Justia Civil Rights Opinion Summaries

Plaintifff Pattyann Larsen filed employment discrimination and other claims against her former employer shortly after her debts had been discharged by the federal bankruptcy court, but she had failed to list those claims as assets in her bankruptcy case. The trial court granted defendant’s motion for summary judgment, concluding that the bankruptcy trustee—not plaintiff— was the real party in interest. The court then denied plaintiff’s motion to substitute the bankruptcy trustee as plaintiff and dismissed the case based on its conclusion that plaintiff’s attempt to pursue this action in her own name was not an “honest and understandable mistake.” The Court of Appeals affirmed, concluding that the trial court had not abused its discretion in denying substitution. THe Oregon Supreme Court reversed: under ORCP 26 A, a motion to substitute the real party in interest as the plaintiff, if granted, would require plaintiff to amend the complaint under ORCP 23 A. “We have interpreted the standard specified in that rule—leave to amend ‘shall be freely given when justice so requires’—to mean that leave to amend should be granted absent any unfair prejudice to the nonmoving party. The text, context, and legislative history of ORCP 26 A confirm that the standards governing leave to amend the pleadings under ORCP 23 A also apply in deciding whether to allow substitution of the real party in interest under ORCP 26 A.” Defendant did not contend that it would be unfairly prejudiced if the bankruptcy trustee were to be substituted as the plaintiff in this case. The Supreme Court concluded that, because the trial court applied the wrong legal standard, it abused its discretion in denying substitution and dismissing this case. View "Larsen v. Selmet, Inc." on Justia Law

Petitioners moved to quash trial subpoenas issued by the United States Bankruptcy Court for the Central District of California, requiring them to testify via contemporaneous video transmission from their home in the U.S. Virgin Islands. The bankruptcy court denied their motions, and the Petitioners sought mandamus relief from this court. Petitioners argued that Federal Rule of Civil Procedure 45(c)(1) prohibits the bankruptcy court from compelling them to testify, even remotely, where they reside out of state over 100 miles from the location of the trial.   The Ninth Circuit granted the petition. The panel held that the bankruptcy court erred in refusing to quash the trial subpoenas because, under the plain meaning of the text of the Rules, the geographic limitations of Rule 45(c) apply even when a witness is permitted to testify by contemporaneous video transmission. The panel concluded that Rule 45(c) governs the court’s power to require a witness to testify at trial and focuses on the location of the proceeding, while Rule 43(a) governs the mechanics of how trial testimony is presented. Weighing the Bauman factors to determine whether issuance of a writ of mandamus was appropriate, the panel concluded that the third factor, clear error, weighed in favor of granting mandamus relief. The panel concluded that the fifth Bauman factor also weighed in favor because the petition presented an important issue of first impression. The panel held that the third and fifth Bauman factors were sufficient on their own to warrant granting mandamus relief in this case. View "IN RE: JOHN KIRKLAND, ET AL V. USBC, LOS ANGELES" on Justia Law

The First Circuit held that the district court correctly denied the Commonwealth of Puerto Rico's motions for reconsideration at issue in this appeal insofar as they might be construed as motions to apply an automatic stay under the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) to either dismiss a 42 U.S.C. 1983 action or a settlement agreement that had not yet been enforced, holding that the circuit court did not err.This case stemmed from a settlement following a section 1983 suit against a Commonwealth officer in the officer's individual capacity. After the settlement agreement was filed under seal and the district court had dismissed the case with prejudice, and before the first installment of the agreed settlement payments was due, the Financial Oversight and Management Board filed a petition for bankruptcy relief on behalf of the Commonwealth under Title III of PROMESA. Appellant filed a motion in opposition, arguing that the automatic stay was not applicable in his case. The district court granted the opposition. The Commonwealth filed a motions for reconsideration, which the district court denied. The First Circuit affirmed, holding that the district court did not err in denying the Commonwealth's motions for reconsideration insofar as they may be construed as motions to apply PROMESA's automatic stay to either the dismiss section 1983 action or the settlement agreement. View "Diaz-Morales v. Rubio-Paredes" on Justia Law

The First Circuit vacated the order of the district court requiring immediate payment of a $10,000 settlement sum by Defendant, the Secretary of Corrections to Puerto Rico, and remanded with instructions to stay Plaintiff's effort to recover on the settlement, holding that the automatic stay provision of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) applied.Plaintiff brought this suit under 42 U.S.C. 1983 against Defendant and others, alleging that the defendants had been deliberately indifferent to his medical needs while he was an inmate at the Baymon Correctional Facility. The parties eventually settled for $50,000. At issue was who was responsible to pay the remaining $10,000 of that sum. The district court ordered Defendant, and not the Commonwealth, to pay the balance of the settlement amount. Defendant appealed, arguing that Plaintiff's effort to collect the $10,000 should have been stayed under the automatic stay provision of PROMESA. The First Circuit agreed, holding that, given the manner in which Plaintiff styled his effort to recover, the automatic stay properly applied. View "Colon-Torres v. Negron-Fernandez" on Justia Law

After Tennial’s mortgage company foreclosed on her home, she filed a Chapter 13 bankruptcy petition. Her petition triggered an automatic stay of any further action against her home, allowing her to continue living there, 11 U.S.C. 362. The next year, REI bought Tennial’s home from the mortgage company and, on REI’s motion, the bankruptcy court terminated the stay on September 12, 2019. Tennial’s attorney received electronic notice of the order the same day, and the court mailed a copy to Tennial by first class mail on September 14.Under Rule 8002(a)(1) of the Federal Rules of Bankruptcy Procedure, Tennial had 14 days—through September 26—to appeal the order. Tennial filed her notice of appeal on October 9. At the bottom of her notice, she wrote, “I did not receive a copy of the order until September 26, 2019, via U.S. Postal Service.” The court dismissed, concluding that it lacked jurisdiction to review the order because Tennial waited too long to file the appeal and failed to move for an extension under Bankruptcy Rule 8002(d).The Sixth Circuit affirmed. While the deadline does not create a limitation on subject matter jurisdiction, Tennial missed the deadline and the deadline is mandatory. View "Tennial v. REI Nation, LLC" on Justia Law

A contractor and the prime contractor, involved in repainting the Queensboro Bridge, became embroiled in a dispute. The subcontractor stopped work. The parties sued each other for breach of contract. The subcontractor filed for bankruptcy. At the final pre-trial conference on an adversary proceeding, the parties entered into a stipulation that if the Bankruptcy Court determined that the subcontractor was the breaching party, then “all of the [p]arties’ pending claims will be withdrawn and disposed of in their entirety with prejudice” and the adversary proceeding “shall be deemed to be finally concluded in all respects.” Following a bench trial, the Bankruptcy Court concluded that the subcontractor was the breaching party and ordered compliance with the stipulation. Instead, the subcontractor appealed. The district court concluded that the subcontractor had released its claims and waived its right to appeal and modified the Bankruptcy Court’s order to make it a dismissal of the adversary proceeding with prejudice. The Third Circuit affirmed. The stipulation’s language confirms an intent to end all pending claims based on the Bankruptcy Court ruling: a party that seeks to appeal must make its intent to do so clear at the time of the stipulation setting the manner for resolution. View "L&L Painting Co., Inc. v. Odyssey Contracting Corp." on Justia Law

Great Plains Royalty Corp. appealed the dismissal of its complaint and deciding ownership of certain real property in favor of Earl Schwartz Co. (“ESCO”); Basin Minerals, LLC; SunBehm Gas, Inc.; and other defendants. In 1968, Great Plains’ creditors initiated a bankruptcy case by filing an involuntary petition under Chapter 11 of the Bankruptcy Code. The bankruptcy court ruled Great Plains was “a bankrupt,” and the case was converted to a liquidation proceeding under Chapter 7 of the Bankruptcy Code. The trustee received permission to sell the estate’s assets, an auction sale was held, and Earl Schwartz was the winning bidder. An order confirming sale of the assets was entered; the order stated Schwartz entered into an agreement with SunBehm to purchase certain properties in the bankruptcy estate, and title was transferred on those properties directly from the estate to SunBehm. The trustee did not collect sufficient funds from the auction to pay all creditors in full. The bankruptcy case was closed in 1974. In 2013, the bankruptcy case was reopened, and a successor trustee was appointed. The successor trustee collected funds sufficient to pay “a 100 percent dividend” to the estate’s creditors, and he attempted to disburse the funds to the unpaid creditors. While the case was open various adversary proceedings were brought, including some to determine ownership of certain properties. Some of the adversary proceedings were decided, and others were dismissed for lack of jurisdiction. The bankruptcy court discharged the trustee and closed the bankruptcy case in May 2016. In December 2016, Great Plains sued ESCO, Basin, and SunBehm to quiet title to oil, gas, and other minerals in and under three properties located in McKenzie County, North Dakota. ESCO and Basin were successors in interest to Schwartz. Great Plains argued the district court erred by finding the bankruptcy trustee intended to sell all of Great Plains’ assets, including those not listed in the auction sale notice, to Earl Schwartz. The North Dakota Supreme Court concluded the district court’s decision to quiet title in favor of the defendants was based on its misapplications of the law and findings that were not supported by the evidence. The Court considered the remaining issues and arguments and concluded they were either without merit or are unnecessary to its decision. Because the court’s findings were clearly erroneous, the Supreme Court reversed the district court’s judgment deciding ownership of certain properties and dismissing Great Plains’ complaint with prejudice. The matter was remanded for further proceedings to determine the parties’ claims and ownership of the properties. View "Great Plains Royalty Corporation v. Earl Schwartz Company, et al." on Justia Law

The First Circuit reversed the judgment of the bankruptcy court allowing The Patriot Group, LLC to amend its pleadings in its adversary complaint requesting denial of the discharge in bankruptcy of Steven Fustolo’s debt and denying Fustolo’s discharge pursuant to the newly added claim, holding that the allowance of this belated amendment failed to satisfy the prescripts of due process underlying Fed. R. Civ. P. 15(b)(2) and was therefore an abuse of discretion. Specifically, the Court held that Appellant did not receive adequate notice of an unpleaded claim and did not provide his implied consent. Therefore, the bankruptcy court’s order must be reversed and the case remanded for further proceedings. View "Fustolo v. Patriot Group LLC" on Justia Law

J&S sought Chapter 7 bankruptcy protection. The estate's largest asset was an Altoona, Pennsylvania building, in which Phoenician previously operated a restaurant. Trustee Swope rejected Phoenician’s lease to facilitate the building's sale. Phoenician attempted to remove property from the closed restaurant; Swope objected. After learning that Phoenician had canceled its insurance and that heating could be an issue with anticipated frigid weather, Swope met with Phoenician’s principal, Obeid and a contractor. Obeid gave Swope a key to the premises; the contractor recommended that the thermostat be set to 60 degrees. Obeid did not do so, the pipes burst, and the property flooded. A disaster restoration company refused to work on the property. Swope asked for another meeting to assess the damage. Obeid demanded that the meeting be rescheduled and held without J&S's principal, Focht; Swope declined, tried to inspect the premises, and discovered the key Obeid had given her did not work. Focht then had the locks changed. Swope retained the only key and provided both parties with only “supervised access.” Phoenician unsuccessfully sought to regain possession. The court indicated that Swope was protected by the automatic stay, which precluded Phoenician from interfering with the property, and dismissed Phoenician’s suit against Swope under 42 U.S.C. 1983 for wrongful eviction, claiming Fourth and Fourteenth Amendment violations. The Third Circuit agreed that Swope was entitled to qualified immunity and took appropriate action to preserve the Estate Property without violating clearly-established law. View "J & S Properties, LLC v. Phoenician Meditteranean Villa, LLC" on Justia Law

Nightingale provided home health care and received Medicare reimbursements. The Indiana State Department of Health (ISDH) visited Nightingale’s facility and concluded that Nightingale had deficiencies that placed patients in “immediate jeopardy.” ISDH recommended that the Centers for Medicare & Medicaid Services (CMS), terminate Nightingale’s Medicare agreement. ISDH conducted a revisit and concluded that Nightingale had not complied. Before CMS terminated the agreement, Nightingale filed a petition to reorganize in bankruptcy and commenced sought to enjoin CMS from terminating its provider agreement during the reorganization, to compel CMS to pay for services already provided, and to compel CMS to continue to reimburse for services rendered. The bankruptcy court granted Nightingale relief. While an appeal was pending, ISDH again found “immediate jeopardy.” The injunction was dissolved. A Medicare ALJ and the Departmental Appeals Board affirmed termination. After failing to complete a sale of its assets, Nightingale discharged patients and closed its Indiana operations by August 17, 2016. On September 16, 2016, the district court concluded that the bankruptcy court had lacked subject-matter jurisdiction to issue the injunction and stated that the government could seek restitution for reimbursements for post-injunction services. CMS filed a claim for restitution that is pending. Nightingale separately initiated a civil rights action, which was dismissed. In consolidated appeals, the Seventh Circuit vacated the decisions. The issue of whether the bankruptcy court properly granted the injunction was moot. Nightingale’s constitutional claims were jurisdictionally barred by 42 U.S.C. 405(g). View "Nightingale Home Healthcare, Inc. v. United States" on Justia Law