Justia Commercial Law Opinion Summaries

Plaintiff filed a voluntary Chapter 13 bankruptcy petition and successfully sought to avoid a lien on her manufactured home held by defendant. The Bankruptcy Appellate Panel and Sixth Circuit affirmed. The mortgage did not originally cover the manufactured home, which was personal property until 2007,when a state court entered an in rem judgment and order of sale converting it to an improvement to real property. After that, the home was covered by the mortgage. The conversion, unlike the mortgage, was involuntary as to the plaintiff, so she had standing under 11 U.S.C. 522(h) to avoid the lien.

Plaintiff appealed the district court's grant of summary judgment to defendant on his claim of malicious prosecution under Arkansas law. The district court held that plaintiff failed to present evidence sufficient to withstand summary judgment on two of the five elements necessary to sustain his claim. The court held that the district court erred in holding that the evidence was insufficient as a matter of law to sustain plaintiff's claim that defendant brought suit against him on the guaranty without probable cause. The court also held that a jury must decide what was defendant's motive or purpose in suing plaintiff if it in fact understood it had no reasonable chance of prevailing on the merits of its claim against plaintiff.

Victor Tacke failed to pay real property taxes on his property in Lake County from 2005 to 2008. In 2006, the County conducted a tax sale for the year 2005, at which the County purchased the tax lien. In 2009, the County assigned its interest in the tax lien to Montana Lakeshore Properties (Lakeshore) in exchange for payment of the past due taxes and issued a tax sale certificate to Lakeshore. The County subsequently issued a tax deed to Lakeshore. In 2010, Tacke filed an action to quiet title in the property, seeking a judicial declaration that the tax deed was void. The district court granted summary judgment in favor of Lakeshore. At issue on appeal was whether Lakeshore violated Mont. Code Ann. 15-17-212(3) by paying the back taxes two hours and forty-five minutes short of two weeks after giving notice to Tacke. The Supreme Court affirmed, holding that the district court did not err by granting summary judgment upholding the tax deed obtained by Lakeshore because this case fit within the general principle that "the law regards the day as an indivisible unit" and discards fractional days in most time computations.

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.

Matador Holdings, Inc. and HoPo Realty Investments, LLC filed separate appeals to challenge elements of a circuit court's order involving commercial property owned by Matador. Matador sued HoPo for payment for materials and services Matador provided to HoPo's lessee Stratford Plastic Components of Alabama. The lease agreement contained provisions allowing for HoPo or its agents to enter the property during the lease-term to make inspections or repairs. Stratford had applied for and received a line of credit with Matador. After taking possession of the leased property, Stratford ordered materials from Matador to convert the property into one suitable for Stratford's production needs. Stratford vacated the property before the lease term expired without paying Matador for the materials. HoPo's agents testified that Stratford did not request any changes be made to the leased property and had no knowledge that Matador would supply materials to the lessee. To resolve the dispute, the trial court denied Matador's claim that HoPo was unjustly enriched by the services provided to Stratford that were unpaid, but the court placed a lien on HoPo's property for the unexpired portion of the Stratford lease. Upon review of the trial court record and its order, the Supreme Court affirmed the lower court's denial of Matador's unjust enrichment claim. Furthermore, the Court reversed the lower court's order insofar as it enforced any portion of a lien against HoPo's property or the improvements made to the property. The Court ruled the lien void.

This case arose when plaintiff, Bank of New York (BNY), asserted that it acquired title to the home of defendant pursuant to foreclosure proceedings. At issue was whether the Housing Court had jurisdiction to decide the validity of a challenge to a title, raised by a former homeowner as a defense to a summary process eviction action by a party acquiring the property pursuant to a foreclosure sale. The court vacated the allowance of summary judgment and remanded for further proceedings because the court concluded that the Housing Court had jurisdiction to consider the validity of plaintiff's title as a defense to a summary process action after a foreclosure sale pursuant to G.L.c. 239, section 1.

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).

This case concerned the application of payments made in connection with a real estate transaction between Kang Park and Marsha Park and Gary Stanford. The district court granted summary judgment to the Parks, determining, as a matter of law, that none of the payments Stanford submitted to the Parks could be credited toward a personal guaranty Stanford had made on the note payable to the Parks. The court of appeals affirmed the district court's grant of summary judgment, concluding that no evidence indicated the Parks had actual knowledge that Stanford intended for the past payments to apply to his guaranty and no agreement or contractual provision expressly required the Parks to make such an application. On certiorari, the Supreme Court reversed, holding (1) the court of appeals applied the wrong test in its holding, and rather, a rule in which payments are credited toward a personal guaranty when the recipient of the payments has a reasonable basis to know the payments were submitted in satisfaction of the guaranty governed the application of payments toward a personal guaranty; and (2) genuine issues of material fact precluded summary judgment under the rule and the record required further development. Remanded.

Countrywide Home Loans, a mortgage holder on certain real estate, foreclosed its mortgage, took title to the property at a sheriff's sale, and then sold the property to a third party. Before these events, the property owners executed a promissory note in favor of Citizens State Bank. When the property owners failed to pay the note, Citizens Bank obtained a judgment in trial court, which was properly recorded. At the time Countrywide filed its foreclosure action, it did not name Citizens Bank as a party. After Countrywide discovered Citizens Bank's judgment lien on the property, Countrywide filed an action to foreclose any interest Citizen Bank may have had on the property. Citizens Bank filed a separate complaint seeking to foreclose its judgment lien. The trial court directed Citizens Bank to redeem Countrywide's mortgage or be barred from asserting its judgment lien. The court of appeals reversed. The Supreme Court also reversed the judgment of the trial court but on different grounds, holding that because Citizen Bank's lien on the property was properly recorded and indexed and because Countrywide did not explain why the lien was overlooked, Countrywide failed to demonstrate that it was entitled to the remedy of strict foreclosure.

May Construction Company appealed from a circuit court order declaring a lien on real property, owned by Town Creek Construction & Development, subordinate to a mortgage filed by Chambers Bank and unenforceable against a lien bond issued by Ohio Casualty Insurance Company. For reversal, May argued that the circuit court erred in (1) interpreting the materialmen's lien statute, (2) ruling that construction commenced after the execution of Chambers's mortgage, and (3) finding that May could not recover against the lien bond. Town Creek cross-appealed, arguing that the circuit court erred in ruling that May was entitled to a lien in the amount of $353,000. The Supreme Court reversed and remanded the direct appeal, holding that the circuit court erred in ruling that construction had not commenced prior to the recording of Chambers's lien because the ruling was based on the intent of the parties contrary to that plain language of the materialmen's lien statute. The Court then affirmed the cross-appeal, finding that the circuit court did not err in calculating the amount Town Creek owed May.