Claim had to be disallowed based on principles of res judicata.
A Chapter 7 trustee rebutted the prima facie validity of a proof of claim that was properly filed by the debtor’s then-estranged, now-former wife, seeking to hold the debtor liable for the same fraud in allegedly forging the wife’s signature on residential mortgage documents that underlay her fraud- based nondischargeability complaint. The wife, as part of a global settlement in the pending dissolution of marriage action, had dismissed her nondischargeability complaint with prejudice, including her request for entry of a monetary judgment liquidating the amount of the allegedly nondischargeable debt. The ex-wife’s claim against the debtor and the debtor’s fort worth bankruptcy estate was unenforceable under applicable the Illinois law of res judicata.
Showing of harm to debtor or its creditors is prerequisite for equitable subordination of claim.
The Fifth Circuit Court of Appeals has held that a claim asserted by former insiders for repayment of loans which they had made to a debtor to alleviate a “cash crunch” that it was experiencing and to allow it to meet its payroll could not be equitably subordinated to the claims of other secured creditors, even assuming that the former insiders had engaged in inequitable conduct by offering these loans to the company “at the eleventh hour,” as the only option available to stave off its dallas bankruptcy attorney collapse, and that the insiders had gained an unfair advantage by the terms of the loans. To equitably subordinate the insiders’ claims for repayment of the loans, evidence had to be introduced that the debtor or its creditors had been harmed by the insiders’ conduct.
Characterization of causes of action for state law limitations purposes was irrelevant to dischargeability issue.
The fact that, under Texas law, a daughter’s misappropriation of funds from her 82-year-old mother’s account would support a cause of action only for breach of fiduciary duty and not for embezzlement, on which the pertinent two- year statute of limitations had already run before the mother sued the daughter in state court, was irrelevant to whether the daughter’s debt to the mother, based on her breach of fiduciary duty as a manager of the mother’s property, could be excepted from discharge when the daughter subsequently filed for Texas Chapter 7 bankruptcy attorney relief as a debt for the daughter’s “embezzlement.” The court had to conduct a two-part inquiry, under which it first determined whether the mother had a claim, in the form of a viable cause of action for breach of fiduciary duty or embezzlement that was not barred by the pertinent Texas statutes of limitation, and then determined whether the circumstances surrounding creation of this debt were such as to trigger a federal dischargeability exception, without regard to how the causes of action were characterized for state law statute of limitations purposes.
Negligence claims to recover for debtor’s alleged emotional distress were not “personal injury tort” claims.
Causes of action brought by a Chapter 13 debtor against a bank to recover for alleged humiliation and embarrassment that he suffered as a result of the bank’s alleged negligence in providing him with financial advice, as a result of the bank’s decision to approve certain loans based solely on the value of underlying collateral and not based on the debtor’s ability to pay the loans, and as result of the bank’s alleged unauthorized withdrawals, did not have to be tried in district court as allegedly being in the nature of “personal injury tort” claims. The debtor’s complaint did not allege any bodily injury to the bankruptcy dallas fort worth debtor but asserted claims more akin to financial, business or property tort claims than to personal injury tort claims.
Party to settlement with trustee had no right to unilaterally repudiate it pending court approval.
The mere fact that a party had entered into a settlement agreement with a Chapter 7 trustee subject to approval of the plano bankruptcy attorney court did not create in the party a right of unilateral repudiation pending that approval. Rather, the party was bound by the settlement agreement that it had negotiated unless and until the bankruptcy court rejected that agreement. Parties to settlement agreements are entitled to some certainty that the agreement they enter into is valid and will be effective and enforceable if the bankruptcy court approves it.
