Case Updates

Summary: A bankruptcy court in Delaware has held that a consignor whose financing statement had lapsed nevertheless prevailed over an inventory lender due to the lender's actual knowledge of the existence of a consignment relationship. [In re TSAWD Holdings, Inc., 2018 Westlaw 6839743 (Bankr. D.Del.).] Read more

Summary: A bankruptcy court in Delaware has held that an assignment of a bankrupt estate's avoidance claims was not champertous because the assignees were creditors of the estate, rather than third-party strangers, and because they promised to remit the net recovery to the estate. [In re Pursuit Capital Management, LLC, 2018 Westlaw 6841364 (Bankr. D. Del.).] Read more

Summary: The First Circuit has held that although the original financing statements pertaining to a $2.9 billion bond issuance failed to describe the collateral, the bonds were properly secured because the subsequent amendments to the financing statements eventually cured the defects. [In re Financial Oversight and Management Board for Puerto Rico, 2019 Westlaw 364029 (1st Cir.).] Read more

Summary: The Fifth Circuit has held that when a transferee is on inquiry notice of fraudulent behavior on the part of the transferor, the “good faith” defense under the UFTA is destroyed, even if an inquiry by the transferee would have been futile since the transferor’s scheme was so complex. [Janvey vs. GMAG, LLC, 2019 Westlaw 141107 (5th Cir.).] Read more

The Second Circuit has held that an arbitration clause contained in a consumer contract was unenforceable because the provision was so obscure that it never became part of the contract at all. [Starke v. SquareTrade, Inc., 2019 Westlaw 149628 (2nd. Cir.).] Read more

A bankruptcy court in Illinois has held that a "silent second" clause contained in a subordination agreement barred a junior creditor from conducting discovery in aid of a bankruptcy trustee's objection to a senior creditor's claim against the debtor. [In re Argon Credit, LLC, 2019 Westlaw 169315 (Bankr. N.D. Ill.).] Read more

Summary: A California appellate court has held that a holdover tenant cannot invoke a right of first refusal that was contained in an expired commercial lease. [Smyth vs. Berman, 2019 Westlaw 156761 (Cal.App.).] Read more

Berkeley Hills Watershed Coalition v. City of Berkeley (2019)_ Cal.App.5th _ , 2019 WL 365765: The Court of Appeal affirmed the trial court's order denying a writ petition challenging the approval of the construction of three new single-family homes on adjacent parcels in the Berkeley Hills. The Court of Appeal rejected petitioner's arguments that (1) the proposed construction was subject to the "location" exception to the Class 3 exemption for "up to three single-family residences" in urbanized areas under the California Environmental Quality Act (CEQA; Public Resources Code, section 21000 et seq.) and (2) that respondent failed to comply with several provisions of its zoning ordinance in approving the project. (C.A. 1st, January 30, 2019.) Read more

The Department of Consumer Affairs (DCA), which oversees the Medical Board, investigated whether Dr. Marc Wolfsohn, a pain management specialist, was overprescribing opiate painkillers. Based on a report from the Controlled Substance Utilization Review and Evaluation System (CURES), investigators identified five patients who may have been prescribed excessive doses. The DCA served a subpoena duces tecum on Dr. Wolfsohn to produce more than two years of medical records for the five patients. After Dr. Wolfsohn objected on patient privacy grounds, the DCA secured an order compelling production. Dr. Wolfsohn appealed. Read more

An asset purchaser has obtained $10 million in compensatory civil contempt damages from a prepetition creditor due to the creditor's assertion of successor liability claims, in violation of the injunctions and releases contained in a Chapter 11 plan of reorganization. [In re Kimball Hill, Inc., 2019 Westlaw 93311 (Bankr. N.D. Ill.).] Read more