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​BANKRUPTCY BULLETIN Editors-in-Chief Karl Johnson, Hellmuth & Johnson, PLLC Jeffrey Klobucar, Bassford Remele, P.A.  Contributing Editor: Matthew D. Swanson, Fuller, Seaver, & Swanson, P.A. Judge_Wright___Chowdhury_v__Hansmeier.pdf           In Chowdhury v. Hansmeier , Nos. 18-cv-3403, 19-cv-0156 (WMW), 2019 U.S. Dist. Lexis 70481 (D. Minn. Apr. 25, 2019), the District Court (1) held that it lacked jurisdiction to hear an appeal of the bankruptcy court’s October 24, 2018 contempt order due to appellant’s failure to timely file a notice of appeal; (2) vacated in part the bankruptcy court’s December 13, 2018 contempt order to the extent ...
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Even the Office of Lawyers Professional Responsibility sometimes gets mixed up about ethics authorities.  In a recent admonition (reversed on appeal), OLPR charged violations of rules that did not apply to the facts as alleged and failed to take account of recent, applicable case law. Several aspects of a recent discipline – reversed by a Lawyers Board panel - suggest that it is time for an update on Rule 1.9, “Duties to Former Clients.” A brief overview will frame the problems with the discipline. There was no former client conflict rule until 1985, when Rule 1.9 was adopted. Protecting confidentiality was the main policy purpose for adopting Rule 1.9, ...
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​ BANKRUPTCY BULLETIN Editors-in-Chief Karl Johnson, Hellmuth & Johnson, PLLC Jeffrey Klobucar, Bassford Remele, P.A. Contributing Editor: Amanda Schlitz, U.S. Bank Eighth_Circuit___Paddock_LLC_v__Bennett.pdf                   In The Paddock, LLC v. Bennett (In re Bennett) , 917 F.3d 676 (8th Cir. 2019), the Eighth Circuit addressed the applicability of the antimodification provision.  The debtors’ Chapter 13 plan proposed a bifurcation of The Paddock’s secured claim in their manufactured home into secured and unsecured parts.  The Paddock objected, arguing that the anti-modification provision of § 1322(b)(2) barred that treatment.  There was ...
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​ BANKRUPTCY BULLETIN Editors-in-Chief Karl Johnson, Hellmuth & Johnson, PLLC Jeffrey Klobucar, Bassford Remele, P.A.  Contributing Editor: Kesha Tanabe, Tanabe Law Eighth_Circuit___Oetting_v__Sosne__In_re_Green_Jacobson__P_C__.pdf Oetting v. Sosne (In re Green Jacobson, P.C.), 911 F.3d 924 (8th Cir. 2018)             In 2002, the Debtor law firm obtained a $333 million settlement for a class of plaintiff-shareholders.  A settlement fund was established for members of the class.  The fund made two substantial distributions to members of the class, but it was also defrauded by the claims administrator, resulting in a loss of $5.87 million ...
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​ BANKRUPTCY BULLETIN Editors-in-Chief Karl Johnson, Hellmuth & Johnson, PLLC Jeffrey Klobucar, Bassford Remele, P.A. Contributing Editors James Brand, Fredrikson & Byron, P.A. Christopher Wilcox, Christensen Law Office PLLC BAP___Conway_v__Heyl.pdf             In  Conway v. Heyl (In re Heyl) , 590 B.R. 898 (B.A.P. 8th. Cir. 2018), the BAP affirmed the bankruptcy court’s order finding that the complaint did not state a claim for which relief is available under § 523(a)(19). A creditor brought an adversary complaint based on an investment loss that he alleged was caused by the debtor’s false pretenses, false representations, and actual fraud.  ...
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​ BANKRUPTCY BULLETIN Editors-in-Chief Karl Johnson, Hellmuth & Johnson, PLLC Jeffrey Klobucar, Bassford Remele, P.A.  Contributing Editor: Kesha Tanabe, Tanabe Law BAP___Page_v__JP_Morgan_Chase_Bank.pdf               In In re Page, 592 B.R. 334 (B.A.P. 8th Cir. 2018), the debtor sought to discharge a student loan debt, but the Bankruptcy Court found in favor of her student loan servicer. On appeal, the B.A.P. closely examined both the language and legislative history of 11 U.S.C. §523(a)(8), reversed the Bankruptcy Court’s order and remanded for additional findings.              First, to be excepted from discharge, the debt at issue must ...
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​BANKRUPTCY BULLETIN Editors-in-Chief Karl Johnson, Hellmuth & Johnson, PLLC Jeffrey Klobucar, Bassford Remele, P.A.  Contributing Editor: Nauni Manty, Manty & Associates, P.A. Eighth_Circuit___Stoebner_v__Opportunity_Finance_LLC.pdf             This case is a by-product of the various Thomas Petters cases.  Thomas Petters, Inc. was a company involved in a multi-billion Ponzi scheme.  Petters owned Polaroid Holding Corporation (“PHC”) and Polaroid Consumer Electronics, LLC (“PCE”), which are successors in interest to Petters Consumer Brands, LLC (“Petters CB”).  PettersCB paid Polaroid licensing fees from the sale of Polaroid branded consumer ...
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​BANKRUPTCY BULLETIN Editors-in-Chief Karl Johnson, Hellmuth & Johnson, PLLC Jeffrey Klobucar, Bassford Remele, P.A.  Contributing Editor: Karl Johnson, Hellmuth & Johnson, PLLC Snyder_v_Zaligson__17-4113_.pdf             In Snyder v. Zaligson (In re Zaligson) , the bankruptcy court held that revocation of discharge under § 727(d)(1) must be strictly and narrowly construed in favor of the debtor and found that the US Trustee failed to show by a preponderance of the evidence that the debtor’s discharge was obtained by fraud because the debtor is not required to disclose property owned or held by a corporation.             The debtor ...
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​BANKRUPTCY BULLETIN Editors-in-Chief Karl Johnson, Hellmuth & Johnson, PLLC Jeffrey Klobucar, Bassford Remele, P.A.  Contributing Editor: Nauni Manty, Manty & Associates, P.A. BAP___Rucker_v__Belew.pdf             In Rucker v. Belew (In re Belew) , 588 B.R. 875 (8th Cir. BAP 2018), the BAP held that bankruptcy courts lack authority to deny an exemption on a ground that is not specified in the Bankruptcy Code. The trustee objected to the debtor’s claim of exemptions based upon bad faith.  Specifically, the debtor failed to schedule various assets in his initial filing.  The debtor failed to list a debit account, a possible equitable ...
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​ BANKRUPTCY BULLETIN Editors-in-Chief Karl Johnson, Hellmuth & Johnson, PLLC Jeffrey Klobucar, Bassford Remele, P.A. Contributing Editor: James Brand, Fredrikson & Byron, P.A. Eighth_Circuit___CRP_Holdings_A-1__LLC_v__OSullivan.pdf             In O’Sullivan v CRP Holdings, A-1, LLC , 914 F.3d 1162 (8th Cir. 2019), the Eighth Circuit held that a creditor’s docketed judgment created a judicial lien on the debtor’s interest in his exempt homestead, even though it was not a lien under Missouri law and was not presently enforceable against the property; as such, the judicial lien could be avoided under 11 U.S.C. § 522(f). The debtor and his spouse ...
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​ BANKRUPTCY BULLETIN Editors-in-Chief Karl Johnson, Hellmuth & Johnson, PLLC Jeffrey Klobucar, Bassford Remele, P.A. Contributing Editor: James Brand, Fredrikson & Byron, P.A. BAP___Snyder_v__Dykes.pdf             In Snyder v. Dykes, (In re Dykes) , 590 B.R. 904 (8th Cir. B.A.P., 2018), joint debtors appealed the denial of their discharge.  The bankruptcy court denied the debtors’ discharge on three separate grounds.  First, the debtors failed to maintain adequate records related to their assets.  Second, the debtors could not account for the disposition of at least four watches valued at over $145,000.  Third, the debtors knowingly failed ...
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​BANKRUPTCY BULLETIN Editors-in-Chief Karl Johnson, Hellmuth & Johnson, PLLC Jeffrey Klobucar, Bassford Remele, P.A.  Contributing Editor: Karl Johnson, Hellmuth & Johnson, PLLC BAP___Lariat_Companies__Inc__v__Wigley.pdf             The Bankruptcy Appellate Panel vacated the bankruptcy court’s order allowing a creditor’s claim and remanded for entry of an order disallowing the claim because the creditor’s state court judgment for fraudulent transfer was not enforceable after the transferor satisfied the predicate claim in the transferor’s bankruptcy case and an unenforceable claim is not allowed under § 502(b)(1). Lariat Companies, ...
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​BANKRUPTCY BULLETIN Editors-in-Chief Karl Johnson, Hellmuth & Johnson, PLLC Jeffrey Klobucar, Bassford Remele, P.A.  Contributing Editor: Karl Johnson, Hellmuth & Johnson, PLLC BAP__Ay_McDonald_Industries__Inc__v__McDonald.pdf             In AY McDonald Industries, Inc. v. McDonald (In re McDonald) , 590 B.R. 506 (B.A.P. 8th Cir. 2018)The BAP vacated the bankruptcy court’s order denying plaintiff’s claims for injunctive relief and declaratory judgment and remanded with instructions to dismiss the same because the bankruptcy court lacked both “arising in” and “related to” jurisdiction.             The debtor entered into a prepetition ...
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Law firms of all sizes face significant challenges in providing affordable health insurance for their employees. It has been expressed by MSBA members that there is a growing interest in exploring possible solutions by pooling together the purchasing power of the MSBA employers and their employees to obtain affordable health insurance coverage. Developing an AHP will allow smaller employers to obtain coverage on terms similar to those currently available only to large employers. The MSBA has engaged with Mercer, a national employee benefit consulting firm with a division that focuses exclusively on offering association benefit programs. The first step ...
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A March 20, 2019 public discipline petition includes an “unreasonable fee” charge, “Respondent's conduct in billing M.G.T.'s estate for non-legal work including tax preparation and accounting at his standard $200 hourly attorney rate violated Rule 1.5(a), MRPC.” [1] The client signed a fee agreement, providing an hourly fee of $200, “for ALL time you spend on my case.” However, the client discharged the lawyer and hired a non-lawyer “tax professional,” whose standard hourly rate was $100. From the petition, it appears to be the position of the Office of Lawyers Professional Responsibility (OLPR) that if a non-lawyer is available to provide a “non-legal service” ...
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​BANKRUPTCY BULLETIN Editors-in-Chief Karl Johnson, Hellmuth & Johnson, PLLC Jeffrey Klobucar, Bassford Remele, P.A.  Contributing Editor: Karl Johnson, Hellmuth & Johnson, PLLC Judge_Kressel___Kassebaum_v__Smith.pdf In Kassebaum v. Smith (In re Smith) , No. 18-05004-RJK, (Bankr. D. Minn. Nov. 1, 2018), the bankruptcy court held that (1) transfers made to the debtor and other employees of a company did not involve fraudulent misrepresentations under § 523(a)(2)(A) when the transfers were fully disclosed in the company’s books and records and (2) borrowing money from a company with the intent to pay it back is neither embezzlement nor ...
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​BANKRUPTCY BULLETIN Editors-in-Chief Karl Johnson, Hellmuth & Johnson, PLLC Jeffrey Klobucar, Bassford Remele, P.A. Contributing Editor: Ian Rubenstrunk, Winthrop & Weinstine, P.A. Judge_Nelson___SunTrust_Bank_v__Hamlin.pdf In Suntrust Bank v. Hamlin, et al ., 2019 WL 318394, the district court affirmed and remanded the bankruptcy court’s order on Suntrust’s motion for relief from the automatic stay under 11 U.S.C. §§ 362(d)(1) and 1301(c)(2).   Suntrust Bank, the appellant, moved for relief from the automatic stay in order to foreclose on a vehicle owned by a non-filing codebtor.  Suntrust argued that it was entitled ...
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A lawyer may not, “knowingly disobey an obligation under the rules of a tribunal.” Rule 3.4(c), Minn. R. Prof. Conduct (MRPC).  When does a lawyer deserve discipline for violating a procedural rule, such as a filing deadline?  The answer is important, because the 2019 Minnesota Rules of Court book has 1,303 pages of rules. On March 6, 2019, the Minnesota Supreme Court answered this question, reversing a private admonition.  The Court’s opinion and the oral argument colloquies show careful analysis, high principle, and common sense. [i]   Serendipitously, the Court also resolved a constitutional, due process issue raised in another, otherwise unrelated, admonition. ...
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Greater MN Project

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Here are updates to five new visualizations produced by the MSBA and our good friend and colleague, Armen Stromquist (also, full disclosure: Armen is my stepson and he's in St. Thomas' data analytics master's program). We welcome your feedback, tips, and other thoughts.  Minnesota Attorneys:  This map plots all attorneys in Minnesota based on address data found in the Minnesota Supreme Court database of active attorneys. Active attorneys include any attorney with a CLE code of 1,2, or 3 and NOT those who have been voluntarily or involuntarily restricted. We also limited to attorneys with Minnesota addresses. Last year, we processed zip codes only. ...
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​BANKRUPTCY BULLETIN Editors-in-Chief Karl Johnson, Hellmuth & Johnson, PLLC Jeffrey Klobucar, Bassford Remele, P.A.  Contributing Editor: Karl Johnson, Hellmuth & Johnson, PLLC Eighth_Circuit___First_State_Bank_of_Roscoe_v__Stabler.pdf             In First State Bank of Roscoe and John Beyers v. Stabler (In re Stabler) , 914 F.3d 1129 (8th Cir. 2019), The Eighth Circuit affirmed sanctions for violating a final bankruptcy discharge injunction and affirmed findings that neither a prior bankruptcy court order nor a related state court judgment had preclusive effect.             When the debtors’ agricultural services business failed, ...
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