Book Review: Jacoby, Melissa- Unjust Debts: How Our Bankruptcy System Makes America More Unequal Ed Boltz Mon, 06/03/2024 - 18:31 Available at Amazon:  Unjust Debts: How Our Bankruptcy System Makes America More Unequal But purchasing from your local bookstore is certainly better.  The first person to ask, will get my copy to read and then pass forward. Summary From the inside cover: Bankruptcy is the busiest federal court in America. In theory, bankruptcy in America exists to cancel or restructure debts for people and companies that have way too many—a safety valve designed to provide a mechanism for restarting lives and businesses when things go wrong financially. In this brilliant and paradigm-shifting book, legal scholar Melissa B. Jacoby shows how bankruptcy has also become an escape hatch for powerful individuals, corporations, and governments, contributing in unseen and poorly understood ways to race, gender, and class inequality in America. When cities go bankrupt, for example, police unions enjoy added leverage while police brutality victims are denied a seat at the negotiating table; the system is more forgiving of civil rights abuses than of the parking tickets disproportionately distributed in African American neighborhoods. Across a broad range of crucial issues, Unjust Debts reveals the hidden mechanisms by which bankruptcy impacts everything from sexual harassment to health care, police violence to employment discrimination, and the opioid crisis to gun violence. In the tradition of Matthew Desmond’s groundbreaking Evicted, Unjust Debts is a riveting and original work of accessible scholarship with huge implications for ordinary people and will set the terms of debate for this vital subject. Table of Contents: Bankruptcy for Real People Race Disparities in Bankruptcy for Real People Bankruptcy for Fake People Civil Rights in a Bankrupt City My Money, My Rules From Overindebtedness to Liability Management Beyond the Victory Lap Commentary: From the perspective of the consumer debtor's bar,  the overwhelming  benefits that Chapter 11 debtors receive compared to Chapter 13  debtors.  These include the "front-loaded"  discharge at confirmation,  the absence of a trustee,  third-party releases (contrast the Sacklers and their  modest contributions to the plan with the requirement in Chapter 13 that co-signed debts require payment in full to grant just a stay and not a discharge),  longer periods over which to pay secured and priority debts, binding creditors with misleading voting, the broad deference given to "non-standard"  plan provisions,   etc. (Many of these Chapter11 benefits would be available to consumers through the Chapter 10 envisioned in Sen. Elizabeth Warren's Consumer Bankruptcy Reform Act.) But Chapter 11 is available to individuals as well... The main reason that individuals don't file Chapter 11 cases is the expense, the lack of expertise in the consumer debtor's bar, and that  regular Chapter 11 attorneys don't want to deal with the unwashed masses.  (Otherwise you might see them handle a pro bono SLAP every now and then.) So what if, in addition to excellent public-facing scholarship such as this,   law school  professors also helped teach law students and practicing attorneys how to file simple "pre-packaged"  or "cookie cutter" Chapter 11  cases for everyday  people? Dumb it down, give consumer  form pleadings,  Best Case for Chapter 11 and call it "Chapter 24"  (11+13),  so that can churn these out,  even if we're not $2500/hr  Tall Building Lawyers. Not only would real people start to get the same advantages that fake people (i.e. corporations)  have long taken  advantage of in Chapter 11,  but the courts and Congress might,  under a sudden groaning burden of regular folks sloppily filing disclosure statements and appearing on first day orders,  start to consider rebalancing the bankruptcy system.  (Not to mention the terror-filled response that  the consumer financial services industry would have.) Heck,  for less than $10  consumers could get a Post Office Box in Wilmington, Delaware and take advantage of that court's vaunted bankruptcy expertise. Other reviews and interviews: Publisher's Weekly:  Fake People, Real Obligations: PW Talks with Melissa B. Jacoby Kirkus Reviews:  Unjust Debts- An impassioned plea for confining bankruptcy to its core purpose of resolving just debts justly. Upcoming Events:  Melissa Jacoby on Unjust Debts at Quail Ridge Books June 13, 2024, Raleigh NC Melissa Jacoby on Unjust Debts at Flyleaf Books June 18, 2024, Chapel Hill NC Melissa Jacoby on Unjust Debts at Greenlight Bookstore June 27, 2024, Brooklyn NY Blog comments Category Book Reviews

Law Review Note: Rylee Stanley, The Poor Man's Problem in Bankruptcy, 55 St. Mary's L.J. 1185 (2024). Ed Boltz Wed, 05/29/2024 - 18:39 Available at: The Poor Man's Problem in Bankruptcy Introduction: This Comment describes how bankruptcy courts operate and explores the effects of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) on indigent parties and  also discusses the unique concerns surrounding pro se bankruptcy cases compared to other proceedings and points out the inequities that currently exist between trustees and debtors.  Next, it examines the civil-criminal dichotomy and the heavily debated “Civil Gideon” movement, first highlighting the landmark case of Gideon v. Wainwright, 11 which declared the right to legal counsel is a fundamental right for indigent criminal defendants.  Second,  the comment dives further into Boddie v. Connecticut and Powell v. Alabama,  which explain the importance of the right to access the courts, as well as how the right to counsel is needed in civil and criminal proceedings.  Then the comment sets forth more details about the Civil Gideon movement and discusses its relevance in bankruptcy law,  also explaining four prevalent issues in bankruptcy law that support the need for an appointed right to counsel in bankruptcy. Most importantly, it proposes a solution to provide access to counsel in bankruptcy proceedings and addresses popular concerns with public assistance programs.  Finally, it wraps up the conversation and revisits the many reasons why the Sixth Amendment right to counsel should be extended beyond the criminal courts.   Commentary: This is an idealistic and well-intentioned law review comment, that unfortunately,  by blending the Civil Gideon  movement with bankruptcy  but without any clear experience directly bankruptcy,  misses the target.  There is neither a recognition of  how many indigent people do not actually need bankruptcy, because they are judgment proof,  nor that many debtors are able to file bankruptcy,  depending on the jurisdiction in either Chapter 7 or Chapter 13,  often paying little, if any, costs or attorneys fees in advance.  (As these are unmentioned, so too are the problems with such options,  including the heightened costs of Chapter 13 or the problems with "zero money down" Chapter 7 cases under Lamie or bifurcation schemes.) To read a copy of the transcript, please see: Blog comments Attachment Document the_poor_mans_problem_in_bankruptcy_compressed.pdf (503.07 KB) Category Law Reviews & Studies

4th Cir.: Bland v. Carolina Lease Management Group Statute of Limitations for UDTPA Ed Boltz Wed, 05/29/2024 - 00:32 Summary: Plaintiffs Hank Bland, Kendell Jackson, and Luetta Innis appealed the dismissal of their lawsuit against Carolina Lease Management Group, LLC, CTH Rentals, LLC, and Old Hickory Buildings, LLC. The case involved rent-to-own purchases of storage sheds, and Plaintiffs alleged violations of the North Carolina Retail Installment Sales Act (RISA), the North Carolina Unfair and Deceptive Trade Practices Act (UDTPA), and the North Carolina Debt Collection Act (DCA). The district court,  applying a  a three-year statute of limitations from RISA to dismiss all claims, including those under UDTPA and DCA,  dismissed the complaint on statute-of-limitations grounds. On appeal, the Plaintiffs argued that their claims, aside from RISA, were subject to a four-year statute of limitations under UDTPA and DCA.  Relying on North Carolina cases,  including  Shepard v. Ocwen Fed. Bank, FSB, 638 S.E.2d 197, 200 (N.C. 2006), , Skinner v. Preferred Credit, 616 S.E.2d 676, 680–81 (N.C. Ct. App. 2005), and Jennings v. Lindsey, 318 S.E.2d 318, 322 (N.C. Ct. App. 1984), the Fourth Circuit agreed with Plaintiffs, noting that UDTPA claims are governed by a four-year statute of limitations regardless of their basis in RISA violations, and while  affirming  the dismissal of the RISA claim,   but vacated and remanded the dismissal by the district court of the UDTPA and DCA Commentary: This is another in a chain of great decisions that Adrian Lapas (and others) has received   regarding the pernicious rent-a-shed  schemes,  which often seek to claim  to be executory  rather that retail sales contracts,  both to avoid modification in bankruptcy,  but also to skirt recordation and affixation  requirements. It is also worth noting that even if the statute of limitations has run to affirmatively raise claims against a creditor,  those can often be raised defensively as a counterclaim to attempts to collect by that creditor.  That can include as a basis for objecting to a Proof of Claim    Blog comments Attachment Document bland_v._carolina_lease_management_group.pdf (168.3 KB) Document mattox.pdf (231.07 KB) Document hargrove.pdf (389.13 KB) Document bland.pdf (893.55 KB) Category 4th Circuit Court of Appeals

N.C . Ct. of App.: Hurd v. Priority Automotive- Fraudulent Concealment Ed Boltz Wed, 05/29/2024 - 00:30 Summary: Brad W.  Hurd purchased a 2018 Honda Accord from  Priority Automotive of Huntersville, Inc.,  believing it had no accident history based on a Damage Disclosure Statement provided by Priority Automotive.   Mr. Hurd later discovered the vehicle had been involved in an accident prior to purchase and that , Priority Automotive of Huntersville, Inc. had actually filed  an insurance claim for that damage. Despite Mr.  Hurd's request, Priority Automotive of Huntersville, Inc.  did not provide a CarFax accident report , instead giving an Experian AutoCheck report without pre-purchase information and later ejecting Mr.  Hurd from the dealership when he insisted on the CarFax report.  Hurd filed an Amended Complaint alleging unfair and deceptive practices, fraud, and fraudulent concealment. The trial court dismissed the claims, leading to this appeal. The Court of Appeals reviewed the trial court's dismissal de novo, held that to state a claim under N.C. Gen. Stat. § 75-1.1 for unfair and deceptive trade practices, Mr.  Hurd needed to show an unfair or deceptive act in commerce that caused actual injury. The court found Mr.   Hurd sufficiently alleged such acts and damages for the  fraud allegation, as he  needed to show: A false representation or concealment of a material fact; Reasonably calculated to deceive; Made with intent to deceive,  Which does in fact deceive; Resulting in damage to the injured party    As to fraudulent concealment, Mr.Hurd sufficiently alleged the necessary criteria: Concealment of a past or existing material fact,  That is reasonably calculated to deceive,  Made with intent to deceive,  Which does in fact deceive, and Which results in damage to the plaintiff   Lastly, the economic loss rule, which bars recovery for purely economic loss in tort, did not apply as Hurd’s claims were for intentional torts, not negligence. Commentary: Great work by Shane Perry. To read a copy of the transcript, please see: Blog comments Attachment Document hurd.pdf (152.07 KB) Category NC Court of Appeals

Bankr. E.D.N.C.: In re Greene- Denial of Amendment of Order Deeming Mortgage Current Ed Boltz Wed, 05/29/2024 - 00:25 Summary: In the case of William and Rebecca Greene, the bankruptcy court  denied BSI Financial Services' motion to amend an order that deemed the mortgage current. The original order, issued on November 16, 2023, stated that the mortgage was current with a balance of $105,505.65, based on the amount provided by BSI itself. BSI later claimed this amount was incorrect and sought to amend it to $134,296.39. However, the court found that BSI did not provide sufficient evidence or justification for the amendment, noting multiple errors in BSI's filings and lack of witnesses at the hearing. Consequently, relying on In re Devita, Case No. 12-02549-5-SWH (Bankr. E.D.N.C. May 31, 2018), and Specialized Loan Servicing, LLC v. Devita (In re Devita), 610 B.R. 513 (E.D.N.C. 2019) the court ruled against BSI, maintaining the original order and mortgage balance as stated as it failed to demonstrate: That the motion is timely; That the moving party has a meritorious claim or defense;  That the nonmoving party will not suffer unfair prejudice; and  That exceptional circumstances justify relief.   Commentary: The amendments to Bankruptcy Rule 3002.1 become effective in December 2024,  requiring that the outstanding principal balance on a residential mortgage be determined.  The long-standing practice in the Eastern District of North Carolina  of making this determination will,  especially though this and the Devita opinions,  serve as guides for other courts that have up until now been hesitant to make this determination. There is a frequent assertion by mortgage services that it is somehow too difficult to determine that principal balance:       For the vast majority of home mortgages, excluding those with adjustable interest rates, which are slightly more complicated, and Daily Simple Interest notes, which do require an advanced accounting degree, by curing and maintaining the on-going mortgage payment, that outstanding principal balance should be exactly the amount owed as shown on the original amortization schedule for the loan. Very nice work by Jeremy Harn. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_green.pdf (298.92 KB) Category NC Supreme Court Cases

SCONC: Midfirst Bank v. Brown- Equitable Subrogation Ed Boltz Wed, 05/29/2024 - 00:23 Summary: After purchasing her home In 2000, Betty J. Brown obtained a mortgage in 2004 from First Horizon Home Loan Corporation.  In 2010, a judgment  in favor of United  General Title Insurance was entered against Ms.  Brown in South Carolina, which was then domesticated and recorded in North Carolina in 2014. In 2016, Brown refinanced her mortgage  with Nationstar Mortgage (MidFirst Bank is Nationstar’s successor in interest), which paid off the  First Horizon mortgage.  In 2019, enforcement proceedings began against Ms. Brown to collect the 2010 judgment. The property was seized and sold at an execution sale, with Ms.  Brown's daughter, Michelle Anderson, placing the successful bid at the Sheriff's sale. The trial court granted summary judgment to MidFirst Bank action to quiet title, asserting that the Nationstar deed of trust still encumbered the property even after the execution sale. The court also held that the doctrine of equitable subrogation applied, allowing Nationstar to assume the rights and priorities of the First Horizon deed of trust. The Court of Appeals reversed this decision, holding that the Nationstar lien was extinguished by the execution sale and that the doctrine of equitable subrogation was not available to MidFirst Bank because it was not "excusably ignorant" of the publicly recorded judgment. The Supreme Court of North Carolina reversed the decision of the Court of Appeals, holding that it erred by applying the incorrect standard regarding equitable subrogation relying on Peek v. Wachovia Bank & Trust Co., 242N.C. 1, 15 (1955) instead of Wallace v. Benner,200 N.C. 124 (1931) The SCONC  held that the doctrine of equitable subrogation applies when: Money is advanced to pay off a prior encumbrance; The new lender is not a volunteer, defined as  one who “pays off or loans money to pay off an incumbrance without taking an assignment thereof, and without an agreement for substitution.” ; The new lender was not culpably negligent, defined as the   “[f]ailure to exercise that degree of care rendered appropriate by the particular circumstances, and which a man of ordinary prudence in the same situation and with equal experience would not have omitted”; and  It does not prejudice junior lienholders. As this requires a very fact intensive inquiry,  the SCONC directed that this case ultimately be remanded to the trial court to reassess. Commentary: The SCONC did point to multiple conflicting facts that the trial court must consider in determining whether equitable subrogation applies including that: The observance of docketing and recordation  is  so important to subsequent purchasers and mortgagees that a very strict compliance with its provisions in every respect is required. The failure by Nationstar to show that it conducted a title examination  or reviewed a credit report before refinancing the mortgage. That Ms. Brown signed an Owner's Affidavit attesting that “there is no person, firm, corporation or governmental authority entitled to any claim or lien against said property.”  That it is undisputed that the United judgment lien was publicly recorded.  That Ms.  Anderson, Brown’s daughter, purchased the subject property at the Sheriff's sale for roughly 1/3rd of the amount owed on the Midfirst mortgage; and That Ms.  Brown continues to reside in the property. All of those tend to muddy the question of who is culpably negligent. To read a copy of the transcript, please see: Blog comments Attachment Document midfirst_bank._v._brown.pdf (120.58 KB) Category NC Supreme Court Cases

SCONC: Canteen v. Charlotte Metro Credit Union: Unilateral Addition of Arbitration Provision and Waiver of Class Action Ed Boltz Wed, 05/29/2024 - 00:15 Summary: Pamela Phillips opened a checking account with the Charlotte Metro Credit Union in 2013, agreeing to a membership agreement that included provisions for unilateral amendments by the Credit Union and specified governing laws. Following a class action lawsuit in 2020 (in which Ms. Phillips was not involved) Charlotte Metro, pursuant to its change-of-terms provision, amended the membership agreement to include an arbitration clause, notifying Ms. Phillips via email, but she did not opt out of the arbitration amendment  within the given 30-day window.  When  Ms.  Phillips filed a class action lawsuit in March of 2021 against the Charlotte Metro for illegal overdraft fees,  the trial court denied the motion by Charlotte Metro to compel arbitration.  While the Court of Appeals reversed the trial court's decision, ruling that the arbitration amendment was enforceable, a  dissent argued that the amendment violated the covenant of good faith and rendered the contract illusory. The North Carolina Supreme Court held that while "a change-of-terms provision does not grant a party free rein to alter a valid agreement"  but  must comply with the implied covenant of good faith and fair dealing.  The Court agreed with the framework from other jurisdictions, see Badie v. Bank of Am, 79 Cal. Rptr. 2d 273 (Cal. Ct. App. 1998),  and the North Carolina Court of Appeals, see SearsRoebuck and Co. v. Avery, 163 N.C. App. 207 (2004), stating that changes to a contract must relate to the "universe of terms" included in the original agreement.  Since the original contract contained a "Governing Law" provision, which considered the allowable forums for resolving disputes, the arbitration amendment was within the reasonable contemplation of the parties. Change-of-terms provisions extend  “insofar as the new or modified terms relate to subjects already addressed in some fashion in the original agreement.” Badie at 220. Further, the SCONC found both that the contract was not illusory because the Notice of Amendments provision was limited by law, requiring good faith and fair dealing in any modifications and that there was mutual assent as Phillips had agreed to the Notice of Amendments provision in 2014, which allowed unilateral changes by the Credit Union upon notice, thus binding her to the arbitration amendment. Justices Riggs and Earls dissented and would have instead held that  the arbitration and class action waiver amendment should be void, as it breaches the implied covenant of good faith and fair dealing, renders the contract illusory, and unfairly deprives Ms.  Phillips of her rights. The dissent called for a more balanced approach that considers the realities of consumer contracts and the need to protect consumers from unfair unilateral amendments by corporations. Commentary: It seems an overreach to hold that the statement in the Governing Law provision  that "As permitted by applicable law, you agree that any legal action regarding this Agreement shall be brought in the county in which the credit union is located"  is sufficiently related to arbitration to allow the unilateral amendment of the contract,  when arbitration was not explicitly included in the 2014 member agreement,  despite being fairly well known as an conflict resolution options since at least 1925, when the Federal Arbitration Act became law. That the option of arbitration is unused and unmentioned in the agreement would seem so indicate that it is outside the "universe of terms." It is not hard to imagine (as Justice Riggs does in her dissent)  that  if the members of a class action against Charlotte Metro Credit Union each individually sought to force arbitration over some issue  that Charlotte Metro, being forced to pay the fees and costs of all of those arbitrators,  would suddenly find a way out of arbitration.  (Probably by unilaterally changing  its  terms and agreements in the middle of litigation.)  See the recent White v. Title Max  where a creditor played similar arbitration games. The majority opinion at least (?)  does say the quiet part out loud  in Footnote 6,  where it shows its servitude to capital by bemoaning the idea that it would be impossible for "products and services be efficiently delivered if, under such a limited view of the modern market, consumer contracts had to be canceled and renegotiated with every necessary update...." And while these contracts absolutely never give the consumer any authority to unilaterally change the terms,  the ability to alter the rights and duties of both borrowers and lenders is,  to some extent, granted to a consumer who files a bankruptcy reorganization plan,  whether Chapter 13 or 11.  Perhaps it should not give pause to bankruptcy courts when  creditors fail,  just as Ms.  Phillips did with her 30-day opt out right,  to object to treatment in such their plans.  At the very least,  plan provisions that eliminate arbitration provisions and waivers of class action should be within the universe of terms. To read a copy of the transcript, please see: Blog comments Attachment Document canteen_v._charlotte_metro_credit_union.pdf (212.89 KB) Category NC Supreme Court Cases

4th Circuit: White v. Title Max- Federal Arbitration Act alone does not provide federal jurisdiction Ed Boltz Fri, 05/24/2024 - 20:38 Summary: Once through the  captions and parties (which constitute the first  37 out of 39 pages of this decision),  this appeal concerns the confirmation of arbitration awards by the district court under Section 9 of the Federal Arbitration Act (FAA)  against TitleMax of Virginia, Inc., which argued that the applications did not identify an independent jurisdictional basis. The appeals court agreed with TitleMax, referencing the Supreme Court's decision in Badgerow v. Walters, which requires an independent jurisdictional basis for a district court to confirm or vacate an arbitration award under Sections 9 or 10 of the FAA. The applications in question did not provide a non-FAA basis for federal question jurisdiction, did not meet the amount in controversy requirement for diversity jurisdiction, and did not invoke the court's supplemental jurisdiction. Accordingly, as the district court lacked the necessary subject matter jurisdiction to grant the applications, its judgment was vacated  and remanded the case for further proceedings consistent with this opinion. Commentary: Creditors love arbitration, except when suddenly  borrowers use it against them. Federal courts also love arbitration,  except, it seems, when borrowers suddenly use it against creditors.  Shocking. To read a copy of the transcript, please see: Blog comments Attachment Document white.pdf (257.76 KB) Category 4th Circuit Court of Appeals

Law Review: David Y. Kamins, Punishing Debtors in Bankruptcy During COVID-19, 18 Brook. J. Corp. Fin. & Com. L. 247 (2023) Ed Boltz Thu, 05/23/2024 - 16:33 Abstract: The 2019 Coronavirus Pandemic (COVID-19) led to widespread government-mandated lockdowns, causing numerous businesses to close their doors permanently. To assist financially distressed businesses and individuals during the pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The Small Business Administration (SBA)—the agency tasked with implementing the CARES Act—distributed funds to individuals and businesses through the Paycheck Protection Program (PPP). Part of the SBA’s eligibility requirements to receive funding through the PPP included an exclusion provision that barred debtors presently involved in any bankruptcy proceeding from receiving any PPP funding. Many debtors in bankruptcy filed suits in federal bankruptcy courts across the United States to enjoin the SBA from excluding applicants solely based on their bankruptcy status. Courts, such as the Second Circuit and the United States Bankruptcy Court for the District of Maine, were split on whether the SBA violated Section 525(a) of the Bankruptcy Code or was within its right to deny PPP funding to debtors in bankruptcy. This Note explores the SBA’s rationale for excluding debtors in bankruptcy from PPP funding solely based on their bankruptcy status. This Note further analyzes the split court decisions regarding whether the PPP functioned more as a typical loan program or more as a grant. This Note then argues that the SBA’s decision to exclude debtors in bankruptcy from receiving PPP funding violated the anti-discrimination provision of the Bankruptcy Code. This Note further asserts that the courts siding in favor of the SBA incorrectly classified the PPP as a typical loan program. Lastly, this Note proposes solutions for the United States government to adopt more inclusive measures for business owners of all backgrounds and financial statuses in a future crisis like the COVID-19 pandemic. Commentary:  The preclusion of PPP funds for businesses and individuals in bankruptcy case and the hostility by the SBA  through its appeals of cases requiring it not to discriminate is unfortunately just one in a long chain of examples of government prejudice against bankruptcy.  This includes the original ineligibility of debtors in bankruptcy from mortgage modification assistance under the HAMP program during the Housing Crisis and also the opposition by the Department of Education until 2018 to allow student borrowers in bankruptcy to participate in Income Driven Repayment plans. Fortunately,  the federal government eventually relented and allowed homeowners in bankruptcy to participate in HAMP (but only after thousands unnecessarily lost their homes.)  With the Buchanan provisions,  I personally  caused  the Department of Education to give student loan borrowers  the same access to IDR plans,  which has led to the even more equitable relief starting July 1st of giving all Chapter 13 debtors IDR credit. While bankruptcy can certainly be a complicating factor in the administration of government relief programs,  those difficulties can be managed and navigated by the bankruptcy courts (which are also parts of the government.) To read a copy of the transcript, please see: Blog comments Attachment Document punishing_debtors_in_bankruptcy_during_covid-19.pdf (415.28 KB) Category Law Reviews & Studies

4th Circuit: In re Bestwall- Contempt and Sanctions related to Discovery is not a Final Appealable Order Ed Boltz Wed, 05/22/2024 - 20:06 Summary: Bestwall, LLC filed for Chapter 11 bankruptcy in November 2017 to address asbestos-related claims and  sought discovery to estimate its asbestos liabilities, leading to a personal injury questionnaire (PIQ) order for all mesothelioma claimants. The PIQ order was contested but upheld, with the court retaining jurisdiction to enforce it.  Claimants attempted to appeal the PIQ order, but the district court dismissed it for lack of jurisdiction. Some claimants, represented by Maune, Raichle, Hartley, French & Mudd, LLC, filed a lawsuit in Illinois to block the PIQ order, leading Bestwall to seek enforcement in the bankruptcy court.  The bankruptcy court found the plaintiffs and their counsel in contempt and sanctioned them for continuing the Illinois lawsuit. The appellants appealed the contempt and sanctions orders, but the district court dismissed these appeals as non-final. The Court of Appeals held that parties cannot immediately appeal a civil contempt order. Instead, they must wait for a final judgment to appeal.  In bankruptcy, a final judgment can be either the end of the entire case or the end of a discrete proceeding within the case.  Examples provided of the end of a discrete proceeding include the entry of a judgment in an Adversary Proceeding,  the confirmation of a bankruptcy plan,  or the adjudication of a motion for relief from the automatic stay. These contempt and sanctions orders for defying a discovery order,  however,  did not end a separate procedural unit, making them non-final and non-appealable. and the district court’s dismissal of the appeals for lack of jurisdiction was affirmed. Commentary: While contempt and sanctions for defiance of discovery are not the the end of a discrete proceeding,  this should not lead to confusion about whether a contempt and sanctions order for violation of the automatic stay  or discharge is final and appealable,  as those are examples of where "the bankruptcy court unreservedly grants or denies relief."   Ritzen Grp., Inc. v. Jackson Masonry, LLC, 140 S. Ct. 582, 589 (2020).  See also  In re Webb, 472 B.R. 665 (B.A.P. 6th Cir. 2012) (unpublished) (same for violating automatic stay); In re Nelson, No. BAP WW-15-1416, 2016 WL 7321196, at *1 (B.A.P. 9th Cir. Dec. 15, 2016) Similarly,  the resolution of an objection to claim should be a final appealable order. This decision,  with its focus on how a  discrete proceeding in bankruptcy  is different from a the overarching bankruptcy case,  also has collateral implications regarding the need for reaffirmations in Chapter 7 cases,   Many retail installment sales contracts have   language that states that it is an event of default if the Debtor "starts a proceeding in bankruptcy or a proceeding in bankruptcy is started against them or the property".  "A proceeding in bankruptcy"  IS NOT simply the filing of bankruptcy.  Accordingly,  most of these ipso facto provisions do not alone put a debtor in default merely because a bankruptcy was filed, making a reaffirmation unnecessary as absent any default the lender has no contractual basis for either repossession or refusal to accept payments. To read a copy of the transcript, please see: Blog comments Attachment Document bestwall.pdf (188.73 KB) Category 4th Circuit Court of Appeals