Latest 2 Cases This Week: Radiance Capital v. Crow (10th Cir.), Rohe v. Wells Fargo Bank, N.A. (11th Cir.)

The Upside-Down Treatment of Religious Exceptions Cases in the Supreme Court

MICHAEL C. DORF

Cornell law professor Michael C. Dorf comments on the U.S. Supreme Court’s decision last week to reject an emergency application from the State of Alabama to lift a stay on the execution of Willie B. Smith III. Professor Dorf observes the Court’s unusual alignment of votes in the decision and argues that, particularly as reflected by the recent COVID-19 decisions, the liberal and conservative Justices have essentially swapped places from the seminal 1990 case Employment Division v. Smith, which established that the First Amendment does not guarantee a right to exceptions from neutral laws of general applicability.

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Radiance Capital v. Crow

Court: US Court of Appeals for the Tenth Circuit

Docket: 19-8082

Opinion Date: February 12, 2021

Judge: Timothy M. Tymkovich

Areas of Law: Bankruptcy, Civil Procedure

This case arose from a bankruptcy filing by Thomas Crow, who owned substantial property and investment accounts in Wyoming. His bankruptcy petition sought an exemption for approximately $2 million contained in a Fidelity account, which he claimed was jointly held with his wife (who did not file for bankruptcy) and therefore was shielded from creditors under Wyoming law. The Trustee and a creditor, Radiance Capital Receivables Nineteen, L.L.C., objected to the claimed exemption. After a hearing, the bankruptcy court upheld the exemption, and a Bankruptcy Appellate Panel (BAP) affirmed. On appeal, Radiance appealed the BAP’s affirmance. Crow argued the Tenth Circuit lacked jurisdiction over this appeal because the BAP’s affirmance of the bankruptcy court’s ruling on the claimed exemption was not “final” within the meaning of 28 U.S.C. 158(d)(1). Radiance also challenged the BAP’s affirmance of the bankruptcy court’s ruling that an adversary proceeding was required to determine the amount of joint debt held by the Crows before any portion of the Fidelity account must be turned over to the Trustee. Finding it had jurisdiction, and deciding on the merits, the Tenth Circuit Court of Appeals affirmed. Applying Wyoming law, Court concluded the Crows jointly held the Fidelity account with a right of survivorship (“tenancy by the entirety” at common law) and was therefore exempt from the bankrupt estate. Furthermore, the tenancy by the entirety was not severed by the Crows’ subsequent conduct. The Court determined Radiance lacked standing to challenge that portion of the BAP’s ruling with regard to the adversary proceeding, and therefore dismissed that aspect of its appeal.

Rohe v. Wells Fargo Bank, N.A.

Court: US Court of Appeals for the Eleventh Circuit

Docket: 19-13947

Opinion Date: February 18, 2021

Judge: Tjoflat

Areas of Law: Bankruptcy, Civil Procedure

Petitioner filed suit alleging that, after she filed for bankruptcy, Wells Fargo violated the automatic bankruptcy stay by continuing with foreclosure proceedings against her in the Florida state courts. Furthermore, Wells Fargo and the state courts acted contrary to federal law governing removal by continuing with the same state court proceedings after petitioner sought to remove the state case to the bankruptcy court. Petitioner filed a petition for a writ under the All Writs Act in the district court, seeking an order declaring that certain actions of the state courts were void and granting her damages against Wells Fargo and its counsel. The Eleventh Circuit affirmed the district court's dismissal of plaintiff's complaint, finding that this case is not the kind of case in which an order under the Act could properly be issued because there is no underlying proceeding over which the district court has jurisdiction and the integrity of which the district court would be in an appropriate position to protect by making such an order. In this case, dismissal was proper because the Act does not empower the district court to issue the order sought by the petition.