Bankruptcy can be a raucous forum sometimes. The ongoing Boy Scouts case is filled with instances of sexual abuse, giving rise to deep emotions. The National Rifle Association case had allegations of forum shopping, mismanagement, and bad faith. That being said, no one has ever accused one of my restaurant clients of operating a child sex-trafficking ring in its basement, nor has anyone accused the U.S. Trustee of being a lizard man being controlled by George Soros. Bankruptcy doesn’t often see the ridiculous antics which characterize partisan politics and the darker corners of the internet. This is for two important reasons: one is self-respect - most of us practice before the same judges, time and time again, and reputation, once tarnished, is hard to repair. The other is the regime of sanctions which can make bad behavior an expensive proposition. While sanctions are the exception rather than the norm, there are some cases where bad behavior by litigants pushes judges to the point of writing a long and scathing opinion finding that sanctions should be awarded. On August 25, 2021, U.S. District Judge Linda Parker released a 110-page opinion granting sanctions in Case No. 20-13134, King v. Whitmer (E.D. Mich. 8/25/21), a case arising out of the failed attempt to decertify the 2020 election results in Michigan. The case is not a bankruptcy opinion, but the same legal grounds apply in all federal litigation, including bankruptcy. There have been numerous cases in which the same doctrines were applied in the bankruptcy setting, a few of which we’ll discuss here. As of this writing, the amount of sanctions to be awarded has not yet been determined.In discussing the Michigan elections case and the bankruptcy cases to follow, I don't want to seem as though I am mocking the attorneys involved. While these are particularly egregious cases, I hope that my attorney readers will view them as an object lesson that could apply to any of us (albeit on a smaller and less public scale) if we allow passion and busyness to overcome our professional judgment. Factual Background in the Michigan Case On November 25, 2020, several Republican voters and candidates filed suit against Michigan Governor Gretchen Whitmer and other state officials seeking to overturn the results of the Presidential election in Michigan, which Joe Biden had won by 150,000 votes. A few days later, they filed an Amended Complaint and a request for emergency injunctive relief. They claimed violations of the Elections and Electors clause of the Constitution, the Fourteenth Amendment equal protection clause, the Fourteenth Amendment due process clause, and violations of the Michigan election laws. By December 7, 2020, the suit was effectively over when the Court denied the request for injunctive relief on the basis that: (1) the state had not waived immunity under the Eleventh Amendment, (2) the claims were barred by laches, (3) the plaintiffs lacked standing, (4) their claims were moot, and (5) abstention was appropriate. The Court also found that the plaintiffs were unlikely to succeed because violation of state election law, even if proven, did not violate the Elections and Electors clause of the Constitution and the claim that the defendants had conspired to switch votes from Donald Trump to Joe Biden was nothing more than belief, conjecture, and speculation. The plaintiffs then sought relief from the Supreme Court arguing that their claims would be moot once electors cast their votes on December 14, 2020. The Supreme Court did not rule by December 14 and in fact, did not deny the petition until February 21, 2021. Meanwhile, on December 15, 2021, the City of Detroit (which had been added to the suit) sent a safe harbor letter to the plaintiffs under Fed.R.Civ.P. 11. On December 22, 2020, the State Defendants filed a motion to dismiss the suit. The motion included a request for sanctions under 28 U.S.C. §1927. When the plaintiffs finally responded on January 14, 2021, they did not respond to the motion to dismiss but did address the request for sanctions. On the same day, they voluntarily dismissed their suit. On January 5, 2021, the city of Detroit filed a Rule 11 “Motion for Sanctions, for Disciplinary Action, for Disbarment Referral and for Referral to State Bar Disciplinary Bodies.” On January 28, 2021, the Governor and Secretary of State of Michigan filed a motion for sanctions under 28 U.S.C. Sec. 1927. The Court scheduled a hearing which was continued to July 12, 2021, and required that any attorney whose name appeared on any of the briefs or motions must appear. The Court conducted a six-hour hearing on July 12, 2021. At the hearing, the attorneys who signed the pleadings argued that they had done so just as local counsel without reviewing the documents, while the attorneys who did not sign the pleadings argued that they could not be held responsible because they had not signed any pleadings. Attorney L. Lin Wood argued that he had never entered an appearance in the case even though his name appeared as “Of Counsel.” When asked if his name was placed on the document without his permission, he equivocated. On August 25, 2021, the Court issued its ruling granting sanctions. The Court discussed three grounds for liability: Fed.R.Civ.P. 11, 28 U.S.C. §1927, and the Court’s inherent authority. Tomorrow’s post will discuss Fed.R.Civ.P. 11.

Why does New York state sue its college students? Thousands have been taken to court, and can defend themselves only in Albany — even if they live hundreds of miles away? This article can be found at Hechinger Report at  https://hechingerreport.org/new-york-states-attorney-general-sues-suny-students-over-debt/

Written by:Liara Aurelia SilvaBarron & Newburger, P.C. Austin, Texas https://bn-lawyers.com              In a pair of decisions, the Bankruptcy Court for the Western District of Texas took on two big issues arising in a dischargeability case concerning allegations of sexual misconduct: whether defamation findings in state court are binding in bankruptcy as well as whether messages in “private” Facebook groups are discoverable.  Joseph Mazzara v. Donna Shute Provencher, Adv. No. 19-05026-cag (Bankr. W.D. Tex. Dec. 4, 2020); Joseph Mazzara v. Donna Shute Provencher, Adv. No. 19-05026-cag (Bankr. W.D. Tex. Apr. 7, 2021). The opinions can be found here and here.  The decisions stem from a lawsuit filed by Joseph Mazzara against Donna Shute Provencher in Virginia State court.  Mazzara alleged that Provencher posted on a Christendom College Alumni Facebook page where she accused him of sexual assault and of having been investigated for it while he was a student at Christendom College.  Mazzara claimed that Provencher’s allegations were false and defamatory.  Shortly before trial, Provencher filed for relief under Chapter 7 of the Bankruptcy Code and Mazzara, in turn, initiated an adversary proceeding against Provencher to determine the dischargeability of the debt.  Defamation Claims and Dischargeability  The bankruptcy court granted a motion to lift the automatic stay filed by Mazzara and held that the defamation claim needed to be litigated in state court.  In the state court proceedings, Provencher stipulated to liability and agreed to entry of judgment in favor of Mazzara for $25,000 plus interest and costs.   The bankruptcy court then considered Mazzara’s arguments that the judgment entered against Provencher in state court could be nondischargeable under Section 523(a)(6) of the Bankruptcy Code due to the applicability of res judicata or judicial estoppel.  Section 523(a)(6) provides that willful and malicious injury by a debtor to another entity or to the property of another entity is nondischargeable. The Court’s first decision focused on res judicata (claim preclusion and issue preclusion).  The Court found against Mazzara on the issue of claim preclusion but found for him on the issue of collateral estoppel (or issue preclusion).  Essentially, because Virginia rejects the majority view that default judgments cannot be used for collateral estoppel purposes, the Court found that the issue of defamation was actually litigated, and collateral estoppel applied.  It reasoned that Provencher had hired an attorney, made appearances, filed motions, stipulated to liability, and did not appeal the judgment when finding the matter was actually litigated.  The Court also concluded that the dollar amount of the debt was subject to res judicata.  However, the Court ruled that it would need to hear further evidence on whether Provencher’s intent was willful and malicious under Section 523(a)(6) because this was not an element of defamation in Virginia, and was therefore not litigated in the state court proceedings. Discovery of “Private” Facebook messages              In a subsequent discovery dispute in the adversary proceeding, the Court considered whether certain documents requested by Mazzara were required to be produced.  Provencher claimed that the documents were conversations she had in a private Facebook group, “Christendom Survivors: The Order of the Phoenix” after Mazzara had threatened to sue.   Provencher asserted that the restricted interest chatroom was for survivors of sexual assault and their supporters, that they engaged in “supportive venting,” and that they discussed rumors concerning parties unrelated to the litigation.  She also claimed that the Facebook group could not be found via search and a third party cannot be a participant in the group without permission from the group members.   Provencher argued that disclosure of the conversations would violate the Facebook group members’ reasonable expectation of privacy under the U.S. Constitution.  Provencher relied, in part, on a criminal holding that the government did not violate the Fourth Amendment when a cooperating witness gave the government access to a defendant’s Facebook profile.  Provencher claimed there was no such waiver in her case.  The Court found this argument unpersuasive and refused to extend Fourth Amendment protections to limit discovery in civil cases that do not involve government actors.  It also noted that there is a general consensus that social networking content is discoverable so long as the requests are not overly broad, unduly burdensome, irrelevant, or disproportionate.             Finally, the Court held that the documents were relevant because they could reasonably serve as evidence to determine the only remaining issue in the adversary proceeding – whether Provencher’s intent was willful or malicious when she had posted about Mazzara on the Christendom College Alumni Facebook page.  Practice Points              The pair of decisions illustrate several practice points.  It is important to be mindful of state law standards that intersect with adversary proceedings.  Here, Virginia’s departure from the majority view on default judgments for collateral estoppel purposes played a major role in the Court’s findings.  The particular elements of defamation in Virginia also meant that the Court had to hear additional evidence to determine dischargeability even after accepting the state court’s findings.  This may be especially important when a bankruptcy case is in a different state than the state court proceedings which was the case here.              This adversary proceeding also illustrates that many communications which we may intuitively think of as private are indeed discoverable.  As the Court noted, the Federal Rules of Civil Procedure permit broad discovery with little differentiation between public and private content so long at is relevant and not privileged.  A prudent attorney will warn her clients not to comment on ongoing litigation in any form of social media since even “private” discussions could be discoverable.    

   In a decision that may have reflected some frustration at the creditor's conduct, the a bankruptcy court in Oregon granted the debtor's request for $4,123.50 in fees for defending a motion for relief from stay on an automobile lease with a subsidiary of Nissan Motor Acceptance Company that had gone to final evidentiary hearing, when the creditor's counsel produced no evidence at such trial.  The case involved a confirmed chapter 13 plan which had assumed the automobile lease.   Nissan filed a motion for relief from stay asserting that the debtor had defaulted by missing three payments.  The Debtor denied the amount of default alleged, and offered to cure any default.  Nissan then acknowledged that in fact only one payment had been missed, but asserted that the payment had increased post-petition.  No explanation had been given for the reason for such increase.  Nissan refused to accept any payments following the motion for relief from stay.  Nissan did not respond to repeated requests for information from Debtor's counsel, including counsel's request for production.     Trial was set on the request, and debtor's counsel filed an exhibit list, a witn4ess list, and a copy of the exhibit to be introduced at trial.  No documents were filed by Nissan, and at trial Nissan did not have any witnesses available to testify or any documents to produce.  Debtor's counsel made an offer of proof that debtor had tendered sufficient funds to cure the alleged default, and that Nissan never sent a statement showing the increase in the lease payment or provided any explanation for the increase.  At the hearing, Nissan's counsel explained for the first time that the increase was due to Debtor's move to a different state post-petition, but produced no evidence to that effect.  The Court found that Nissan failed to produce evidence of the increase in the lease payment to sustain a finding of default, and that Nissan failed to carry it's burden of proof to show a default supporting the request for relief from stay, and thus denied the request to lift stay.  The court directed Nissan to provide payment instructions to Debtor, and absent such instructions Debtor would be deemed current.  Following trial Debtor's counsel requested $4,123.50 in fees pursuant to Fed. R. Civ. P. 54(d), made applicable to contested matters by Fed. R. Bankr. P. 9014(c) asserting he was the prevailing party on the motion for relief from stay and entitled to fees under Oregon's reciprocal fee statute.  In keeping with it's prior conduct, Nissan failed to timely respond to the motion.  After being given an additional 14 days to respond, Nissan objected alleging that the motion was denied for failure to prosecute rather than on the merits.  The court initially concluded that Debtor was the prevailing party in the matter, in that he was the party who received a favorable judgment on the claim.  The court went into much more depth in discussing whether the action was to enforce a judgment.  Oregon's reciprocal fee statute: ORS 20.096 provides in part:In any action or suit in which a claim is made based on a contract that specifically provides that attorney fees and costs incurred to enforce the provisions of the contract shall be awarded to one of the parties, the party that prevails on the claim shall be entitled to reasonable attorney fees in addition to costs and disbursements, without regard to whether the prevailing party is the party specified in the contract and without regard to whether the prevailing party is a party to the contract.ORS 20.096(1).  The court cited the Supreme Court's decision in Travelers Cas. & Sur. Co. of Am. v. Pac. Gas & Elec. Co., 549 U.S. 443, 451-52, 127 S. Ct. 1199, 167 L. Ed. 2d  178 (2007)  which found that an award of attorneys fees based on a contract is not precluded simply because the fees were incurred in bankruptcy litigation.  The bankruptcy court went on to conclude that if a motion for relief from stay requires the court to determine and enforce contractual provisions, then such action is based on a contract.  As the only allegation ultimately relied on by Nissan was that the Debtor was in default due to an increase in the lease payment pursuant to paragraph 17 of the lease, such action was based on a contract.  The court noted this distinguished the case from motions based on adequate protection, equity 8in property, or the necessity of the property for a successful reorganization.   Given the lack of any objection to the reasonableness of the fees, the court also found that the fees requested were reasonable.  The court noted no fees were requested attributable to the single missed payment on the lease.Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, Fl 33609-1703813 870-3100https://hillsboroughbankruptcy.com  

The application process for Social Security Disability benefits in Pennsylvania is long, frustrating, and difficult. Many people assume that once they have been approved and are receiving Social Security Disability Insurance (SSDI) benefits, they will continue to do so for the rest of their lives. This is not always the case. Most people who are […] The post How Long Can You Stay on Social Security Disability Benefits in Pennsylvania? appeared first on .

Applying for Social Security Disability Insurance (SSDI) benefits in Pennsylvania is a frustrating process. On average, six out of every ten initial applications are denied. On appeal, approximately 14% of cases that were under reconsideration are approved. Finally, applicants who brought their claim before an administrative law judge succeeded 48% of the time. There are […] The post How to Get Social Security Payments for a Disability in Pennsylvania? appeared first on .

 Judge Funk in Jacksonville ruled in favor of the debtor as to a debt that was not scheduled before the claims bar date in a chapter 7, but where the claim was filed in time to share in any distribution.  In re Simmons, 2021 Bankr. LEXIS 2302, Case no 3:18-bk-03267-JAF, Adv 3:20-ap-0081-JAF (Bankr. M.D. Fla. 24 August 2021).   The specific factual background is a bit unusual.  The debtor filed a chapter 7 case in September 2018, initially presumed to be a no asset case.  When it appeared there may be assets to pay creditors, a notice of claims bar date was set for 14 February 2019.  A discharge had already been entered on 26 December 2018.  On 15 January 2020 Debtors supplemented schedule F to add Creative Enters. HK as a general unsecured creditor in the amount of $55,000.   Creative filed a claim in the amount of $79,654.58 on 23 January 2020.  Creative then filed an adversary proceeding asserting that the debt should be nondischargeable under §523(a)(3)(A), noting that the amendment adding them was filed almost a year after the claims bar date had been set.  However it appears no distribution had yet been made to creditors, and Creative would be entitled to receive a distribution if assets are recovered.  11 U.S.C. 523(a)(3)(A) provides that a debt that is not scheduled in time to timely file a proof of claim is not discharged unless the creditor has actual knowledge of the case in order to timely file a claim.  Judge Mark noted that this section should be read in conjunction with §726(a)(2)(C) which provides that a late filed claim is treated as if it was filed timely if the creditor did not possess actual knowledge of the case in time to file a timely claim, and if the claim is filed in time for it to be paid.    The court noted that courts are split on whether a debt in this situation is nondischargeable.   Cases following the plain language approach find the language of §523(a)(3)(A) requires that the debt be nondischargeable even if the creditor knew of the case in time to file a tardy proof of claim and share equally in the distribution.  Disagreeing with this approach, cases following the distribution approach take a holistic view, and ready §523(a)(3)(A) in conjunction with §726(a)(2)(C).  These courts note that the central purpose of the Bankruptcy Code is to allow a fresh start, and that exceptions to discharge must be narrowly construed.  Since §523(a)(3)(A) is only concerned with the ability to file a claim, when a creditor is able to do so and share equally in the distribution, the creditor's rights to such assets had been adequately protected, and the debt should not be excepted from discharge.1  The court distinguished Samuel v. Baitcher (In re Baitcher), 781 F.2d 1529, 1534 (11th Cir. 1986) in that such case had to consider grounds pled under §§523(a)(2), (a)(3), (a)(4), and (a)(6).  None of these counts were pled in the case at bar.1 In re Snyder, 544 B.R. 905, 909-910 (Bankr. M.D. Fla. 2016).↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, Fl 33609-1703813 870-3100https://hillsboroughbankruptcy.com  

There was a time when you could file for bankruptcy to stop an eviction. Many Chapter 7 filers would use their bankruptcy to stop a sheriff from executing a judgment for possession. While landlords had a right to petition the bankruptcy court to lift the automatic stay that protected the debtor, many were unaware of […] The post Can You File for Bankruptcy to Avoid Eviction in Pennsylvania? appeared first on .

Restitution is a court ordered payment to a victim of a crime. Whether you were convicted of a felony or misdemeanor, restitution is often ordered to compensate the party who was harmed or suffered a financial loss due to your criminal behavior. In some cases, restitution could be ordered as a probation condition. The amount […] The post Can You File for Bankruptcy to Avoid Paying Restitution in Pennsylvania? appeared first on .

What’s a Realistic Timeline For My Credit Score To Bounce Back After Bankruptcy? How Does Filing For Bankruptcy Affect Your Credit Score One of the primary concerns of many people considering filing for bankruptcy is how it will impact their credit score. The idea persists that filing for bankruptcy in Glendale will devastate your credit, which many people think will make it impossible for them to buy a house or a car for many years to come. Unfortunately, that’s just not the reality – but the persisting myth keeps many people from getting the debt relief they need through bankruptcy. If you file for bankruptcy, it will affect your credit score, but you’ll ultimately end up on much better financial footing as a result. Things That Affect Your Credit Score There are many factors that affect your credit score, and getting an understanding of these things can help you gauge the effect that Avondale bankruptcy will have on your score and what you can do later to improve it. Your score will be primarily influenced by the amount and type of credit you have and how long you have had it. The longer you have had credit, the better your score will be (and the faster it will recover from setbacks). So, if you have had a long and positive credit history before you file for bankruptcy, chances are good that you’ll bounce back faster. Timely payments will positively affect your score, while late payments and delinquencies will negatively affect it. Having too many inquiries, or credit applications, will also negatively affect your credit. Therefore, you may end up doing more harm to your credit by delaying filing for bankruptcy because you may continue to struggle paying your debt, ending up with a lot of late payments and missed payments. You may also end up with a lot of inquiries if you try to open new lines of credit to pay off the ones you currently have. How Bankruptcy Affects Your Score Bankruptcy is definitely a black mark on your credit history. However, what kind of affect it will have depends on what your credit was like prior to filing. If you were struggling with excessive debt, late payments, and missed payments for a long time, chances are good that your credit is pretty bad. Filing for bankruptcy can actually improve your score in cases like that because it puts a stop to those other negatives. Typically, bankruptcy stays on your credit report for seven to 10 years. However, it tends to fall into the background as time goes on, having less and less impact. What You Can Do After Bankruptcy How long bankruptcy makes it difficult for you to get new credit will depend a lot on what you do after your bankruptcy is discharged. In most cases, you can start getting new credits in a year, and you can qualify for some home loans and car loans in two years. The best thing you can do for your credit is to make a budget and stick to it. You always want to be able to pay all your bills on time (barring any unforeseen financial circumstances, of course). Save what you can to use as collateral for a secured credit card and to cover yourself in case of any financial emergency. Then apply for small lines of credit through store credit cards or gas credit cards. The threshold for approval on these is lower, and if you can get one and start spending small amounts on it, you will quickly start rehabbing your credit score. Keep an eye on your applications though! Too many inquiries can also bring down your credit. Apply for one card, and if you’re rejected, give it at least another month before you apply for anything again. Hire a Trusted Bankruptcy Attorney In Avondale If you are struggling with debt, do not let fears about what it will do to your credit score keep you from getting the relief that bankruptcy offers. Talk with a bankruptcy attorney to explore your options. Call My AZ Lawyers today to talk with a bankruptcy lawyer about how Chapter 7 bankruptcy or Chapter 13 bankruptcy may help you. One of our attorneys will review your finances and help you understand which option will benefit you most. Our goal is to help you get the maximum debt relief possible under the law. We represent clients in Phoenix, Tucson, Glendale, and Mesa. Contact us today to schedule a free consultation with a bankruptcy lawyer and learn more.   Arizona Offices: Mesa Location: 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: (480) 448-9800 Email: [email protected] Website: https://myazlawyers.com/ Phoenix Location: 343 West Roosevelt, Suite #100 Phoenix, AZ 85003 Office: (602) 609-7000 Glendale Location: 20325 N 51st Avenue Suite #134, Building 5 Glendale, AZ 85308 Office: (602) 509-0955 Tucson Location: 2 East Congress St., Suite #900-6A Tucson, AZ 85701 Office: (520) 441-1450 Avondale Location: 12725 W. Indian School Rd., Ste E, #101 Avondale, AZ 85392 Office: (623) 469-6603 The post What’s a Realistic Timeline For My Credit Score To Bounce Back After Bankruptcy? appeared first on My AZ Lawyers.