Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

Liberty entered into a Master Declaration and Easements, Covenants, Conditions and Restrictions for a shopping mall. PMI purchased the property and entered into a Declaration that gave Liberty the right to prior approval of future purchasers and an option to purchase. PMI borrowed $3.5 million from Nationwide, using the property as collateral. Nationwide purchased title insurance from Commonwealth, containing the ALTA 9 endorsement. PMI defaulted and conveyed the property to Nationwide, which attempted to sell to Ironwood. Liberty’s successor, Franklin, refused to approve Ironwood under its rights conferred by the Declaration, based on Ironwood’s planned use as a school. Nationwide claimed that the restrictions upon which Franklin justified refusal rendered the property unusable and unsalable. Commonwealth denied the claim. The district court dismissed. The Third Circuit remanded, holding that Commonwealth is obligated to cover the claim if the restriction causing Nationwide’s harm was covered by the ALTA 9 Endorsement and not expressly excepted on Schedule B. The district court then ruled in favor of Nationwide. The Third Circuit affirmed and remanded for determination of damages owed Nationwide, relying on the plain language of the ALTA 9 rather than deferring to industry custom and usage. View "Nationwide Life Ins. v. Commonwealth Land Title Ins. Co." on Justia Law

Orton filed a Chapter 7 petition. On Schedule A (realty), he listed his one-eighth interest in vacant land that is subject to an oil and gas lease, stating fair market value as $34,000 and claiming an exemption for $4,250 (1/8). On Schedule B (personal property), Orton listed his one-fourth interest in royalty interest in the oil and gas lease, assigning a fair market value of $1; no well has been drilled. On Schedule C (claimed exemptions), Orton claimed wildcard exemptions, 11 U.S.C. 522(d)(5), for $4,250 and $1. No party objected. The Trustee moved to close the case and to except Orton’s royalty interest from abandonment, preserving ability to recover any future royalties for the estate. Orton objected, claiming that he had successfully, permanently removed the assets from the estate, securing for himself future appreciation, free from creditors’ claims. The Bankruptcy Court held that the Trustee was entitled to pursue any future increase in value above the amount stated in Schedule C. The district court and Third Circuit affirmed. The Trustee, not the Debtor, is entitled to post-petition appreciation in value of estate assets that surpasses the amount exempted. Orton had exempted only an interest, not the asset itself, and was entitled to only the amount listed in Schedule C, not to future appreciation. View "In Re:Orton" on Justia Law

The business proprietor, Calabrese, filed for reorganization of the business under Chapter 11 of the Bankruptcy Code. After failure to confirm a reorganization plan, the bankruptcy was converted to Chapter 7. He also filed an individual petition under Chapter 13. The State of New Jersey Department of Taxation filed several secured proofs of claim in the individual bankruptcy. As proprietor of a restaurant, Calabrese was required to collect sales tax from customers. N.J. Stat. 54:32B-3(c)(1), 54:32B-12(a), 54:32B-14(a). Calabrese successfully moved to have the claims reclassified as unsecured. New Jersey filed amended proofs alleging that Calabrese owes $63,437.19 in taxes collected while operating his business from 2003 to 2009. The Bankruptcy Court held the taxes at issue are trust fund taxes under 11 U.S.C. 507(a)(8)(C) rather than excise taxes under 507(a)(8)(E) and, therefore, not dischargeable. The district court and Third Circuit affirmed. Public policy concerns weigh against Calabrese, primarily because sales taxes collected by a retailer never become the property of the retailer; it retains those funds in trust for the state. View "In Re: Calabrese" on Justia Law

Borrome, a citizen of the Dominican Republic, and, since 1996 a lawful permanent resident of the U.S. pled guilty in 2002 to violations of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 301-399d, prohibitions on unlicensed wholesale distribution of prescription “drugs” in interstate commerce. He was sentenced him to four months’ imprisonment followed by four months’ home confinement. In 2010 he was served with a notice of removal and the IJ reasoned that because Borrome’s offense involved unauthorized distribution of a Schedule II controlled substance (Oxycontin ), it is an aggravated felony under 8 U.S.C. 1101(a)(43)(B) pursuant to the “hypothetical federal felony test,” so that Borrome was removable under 8 U.S.C. 1227(a)(2)(B)(i) as an alien convicted of violating any law “relating to a controlled substance.” The Board of Immigration Appeals affirmed. Borrome has been removed from the United States. The Seventh Circuit reversed, concluding that violation of the FDCA wholesale distribution provisions does not constitute an aggravated felony and that those laws are not laws relating to a controlled substance. View "Borrome v. Att'y Gen. of the U.S." on Justia Law

Schering held a patent on the controlled release coating applied to potassium chloride crystals for treatment of potassium deficiencies. Potential generic manufacturers filed an abbreviated application for approval (ANDA),Hatch-Waxman Act, 21 U.S.C. 301-399, asserting that the Schering patent was invalid or would not be infringed by their new generic drugs. Schering’s subsequent infringement suits were resolved through agreements in which it paid the generic manufacturers to drop patent challenges and refrain from producing a generic drug for a specified period. Congress amended Hatch-Waxman to require pharmaceutical companies who enter into such settlements to file for antitrust review. The FTC filed an antitrust action with respect to Schering’s settlements. Plaintiffs sued on behalf of a class of purchasers of the drug. The Third Circuit affirmed the district court’s certification of the class, but reversed its presumption that Schering’s patent was valid and gave Schering the right to exclude infringing products until the end of its term, including through reverse payment settlements. The court directed use of a “quick look rule of reason analysis” based on economic realities of the settlement rather than labels. The court must treat any payment from a patent holder to a patent challenger who agrees to delay entry into the market as prima facie evidence of unreasonable restraint of trade, rebuttable by showing that the payment was for a purpose other than delayed entry or offers some pro-competitive benefit. View "In Re: K-Dur Antitrust Litigation" on Justia Law

Nelson, a citizen of Jamaica, was admitted to the U.S. as a permanent resident in 1994. In 1999, he pleaded guilty to possession of 16 ounces of marijuana. In 2000, Nelson visited Canada for two days. Although his conviction rendered him inadmissible he was allowed to reenter. He did not leave the U.S. again. In 2008, Nelson was found guilty of attempted possession with intent to distribute marijuana. DHS charged him as removable because his 2008 convictions constituted aggravated felonies and controlled substances offenses under 8 U.S.C. 1227(a)(2)(A)(iii) and (B)(i). The Immigration Judge found Nelson removable, but withdrew the findings because the convictions were on appeal and not final. In 2009, DHS issued additional charges based on the 1999 conviction. After finding Nelson removable based on the 1999 conviction, the IJ denied cancellation, concluding that Nelson had not accrued the required seven years of continuous residence, because the 1999 offense triggered “stop-time” provisions of 8 U.S.C. 1229b(d)(1), and ended his continuous residence short of the seven-year statutory threshold. Nelson was not permitted to start a new period of continuous residence based on his 2009 reentry. The BIA found Nelson removable based on the 1999 conviction. The Third Circuit denied review. View "Nelson v. Att'y Gen. of the United States" on Justia Law

A jury found Claxton guilty of conspiring to possess cocaine with the intent to distribute, but the district court entered a judgment of acquittal on the ground that there was not enough evidence for a reasonable jury to conclude that Claxton knowingly participated in the conspiracy. The Third Circuit reversed and remanded for sentencing. The court noted evidence that Claxton repeatedly did that organization’s bidding, that he was entrusted to help transport large sums of money, that he visited the place where that money was laundered, and that he frequented the place where the organization’s drugs were stored and its business discussed. The totality of those circumstances was more than enough to allow the jury to rationally decide beyond a reasonable doubt that he was guilty. View "United States v. Claxton" on Justia Law

Philadelphia International Airport is the ninth busiest airport in the U.S. Since 1999, PHL has been among the 10 most delayed airports and has contributed to delays at airports nationwide because its runways are too short, too close together, and too few. After receiving the City’s proposal for expansion in 2003, the FAA prepared an Environmental Impact Statement. In 2008 the FAA published a three-volume, 900-page draft EIS. The EPA submitted comments, citing alleged data omissions in the FAA’s analysis. The FAA considered and responded to each of the EPA’s comments in the final EIS. Although disagreements remained, in 2010, the FAA published its Record of Decision, which approved the expansion and delineated reasons for approval, including a finding that the project was reasonably consistent with existing plans of public agencies for development of areas surrounding the airport, as required by the Airport and Airway Improvement Act (AAIA), 49 U.S.C. 47106(a)(1. Objectors alleged violations of the National Environmental Policy Act, 42 U.S.C. 4321 and the AAIA. The Third Circuit denied review, finding that the FAA decision was not arbitrary. View "Twp. of Tinicum v. U.S. Dep't of Transp." on Justia Law

The federal government has maintained navigation in the Delaware River for more than 100 years. In 1992, the Army Corps of Engineers published an Environmental Impact Statement, recommending deepening of five feet along 102-miles. The EIS identified potential adverse impacts, but concluded these would be minimal and were outweighed by benefits of reduced shipping costs. In 1997, after engineering, the Corps published a Supplemental EIS. The project stalled until 2008, when the Philadelphia River Port Authority agreed to share costs. Improved technology reduced the amount of sediment; wetlands restoration was deferred. An oil spill had increased sediment toxicity. Expected expansion of sturgeon, potentially increased blasting risks. A 2009 Environmental Assessment recommended the project proceed. The district court rejected state challenges under the Coastal Zone Management Act, which requires a “consistency determination” for any state whose coastal zone will be affected, 16 U.S.C. 1456(c)(1); the Clean Water Act, which requires compliance with state water pollution law, 33 U.S.C. 1323(a); and the National Environmental Policy Act, 42 U.S.C. 4321. The states had attempted to revoke CZMA clearances. The Third Circuit affirmed, noting that dredging has begun. The 2009 EA was not arbitrary. CWA’s “congressionally authorized” exception to state approvals applies. The Corps reasonably concluded that it need not provide supplemental CZMA consistency determinations to states. View "State of DE v. U.S. Army Corps of Eng'rs" on Justia Law

Booker participated in a bank robbery with co-conspirators. After being arrested on unrelated charges, he provided incriminating statements to the police. Booker moved to suppress these statements as violations of his Miranda rights. The district court denied his motion. Before trial, Booker requested that he be allowed to proceed pro se. The court conducted a hearing and warned him of the consequences of self-representation. While articulating the potential sentences facing him, the district court erred and misstated one of the relevant mandatory minimums (stating it was five years and not 25 years). Booker was convicted of all charges. The Third Circuit vacated and remanded for a new trial. In light of the court’s error, Booker’s waiver of counsel was not voluntary and knowing. View "United States v. Booker" on Justia Law