Bankr. M.D.N.C.: In re Carter- Standing in Involuntary Bankruptcy; Good Faith in Filing Involuntary Bankruptcy

Summary:

The Debtor caused a fatal motor vehicle accident while under the influence and was subsequently pleaded guilty to felony death by motor vehicle. At the time of the collision, the Debtor was covered by his own insurance with State Farm and the Allstate insurance policy held by the owner of the car the Debtor was driving. The decedent’s estate settled with both Allstate, but after being unable to reach terms with State Farm, ultimately obtained a wrongful death verdict for approximately $2.8 million. When collection efforts failed, the Estate commenced an involuntary Chapter 7, with the Trustee employing special counsel to pursue automobile liability claims against State Farm and Allstate.

State Farm and Allstate sought dismissal of the bankruptcy arguing that while, following Wilson v. Wilson, 121 N.C. App. 662, 468 S.E.2d 495 (1996), North Carolina does not recognize a cause of
action for third-party claimants against the insurance company of an adverse party based on bad
faith and unfair and deceptive trade practices, the decendent’s estate were using the involuntary bankruptcy case to prosecute such the potential claims for its sole benefit.

Agreeing with the Trustee, however, the court held that the potential claims were actually first-party claims belonging to the Debtor, as he had causes of action against the insurers related to when and how to settle claims arising under such insurance policies. See Alford v. Textile Ins. Co., 103 S.E.2d 8 (N.C. 1958). Upon the filing of the bankruptcy, those potential claims against the insurers became assets of the bankruptcy estate.

(That these potential claims were not scheduled in the petition was dispensed with by the court, as all assets, even if unknown or undisclosed are assets of the bankruptcy estate. See Field v. Transcon. Ins. Co., 219 B.R. 115, 119 (E.D. Va. 1998), aff’d, 173 F.3d 424 (4th Cir. 1999) (holding that the trustee was entitled to bring the debtor’s bad faith failure to defend or settle automobile accident claims against insurance company).)

Since the Trustee had only at this point sought to conduct examinations of the insurers pursuant to Rule 2004 and had not yet commenced any Adversary Proceeding, the court held that State Farm had not suffered a “actual or imminent injury” sufficient to have standing to seek dismissal of the bankruptcy. Even if State Farm did have standing, the court alternatively held that the assertion that the involuntary bankruptcy was filed by the decendent’s estate “to prevent wasting of the Debtor’s sole possible asset” was, absent any evidence from State Farm to the contrary, enough to establish the good faith of the filing.

Commentary:

Lest personal injury attorneys look towards this case as a new means to raise third-party claims, the later history is pertinent. Unsurprisingly, this decision was appealed and, after being subsequently cast into doubt in following the dismissal shortly after this opinion in In re Black, the parties also consented to the dismissal of the case.

In Black, the same special counsel had sought to also use an involuntary bankruptcy to similarly assert claims held by that Defendant/Debtor against insurers. Unlike in Carter, however, Black involved a Defendant/Debtor which was not incarcerated and with whom the Plaintiff’s personal injury attorney had sought the assistance of the same attorney who had served as special counsel to the Trustee in Carter to prepare, after some degree of consultation with the Defendant/Debtor, the involuntary bankruptcy petition. After the bankruptcy was filed, Mr. Black sought dismissal of the case himself. The court there found that the Black case had been filed in bad faith because the Debtor/Defendant had generally been paying his debts and, particularly damning, were that the actions of the personal injury attorney and special counsel seemed “duplicitous in nature” and potentially violated the Rules of Professional Conduct. Unlike in Carter, there was no allegation that potential claims were wasting, as Mr. Black could still pursue such claims himself.

These twists and turns of events leave the tactic of using involuntary bankruptcies to bring a Defendant/Debtor’s causes of action against insurers for the benefit of creditors in limbo,  as the problematic behavior in Black cast a shadow on Carter.

For a copy of these opinion, please see:

Carter- Standing in Involuntary Bankruptcy; Good Faith in Filing Involuntary Bankruptcy

Black-Bad Faith Involuntary Bankruptcy

Posted in Middle District, North Carolina Bankruptcy Cases Tagged with: , , ,

Bankr. E.D.N.C.: In re Rogers- Denial of Homestead Exemption in Adjacent Property

Summary:

Ms. Roger inherited real property from her mother, which included a residence and a building originally used as a country store, which was subsequently renovated into a residential rental property. After obtaining a mortgage against the entire property, Ms. Rogers, with the consent of the lienholder, subdivided the residence and the rental properties. Upon filing Chapter 13, Ms. Rogers claimed both properties under her homestead exemption, as the two were previous a single parcel and the rental property produced revenue necessary for payment of taxes and insurance on both.

Relying on both the definitions of the term “residence” from the dictionary and the Bankruptcy Code at 11 U.S.C. § 101(13A), including the related term “incidental property” at § 101 (27B), the court held that the adjacent property did not fall within any of these, particularly as the rent derived was completely separate from the residence, particularly as the tenant was neither a dependent nor even relative.

For a copy of the opinion, please see:

Rogers- Denial of Homestead Exemption in Adjacent Property

Posted in Eastern District, North Carolina Bankruptcy Cases Tagged with: , ,

Bankr. E.D.N.C.: Baum v. Baum- Discharge under § 523(a)(15) for Debts In Connection with Divorce Decree

Summary:

During a period of financial distress and shortly before their divorce, Doreen Baum made repeated unauthorized withdrawals from the Martin Baum’s IRAs, and did not pay the mortgage on the couple’s beach house, using the funds for the support and maintenance of the family. When the Baums divorced, the parties entered into an consent orders for Alimony and Equitable Distribution. While aware of the unauthorized withdrawals, Martin Baum believed any claims he had for fraud were preserved, whereas Doreen Baum believe these consent orders resolved all issues, including for the unauthorized withdrawals.

Doreen Baum filed Chapter 7 and Martin Baum brought an Adversary Proceeding seeking to both have the bankruptcy court determine that Doreen Baum was indebted to him for compensatory and punitive damages resulting from fraud and to have such declared nondischargable. The initial complaint was not timely filed, so Martin Baum was unable to maintain nondischargability claims under U.S.C. § 523(a)(2) or (4) for debts “obtained by false pretenses, a false representation, or actual fraud . . . [and] for fraud or defalcation while acting in a fiduciary capacity . . . .” The court did, nonetheless, allow amendment of the complaint to assert nondischargability under § 523(a)(15) for a debt incurred “in connection with a separation agreement, divorce decree or other order of a court of record….”

The bankruptcy court then had to determine whether to rule first on the fraud or dischargability claim, which presented a “chicken and egg” conundrum as:

If the court determines that [Doreen Baum] is not liable to [Martin Baum] under the either of Fraud Claims, then there is no debt for determination of dischargeability. Contrarily, if the court determines the Fraud Claims, as asserted, are dischargeable obligations, then the need to fully adjudicate and liquidate the Fraud Claims likewise becomes unnecessary.

Since jurisdiction over the fraud claims, based on state law, was more questionable, the bankruptcy court evaluated dischargability first.

Regarding dischargability, Doreen Baum’s insistence that the equitable distribution order resolved liability from the unauthorized transfers, complicated the determination under § 523(a)(15). That notwithstanding, the bankruptcy court held that as Doreen Baum had no outstanding liability, whether liquidated or not, to Martin Baum as a result of the equitable distribution order, the objection to discharge failed.

Despite having stated that a determination of the fraud claim would be unnecessary if any such debt was dischargeable, the bankruptcy court, nevertheless, continued on in that regard, as the issue could present itself in a later claims objection by the Trustee. While the action by Doreen Baum could meet most of the requirements for either actual or constructive fraud, the bankruptcy court did not, despite expressing it abhorrence at her actions, believe that Martin Baum had been actually damaged, as required for actual fraud, nor that Doreen Baum had sought to benefit herself, as necessary to establish constructive fraud, as the funds were used mainly for joint household expenses. Continuing, the bankruptcy court expressed that punitive damages could be awarded even absent actual damages.

Commentary:

This case has been appealed.

For a copy of the opinion, please see:

Baum v. Baum- Discharge under § 523(a)(15) for Debts In Connection with Divorce Decree

Posted in Eastern District, North Carolina Bankruptcy Cases Tagged with: , , , , , , ,

Bankr. W.D.N.C.: In re Hudgins- Secured Status of Fixture versus Consumer Good

Summary:

Lendmark financed the purchase and installation of an HVAC unit for Ms. Hudgins’ home. All parties agreed that the HVAC unit was a “consumer good” as defined by N.C.G.S. § 25-9-102, that Lendmark held an automatically perfected purchase money security interest in the HVAC as chattel pursuant to N.C.G.S. § 25-9-309(1) and that Lendmark did not record a fixture filing.

The Trustee argued that without the fixture filing Lendmark’s security interest fell to the hypothetical judgment lien creditor status of bankruptcy estate under 11 U.S.C. § 544. Lendmark countered that its perfected lien against the HVAC as a consumer good was not lost when it became a fixture.

The bankruptcy court agreed with Lendmark that “a PMSI in consumer goods that are also fixtures has priority as against any other secured parties or lien creditors with a conflicting security interest in the same goods arising not as a result of a real estate interest. “ 9B Fredrick H. Miller and Carl S. Bjerre, HAWKLAND UCC SERIES § 9-309:2 [Rev] (June 2016). Further, 11 U.S.C. § 544(a)(3) grants a Trustee bona fide purchaser status for real property “other than fixtures.” As such, Lendmark perfected PMSI primed the trustee’s interest and remained secured by the HVAC.

Commentary:

As the opinion notes that the claim was co-signed by Ms. Hudgins’ non-filing husband, that would have been a sufficient grounds to hold that the claim was secured.

Further, despite the parties agreement that the claim was secured as a PMSI and while the Consumer Credit Installment Sales Contract (“CCISC”) attached to the Proof of Claim does provide that “Buyer grants to the Seller a Security interest under the Uniform Commercial Code in the goods described in the [CCISC] on page 1 hereof.” That section, however, is blank in the sections for Description of Goods or Services, Model Number and Serial Number. This would not seem to adequately describe the goods as required by the UCC. While there is a subsequent Performance Contact also attached to the Proof of Claim that does describe the HVAC unit, this is signed only by Mr. Hudgins and is not referenced in the CCISC.

And, for what its is worth, the CCISC, which originated with the Seller, 72 Degrees, also includes an indorsement of the note to Bank of America. There is nothing in the Proof of Claim linking Lendmark with this claim, raising questions about whether Lendmark is actually a proper party.

For a copy of the opinion and the Proof of Claim, please see:

Hudgins- Secured Status of Fixture versus Consumer Good

Hudgins- Lendmark Proof of Claim

Posted in North Carolina Bankruptcy Cases, Western District Tagged with: , , ,

N.C. Ct. of Appeals: Henkel v. Triangle Homes- Foreclosure Sale does not Extinguish Tax Lien unless Federal Foreclosure Requirements are Met

Summary:

The IRS recorded two tax liens against real property and subsequently the Village of Sugar Mountain (“the Village”) obtain a third lien against the property for local property taxes. The Village ultimately sought to foreclose on its tax lien, but did not, despite the requirement in 26 U.S.C. § 7425(a), give notice to the federal government of the sale. The property was sold on November 13, 2013, in a judicial tax foreclosure for $6,673.73 to the Village. The following day, November, 14, 2013,the property was sold at a federal tax foreclosure to Mr. Henkel for $172,000.00. At that second foreclosure, the Village agreed to assign its interest in the property to Mr. Hensel (or the eventual highest bidder). That same day, however, Triangle Homes, despite having knowledge of the federal tax lien foreclosure earlier in the day, bid $7,423.73 in the local tax lien foreclosure. Mr. Henkel paid the full bid price on December 14, 2013, and received Certificate of Seized Property on December 16, 2013. Undeterred, Triangle Homes moved for confirmation of the local tax lien foreclosure on January 3, 2014, with the district court granting such on January 21, 2014. The Village then executed a Commissioner’s Deed which was recorded on April 7, 2014. Mr. Henkel, however, had to wait out the statutorily proscribed redemption period of 180-days, following which he applied for and received a Deed of Real Estate from the IRS, which was recorded on June 6, 2014.

Triangle Home argued that as North Carolina is a “pure race” state, since its Deed was recorded first, it was the owner of the property. The Court of Appeals recognized that 26 U.S.C. § 6323(b)(6) together with N.C.G.S. § 105-356(a)(1), give seniority to local tax liens over federal tax liens. This is, however, subject to the senior lien holder complying with all foreclosure procedures, which, when federal tax liens have attached, includes not only North Carolina foreclosure requirements but also additional obligations under federal law. This includes providing the federal government with notice of the local tax lien foreclosure, otherwise, pursuant to 26 U.S.C. § 7425(a), the federal tax lien was not disturbed. Accordingly, Triangle Homes Deed was subject to the federal tax lien. As Triangle Homes did not redeem the property within 180 days of Mr. Hensel’s purchase at the federal tax lien foreclosure, it forfeit any rights in the property.

Commentary:

It is good to know that the redemption period for a federal tax lien foreclosure is 180 days, rather than only 10 as allowed under North Carolina law.

The principal owner of Triangle Homes, James McClure, sought to sell the property to a third party for $144,000 free of all liens, without disclosure of the federal tax liens. Mr. McClure did, after prosecution by the NC Real Estate Commission for fraud, surrender his real estate broker’s license.

This case, together with Daniel v. Jones Family Holdings, point to a troubling trend of rapacious and well funded entities buying properties at tax and homeowner’s association foreclosures without regard for anything approaching the actual value of the property nor other lienholder. While a local tax authority does not have the same fiduciary duty to the property owner as a Substitute Trustee does, a tax sale is confirmed by the district court and subject to disapproval if unconscionable.

For a copy of the opinion, please see:

Henkel v. Triangle Homes- Foreclosure Sale does not Extinguish Tax Lien unless Federal Foreclosure Requirements are Met

Posted in NC Court of Appeals, NC Courts Tagged with: , ,

Bankr. E.D.N.C.: In re McGregor – Lack of Jurisdiction to Enforce Order following Dismissal

Summary:

Turnover of a vehicle held by a Raeford Collision and subject to a possessory mechanic’s lien was resolved subject to a Consent Order, which required the MacGregor to provide the title to the vehicle so that a lien could be recorded with the North Carolina DMV. When the MacGregor’s Chapter 13 case was dismissed and they failed to produce the title, Raeford Collision sought an order “divesting title” or to sequester the vehicle and to hold the McGregors in contempt.

The bankruptcy court held that, while it would have had authority to grant relief in an open case, because a dismissal is a final appealable order and neither had a reservation of jurisdiction nor had been appealed, the bankruptcy court not able to “affect the rights of litigants before it . . . and the court lacks subject matter jurisdiction to decide it.” In re Westgate Nursing Home, Inc., 518 B.R. at 256; see also Fox v. Bd. of Trs. of the State Univ. of New York, 42 F.3d 135, 140 (2d Cir. 1994). That notwithstanding, the bankruptcy court did continue and found that dismissal of the case, pursuant to 11 U.S.C. § 349(b), “rolls back the clock and the parties’ relative rights in estate property existing as of the minute before a bankruptcy petition’s filing are reinstated.” As such another court with competent jurisdiction could reinstate the mechanic’s lien previously held by Raeford Collision.

Commentary:

As will surprise no one, the McGregors did file a second Chapter 13, but in order to avoid the inevitable bad faith objections, did tender the title to the vehicle and fully comply with the terms of the previous Consent Order. Additionally worthy of note, were the serious allegations of bad acts by Raeford Collision both prior to and during the bankruptcy.

For a copy of the opinion, please see:

McGregor – Lack of Jurisdiction to Enforce Order following Dismissal

Posted in Eastern District, North Carolina Bankruptcy Cases Tagged with: , , ,

M.D.N.C.: In re Washabaugh- Denial of Interlocutory Appeal

Summary:

Following the re-opening of Ms. Washabaugh’s Chapter 7, the Bankruptcy Administrator sought revocation of her discharge. Ms. ’s motion to dismiss that complaint, alleging that the Bankruptcy Administrator lacked standing for such action, was denied by the bankruptcy court and Ms. Washabaugh sought leave to bring an interlocutory appeal to the district court.

The district court began with 28 U.S.C. § 158, which allows “with leave from the court” appeal of interlocutory orders based on the following factors:

(1) the appeal involves a controlling question of pure law, the resolution of which will completely determine the outcome of the litigation;
(2) as to which there is a substantial ground for difference of opinion between courts; and
(3) the resolution of the question as a whole would materially advance the termination of the litigation.
See In re Biltmore Invs., Ltd, 538 B.R. 706 (Bankr. W.D.N.C. 2015), appeal dismissed (4th Cir. 15-2313) (Feb. 5, 2016).

Commentary:

While not squarely on same specific issue as Bullard v. Blue Hills Bank, 135 S. Ct. 1686 (2015), which involved whether the denial of confirmation was a final, appealable order, the Supreme Court there did recently address interlocutory appeals in bankruptcy. While not giving carte blanche to such, it the unanimous opinion did discuss the “several mechanisms for interlocutory review” available and also expressed its “expectation that lower courts will certify and accept interlocutory appeals from plan denials in appropriate cases.”

For a copy of the opinion, please see:

Washabaugh- Denial of Interlocutory Appeal

Posted in District Courts, Middle District Tagged with: ,

Bankr. W.D.N.C.: In re Foley- Sole Use and Benefit under Life Insurance Exemption

Summary:

Mr. and Mrs. Foley each had several life insurance policies which named as the beneficiary a testamentary trust created by virtually identical wills. These directed the estate trustee to use any income and principal from the trust “for the health, maintenance and support” of the surviving spouse or subsequently their son. A later provision, however, authorized the trustee to “compromise claims”. Based on this provision, the bankruptcy trustee objected to the Foley’s claimed exemption.
The bankruptcy court started from the position that exemptions are to be liberally construed in favor of the debtor, see Elmwood v. Elmwood, 295 N.C. 168, 185, 244 S.E.2d 668, 678 (1978) (citing Goodwin v. Claytor, 137 N.C. 24, 49 S.E. 173 (1904)) and that, pursuant to Bankruptcy Rul2 4003(c), the party objecting to exemptions has the burden of establishing the claim exemption are improper. Despite holdings in In re Foster, No. 11-02711-8- JRL, 2011 WL 5903393, at *2 (Bankr. E.D.N.C. Nov. 1, 2011) and In re Eshelman, No. 11-08925-8-SWH, 2012 WL 1945709 (Bankr. E.D.N.C. May 30, 2012), the bankruptcy court overruled the trustee’s objection. While in both Foster and Eshelman, the estate trustee was specifically authorized to pay claims against the decedents’ estates, here the authority to “compromise claims” was more vague and ambiguous. Further, the Wills here, unlike in the other cases, pointedly directed expenditures and disbursements for th “for the health, maintenance and support” of the spouse and child, which was close enough to restricting funds for the “sole use and benefit” of the spouse and child to fall within a liberal construction of the exemption.

 

For a copy of the opinion, please see:

Foley- Sole Use and Benefit under Life Insurance Exemption

Posted in North Carolina Bankruptcy Cases, Western District Tagged with: ,

Bankr. E.D.N.C.: In re Faison- Denial of Confirmation for Infeasibility

Summary:

Mr. Faison filed a voluntary Chapter 11 bankruptcy seeking, among other things, to continue to develop real property against which Summit Bridge held several claims. Summit Bridge objected to confirmation of Mr. Faison’s (third) plan of reorganization based on infeasibility at it was a “visionary scheme” that was “based on speculation, hope and desire, and has no demonstrable objective fact or facts as its foundation.”

While stating that it believed Mr. Faison could ultimately propose a feasible plan, the bankruptcy court found the current plan infeasible. This was in part due to a failure to treat each parcel of property in the proposed development as unique and of differing values, high degree of speculation as to both the values of the lots and the costs of expenses, etc.

Commentary:

While Mr. Faison has real property located in Orange, Vance and Wake Counties, not only is his primary residence in Orange County but also the majority of the number of properties and the value of those properties are located in Orange County, including the land which forms the primary basis for the Chapter 11 reorganization. That Orange County is in the Middle District of North Carolina, arguably makes that the proper venue for this case, but apparently filing out-of-venue in the Eastern District of North Carolina was preferable and not objectionable to neither the Bankruptcy Administrator nor other creditors. That the bankruptcy court in the Eastern District was, despite denial of confirmation, willing to propose concrete suggestions as to what would be necessary and sufficient to confirm a plan, may indicate at least part of reason for this preference.

For a copy of the opinion, please see:

Faison- Denial of Confirmation for Infeasibility

Posted in Eastern District, North Carolina Bankruptcy Cases Tagged with: , ,

Bankr. M.D.N.C.: Daniel v. Jones Family Holdings – § 548 Avoidance of Foreclosure for Less than Reasonably Equivalent Value

Summary:

Mr. Daniel, together with the Chapter 13 Trustee subsequently added as a necessary Plaintiff, sought to avoid a pre-petition foreclosure by his homeowner’s association of his residence (in which the upset period had elapsed prior to filing of the bankruptcy) pursuant to 11 U.S.C. § 548(a)(1), as it had occurred within two years prior to the filing of the bankruptcy, had made the Debtor insolvent and provided less than “reasonably equivalent value” in exchange for the transfer. Jones Family Holdings (“JFH”), the highest bidder and purchaser of the property, moved to dismiss for failing to adequately state a claim, as it is a good faith, third party purchaser protected by state law, and that the Rooker-Feldman doctrine, res judicata, and collateral estoppel prevent the Daniel from bringing a claim.

In order to survive a motion to dismiss for failure to state a claim, the court restated that Mr. Daniel and the Chapter 13 Trustee “must merely demonstrate the plausibility of their claim, element by element.” It was not contested that the foreclosure had occurred within two years of the bankruptcy nor that the loss of the his home, which was Mr. Daniel’s primary asset and had substantial equity, caused his insolvency. The only issue which JFH contested was whether Mr. Daniel had received “reasonably equivalent value” for the transfer.

Following BFP v. Resolution Trust Corp., 511 U.S. 531 (1994), which held that the price received at a mortgage foreclosure sale conclusively establishes reasonably equivalent value if state foreclosure law requirements had been met, and Hollar v. Myers (In re Hollar), 184 B.R. 243, 252 (Bankr. M.D.N.C. 1995), which extended BFP to forced sales for tax liens, the bankruptcy court found the same applied to sales by homeowner’s associations. See also Callaway v. Cimarron Homeowners Ass’n (In re Roszkowski), 494 B.R. 671, 680 (Bankr. E.D.N.C. 2013).

Under North Carolina law a merely inadequate final bid is insufficient to overturn a foreclosure. Instead there must be some material irregularity in the sale. Beneficial Mortg. Co. of N.C. v. Peterson, 592 S.E.2d 724, 728 (N.C. App. 2004). Mr. Daniel alleged, however, that the substitute trustee breached his fiduciary duty to the Mr. Daniel by acting as the sale trustee while also representing the Association and presenting evidence to the Clerk, in so doing violating the neutrality of the substitute trustee’s role by failing to maximize the sales price and instead acting as advocate for the homeowner’s association in merely seeking sufficient funds to satisfy its lien.

The bankruptcy court held that, despite a previous ruling denying a stay of eviction of Mr. Daniel from the property as he was unlikely to ultimately prevail, to survive a motion to dismiss, Mr. Daniel merely had to demonstrate a plausible claim, which he had.

As to JFH contention that it was insulated from recovery as a good faith, third party purchaser, the bankruptcy court held that a Trustee can recover from an initial transferee. Further, the res judicata/estoppel and Rooker-Feldman defenses failed both because the Trustee was not a party to the earlier litigation and also because the § 548 cause of action was not (and could not) have been raised in the pre-bankruptcy state court case.

Commentary:

Despite finding that Mr. Daniel stated a sufficiently plausible claim to satisfy the relatively low standard to survive a motion to dismiss for failure to state a claim, not only had he failed to show a likelihood of success on the merits to obtain a preliminary injunction to retain possession of his house, but he subsequently also failed to meet the burdens for confirmation. There the bankruptcy court held that, in conjunction with the odor that arose from his purchase of a new car mere hours before filing bankruptcy, Mr. Daniel’s “attempt to circumvent” the unfavorable state court foreclosure “constitutes an improper purpose” for filing bankruptcy. See, e.g., In re Lundahl, 307 B.R. 233, 246–47 (Bankr. D. Utah 2003) and In re McGovern, 297 B.R. 650, 659 (S.D. Fla. 2003). As such, confirmation of his case was denied as neither the plan nor case were filed in good faith.

The North Carolina State Bar has held in 2014 FEO 2 that a lawyer representing a party by serving as the substitute trustee in a contested foreclosure proceeding cannot also represent that party in the proceeding. This, while unmentioned in this opinion, it does give a basis for asserting a material irregularity in sales. A future case, where the debtor is not tainted with other factors indicating bad faith, could stand a better chance of prevailing.

Foreclosure firms should advise their clients, whether homeowner’s associations or mortgage holders, that the roles of substitute trustee and attorney for the creditor need to be separated. This would seem to be beneficial to law firms, since then two firms get paid for each foreclosure rather than one.

For a copy of the opinion, please see:

Daniel v. Jones Family Holdings – § 548 Avoidance of Foreclosure for Less than Reasonably Equivalent Value

Daniel v. Jones Family Holdings – Denial of Confirmation for Bad Faith Filing to Relitigate Issues

2014 Formal Ethics Opinion 2- Serving as Substitute Trustee and Attorney for Creditor

Posted in Middle District, North Carolina Bankruptcy Cases Tagged with: , , ,