Latest 3 Cases This Week: City of Chicago v. Kiera Cherry (7th Cir.), Nicolaus v. United States (8th Cir.), West Pleasant-CPGT, Inc. v. U.S. Home ...

A Modest Proposal: A Heartbeat Bill for Those Who Don’t Wear Masks

MARCI A. HAMILTON

University of Pennsylvania professor Marci A. Hamilton draws upon a strategy used by anti-abortion advocates in suggesting a way to encourage (or coerce) more people into wearing masks to avoid the spread of COVID-19. Hamilton proposes requiring persons who opt not to wear a mask in public (1) to watch, on a large screen, an adult's beating heart for 30 seconds, and (2) to be read a statement about how their decision unreasonably endangers others.

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City of Chicago v. Kiera Cherry

Court: US Court of Appeals for the Seventh Circuit

Dockets: 19-1558, 19-1534

Opinion Date: July 6, 2020

Judge: Frank Hoover Easterbrook

Areas of Law: Bankruptcy

Chicago assesses fines for parking and other vehicular offenses against the owner. If the owner filed bankruptcy, keeping the car in the estate meant that the automatic stay prevented the city from using collection devices such as towing or booting. The Seventh Circuit previously held 11 U.S.C. 1327(b), which provides that “confirmation of a plan vests all of the property of the estate in the debtor” precludes debtors from avoiding such fines by keeping the car in the estate except when a court enters a case-specific order, supported by good case-specific reasons. Bankruptcy judges then changed their form confirmation order, adding a checkbox through which debtors could elect a departure from the statutory presumption. The Seventh Circuit then held that vehicular fines are administrative expenses that bankruptcy estates must pay even though not listed on debtors’ 11 U.S.C.507(a)(2) schedules. Whether a car’s title returns to the owner on confirmation of the plan or remains in the estate, vehicular fines must be paid. The Seventh Circuit then reversed confirmation orders that were based only on the debtor’s choice. Immunity from traffic laws is not an outcome plausibly attributed to the Bankruptcy Code. A bankruptcy court must confirm any plan that satisfies 11 U.S.C. 1325(a) and "other applicable provisions of this title”; section 1327(b) is an applicable provision. A bankruptcy court may confirm a plan that holds property in the estate only after finding good case-specific reasons for that action.

Nicolaus v. United States

Court: US Court of Appeals for the Eighth Circuit

Docket: 19-1155

Opinion Date: July 6, 2020

Judge: Stras

Areas of Law: Bankruptcy

At issue in this case is whether a debtor must object to a proof of claim filed by the IRS by serving it on the Attorney General and the local United States Attorney? Or is it good enough to simply mail it directly to the IRS? The Eighth Circuit held that, according to the plain language of Bankruptcy Rule 3007, an objection need only be mailed to the "claimant." In this case, once debtor fulfilled this requirement, he did enough to bring the United States within the jurisdiction of the bankruptcy court. Therefore, the bankruptcy court and the district court erred by finding that debtor needed to serve the objection on both the Attorney General and the local United States Attorney. The court remanded for further proceedings.

West Pleasant-CPGT, Inc. v. U.S. Home Corporation

Court: Supreme Court of New Jersey

Docket: a-1-19

Opinion Date: July 8, 2020

Judge: Jaynee LaVecchia

Areas of Law: Arbitration & Mediation, Bankruptcy, Civil Procedure, Contracts, Real Estate & Property Law

In 2005, U.S. Home Corporation entered into a contract to purchase two contiguous tracts of land, one of which was owned by West Pleasant-CPGT, Inc. Under the contract, West Pleasant and the other landowner were to gain certain approvals permitting development of the properties. Pursuant to the contract, U.S. Home paid advances to the landowners totaling over $1.5 million. As security for the advances, West Pleasant executed a mortgage and note on its property; the other landowner did not. When a contract dispute arose in 2006, U.S. Home sought to terminate the contract and get a return of its total advance. U.S. Home prevailed in arbitration and was awarded a judgment in the full amount of the advance, plus interest. The Appellate Division affirmed the judgment in 2009. When the judgment was not satisfied, U.S. Home commenced foreclosure actions against the properties. The foreclosure proceedings were stayed when West Pleasant and the other property owner filed for bankruptcy. In West Pleasant’s bankruptcy action, U.S. Home moved to dismiss and for relief from the automatic stay. West Pleasant and U.S. Home executed a Consent Order, in which West Pleasant dismissed its bankruptcy proceeding, waived a fair market valuation and its right to object to a sheriff’s sale of its property, and released U.S. Home from any claims in law or equity. U.S. Home never proceeded with any deficiency action against either landowner. Nonetheless, the landowners commenced the affirmative litigation that gave rise to this appeal, seeking a declaration that the arbitration award was fully satisfied, as well as compensation “in the amount of the excess fair market value of the properties obtained by defendant U.S. Home over the amount of its outstanding judgment.” The second property owner then assigned its rights to West Pleasant. After trial, the court valued the second property as worth almost $2.4 million and West Pleasant’s property as worth almost $2 million. The court ordered U.S. Home to pay the fair market value of the West Pleasant property, plus interest, and extinguished the arbitration award on the second property. On appeal, the Appellate Division determined that West Pleasant had waived its right to a fair market valuation on its property but that it was owed a fair market value credit for the second property. The Appellate Division remanded the matter to the trial court for recalculation of damages. The New Jersey Supreme Court reversed, finding use of fair market value credit by this debtor to obtain a money judgment against a creditor, in the absence of a deficiency claim threatened or pursued or any objection being raised at the time of the sheriff’s sales, was "inconsistent with sound foreclosure processes and, moreover, inequitable in the circumstances presented." The judgment of the Appellate Division was reversed and the matter remanded for further proceedings.