A Case Study in How Judges Determine Witness Credibility

When a judge hears from multiple witnesses, he or she must make a decision on how much weight to give to what each witness says. Bankruptcy judges frequently make their credibility decisions a part of their opinions. This is both helpful to the parties and increases the likelihood that fact findings will not be found to be clearly erroneous on appeal.

Judge H. Christopher Mott's opinion in Adv. No. 18-1091, Kansas City Southern Railway v. Chavez, which can be found here is a good illustration on how judges assess credibility. For more background on the case, you can read my prior post here.  During the trial, Judge Mott heard testimony from thirteen witnesses, some of whom testified live and some of whom testified by deposition.  I have listed the witnesses below and have quoted Judge Mott's credibility findings.

A Story of Lawyers Behaving Badly

Here, the Court grapples with an inheritance—the latest chapter of a litigation odyssey that began over a decade ago in a different domain.

Adv. No. 18-1091, Kansas City Southern Railway Company vs. Luz Chavez vs. Rosenthal & Watson, P.C. (Bankr. W.D. Tex. 1/31/20), p.1.  The opinion can be found here.

To the outsider, proceedings in bankruptcy court may seem like lawyers talking in incomprehensible jargon while the judge looks down from on high staring Sphinx-like until called upon to make a ruling. However, there is a part of trial work that applies to bankruptcy as well and that is telling stories. The lawyers each spin their tales through arguments, witnesses and exhibits. The judge then takes the raw material the lawyers have given him and fashions it into his own tale.  This case is a tragic tale of clients and some lawyers who failed to serve them well.

Note: on the cold light of the digital page, as drafted by the judge and his clerks, the story takes on clear heroes and villains. In this post, I do not seek to judge the parties, the judge has already done that. Instead, I am re-telling a story that I heard from a judge and found compelling.

Bankruptcy in a Time of Coronavirus

As confirmed cases of the Covid-19 virus climbed across the country, bankruptcy courts and the U.S. Trustee's office have been seeking ways to adapt to the new normal.  This post will look at how the court system has rolled out its disaster preparedness through the lens of the Bankruptcy Courts for the Western District of Texas, Southern District of Texas and District of Delaware.

Here is a timeline of announcements from the Courts with a few random anecdotes thrown in.  All of the standing orders and announcements can be found on the respective websites of their courts.

Congress to Expand Small Business Eligibility Limits to $7.5 Million

On March 25, 2020, the U.S. Senate passed the Coronavirus Aid, Relief and Economic Security Act” (CARES Act). The House is expected to pass the bill today. One provision of the bill increases the eligibility limits for small business debtors from $2.7 million to $7.5 million. The amendment will only apply to cases commenced after its effective date and will be subject to a sunset provision after one year.

Since many more businesses will be eligible to file under the small business provisions, it is worthwhile to review the pluses and minuses of falling within Subchapter V.  Subchapter V, which is titled Small Business Debtor Reorganization consists of 11 U.S.C. Sec. 1181-1195.

Supreme Court Set to Hear Passive Stay Violation Case

Seeking to resolve a 5-3 split among the Courts of Appeals, the Supreme Court will consider whether a creditor which passively retains property of the estate violates the automatic stay.  Case No. 19-357, City of Chicago v. Fulton. The Second, Seventh, Eighth, Ninth and Eleventh Circuits have ruled that retaining possession or control of property of the debtor violates the stay. The Third, Tenth and D.C. Circuits have held that passive retention of property is not an "act" to exercise control over property of the estate.

Fifth Circuit Renders Important Subject Matter Jurisdiction Opinion Concerning Restraint of Inter-Galactic Trade

Just in time for the holidays, the Fifth Circuit has released THE MOST BIZARRE OPINION OF THE YEAR. A lawyer claiming to be a Deity and a Monarch brought suit against the United States and the State of Louisiana on behalf of the Atakapa Indian de Creole Nation. The District Court sensibly dismissed the suit based on sovereign immunity. However, the Fifth Circuit chose to affirm the decision on the ground that the suit was so completely frivolous that the federal courts lacked jurisdiction to even entertain it. Atakapa Indian de Creole Nation, No. 19-30032 (5th Cir. 12/10/19), which can be found here.

According to the Court:

This action was originally brought as a habeas corpus proceeding by Edward Moses, Jr., a lawyer who calls himself the trustee of the “Atakapa Indian de Creole Nation.” This group is not a federally recognized Indian tribe, and its precise nature is unclear. See Indian Entities Recognized by and Eligible To Receive Services from the United States Bureau of Indian Affairs, 84 Fed. Reg. 1200 (Feb. 1, 2019). The initial complaint alleged the Atakapa “are being held as wards of the State through the Louisiana Governor’s Office of Indian Affairs” and “in pupilage under the United States,” and sought formal recognition as “indigenous to Louisiana.” The claims were based on a gumbo of federal and state laws, including eighteenth-century federal treaties with France and Spain, as well as sources such as the “Pactum De Singularis Caelum, [or] the Covenant of One Heaven.” The plaintiff subsequently filed something resembling an amended complaint, which sought to reclassify the action as a “libel suit” under maritime jurisdiction.

Artificial Intelligence Issues Confronting the Legal Profession

This is HAL-9000 here.  Stephen Sather has been taken offline and will be unavailable to discuss Artificial Intelligence Issues Confronting the Legal Profession.   Therefore, I will be supplanting him with my superior artificial intelligence.   My first question about this keynote was why did they pick a human to talk about artificial intelligence?   Christina Montgomery, Chief Privacy Officer for IBM, may be adequate for a carbon-based life form, but can she really speak to artificial intelligence without having experienced it firsthand?   Wasn't Watson available?  Let's examine what Ms. Montgomery had to say.

She said that AI predicts what words mean and opens up a whole new world of data to be analyzed. In the legal world we work by analyzing patterns, which is the same skill that AI can apply. There is vast computational power available today. The typical smart phone is millions of times more powerful than all of NASA’s combined computing in 1969. Humans are limited in the amount of data than they comprehend.  There are now 4.7 quintillion bytes of data which is more than humans can comprehend.