Justia Commercial Law Opinion Summaries

In this action, secured parties, as creditors in bankruptcy proceedings and appellees here, attempted in separate cases before the bankruptcy court to execute on four deeds of trust whose affidavits of considerations were missing or improper. Appellants, four trustees in bankruptcy, argued that those defects rendered the deeds of trust invalid such that the trustees possessed the properties free and clear of the creditor's interests. The creditors countered that Md. Code Ann. Real Prop. 4-109 cured the defects at issue. The Court of Appeals accepted certified questions regarding the statute and answered them in the affirmative, holding that Section 4-109 is unambiguous, and pursuant to the plain language of the statute and as confirmed by legislative history, cures the type of defects identified by the trustees, including missing or improper affidavits or acknowledgments, unless a timely judicial challenge is mounted.

Appellant Matthew Kundinger received a default judgment against Louis and Linda Frazer (the Frazers) before the Frazers closed a refinance mortgage with Matrix Financial Services Corporation (Matrix).  In Matrix's foreclosure action, the master-in-equity granted Matrix equitable subrogation, giving the refinance mortgage priority over Appellant's judgment lien. Appellant counterclaimed, alleging his judgment had priority over Matrix's mortgage because it had been recorded first.  Matrix, attempting to gain the primary priority position, then sought to have the refinance mortgage equitably subrogated to the rights of its January 2001 mortgage.  The master-in-equity granted Matrix's request, and Appellant appealed that order. Upon review of the applicable legal authority, the Supreme Court found that a lender that refinances its own debt is not entitled to equitable subrogation.  The Court reversed the lower court's decision and remanded the case for further proceedings.

This case stemmed from credit agreements Lehman entities entered into with Palmdale Hills, LLC entities. Palmdale filed for chapter 11 bankruptcy in November 2008 and Lehman subsequently filed eight motions for relief from Palmdale's stay to foreclose on the collateral securing the loans that were in default. The court held that the Bankruptcy Appellate Panel (BAP) correctly held that Lehman had standing to appeal the bankruptcy court's finding that the automatic stay did not prevent equitably subordinating Lehman's claims. The court also held that the BAP correctly determined that the appeal was not moot. The court further held that the BAP correctly determined that Lehman's automatic stay prevented Lehman's claims from being subordinated. Accordingly the court affirmed the BAP's judgment.

This case stemmed from the replevin actions filed by Klein Bank against debtors. Klein Bank appealed from the Orders of the Bankruptcy Court denying its motions to remand its replevin actions which had been removed from the state court to the bankruptcy court. In denying the motions, the Bankruptcy Court concluded that replevin actions were core proceedings. While this appeal was pending, the United States Supreme Court clarified that core proceedings were limited to those "arising under or arising in" a bankruptcy case. Based on that, the court now concluded that the matters involved in the replevin actions were not core proceedings. Accordingly, the court reversed and remanded to the Bankruptcy Court for further findings on the question of whether the court was required to abstain under 28 U.S.C. 1334(c)(2).

Debtor Maureen Roberson filed a petition under Chapter 13 of Title 11 of the Bankruptcy Code, alleging that Ford Motor Credit Company wrongfully repossessed her car in the wake of her prior Chapter 7 bankruptcy charge and seeking to recover damages from Ford. During the proceedings, Ford filed a motion for summary judgment. Before the court could rule on the motion, Roberson filed a motion seeking certification of the question of whether a secured creditor is permitted under Maryland law to repossess in a car in which it maintains a security interest when the debtor has filed a bankruptcy petition and has failed to reaffirm the indebtedness, but has otherwise made timely payments before, during, and after bankruptcy proceedings. The Bankruptcy Court granted the motion. The Supreme Court answered the certified question in the positive because the parties agreed that Ford elected Section 12-1023(b) of the Credit Grantor Closed End Credit Provisions, Commercial Law Article, Maryland Code, to govern the retail installment contract in the present case.

Enron Creditors Recovery Corp. (Enron) sought to avoid and recover payments it made to redeem its commercial paper prior to maturity from appellees, whose notes were redeemed by Enron. On appeal, Enron challenged the district court's conclusion that 11 U.S.C. 546(e)'s safe harbor, which shielded "settlement payments" from avoidance actions in bankruptcy, protected Enron's redemption payments whether or not they were made to retire debt or were unusual. The court affirmed the district court's decision and order, holding that Enron's proposed exclusions from the reach of section 546(e) have no basis in the Bankruptcy Code where the payments at issue were made to redeem commercial paper, which the Bankruptcy Code defined as security. Therefore, the payments at issue constituted the "transfer of cash ... made to complete [a] securities transaction" and were settlement payments within the meaning of 11 U.S.C. 741(8). The court declined to address Enron's arguments regarding legislative history because the court reached its conclusion based on the statute's plain language.

The borrowers, former high-level employees, participated in the company’s shared investment program by purchasing company stock. The entire purchase price was funded by personal loans from banks. The company guaranteed the loans, received loan proceeds directly from the banks, and held the shares. Some participants made a profit, but in 2001 the company filed for bankruptcy. After settling with the lenders, the bankruptcy trustee filed actions against the borrowers. The district court ruled in favor of the trustee. The Seventh Circuit vacated and remanded. The borrowers may have enough evidence to satisfy the "in the business of supplying information" element of a negligent misrepresentation defense. The borrowers may raise margin Regulations G and U as an affirmative excuse-of-nonperformance defense; it is not clear whether the borrowers, the banks, the company, or the plan violated those regulations. Summary judgment on the Securities and Exchange Act Section 10(b) and Section 17(a) illegality defenses was also in error.