Case Updates

On March 27, 2020, President Trump signed into law H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). As an emergency act, the CARES Act takes immediate effect. Read more

The Supreme Court of Connecticut, addressing a matter of first impression, held that a record of an assignee of a lender regarding payment history was admissible under the business records exception to the hearsay rule despite the fact the assignee’s record began with a starting balance it obtained from the lender rather than a full debit/credit calculation from the inception of the note. In an equally significant matter of first impression, the court also ruled that the lender’s assignment of the promissory note also operated as assignment of a limited guarantee which was secured by residential property, giving the assignee standing to foreclose on the residential mortgage. Jenzack Partners, LLC v. Stoneridge Associates, LLC, 334 Conn. 374, 2020 WL 246428 (Conn. 2020). Read more

A bankruptcy court denied a motion to compel arbitration as to claims for nondischargeability of debt and other claims by a consumer against an online university because arbitrating the claims would pose an inherent conflict with the Bankruptcy Code and there was not “clear and unmistakable” evidence of intent to delegate threshold issues to an arbitrator for determination. Little v. Career Education Corporation aka CEC and Colorado Technical University aka CTU (In re Little), 2020 WL 211467 (Bankr. D. S.C. 2020). Read more

The United States Court of Appeals for the Eleventh Circuit determined that Section 11-3-420 of the Georgia Uniform Commercial Code (UCC) governing conversion of instruments preempted common law conversion and negligence claims arising from a bank’s disbursement of funds to a third party. The court’s decision was also instructive about pleading form, ruling that “shotgun pleading” resulted in an unintelligible complaint that failed to meet the specificity required by Ashcroft v Iqbal, 556 U.S. 662 (2009). Estate of Bass v. Regions Bank, Inc., 2020 WL 284094 (11th Cir. Jan. 21, 2020). Read more

On April 6, the Judicial Council of California issued eleven Emergency Rules meant to address issues raised by the COVID-19 pandemic. These Emergency Rules, which take effect immediately, significantly modify procedural and substantive rights of parties in California state court. Read more

In re Progressive Solutions, Inc., 2020 Bankr. LEXIS 467 (Bankr. C.D. Cal. 2020) (“PSI”) is the first reported opinion addressing the Small Business Reorganization Act of 2019, Pub. L. No. 116-54 (2019) (the “SBRA” or the “Act”). In PSI, Judge Scott Clarkson [https://calawyers.org/business-law/ilc-judicial-profile-series-united-states-bankruptcy-judge-scott-c-clarkson-central-district-of-california/] denied a Motion for Order Authorizing Amendment of Chapter 11 Petition to Elect Subchapter V (the “Motion to Amend”) and a related motion to confirm a new plan under the SBRA without prejudice. The basis for the court’s ruling was that re-designation of a Small Business Case to one under Subchapter V is accomplished by amendment of the voluntary petition, and there is no legal requirement to obtain leave of court to amend under Federal Rule of Bankruptcy Procedure 1009 (“FRBP”). Read more

In Freeman v. Nationstar Mortgage LLC (In re Freeman), 608 B.R. 228 (9th Cir. B.A.P. 2019), the United States Bankruptcy Appellate Panel of the Ninth Circuit (“BAP”) reversed in part a bankruptcy court’s denial of a debtor’s motion for contempt sanctions against a creditor who violated the discharge injunction by attempting to foreclose on a void deed of trust. Read more

A stockholder must make a demand on a corporation’s board of directors before initiating a derivative action unless the complaint can allege with particularity that a demand would be futile. Allegations of futility will pass muster when specific facts are alleged showing the existence a disabling conflict affecting a majority of the directors which would have considered a demand. Read more

Marisol Lopez took her infant daughter Olivia to a dermatology clinic owned by Dr. Glenn Ledesma to assess a spot developing on Olivia’s scalp. Physician assistant Suzanne Freesemann examined Olivia and requested her insurer to approve an “excision and biopsy.” Brian Hughes, another physician assistant at the clinic, saw Olivia one month later and performed a “shave biopsy” of the lesion. The doctor who examined the biopsied tissue found no malignancy. Read more

In re Bello, 2019 WL 6826007 (Bankr. E.D. Mich. Dec. 13, 2019) shows that in applying the unsecured debt limit for Chapter 13 eligibility, a debt may be regarded as both liquidated and unliquidated at the same time. The court in Bello reasoned that if the Debtor admits that he or she owes a certain amount of money to a creditor, the admitted portion of an otherwise disputed debt should be taken into account in applying the debt limit. However persuasive this logic might be, it has not been applied in cases involving involuntary bankruptcy, in which any dispute as to the amount of a debt will disqualify a petitioning creditor. Read more