Based upon your review of the textbook readings, post a 450-word (minimum) synopsis of your understanding of the material. This should demonstrate understanding of the legal issues reviewed. Then answer the following case questions on a separate document:Chapter 20:
Chapter 2121-3Rodney Platt was the vice chairman of the board of Mylan. He was also one of the owners of an office park that Mylan leased, making him Mylan’s landlord. How could Mylan comply with the business judgment rule in connection with this transaction?21-4Careless Inc. ran HIV/AIDS treatment clinics. Some of its employees violated federal law by paying kickbacks to doctors who referred patients to Careless facilities. But the Careless employee in charge of preventing this kind of behavior was careless: He did not see some obvious problems. The board had never asked about the company’s monitoring process. Was the board of directors liable for this employee’s wrong-doing?21-5Congressional Airlines was highly profitable operating flights between Washington, D.C. and New York City. The directors approved a plan to offer flights from Washington to Boston. This decision turned out to be a major mistake and the airline ultimately went bankrupt. Under what circumstances would shareholders be successful in bringing suit against the directors?Chapter 22
Mary Price went for a consultation about a surgical procedure to remove abdominal fat. When Robert Britton met with her, he wore a name tag that identified him as a doctor, and was addressed as “doctor” by the nurse. Britton then examined Price, touching her stomach and showing her where the incision would be made. Britton was not a doctor, he was the office manager. Although a doctor actually performed the surgery on Price, Britton was present. The doctor left a tube in Price’s body at the site of the incision. The area became infected, requiring corrective surgery. A jury awarded Price $275,000 in damages in a suit against Britton. He subsequently filed a Chapter 7 bankruptcy petition. Is this judgment dischargeable in bankruptcy court?
AnswerUnder Chapter 7, fraud claims are not dischargeable.In re Britton, 950 F.2d 602, 1991 U.S. App. LEXIS XXXXXXXXXX9th Cir. 1991).
To finance her education at DeVry Institute of Technology, Lydia borrowed $20,000 from a private lender. After graduation, she could not find a job in her field, so she went to work as a clerk at an annual salary of $12,500. Lydia and her daughter lived with her parents free of charge. After setting aside $50 a month in savings and paying bills that included $233 for a new car and $50 for jewelry, her disposable income was $125 per month. Lydia asked the bankruptcy court to discharge her debt. Should the court do so?
Dr. Ibrahim Khan caused an automobile accident in which a fellow physician, Dolly Yusufji, became a quadriplegic. Khan signed a contract to support her for life. When he refused to make payments under the contract, she sued him and obtained a judgment for $1,205,400. Khan filed a Chapter 11 petition. At the time of the bankruptcy hearing, five years after the accident, Khan had not paid Yusufji anything. She was dependent on a motorized wheelchair; he drove a Rolls-Royce. Is Khan’s debt dischargeable under Chapter 11?
AnswerThe court would not permit this debt to be discharged because Dr. Khan was not acting in good faith.In re M. Ibrahim Khan, P.S.C., 34 Bankr. 574 (Bankr. W.D. Ky. 1983).
After filing for bankruptcy, Yvonne Brown sought permission of the court to reaffirm a $6,000 debt to her credit union. The debt was unsecured, and she was under no obligation to pay it. The credit union had published the following notice in its newsletter:
If you are thinking about filing bankruptcy, THINK about the long-term implications. This action, filing bankruptcy, closes the door on TOMORROW. Having no credit means no ability to purchase cars, houses, credit cards. Look into the future—no loans for the education of your children.
Should the court approve Brown’s reaffirmation?
ETHICSOn November 5, Hawes, Inc., a small subcontractor, opened an account with Basic Corp., a supplier of construction materials. Hawes promised to pay its bills within 30 days of purchase. Although Hawes purchased a substantial quantity of goods on credit from Basic, it made few payments on the accounts until the following March, when it paid Basic over $21,000. On May 14, Hawes filed a voluntary petition under Chapter 7. Why did Hawes pay Basic in March? Does the bankruptcy trustee have a right to recover this payment? Is it fair to Hawes’s other creditors if Basic is allowed to keep the $21,000 payment?