(b) Carrier shall have no liability for any loss or damage to a shipment or for any delay caused by an Act of God, the public enemy, public authority, or any act, omission, or default of the shipper. The carrier or party in possession shall not be liable for loss, damage or delay which results: when the property is stopped and held in transit upon request of the shipper, owner or party entitled to make such request; or from faulty or impassible highway, or by lack of capacity of a highway, bridge or ferry; or from a defect or vice in the property.
2. Unless arranged or agreed upon, in writing, prior to shipment, carrier is not bound to transport a shipment by a particular schedule or in time for a particular market, but is responsible to transport with reasonable dispatch. In case of physical necessity, carrier may forward a shipment via another carrier. Carrier shall have no liability for any claim for delay absent a separate written agreement to deliver by a date certain. In the case of delivery by a date certain, the maximum potential damages recoverable by shipper for late delivery shall be the freight charges paid for that singular shipment.
3. (a) As a condition precedent to recovery, any claim for loss, damage, or delay must be submitted in writing with the carrier identified on the face of this bill of lading. The failure to take exceptions to the condition of goods, and the execution of this document by the consignee without exceptions shall be direct evidence that the shipment was received in good condition. Any claim of concealed damage requires notice to the carrier within 24 hours of delivery in the case of local or intrastate transportation, or within five (5) days in the case of interstate transportation. Carrier shall have no liability for concealed damage where shipper fails to notify carrier in writing of concealed damage within 24 hours of delivery. Any cargo for which consignee did not take a written exception on the delivery document at the time of delivery shall be considered concealed damage.
(b) Claims for loss, damage, or delay must be filed within 15 days of delivery of shipment or the reasonable delivery date of such shipment if undelivered. Failure to file such written claim shall be deemed a waiver of the right to claim damages by such shipper.
(c) Suits for loss, damage, injury or delay shall be instituted against any carrier no later than two years and one day from the day when written notice is given by the carrier to the claimant that the carrier has disallowed the claim or any part or parts of the claim specified in the notice. Where claims are not filed or suits are not instituted thereon in accordance with the foregoing provisions, no carrier shall be liable, and such claims will not be paid.
(d) Any carrier or party liable for loss of or damage to any of said property shall have the full benefit of any insurance that may have been effected, upon or on account of said property, so far as this shall not void the policies or contracts of insurance, provided that the carrier receiving the benefit of such insurance will reimburse the claimant for the premium paid on the insurance policy or contract.
4. (a) In all cases not prohibited by law, where a shipper fails to declare a value to the carrier in writing prior to tendering the subject shipment, which declaration is received by carrier, and rate increase is agreed upon and paid by the shipper, the value of the shipment is hereby agreed to be not more than $50.00 per shipment, or ten cents per pound, per article, whichever is less.
(b) The limitation of liability provided for in this section shall be enforceable regardless of cause of loss, damage or delay, including gross negligence, recklessness or willful and wanton conduct. Nothing short of conversion to the carrier's own use, for the direct benefit of the corporation itself, shall vitiate this limitation of liability.
(c) The limit of Comet Delivery Service's liability may be increased up to $500.00 per shipment maximum. Comet Delivery Services will not carry a shipment declared to have a value in excess of $500.00 under this bill of lading. Any shipment with a value in excess of $500.00 must be represented by a separate written agreement whereby the commodity is described in detail and the carrier expressly agrees to such greater value. Such separate written agreement must be executed by duly authorized representatives of each party at least twenty-four hours prior to transportation.
(d) Under no circumstances will any shipment containing particularly high valued items such as cash, furs, jewelry, coins, negotiable instruments, or items of similar value to weight ratios be accepted pursuant to this bill of lading. Any such shipments must be covered by a separate written agreement executed by both parties. If such a shipment is inadvertently accepted by carrier, or mislabeled by shipper for any reason, Carrier's liability shall be limited as provided in section 4(a).
(e) Under no circumstances will Comet Delivery Services be liable for loss or damage caused by delay or by improperly packed or improperly labeled shipments, or for any “special” or “consequential” or “economic” damages including, but not limited to lost interest, profits, income, or business opportunities whether or not Comet Delivery Services acknowledged or knew such damages may be incurred.
5. No employee or representative of Comet Delivery Services is authorized to alter, vary or contradict these terms regarding Comet Delivery Service's liability.
6. Should any claim in any amount even if in excess of such limits of Comet Delivery Service's liability be asserted against Comet Delivery Services by any third party for any loss or damage to any shipments carried hereunder, shipper agrees to indemnify Comet Delivery Services and hold it harmless against any damages, expenses, or cost including attorney's fees, arising out of any such claim regardless of the cause.
7. Freight charges pursuant to this bill of lading are due within three (3) business days of delivery of said shipment unless a credit agreement is in place between Carrier and Shipper. In the event of customer's failure to pay freight charges in full within fifteen (15) days of delivery, customer hereby agrees to pay liquidated damages in the amount of thirty percent of the original freight charges, in addition to the original freight charges, plus reasonable attorney's fees and all costs of collection whether or not suit is commenced. No shipper or consignee shall be entitled to set off any claims for loss, damage or delay against freight charges owed to carrier, and any pending or denied claims shall not serve to toll or void the Carrier's collection efforts, loss of discount, or Carrier's entitlement to fees. This fee provision extends only to the collection of delinquent freight charges, and does not apply to any other claims, demands, or litigation of any kind between the parties.
8. It is the sole and non-delegable duty of shipper to provide appropriate packaging, containerization, sealing, palletizing, boxing, or crating of product tendered to Carrier. All cargo must be packaged and prepared in a manner so as to withstand the normal rigors of motor carriage and handling. Acceptance by Carrier of any package or cargo does not serve as acquiescence or agreement to the fitness of the packaging or packing of said cargo. In the event that a failure, flaw, omission, mistake, or negligence of any kind of degree in the packaging of the product tendered by shipper to Carrier, shipper hereby agrees to indemnify and hold harmless Carrier from any and all damage resulting from said insufficient, improper, failing, or negligent packaging, including damage to other commodities transported or stored by Carrier and damage to Carrier's property or that of any other entity or individual. It is shipper's further duty to ensure that all product is accurately and properly marked, classified, and tendered in accordance with these rules and the normal standards of interstate and intrastate shipping. Shipper shall defend, indemnify, and hold harmless, CARRIER from any damage, loss, liability, or claims of any kind resulting from the improper or negligent packing, marking, description or classification of any product. Any and every party, whether principal or agent, shipper or consignee, who ships explosives, illegal goods, contraband, or dangerous goods, shall be liable for and indemnify the carrier against all loss or damage caused by such goods. Such goods may be warehoused and disposed of at owner's risk and expense or destroyed without compensation.
9. Nothing in this bill of lading shall limit the right of the carrier to require the prepayment or guarantee of the charges at the time of shipment or prior to delivery. If the description of articles or other information on this bill of lading is found to be incorrect or incomplete, the freight charges must be paid based upon the articles actually shipped.
10. If the consignee refuses the shipment tendered for delivery by carrier or if carrier is unable to deliver the shipment, because of fault or mistake of the consignor or consignee or for any reason not directly attributable to carrier, the carrier's liability shall then become that of a warehouseman, except that the limitations of liability herein shall still apply unless a lesser limitation is found to apply by virtue of the law. Carrier shall promptly attempt to provide notice, by telephonic or electronic communication as provided on the face of the bill of lading, if so indicated, to the shipper or the party, if any, designated to receive notice on this bill of lading. Storage charges, based on carrier's terms and conditions, shall start no sooner than the next business day following the attempted notification. Storage may be, at the carrier's option, in any location that provides reasonable protection against loss or damage. The carrier may place the shipment in public storage at the owner's expense and without liability to the carrier.
(b) If the carrier does not receive disposition instructions within 48 hours of the time of carrier's attempted first notification, carrier will attempt to issue a second and final confirmed notification. Such notice shall advise that if carrier does not receive disposition instructions within 10 days of that notification, carrier may offer the shipment for sale at a public auction and the carrier has the right to offer the shipment for sale. The amount of sale will be applied to the carrier's invoice for transportation, storage and other lawful charges. The owner will be responsible for the balance of charges not covered by the sale of the goods. If there is a balance remaining after all charges and expenses are paid, such balance will be paid to the owner of the property sold hereunder, upon claim and proof of ownership.
In the event the warehouseman retains an attorney to collect any charges or amounts due the warehouseman by the storer, it is agreed that the storer will be liable for and will pay all reasonable attorney fees and costs of collection, including but not limited to court costs, and all costs normally and reasonably charged by the attorney as well as any other charges reasonably incurred in connection with the collection of moneys due the warehouseman by the storer including on appeals. This fee provision only applies to disputes and actions for the limited purpose of collection of storage charges and is expressly limited to not include claims for loss or damage.
This contract and rate quotation including accessorial charges endorsed on or attached hereto must be accepted within 15 days from the proposal date by signature of depositor on the reverse side of the contract. In the absence of written acceptance, the act of tendering goods described herein for storage or other services by warehouseman within 15 days from the proposal date shall constitute such acceptance by depositor. Irrespective of whether a contract has been provided to or executed by the depositor, storage for a period in excess of thirty days or the payment of any invoice for storage or related charges shall be an express acceptance by the depositor to be bound by these terms.
In the event that goods tendered for storage or other services do not conform to the description contained herein, or conforming goods are tendered after 15 days of the proposal date without prior written acceptance by depositor as provided in paragraph (a) of this section, warehouseman may refuse to accept such goods. If warehouseman accepts such goods, depositor agrees to rates and charges as may be assigned and invoiced by warehouseman and to all terms of this contract.
This contract may be cancelled by either party upon 30 days written notice and is cancelled if no storage or other services are performed under this contract for a period of 180 days.
Depositor agrees not to ship goods to warehouseman as the named consignee. If, in violation of this agreement, goods are shipped to warehouseman as named consignee, depositor agrees to notify carrier in writing prior to such shipment, with copy of such notice to the warehouseman, that warehouseman named as consignee is a warehouseman and has no beneficial title or interest in such property and depositor further agrees to indemnify and hold harmless warehouseman from any and all claims for unpaid transportation charges, including undercharges, demurrage, detention or charges of any nature, in connection with goods so shipped. Depositor further agrees that, if it fails to notify carrier as required by the next preceding sentence, warehouseman shall have the right to refuse such goods and shall not be liable or responsible for any loss, injury or damage of any nature to, or related to, such good. Depositor agrees that all promises contained in this section will be binding on depositor’s heirs, successors and assigns.
All goods for storage shall be delivered at the warehouse properly marked and packaged for handling. The depositor shall furnish at or prior to such delivery, a manifest showing marks, brands, or sizes to be kept and accounted for separately, and the class of storage and other services desired. It is the sole and non-delegable duty of depositor to provide appropriate packaging, containerization, sealing, palletizing, boxing, or crating of product tendered to warehouseman. All cargo must be packaged and prepared in a manner so as to withstand the normal rigors of motor carriage and warehouse handling. Acceptance by warehouseman of any package or cargo does not serve as acquiescence or agreement to the fitness of the packaging or packing of said cargo. In the event that a failure, flaw, omission, mistake, or negligence of any kind of degree in the packaging of the product tendered to warehouseman, depositor hereby agrees to indemnify and hold harmless warehouseman from any and all damage resulting from said insufficient, improper, failing, or negligent packaging, including damage to other commodities transported or stored by warehouseman and damage to warehouseman’s property or that of any other entity or individual. Depositor shall defend, indemnify, and hold harmless, warehouseman from any damage, loss, liability, or claims of any kind resulting from the improper or negligent packing, marking, description or classification of any product tendered for storage.
All charges for storage are per package or other agreed unit per month. Storage charges become applicable upon the date that warehouseman accepts care, custody and control of the goods, regardless of unloading date of issue of warehouse receipt.
Except as provided in paragraph (d) of this section, a full month’s storage charge will apply on all goods received between the first and the 15th, inclusive, of a calendar month; one-half month’s storage charge will apply on all goods received between the 16th and the last day, inclusive of a calendar month, and a full month’s storage charge will apply to all goods in storage on the first day of the next and succeeding calendar months. All storage charges are due and payable on the first day of storage for the initial month and thereafter on the first day of the calendar month.
When mutually agreed by the warehouseman and the depositor, a storage month shall extend from a date in one calendar month to, but not including, the same date of the next and all succeeding months. All storage charges are due and payable on the first day of the storage month. In the event payment is late, warehouseman will charge a minimum of $10.00 or 10% of the outstanding balance each month until balance and late fees are paid.
Instructions to transfer goods on the books of the warehouseman are not effective until delivered to and accepted by warehouseman, and all charges up to the time transfer is made are chargeable to the depositor of record. If a transfer involves rehandling the goods, such will be subject to a charge. When goods in storage are transferred from one party to another through issuance of a new warehouse receipt, a new storage date is established on the date of transfer.
The warehouseman reserves the right to move, at his expense, 14 days after notice is sent by certified or registered mail to the depositor of record or to the last known holder of the negotiable warehouse receipt, any goods in storage from the warehouse in which they may be stored to any other of his warehouses; but if such depositor or holder takes delivery of his goods in lieu of transfer, no storage charge shall be made for the current storage month. The warehouseman may, without notice, move goods within the warehouse in which they are stored.
The warehouseman may, upon written notice to the depositor of record and any other person known by the warehouseman to claim an interest in the goods, require the removal of any goods by the end of the next succeeding storage month. Such notice shall be given to the last known place of business or abode of the person to be notified. If goods are not removed before the end of the next succeeding storage month, the warehouseman may sell them in accordance with applicable law.
If warehouseman in good faith believes that the goods are about to deteriorate or decline in value to less than the amount of warehouseman’s lien before the end of the next succeeding storage month, the warehouseman may specify in the notification any reasonable shorter time for removal of the goods and in case the goods are not removed, may sell them at public sale held one week after a single advertisement or posting as provided by law.
If as a result of a quality or condition of the goods of which the warehouseman had no notice at the time of deposit the goods are a hazard to other property or to the warehouse or to persons, the warehouseman may sell the goods at public or private sale without advertisement on reasonable notification to all person known to claim an interest in the goods. If the warehouseman after a reasonable effort is unable to sell the goods he may dispose of them in any lawful manner and shall incur no liability by reason of such disposition. Pending such disposition, sale or return of the goods, the warehouseman may remove the goods from the warehouse and shall incur no liability by reason of such removal.
The handling charge covers the ordinary labor involved in receiving goods at warehouse door, placing goods in storage, and returning goods to warehouse door. Handling charges are due and payable on receipt of goods.
Unless otherwise agreed, labor for unloading and loading goods will be subject to a charge. Additional expenses incurred by the warehouseman in receiving and handling damaged goods, and additional expense in unloading from or loading into cars or other vehicles not at warehouse door will be charged to the depositor.
Labor and materials used in loading rail cars or other vehicles are chargeable to the depositor.
When goods are ordered out in quantities less than in which received, the warehouseman may make an additional charge for each order or each item of an order.
The warehouseman shall not be liable for demurrage, delays in unloading inbound cars, or delays in obtaining and loading cars for outbound shipment unless warehouseman has failed to exercise reasonable care.
No goods shall be delivered or transferred except upon receipt by the warehouseman of complete instructions properly signed by the depositor. However, when no negotiable receipt is outstanding, goods may be delivered upon the instructions by telephone in accordance with a prior written authorization, but the warehouseman shall not be responsible for loss or error occasioned thereby.
When a negotiable receipt has been issued no goods covered by that receipt shall be delivered, or transferred on the books of the warehouseman, unless the receipt, properly endorsed, is surrendered for cancellation or for endorsement of partial delivery thereon. If a negotiable receipt is lost or destroyed, delivery of goods may be made only upon the order of a court of competent jurisdiction and the posting of security approved by the court as provided by law.
When goods are ordered out, a reasonable time shall be given the warehouseman to carry out instructions, and if he is unable because of acts of God, war, public enemies, seizure under legal process, strikes, lockouts, riots and civil commotions, or any reason beyond the warehouseman’s control, or because of loss or destruction of goods for which the warehouseman is not liable, or because of any other excuse provided by law, the warehouseman shall not be liable for failure to carry out such instructions and goods remaining in storage will continue to be subject to regular storage charges.
Warehouse labor required for services other than ordinary handling and storage will be charged to the depositor.
Special services requested by depositor including but not limited to compiling of special stock statements; reporting marked weights, serial numbers or other data from packages: physical check of goods; and handling transit billing will be subject to a charge.
Dunnage, bracing, packing materials or other special supplies, may be provided for the depositor at a charge in addition to the warehouseman’s cost.
By prior arrangement, goods may be received or delivered during other than usual business hours, subject to a charge.
Communication expense including postage, teletype, telegram, facsimile, or telephone will be charged to the depositor if such concern more than normal inventory reporting or if, at the request of the depositor, communications are made by other than regular United States Mail.
A charge in addition to regular rates will be made for merchandise in bond.
Where a warehouse receipt covers goods in U.S. Customs bond, such receipt shall be void upon the termination of the storage period fixed by law.
A minimum handling charge per lot and a minimum storage charge per lot per month will be made. When a warehouse receipt covers more than one lot or where a lot is in assortment, a minimum charge per mark, brand, or variety will be made.
A minimum monthly charge to one account for storage and/or handling will be made. This charge will apply also to each account when one customer has several accounts, each requiring separate records and billing.
THE WAREHOUSEMAN SHALL NOT BE LIABLE FOR ANY LOSS OR INJURY TO GOODS STORED, HOWEVER CAUSED, UNLESS SUCH LOSS OR INJURY RESULTED FROM THE FAILURE BY THE WAREHOUSEMAN TO EXERCISE SUCH CARE IN REGARD TO THE GOODS AS A REASONABLY CAREFUL PERSON WOULD EXERCISE UNDER SIMILAR CIRCUMSTANCES AND WAREHOUSEMAN IS NOT LIABLE FOR DAMAGES WHICH COULD NOT HAVE BEEN AVOIDED BY THE EXERCISE OF SUCH CARE.
GOODS ARE NOT INSURED BY WAREHOUSEMAN AGAINST LOSS OR INJURY HOWEVER CAUSED.
THE DEPOSITOR DECLARES THAT DAMAGES ARE LIMITED TO 5 TIMES THE BASE STORAGE RATE OR $.50 PER POUND, PER ARTICLE WHICHEVER IS LESS, PROVIDED HOWEVER, THAT SUCH LIABILITY MAY AT THE TIME OF ACCEPTANCE OF THIS CONTRACT AS PROVIDED IN SECTION 1 BE INCREASED ON PART OR ALL OF THE GOODS HEREUNDER IN WHICH EVENT A MONTHLY CHARGE FOR EXCESS VALUATION WILL BE MADE IN ADDITION TO THE REGULAR MONTHLY STORAGE CHARGE. SUCH EXCESS VALUATION MUST BE DECLARED TO AND ACCEPTED BY WAREHOUSEMAN IN WRITING, AND EXCESS VALUATION CHARGES MUST BE PAID IN FULL, IN ADVANCE FOR EACH MONTH OF STORAGE IN ORDER FOR SUCH EXCESS VALUATION TO BE EFFECTIVE. THE FAILURE TO TIMELY PAY STORAGE CHARGES IN FULL, INCLUDING THE EXCESS VALUATION CHARGES WILL RESULT IN AN EXPRESS AGREEMENT TO STORE THE GOODS AT A VALUE NOT EXCEEDING $.50 PER POUND PER ARTICLE. DAMAGE TO ONE ARTICLE SHALL NOT BE CONSIDERED DAMAGE TO ANY UNDAMAGED ARTICLE WITHIN IN A SET.
Claims by the depositor and all other person must be presented in writing to the warehouseman within a reasonable time, and in no event longer than either 10 days after delivery of the goods by the warehouseman or 10 days after depositor of record or the last known holder of a negotiable warehouse receipt is notified by the warehouseman that loss or injury to part or all of the goods has occurred, whichever time is shorter.
No action may be maintained by the depositor or others against the warehouseman for loss or injury to the goods stored unless timely written claim has been given as provided in paragraph (a) of this section and unless such action is commenced either within three months after date of delivery by warehouseman or within three months after depositor of record or the last known holder of a negotiable warehouse receipt is notified that loss or injury to part or all of the goods has occurred, whichever time is shorter.
All Claims must be made in writing, and include such information as to identify the goods in question, include a copy of the warehouse receipt or identification information, include a demand for an amount certain which must be supported by invoice or similar documentation, and include a specific weight for the goods being claimed as damaged or missing.
When goods have not been delivered, notice may be given of known loss or injury to the goods by mailing of a registered or certified letter to the depositor of record or to the last known holder of a negotiable warehouse receipt. Time limitations for presentation of claim in writing and maintaining of action after notice begin on the date of mailing of such notice by warehouseman.
Nothing entered hereon shall be construed to extend the warehouseman’s liability beyond the standard of care specified in Section 11 above.
The Warehouseman possess a lien as described in Section 677.209, Florida Statutes, and may enforce such lien as provided by Section 677.210, Florida Statutes.
If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effected during the terms of this Agreement, such provision shall be fully severable from the remaining provisions of this Agreement, and it shall not affect the validity of the remaining provisions, which provisions shall be given full force and effect as if the illegal, unenforceable, or invalid provision had not been included in this Agreement. In lieu of an illegal, unenforceable, or invalid provision, there shall be substituted a provision as similar in terms to the illegal, invalid, or unenforceable provision as may be possible and still be legal, valid and enforceable.
This Agreement shall be governed by and be construed in accordance with Florida law.
The Parties consent to exclusive jurisdiction and venue in Miami Dade County, Florida in any dispute which might arise in connection with this Agreement.
This Agreement and the addenda hereto form the entire agreement between the Parties relating to the subject matter hereof. Except as otherwise agreed in this Agreement, all amendments and modifications to this Agreement shall be made by a written document executed by both Parties.
Comet Delivery Services, (hereinafter "BROKER") is a transportation broker as defined by 49 U.S.C. §13102(2), arranging for the transportation of goods of all kinds on behalf of its shipper-clients.
SHIPPER shall include any corporation, limited liability company, individual, or entity of any nature seeking to engage a transportation broker to assist it in locating motor carriers to transport SHIPPER's goods.
BROKER is a licensed property broker with the U.S. Department of Transportation.
BROKER arranges for transportation of goods on behalf of SHIPPER, but does not actually carry, consolidate, possess, or otherwise take dominion over the loads that it brokers.
BROKER agrees to provide SHIPPER with transportation services, including the locating, hiring, confirmation of carrier authority, rate negotiation, and tendering of a carrier, who will perform the actual carriage of the SHIPPER'S goods at the direction of BROKER.
SHIPPER is aware and acknowledges that BROKER is not a motor carrier, and will not ever take actual possession, custody or control over the shipments being arranged for on SHIPPER'S behalf.
BROKER will only utilize the services of carriers who have demonstrated their qualification by providing proof of operating authority and cargo insurance coverage as demonstrated by a declaration page showing active coverage. BROKER does not warrant particular coverages or exclusions.
BROKER will be solely responsible for invoicing and collecting freight charges from the SHIPPER, and all carriers utilized by BROKER to carry SHIPPER's goods have expressly waived any and all rights to collect from or make demands upon the SHIPPER, consignor, or consignee directly.
BROKER agrees to pay CARRIER's freight charges on behalf of SHIPPER, and to invoice SHIPPER directly for payment of said freight charges.
BROKER's invoice will, upon request written request from the SHIPPER, be accompanied by a copy of the bill of lading.
In the event that SHIPPER does not approve of a particular carrier, once a request in writing is delivered to BROKER to no longer use said carrier on SHIPPER's loads, BROKER will cease use of that carrier on BROKER's loads, or request a waiver of said bar prior to transport.
SHIPPER shall provide a full description of the goods for which transportation is being arranged, accurate information regarding the origin and destination for such shipments, and all other information necessary to complete the transportation of the shipment.
BROKER'S standard payment terms require receipt of cash payment in advance of services. If BROKER chooses to extend credit to SHIPPER, SHIPPER shall make payment of the full invoiced amount for all loads arranged for by BROKER within 10 days of invoice date. In the event that SHIPPER fails to timely pay BROKER'S invoice as required herein, SHIPPER shall be liable for fifteen percent (15%) late payment fee, as well as any and all attorneys' fees or collection fees expended by BROKER in an effort to collect those charges.
SHIPPER agrees to be bound to any additional charges which may become due, including equipment repair, accessorial charges, waiting times, or unnecessary delay caused by the SHIPPER.
Except as provided herein, all claims will be filed and resolved in accordance with the provisions of 49 CFR Part 370. BROKER may assist SHIPPER with claims to carrier, but all claims must be made against carrier and not BROKER, who expressly bears no liability for any loss or damage or delay to any shipment arranged by BROLER for SHIPPER. Except as provided herein, liabilities and burdens of proof against carrier will be governed by federal law and by the provisions of 49 U. S. C. § 14706.
All overcharge, duplicate payments, and over collection claims will be filed and resolved in accordance with the provisions of 49 CFR Part 378.
Nothing contained herein shall be construed as a commitment by the SHIPPER to employ BROKER on any specific number of shipments or any specific percentage of shipments.
The rates set forth in Rate Confirmations are designed to meet the distinct needs of the parties to this agreement. Each shipment should be accompanied by a Rate Confirmation which is expressly subject to the terms of this Agreement.
It is the duty to the SHIPPER to inquire directly to any carrier tendered hereunder as to any applicable rules or tariffs, and how they might affect liability, claims, or other duties and rights between SHIPPER and carrier. Broker has no role in regard to such items, and merely arranges for a carrier to perform the requested carriage at a specific rate agreed upon.
BROKER may submit invoices electronically. SHIPPER agree to receive invoices electronically. SHIPPER may transfer funds electronically to the bank designated by BROKER.
BROKER and SHIPPER each agree to utilize their best efforts to utilize electronic invoicing and payment systems as soon as possible; however, reasonable delays in such development shall not be considered a breach of this Agreement.
BROKER as a licensed property broker does not have any legal liability for loss, damage, or delay in the transportation of SHIPPER'S property. BROKER's liability is extinguished by the tendering of a qualified carrier to the location designated by SHIPPER for pickup.
Any and all claims for loss, damage, or delay are to be made directly with the motor carrier. BROKER will provide all necessary information and documentation to assist SHIPPER in the handling of such a claim with the motor carrier, but such action does not create any liability on the part of the BROKER or waive any term of this agreement.
Regardless of any of the foregoing, BROKER'S maximum liability in any regard or for any cause whatsoever, to any person or party, shall be limited to the total sum of fifty dollars ($50.00) per shipment.
All bills of lading, delivery receipts, or other transportation documentation, aside from estimates and Rate Confirmations exchanged directly between SHIPPER and BROKER, shall be the sole responsibility of SHIPPER, and shall not bind BROKER in any manner.
SHIPPER's designation of BROKER on any bills of lading or delivery receipts shall be for informational purposes only and will not modify the terms of this Agreement. Any representations made by the motor carrier do not bind BROKER in any manner.
Upon the request of SHIPPER, BROKER will provide copies of delivery receipts and bills of lading from carrier, where SHIPPER has instructed carrier to retain copies of such documentation or have such documentation executed by consignee.
The terms and conditions of any freight documentation used by SHIPPER and/or the motor carrier selected by BROKER may not supplement, alter, or modify the terms of this Agreement. In the event of any conflicts, this Agreement shall control.
To the full extent permitted by law, SHIPPER agrees to indemnify, defend and hold harmless BROKER, its partners and affiliates, as well as all of their officers, directors, attorneys, agents, insurers, and employees from and against any and all claims, demands, actions, liabilities, judgments, losses, damages, expenses, costs, penalties, and fines, including third party claims for contribution, attorney's fees for injury or alleged injury of any kind to any person, including death, and/or damage or alleged damage of any kind to any property arising from the negligent acts or omissions of SHIPPER, related to the tendering of hazardous materials, or improper packaging, loading, or latent defects in goods tendered for carriage.
shall indemnify and save harmless each other, their subsidiaries and their respective officers, directors, and employees, from and against all liabilities, obligations, losses, damage, penalties, claims, actions, suits, costs, charges and expenses, including without limitation, reasonable fees and expenses of legal counsel and expert witnesses, which are the result of or arising out of any or all of the respective obligations of the parties or which may be imposed or incurred by or asserted against BROKER or SHIPPER by reason of actual or alleged; (i) injury or death to persons; (ii) damage to the property of any person or legal entity; (iii) violation of any law, ordinance or regulation of any federal, state or local governmental authority by either BROKER or SHIPPER or any of the parties set forth above; provided, however, the foregoing agreement to indemnify and hold harmless each other shall only be applicable to the extent that such liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, charges and expenses are attributable to the sole negligence of either BROKER or SHIPPER.
SHIPPER hereby agrees to comply with all applicable laws and regulations relating to the transportation of hazardous materials as defined in 49 CFR §172.800 and §173 et seq. to the extent that any shipments constitute hazardous materials.
SHIPPER hereby acknowledges and agrees that SHIPPER will not tender to BROKER or BROKER's designated motor carrier any hazardous materials for shipment. Notwithstanding, SHIPPER is obligated to inform BROKER immediately if any such shipments tendered by error do constitute hazardous materials.
Neither Party shall be liable to the other for failure to perform any of its obligations under this Agreement during any time in which such performance is prevented by fire, flood, or other natural disaster, war, embargo, riot, civil disobedience, or the intervention of any government authority, or any other cause outside of the reasonable control of the BROKER or SHIPPER provided that the Party so prevented uses its best efforts to perform under this Agreement and provided further, that such Party provide reasonable notice to the other Party of such inability to perform.
Cargo liability insurance with minimum limits of $50,000 per occurrence, with a deductible of not more than $5,000.
Automobile liability insurance covering its owned, hired and non-owned automobiles with minimum limits of $1,000,000 per occurrence.
Comprehensive general liability insurance, including contractual liability coverage, with minimum limits of $1,000,000 per occurrence, with a deductible of not more than $10,000.
In those circumstances where, due to the value of any shipment, SHIPPER requires greater cargo coverage, SHIPPER may either acquire a greater amount of insurance on its own, or may choose to make arrangements with the motor carrier directly to release the goods for transportation at a particular value. Any such agreements between SHIPPER and carrier shall not bind or affect BROKER.
Regardless of the foregoing, BROKER is not an insurer of shipments for which it arranges transportation, and any failure of any excess policy to provide coverage shall not affect BROKER's liability.
BROKER has no liability for the failure of a motor carrier's insurance policy to timely or reasonably pay claims. However, BROKER has contractually required from carriers that such coverage is in place for each motor carrier used prior to assignment of such motor carrier to any loads.
BROKER is not required to obtain copies of the full policy of insurance of carriers, but instead will simply acquire a declaration page. BROKER makes no representations as to any coverages or exclusions beyond what appears on the face of the declaration page provided, and BROKER will forward such information on to SHIPPER upon request. It is SHIPPER's duty to perform any investigation into policies and specific exclusions therein.
BROKER may assist their customers in the filing of claims with motor carriers under this Agreement, and BROKER has required that motor carriers will upon receipt of a claim in writing from either BROKER or SHIPPER, acknowledge receipt of such claim within thirty (30) days of receipt of the claim.
All claims must be filed with carrier within 9 months of delivery or the date of anticipated or expected delivery of an undelivered shipment, pursuant to 49 U.S.C. §14706(e).
The filing, processing and disposition of all cargo claims shall be governed by 49 C.F.R. §370 et seq. to the extent not modified herein.
Any assistance by BROKER in facilitating the claims process shall not change the liability of the BROKER as outlined herein.
Neither party may disclose the terms of this Agreement to a third party without the written consent of the other party except: (1) as required by law or regulation; (2) disclosure is made to its parent, subsidiary or affiliate company; or (3) to facilitate rating or auditing of transportation charges by an authorized agent and such agent agrees to keep the terms of the Agreement confidential.
SHIPPER further agrees not to solicit the services of, or directly engage, the carrier(s) tendered by BROKER pursuant to the terms of this Agreement. Furthermore, SHIPPER shall not disclose the terms of this agreement or the rates agreed upon between SHIPPER and BROKER to any third party unless required by law.
The BROKER and SHIPPER hereby expressly state that they are the only parties to this Agreement and that neither the BROKER, nor the SHIPPER intend for any third party to specifically benefit from this Agreement.
Failure of either party to insist upon performance of any of the terms, conditions or provisions of this Agreement, or to exercise any right or privilege herein, or the waiver of any breach of any of the terms, conditions or provisions of this Agreement, shall not be construed as thereafter waiving any such terms, conditions, provisions, rights or privileges, but the same shall continue and remain in full force and effect as if no forbearance or waiver had occurred.
This Agreement shall not be assignable by either party, in whole or in part, without the written consent of the other party, which consent shall not be unreasonably withheld.
Without regard to the principles of conflicts of law, the Agreement shall be construed in accordance with, and any and all disputes arising under or out of this Agreement, shall be governed by federal law where applicable, or otherwise Florida law. Venue shall be in Broward County, Florida.
SHIPPER hereby asserts that it is and does conduct business in Broward County, Florida and is subject to the personal jurisdiction of Broward County Courts.
This Agreement is entered into in Broward County, Florida.
This Agreement, along with any rate confirmation provided to shipper, shall embody the entire understanding between BROKER and SHIPPER covering the services to be performed hereunder, and there are no other agreements, understandings, conditions, warranties, or representations, oral or implied with reference to the subject matter hereof.
In the event of any conflict between this Agreement and any term or provision in any other document related to or used in the process of arranging or transporting of goods by BROKER and SHIPPER, this Agreement shall govern to the extent of the conflict.


Bankruptcy Rule 9011 Applies to Blind Reliance on Mortgagee’s Electronic Data: The United States Court of Appeals for the Third Circuit has delivered an important message about the management of mortgage claims in bankruptcy cases: blind reliance on inaccurate data supplied by a mortgage lender subjects the lender, its attorney and her law firm to sanctions under Bankruptcy Rule 9011. In re Taylor, No. 10-2154, 2011 WL 3692440 (3d Cir. Aug. 24, 2011) (Fuentes, Smith, Van Antwerpen).
Careful What You Wish For: State Court Judgment Gives Debtor Standing to Avoid Preference: You may remember the decision of the Bankruptcy Appellate Panel for the Sixth Circuit in Dickson v. Countrywide Home Loans (In re Dickson), 427 B.R. 399 (B.A.P. 6th Cir. Apr. 12, 2010) (Fulton, McIvor, Shea-Stonum). The interesting holding by the BAP in Dickson was that a Chapter 13 debtor had “derivative standing” to pursue the preferential perfection of a lien on a manufactured home when the trustee declined to bring the action. On further appeal, the United States Court of Appeals for the Sixth Circuit has affirmed the BAP, but the Circuit found a different and equally interesting logic: the Chapter 13 debtor has direct standing to avoid the preferential perfection of a lien when the creditor took a default judgment during the preference period. Dickson v. Countrywide Home Loans (In re Dickson), No. 10-5580, 2011 WL 3768684 (6th Cir. Aug. 26, 2011) (Norris, Gibbons, Griffin).
POSTPETITION DSOs RUN AMOK IN EIGHTH CIRCUIT: Of course, it’s not uncommon for strange facts to make strange law. But the outcome found by the United States Court of Appeals for the Eighth Circuit in Burnett v. Burnett (In re Burnett), 646 F.3d 575 (8th Cir. July 20, 2011) (Smith, Beam, Benton), may be the product of both strange law and strange facts with respect to the treatment of domestic support obligations (DSOs) in Chapter 13 cases after BAPCPA.
Early Payoff v. Applicable Commitment Period: Bird in Hand or What?: Two recent bankruptcy court decisions reach opposite conclusions with respect to whether a Chapter 13 debtor can payoff a confirmed plan and receive a discharge before completion of the applicable commitment period. As more and more appellate courts conclude that the applicable commitment period in § 1325(b)(4) is “temporal” and that Chapter 13 debtors must stay in their plans for that time without regard to the entitlement of unsecured creditors, there are sure to be more cases like these two.
Regular Income: In the Eye of the Beholder: Courts continue to struggle with the regular income condition for eligibility in §§ 109(e) and 101(30) when the source of the debtor’s income is a spouse or family member. The strange accounting for income and expenses required by the projected disposable income test after amendment by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) has complicated the regular income calculus. Two recent decisions reach opposite regular income conclusions in the context of family members in separate Chapter 13 cases.
Applicable Commitment Period and the Debtor with No Disposable Income: Outside the Sixth and Eleventh Circuits, bankruptcy practitioners, trustees and courts continue to struggle with the question whether a Chapter 13 debtor with current monthly income (CMI) greater than applicable median family income must sit in a Chapter 13 case for five years when there is no projected disposable income available for unsecured creditors. This question was directly addressed by the U.S. Court of Appeals for the Ninth Circuit in Maney v. Kagenveama (In re Kagenveama), 541 F.3d 868 (9th Cir. June 23, 2008) (Pregerson, Siler, Bea). The Ninth Circuit said that applicable commitment period in § 1325(b)(4) is a temporal requirement that determines the time during which a debtor is obligated to pay unsecured creditors; but, when there is no projected disposable income, there is no applicable commitment period.
Supreme Court Adopts Amendments and New Bankruptcy Rules: On April 26, 2011, the Supreme Court transmitted to the Speaker of the House and President of the Senate its adoption of amendments to Bankruptcy Rules 2003, 2019, 3001, 4004, and 6003, as well as new Rules 1004.2 and 3002.1. Assuming no adverse action by Congress, these amendments and new Rules will take effect December 1, 2011. New Rule 3002.1—addressing the management of home mortgages in Chapter 13 cases—is particularly important.
Naked Stay Relief Motion Is Stricken to Avoid § 109(g)(2) Prejudice: Here’s one you may need someday: a procedurally defective motion for stay relief was stricken by the bankruptcy court, rather than just denied, to avoid potential prejudicial effect under § 109(g)(2) in the event of dismissal. In re Cross, 442 B.R. 681 (Bankr. N.D. Ind. Dec. 20, 2010) (Grant). This case is a lesson in why naked stay relief motions are a bad idea and how bankruptcy courts might deal with the systemic problems involved.
Another Reason It Is Important to Object to Claims: Monk v. LSI Title Co. of Oregon, LLC (In re Monk), No. 10-6067-fra, 2011 WL 212831 (Bankr. D. Or. Jan. 21, 2011) (Alley), is an important reminder to debtors and trustees why it may be critical to object to a mortgage creditor’s proof of claim. Litton Loan Servicing filed a proof of claim in Monk that was disallowed on the trustee’s objection when Litton failed to respond to the trustee’s requests for documentation of its security interest. The claim was disallowed under § 502, but not for reasons described in § 506(d)(1), leading the court to conclude that the claim was not an “allowed secured claim,” and that the lien was void under § 506(d). Consequently, when the debtors completed plan payments and received their discharge, Litton had no lien that could survive discharge. Judge Alley’s analysis knitted together several Code definitions and the effects of disallowance.
Judicial Estoppel Applied to Proof of Claim: We frequently see judicial estoppel applied when a Chapter 13 debtor has neglected to disclose a cause of action in the schedules and then attempts to pursue that action after the bankruptcy case is dismissed or closed. See Chapter 13 Bankruptcy, 4th Ed. § 47.7. In a recent case, Oparaji v. Wells Fargo Bank, N.A. (In re Oparaji), No. 10-03231, 2010 WL 5462456 (Bankr. S.D. Tex. Dec. 29, 2010) (Isgur), Judge Marvin Isgur applied judicial estoppel in an unusual setting: to preclude Wells Fargo from seeking arrearages and charges that were inconsistent with the amounts it stated in proofs of claim filed in a prior Chapter 13 case.
Sixth Circuit BAP Holds Michigan Bankruptcy-Specific Exemptions Unconstitutional: Michigan, like eight other states, legislated specific exemptions that are available only to bankruptcy debtors. Perhaps ironically, the Michigan bankruptcy-specific homestead exemption is more favorable than the homestead exemption available to nondebtors. Under Michigan Compiled Laws § 600.5451(n), a debtor in bankruptcy may claim a homestead exemption of up to $34,450, and if the debtor is 65 years old or is disabled, the homestead exemption increased to $51,560. By contrast, individuals not in bankruptcy can only claim a miserly state homestead exemption of $3,500. Mich. Comp. Laws § 600.6023. In two Chapter 7 cases, debtors chose the Michigan enhanced bankruptcy homestead exemption, and the trustees objected, challenging the constitutionality of the bankruptcy-specific exemptions.
Ransom: No Debt, No Transportation Ownership Costs: In her debut opinion, Justice Elena Kagan enthusiastically joins seven other Justices of the Supreme Court willing to Fix the mess that Congress made of consumer bankruptcy in 2005. In Ransom v. FIA Card Services, N.A., No. 09-907, 2011 WL 66438 (Jan. 11, 2011), the Supreme Court holds that a Chapter 13 debtor with current monthly income greater than applicable median family income cannot deduct Local Standards Transportation Ownership Costs with respect to a car owned free of debt or lease. On the way there, the majority opinion comments broadly about many important consumer bankruptcy issues—answering some questions not presented and declining to answer others that were.
Good Faith, Equitable Tolling And Counting The 910 Days In The Hanging Sentence: A bankruptcy court has ruled that the 910-day period in the hanging sentence at the end of § 1325(a) is tolled during a debtor’s prior Chapter 13 case—notwithstanding the absence of bad faith or misconduct by the debtor. In re Hingiss, No. 10-29145-jes, 2010 WL 4941622 (Bankr. E.D. Wis. Dec. 2, 2010) (Shapiro). There are contrary cases but Supreme Court authority seems to support this outcome.
Bankruptcy Technical Corrections Act of 2010: Minor Changes to Chapter 13: On December 23, 2010, the President signed the Bankruptcy Technical Corrections Act of 2010. It took nearly six years to get here and the bill that finally emerged is a bit of a yawn. For the most part, this Technical Corrections Act just corrects misspellings, punctuation and mistaken cross references that abounded in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). There are changes to Chapter 13 in the Technical Corrections Act, but Congress did not address the major nonsenses, leaps of illogic or areas of significant controversy in BAPCPA.
Bankruptcy Rules and Forms Changing December 1, 2010: Several Bankruptcy Rules and Official Forms are amended, effective December 1, 2010, and some of those changes are applicable to Chapter 13 cases. The complete versions of the amended Rules and Forms are available on the website of the U.S. Courts, www.uscourts.gov. A summary of the changes affecting consumer cases follows.
Making Sense of Property Taxes in Chapter 13 Cases: Bankruptcy Judge John Cook in Chattanooga, Tennessee, has offered some logic for the management of property taxes in Chapter 13 cases. In re Stokes, No. 06-11296, 2010 WL 3980232 (Bankr. E.D. Tenn. Oct. 8, 2010) (Cook). This is a messed-up area of Chapter 13 practice and Stokes is a useful contribution to the debate.
Lien Stripping and the Debtor Ineligible for Chapter 13 Discharge: In a prior editorial, we examined recent decisions discussing which methods are available for lien stripping of a wholly unsecured junior lien, and which legal theories have been used to get there. (See: The Many Ways To Strip Off Wholly Unsecured Liens.) Now, we look at some recent analyses of whether debtors ineligible for a Chapter 13 discharge can accomplish lien stripping under any method or theory.
Can You Modify a Due on Sale Clause?: In a fresh look at the enforcement of due on sale clauses and the prohibition against modification of home mortgages, the court in In re Mullin, No. 09-39760-H4-13, 2010 WL 2680868 (Bankr. S.D. Tex. July 2, 2010) (Bohm), concluded that the clause was enforceable under Texas law and prevented the Chapter 13 debtor from curing default and making ongoing payments when the mortgage creditor objected to confirmation.
Lanning: Down the Slope and Off the Cliff: Pandora’s box is open. In Hamilton v. Lanning, __ U.S. __, 130 S. Ct. 2464 (June 7, 2010), the Supreme Court unhinged the projected disposable income test from the statutory definition of disposable income in §§ 101(10A), 707(b)(2)(A) and 1325(b), substituting the discretion of bankruptcy judges for the policy choices Congress made in BAPCPA in 2005. If you don’t believe that, take a look at the early returns: In re Collier, No. 09-33187, 2010 WL 2643542 (Bankr. M.D. Ala. June 29, 2010) (Williams); In re Cranmer, No. 10-22994, 2010 WL 2680940 (Bankr. D. Utah June 29, 2010) (Thurman).
The Many Ways To Strip Off Wholly Unsecured Liens: The volume of opinions discussing the stripping off of wholly unsecured junior mortgages on residential property continues to grow, supported by nearly unanimous appellate authority supporting Chapter 13 debtors’ ability to do so. Several recent decisions address the sticky question whether a debtor who is ineligible for Chapter 13 discharge may accomplish lien stripping—the subject of a sequel to this editorial. Before we get there, a review of the procedural differences seen in recent reported opinions will be helpful as background. The fundamental procedural question is: How does a Chapter 13 debtor accomplish lien stripping? Can it be done through the Chapter 13 plan confirmation process, or does it require a separate motion? Or an adversary proceeding? Courts haven’t agreed on a single pathway or on a single legal theory for lien stripping.
Sixth Circuit BAP: You Can’t Reprogram Pension Loan Repayment as Retirement Plan Contribution: A divided panel of the Bankruptcy Appellate Panel for the Sixth Circuit has resolved against the debtor the fascinating question whether a Chapter 13 plan can use the money that is repaying a pension loan to commence contributions to a 401(k) plan when the pension loans are repaid. Burden v. Seafort (In re Seafort), Nos. 09-8062 & 09-8063, 2010 WL 3564709 (B.A.P. 6th Cir. Sept. 14, 2010) (Boswell, McIvor, Shea-Stonum).
Homeowners’ Association Dues Don’t Discharge: For lots of years, the status of homeowners’ association (HOA) dues has been a mess in consumer bankruptcy cases because of conflicting appellate decisions and ambiguous changes in the Bankruptcy Code. Without reviewing the whole story, it is enough to say that one line of cases considered HOA dues to be “covenants running with the land” that were not ordinary debts and could not be discharged in bankruptcy. See, e.g., River Place East Housing Corp. v. Rosenfeld (In re Rosenfeld), 23 F.3d 833 (4th Cir. May 4, 1994) (Hamilton, Chapman, Young). Other courts treated HOA dues as debts arising from prepetition contract that could be discharged in bankruptcy. See In re Rosteck, 899 F.2d 694 (7th Cir. Apr. 13, 1990) (Bauer, Flaum, Manion).
Judicial Estoppel is a Force to be Reckoned with in Chapter 13 Practice: Judicial estoppel is not a concept that is kind to Chapter 13 debtors. We regularly report cases in which judicial estoppel is used against a Chapter 13 debtor to bar a cause of action the debtor failed to schedule during the Chapter 13 case. In Montonati v. Wettstein (In re Wettstein), No. 10-2124, 2010 WL 2772628 (Bankr. E.D. Wis. July 13, 2010) (McGarity), the bankruptcy court uses judicial estoppel in a different way—to bar the debtor from denying the nondischargeability of a debt. There are lessons in Wettstein for debtors and for those who may litigate with debtors.
Don’t Forget: Five Days Became Seven Days for Waiver of Prepetition Briefing: Section 109(h)(3)(A)(ii) was amended effective December 1, 2009, to increase from five days to seven days the time within which a prospective debtor must be unable to obtain briefing services to qualify for the 30-day waiver in § 109(h)(3)(B). The Statutory Time Periods Technical Amendments Act of 2009, Pub. L. No. 111-16, 123 Stat. 1607 (2009), made this change, but not everyone got the word.
FIFTH CIRCUIT VACATES CLASS ACTION CERTIFICATION: Class action certifications have become more common in Chapter 13 cases—especially when debtors contest the validity of actions by mortgage creditors and servicers, such as nondisclosure of postpetition fees and charges. The Fifth Circuit has struck a blow to certification in Wilborn v. Wells Fargo Bank, N.A. (In re Wilborn), No. 09-20415, 2010 WL 2433091 (5th Cir. June 18, 2010) (Reavley, Prado, Owen), vacating a class action certification by the bankruptcy court in Wilborn v. Wells Fargo Bank, N.A. (In re Wilborn), 404 B.R. 841 (Bankr. S.D. Tex. Mar. 24, 2009) (Bohm). The plaintiffs in Wilborn alleged that Wells Fargo, as the mortgage holder or servicer, had charged or collected, unreasonable and unapproved postpetition attorney fees and other costs during Chapter 13 cases, in violation of Bankruptcy Rule 2016 and Code § 506(b). The bankruptcy court certified a class action for its district only, not nationwide. The Fifth Circuit granted Wells Fargo permission to appeal.
EIGHTH CIRCUIT BAP HOLDS THAT INHERITED IRA IS EXEMPT: In a recent editorial, we discussed the holding of In re Chilton, 426 B.R. 612 (Bankr. E.D. Tex. Mar. 5, 2010) (Rhoades), that an IRA inherited by the Chapter 13 debtor from her mother was not exempt under § 522(d)(12) (see Chilton: Inherited IRA Not Exempt Under § 522(d)(12)). The Eighth Circuit BAP has disagreed in a Chapter 7 case, Doeling v. Nessa (In re Nessa), 426 B.R. 312 (B.A.P. 8th Cir. Apr. 9, 2010) (Schermer, Venters, Saladino). In Nessa, the debtor inherited an IRA from her father and then made a “trustee-to-trustee transfer of the IRA to her own account.” The Nessa debtor made no contributions of her own funds to the inherited account and made no withdrawals.
Tennyson: Eleventh Circuit Says Applicable Commitment Period Is Minimum Plan Length: Citing Hamilton v. Lanning, No. 08-998, 2010 WL 2243704 (June 7, 2010), and rejecting Maney v. Kagenveama (In re Kagenveama), 541 F.3d 868 (9th Cir. June 23, 2008) (Pregerson, Siler, Bea), the U.S. Court of Appeals for the Eleventh Circuit has concluded that the applicable commitment period calculation in § 1325(b)(4) is the minimum required length of any Chapter 13 plan that does not pay unsecured claims in full—without regard to whether the debtor has any projected disposable income. Whaley v. Tennyson (In re Tennyson), No. 09-14628, 2010 WL 2793941 (11th Cir. July 16, 2010) (Tjoflat, Wilson, Ebel). Conflating plan length and applicable commitment period, the Eleventh Circuit has sentenced all Chapter 13 debtors to sit purposelessly in their Chapter 13 plans for years even when they have no money with which to pay unsecured creditors. This reading of the statute distorts legislative intent to punish Chapter 13 debtors—perhaps punishing trustees and creditors along the way.
Penrod: Ninth Circuit Says “Negative Equity” Is Not Purchase Money: However lonely it may be, the U.S. Court of Appeals for the Ninth Circuit has bravely declared that the Emperor has no clothes: “Negative equity”—the deficiency on the loan on a car traded in—is not part of the “price” of the new car and is not a purchase money debt for purposes of the hanging sentence at the end of § 1325(a). AmeriCredit Financial Services v. Penrod (In re Penrod), No. 08-60037, 2010 WL 2794409 (9th Cir. July 16, 2010) (Goodwin, Fletcher, Mills). To get there, the Ninth Circuit had much good help from the BAP opinion by Judge Markell and from oral argument for the debtor by Professor Kenneth Klee. Penrod splits the circuits on the negative equity issue.
SUPREME COURT GIVES ADVICE ON HOW TO CLAIM EXEMPTIONS: In its fourth bankruptcy decision this term, the Supreme Court’s 6-3 decision in Schwab v. Reilly, No. 08-538, 2010 WL 2400094 (June 17, 2010) (J. Thomas), delivers important exemption advice for debtors and trustees in all consumer bankruptcy cases.
A TWIST ON WHO GETS FUNDS HELD BY TRUSTEE AT PRECONFIRMATION DISMISSAL: Bankruptcy Code § 1326(a)(2) states that “if a plan is not confirmed, the trustee shall return any [preconfirmation plan] payments not previously paid and not yet due and owing to creditors . . . to the debtor, after deducting any unpaid claim allowed under section 503(b).” This provision, coupled with the revesting of property upon dismissal under § 349(b)(3), has typically led courts to hold that, upon dismissal of a Chapter 13 case before confirmation, the trustee should return any funds on hand, less administrative expenses, to the debtor. The difficulty comes when a diligent creditor grabs those funds, through garnishment or other execution method, before the trustee pays the debtor.
LANNING: ONE BIG ANSWER AND MANY QUESTIONS: An 8 to 1 majority of the United States Supreme Court has endorsed the “forward-looking approach” to determine projected disposable income at confirmation in Chapter 13 cases. Hamilton v. Lanning, No. 08-998, 2010 WL 2243704 (June 7, 2010). Perhaps more important, the Supreme Court has answered the fundamental question of will the Supreme Court fix the mess that is our Bankruptcy Code after BAPCPA, or will it tell us to follow the crooked path set by Congress? Now we know. Eight justices have signed on to be fixers. But as always, the devil is in the detail and there is precious little detail in Lanning.
DERIVATIVE STANDING FOR DEBTOR IN PREFERENCE LITIGATION: A PRACTICAL RESULT: Acknowledging a split of authority, the Bankruptcy Appellate Panel of the Sixth Circuit has held that a Chapter 13 debtor has derivative standing to maintain a preference action when the Chapter 13 trustee declines to pursue avoidance. Countrywide Home Loans v. Dickson (In re Dickson), No. 09-8034, 2010 WL 1427380 (B.A.P. 6th Cir. Apr. 12, 2010) (Fulton, McIvor, Shea-Stonum). Writing for a unanimous panel, Judge Thomas H. Fulton affirmed the avoidance of Countrywide’s perfection of a lien on a manufactured home in a preference action brought by the Chapter 13 debtor.
INHERITED IRA NOT EXEMPT UNDER § 522(d)(12): Sections 522(b)(3)(C) and 522(d)(12), added by BAPCPA, give debtors an exemption in “retirement funds to the extent . . . exempt from taxation” under specified sections of the Internal Revenue Code (IRC). This exemption is available under both state or federal exemption schemes and the referenced IRC provisions include Individual Retirement Accounts (IRAs). Seems like a broad exemption, up to a monetary limit of $1,171,650, as automatically adjusted on April 1, 2010, but not broad enough, according to In re Chilton, No. 08-43414, 2010 WL 817331 (Bankr. E.D. Tex. Mar. 5, 2010). Judge Brenda T. Rhoades held that the exemption in § 522(d)(12) did not reach an inherited IRA. Her rationale would apply to § 522(b)(3)(C) as well, since the same language appears in both subsections. (See also Nessa: Eighth Circuit BAP Holds That Inherited IRA Is Exempt).
DEVELOPING NEW LAW: LIMITATIONS ON THE RECOVERY OF ATTORNEY FEES FOR STAY VIOLATIONS: Recent reported cases reflect a lot of litigation over willful stay violations, and it is common that the debtor’s most significant, perhaps only, damages are attorney fees. A controversial recent decision by the Ninth Circuit in a Chapter 11 case that severely limited the recovery of attorney fees as damages for a willful stay violation, Sternberg v. Johnston, 582 F.3d 1114 (9th Cir. Oct. 22, 2009) (Hawkins, Berzon, Clifton), is finding acceptance in Chapter 13 cases, such as In re Thompson, No. 08-02560, 2010 WL 1063578 (Bankr. N.D. Ill. Mar. 19, 2010) (Schmetterer). What makes Thompson particularly interesting is that it was on remand after the Seventh Circuit held that a car lender willfully violated the stay by not promptly returning a repossessed car. Thompson v. General Motors Acceptance Corp., 566 F.3d 699 (7th Cir. May 27, 2009) (Cudahy, Williams, Tinder). One might expect big damages, but the bankruptcy court was persuaded that the American Rule on attorney fees applied to § 362(k)(1).
BAILEY, ESPINOSA AND CHUBB: THE CYCLE IS COMPLETE: On remand from the Supreme Court, Travelers Indemnity Co. v. Bailey, __ U.S. __, 129 S. Ct. 2195, 174 L. Ed. 2d 99 (June 18, 2009), the United States Court of Appeals for the Second Circuit in Johns-Manville Corp. v. Chubb Indemnity Insurance Co. (In re Johns-Manville Corp.), Nos. 06-2103-bk, 06-2118-bk, 06-2186-bk, 2010 WL 1007832 (2d Cir. Mar. 22, 2010) (Calabresi, Wesley), has put an exclamation point to one of the important take-aways of United Student Aid Funds, Inc. v. Espinosa, No. 08-1134, 2010 WL 1027825 (Mar. 23, 2010): The binding effect of confirmation in any bankruptcy case depends on constitutionally adequate notice to parties affected by the plan.
RANSOM: WHY DID THE SUPREMES TAKE CERT?: The consumer bankruptcy world is abuzz about the Supreme Court’s April 19, 2010, grant of certiorari in Ransom v. MBNA, America Bank, N.A., No. 09-907, 2010 WL 333672 (Apr. 19, 2010).
KIRKLAND: FOURTH CIRCUIT MAKES BAD LAW ON BAD FACTS: On very messy facts, after completion of payments, discharge and closing of Chapter 13 case, the U.S. Court of Appeals for the Fourth Circuit holds that the bankruptcy court lacks subject matter jurisdiction to determine the nondischargeable amount of postpetition interest and collection costs due on a student loan. Educational Credit Management Corp. v. Kirkland (In re Kirkland), No. 009-1379, 2010 WL 851414 (4th Cir. Mar. 12, 2010) (Motz, King, Agee). The terrible facts explain this outcome but the jurisdictional holding is just plain strange.
ESPINOSA—MUCH MORE THAN A STUDENT LOAN OPINION: On March 23, 2010, the Supreme Court issued one of its most significant opinions on Chapter 13 law, United Student Aid Funds, Inc. v. Espinosa, No. 08-1134, 2010 WL 1027825 (Mar. 23, 2010). Affirming the Ninth Circuit’s opinion at 553 F.3d 1193 (9th Cir. Dec. 10, 2008), the unanimous decision authored by Justice Thomas, held that the confirmation order was not void under Federal Rule of Civil Procedure 60(b)(4), notwithstanding that it was legal error to confirm a plan that paid only the principal portion of student loan debt and discharged interest without a finding of undue hardship or the filing of an adversary proceeding. It would be a mistake to read the opinion narrowly as merely a student loan discharge case.
IF YOU CAN’T SEPARATELY CLASSIFY, CONSIDER ENJOINING STUDENT LOAN CREDITOR: In re Harding offers a twist on treatment of student loan debt that can’t be fully paid during the plan’s life. Judge John K. Olson held (as have many other courts) that the student loan could not be separately classified as a long term debt under § 1322(b)(5). To get there, Judge Olson observed that § 1322(b)(5) was directed toward long-term mortgage debt and could trump the § 1322(b)(1) prohibition against unfairly discriminatory classification only on unusual facts. The opinion reviewed the tests for unfairness, and distinguished Judge Olson’s prior opinion, In re Kalfayan, in which separate classification of a student loan was not discriminatory because failure to repay student loan in full would jeopardize a professional license without which unsecured creditors would receive nothing. The facts in Harding just wouldn’t support the fairness of separate classification.
GOOD FAITH AND THE CHAPTER 13 DEBTOR WHO CAN’T PAY UNSECURED CREDITORS: A STUDY IN CONTRASTS: What do you do with a debtor who is not eligible for a Chapter 7 discharge because of a prior Chapter 7 case, but doesn’t have enough money to pay unsecured creditors in a Chapter 13 case? Can you file a “good faith” Chapter 13 plan for this debtor? Does it implicate a lack of good faith that the debtor is eligible for a Chapter 13 discharge but not eligible for a Chapter 7 discharge? Does payment of attorney fees and no payment to unsecured creditors cast a stench about the case? It was nothing but coincidence that almost identical Chapter 13 cases raising exactly these issues were filed by the same debtors’ attorney in the same district within a few weeks of each other before two different bankruptcy judges. The differing outcomes are a testament to the endless difficulty of good-faith analysis in Chapter 13 cases.
PAYING LESS THAN 100% OF DSO CLAIMS ASSIGNED TO THE GOVERNMENT—NOT EASY, MAYBE NOT GOOD: Recent opinions from several courts remind us that § 1322(a)(4) permits a plan to pay less than 100% of an assigned domestic support obligation (DSO) that falls within the § 507(a)(1)(B) priority, but the process is complicated and the results are not necessarily good for the debtor.
DOLLAR AMOUNTS INCREASE APRIL 1, 2010: Every three years, beginning April 1, 1998, pursuant to 11 U.S.C. § 104(b)(1), automatic increases in many of the monetary amounts in the Bankruptcy Code take effect. The increases are based on changes in the Consumer Price Index for Urban Consumers. Of most significance for Chapter 13 practitioners is the increase in the § 109(e) debt limits for eligibility, but other amounts are important in all cases. Some of the Official and Procedural Forms issued by the Administrative Office of the United States Courts will be modified to reflect these changes, but the effective date of the increases does not await form changes. Effective for bankruptcy cases filed on or after April 1, 2010, monetary amounts are adjusted as shown in the following chart . . .
MILAVETZ: SOTOMAYOR’S FIRST CUT ON BAPCPA: Who would have thunk: the third authored opinion by the newest Justice of the Supreme Court is a bankruptcy case! Is there a take-away here? You remember the case—Milavetz, Gallop & Milavetz, P.A. v. United States. A law firm in Minnesota (Milavetz) sought a declaration that it was not a “Debt Relief Agency” (DRA) under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 and thus was not bound by the prohibition in § 526(a)(4) against advising an assisted person “to incur more debt in contemplation of” bankruptcy and was not subject to the “We are a Debt Relief Agency” disclosure and advertisement requirements in § 528(a)(4). The district court found that attorneys were not DRAs and that §§ 526 and 528 were unconstitutional as applied to attorneys. The Eighth Circuit affirmed in part and reversed in part—holding that attorneys were DRAs and DRAs were subject to the disclosure and advertising requirements in § 528; but the Eighth Circuit found § 526(a)(4) unconstitutional because it over-broadly prohibited DRAs from providing prudent prebankruptcy advice with respect to incurring debt. Perhaps not too surprisingly, the Supreme Court affirmed the Eighth Circuit’s conclusions that attorneys can be DRAs and that attorneys must provide the disclosures in advertisements required by § 528. The Supreme Court reversed the Eighth Circuit’s holding with respect to the constitutionality of § 526(a)(4) concluding that a narrow interpretation of “in contemplation of” the filing of a petition required that only advice to incur debt “impelled” by the prospect of filing for bankruptcy was prohibited by § 526(a)(4).
FORM B22C MISLEADS AGAIN: In re Trimarchi, 421 B.R. 914 (Bankr. N.D. Ill. Jan. 25, 2010) (Squires), illustrates how the upside-down construction of Form B22C makes the calculation of current monthly income (CMI) unnecessarily complicated. The outcome of the case looks “right,” but getting there was a struggle for the debtors, the trustee and the court.
WHY KAGENVEAMA TRUMPS SMITH: A bankruptcy court in Montana has explained why the Ninth Circuit Bankruptcy Appellate Panel’s decision in Howe v. Smith (In re Smith), 418 B.R. 359 (B.A.P. 9th Cir. Oct. 5, 2009), is inconsistent with the decision of the Ninth Circuit itself in Maney v. Kagenveama (In re Kagenveama), 541 F.3d 868 (9th Cir. June 23, 2008).
STRANGE OUTCOME: JOINT DEBTORS USE DIFFERENT EXEMPTION SCHEMES: Section 522(b)(1) says that when husband and wife are joint debtors in a jointly administered case, one debtor may not elect exemptions under § 522(b)(2)—the federal bankruptcy exemptions—while the other elects exemptions under § 522(b)(3)—the state-law exemptions. If joint debtors can’t agree on the alternative “to be elected,” they are “deemed to elect paragraph (2), where such election is permitted under the law of the jurisdiction where the case is filed.” Sounds like joint debtors must always use the same exemption scheme, right? Not so, said Judge Leonard in In re Connor.
“NO LOOK” FEES: NEVER BEYOND DISPUTE: Judge Paul Bonapfel has reminded debtors’ attorneys that a “no look” or “flat” fee—agreed upon between the Chapter 13 debtor and attorney—is not insulated from objection by the trustee and won’t survive scrutiny if not reasonable on the facts of each case. In re Dabney, 417 B.R. 826, 827 (Bankr. N.D. Ga. Apr. 7, 2009).
BANKRUPTCY RULES CHANGING DECEMBER 1, 2009: After working through the Rules amendment process with the Advisory Committee on Bankruptcy Rules, after approval by the Judicial Conference of the United States Courts and by the Supreme Court, and after no adverse action by Congress, amendments to the Federal Rules of Bankruptcy Procedure take effect on December 1, 2009. The principal change results from a Time-Computation Project by the Rules Committee, adjusting the manner in which time is computed for purposes of the Federal Bankruptcy, Civil Procedure and Appellate Rules.
SMITH AND MARTINEZ: NINTH CIRCUIT BANKRUPTCY APPELLATE PANEL MAKES A COLOSSAL MESS OF THE PROJECTED DISPOSABLE INCOME TEST: Just when you thought (hoped?) the projected disposable income debate couldn’t get any more convoluted, the Bankruptcy Appellate Panel for the Ninth Circuit has trashed the relatively straight-forward analysis of Maney v. Kagenveama (In re Kagenveama), 541 F.3d 868 (9th Cir. 2008), and replaced it with an unfamiliar new test.
WEAVING A TANGLED WEB: WASHBURN, LASOWSKI AND FREDERICKSON: If you aren’t convinced that disposable income jurisprudence will require congressional intervention, take a look at the trio of recent § 1325(b) cases from the Eighth Circuit.
CIRCUIT SPLIT: ARE TAXES PRE- OR POSTPETITION CLAIMS?: In 1991, the U.S. Court of Appeals for the Fifth Circuit held that self-employment taxes “become payable” when the debtors are required to file their tax returns, not when estimated tax installment payments are due; thus, in a Chapter 13 case filed in November of 1987, unpaid self-employment taxes for 1987 were postpetition claims under § 1305. Both the Tenth Circuit Bankruptcy Appellate Panel and, most recently, the Ninth Circuit disagreed with the Fifth Circuit’s analysis.
ONE SOLUTION TO MANAGEMENT OF MORTGAGE CLAIMS: ADOPT THE PROPOSED NEW RULES: As courts continue to struggle with many issues arising out of mortgage claims disputes, the Bankruptcy Court for the District of Massachusetts found a unique approach — adoption of proposed Federal Bankruptcy Rules 3001(c) and 3002.1. Even though these proposed Rules may never be adopted, or, if they are, may see significant changes before becoming official Bankruptcy Rules, Judge Rosenthal found them so persuasively useful in resolving a dispute over mortgage arrearage and charges that he required the debtor to file an amended plan incorporating the terms of proposed Rules 3001(c) and 3002.1.
RAMSOM: NINTH CIRCUIT TAKES A WRONG TURN IN THE DISPOSABLE INCOME CALCULATION: Two things are remarkable about the Ninth Circuit’s recent decision in Ransom v. MBNA, America Bank, N.A. (In re Ransom): how wrongheaded it is and how honestly the panel admits it has made a policy choice that rests with Congress.
NEGATIVE EQUITY TRENDING INTO AN ABYSS: Despite insightful dissents, the courts of appeals continue to trend in favor of finding that “negative equity” financing is included in a purchase-money security interest for purposes of the protection from bifurcation in the hanging sentence at the end of § 1325(a).
PROJECTED DISPOSABLE INCOME COMES UNGLUED: NOWLIN, TURNER, LANNING AND FREDERICKSON: At this writing, the box score is 4 to 1 with only the Ninth Circuit holding the statutory line on the meaning of projected disposable income after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Four circuits—the Fifth, Seventh, Eighth and Tenth—have now abandoned the statute and substituted some form of the pre-BAPCPA discretion that Congress thought it had squeezed out of the statute. Once unhinged from the statutory definition of “disposable income,” the courts of appeals have offered a fruit salad of different formula to determine projected disposable income.
IN RE VARNER: NOT ALL RENTERS SUFFER UNDER BAPCPA: In re Varner, No. 08-20806-TLM, 2009 WL 1468707 (Bankr. D. Idaho May 22, 2009) (Myers), is a good case study of the almost complete mismanagement of renters by BAPCPA.
ANOTHER CHAPTER 20 TWIST ON MANAGING LIENS THAT SURVIVE DISCHARGE IN A PRIOR CHAPTER 7 CASE: The Bankruptcy Court for the District of Kansas recently reported an interesting twist on a difficult question: What is a lienholder’s entitlement in a Chapter 13 case when the debtor’s personal liability was discharged in a prior Chapter 7 case and the debtor is not eligible for discharge in the current Chapter 13 case because of § 1328(f)? In re Picht concludes that the lienholder is only entitled to retain its lien to the extent there is value in its collateral. Admittedly in a "Chapter 20" context, this seems to effect the outcome rejected by the Supreme Court in a Chapter 7 case in Dewsnup v. Timm — an attractive potential use of Chapter 13 for some debtors.
REINSTATEMENT AFTER DISMISSAL MAY RESET CLAIMS BAR DATE: In In re Gulley, Bankruptcy Judge Jernigan concluded that although “Rule 9006(b)(3) appears to unambiguously preclude any equitable discretion on the part of a bankruptcy court to extend or toll [Rule 3002(c)] deadlines,” there is authority in the Fifth Circuit to “nullify” the original claims bar date and reset that date upon reinstatement of a dismissed case.
THINKING ABOUT THE MEANING OF “WITH RESPECT TO THE DEBTOR”: In In re Daniel, a case filed under Chapter 13 within one year of the dismissal of a prior Chapter 13 case, Bankruptcy Judge Gene Wedoff gives new meaning to the phrase “with respect to the debtor” in § 362(c)(3).
THEY DID IT AGAIN, AGAIN AND WHY YOU SHOULD CARE: On May 9, 2008, the Internal Revenue Service eliminated the “Health Care” category of Other [Necessary] Expenses. Even if you do a lot of consumer bankruptcy, I bet you didn’t know that. If you don’t do a lot of consumer bankruptcy, I suspect you are scratching your head and wondering what I am talking about and why you should care. You should care and here’s why.
SEVENTH CIRCUIT AGREES WITH SIXTH CIRCUIT BAP: TRANSPORTATION OWNERSHIP EXPENSE IS ALLOWED WITHOUT REGARD TO DEBT: It’s in a Chapter 7 case, but the United States Court of Appeals for the Seventh Circuit has sided with the Bankruptcy Appellate Panel for the Sixth Circuit to conclude that transportation ownership expenses are allowed under § 707(b)(2)(A)(ii)(I) without regard to actual debt on or lease of vehicle.
PROJECTED DISPOSABLE INCOME BOX SCORE – FIXERS: 2, FOLLOWERS: 1: As of Thanksgiving Day 2008, the fixers have moved slightly ahead in the race for circuit decisions with respect to the meaning of projected disposable income in § 1325(b). But if the appellate courts will just read the statute carefully, they will realize that the projected disposable income test does not invite this particular fixing.
PETRO AND THOMAS: SIXTH BAP WANDERS INTO DEEP YOGURT?: With full disclosure that both of these BAP cases came out of the Middle District of Tennessee, Petro v. Hildebrand (In re Petro), and Thomas v. Hildebrand (In re Thomas), signal trouble ahead for consumer bankruptcy practitioners in the Sixth Circuit.
PENROD: MARKELL ON NEGATIVE EQUITY AND THE INFAMOUS HANGING SENTENCE: The contrast between the Eleventh Circuit’s decision in Graupner v. Nuvell Credit Corp. (In re Graupner) and Judge Markell’s opinion for the Bankruptcy Appellate Panel for the Ninth Circuit in Americredit Financial Services v. Penrod (In re Penrod) could not be more stark: The Eleventh Circuit knee-jerked in Graupner, reasoning without careful analysis that Georgia law included negative equity in a purchase money security interest for purposes of the hanging sentence at the end of § 1325(a); Penrod meticulously dissects the language, history and policies underlying the U.C.C. and the hanging sentence to explain why negative equity is not part of a purchase money security interest.
NINTH CIRCUIT GETS IT RIGHT: STUDENT LOAN DISCHARGE THROUGH CONFIRMED PLAN STICKS ABSENT TIMELY OBJECTION: Bucking the trend in convincing fashion, the Ninth Circuit reaffirms in Espinosa v. United Student Aid Funds, Inc. that Great Lakes Higher Education Corp. v. Pardee (In re Pardee) correctly held that student loan creditors are not entitled to relief from the discharge order in a Chapter 13 case when notice of the plan was adequate and the creditor failed to object to confirmation of a plan that discharged student loan debt. In getting there, the Ninth Circuit rejects statutory and constitutional objections to the discharge of student loans through confirmed Chapter 13 plans that have been accepted by several other circuits. A clear circuit split is now framed.
FREDERICKSON: THE SPLIT BEGINS: As quickly as the Ninth Circuit came out of the box with Maney v. Kagenveama (In re Kagenveama), 541 F.3d 868 (9th Cir. 2008) (Pregerson, Siler, Bea), the Eighth Circuit has brushed it aside with hardly a mention in Coop v. Frederickson (In re Frederickson), No. 07-3391, 2008 WL 4693132 (8th Cir. Oct. 27, 2008) (Wollman, Beam, Riley).
TIME-BARRED PROOF OF CLAIM IS NOT NECESSARILY FALSE OR FRAUDULENT, WITH A LITTLE JOURNEY THROUGH THE FAIR DEBT COLLECTIONS PRACTICES ACT AND THE BANKRUPTCY CLAIMS PROCESS: Considering when the filing of a proof of claim may subject the filer to sanctions, In re Varona addresses the specific question whether a claim for a debt that is time-barred is a false or fraudulent claim. If it is, can the bankruptcy court use its sanction authority to deal with the filer?
ELEVENTH CIRCUIT – CAR LENDERS: 2, DEBTORS: 0: In two decisions filed a day apart, the same panel of the Eleventh Circuit handed car lenders victories with respect to two aspects of the hanging sentence at the end of § 1325(a). Nuvell Financial Services Corp. v. Dean (In re Dean) holds that a 910-day PMSI car claim must be treated as fully secured with present value interest under § 1325(a)(5)(B)(ii) when the debtor retains the collateral and makes installment payments through a plan. Graupner v. Nuvell Credit Corp. (In re Graupner) applies Georgia law (sort of) to conclude that financed “negative equity” is included in a purchase money security interest for purposes of the hanging sentence. Neither opinion adds much to the robust debate on these two important issues under BAPCPA, but the Eleventh Circuit firmly takes sides.
BRIEFING ON SAME DAY AS PETITION IS OKAY!: The Bankruptcy Appellate Panel for the Tenth Circuit has concluded in In re Francisco, that a briefing on the same calendar day as the filing of the petition satisfies the eligibility requirement in § 109(h). This appears to be the first appellate decision on the subject, and with a little luck, it will lay to rest a split among the bankruptcy courts.
“CHAPTER 13 IS A SAGA, NOT A SNAPSHOT”: You can count on Bankruptcy Judge Marvin Isgur in the Southern District of Texas to find a twist in BAPCPA that leaves folks scratching their heads. That’s what he did in In re DeSardi with respect to payments before confirmation, and now there is In re Gonzalez addressing the allowance of expenses at confirmation for a debtor with current monthly income (CMI) greater than applicable median family income.
IRS FREEZE THAWS WITHOUT VIOLATING STAY: What first looks like a stay violation doesn’t always turn out to be. Harchar v. United States (In re Harchar) gives an in-depth analysis of why a temporary freeze by the Internal Revenue Service of a debtors’ tax refund is not a per se violation of §§ 362(a)(3) or (6), even when that freeze occurs postpetition.
TIP OF AN ICEBERG? — STRIPPING A WHOLLY UNSECURED MORTGAGE IN A “NO DISCHARGE” CHAPTER 13 CASE: Here is Dewsnup v. Timm in a Chapter 20 package, rejected by the Bankruptcy Court for the Central District of Illinois. But there may be more lurking here than first meets the eye.
TENTH CIRCUIT RETREATS FROM MERSMANN?: A panel of the same United States Court of Appeals that recently gave us Educational Credit Management Corp. v. Mersmann (In re Mersmann) has delivered a confusing and perhaps contrary message with respect to the binding effect of confirmation and acceptance by silence in Wachovia Dealer Services v. Jones (In re Jones).
A MUST READ: THIRD CIRCUIT DEBATES FINALITY OF CONFIRMATION: Too often lately, the circuit courts of appeals have rediscovered the question whether a confirmed Chapter 13 plan is binding on a creditor that had notice but failed to object to a provision that would have been rejected had the creditor timely challenged confirmation. This fundamental issue for Chapter 13 practice just won’t go away notwithstanding the unambiguous language in § 1327 that a confirmed plan binds all creditors. Several courts of appeals have recently refused binding effect to confirmed plans that found “undue hardship” for purposes of the discharge of student loans — sometimes overruling earlier contrary decisions by the same courts. Now the Third Circuit has revisited the effect of confirmation on liens, and the outcome is scary.
EARLY PAYOFF AND MODIFICATION AFTER CONFIRMATION: IS THE DEBTOR TRAPPED?: There is a curious case out of the Bankruptcy Court for the Northern District of Texas styled In re McCarthy about early payoff of Chapter 13 plans, entitlement to discharge, postconfirmation modification in response to early payoff and the impact of BAPCPA on all of the above. These are hot issues in Chapter 13 practice, and McCarthy takes an incendiary approach.
SIXTH CIRCUIT BAP: EVERY CAR OWNER DESERVES A TRANSPORTATION OWNERSHIP DEDUCTION: Bucking the appellate trend, the Bankruptcy Appellate Panel for the Sixth Circuit has convincingly held that the Local Standards deduction for Transportation Ownership is an allowed expense for a Chapter 13 debtor with current monthly income greater than applicable median family income without regard to actual lease or debt payment. Rejecting the contrary conclusions of the Eighth and Ninth Circuit BAPs, Judge Rhodes for the Sixth Circuit BAP collects the competing arguments and forcefully lists the reasons why the ownership expense allowance is available when the debtor has no debt or lease payment.