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BANKRUPTCY BULLETIN Contributing Editor: Jeff Merritt , Dorsey & Whitney LLP      In  Kelley v. BMO Harris Bank N.A. , No. 19-CV-1756 (D. Minn. Sept. 29, 2022), the district court addressed the scope of adverse inference spoliation sanctions that were previously imposed; motions to exclude expert testimony; and a motion to bifurcate punitive damages from liability and compensatory damages.    The plaintiff, the chapter 11 trustee for the bankruptcy proceeding concerning Petters Company, Inc. (“PCI”) and the defendant, BMO Harris Bank N.A. (“BMO Harris”), each filed motions for clarification on the scope of the adverse inference. Both parties ...
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BANKRUPTCY BULLETIN David M. Tanabe ,  Winthrop & Weinstine, P.A.   In Ritchie Special Credit Investments, Ltd. v. JPMorgan Chase & Co. , 48 F.4th 896 (8th Cir. Sept. 13, 2022), the Eighth Circuit affirmed the dismissal of the complaint based on lack of standing and failure to state a plausible claim against a creditor and consulting firm in the Petters Ponzi scheme. Plaintiff Ritchie Special Credit Investments, Ltd. (“Ritchie”) made investments that were lost in the Petters Ponzi scheme. The trustees in the Petters bankruptcy reached a settlement for Defendant JP Morgan Chase & Co. (“JP Morgan”) to repay some of what it collected during ...
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BANKRUPTCY BULLETIN Laura Goforth , Dorsey & Whitney LLP In Ahlgren v. Miller (In re Holbert) , 643 B.R. 332 (Bankr. D. Minn. 2022), the bankruptcy court held that for purposes of a preference action, a transfer occurs on the date funds are deposited with a court and not, as the trustee argued, on the date the court distributes the funds to the preference defendant.  Because this was outside the 90-day preference window, the complaint was dismissed. Years before seeking bankruptcy protection, the debtor entered into an agreement to own certain real property jointly with the preference defendant.   Seven years later, the defendant commenced a ...
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BANKRUPTCY BULLETIN Natasha Wells, Dorsey & Whitney LLP   In In re Paczkowski , Case No. 19-40365 (Bankr. D. Minn. Oct. 6, 2022), the U.S. Bankruptcy Court for the District of Minnesota (the “ Court ”) denied a chapter 7 debtor’s motion for contempt against certain creditors because the creditors’ actions did not violate the Court’s order. Previously, the Court issued an order granting the creditors’ motion for relief from the automatic stay to pursue and liquidate certain Minnesota Uniform Voidable Transactions Act (“ MUVTA ”) claims against the debtor in state court, but not to collect on any resulting judgment without the Court’s permission. Subsequently, ...
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Job Search Scams

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Identity thieves are targeting job hunters. Some of these scams are quite elaborate. For example, a scammer might access an individual's resume on Indeed or some other job-hunting website, and contact the person to express interest in hiring him or her. In some cases, a lengthy interview may be set up. During this time, an offer of employment will be extended. The faux employer then instructs the applicant to disclose his or her Social Security number, and sometimes other extremely sensitive confidential information, such as the individual's bank routing and account numbers.  Thomas James, attorney at the Cokato, Minnesota law office of Tom James, identifies ...
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This blog is an expanded and modified version of a column that appeared in MINNESOTA LAWYER on September 20, 2002. On September 14, 2022, the author sent an advance copy of the article to Susan Humiston and offered to post any comment Ms. Humiston wished to make with this blog.  No reply was received. However, on September 21, 2022, the author learned on making inquiry of Bench & Bar that earlier on the same date Ms. Humiston submitted an “Author’s Note” to Bench & Bar.  The Author’s Note and Ms. Humiston’s article are linked at https://www.mnbar.org/resources/publications/bench-bar/2022/09/01/your-ethical-duties-in-dealing-with-unrepresented-persons ...
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BANKRUPTCY BULLETIN David M. Tanabe ,  Winthrop & Weinstine, P.A.   In Campbell v. Experian Information Solutions, Inc. , No. CV 20-2498(DSD/BRT), 2022 WL 3716982 (D. Minn. Aug. 29, 2022), the court granted summary judgment to a defendant, Experian Information Solutions, Inc. (“Experian”), because the plaintiff failed to show actual, statutory, or punitive damages from the inaccurate credit report for a discharged debt in bankruptcy.  The plaintiff received a discharge under Chapter 7 of the Bankruptcy Code. The plaintiff’s truck lease was discharged in the bankruptcy, but credit reports from the credit reporting agencies showed the lease with ...
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BANKRUPTCY BULLETIN David M. Tanabe ,  Winthrop & Weinstine, P.A.   In Rydholm v. Equifax Information Services LLC , No. 20-3425, 2022 WL 3364952 (8th Cir. Aug. 16, 2022), the Eighth Circuit affirmed the district court’s dismissal of a complaint for failure to state plausible claims for alleged violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (“FCRA”). Plaintiff filed a petition for relief under Chapter 7 of the Bankruptcy Code. On his bankruptcy schedules, Plaintiff listed Wells Fargo with an unsecured nonpriority claim. After the discharge order was entered, Plaintiff received credit reports from the defendants, Experian ...
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BANKRUPTCY BULLETIN David M. Tanabe ,  Winthrop & Weinstine, P.A.   In Ferrin v. Experian Information Solutions, Inc. , No. 20-CV-841 (NEB/TNL), 2022 WL 2954026 (D. Minn. July 26, 2022), the court denied summary judgment to the credit reporting agency (“CRA”) on the issue of reasonable procedures to assure maximum possible accuracy of credit report information for the plaintiff’s claim under 11 U.S.C. § 1681e(b) of the Fair Credit Reporting Act (“FCRA”).    Defendant Experian Information Solutions, Inc. (“Experian”) used bankruptcy scrub procedures that left certain debts less than 90 days delinquent on credit reports. The plaintiff had two accounts—a ...
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BANKRUPTCY BULLETIN By: Michael Green   In Kelley v. BMO Harris Bank N.A. , No. 19-CV-1756, 2022 WL 1771999 (D. Minn. June 1, 2022) , the district court denied the defendant’s request for a pretrial evidentiary hearing to review de novo the bankruptcy court’s imposition of spoliation sanctions. The plaintiff, the chapter 11 trustee for the bankruptcy proceeding concerning Petters Company Inc. (“PCI”), alleged that the defendant, BMO Harris N.A. (“BMO Harris”), was complicit with PCI’s fraudulent conduct. The bankruptcy court sent this case to the district court for trial, scheduled for October 2022, on four counts: violation of the Minnesota Uniform ...
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BANKRUPTCY BULLETIN Laura Goforth , Dorsey & Whitney LLP   In Bell v. Arneson , 2022 WL 2835068 (D. Minn. July 20, 2022), the United States District Court for the District of Minnesota applied judicial estoppel to prevent a plaintiff from litigating a claim he had intentionally withheld from his bankruptcy case, to his benefit. The plaintiff in Bell filed a civil lawsuit against two police officers who he alleged used excessive force while arresting him in violation of his Fourth Amendment rights.  About one year before the civil lawsuit, the plaintiff filed for bankruptcy.  At the time of his bankruptcy filing, the plaintiff declared to the ...
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This blog was originally published as William J. Wernz, Professional Competence as an Ethics Obligation, Minn. Law., June 29, 2022. ----- A brochure of the Office of Lawyers Professional Responsibility (OLPR) informs persons considering complaints, “Lawyers, like other professionals, sometimes make mistakes. A lawyer might handle a matter in a way that is inadequate but not unethical. … Most malpractice and inadequate performance matters are not handled by the Office of Lawyers Professional Responsibility.” i For many years, OLPR has generally dismissed complaints of isolated mistakes and has charged Rule 1.1 (“Competence”) violations only for “mistake ...
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BANKRUPTCY BULLETIN Contributing Editor: Eleanor J. Vincent , Stoel Rives LLP   In Siegel v. Fitzgerald , 596 U.S. ___, 2022 WL 1914098 (2022), the U.S. Supreme Court unanimously held that a temporary increase in U.S. Trustee (“UST”) quarterly fees enacted by Congress in 2017 violated the uniformity requirement of the Constitution’s Bankruptcy Clause because it did not apply in the same way in the six districts under the Administrator Program. The temporary increase applied to both new and pending cases in UST districts (funded by user fees) beginning the first quarter of 2018 through the end of 2022.  In the six judicial districts with a taxpayer ...
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BANKRUPTCY BULLETIN David M. Tanabe ,  Winthrop & Weinstine, P.A.   In Lund-Ross Constructors, Inc. v. Buchanan (In re Buchanan) , No. 21-1856, 2022 WL 1193992 (8th Cir. Apr. 22, 2022), the Eighth Circuit reversed the bankruptcy court’s grant of summary judgment given the bankruptcy court’s failure to address alternative tort claims. The debtors owned a corporation hired to do electrical projects for the general contractor plaintiff. The debtors closed their business and filed a voluntary petition under chapter 7. Suppliers to the debtors’ business filed construction liens for amounts owed. The plaintiff obtained default judgment against the corporation ...
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BANKRUPTCY BULLETIN David M. Tanabe ,  Winthrop & Weinstine, P.A. In Kelley v. Safe Harbor Managed Account 101, Ltd. , No. 20-3330, 2022 WL 1177748 (8th Cir. Apr. 21, 2022), the Eighth Circuit reversed the district court and remanded to consider whether certain transfers to a financial institution where made in connection with a securities contract for the safe harbor exception to avoidance pursuant to 11 U.S.C. § 546(e). This case is one of many arising from the multi-billion-dollar fraud perpetuated by former Minnesota businessman, Thomas Petters, through his company, Petters Company, Inc. (“PCI”). Appellee Safe Harbor Managed Account 101, Ltd. ...
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BANKRUPTCY BULLETIN David M. Tanabe ,  Winthrop & Weinstine, P.A.   In Kamal v. Baker Tilly US, LLP , No. CV 21-1549 (MJD/DTS), 2022 WL 1050053 (D. Minn. Apr. 7, 2022), the court granted a motion to dismiss aiding and abetting claims as derivative claims belonging exclusively to the bankruptcy trustee. In this case, a holding company issued notes. The holding company was part of a complex web of entities. A retail energy company (the “Company”) assumed the notes in a restructuring. The Company structured the borrowed funds under another entity thereby allegedly giving unfettered access to a principal owner (“Principal”) without any personal guarantees ...
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BANKRUPTCY BULLETIN David M. Tanabe ,  Winthrop & Weinstine, P.A. In Beers v. Experian Information Solutions, Inc. , No. 20-CV-1797 (WMW/JFD), 2022 WL 891620 (D. Minn. Mar. 25, 2022), the court granted summary judgment to a credit reporting agency on the claim under the Fair Credit Reporting Act (FCRA) given a lack of evidence that (1) the erroneous credit report caused actual damages and (2) the defendant’s procedures for reporting Chapter 7 bankruptcies were willful or reckless.   The plaintiff received a Chapter 7 bankruptcy discharge. The defendant, a credit reporting agency, issued a credit report which erroneously reported that two accounts ...
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BANKRUPTCY BULLETIN David M. Tanabe ,  Winthrop & Weinstine, P.A. In ASI, Inc. v. Aquawood, LLC , No. CV 19-763 (JRT/HB), 2022 WL 980398 (D. Minn. Mar. 31, 2022), the court determined that it did not have personal jurisdiction for alter ego and fraudulent transfer claims against a debtor’s liquidators that filed a petition for recognition of a foreign proceeding under Chapter 15 of the Bankruptcy Code. The plaintiff won a judgment in the District of Minnesota in the amount of $8.5 million against the debtor. Thereafter, the debtor initiated proceedings in its home jurisdiction of Hong Kong to liquidate its assets. The principals of the debtor also ...
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