Exception to Discharge -- attacking bankruptcy filings in Federal Court

Source: https://www.americanbar.org/publications/blt/2016/10/02_maurice.html

I was recently asked to discuss how the heck you could challenge a person filing for bankruptcy. The most obvious answer is by showing they are hiding money. Nail them with that, and it's "game over." However, often, that is not so easily proven, nor necessarily the case. There are so many warrens in bankruptcy court, that it is much easier to hide than most people think. Enter the 523 exceptions!

How does it work?

If you are passed the filing deadline for exceptions to discharge, you will need to show good cause as to why the date was missed. Discharge is covered under 11 USC 523. There are six of them that matter most in commercial context:

• 523(a)(1): Taxes and duties exception


• 523(a)(2): obtaining loans, credit, or money by (a) false pretense as to financial position, or (b) through writing (applications)


• 523(a)(3): Failure to list creditor in a timely fashion in bankruptcy proceedings, such that the creditor could not contest


• 523(a)(4): fraud or defalcation of a fiduciary (or fiduciary duty)


• 523(a)(5): support (child/alimony) obligations


• 523(a)(6): willful or malicious injury

There are additional ones, but they get really obscure (home owner associations dues, and government obligations).

Generally, for corporate battles (partnerships, etc.), it ends up being under 523(a)(4). For debts incurred through fraud – 523(a)(2). For punitive damages or exemplary damages mandated by a Court – 523(a)(6).

I’ve won on 523(a)(6), and lost on 523(a)(2) and reached a draw (Settlement) as to 523(a)(4).

Here, however, because the filing is untimely, you would have to show good-cause to re-open the window. Service is popular, as is failure to notify the creditor at all. Also, manifest unjustice would be a good argument, but I don’t see it in your case.

Hanover Law, PC
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FLSA law suits - settlements that get approved

We recently handled an FLSA (Fair Labor Standards Act) lawsuit in the Eastern District of Virginia (VA Federal Court). After a bit of back and forth, we agreed on a settlement. I wanted to post a couple of pointers on how to handle FLSA settlement actions, as they are not the same as traditional civil action settlements. Because the requirements of the FLSA are statutory (defined at 29 USC 201 through 219), in order to settle a suit already filed with the Court, a judge must approve the settlement and ensure it satisfies the statutory requirements in order to constitute an effective "end" to the lawsuit. If the settlement agreement does not comport with the code, it will be denied.

Requirements of a Court Approved Settlement Agreement

Note: the rules governing FLSA settlements are strictly enforced by the Court. If you do it incorrectly, you run the risk of (a) having the settlement denied by the judge, and/or (b) the settlement will not preclude a subsequent lawsuit on exactly the same grounds. It can and does happen. And a prior settlement, not approved by the Court, will not stop a subsequent lawsuit on the exact same issue. There are some limited exceptions, but they are not strong, and not followed by most circuits.

Non-Court Approved Settlements

A settlement that is not submitted for approval by a Court is called a "private settlement" and is given no effect when there is a "bona fide dispute" regarding hours and wages most circuits. The Circuit Court in Florida stated it succinctly:

"[A]n employer undertakes the private resolution of an FLSA dispute at his peril. If the employer pays the employee in full, including all wages owed and liquidated damages, the employee retains no uncompensated FLSA claim and the peril dissipates. However, if the employer extracts a compromise, the release of an FLSA claim approved by neither the Department of Labor nor the district court remains unenforceable." Dees v. Hydradry, Inc., 706 F. Supp. 2d 1277, 1237-38 (M.D. Fla. 2010).

See also, Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982) which held the 29 USC 216 controls settlements on this type of case, and allows only Court approved or Department of Labor approved cases. Note that there was an opposite holding in the 5th circuit under Martin v. Spring Break ’83 Productions, L.L.C., 688 F.3d 247 (5th Cir. 2012). According to the Fifth Circuit, private settlements are enforceable if they provide all benefits that the employee would be entitled to under FLSA litigation because there is “little danger of employees being disadvantaged by unequal bargaining power.”

Three parts of a Court Approved Settlement Agreement

1. You need the actual settlement agreement. The controlling case for FLSA settlement agreements, and what must be in them, can be found at Dorian Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015). This case makes clear that the only thing that may be settled in the agreement are the specific allegations of hours and work time during the period of the complaint. A settlement agreement MAY NOT settle all potential past and future claims, as that would put the settlement agreement in direct conflict with federal law on the matter of wages and hours. The term of art is "narrowly tailored" to address the specific period addressed in the complaint. As a matter of law, the look back period is limited to 2 years from the date of the filing of an FLSA lawsuit. You can wave the three year "intentional act" look back by agreement of the parties (however, the two year is always permitted, and therefore cannot be waived).
   
   A settlement agreement must demonstrate that the parties have reviewed all wage and hour claims during the given time frame, and that the employer has provided all time records so that the employee can confirm the time and hours worked. Absent an agreement that full disclosure has been made (or that the parties agree that it has been made), the Court cannot determine if (a) there is a bone fide dispute as to hours, (b) if the resolution is fair and fully resolves the conflict. See, Dorian Cheeks above. To demonstrate this, you must always include the punch records or time records with any proposed settlement, and both sides must sign-off indicating that they have received and reviewed the records.
   
   To ensure that the settlement is fair, when the employees are not represented by counsel, a cooling period must be provided. A copy of the settlement, along with time records, and any other documents, must be provided, and a minimum of 72 hours given for the employees to review the agreement, or withdraw their consent, if already signed.
   
   Note, that the parties can agree to alter the punch records to comport to what was "actually" worked, allowing both sides to negotiate and settle on a reasonable amount. The requirement is only that all time records during the period were considered, and that the parties each reviewed and agree to the record as amended. Any changes should be initialed by each side, indicating agreement specifically to a change in hours on a given day. Precision is critical so that the Court can determine the degree of understanding and consent to the settlement by each party.
   
   Remember, also, that in FLSA litigation, the employee will receive 2x the amount of the missing pay, as a statutory payment -- so if the employee should have been paid 100 hours of OT, but instead was paid 100 hours of straight time, they would be due 100 x (2 x base pay). The two times multiplies is statutory and cannot be waived in a settlement agreement. If you wish to control the amount paid, both parties must agree to a change in the hours, not the pay rate. Never change the pay rate.
2. You must include a joint motion to dismiss the action with prejudice. The wording of this motion (and memorandum, if you don't combine the motion with a memorandum) follows a present format. See the attached document. Change as needed to fit your circumstances. NOTE! It is critical that you include that if payment of attorney fees is part of the settlement, the attorney fees were reasonably earned. Included a list of attorney hours unless it is $5000 or below (in which case, the Court generally will accept representation of counsel). Additionally, be sure to include that any additional attorney fees, over the amount paid in settlement (if any), are the responsibility of the party that incurred them. This should be part of the settlement, and expressly spelled out in the motion as well as the final order (see below).
3. Finally, you include a proposed order that contains the specific wording needed to dismiss the suit an give effect to the settlement. See attached. Note, you include that attorney fees not paid in the settlement are expressly the responsibility of the respective party.

Do you have a question about employment litigation? Call us! We can help -- both in the defense of your business, or in the defense of your rights as an employee. We know the law, and we understand how to get things done! 1-800-579-9864 or admin@hanoverlawpc.com.

• GENERIC Joint Memorandum FLSA.pdf
• GENERIC Joint Motion FLSA.pdf
• GENERIC Order FLSA.pdf
• GENERIC settlement agreement FLSA.pdf

Hanover Law, PC
Offices in Fairfax, VA and Washington, DC
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2751 Prosperity Ave, Ste 150 Fairfax, VA 22031	Sean R. Hanover, Esq. Stephen Salwierak, Esq. Charlet Herr, Practice Manager
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Evidence and opening statements in Immigration Court

A colleague asked me about the rules of court, regarding evidence in immigration proceedings. I thought I would share the answer here:

I have a CAT only IH coming up. I want to introduce a news article that I feel is relevant. Can I refer to the article in my opening statement?

Sure you can! You need to submit the article, and any other evidence you want to use, 15 days in advance -- unless for good cause you can’t do that. At the beginning of the hearing, the judge will review the evidence, and admit/deny as appropriate (almost always admit in CAT – it becomes a question of weight, not admissibility). In a state or federal court, the opening statement is limited to facts. However, if you had a pre-trial exchange of exhibits, you could certainly cite to a “fact” in your exhibits, too. You would do that (and in immigration court, too!) by saying something like this: “Not only will my client testify that giant green elephants are the cause of his fear, the evidence will show that as of 31 February 2016 (date of the article), the citizens of Ubuland are afraid of the government, and believe that they will all be killed by the green elephants with the governments agreement or even assistance.”. In state or federal court, you need to lay a foundation and provide authentication for evidence, before it can be admitted. Usually, you can file a motion in limine regarding certain documents, such as newspaper articles, in order to have the Court recognize the authenticity and foundation of new print prior to trial. That is not required in immigration court.

In an immigration context, you can even bring in hearsay in the opening, closing, and throughout the trial.

Do you have an immigration question? Give us a call! 1-800-579-9864 or admin@hanoverlawpc.com.

Hanover Law, PC
Offices in Fairfax, VA and Washington, DC
www.hanoverlawpc.com
2751 Prosperity Ave, Ste 150 Fairfax, VA 22031	Sean R. Hanover, Esq. Stephen Salwierak, Esq.
1-800-579-9864 admin@hanoverlawpc.com

Federal Appeals: Discretionary Appeal under 28 U.S.C. §1292(b)

This is a quick article outlining the process for interlocutory appeals in the midst of a federal lawsuit. When the court has ruled on a summary judgment, or partial summary judgment, an appeal may be requested. It is not automatic, and the District Court must approve. Note that appeal work is tricky. There are subtle nuances. A final decision as to liability (i.e. summary judgment as to liability) but not to damages, is not a final decision within the purview of Rule 54(b) and therefore can not be taken under that rule. Mr. Jeremy Doernberger, an associate at Anukem Law in Maryland, did an excellent review of this recently. If you are considering a Rule 54(b) appeal, a good case at bar is Bell Microproducts, Inc. v. Global-Sync, Inc., 20 F. Supp. 2d 938, 942 (E.D. Va. 1998). However, what if you do not have a final judgment -- that is, you have judgment as to liability, but not as to damages? Rule 54(b) won't work, and you are left with....

28 U.S.C. §1292(b)

When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals which would have jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within ten days after the entry of the order: Provided, however, That application for an appeal hereunder shall not stay proceedings in the district court unless the district judge or the Court of Appeals or a judge thereof shall so order.

This code section is the great catch-all for any appeal taken as a to matter that really has no home...it's not a final disposition, but it impacts the case. As always, any appeal taken during the course of the litigation requires District Court approval, and it is not likely to be forthcoming. However, if you have a dispute at law (that means an argument about how certain legal principals were applied to the facts, or whether given legal principals should apply at all), it can be be a handy way of framing an issue before the District Court. The District Court is always free to "reconsider" it's prior decision and change holding on a summary judgment or interlocutory matter, and a 28 U.S.C §1292(b) motion may be just the ticket to get it done.

How to file:

To file a 1292(b) motion, you need two parts. First, you need to file a motion in district court for "leave" to appeal the matter in question. While not strictly required, it is a good idea to include in the motion a section detailing the cause and thrust of why the appeal is warranted. For maximum effect, don't attack the decision of the judge en face, instead show how there is a genuine question of law.

Concurrently, you must file with the Appeals Court within ten days of the underlying District Court decision that gave rise to the appeal. This can be confusing, and there is conflicting holdings on whether you must file for leave to appeal in the Appeals Court AFTER the District Court certifies the matter for appeal (10 days from that order), or 10 days after the entry of the District Court order against which the appeal is sought. Answer: 10 days from the order against which the appeal is sought. This process is called "lodging." No fee is paid, but the right to appeal is preserved in the event the District Court does certify the appeal. Only then will you be required to pay the appeals fee and the Appeals Court will then consider the matter. By the way, you enter your appeal through CM/ECF via the utility option. You won't receive any notice of acceptance until after the clerk manually reviews the filing -- this can be very confusing if you are filing at the last moment (ahem).

The filing with the Appeals Court must include a copy of the underlying order from which the appeal is drawn, or the appeals case will be rejected. Similarly, you must include a corporate statement and certification that you have conferred with opposing counsel when filing the appeal. DO NOT miss those two attachments, or your filing is toast.

Do you have a question regarding a federal appeal? Give us a ring! We have considerable experience in federal court and would be glad to discuss your case. 1-800-579-9864.

Hanover Law, PC
Offices in Fairfax, VA and Washington, DC
www.hanoverlawpc.com
2751 Prosperity Ave, Ste 150 Fairfax, VA 22031	Sean R. Hanover, Esq. Stephen Salwierak, Esq.	Lili O'connell, Esq. Charles Hatley, Esq.
1-800-579-9864	admin@hanoverlawpc.com

Difference between JOINT filing and CONSENT filing

As a practitioner in both Federal and State jurisdictions, I am often consulted on matters that cross between both types of Courts. A recent question posted to the American Immigration Lawyers Association (AILA) is a good example. In this case, a practitioner new to immigration law (Federal) was asking the difference between a joint filing with the opposing counsel, and a consent filing with the DHS attorney. Her question, in part, read:

I used to file "consent" motions in state criminal court when I had consulted with the prosecutor and they agreed on whatever I was asking for. I didn't have them [prosecutors] actually sign the motion...

I've been looking at a sample "joint" motion to admin close an immigration case, and there's a space for the DHS attorney to sign. Is that just a best option, or is it actually necessary for me to get OCC's (Office of Chief Counsel -- immigration equivalent of the "district attorney" for a particular court) signature on a joint motion?

Does it make a difference if I title my motion "consent" vs. "joint"?

A discussion on JOINT MOTIONS vs. CONSENT MOTIONS:

A consent motion is one that the opposing parties agrees to allow you to file – consent = no opposition. The other party consents to your filing, but takes no position on the matter.

A joint motion is one where you and another party (together) are requesting the Court take some action. A joint motion is much stronger than a consent motion. In a joint motion, all parties are arguing that the Court should grant the requested relief, and the facts alleged are true. The opposition has moved from merely agreeing to allow you to file, to actually arguing for the relief to be granted. To make an argument to the Court, counsel must sign the motion. Hence for a joint filing, all parties filing in joint must sign.

When the petitioner AND the government both file in joint (a joint motion -- in the example above, OCC and the petitioner), the government is actually obligated to argue on behalf of the motion, just as you are obligated to argue on behalf of the motion. The Court is obligated to view the requested relief as beneficial to the government (or other joint filing party) when factoring whether to grant the same, or not.

Oddly, I just had a joint motion for bond redetermination denied by the Superior Court in DC (client had a 3rd DUI and was being held on a show cause for probation violation). That is exceptionally rare, and despite my impassioned plea, and rather luke-warm, tepid support by the government, the judge did her own thing. Just goes to show no matter how strong a joint motion is, the final arbitor is always the judge!(laughing). Those of you who have had favorable plea agreements nixed by the Court are too aware of the odd quirks that a judge can take despite the agreement of all parties on how the case should move forward.

Do you have a procedural question or concern in Federal or State Court? Call us! We can help -- 703-402-2723 or 1-800-579-9864.

Hanover Law, PC
Offices in Fairfax, VA and Washington, DC
www.hanoverlawpc.com		Lili O'connell, Esq. Abby Archer, Esq.
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