Consumer Bankruptcy Journal Summer 2017 | Page 34

CASES IN REVIEW
__________________________________________________________________
Cases in Review
June, 2017
“Cases in Review” highlights recent cases that may be of particular
interest to consumer bankruptcy practitioners. It is brought to you by
Consumer Bankruptcy Abstracts & Research (www.cbar.pro) and
the National Consumer Bankruptcy Rights Center (www.ncbrc.org).
Actions against mortgage creditor: A $400,000 punitive damages award against the
Chapter 13 debtor's mortgage servicer for its "reprehensible" conduct in aggressively
pursuing collection, following the debtor's discharge, of a nonexistent deficiency was
supported by the evidence and was not constitutionally excessive. Evidence that the
servicer acted with a reckless indifference to the debtor's rights was legally sufficient
to establish the requisite mental state to support the punitive damages awarded by the
jury on the debtor's claim of invasion of privacy, where the debtor contacted the
servicer repeatedly to demand that it resolve the issues with her account, but rather
than suspend its efforts, the servicer posted the debtor's home for foreclosure and
conducted repeated inspections of her residence, and the debtor suffered physical
ailments from the stress caused by the servicer's conduct. May v. Nationstar Mortgage,
LLC, 852 F.3d 806 (8th Cir. March 29, 2017) (case no. 16-1285).
Avoidable transfers—Preferential transfer under Code § 547: A debtor's wages
cannot be transferred until they are earned. Thus, a creditor's collection of garnished
wages earned during the 90-day preference period in Code § 547(b) is an avoidable
transfer even if the garnishment was served prior to that period. In re Jackson, 850 F.3d
816 (5th Cir. March 13, 2017) (case no. 16-30274).
Chapter 13—Allowance of attorney’s fees: Affirming In re Cripps, 549 B.R. 836
(Bankr. W.D. Mich., May 13, 2016), the district court held that, where the Chapter 13
debtors' attorney filed his final fee application after the Chapter 13 trustee had filed a
notice of plan completion, the bankruptcy court did not err in concluding that the
fees would be allowed, but not as an administrative expense, since there were no
funds available to pay the award and it was too late to modify the debtors' plan. Nor
did the bankruptcy court err in concluding that the fee award did not survive the
©National Consumer Bankruptcy Rights Center
www.ncbrc.org
34
CONSUMER BANKRUPTCY JOURNAL
Summer 2017
National Association of Consumer Bankruptcy Attorneys