware to sidestep Jevic, and other important learning from the case.  Here, our co-editor Justin Morgan, practicing law just

Déjà Vu All Over Again: The Ninth Circuit Finds Concrete Injury in Spokeo Remand

Editor’s Note:  The Bankruptcy Cave is just about ready to return from summer vacation (which is our lame way of saying we got really busy with work for actual clients, and blogging just fell by the wayside).  But rest assured, we have a lot of great posts tee’d up for the next several weeks, and The Bankruptcy Cave looks forward to re-joining the cadre of practical, semi-academic, and occasionally critical commentators on restructuring and bankruptcy matters.  In the meantime, here is a great cross-post based on a Bryan Cave client advisory issued last week by our Bryan Cave Consumer Financial Services colleagues Eric Martin and Jonathan NicolSpokeo shows up a lot in consumer class actions, but this Supreme Court opinion is equally important to anyone dealing with FDCPA, FCRA, or other types of claims brought by a Chapter 7 debtor.   

Supreme Court Grants Cert on, of all Things, the Standard of Review for Determining Non-Statutory Insider Status

Last December, we updated you that the Supreme Court was considering whether to grant review of In re The Village at Lakeridge, LLC, 814 F.3d 993 (9th Cir. 2016). Our original post is here.  On March 27, 2017, the Supreme Court granted review of Village at Lakeridge, but only as to one question presented, the most boring one in our view.  (Seems like after giving us bankruptcy professionals a thrill with a deep, insightful, and important ruling like Jevic, the Supreme Court is going back to bankruptcy matters that range from the esoteric to the downright irrelevant; oh well.)

In The Village at Lakeridge, a non-statutory insider acquired a $2.76 million claim against the debtor from an insider for $5,000.  Id. at 997.  The debtor attempted to confirm its plan (which included a cramdown of U.S. Bank’s claim) by arguing that the assignee

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