Welcome to the October 2021 edition of the ACIC Private Notes!

In this edition, you’ll find:

Also, don’t forget to register for the 2021 Virtual Fall Annual Meeting and Education Conference, which takes place SOON on October 13 and October 14! Click here to sign up today and get the latest updates, including conference papers as they come in. Multiple session materials are already available!

In Onthank v. Onthank, a Connecticut court held that, under the Doctrine of Substantial Performance, a lender’s mechanistic compliance with a notice of default provision was not required where noncompliance by the lender did not result in prejudice to the borrowers and the borrowers had actual notice of the default. Click here to learn more.

In Eichler v. Healthy Mom, LLC, a Connecticut court held that a noteholder could not recover damages for a borrower’s failure to pay a note at the original maturity where the maturity date was extended and events of default were waived by “Requisite Holders” in accordance with the terms of the note, despite a noteholder having issued a demand and default notice prior to the extension and waiver. Click here to learn more.

In Commercial Park Realty, LLC v. HR2-A Corp., the Supreme Court of Rhode Island held that (1) lenders were not able to rely on the borrowers’ rep that a statutory analysis was done demonstrating that the loans were capable of being repaid (and so were not able to take advantage of an exception to Rhode Island’s usury laws), (2) a forbearance agreement release didn’t release a usury claim under “coercive” circumstances and (3) the Massachusetts choice-of-law provision was overridden as being contract to Rhode Island public policy (with the result being that the Rhode Island usury law applied). Click here to learn more.

In In re: Darren E. Bryant, the United States Bankruptcy Court for the Middle District of Georgia concluded that under Georgia law, a creditor's failure to include the debtor's middle name on its financing statements, when his driver's license had his full middle name, strongly indicated that its liens were invalid for purposes of the pending motion. Click here to learn more.

In Rubenstein v. Palatchi, the Georgia Court of Appeals reversed in part a grant of summary judgment finding that there was a genuine issue of material fact existed as to whether an officer misrepresented a company’s financial position and whether the lenders justifiably relied on information provided by the officer that allegedly misrepresented company’s financial position—thus, precluding summary judgment on the lenders’ fraud claim. Click here to learn more.

In Shorter Bros., Inc. v. Vectus 3, Inc., the Supreme Court of Alabama affirmed the trial court’s ruling to pierce the corporate veil to hold a buyer entity’s owners personally liable the buyer entity’s actions. Click here to learn more.

In Chisum v. Campagna, the Supreme Court of North Carolina, resolving a business dispute, ordered judicial dissolution of multiple limited liability companies, holding that the statute of limitations begins to run on a breach of contract claim upon notice to the non-breaching party and that nominal damages are sufficient to establish breach of fiduciary duties and constructive fraud claims. Click here to learn more.

In Versailles Farm, Home & Garden, LLC v. Haynes, the Kentucky Court of Appeals affirmed the trial court’s finding in favor of a senior creditor that the lack of a future advances clause in a security agreement did not entitle the junior creditor to a portion of the proceeds from the sale of tobacco crops. Click here to learn more.

In In re: Karcredit, LLC., the US Bankruptcy Court for the Western District of Louisiana held that a corporate issuer of stock used as collateral for two loans is liable to the first lender for breaching the express provisions of the terms of its merger agreement. Click here to learn more.

In Morgan v. U.S. Bank Nat’l Ass’n, the plaintiffs challenged the foreclosure of their homestead by the defendant, who had purchased the home loan from the plaintiffs’ original lender, by asserting, among other things, that the assignment of the home loan from the original lender to the defendant was forged. The defendant argued that the plaintiffs lacked standing to contest the assignment of the loan, since they were not a party to the assignment agreement. Click here to find out the outcome and learn more.

In In re: First River Energy, L.L.C., the Fifth Circuit court was asked to resolve a lien priority dispute between the lender to a bankrupt entity that had purchased oil and the producers of that oil, who were entities located in Oklahoma and Texas. Because production of the oil was based in Texas and Oklahoma, each of which has its own priority rules for oil and gas producers and sales of production, and the Debtor’s jurisdiction of formation was Delaware, the court was required to evaluate conflict of law principles to determine whether Texas, Oklahoma or Delaware law would apply. Click here to find out the outcome and learn more.

In In re Hawkeye Entertainment, LLC, the United States Bankruptcy Court for the Central District of California awarded attorney’s fees, pursuant to a California fee-shifting statute, to a chapter 11 debtor that prevailed on a motion to assume a commercial lease. Click here to learn more.

In In Guzman v. Johnson, the Nevada Supreme Court held that a shareholder who sues a corporate director individually for breach of fiduciary duty must, under NRS 78.138(7), rebut the business judgment rule and demonstrate that the alleged breach involved intentional misconduct, fraud, or a knowing violation of the law. Click here to learn more.

In In Bank of New York Mellon v. 732 Hardy Way Trust, the United States Court of Appeals for the Ninth Circuit held that an HOA’s nonjudicial foreclosure of an HOA lien on a residential property in violation of the automatic stay was void, and that a lender with a deed of trust against the property had standing to sue under Nevada’s quiet title statute. Click here to learn more. 

Are you curious about what each of the ACIC committees does? Are you interested in joining an ACIC committee?

Click here for an overview of the purpose, goals, and current initiatives of each of the College's committees.