Case Updates

Summary: A bankruptcy court in Virginia has held that two adjacent retail parcels did not constitute a "shopping center" despite their common ownership; thus, a bankrupt tenant could assign its lease to a neighboring tenant's competitor, in violation of the existing tenant’s exclusivity clause. [In re Toys "R" Us Property Co. I, LLC, 2019 Westlaw 1075434 (Bankr. E.D. Va.).] Read more

Summary: An individual borrower obtained a $3 million punitive damage award, on top of almost $600,000 in total compensatory damages, against a loan servicer that falsely declared that her mortgage was delinquent. In calculating the permissible ratio of punitive damages, the court aggregated all of the borrower's cumulative damage awards, rather than looking solely to her tort claim. [Saccameno vs. Ocwen Loan Servicing, LLC, 2019 Westlaw 1098930 (N.D. Ill.).] Read more

Summary: The Wyoming Supreme Court has held that the members of an insolvent LLC do not owe fiduciary duties to its creditors, unlike the principals of an insolvent corporation. [Mantle vs. North Star Energy & Construction LLC, 437 P.3d 758 (Wyo. 2019).] Read more

Summary: A bankruptcy court in New York has held that a group of term lenders who received payment under a debtor-in-possession order could not invoke an earmarking defense to the estate's avoidance claims because the order itself authorized the estate to prosecute those claims. [In re Motors Liquidation Co., 2019 Westlaw 367170 (Bankr. S.D.N.Y.).] Read more

Summary: The Pennsylvania Supreme Court has held that a mortgage assignee's litigation manager was able to authenticate the business records created by the original lender, depending on the circumstances. [Bayview Loan Servicing LLC vs. Wicker, 2019 Westlaw 1388516 (Pa.).] Read more

Monster Energy Company v. Schechter (SC S251392 7/11/19) Settlement Agreements/Attorneys’ Confidentiality Obligations (applicable to employment settlements). Attorneys may have been bound by the contractual confidentiality obligation in a settlement agreement when they approved it as to form and content and body of agreement referenced that they would be bound. Read more

Summary: The Seventh Circuit has held that under Wisconsin law, where a "limited remedies" provision would have deprived the non-breaching party of all of its remedies against the breaching party, the clause is per se unconscionable and is unenforceable. [Sanchelima International, Inc., vs. Walker Stainless Equipment Co., LLC, 2019 Westlaw 1552681 (7th Cir.).] Read more

The Federal Nursing Home Reform Amendments (FNHRA) impose various requirements on nursing homes receiving reimbursement under Medicaid. As pertinent here, they require a nursing home that transfers, discharges, or refuses to readmit a hospitalized resident to inform the resident of his or her right to appeal that decision. The state-established appeals process must provide a “fair mechanism” by which residents may challenge a decision. Read more

Health and Safety Code § 1418.8 requires an interdisciplinary team (IDT) to make healthcare decisions for “unbefriended” nursing home residents who lack capacity to make those decisions. A nursing home resident, a taxpayer, and the California Advocates for Nursing Home Reform petitioned for a writ of mandate against the Director of the Department of Public Health (Department) challenging the constitutionality of section 1418.8. The superior court granted the petition, ruling that section 1418.8 was unconstitutional because it (1) facially violated due process by failing to require notice to a resident of a physician’s determination that the resident lacks capacity, has no surrogate decisionmaker, needs a recommended medical intervention, and has a right to judicial review; (2) violated due process when applied to authorize an IDT to make decisions about administering antipsychotic medication; and (3) violated the patient’s privacy rights regarding end of life withdrawal of care decisions. The court entered judgment and prohibited enforcement of section 1418.8 to the extent it conflicted with those rulings. Both parties appealed. Read more

Summary: The Fifth Circuit has held that two agricultural purchase money security interests were unperfected because the secured creditors' financing statements listed both the debtor's correct name and its DBA, thus making it impossible for the Secretary of State's standard search logic to pick up the filings. Further, the contractual choice of law clauses contained in the parties' invoices did not control the issue of lien perfection. [Fishback Nursery, Inc., vs. PNC Bank, N.A., 2019 Westlaw 1548823 (5th Cir.).] Read more