Pacific/Rocky Mountain Region

 

In In re 3MB, LLC , the U.S. Bankruptcy Court for the Eastern District of California held that a provision in a promissory note, governed by California law, that provided for default interest at the rate of 4% per annum above the non-default rate was an enforceable charge for interest under California law and was not a liquidated damages clause, and even if the provision were viewed as a liquidated damages clause, it would nevertheless be valid. Click  here to learn more.

 

In Fed. Home Loan Bank of Seattle v. Credit Suisse Sec. (USA), LLC, a state securities fraud case arising out of investment losses caused by losses on subprime residential mortgage-backed securities, the Washington State Supreme Court held that a plaintiff suing for misrepresentation in a private action under the Washington State equivalent of Rule 10b-5, need not prove "reliance" to recover.  Click here to learn more.

 

In In re Mayacamas Holdings LLC, the U.S. Bankruptcy Court for the Northern District of California held that a lender's claims for default interest, late charges and an exit fee under a promissory note were enforceable under Colorado law, the chosen governing law of the note, where the total interest, fees and costs did not exceed Colorado's 45% per annum cap.  However, the lender did not have a security interest in the insurance proceeds received by the chapter 7 trustee after a fire severely damaged the real property that secured the debtor's obligations under the note because the lender failed to notify the insurer in writing that it should be added as a loss payee on the insurance policy. Click here  to learn more.

 

In In re Southern Inyo Healthcare District, a debtor healthcare district objected to a proof of claim filed by a bank and sought a declaratory judgment that the bank's security interests were invalid because the loan violated state law. The bankruptcy court denied the healthcare district's motion for summary judgment, holding that there was a genuine issue of material fact as to whether the loan had been properly authorized and whether it complied with the debt restriction limits of the California Health & Safety Code. The bankruptcy court also refused to grant the bank's summary judgment motion as to its claim for restitution, holding that, if the loan was an ultra vires act for the healthcare district, restitution was most likely unavailable. Click here to learn more.

 

Southwest Region

 

In Matter of Henry, the Fifth Circuit Court of Appeals was called upon to determine whether the bankruptcy court erred in refusing to enforce an arbitration agreement and to compel arbitration in a proceeding seeking to enforce a discharge injunction. The Court of Appeals affirmed the bankruptcy court's position, noting that prior case law supported the conclusion that bankruptcy courts have discretion to refuse to compel arbitration in proceedings seeking enforcement of a discharge injunction. Click here to learn more.

 

In In Magna Equities II, L.L.C. et al. v. Heartland Bank, the Fifth Circuit Court of Appeals affirmed the district court's grant of summary judgment in favor of Heartland Bank on an action claiming, among other things, fraud and negligent misrepresentation. Click here to learn more.

In an effort to provide our members with relevant COVID-19-related content, the ACIC will be launching a COVID-19 Resource Center.  Many of our law firm partners have already prepared alerts and summaries covering a range of relevant topics for investment counsel and we anticipate additional topics emerging as matters develop.

 

As such, the ACIC is inviting its law firm members to submit any content their firms have prepared that would be relevant for our members. These submissions can be sent to [email protected].

 

We will be following up shortly once the resource center is operational so please stay tuned for future announcements!