Mortgage Legal Descriptions: To Avoid Litigation, Get It Right in the First Place

Ivy v. U.S. Bank N.A. as Legal Title Trustee for Truman 2016 SC6 Title Trust (In re Ivy), 604 B.R. 540 (Bankr. W.D. Ark. 2019) –

A chapter 7 debtor brought an adversary proceeding against a foreclosing lender seeking a bankruptcy court determination that the lender’s mortgage lien was void due to an incomplete legal description, or alternatively that it was voidable as a cloud on his superior title. This case turned on state law and exemption impairment rather than a typical trustee’s exercise of strong arm powers. Continue reading

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Foreclosure Adjournment: Does Continue Really Mean Continue?

In re Winters, 604 B.R. 54 (Bankr. D. Utah 2019) –

A chapter 7 debtor contended that a mortgage creditor’s postponement of a scheduled nonjudicial foreclosure sale after receiving notice of the debtor’s bankruptcy constituted a violation of the automatic stay. Accordingly, it sought an order for contempt and sanctions against the trustee and beneficiary under a deed of trust and a law firm involved in the foreclosure. The trustee and law firm moved for summary judgment, requesting that the bankruptcy court deny the debtor’s motion. Continue reading

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Extending the Stay to Third Parties: Sometimes a Bankruptcy Court Will Intercede

Durr Mechanical Constr., Inc. v. I.K. Constr. Inc. (In re Durr Mechanical Constr., Inc.), 604 B.R. 131 (S.D.N.Y. 2019) –

A general contractor debtor filed an adversary proceeding against a subcontractor seeking various relief. It then filed a motion seeking to extend the automatic stay to protect nondebtor insurers that had issued a surety bond relating to the debtor’s contract with the subcontractor. Continue reading

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Easements and Sales “Free and Clear”: Oops – All Gone

Port of Corpus Christi Auth. v. Sherwin Alumina Co., L.L.C. (In re Sherwin Alumina Co., L.L.C.), 932 F.2d 404 (5th Cir. 2019) –

A state port authority (1) challenged sale of property free and clear of its road easement on Eleventh Amendment grounds and (2) sought revocation of a Chapter 11 plan confirmation order arguing that it was obtained by fraud. The bankruptcy court rejected these claims; the district court affirmed; and the port authority appealed to the Fifth Circuit. Continue reading

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Chapter 7 Sales: The Debtor May Be Pretty Much Irrelevant

Pasley v. Keats (In re Pasley), 603 B.R. 6 (6th Cir. BAP 2019) –

A chapter 7 trustee sought to sell real estate owned by the debtor’s limited liability company (LLC). When the bankruptcy court entered an order approving the sale over the debtor’s objection, the debtor appealed to the Bankruptcy Appellate Panel (BAP). Continue reading

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Sale Orders: What Constitutes a Collateral Attack?

Fulmer v. Fifth Third Equipment Finance Co., 931 F.3d 730 (8th Cir. 2019) –

A chapter 7 trustee sued more than 20 defendants alleging more than a dozen causes of action based on an allegation that a higher price could have been obtained at a pre-conversion sale of estate assets. The bankruptcy court dismissed the claims on the grounds that they were either without merit or constituted an impermissible collateral attack on the sale order. The Bankruptcy Appellate Panel affirmed, and the trustee appealed to the Eighth Circuit. Continue reading

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