Bankruptcy -- The New Normal?

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At the beginning of May, the Administrative Office of the U.S. Courts announced that new bankruptcy filings decreased by 1.1 percent for the 12-month period ending March 31, 2020 as compared with last year. This decline in the number of new bankruptcy petitions is following a downward trend established in the period after the Great Recession when there were almost 1.6 million filings in the year ending September 2010. Unfortunately, that trend might be over, thanks to the coronavirus pandemic that has crippled the economy not only in the United States but also worldwide. The pandemic has affected all business sectors from local bars and restaurants to retail shops to local governments. Already, several major retailers have filed for bankruptcy including Stage Stores, Neiman Marcus, JC Penney, and Pier 1. Restaurant chains like Garden Fresh Restaurants and Steak ‘n Shake have opted to shut operations completely or close a number of their stores. Even car rental giant, Hertz, has recently filed for bankruptcy protection. Sadly, there are also a large number of small businesses have made the difficult decision and quietly closed their doors permanently.

Of course, not all bankruptcies result in the business shuttering its doors for good. Some companies use bankruptcy as a means to turn their business around by reorganizing or restructuring their finances to continue operating rather than liquidating all of their assets. The different types of bankruptcy cases can be found in Bankruptcy Code, codified in Title 11 of the United States Code. The Code provides for six main types: Chapter 7 (“Liquidation”), Chapter 9 (“Adjustment of Debts of a Municipality”), Chapter 11 (“Reorganization”), Chapter 12 (“Adjustment of Debts of a Family Farmer or Fisherman With Regular Annual Income”), Chapter 13 (“Adjustment of Debts of an Individual With Regular Income”), and Chapter 15 (“Ancillary and Other Cross-Border Cases”). Although individuals are able to file for bankruptcy on their own without the assistance of an attorney, they need to keep in mind that bankruptcy is a complicated and complex process. Nevertheless, there are plenty of good resources available that can help the self-represented litigant through the bankruptcy. Note that these resources are not substitutes for the advice of a lawyer, but they can offer some good information and guidance. Here area few:

The Basics of Bankruptcy

United States Courts - “Bankruptcy Basics”

TexasLawHelp - “Bankruptcy: An Overview”

FindLaw - “Bankruptcy Basics”

Nolo - “Bankruptcy Basics”

Bankruptcy Forms

United States District & Bankruptcy Court for Southern District of Texas

United States Bankruptcy Court for Northern District of Texas

United States Courts

Legal Aid

Lone Star Legal Aid

Legal Aid of NorthWest Texas

Texas RioGrande Legal Aid

As stay-at-home orders are lifted and businesses reopen, more people will venture out and patronize businesses that might have been closed for weeks or even months. The recovery from the pandemic may not be as quick as some want or need, but we have to continue to hope that bankruptcies and a sagging economy will not become the new normal.

Regulating Your Fun in the Sun

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Did you know that the Friday before Memorial Day has been designated as Don’t Fry Day? Relax. It doesn’t mean that you cannot eat or cook any fried food, such as fried chicken or French fries, but rather, it is day set aside by the National Council on Skin Cancer Prevention to encourage sun safety awareness. In the United States, Memorial Day weekend is typically the unofficial beginning of the summer season. That would mean (in a pandemic-free world), trips to the beach or the park, backyard barbecues, and swimming, all of the hallmarks of summer living. All of that time spent outdoors in the sunshine also means that it’s time to slather on the sunscreen.

According to the Centers for Disease Control and Prevention (CDC), skin cancer is the most common form of cancer found in the United States. While it recognizes that there are benefits to spending time outdoors, the CDC recommends protecting your skin from harmful UV rays “by staying in the shade, wearing protective clothing, and applying a broad spectrum sunscreen with a sun protection factor (SPF) of 15 or higher.”

All of this talk of sunscreen made us wonder about the regulations that govern the sunscreen that we are putting in our skin. (We’re law librarians. Can’t you tell?) The U.S. Food & Drug Administration (FDA) is the agency responsible for regulating the topical sunscreens that consumers find on store shelves. These regulations can be found in 21 C.F.R. §§352.1 - 352.77 (2020). Specifically, the FDA regulates the active ingredients that are in the sunscreen, the combination of those ingredients, the labeling of the products, and the testing procedures. In addition, to be “generally recognized as safe and effective” (GRASE) and not misbranded, a sunscreen product must meet the conditions set forth in 21 C.F.R. § 330.1 (2020) as well as those found in Part 352.

To comply with provisions in the Federal Food, Drug, & Cosmetic Act (FDCA), as amended by the Sunscreen Innovation Act (SIA), the FDA published a proposed rule in the Federal Register early last year requesting additional data to determine whether certain active ingredients found in sunscreens are GRASE in light of changed conditions since the publication of the previous rule in 1999. The proposed rule would update the regulatory requirements for most sunscreens. The FDA planned to implement this rule and make it part of a final Monograph, but never did. The proposed rule and monograph have been thrust once again into the light of day with the enactment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March. Section 3854 of the CARES Act, which sunsets the SIA on September 30, 2022, permits a sponsor of a nonprescription sunscreen active ingredient to elect a review of the ingredients in accordance with the procedure set forth in section 505G of the FDCA, as added by Section 3851 of the CARES Act or pursuant to the process set forth in section 586C of the FDCA (21 U.S.C. §360fff-3). The effect of these new rules concerning the safety of certain active ingredients remains to be to seen. Until then, the FDA still highly recommends that everyone use sunscreen and be smart when it comes to sun exposure. So, on this Feel Good Friday, we want you to enjoy, have fun, and be safe. And, remember, don’t fry today or any day.

To the Skies

“Flying may not be all plain sailing, but the fun of it is worth the price.” — Amelia Earhart

As far as the history of aviation goes, May 21 is a high-flying day. In 1922, Charles Lindbergh landed at Le Bourget Field outside of Paris to become the first person to make a nonstop solo flight across the Atlantic Ocean. Ten years later, in 1932, Amelia Earhart became the first woman to make that solo flight across the Atlantic, landing near Derry in Northern Ireland. These milestones in aviation history made us wonder about the history of aviation law. It is not an area that we hear too much about here at the Harris County Law Library.

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Generally speaking, aviation law encompasses the regulation of pilots, aircrafts, air carriers, and aviation facilities; the extent of ownership of airspace; the imposition of civil and criminal liability resulting from the operation of an aircraft; and the application of tort liability and principles in the event of an aviation accident. The first known lawsuit involving aviation was Guille v. Swan, a case decided in 1822 in New York. Plaintiff Swan sued defendant Guille in an action of trespass. Apparently, Guille has ascended in a balloon not too far from Swan’s garden. Somehow, Guille became entangled and called for help, causing the crowd that was following the balloon to trample upon Swan’s vegetables and flowers as they raced to his rescue. Swan sought to recover $90 for the damage that Guille and the crowd caused to his garden. The court found Guille liable for the entire amount, not just the damage caused by his balloon. On appeal, the court affirmed the lower court’s judgment, finding that because of his perilous situation and cries for help, Guille should have foreseen the crowd and the resulting damage.

Of course, aviation law has evolved quite a bit from that first lawsuit involving an errant balloon. It has developed into a highly regulated field, falling under the purview of the U.S. Department of Transportation. It all began with the Air Commerce Act of 1926, which gave the Secretary of Commerce regulatory powers over the registration and rating of aircraft and the establishment of air traffic rules. This was repealed and followed by the Civil Aeronautics Act of 1938, which, among other things, established the Civil Aeronautics Authority (CAA), an independent agency tasked with promoting and regulating the air industry, investigating accidents, and advocating safety. The modern era of aviation law came with the enactment of the Federal Aviation Act of 1958, which, although retaining the Civil Aeronautics Board (CAB) (which came about when the CAA was split into two agencies: the CAB and the Civil Aeronautics Administration), called for the creation of the Federal Aviation Agency, which would be responsible for civil aviation safety. The Federal Aviation Agency is the predecessor of today’s Federal Aviation Authority (FAA). The FAA, an agency under the U.S. Department of Transportation, is now responsible for not only the management and regulation of airports and airspace but also the commercial space launch industry. Investigations into aircraft accidents was transferred to the newly-created National Transportation Safety Board in 1967 when the new Department of Transportation was established.

Aviation law, however, is not all about regulation. Aviation tort law developed from the early cases involving balloon accidents and has evolved to include cases involving helicopters, gliders, and other aircraft. Legal actions in the area of aviation law assert claims based on the legal concepts of negligence, breach of contract and warranty, strict liability, ultrahazardous activity, nuisance, and trespass. Injuries can occur in a variety of circumstances, from those occurring during taxiing or takeoff to those caused by the aircraft’s sonic boom. Actions can also come in the form of products liability claims with allegations of breach of warranty, breach of a manufacturer’s duty of care, and enforcement of strict liability. Criminal liability can result under state and local law, as well as under the Federal Aviation Act. Despite federal preemption in most other areas of aviation law, states can impose criminal sanctions for such actions as unlawful operation of an aircraft over its land and waters, the operation of an aircraft while intoxicated, and reckless operation of an aircraft. Federal crimes include: aviation theft, aiming a laser pointer at an aircraft, and interference of safe operation of an aircraft. Offenses under the Federal Aviation Act include piracy and hijacking, carrying weapons or explosives on board an aircraft, interference with flight crew and attendants, and providing false information.

Aviation has certainly come a long way since those early days of the Wright Brothers, Lindbergh, and Earhart, and we’ve been flying high ever since.

Evictions Are Once Again on the Docket

Due to the coronavirus pandemic, the Supreme Court of Texas had issued its Fourth Emergency Order Regarding the COVID-19 State of Disaster, establishing a moratorium on any action for eviction to recover possession of residential property until April 19, 2020. The expiration date for this moratorium was subsequently extended by the Twelfth Emergency Order Regarding the COVID-19 State of Diasater to May 18, 2020. These orders allowed new filings to be submitted during the moratorium but halted the posting of any statutory notice of a writ of possession as well as any service of citation until May 25, 2020.

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In addition to the Texas moratorium, renters had the further protection provided by the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted by Congress on March 27, 2020. The CARES Act, and specifically Section 4024(b), prohibited landlords of certain “covered dwellings” from instituting eviction actions or charging fees or penalties for the nonpayment of rent. The protections afforded by the CARES Act extend 120 days from its date of enactment. During this 120-day period, landlords also are enjoined from issuing any notices to vacate. Under the statute, landlords are also required to provide tenants with 30 days during which to vacate the premises. However, the protections afforded by the CARES Act are only applicable to covered property. Section 4024(a)(2) defines “covered property” as any property that participates in a federal assistance program, such as public housing, Section-8 Project-Based Rental Assistance, and the Low Housing Income Tax Credit (LHITC) program or that is secured by a federally backed mortgage loan or federally backed multifamily mortgage loan, such as Fannie Mae and Freddie Mac, or that is insured by the Federal Housing Administration or the Department of Veterans Affairs. Of course, the difficulty involved with the CARES Act as it relates to renters involves whether the property which they are renting is a covered property under the Act. Unfortunately, renters might have no reason to know this as the property is owned by another party, and it might be difficult to determine or discover whether the property is covered. To aid in this regard, ProPublica, an independent, nonprofit newsroom, has published an interactive database to help renters find out if the federal moratorium would apply to them.

For those Texas renters whose property is not a covered one as defined in the CARES Act, eviction, unfortunately, could become a sad reality. With the Texas moratorium expiring on May 18, landlords are now free to move forward with eviction proceedings, including the issuance of service of process and the posting of writs of possession. Note that the onus is not necessarily on the tenant to determine whether the dwelling is a covered one under the CARES Act. Pursuant to the Fifteenth Emergency Order Regarding the COVID-19 State of Disaster, landlords are required to state in any sworn petitions or separate affidavit filed between March 27, 2020 and July 25, 2020, that “the premises are not subject to the moratorium on evictions imposed by Section 4024 of the CARES Act.” A sample of an affidavit containing the required language can be found on the website of the Harris County Justice Courts. Interested parties are directed to consult the websites of the individual justice courts for more information about filing and court proceedings.

For those tenants who require some assistance, there are some options available. There are some legal aid organizations in Harris County and the Houston area that might be able to help, most notably, Houston Volunteer Lawyers and Lone Star Legal Aid. Others around Texas include: Legal Aid of Northwest Texas, Texas Legal Services Center, and Texas RioGrande Legal Aid. There is also some useful information on TexasLawHelp.org concerning eviction and other landlord issues, including a page discussing Evictions During the COVID-19 Pandemic. See also a post written by the blog team here at the Harris County Law Library about some useful landlord/tenant resources.