2014 Commercial Law Developments, Prepared by the Commercial Transactions Committee for the Business Law Section 2014 Annual Report
X. Other Laws Affecting Commercial Transactions

A. Bankruptcy

  • In re 35th and Morgan Development Corp., 510 B.R. 832 (Bkrtcy. N.D. Ill. 2014) - [Evaluating claims of multiple parties to loan agreement.]
  • In re NNN 123 North Wacker, LLC, 510 B.R. 854 (Bkrtcy. N.D. Ill. 2014) - [Evaluating the ability of an LLC to file for bankruptcy.]
  • In re TMT Procurement Corp., 764 F.3d 512 (5th Cir. 2014) - [Vacating DIP financing order because DIP Lender knew of adverse claim against collateral.]
  • In re Peregrine Financial Group, Inc., 2014 Bankr. LEXIS 2328 (Bkrtcy. N.D. Ill. 2014) - [CFTC and purchase money trust.]

1. Automatic Stay

  • N. Am. Banking Co. v. Leonard (In re WEB2B Payment Solutions, Inc.), 488 B.R. 387, 393-394 (B.A.P. 8th Cir.2013) - Under Bankruptcy Code § 542's turnover requirement is selfeffectuating and party wishing to preserve its lien has burden of asking the Court to adequately protect its possessory lien.

2. Substantive Consolidation

3. Claims

4. Bankruptcy Estate

5. Secured Parties, Set Off, Leases

6. Avoidance Actions

7. Executory Contract

8. Plan

9. Other

B. Consumer Law

  • Hayes v. Find Track Locate, Inc., 2014 WL 5111587 (D. Kan. 2014) - A company that finds, tracks, and locates property to be repossessed is not a "debt collector" within the meaning of the Fair Debt Collection Practices Act. Thus it did not have liability under the Act for the phone calls it made to locate the debtor's vehicle.
  • Costin v. Ally Bank Corp., 2014 WL 130527 (E.D.N.C. 2014) - A bank repossessed a debtor's vehicle after allegedly stating that it would not do so if the debtor made a payment. The debtor made the payment. The lender was liable for violation of the North Carolina Debt Collection Act. At most the claim stated a cause of action for breach of contract, which cannot serve as a basis for a claim under the NCDCA. The bank was also not liable for intentional infliction of emotional distress in repossessing the vehicle because such action was not extreme and outrageous conduct. It was also not liable for negligent infliction of emotional distress because the debtor had not alleged that bank's negligence was the proximate and foreseeable cause of his distress __________ and foreseeable result of the __________ .
  • Patton v. Wells Fargo Financial Maryland, Inc., 85 A.3d 167 (Md. 2014) - Debtor's claim for violation of the Maryland Credit Grantor Closed End Credit Law must be brought no later than six months after satisfaction of the loan. Because the loan was not satisfied and the debtor remained liable for a deficiency, the debtor's claim was not barred.
  • Davidson v. Capital One Bank (USA), 2014 WL 4071891 (N.D. Ga. 2014) - An entity that bought credit card receivables was not a debt collector for the purposes of the Fair Debt Collection Practices Act even if the cardholders were in default at the time the receivables were purchased. The buyer was admittedly not in a business the principal purpose of which was to collect debts and it was not regularly collecting debts owed to another. The statutory language creating an exception to the second prong of the definition if the debt was not in default when assigned does not mean that an assignee of a debt in default is a "debt collections" if the debt was in default, if the assignee is not collecting for another.
  • Lankhorst v. Independent Savings Plan Co., 2014 WL 4101199 (M.D. Fla. 2014) - A lender provided purchase-money financing for the debtors' water treatment equipment, which was installed as a fixture outside their home. The lender did not have liability under the Truth in Lending Act for failing to disclose examples of the minimum payments or for failing to provide a three-day rescission period because the collateral for the transaction was the fixtures, not the borrowers' home. The agreement described the collateral as "any purchases you charge to your account," which was limited to the fixtures. It did not matter that the agreement also stated that the security interest could be enforced "similarly as liens on the house" or that the lender made a fixture filing.
  • Shannon v. Windsor Equity Group, Inc., 2014 WL 977899 (S.D. Cal. 2014) - A company provided skip tracing services in connection with consumer automobile loans. The company was a debt collector for the purposes of both the Fair Debt Collection Practices Act and the California Rosenthal Act. Therefore it could be liable to a third party whom is the company harassed at his place of work with numerous phone calls.
  • RL BB Acquisition, LLC v. Bridgemill Commons Development Group, LLC, 754 F.3d 380 (6th Cir 2014) - Guarantor has its own claim for violation of Equal Credit Opportunity Act.
  • Hawkins v. Community Bank of Raymore, 2014 WL 3826820 (8th Cir 2014), cert granted - Guarantor does not have its own claim for violation of Equal Credit Opportunity Act.

C. Professional Liability

  • FDIC v. Lowis & Gellen LLP, 2014 U.S. Dist. LEXIS 21022 (N.D. Ill. 2014) - A lender could bring a legal malpractice claim for faultily documenting a loan claim based don the failure to file a financing statement.
  • Heartland Bank and Trust Company v. The Leiter Group, 2014 Ill. App. LEXIS 662 (Ill. App. Ct. 2014) - [Court evaluates whether law firm converted IOLTA check.]
  • Jennings v. Shuler, 147 So. 3d 847 (Miss. Ct. App. 2014) - Lawyer did not file a financing statement to perfect his client's security interest. Whether that failure constituted negligence is a case-bycase, fact-intensive question. However, the lawyer was nevertheless not liable because the client could not show that the failure to perfect caused injury or that her claim was brought within the limitations period.
  • Fjellin ex rel. Leonard Van Liew Living Trust v. Penning, 2014 WL 4298053 (D. Neb. 2014) - Secured parties had no cause of action under UCC § 9-625 against the law firm representing the debtor for filing an unauthorized termination statement. UCC § 9-625 deals with the liability of the secured party, not others. The secured parties also had no cause of action for negligence because the unauthorized termination statement was ineffective - the security interest remained perfected and continued to encumber the collateral, even after the debtor sold it - and thus the act of filing it did not cause any damages.
  • DLA Piper US, LLP v. Linegar, 2014 WL 3698289 (Tex. Ct. App. 2014) - An individual's Australian retirement fund - a separate legal entity - made a $1.75 million loan to company in which the individual held an interest. The individual did not have standing to bring a malpractice claim against the borrower's law firm for failure to perfect the security interest because even though the individual might have suffered a loss, the fund was the real party in interest.
  • American Asset Finance, LLC v. Trustees of Client Protection Fund of Bar of Maryland, 86 A.3d 73 (Md. Ct. App. 2014) - A financier purchased portions of lawyer's right to attorney's fees in four cases. The financier did not have standing to bring a claim against the Client Protection Fund of the Bar of Maryland after the lawyer received the attorney's fees, deposited them into his IOLTA account, and then misappropriated them. The financier was not a client of the lawyer and, despite language in the financing agreement by which the lawyer promised to hold funds received as the financier's "fiduciary," the lawyer did not have fiduciary duties to the financier arising from his role as a lawyer.
  • In re Fish & Fisher, Inc., 557 F. App'x 259 (5th Cir. 2014) - Bank with a security interest in borrower's accounts had no cause of action against law firm that, after being notified of the security interest, obtained and collected a judgment against a client of the borrower and remitted the proceeds to the borrower. The law firm was not liable in negligence because it owed no duty to the bank. There was no constructive trust absent unconscionable conduct, fraud, or unjust enrichment. There was no claim for conversion because perfecting a security interest is insufficient to establish ownership. While a claim for conversion might exist if the disbursement violated a court order, the complaint lacked specific allegations about what order might have been violated.
  • Fulbright & Jaworski LLP v. Verano Land Group, LP, 2015 WL 481177 (Nev 2015) (No personal jurisdiciton over out-of-state law firm).
  • CVR Energy v. Wachtell, Lipton (DC Kan Aug 14 2014) - Court did not have personal jurisdiction over out-of-state law firm.
  • Nomura v. Cadwalader (NY, Feb 13 2014): Effect of lawyer opinion letter to client.

D. Other

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