Articles Posted in Bankruptcy

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Debtor filed for Chapter 7 Bankruptcy. Debtor claimed an Individual Retirement Account (IRA) he inherited from his mother upon her death as exempt property from the bankruptcy estate. The Trustee of the case objected to Debtor’s claim of exemption. The United States Bankruptcy Court for the District of Montana certified a question to the Supreme Court regarding whether a Debtor may claim an exemption in an IRA pursuant to Mont. Code Ann. 25-13-608(1)(e). The Supreme Court answered the question in the negative, holding that, under Montana’s liberal construction of exemptions, a debtor may not claim an exemption to an inherited IRA under section 25-13-608(1)(e). View "In re Golz" on Justia Law

Posted in: Bankruptcy

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John Stokes appealed the judgment against him in a defamation case and retained attorney Greg Duncan to advise him on how to maintain his appeal while discharging his obligation in bankruptcy. After Duncan filed a bankruptcy petition on Stokes’ behalf, the bankruptcy court granted Duncan’s motion to withdraw. While the bankruptcy action was pending, Stokes filed the present action in state court against Duncan and his paralegal (collectively, Duncan) seeking damages for legal malpractice. The bankruptcy trustee intervened in the malpractice action, arguing that the action was an asset of the bankruptcy estate. The district court stayed all proceedings in the malpractice action. The bankruptcy court concluded that the malpractice action was an asset of the bankruptcy estate and subsequently sold the action to Duncan. After Stokes’ bankruptcy proceeding was discharged, the bankruptcy court entered an order concluding that Stokes’ claims against Duncan were property of the bankruptcy estate that had been purchased by Duncan. The state district court subsequently lifted the stay and granted Duncan’s motion for summary judgment, concluding that Stokes’ malpractice claims were property of the bankruptcy estate and had been purchased by Duncan. The Supreme Court affirmed, holding that Stokes’ claims were part of the bankruptcy estate. View "Stokes v. Duncan" on Justia Law

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In 2008, Allen Ginn was injured while delivering a truck load of logs to a mill owned by Smurfit Stone Container Enterprises, Inc. In 2009, Smurfit filed voluntary petitions for bankruptcy relief under Chapter 11. In 2011, Ginn and his wife (the Ginns) and Smurfit stipulated an agreement in which Smurfit agreed not to enforce the claim bar date set by the bankruptcy court. The Ginns subsequently served Smurfit with a complaint, summons, and related document. When the Ginns received no reply or acknowledgement of service, they requested entry of default from the district court. The district court entered default against Smurfit. Smurfit filed a motion to vacate the entry of default. The court concluded that the default would stand with regard to Smurfit’s liability but that a jury would be allowed to consider the issues of causation and damages. Thereafter, a jury awarded Allen Ginn $3,470,899 in damages plus an additional $500,000 to his wife. The Supreme Court affirmed, holding that the district court did not abuse its discretion, even slightly, in denying Smurfit’s motion to vacate the entry of default, as good cause did not exist to vacate the entry of default. View "Ginn v. Smurfit Stone Container Enters., Inc." on Justia Law

Posted in: Bankruptcy, Injury Law

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Tamara Lucas and her husband James brought a legal malpractice claim against attorney Mat Stevenson after they hired Stevenson to defend James against criminal charges and to represent them in a civil suit against the city police department, the city, and individual police officers that arrested James for disturbing the peace and felony assault on a peace officer. However, Stevenson later learned that the Lucases had previously filed for bankruptcy. The civil suit was determined to an asset of the bankruptcy estate, and Stevenson was reassigned to pursue the case on behalf of the bankruptcy estate. After a settlement agreement was reached, the Lucases brought this action against Stevenson. The district court granted summary judgment in favor of Stevenson. The Supreme Court affirmed, holding that the district court correctly determined (1) the Lucases' civil claims were properly determined to be an asset of the bankruptcy estate; and (2) Stevenson did not represent the Lucases at the time the claims were settled, and therefore, the Lucases had no standing to bring a legal malpractice claim against him. View "Lucas v. Stevenson" on Justia Law

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Marjorie Ward established a trust that devised $100,000 to her stepdaughter, Joan, and provided that the trust residue be distributed in equal shares to Ward's sons, Jack and James. Ward also instructed that before Jack would receive any distributions from the trust, his share would be decreased, and Joan's increased, by any amount he owed Joan. After Ward died, the district court concluded Jack's share would be reduced by $298,356, the amount he owed Joan on the date of Ward's death. The Supreme Court affirmed, holding (1) the district court complied with the requirements of Mont. R. Civ. P. 52(a) by orally stating its findings of fact and conclusions of law; and (2) the district court did not err in ordering that Jack's share of the trust be reduced by the amount he owed his stepsister, pursuant to Ward's instructions contained in the trust, even though that debt was previously discharged in bankruptcy proceedings. View "Ward v. Ward" on Justia Law

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Husband and Wife entered into a property settlement agreement (PSA) pursuant to their divorce in which Wife transferred all of her interest in two corporations the parties owned to Husband in exchange for Husband's payment to Wife of $250,000. The parties subsequently agreed that Wife would assume managerial and operational control of the businesses. The district court ordered Husband to provide Wife with access to the businesses' accounts and financial information and to return possession of the business records. Because of Husband's noncompliance with the court order, Wife ultimately was forced to file for Chapter 13 bankruptcy. The district court subsequently (1) found Husband to be in contempt, (2) awarded Wife sole possession of one of the businesses, (3) ordered Husband to pay Wife the receiver fees he had accumulated during his operation of the business, and (4) ordered Husband to pay Wife's attorney's fees and costs. The Supreme Court affirmed, holding that the district court did not (1) err by refusing to send the dispute to arbitration and by holding Husband in contempt; (2) deny Husband due process; and (3) err in awarding attorney's fees to Wife. Remanded for a determination of Wife's attorney's fees and costs on appeal. View "In re Marriage of Cini" on Justia Law

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This was an original proceeding brought to the Supreme Court on a certified question from a bankruptcy judge from the District of Montana. The question of law was whether, under Montana's liberal construction of exemptions, debtors may claim an exemption in a Yamaha four-wheel all-terrain vehicle (ATV) as a sporting good pursuant to Mont. Code Ann. 25-13-609(1). The Supreme Court accepted the certified question and answered that, under Montana law, debtors may not claim an exemption in a Yamaha four-wheel ATV as a sporting good because (1) an ATV is motor vehicle under Montana's motor vehicle code, (2) an ATV is subject to registration and title requirements that do not apply to firearms and sporting goods, and (3) since the Legislature provided a specific and separate exemption for a motor vehicle, it follows that the exemption for firearms and other sporting goods was not intended to include motor vehicles.