Business Law

Reflecting a growing split among bankruptcy courts, a Delaware bankruptcy judge ruled that the statutory amendment which increased quarterly United States Trustee fees by as much as 833% in cases pending at the time of its enactment as well as cases filed thereafter is not impermissibly retroactive, does not amount to a taking, and does not violate the United States Constitution’s Bankruptcy Clause. Read more

The following published decisions may be of interest to attorneys practicing insurance law. Read more

Many, perhaps most, home loan foreclosures are commenced on behalf of parties who were not the original lenders. The homeowner will often challenge the standing of a successor mortgagee to conduct the foreclosure, alleging that a formal defect occurred at some point in what may be a chain of assignments. In JPMorgan Chase Bank, N.A. v Syed, 2020 WL 1967527 (Conn App. April 28, 2020) the mortgage note was endorsed for assignment by the original lender bank using the stamped signature of a person who had left the bank’s employ years earlier. An intermediate appellate court in Connecticut has given effect to that endorsement, carefully applying the law governing negotiable instruments, as set forth in Article 3 of Uniform Commercial Code. Read more

Ben-E-Lect, a third party insurance claim administrator, developed a “wrapping” strategy for reducing employer health insurance costs by bundling low-premium, high-deductible health insurance with self-funded accounts to pay employee healthcare expenses within the annual deductible and any co-pay requirements. Ben-E-Lect sold its wrapping services through insurance brokers and agents to the small-employer market. Read more

After a surgical sponge was inadvertently left inside a patient, the State Department of Public Health fined Saint Francis Memorial Hospital for failing to develop and implement a sponge count procedure and a policy for properly training its staff. Saint Francis sought administrative review. Read more

The U.S. Bankruptcy Court for the Eastern District of New York ruled that nunc pro tunc employment of counsel for the chapter 7 trustee was not appropriate following a recent decision by the Supreme Court which cast doubt on nunc pro tunc orders. However, the bankruptcy court determined that professionals employed in bankruptcy cases may still be paid for work performed prior to the date of employment, subject to court approval. In re Benitez, 2020 WL 1272258 (Bankr. E.D. N.Y. March 13, 2020). Read more

In a case of first impression, the United States Court of Appeals for the Ninth Circuit held recently that a trust created by an individual for tax and estate planning purposes is entitled to receive all state and federal consumer disclosure protections for a consumer credit transaction. Gilliam v Levine, 2020 WL 1861977 (9th Cir. 4/14/20). Read more

The Bankruptcy Appellate Panel for the Eighth Circuit has held that contractual default interest provision is not subject to a liquidated damages analysis under Missouri or bankruptcy law and therefore is allowed as part of a secured claim. [In re Family Pharmacy, Inc., No. 19-6025, 2020 WL 1291112 (8th Cir. BAP Mar. 19, 2020)] Read more

The Partnership and LLCs Committee (“PLLC”) will propose amendments to two sections of the California Revised Uniform Limited Liability Company Act ("RULLCA"). The proposed amendments will clarify how an otherwise dissolved (canceled) LLC may continue to exist for purposes of distributing its assets and paying off its liabilities, if needed, after a certificate of cancellation has been filed. Read more

In a recent case which addressed the dilemma faced by many potential chapter 7 debtors who cannot afford to pay up front a flat sum for attorney’s fees for a chapter 7 case, a bankruptcy court in Kentucky approved a “dual contract” arrangement, whereby the attorney and debtor entered into separate prepetition and postpetition contracts which bifurcated the services and the debtor’s obligation to pay for those services. Read more