U.S. Supreme Court and 4th Circuit Each Rules for Creditors in Recent Notable Opinions

This month we report on two very recent court decisions that are noteworthy for creditors. In the first decision, the U.S. Supreme Court defined “actual fraud” in a way that allows a creditor’s claim against the recipient of a fraudulent transfer to be declared nondischargeable in bankruptcy. In the second decision, the federal Fourth Circuit Court of Appeals clarified that a Chapter 13 debtor’s right to “cure” his mortgage default doesn’t mean that he gets to reinstate a pre-default interest rate.

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Bank With U.C.C. Security Interest In Deposit Account v. Garnishment Creditor: Who Has Priority?

In a commercial loan transaction, a bank is able to (and often does) obtain a perfected Uniform Commercial Code security interest in a deposit account maintained by its borrower at the bank. A bank that has obtained such an interest may not think to worry about what would happen if it receives a garnishment summons from another creditor of that borrower. In a recent case, however, a federal court ruled that a Garnishment Creditor trumped the bank’s security interest in its borrower’s deposit account because the bank failed to declare the borrower’s loan in default and take affirmative steps to enforce its security interest before it received the garnishment summons.

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"Duke Rules Package" Implementation: Revisions to the Federal Rules of Civil Procedure Four Months Later

Last year, we published a four-part series about the so-called “Duke Rules Package”—a set of proposed amendments to the Federal Rules of Civil Procedure developed during the 2010 Federal Rules Advisory Committee meeting held at Duke University. Those amendments, appropriately, have been nicknamed the “Duke Rules.” The Supreme Court adopted most of the “Duke Rules” effective December 1, 2015.

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Contractors: To Waive Or Not To Waive Consequential Damages?

A waiver of consequential damages is contained in many construction contracts. The American Institute of Architects, for example, has included a mutual waiver of consequential damages between the owner and contractor since at least 1997 and continues to do so today. (See, e.g., AIA A201-2007, at § 15.1.6). But what does such a waiver mean and is it a good thing for contractors to give up a right to recover consequential damages?

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