Before Paul filed for Chapter 7 bankruptcy, Paul and Candace were in divorce proceedings in New Jersey. No final judgment existed nor was there a division of marital assets. Based on an estimate of her expected share of marital assets, Candace filed a timely proof of claim for $577,935 against Paul’s bankruptcy estate, apparently premised on her stake in a partnership that was legally titled in Paul’s name and, therefore, passed to his bankruptcy estate. It would likely be distributed as shared marital property in a divorce decree. The trustee sought to expunge the claim, arguing that Candace’s interest in equitably dividing marital property in Paul’s bankruptcy estate was not a “claim” under 11 U.S.C. 101(5), because the state court had not entered a final divorce decree before Paul’s filing. The bankruptcy judge found that the claim for equitable distribution arose prepetition and must be allowed. On direct appeal, the Third Circuit affirmed. Although Candace did not have an equitable distribution decree in hand at the time Paul filed for bankruptcy, the focus should not be on when the claim accrues, but whether a claim exists. Given the Bankruptcy Code’s expansive definition of “claim,” a non-debtor spouse has an allowable pre-petition claim against the bankruptcy estate for equitable distribution of marital property when the parties are in divorce proceedings before the bankruptcy petition is filed. View "In re: Paul Ruitenberg, III" on Justia Law
In 1999, Klein and Weidner divorced in California. Weidner was ordered to pay spousal and child support. He made some child support payments but had paid no spousal support, when Klein filed suit, resulting in a 2008, judgment that he owed $548,797.07 in unpaid spousal and child support. Klein later challenged, under the Pennsylvania Uniform Fraudulent Transfer Act, Weidner’s 2006 transfer of Pennsylvania real estate to himself and his new wife as tenants by the entirety. The district court granted Klein summary judgment and awarded $548,797.07 in punitive damages; the Weidners were ordered to execute a deed transferring the property back to Weidner in fee simple by January 15, 2010. Klein also successfully attacked Weidner’s transfer of an ownership interest in a company, DMW, and attempted to pierce DMW’s corporate veil. The Third Circuit affirmed, holding that the new wife was not a good faith transferee and that the Pennsylvania statute does authorize an award of punitive damages. View "Klein v. Weidner" on Justia Law
In 1996 mother reported to police that, during a visit to her father’s apartment, their 12-year-old (Linda) alleged that father made sexual advances. Mother obtained an order of protection after he twice failed to appear. The county agency classified father as an “indicated” child abuse perpetrator on Pennsylvania’s child abuse registry. Father was charged with indecent exposure and endangering a child’s welfare. He pled guilty to harassment; the remaining charges were dismissed. In subsequent years, Linda denied the incident. Mother and father resumed living together and were allowed, by the agency, to have related children in their home. After mother obtained custody of their grandchild, the agency removed all children from the home, based on father’s listing. By the time father attempted to appeal in 2007, the agency had destroyed its 1996 records. The listing was expunged in 2010. The district court rejected claims under 42 U.S.C. 1983. The Third Circuit affirmed, finding that the agency’s position with respect to the listing did not “shock the conscience” and that there was no showing of a deliberate decision to deprive the plaintiff of due process nor evidence that the agency employs a policy or has a custom of conducting desultory investigations. View "Mulholland v. Cnty. of Berks" on Justia Law
Posted in: Civil Rights, Constitutional Law, Criminal Law, Family Law, Juvenile Law, U.S. 3rd Circuit Court of Appeals
Daughter, born in June 2004, suffered medical problems that stunted her growth. In October 2005, Mother took Daughter to Dr. Lindblad, who diagnosed failure to thrive. She was treated inpatient for six days and gained 50 grams per day, a gain normal for a child of Daughter’s age and condition. After returning to Mother’s care, Daughter gained only four grams per day. Lindblad again prescribed inpatient treatment and, in April 2006, concluded that Daughter’s condition was psychosocial; he feared that Daughter was neglected and noted concern about Munchausen by proxy. He spoke to a child welfare caseworker, who was already investigating the situation. A judge ordered Daughter removed to her father’s home, with Mother to have only supervised visitation. Caseworkers thought it unnecessary to hold the hearing that Pennsylvania law would require were Daughter taken into state custody. Mother received no explanation of how to arrange for a hearing. After Daughter was removed, discrepancies in her recorded weights were discovered. Mother’s habeas petition, filed 40 days after removal, was rejected. Mother and father later agreed to share custody. The district court rejected Mother’s 42 U.S.C. 1983 suit. The Third Circuit reversed and remanded for trial on procedural due process claims. View "B. S. v. Somerset Cnty." on Justia Law
Posted in: Civil Rights, Constitutional Law, Family Law, Juvenile Law, U.S. 3rd Circuit Court of Appeals
When William and Adele divorced in 2008, she waived her right to proceeds from his 401(k) plan, governed by the Employee Retirement Income Security Act, 29 U.S.C. 1001-1461. He did not replace her as named beneficiary before he died intestate, nine months later. Because of a 2009 Supreme Court case, Kennedy v. Plan Administrator, 555 U.S. 285, the plan was obligated to pay the proceeds to Adele in accordance with plan documents regardless of the waiver. The district court held that estate could not attempt to recover the funds by bringing suit directly against Adele to enforce her waiver. The Third circuit reversed in part. Permitting suits against beneficiaries after benefits have been paid does not implicate any concern of expeditious payment or undermine any core objective of ERISA.
Harold and his son William started a corporation, operated by William. Harold made loans to the corporation. When the corporation ceased operating William and his wife formed PCI-2 to take its place; despite an agreement, Harold's loans were not repaid and Harold made loans to PCI-2, lending about $300,000 to PCI-1 and PCI-2. William and his wife acquired other corporations and substantial real estate holdings. One business, WEL, issued one share of stock to Harold and nine shares to Harold as custodian for William's infant son, L.L. Harold was a director of WEL. William and his wife divorced. In 2004, Harold filed a loan repayment lawsuit against WEL and PCI-2; William did not defend, asserting there was no money. Harold obtained default judgments of $1,107,550 and $1,204,439, commenced execution proceedings against property that WEL owned, and obtained approximately $320,000 in proceeds. In the Bankruptcy Court, a custodian for shares owned by L.L. sought to recover $345,000 from Harold, claiming that Harold breached his fiduciary duties owed to L.L. The Bankruptcy Court and the district court rejected the claim. The Third Circuit reversed. Harold breached his duties as a WEL director and as a custodian for L.L.'s shares.
Posted in: Bankruptcy, Business Law, Corporate Compliance, Family Law, U.S. 3rd Circuit Court of Appeals
The biological mother of three children lived with the children and their adoptive mother and named the adoptive mother as beneficiary on one of her life insurance policies through her employer. She did not name beneficiaries on other policies and, after she died, the insurers rejected claims on behalf of the children. The district court dismissed claims under the Employee Income Security Act (ERISA), 29 U.S.C. 1001, which lists children as default beneficiaries. The Third Circuit vacated and remanded. ERISA grants standing to participants and beneficiaries; whether the term "children," as used in the insurance contracts, includes biological children who have been adopted by a non-participant is ambiguous. There was evidence of the insured's intent to benefit the children, sufficient to create a colorable claim adequate to support standing.