Header graphic for print

Are Dischargeability Contests Looming in 50 Cent Bankruptcy?

Posted in Bankruptcy, Chapter 11, Creditors' Rights, Dischargeability, Uncategorized

As mentioned in an earlier post, the current deadline to object to dischargeability of certain debts in Curtis James Jackson, III’s bankruptcy (“50 Cent” or “Debtor”) pursuant to 11 U.S.C. 523 is October 5, 2015.

The filing of a Chapter 11 bankruptcy case does not automatically result in the discharge of the debts owed by the individual debtor for various reasons.  Certain claims against a debtor are “non-dischargeable”.  This means that the debt cannot be eliminated by bankruptcy process and the debtor will still owe these debts after his/her bankruptcy.

lightening pig

There are several categories of non-dischargeable debt for individuals in Chapter 11 and it is essential for creditors to know the nature of their claim against the debtor.  These categories fall into two types of non-dischargeable claims: 1) claims that are exempt from discharge as a matter of law (i.e. student loans, criminal fines, certain taxes); and 2) claims which require a creditor to file an adversary proceeding in the debtor’s bankruptcy case for determination by the Bankruptcy Court that the claim is non-dischargeable.  If a creditor fails to timely file an adversary proceeding by the Court scheduled deadline in a bankruptcy case, a discharge awarded to the debtor will also discharge the potentially non-dischargeable debt.

One category of claims that requires a creditor to file an adversary proceeding for determination of non-dischargeability, is for a debt “for willful and malicious injury by the debtor to another entity or to the property of another entity” pursuant to 11 U.S.C. § 523(a)(6).

Recent news articles http://www.nbcnews.com/business/business-news/50-cent-sex-tape-case-jury-adds-2-million-punitive-n398926 about 50 Cent’s bankruptcy filing have focused on the New York jury verdicts for $5 million for compensatory damages and $2 million for punitive damages (“NY Litigation Debt”) in favor of Lastonia Levitson (“Levitson”).  Levitson sued the Debtor for intentional infliction of emotional distress and violation of the New York Civil Rights Law related to Jackson’s release of a private, intimate video depicting Levitson having sex with her then boyfriend.

An interesting issue in 50 Cent’s bankruptcy case will be whether he can prevail against (or settle) any adversary proceeding by Leviston for determination that the NY Litigation Debt is non-dischargeable.  The NY Litigation Debt,  in part, was based on a finding that 50 Cent was liable to Leviston under her cause of action for intentional infliction of emotional distress.

The elements of a cause of action for the intentional infliction of emotional distress are: “(i) extreme and outrageous conduct; (ii) intent to cause, or disregard of a substantial probability of causing, severe emotional distress; (iii) a causal connection between the conduct and the injury; and (iv) severe emotional distress” (Howell v. New York Post Co., 81 N.Y.2d 115, 121 [1993] ).

Several courts have found that a claim for intentional infliction of emotional distress satisfies the “willful and malicious injury” standard under 11 U.S.C. § 523(a)(6), supporting non-dischargeability of these types of claims.  See e.g. Mussilli v. Droomers (In re Musilli), 379 Fed.Appx. 494, 498 (6th Cir. 2010) (“This Court has created a non-exclusive list of the ‘types of misconduct [that] satisfy the willful and malicious injury standard: intentional infliction of emotional distress…’ “); Berrien v. Van Vuuren (In re Berrien), 280 Fed.Appx 762, 766 (10th Cir. 2008)(intentional infliction of emotional distress claim satisfies the “willful and malicious injury” standard).  Collier on Bankruptcy § 523.12[4] (16th ed. 2012) (“Claims based on…intentional infliction of emotional distress…have typically been held nondischargeable”).

Perhaps some of these issues will be raised at the status hearing to be held in the Debtor’s bankruptcy case on August 26, 2015 at 2:00 p.m. 


Heather L. Ries is an attorney with the Financial Restructuring and Bankruptcy Department of the law firm of Fox Rothschild LLP.  Heather focuses her practice in matters related to bankruptcy, creditors’ rights, commercial workout and foreclosure disputes, and commercial litigation.  You can contact Heather at 561-804-4419 or hries@foxrothschild.com.

Suing Consumer Bureaus: Business Does Not Have to Be Consumer to Sue under Florida Deceptive and Unfair Trade Practices Act.

Posted in Uncategorized

In a related post, I recently addressed Florida’s Fourth District Court of Appeal’s decision in Caribbean Cruise Line, Inc. v. Better Business Bureau of Palm Beach County, Inc. d/b/a Better Business Bureau of Southeast Florida and the Caribbean, Case No. 4D13-3916. For those involved in consumer bureau litigation, the most exciting part of the Court’s opinion was obviously the Court’s holding that a local Better Business Bureau (“BBB”)  affiliate was not protected by First Amendment privilege when a claim concerns the BBB’s methods, business conduct, or representations. However, the Court also shed some new light on Florida’s Deceptive and Unfair Trade Practices Act (“FDUTPA”).

As a matter of background, the Florida legislature amended FDUTPA in 2001 by changing the definition of who could bring a FDUTPA action from a “consumer” to a “person.” While it may seem obvious that the amendment signaled an intention to expand access to FDUTPA actions, sparse Florida case law on FDUTPA created some confusion. Often times, trial courts, such as the one in Caribbean Cruise, erroneously continued to require consumer status for a claimant bringing a FDUTPA action based on the Fourth District’s opinion in Beacon Prop. Mgmt., Inc. v. PNR, Inc., 890 So. 2d 274, 278 (Fla. 4th DCA 2004).

Fortunately, the Fourth District has added some clarity to the issue. In the second portion of the Court’s opinion in Caribbean Cruise, the Court held that the 2001 amendment indicated that “the legislature no longer intended FDUTPA to apply only to consumers, but to other entities able to prove the remaining elements of the claim.” The Court stated:

[W]hile the claimant would have to prove that there was an injury or detriment to consumers in order to satisfy all of the elements of a FDUTPA claim, the claimant does not have to be a consumer to bring the claim.

After Caribbean Cruise, FDUTPA claims seem to be available to businesses in B2B transactions as long as the claimant can show some potential harm to consumers resulting from the unfair or deceptive trade practice. More specifically, however, the Court was unequivocally clear that FDUTPA claims are available to businesses in litigation against consumer bureaus like the BBB where the claimant alleges that the bureau is acting in a biased or partial way even though the bureau makes representations that it acts impartially or without bias. In this sense, the Fourth District opened the door to lawsuits in connection with representations that consumer bureaus make about themselves as opposed to their constitutionally protected opinions about a particular business.

Caribbean Cruise is certainly a sign of hope for practitioners and businesses aggrieved by a consumer bureau like a local BBB. However, in order take advantage of Caribbean Cruise and bring a claim against a consumer bureau like a local BBB, businesses and their attorneys will need to develop a sound strategy well in advance of filing suit and be extremely meticulous in pleading their causes of action so as to overcome defenses of constitutional protection in the bureau’s motion to dismiss.

________________________________________

W Mason is an associate with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W focuses his practice on commercial litigation throughout Florida, with an emphasis on litigation involving consumer bureaus including the Better Business Bureau. You can reach W at (561) 804-4432 or wmason@foxrothschild.com.

50 Cent – Lavish Lifestyle or Drowning in Litigation Debt?

Posted in Bankruptcy, Chapter 11, Creditors' Rights

According to recent filings, the Curtis James Jackson, III (“50 Cent” or “Debtor”) has 1-49 creditors, $10,000,001 to $50 million in Assets, and estimated liabilities of $10,000,001 to $50 million. Listed among the 20 largest creditors are Sleek Audio, LLC, Lastonia Leviston, Suntrust Bank, 8X10 Boutique LLC, Premium Assignment Corp. and American Express.  The Debtor has indicated in papers filed with the Bankruptcy Court in Connecticut that his bankruptcy filing “is not primarily a result of excessive current expenses exceeding his current revenues, but rather the substantial costs of litigation and resulting awards against in the past year which total in excess of $20 million” and that while he has “substantial assets, he does not have the ability to pay the full amount of these litigation claims and all other asserted claims at the present time, thereby necessitating this chapter 11 filing.”

drowning pig

Debtors in bankruptcy are required to complete and file Schedules which list all of their assets and all of their debts, along with a statement of financial affairs (“SOFA”) listing other important financial information.  50 Cent must sign the Schedules and SOFA, declaring under penalty of perjury that the information provided in those documents is true and correct.  While a debtor’s bankruptcy Schedules and SOFA are generally due within 14 days from the bankruptcy filing, 50 Cent has sought by motion to extend that deadline to August 3, 2015 (Docket Entry 30).  Requests for extension are not uncommon, especially where the debtor runs his business through several entities and there is a large volume of information to be included in the Schedules and SOFA.

Once filed, the Schedules and SOFA should provide creditors and parties in interest a good picture of where 50 Cent’s financial life stands.  Is he a victim of his own lavish lifestyle or drowning in litigation debt?


 

Heather L. Ries is an attorney with the Financial Restructuring and Bankruptcy Department of the law firm of Fox Rothschild LLP.  Heather focuses her practice in matters related to bankruptcy, creditors’ rights, commercial workout and foreclosure disputes, and commercial litigation.  You can contact Heather at 561-804-4419 or hries@foxrothschild.com.

50 Cent Proposes Bankruptcy Professionals

Posted in Bankruptcy, Chapter 11

This week, Curtis James Jackson, III (“50 Cent” or “Debtor”) sought to employ several professionals to assist him with his chapter 11 bankruptcy.  The Debtor is seeking to employ two firms as his bankruptcy counsel:

  • Neligan Foley LLP (“NFL”) – 50 Cent wishes to employ NFL as his bankruptcy counsel (Docket Entry 34) to develop, propose, and consummate a plan of reorganization or liquidation, along with customary bankruptcy professional services.  The Debtor proposes to pay NFL their customary hourly rate for services rendered, ranging from $395 to $675 per hour for NFL partners and $130-$350 for NFL paralegals and associate attorneys.
  • Zeisler & Zeisler, P.C. (“ZZP”) – The Debtor also seeks to employ ZZP as bankruptcy counsel (Docket Entry 40), the same firm representing SMS Promotions, LLC (“SMS”) (50 Cent is the manager and sole owner) in its chapter 11 bankruptcy.  The Debtor proposes to pay ZZP their customary hourly rate for services rendered, ranging from $395 to $475 per hour for ZZP partners and $175-$375 for ZZP paralegals and associate attorneys.

help wanted

The Debtor further seeks to employ a financial advisor/accounting firm and litigation and intellectual property counsel:

  • GSO Business Management, LLC (“GSO”) – In his application to employ GSO (Docket Entry 27), 50 Cent indicates that his “bankruptcy filing is not primarily a result of excessive current expenses exceeding his current revenues, but rather the substantial costs of litigation and resulting awards against him the past year which exceed in excess of $20 million.”   GSO performed financial advisory and accounting services for 50 Cent and all his related entities prior to the bankruptcy filing and he seeks to continue to employ them post-bankruptcy filing in that role and, among other services, to assist him with negotiations with creditors and other parties in interest, preparation of bankruptcy schedules and his statement of financial affairs, preparation of monthly operating reports, and analysis of financial data necessary to obtain confirmation of the a plan or reorganization/liquidation or consummation of a settlement.  50 Cent proposes that GSO will be paid $30,000 by G-Unit Records, Inc. for financial and accounting services and hourly by the Debtor for litigation support and testimony services.
  • Robins Kaplan LLP (“RKL”) – RKL (Docket Entry 32) will  to continue to represent the Debtor going forward with trademark maintenance and protection and  several litigation matters RKL was handling prior to the bankruptcy filing, including litigation between 50 Cent and/or his businesses with Sleek Audio, Lastonia Leviston, Andrew Jameson.  50 Cent proposes that RKL be paid pursuant to their pre-bankruptcy engagement letters, except for certain fee caps and fee reductions as outlined in the application.

So far, there has not been any opposition to the employment of these professionals.

$15 Minimum Wage in Florida?

Posted in Labor & Employment

Following other efforts across the country to raise minimum wage above the Federal requirement, a Florida senator is now proposing a $15 minimum wage here in Florida.

Florida already has a statute that mandates a minimum wage higher than the Federal requirement.  Currently, as of January 1, 2015, Florida’s minimum wage is $8.05 for regular employees and $5.03 for tipped employees.

————————–

Dori K. Stibolt is an attorney with the law firm of Fox Rothschild LLP.  Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

 

 

Medical Marijuana in Florida – Second Effort Advances

Posted in Labor & Employment

While Amendment 2, medical marijuana, obtained more votes (58%) than Governor Scott (who was reelected with 48.1% of the vote) it still failed to reach the 60% threshold to pass.

37211042_s

Now, as folks gear up for the 2016 general election, there is a second effort to get medical marijuana back on the ballot for 2016.  While the language of the proposed amendment has be tweaked, the issues for Florida employers remain the same.

While we await determination of whether medical marijuna will make it onto the 2016 ballot, employers with concerns can review my prior post:  Amendment Two (Medical Marijuana) – What Florida Employers Need to Know

—————————-

Dori K. Stibolt is an attorney with the law firm of Fox Rothschild LLP.  Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

Swift Stay Relief for Leviston in 50 Cent Bankruptcy

Posted in Bankruptcy, Chapter 11, Creditors' Rights

Curtis James Jackson, III, better known as rapper 50 Cent, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court, District of Connecticut (“Bankruptcy Court”) on Monday, July 13th.  His bankruptcy filing followed shortly after a New York jury verdict in the amount of $5 million in favor of Lastonia Levitson, who sued him for intentional infliction of emotional distress and violation of the New York Civil Rights Law related to Jackson’s release of a private, intimate video depicting Levitson having sex with her then boyfriend.  The bankruptcy filing stayed, pursuant to 11 U.S.C. 362, the punitive damages phase of the trial that was set to commence on the morning of the filing.

Levitson immediately filed a Motion for Relief from the Automatic Stay (“Stay Relief Motion”) seeking relief from the automatic stay to proceed with the punitive damages phase of her New York action.  Today, the Court granted Levitson’s Stay Relief Motion, terminating the automatic stay of 11 U.S.C. 362 so that Levitson may proceed with the punitive damages phase of her case through entry of judgment and waived the 14 day stay so that such proceedings may continue immediately.  The Bankruptcy Court did not modify the stay to allow any collection activity, including any lien or attachment, or the perfection of any security interest.

The meeting of creditors in Jackson’s bankruptcy case is currently scheduled for August 5, 2015 at 2:00 P.M.  The deadline for creditors to file proofs of claim is November 3, 2015.  The deadline to object to dischargeability of certain debts pursuant to 11 U.S.C. 523 is October 5, 2015.

EEOC Orientates Towards Sexual Orientation Protection

Posted in Labor & Employment

Following up on my earlier posts here and here regarding the Equal Employment Opportunity Commission (“EEOC”) focus on sex discrimination protection for transgender employees, now the EEOC has turned its attention to discrimination based on sexual orientation.

13928335_s

Recently, the EEOC addressed a charge brought by unnamed employee in the air traffic control tower at Miami International Airport who claimed he was denied a promotion because he’s gay.  The airport worker who filed the claim said a supervisor had made disparaging comments about him for talking about his partner, repeatedly calling him “a distraction in the radar room.”  Allegedly, the supervisor said, “We don’t need to hear about all that gay stuff.” The worker claimed that his sexual orientation factored into his supervisor’s decision to promote two of his colleagues but not him.

In a 17-page ruling, issued in July, the EEOC said such discrimination is unlawful under Title VII, which prohibits sex bias.  In its ruling, the EEOC concluded that sexual orientation is a sex-based consideration.  Specifically, the EEOC stated: “Sexual orientation discrimination is sex discrimination because it necessarily entails treating an employee less favorably because of the employee’s sex.”

What is the takeaway for employers?

1. Get your policies and procedures updated.  While Title VII may not expressly provide protection for discrimination based on gender identity or sexual orientation, employers must recognize that the EEOC interprets existing law as providing that protection.  Additionally, your company may be subject to local or state law that does provide specific coverage for these types of claims.

2. Recognize that the EEOC is focusing on discrimination and harassment that involves gender identity and sexual orientation.  Therefore, your nondiscrimination and harassment policies and procedures need to include, both in writing and in practice, a bar against discrimination/harassment based on gender identity and sexual orientation.

3. It may be time for training.  When was the last time you held discrimination/harassment training?  If you can’t remember then it may be time to do a training session with an emphasis on gender identity and sexual orientation.

————————-
Dori K. Stibolt is an attorney with the law firm of Fox Rothschild LLP.  Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

Suing Consumer Bureaus: Florida Court rules that Better Business Bureau’s Practices, Representations, and Systems are Not Protected by First Amendment

Posted in General Litigation

Successfully suing a consumer rating bureau for the lost business that results from an erroneous or biased rating can be extremely challenging. Potential business-owner litigants and their attorneys quickly learn that in most jurisdictions, courts have developed case law shrouding consumer bureaus like the Better Business Bureau with broad constitutional protection. Specifically, in many places, courts find that statements made by a consumer bureau such as the Better Business Bureau are statements of pure opinion that receive absolute privilege under the First Amendment of the Constitution of the United States. As such, a plaintiff in a lawsuit against a consumer bureau may have a difficult time surviving the pleading phase of litigation.

Fortunately, for businesses in South Florida, the legal landscape has changed. Florida’s Fourth District Court of Appeal recently dealt a devastating blow to consumer bureaus, the Better Business Bureau in particular, in the case captioned Caribbean Cruise Line, Inc. v. Better Business Bureau of Palm Beach County, Inc. d/b/a Better Business Bureau of Southeast Florida and the Caribbean, Case No. 4D13-3916. In Caribbean, the plaintiff alleged claims against the Better Business Bureau under Florida Unfair and Deceptive Trade Practices Act on the basis that “BBB is deceptive in their practices, including its representation that it has an unbiased rating system and conducts an adequate investigation into the businesses for which it rates, when, in fact, it does not.” Further, the plaintiff alleged that “BBB falsely represents that it bases its grade on sixteen specifically-enumerated factors, and that BBB does not inform the public that it partially relies on whether a business is ‘accredited’ in grading that business.”

The trial court granted a motion to dismiss filed by the BBB finding that the BBB’s statements were protected by the First Amendment. Upon review, the Fourth District strongly disagreed and found that the plaintiff’s dispute was not with the opinions issued by the BBB, but rather was with the representations that the BBB makes, the methods that it employs, and the way it conducts its business. The Fourth District Court of Appeal held:

Since Caribbean Cruise’s allegations do not challenge statements of BBB’s opinions, the First Amendment did not protect BBB from Caribbean Cruise’s FDUTPA claim.

Therefore, the Fourth District reversed and remanded the case to the trial court.

While litigation against a consumer bureau still presents challenges for plaintiffs, the Fourth District’s ruling in Caribbean is great news for potential litigants considering a lawsuit against a consumer bureau such as the Better Business Bureau. However, a case against a consumer bureau will still require careful development of legal strategy and extremely well crafted pleading in advance of filing a lawsuit.

_______________________

W Mason is an associate with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W focuses his practice on commercial litigation throughout Florida, with an emphasis on litigation involving consumer bureaus and various Better Business Bureau affiliates. You can reach W at (561) 804-4432 or wmason@foxrothschild.com.

Tenants by the Entireties for Same Sex Couples?

Posted in Bankruptcy, Creditors' Rights

th[3]

Married couples have the additional advantage of being able to own property as tenants by the entirety in Florida and other select states.  Now that the Supreme Court has ruled that same-sex marriage is legal in all 50 states, same-sex married couples should be able to take advantage this type of property ownership only previously available to marriages between a man and a woman.  What does this mean and why is it relevant?  Stay tuned for my future blogs on this issue.