Commodity Futures Trading Commission v. Lake Shore Asset Management Ltd.
646 F.3d 401
7th Cir.2011Background
- Lake Shore Asset Management collapsed in 2007–2008; assets frozen and placed under receiver Robb Evans & Associates.
- Andbanc, an Andorra bank, filed a claim in the receivership but was deemed untimely; the receiver denied late-claim allowance.
- District court adopted a standard requiring “good cause” for late filing, and denied Andbanc’s motion.
- GAMAG held an allowed claim but disputed the receiver’s valuation; GAMAG’s appeal is consolidated with Andbanc’s.
- The Seventh Circuit applies de novo review to the legal standards and reviews factual disputes in Andbanc’s favor due to no evidentiary hearing.
- The court affirms the district court’s rulings denying late-claim admission and GAMAG’s valuation challenge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What standard governs late-claim relief in receivership | Andbanc: “good cause” standard governs | Receiver: “excusable neglect” governs | excusable neglect governs |
| Was failure to receive notice a valid basis to grant late filing | Andbanc: notice failure can excuse lateness | Receiver: delivery was adequate; notice duties met | not a breach; excusable neglect still controls |
| Did the district court abuse its discretion in denying late claim and allocation | Andbanc: more lenient treatment warranted | District court properly balanced interests; no abuse | no abuse; district court's denial affirmed and GAMAG’s claim rejected for priority |
Key Cases Cited
- Pioneer Investment Services Co. v. Brunswick Associates Limited Partnership, 507 U.S. 380 (Supreme Court 1993) (defines excusable neglect in Rule 60(b)(1) context)
- In re O'Brien Environmental Energy, Inc., 188 F.3d 116 (3d Cir. 1999) (borrowing excusable neglect concept from bankruptcy law)
- Old Colony Trust Co. v. Medfield & Medway Street Ry., 215 Mass. 156 (Mass. 1913) (early articulation of equitable notice in insolvency-like proceedings)
- In re Marinez, 589 F.3d 772 (5th Cir. 2009) (appellate review in receivership-like contexts)
- SEC v. Enterprise Trust Co., 559 F.3d 649 (7th Cir. 2009) (priority and creditors’ rights in receivership context)