Things that make you say hmmm... NV Supreme Court Seems to Hold that a Bankruptcy Proceeding without the filing of an Adversary Case is non-adversarial.... Moon v. McDonald Carano (8-1-13)

There is no litigation in bankruptcy.....unless you file an adversary proceeding. 

 

The Nevada Supreme Court in examining a dismissal of a malpractice claim determined that for purposes of the statute of limitations an attorney's negligence in representing a creditor in the "non-adversarial parts" of a bankruptcy proceeding does not constitute litigation malpractice causing the so called Hewitt litigation tolling rule to apply.

 

The Nevada Supreme Court, in a panel decision, seemed to misinterpret what constitutes litigation within a Bankruptcy Proceeding.  Anyone that practices bankruptcy has certainly litigated issues outside of an adversary proceeding... for instance, motions to lift stay, objections to exemptions, objections to plan, objections to disclosure statements, valuation hearings etc. etc.  Bankruptcy Rule 9014 described the process of a contested proceeding.

 

Moreover the Advisory Notes state:  Whenever there is an actual dispute, other than an adversary proceeding, before the bankruptcy court, the litigation to resolve that dispute is a contested matter. For example, the filing of an objection to a proof of claim, to a claim of exemption, or to a disclosure statement creates a dispute which is a contested matter. Even when an objection is not formally required, there may be a dispute. If a party in interest opposes the amount of compensation sought by a professional, there is a dispute which is a contested matter.

 

Despite this fact, the Nevada Supreme Court found that a rejection of an unexpired lease that was resolved by a stipulation is not adversarial.  However, just because someone resolved an issue, doesn't that infer that the matter was contested, but was simply resolved?

 

Perhaps I am reading more into the decision but as a published decision, it seems to me that the Nevada Supreme Court could have determined that the matter was not a contested proceeding because there was no dispute (assuming the facts supported such position) but clearly a contested proceeding is adversarial in nature....

 

Time will tell if they revisit this issue.  The link to the case follows:

Moon vs. Mcdonald Carano & Wilson 8-1-13

7-22-13 - 9th Cir. BAP - IRS Penalties are Not an Administrative Expense Under 503(b)(1)(A) -

The BAP had a good idea in 800ideas.com, Inc. to hold that the IRS did not have an administrative claim under 503(b)(1)(A) but remanded for a further determination as to whether it still could be an administrative expense on some other legal basis. 

In this case, the Court found that an IRS post-petition claim for penalties based upon the Trustee's failure to timely file a debtor's corporate tax return was NOT allowed as an administrative expense claim with first priority under 503(b)(1)(A) but the Court remanded the case for further determination if the post-petition penalty could be an administrative expense for some other reason.

In re 1800ideas.com (9th Cir. July 22, 2013)  

Goretorium files for bankruptcy - Las Vegas - July 2013

Haunted Desert LLC which owns the haunted house attraction on the strip filed a Chapter 11 Bankruptcy Petition on July 1, 2013.....time will tell if the haunted attraction disappears ....

If you like haunted houses, then its time to check it out!!

Las Vegas Sun Article on Bankruptcy

Goretorium Website

New Nevada Bankruptcy Judge - 7-12-13

CONGRATULATIONS TO

LAUREL E. DAVIS!!

Laurel Elizabeth Davis was sworn in as a Nevada Bankruptcy Judge on July 12, 2013. Prior to taking the bench, Judge Davis practiced law for 26 years in Nevada and Arizona. She represented debtors, including individuals; trustees; committees and creditors in bankruptcy proceedings and litigation, commercial litigation, mediation, arbitration, workouts and restructuring. She also served as a chapter 11 trustee. Judge Davis specialized in high net worth chapter 11 debtors as well as sensitive matters involving ethics issues, disgorgement and show cause orders issued to companies, law firms and attorneys.

Since 1993, Judge Davis has held a business bankruptcy certification from the American Board of Certification, which is accredited by the American Bar Association. Ms. Davis was Chair of the Nevada State Bar Bankruptcy Section in 2010 and 2011. In 2012 and 2013, she was recognized by Benchmark Litigation as among the Top 250 Women in Litigation in the Nation, and as a 2012 Rising Star. She was a Ninth Circuit Lawyer Representative from 2001 to 2004, and in 2004 served as co-chair of the Nevada Delegation and member of the Lawyer Representative Coordinating Committee. 

Ms. Davis is a Master with the Howard D. McKibben Inn of Court, is a Nevada Transitioning Into Practice Mentor, serves on numerous bench/bar committees for the Bankruptcy and U.S. District Courts, and is active in various professional, community and public service organizations. Ms. Davis regularly writes and speaks on topics which include ethics, litigation, real estate and bankruptcy.

Ms. Davis provides pro bono service to indigent clients through the Legal Aid Center of Southern Nevada, where she serves on the Executive Committee for the Mid Case Bankruptcy Panel. Her contributions have been recognized through several awards received from the Center, as well as an award of fees from the Nevada Supreme Court for the successful prosecution of an appeal for a pro bono client.

A native of Utah, Ms. Davis received her B.S. in Hotel Administration from the University of Nevada, Las Vegas in 1983, and her JD, magna cum laude, from the University of San Diego School of Law in 1987.

Unilateral Withdrawal by a Debtor's Attorney Could be Costly to the Debtor and Counsel

Bankruptcy Judge Eileen Howell, in In re Barron, 2010 WL 5168889 (Bankr. D. Ariz, December 14, 2010) recently entered a decision on a reaffirmation agreement issue.  The decision is very important on the jurisdictional issue for the Court (i.e. must the Court hold a hearing if the Debtor is represented by counsel but counsel fails to sign off on the reaffirmation agreement? – the answer is “no jurisdiction”).  However, as the Debtor did everything required of them, the Court found that 521(d) is inapplicable. 

My focus is on the Court’s statement that “[c]ounsel simply cannot unilaterally withdraw from the reaffirmation process and abandon the client even if counsel and their clients disagree").  In the Barron case, the Debtor’s counsel did not formally withdraw but instead chose not to represent the debtor.  This type of action by Debtor’s counsel is prevalent throughout the Country. 

All Debtors’ counsel should be fully aware that their action or lack of action could be costly to not only their client but their own pocketbook.  The Nevada Courts have the local rules, case law as well as our ethical rules to support the same conclusion that your the attorney until you obtain an order withdrawing from the case.