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Justia Weekly Opinion Summaries

Bankruptcy
February 26, 2021

Table of Contents

Jackson v. ING Bank, FSB

Bankruptcy, Real Estate & Property Law

US Court of Appeals for the First Circuit

Kearney v. Unsecured Creditors Committee

Bankruptcy, Constitutional Law, Trusts & Estates

US Court of Appeals for the Tenth Circuit

Reynolds v. Behrman Capital IV L.P.

Bankruptcy, Civil Procedure

US Court of Appeals for the Eleventh Circuit

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Legal Analysis and Commentary

Death Penalty Opponents Should Rethink Their Support for Life Without Parole Sentences

AUSTIN SARAT

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Austin Sarat—Associate Provost and Associate Dean of the Faculty and Professor of Jurisprudence & Political Science at Amherst College—argues that life sentences without the possibility of parole (LWOP) are as problematic and damaging as the death penalty. For this reason, Professor Sarat calls upon death penalty opponents to reconsider their support for LWOP sentences.

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Bankruptcy Opinions

Jackson v. ING Bank, FSB

Court: US Court of Appeals for the First Circuit

Docket: 17-9002

Opinion Date: February 22, 2021

Judge: Jeffrey R. Howard

Areas of Law: Bankruptcy, Real Estate & Property Law

The First Circuit affirmed the decision of the bankruptcy court declaring a foreclosure void and awarding Appellant damages but denying relief on her remaining claims, holding that Appellant's challenges on appeal were either waived or otherwise unavailing. After two attempts to foreclose the mortgage on a condominium that Appellant purchased she filed a six-count adversary complaint in the bankruptcy court naming five defendants, the financial institutions and law firms connected with the foreclosure. The bankruptcy court granted summary judgment as to one count in favor of Appellant, voiding one of the foreclosures, but denied the remaining claims. The First Circuit affirmed, holding that Appellant's challenges were either waived or baseless.

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Kearney v. Unsecured Creditors Committee

Court: US Court of Appeals for the Tenth Circuit

Docket: 19-2209

Opinion Date: February 24, 2021

Judge: Stephanie Kulp Seymour

Areas of Law: Bankruptcy, Constitutional Law, Trusts & Estates

Appellant Victor Kearney was the lifetime income beneficiary of two spendthrift trusts when he filed for bankruptcy in 2017. The United States Trustee’s office appointed an unsecured creditors committee (“UCC”) which proposed a reorganization plan contemplating a one-time trust distribution to pay off appellant's debts. After a New Mexico state court modified the trusts to authorize the distribution, the bankruptcy court approved the plan. Appellant appealed. The Bankruptcy Appellate Panel (“BAP”) of the Tenth Circuit concluded that the bankruptcy court did not deny appellant due process, made no errors in its findings of fact, and did not abuse its discretion in settling appellant's claims. On appeal of that decision, appellant argued that using spendthrift trust assets to fund the reorganization plan violated the trusts’ spendthrift provision and the law, and that approving the settlement of his claims amounted to an abuse of the bankruptcy court’s discretion. Finding no reversible error, the Tenth Circuit affirmed the BAP.

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Reynolds v. Behrman Capital IV L.P.

Court: US Court of Appeals for the Eleventh Circuit

Docket: 19-13537

Opinion Date: February 23, 2021

Judge: Jordan

Areas of Law: Bankruptcy, Civil Procedure

The Chapter 7 trustee for the bankruptcy estates of Atherotech Inc. and Atherotech Holdings, appeals the dismissal of his complaint for lack of personal jurisdiction. After removal from Alabama state court, the district court applied the doctrine of derivative jurisdiction articulated in Lambert Run Coal Co. v. Baltimore & O.R. Co., 258 U.S. 377, 382 (1922), and ruled that because the state court did not have personal jurisdiction over defendants under Alabama's long-arm statute, it too lacked personal jurisdiction. The district court concluded that the trustee could not rely on Bankruptcy Rule 7004(d) (which looks to a defendant's national contacts and permits nationwide service of process) to establish personal jurisdiction. The district court also denied as futile the trustee's motion to transfer the case. The Eleventh Circuit reversed and concluded that the trustee did not waive his right to appeal the district court's dismissal of MidCap for lack of personal jurisdiction by failing to name MidCap in the amended complaint because amendment would have been futile. Under the circumstances of this case, the trustee did not waive his right to appeal the district court's dismissal of Mid Cap from the original complaint for lack of personal jurisdiction. The court also concluded that the doctrine of derivative jurisdiction does not apply to removed cases in which the state court lacked personal jurisdiction over the defendants. The court explained that the district court could exercise jurisdiction following removal notwithstanding the state court's lack of personal jurisdiction over defendants under Alabama's long-arm statute. The court reasoned that the district court could look to Bankruptcy Rule 7004(d) to decide whether personal jurisdiction existed. Furthermore, the district court could consider the trustee's alternative request for a transfer to the Southern District of New York pursuant to 28 U.S.C. 1406 even if there was no personal jurisdiction over defendants under Alabama's long-arm statute. The court remanded for further proceedings.

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