Recent Opinion Index For Judge Boulden with Case Summaries 1997-Present

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(396) 1-10-97 UNPUBLISHED In re Ricci Investment Company, 93B-23895, Judge Boulden.

The proponents of a confirmed chapter 11 plan objected to the fee application filed by the chapter 11 trustee's attorneys and raised issues regarding the chapter 11 trustee's business judgment versus the attorney for the trustee's legal judgment, whether certain tasks performed by the trustee's attorneys were beneficial to the estate, and the impact of a violation of Fed. R. Bankr. P. 3016(a) on the allowance of fees. Relying on In re Curlew Valley Assoc., 14 B.R. 506 (Bankr. D. Utah 1981), the Court found that although in hindsight, some of the trustee's decisions may have appeared improvident or premature, the trustee's decisions were reasonable, made in good faith, and were within the scope of the trustee's authority under the Bankruptcy Code. Applying 11 U.S.C. § 330 as it existed prior to the Bankruptcy Reform Act of 1994, the Court determined benefit under Rubner & Kutner, P.C. v. U.S. Trustee (In re Lederman Enters., Inc.), 997 F.2d 1321 (10th Cir. 1993) by looking at whether services rendered by the trustee's attorneys promoted the bankruptcy process in accordance with the Bankruptcy Code and Rules. The Court concluded that time spent by the trustee's attorneys to draft the trustee's disclosure statement and plan that were filed in violation of Fed. R. Bankr. P. 3016(a) and time spent by the trustee's attorneys on an escrow agreement that allowed a result contrary to that approved by the Court were not beneficial to the estate. The Court denied compensation for these services.

(398) 7-8-97 UNPUBLISHED In re Ricci Investment Company, Inland Oil Products, Inc., Monrovia Oil Products, Inc., and Salina Investment Company, Inc., Substantively Consolidated Case No. 93B-23895, Judge Boulden.

Chapter 11 trustee, his counsel and the trustee's accounting firm submitted their third and final supplemental fee applications seeking reimbursement for fees and costs related to the defense of their second fee applications. The trustee and his counsel had encountered significant opposition to their second fee application and the Court disallowed a portion of the fees requested in their second applications. The determination whether the fees requested in the supplemental fee applications is governed by Section 330 as it existed prior to the Bankruptcy Reform Act of 1994 and the Tenth Circuit case law interpreting Section 330. See Rubner & Kutner, P.C. v. U.S. Trustee (In re Lederman Enters., Inc.), 997 F.2d 1321 (10th Cir. 1991) (benefit to the estate is threshold concern when determining eligibility for reimbursement of fees). The Court determined that trustee's counsel did not exercise reasonable discretion during the course of administering the assets of the estate and the time spent preparing and defending the previous fee application was disproportionate to the amount ultimately in dispute. The reasonableness and necessity of incurring fees to defend a prior fee application in comparison to the benefit to the estate entitled trustee's counsel to 4 percent of the total fee request. The Court awarded a collective 34 percent of the total amount requested by the trustee and the trustee's accounting firm because there was benefit to the estate for the trustee's defense against allegations that the trustee acted negligently because those allegations were subsequently found to be untrue. The Court further disallowed the applicants' request for payment of interest and collection costs on the fees previously approved by the Court.


(402) 10-15-98 UNPUBLISHED Duane H. Gillman, Trustee v. James Van Treese and Jason Van Treese (In re Northwest Publishing, Inc.), 97PB-2036, Judge Boulden.

Chapter 7 trustee brought this action against two of the debtor's officers and directors claiming corporate mismanagement, requesting an accounting, and seeking a determination that the debtor was defendants' alter ego. The court held that the proceeding was non-core but was related to the main case, and that the parties consented to entry of a final judgment. The court applied state law in analyzing the trustee's corporate mismanagement claim, holding that the presumption of good faith contained in the business judgment rule was overcome by the defendants' gross negligence. The debtor was also determined to be the alter ego of the debtor's president.

(403) 12-17-98 PUBLISHED Berdene D. Dennison vs Don L. Hammond (In re Don L. Hammond), 97PB-2227, Judge Boulden. 236 B.R.751 (Bankr. D. Utah 1998)

Debtor's ex-spouse filed a nondischargeability action under 11 U.S.C. § 523(a)(5) and 11 U.S.C. § 523(a)(15). The court found the debt dischargeable under 11 U.S.C. § 523(a)(5) because the ex-spouse failed to prove by a preponderance of the evidence that the parties intended the debt to be in the nature of support at the time of the divorce decree. Because the court did not find that the parties intended the debt to be in the nature of support, it did not reach the issue of whether the substance of the debt was in the nature of support. Sampson v. Sampson (In re Sampson), 997 F.2d 717, 723 (10th Cir. 1993). However, the court found the debt nondischargeable under 11 U.S.C. § 523(a)(15) because the debtor failed to meet his burden of proving either of the exceptions to nondischargeability under 11 U.S.C. § 523(a)(15)(A) or (B). At the time of trial, the debtor had the ability to make payments on the debt from income not reasonably necessary for the maintenance or support of the debtor or a dependent of the debtor. The court excluded contributions to the debtor's 401(k) plan and charitable contributions in making this determination. Reviewing the evidence presented under a totality of the circumstances analysis and as it specifically relates to the eleven factors set forth in Hart v. Molino (In re Molino), 225 B.R. 904, 909 (6th Cir. BAP 1998), the court concluded that the debtor had not shown that discharging the debt would result in a benefit to the debtor that outweighs the detrimental consequences to the ex-spouse.


(404) 1-6-99 UNPUBLISHED In re Richard D. Cummins and Tawna R. Cummins, 97B-26970, Judge Boulden.

Chapter 13 trustee sought clarification of time allowed for responding to his motion to dismiss. The court recognized a conflict between Local Rules 2003-1(a), 2083-1(b), and 5005-1(b)(1) which allow a ten-day response time, and Federal Rules of Bankruptcy Procedure 1017(a) and 2002(a) which allow a twenty-day response time. When there is a conflict between the Local Rules and Federal Rules of Bankruptcy Procedure, the Federal Rules control. Accordingly, the response time to a motion to dismiss is twenty days unless otherwise ordered by the court.

(405) 2-8-99 PUBLISHED America First Credit Union vs Matthew Scott Gagle, et al., (In re Matthew and Lisa Gagle), 97PB-2386, Judge Boulden. 230 B.R.174 (Bankr. D. Utah 1999)

Debtor disassembled and sold off all parts of debtor's truck which was subject to a security interest. Secured creditor brought § 523(a)(2)(A) action alleging fraudulent misrepresentation in obtaining the loan and § 523(a)(6) action alleging willful and malicious injury. The court looked to the Restatement of Torts for guidance on the meaning of both § 523(a)(2)(A) and § 523(a)(6). The creditor failed to establish its § 523(a)(2)(A) claim which was dismissed. The court relied on Kawaauhau v. Geiger (In re Geiger), 118 S.Ct. 974 (1998), and Dorr, Bentley & Pecha, CPA's P.C. v. Pasek (In re Pasek), 983 F.2d 1524 (10th Cir. 1993) in holding that "willful and malicious injury" requires a deliberate or intentional injury that is performed without justification or excuse. In a two part analysis, the court held there was no intent to injure the creditor because the debtor intended to repay the debt. However, the debt was held nondischargeable as the debtor intended to injure the creditor's property consisting of its security interest by disassembling and selling his truck, and did so without justification or excuse. The court based the measure of damages and the disallowance of attorney's fees on a tort analysis, rather than relying upon the underlying contract.

(408) 7-27-99 PUBLISHED In re WIN Trucking, Inc., 98B-25814, Judge Boulden.   236 B.R. 774

Chapter 11 debtor elected to be treated as a small business but no party filed a plan within the 160-day time limit imposed by 11 U.S.C. § 1121(e). After filing an untimely plan, the debtor filed a withdrawal of its small business election. The court concludes that the debtor’s failure to timely file its plan and its belated attempt to withdraw its small business election preclude confirmation of the plan under 11 U.S.C. § 1129(a)(1) and (2).


(410) 2-16-00 UNPUBLISHED In re Donnie Lee Amos, 98B-32761, Judge Boulden.

"Gap period" attorneys fees incurred after the filing of a chapter 13 petition but before conversion to chapter 7 which are not allowed under § 330(a)(4)(B) will not be allowed under § 503(b)(1)(A). Applications for allowance of administrative expenses filed prior to conversion to chapter 7 are timely pursuant to Fed R. Bankr. P. 1019(c), and, to the extent allowed by the court, should be paid by the chapter 13 trustee from available § 1306(a)(2) funds. If there are more allowed chapter 13 administrative claims than available § 1306(a)(2) funds, the allowed § 503(b)(2) administrative claims should be prorated and paid from § 541 property after chapter 7 administrative expenses pursuant to § 726.

Procedure change: Parties seeking allowance of any chapter 13 administrative expense must timely file a request for payment of the administrative expense prior to conversion to chapter 7 and have that request resolved by a final order, or other order extending the period, within sixty days of the conversion, or the administrative expense claim will be deemed waived by the applicant.

(412) 4-14-00 UNPUBLISHED Diane George v. Robert Lee Cevering (In re Robert Lee Cevering), 99PB-2022, Judge Boulden.

Debtor’s ex-spouse filed a nondischargeability action under 11 U.S.C. §§ 523(a)(4), (a)(5), and (a)(15) seeking $50,000, an award of punitive damages and attorney fees. On the day of trial, the debtor stipulated that the $50,000 debt was nondischargeable under 11 U.S.C. § 523(a)(15). The court found that the debt was also nondischargeable under 11 U.S.C. § 523(a)(4) but declined to award punitive damages because the statute of limitations ran on any state law conversion claim prepetition and no provision of the Bankruptcy Code allowed punitive damages under the circumstances of the case. The court declined to award attorney fees finding there was no case law, contractual, or statutory basis. The plaintiff also sought a general denial of the debtor’s discharge under 11 U.S.C. §§ 727(a)(2) and (a)(4)(A). The court denied the debtor’s discharge under § 727(a)(4)(A) finding that the debtor knowingly and fraudulently made a material false oath.

(416) 11-9-00 PUBLISHED In re Michael A. Parks and Theresa L. Parks, 00-27517JAB, Judge Boulden. 255 B.R. 768

Trustee objected to chapter 7 debtor’s exemption of funds accrued while participating in a 401(k) ERISA qualified pension plan where funds were available to debtor as a result of debtor’s employment terminating prepetition. Because the terms of the plan provided that after termination of employment debtor had the absolute right to the funds, trustee argued the funds lost their anti-alienation characteristics as part of an ERISA qualified plan and were not exempt under Utah Code Ann. § 78-23-5(1)(a)(x). Debtor responded by arguing that because the funds remained in the plan until they were deposited into an IRA, postpetition, they remained exempt under either ERISA or state exemption statutes. The court cited Guidry v. Sheet Metal Workers Nat’l Pension Fund, 39 F.3d 1078, 1082-83 (10th Cir. 1994)(en banc), cert. denied, 514 U.S. 1063 (1995), for the proposition that such funds are protected by anti-alienation provisions of ERISA § 206(d)(1), so long as they are within the fiduciary responsibility of private plan managers and not paid to or received by plan participants or beneficiaries. Therefore, the court concluded that the trustee’s objection to exemption was overruled because the debtor’s plan funds were not property of the estate.

(417)11-22-00 PUBLISHED In re Husting Land & Development, Inc., 97B-20309, Judge Boulden. 255 B.R. 772 see opinion #424

Unsecured creditor entered into a postpetition construction agreement with debtor, a land developer, for the purpose of correcting defective work and completing improvements on debtor’s sixty-one acre residential subdivision. Upon creditor’s application for allowance of administrative expense, the trustee and secured creditors objected, arguing that the postpetition debt was not incurred in the ordinary course of the debtor’s business pursuant to 11 U.S.C. § 364(a). The court concluded that the postpetition debt was not incurred in the ordinary course of business and, accordingly, creditor’s claim could not be allowed as an administrative expense. The court first determined that the opinion testimony of creditor’s expert witness was inadmissable because his methodology could not be proved under the test set forth in Kuhmo Tire Company, Ltd. vs. Carmichael, 526 U.S. 137 (1999). The court then applied the well-established "creditor expectation" test to determine that, given its scope and nature, this was not the type of transaction a reasonable creditor would expect the debtor to enter into in the ordinary course of its business. Specifically, when the debtor and creditor entered into the construction agreement, neither had a clear understanding of the amount of corrective work that would be necessary, nor was there any certainty as to the source of funds to repay the debt incurred. As such, this transaction was outside the ordinary course of the debtor’s business, and creditors should have been given notice and an opportunity to be heard.


(420) 8-17-01 UNPUBLISHED In re Horsley, 99-30458, Judge Boulden.

Chapter 7 trustee filed a motion for nunc pro tunc substantive consolidation of the assets and liabilities of debtor and a nondebtor entity pursuant to 11 U.S.C. § 105. Acknowledging that substantive consolidation may be appropriate in some cases, see Fish v. East 114, F.2d 177 (10th Cir. 1940) and Federal Deposit Ins. Corp. v. Hogan (In re Gulfco Invest. Corp.), 593 F.2d 921 (10th Cir. 1979), under the circumstances of this case, the Court determined that the debtor and nondebtor were not so intertwined as to afford the trustee the relief sought. Although the debtor managed and controlled both entities, there was insufficient evidence that the nondebtor lacked an economic existence independent from the debtor. In turn, the Court concluded that because nunc pro tunc relief is predicated upon a finding that a substantial identity exists between the parties, lack of evidence to support such a finding precluded therelief.


(424) 1-30-02 APPEAL In re Husting Land & Development, Inc., 97B-20309 (case number on appeal 2:01-CV-24B), Chief Judge Benson, U.S. District Court. See #417. 

Determining first that the testimony of creditor’s expert was inadmissable, and second, that the "creditor expectation" test was not satisfied, the bankruptcy court concluded that creditor’s postpetition debt was not incurred in the ordinary course of business and, accordingly, creditor’s claim could not be allowed as an administrative expense. The district court affirmed, basing its decision on the reasons set forth in the bankruptcy court’s opinion and with these additional comments: (1) that the creditor expectation test is well supported and in furtherance of the purpose of chapter 11; (2) that the bankruptcy court’s rulings were within its discretion and supported by the reasons articulated in its decision; and (3) that the proffered expert testimony concerning "ordinary course of business" was inadmissable because the opinion was based on the meaning of the law and the witness was not a legal expert and, in any event, testimony by a legal expert is neither common, nor proper in these proceedings.

(426) 4-9-02 PUBLISHED Skull Valley Band of Goshute Indians v. Chivers (In re Chivers), 99P-2573, Judge Boulden. 275 B.R. 606

Creditor sought nondischargeability of certain debts under 11 U.S.C. §§ 523(a)(2)(A) and (B) and sought a determination thereof pursuant to its motion for summary judgment. Debtor filed a cross motion for summary judgment seeking dismissal of claims. The decision required a determination of the meaning of the term "financial condition" under § 523(a)(2)(B) and the interplay of Field v. Mans, 516 U.S. 59 (1995) and the tort of fraudulent misrepresentation with § 523(a)(2)(A). The Court adopted a narrow reading of "financial condition"which requires that a false written statement describe the debtor's net worth, overall financial health, or ability to generate income. The Court also recognized the Supreme Court's reference in Field to the Restatement (Second) of Torts and adopted the analysis set forth in the Restatement in analyzing fraudulent misrepresentations under § 523(a)(2)(A). Judgment in favor of creditor.

(427) 6-4-02 UNPUBLISHED In re Tae Sun Hong and Bok R. Hong, 01-35072, Judge Boulden.

Upon the chapter 7 trustee's objection to exemption, the debtors sought a determination that funds rolled over prepetition from an ERISA qualified plan into an IRA annuity were either not property of the chapter 7 estate under 11 U.S.C. §541(c)(2), or were exempt under Utah Code Ann.§§ 78-23-5(1)(a)(x) or 79-23-6. The Court determined that the funds in the IRA annuity lost their ERISA anti-alienation characteristics prepetition and were therefore property of the estate. Once property of the estate, the funds were exempt pursuant to Utah Code Ann. §§ 78-23-5(1)(a)(x) because they were held in an arrangement described in Section 408 of the Internal Revenue Code, unless the funds constituted a "contribution" made to the IRA annuity within one year of filing for bankruptcy. The Court found that the statute did not restrict "contribution" to exclude rollover funds, and therefore Utah Code Ann. §§ 78-23-5(1)(b) applied, and the funds were not exempt. Further, Utah Code Ann. § 78-23-6 was inapplicable to exempt the funds as a matter of fact.

(429) 9-3-02 UNPUBLISHED General Motors Acceptance Corporation v. Staples (In re Staples), 01P-2084, Judge Boulden.

GMAC brought a nondischargeability action against the debtor seeking to have a deficiency debt resulting from the sale of a repossessed vehicle declared nondischargeable under 11 U.S.C. § 523(a)(2)(C). The Court found, under all the facts of the case, that the 2000 GMC Jimmy SLC 4x4 4-door sport utility vehicle was not a "luxury good" as used in the statute, and the debt was discharged.

(431) 10-21-02 UNPUBLISHED In re Mountaineer Development Corp., 00-28590, Judge Boulden.

The high bidder at a trustee’s auction moved to set aside the sale of the estate’s interest in a note, alleging that false or misleading information induced his bid. Following the failed sale, the chapter 7 trustee moved for authority to sell the asset to a third party. The original high bidder also objected to sale of the estate’s interest in the note to a third party. The original sale was authorized by the court, made regularly and with notice. The terms of the sale were as is, where is, if is, with no warranties or representations. To set aside such a sale, a party must show fraud, accident, mistake, or some other equitable cause for avoiding a like sale between private parties. See Golfland Entertainment Centers, Inc. v. Peak Investment, Inc. (Ir re BCD Corp.), 119 F.3d 852, 859-60 (10th Cir. 1997) (citations omitted). The trustee had passed along some, but not all, information in her possession regarding the status of the asset to the bidder. The trustee lacked independent knowledge of the accuracy of the information in issue, and the bidder made no specific request for this information. The court denied bidder’s motion, finding the evidence insufficient to show any of the required elements. The court further held that the trustee owed no heightened fiduciary duty to disclose information to a bidder at auction where the bidder is also a creditor of the estate. The trustee’s duty to a bidder-creditor is the duty of due care, diligence, and skill as measured by a reasonable person standard. See United States of America v. Aldrich (In re Rigden), 795 F.2d 727, 731 (9th Cir. 1986). There was no evidence in this case that the trustee had failed to fulfill her duty.  Relying on the factors set forth in In re Anchor Exploration Co., 30 B.R. 802 (N.D. Okla. 1983), the court found the trustee’s proposed second sale to a non-bidding third party appropriate under the terms of the original Sale Order. See In re Anchor, 30 B.R. at 808


(434) 2/28/2003 UNPUBLISHED  In Re In re Alice M. Sink, aka Alice M. Phillips, 02-40042; In re Hipolito D. Valenzuela, 02-32504; In re Clay Petersen, 02-38843, Judge Boulden

Creditors filed motions to dismiss with prejudice, pursuant to 11 U.S.C. § 109(g)(1). In each case, the debtor had failed to make plan payments, failed to appear at the first meeting of creditors, or failed to file required statements and schedules. To prevail on a § 109(g)(1) motion, the movant must prove either that the debtor willfully failed to abide by an order of the court or that the debtor willfully failed to appear before the court in proper prosecution of the case.

The first clause of § 109(g)(1) relates to the debtor’s failure to abide by a specific order that may be issued in the case. The Court distinguished In re Fulton, 52 B.R. 627 (Bankr. D. Utah 1985) which stated that failure to appear at a meeting of creditors may be a violation of a court order, because the standing order then in effect governing dismissal procedures has been superceded by Local Rules 2003-1(a) and 2083-1(a) and (b). The Court determined it was unnecessary to consider whether statutory requirements and local rules of practice are equivalent to court orders. Turning to the second clause of § 109(g)(1), the Court stated that an "appearance" encompasses a broad range of conduct in addition to physical presence at a hearing. An appearance was determined to include, among other things, being represented at non-court hearings related to a case and filing papers required by rule or statute. The Court further determined that a debtor’s conduct is willful within the meaning of § 109(g)(1) when the debtor has notice of the responsibility to act and intentionally engages in conduct that results in a failure to fulfill that responsibility.

The Court held that failure to file required papers, failure to appear at the first meeting of creditors, and failure to make Chapter 13 plan payments were failures to appear before the court in proper prosecution of the case. Failure to defend against dismissal proceedings was also held to be a failure to appear in proper prosecution. Evidence of repeated filings allowed an inference in each case that the debtor knew his or her responsibilities under the Bankruptcy Code and knew the consequences of failing to fulfill those responsibilities. Therefore, the Court determined that the debtor’s conduct in each case was willful. Each case was dismissed with prejudice to refiling a bankruptcy petition for 180 days.

(436) 5/8/2003 UNPUBLISHED In re Amy Williamson, 02-40943, Judge Boulden.

The United States trustee objected to dismissal and filed a motion to disgorge fees under 11 U.S.C. § 329 due to unusual circumstances that led to two cases being open for the debtor simultaneously. Due to serious violations of the Bankruptcy Code and rules, counsel’s services were found to have been performed so poorly and negligently as to be of no value.

The Court’s ruling was based on several factors, including counsel’s failure to provide any legal advice to the debtor prior to filing the bankruptcy petition, failure to file a list of creditors and their addresses with the petition, failure to notify the debtor of important deadlines affecting the case, and counsel’s action in filing a second bankruptcy petition without the debtor’s knowledge or consent. Counsel also collected a fee exceeding the amount disclosed on the Fed. R. Bankr. P. 2016(b) statement in violation of 11 U.S.C. § 329. The Court condemned counsel’s office procedures which result in the routine filing of defective chapter 7 petitions absent a schedule of liabilities or list of creditors in violation of Fed. R. Bankr. P. 1007(a)(1) and (c). The Court further condemned counsel’s practice of filing an incomplete list of creditors in a practice calculated to deprive creditors of proper notice of the first meeting of creditors under Fed. R. Bankr. P. 2002(a)(1) and circumvent the debtor’s statutory duties under 11 U.S.C. § 521(1). 

The Court overruled the objection to dismissal, but ordered debtor’s counsel to disgorge fees in full.

(437) 6/10/2003 UNPUBLISHED In re Jim Tilson, 03-22735, Judge Boulden.

A creditor filed a motion to dismiss the case with prejudice pursuant to 11 U.S.C. § 109(g)(1). Based upon the debtor’s failure to file required papers or attend the first meeting of creditors, combined with his admission that the debtor had no intent to prosecute the case, the Court granted the motion.

The debtor filed a chapter 13 petition in order to stave off a pending foreclosure and allow time to consummate a sale of the property. The debtor failed to file a list of creditors and their addresses, failed to file any statements or schedules and failed to file a plan of reorganization in violation of 11 U.S.C. § 521, Fed. R. Bankr. P. 1007, LR 2002-1(d) and LR 5005-1. These failures are also failures to appear before the court in proper prosecution of the case within the meaning of 11 U.S.C. § 109(g)(1).

The debtor offered several explanations for his conduct, but the Court found only one explanation to be credible. The debtor intended to satisfy all of his creditors through a sale of the property on which foreclosure was pending, and had no intent to pursue reorganization under the Bankruptcy Code. On that basis, the Court concluded that the debtor’s failures to appear noted above were willful and dismissed the case with prejudice.

(440) 7/29/2003 UNPUBLISHED In re Gregory Marshall, 01-36611, Judge Boulden

Chapter 12 Trustee objected to allowance of debtors' counsel's fee applications in a case originally filed as a Chapter 11 case. The Trustee objected on the grounds that while counsel did file an Application to Employ while the debtor was in possession in the Chapter 11 case, the law firm was never appointed under 11 U.S.C. § 327 and was thus never employed as a professional person entitled to compensation under 11 U.S.C. § 330. Counsel for the debtors argued appointment by the court under 11 U.S.C. § 327 is not necessary for debtors counsel to receive compensation when representing individual debtors under Chapter 12.
The Court found that 11 U.S.C. § 330(a)(4)(B), added to the Code by The Bankruptcy Reform Act of 1994, Pub.L.No. 103-394, 108 Stat. 4106 (1994), obviates the need for court appointment of debtor's counsel in a Chapter 12 case in which the debtor is an individual. However, while the Court held fees and costs were allowed, it also discovered that no payment of fees is authorized under the express terms of the confirmed Plan which only allows payment to professionals appointed under 11 U.S.C. § 327.

(443) 9/16/2003 PUBLISHED 298 BR 778, In re Perkins, Barney Retirement Fund v. Perkins 02-2163, Judge Boulden

Creditor, a retirement fund, filed a nondischargeability action against Debtor under 11 U.S.C. § 523(a)(2)(A) alleging the Debtor’s omissions and misrepresentations to Creditor were material and thus nondischargeable. The Debtor previously operated an investment firm in which Creditor placed funds for retirement. The Debtor failed to disclose personal ties and interests to a company to which the investment firm extended a loan that was funded by the Creditor. In analyzing whether the Debtor incurred a debt to the Creditor by soliciting, receiving and refusing to account for assets through false representations and material omissions, the Court looked to the Restatement (Second) of Torts § 551(2). The Court concluded that the parties’ relationship was one of trust and confidence which triggered the Debtor’s duty to exercise reasonable care to disclose material information. The Debtor failed to uphold this duty to disclose by omitting and misrepresenting significant information that was material to the Creditor’s investment decisions. The Creditor justifiably relied on the Debtor’s representations and omissions in making investment decisions and was harmed as a result.

(447) 10/27/2003 PUBLISHED, In re Mark James Grogan and Jan Grogan, 02-36231, Judge Boulden 300 B.R. 804.

Debtors failed to disclose settlement proceeds and the bank account into which the funds were deposited on their statements and schedules. The Chapter 7 trustee discovered the undisclosed assets and sought turnover of the settlement proceeds to the estate. After several months of delay, the debtors amended their schedules by listing the settlement proceeds as an asset and also claiming the funds as exempt property. The trustee objected to the amended objection claiming the omission of the settlement proceeds was intentional. The Court found that the debtors acted in bad faith in claiming the exemption on assets belatedly disclosed in amended schedules. The delayed exemption claim was disallowed for both bad faith and prejudice to creditors of the estate and debtors were required to turnover the settlement proceeds to the trustee.

(451) 10/24/03 UNPUBLISHED, Gillman v. Carson, 01-2326, Judge Boulden

Trustee brought a nondischargeability action against the Debtor alleging that the Debtor failed to comply with the requirements of 11 U.S.C. § 727(a)(3) and (a)(4)(A). Court denied the Debtor his discharge and found: (1) that the Debtor, not the Trustee, has the burden of compiling and reconstructing the Debtor’s financial history; and (2) that the Debtor knowingly and fraudulently omitted property from his statements and schedules. (Posted 1/26/2003)



(450) 1/20/04 UNPUBLISHED, Great American Fidelity Insur. Co., f/k/a American Dynasty Surplus Lines Insur. v. Arrow Dynamics, Inc., Kathy Walker, Paul Walker, and Universal City Property Management Company II, et al. (In re Arrow Dynamics Inc.), 02-2441, Judge Boulden

Plaintiff insurance company filed declaratory judgment action against Debtor and other Claimants involved in state court litigation to resolve insurance coverage questions. The insurance company and Debtor are parties to a policy which the insurance company claims does not provide coverage to the debtor for claims brought in state court litigation. The insurance company filed for summary judgment and certain of the defendants (excluding the debtor) filed cross motions for summary judgment seeking declaratory judgment on whether or not the policy provides coverage for all claims asserted. The Court reached the following conclusions. A declaratory judgment action is not a core proceeding but relates to the bankruptcy because a determination of insurance coverage may increase or decrease the payment to creditors from assets fo the estate. A waiver of claims against the Debtor by the Claimants in an agreed order lifting the automatic stay to pursue state court litigation does not prohibit Claimants from recovering insurance proceeds from the policy. The Court further held that while the general rule under Utah law is that an ambiguous consumer insurance contract should be strictly interpreted against the insurer in favor of coverage, the facts of this case warrant reference to the intent of the parties in agreeing to the bargained for contractual terms of the policy. The intention of the parties to the insurance policy was that the self-insured retention endorsement attached to the policy is applicable despite some confusion by reference to a separate type of policy. However, contrary to the plaintiff's argument, no breach of the self-insured retention has occurred which would void coverage. Finally, the Court was asked to determine whether there is contractual indemnity coverage in the policy under certain contracts between the debtor and one of the claimants. In interpreting the contracts the Court found that the language of the policy included indemnification of another party for the debtor's own negligent acts but excluded indemnification for that parties' negligent acts, and found other indemnification issues unripe.

(453) 2/17/04 UNPUBLISHED, In re Frank Bushman and Heather Bushman, 01-26116, Judge Boulden.

The debtors filed a motion for sanctions against a creditor for willful violation of the discharge injunction of 11 U.S.C. § 524. Following the debtors’ receipt of a chapter 7 discharge in a no asset case, a creditor filed suit against the debtors in state court seeking to collect on a pre-petition guaranty that one of the debtors executed for the benefit of his corporation. The debtors attempted to defend the state court action by claiming the debt received discharge in bankruptcy but the creditor continued to prosecute the case claiming the debtors had continuing liability on the guaranty, the debt did not exist as of the date of filing, and the debtors remained obligated because the creditor was not listed on the debtors’ schedules. The court found the creditor acted in violation of the injunction imposed by § 524 when it pursued its collection action against the debtors in state court. The court determined the personal guaranty executed by one of the debtor’s was an executory contract for financial accommodation which was extinguished as of the date of petition. The court was unable to sanction the creditor because the debtors did not offer any proof of actual damages.

(454) 4/13/04 UNPUBLISHED, In re Stephen M. Harmsen, 03-33637, Judge Boulden. 

One of the debtor’s creditors filed an involuntary chapter 7 petition against him as a single petitioning creditor under 11 U.S.C. § 303(b)(2) seeking adjudication in an attempt to collect upon a foreign judgment. The debtor responded to the involuntary petition claiming he had more than eleven holders of claims and the involuntary petition filed by a single petitioner was therefore improper. The petitioning creditor challenged whether the alleged debtor’s listed holders of claims were eligible under § 303, asserting some entities could not be counted because they were insiders or subject to voidable transfers under §§ 547, 548, or 549. The court found it unnecessary to reach the determination of the required number of qualifying petitioners because the petitioner could not prove that the alleged debtor was not generally paying his debts as they became due and dismissed the petition.

(456) 6/10/04 UNPUBLISHED, In re Frank Bushman and Heather Bushman, 01-26116, Judge Boulden.

The debtors filed a motion for partial reconsideration to reopen a sanctions hearing to present evidence regarding actual and punitive damages that was not presented in a prior sanctions hearing. The court determined that the debtors’ failure to present evidence regarding damages at the sanctions hearing was not due to mistake or inadvertence or any other reason allowed under Federal Rule Civil Procedure 60(b) but was part of counsel’s calculated litigation strategy and the motion for reconsideration was denied.

(457)  8/18/04 UNPUBLISHED, In re, 04-26754, Judge Boulden.

A motion to dismiss or suspend case under 11 U.S.C. § 305(a)(1) was filed by parties claiming ownership and/or control of the debtor. The moving parties raised the question of whether or not the filing of the debtor’s petition by the person allegedly in control of the debtor at the time of filing, was authorized. The questions of control and ownership of the debtor were the subject of extensive litigation which was being pursued prior to filing in California litigation. The court determined it was in the best interest of the creditors of the estate and the debtor to dismiss the case pursuant to § 305.

(458) 8/23/04 PUBLISHED, In re JAMES CRAIG CLUFF and KATHLEEN CLARK CLUFF, 03-32779,  In re TOMAS MEDINA, 03-39152, Judge Boulden.

The Debtors sought disallowance of certain unsecured claims because creditors failed to attach sufficient documentation under Bankruptcy Rule 3001(c). The Court overruled the Debtors’ objections because (1) Bankruptcy Rule 3001(c) does not create an independent ground to disallow claims; (2) failure to comply with the documentation requirements in Bankruptcy Rule 3001(c) is an evidentiary defect that only deprives a claim of its prima facie validity; and (3) failure to comply with Bankruptcy Rule 3001(c) merely results in the claimant having the burden of proof if an objection to the claim is filed, but that objection must meet or surpass the evidence set forth in the claim. The Debtors’ objections were found insufficient because many of the claims were entitled to prima facie validity and the Debtors did not rebut that presumption with sufficient evidence. The Debtors’ objections to proofs of claim not entitled to prima facie validity were overruled because the Debtors did not come forward with any evidence that was of equal force to that contained in the claim to rebut the allegations made in the proofs of claim.

(459) 9/7/04 PUBLISHED, State Farm Fire and Casualty Company v. Deborah K. Edie (In re Deborah K. Edie), 03-2449, Judge Boulden.

Plaintiff insurance company filed a nondischargeability action under 11 U.S.C. § 523(a)(6) to except a California state court default judgment from the debtor’s discharge. The debtor admitted she intentionally started a fire in the home of the plaintiff’s insured but claimed her intent was limited to a desire to burn shirts hanging in a closet, not to destroy the entire home. The debtor further defended her actions by claiming she was not able to foresee the potential and likely consequences of her conduct due to a mental defect or illness from which she suffered at the time she started the fire. The plaintiff filed a summary judgment motion claiming the debtor’s admission of intent to start the fire and application of collateral estoppel to the previously obtained default judgment left no material issue of fact to be determined at trial. The court granted summary judgment and determined California’s collateral estoppel doctrine applies to default judgments and barred the debtor from presenting new defenses not raised in the state court litigation. The court also found that even absent the application of collateral estoppel, the debtor’s admission of intentionally igniting a fire to the plaintiff’s insured’s property amounts to a willful and malicious injury to the plaintiff and the defendant did not offer any evidence to support a defense of mental impairment.

(463) 12/10/2004, UNPUBLISHED, Deaine Burningham, 04-24586, Judge Boulden.

The United States Trustee brought a motion seeking disgorgement of fees and fines against petition preparer for assisting a pro se chapter 7 debtor to complete her petition, schedules and statement of financial affairs. The following issues were determined: First, it is a violation of § 110(g) for a petition preparer to collect a debtor’s filing fee even if made payable to the U.S. Bankruptcy Court; however, in this case, the violation was sufficiently remedied and only a nominal sanction of $1 was issued. Second, the fee charged by the petition preparer is reasonable for the services rendered pursuant to § 110(h)(2). Third, there is insufficient evidence that the petition preparer received an additional $100 cash paid by the debtor as alleged by the United States Trustee and although the petition preparer did not report the courier fee on his Disclosure of Compensation, he remedied the problem by discontinuing the practice of using a courier and no fraud was perpetrated against the Court for either omission; however, the Court required disgorgement of the $20 courier fee to the debtor as required by the Code. Finally, based on the facts presented, no violation for the prohibition of practicing law without a licence for the petition preparer’s explanation of the chapters of bankruptcy and no violation for filling out the schedules and statement of financial affairs. However, the Court did find that allowing a software program to select state exemptions for a debtor constitutes the unauthorized practice of law in violation of § 110(k).
While the Court determined that the petition preparer violated some portions of § 110, it pointed out that the petition preparer made a tremendous effort to bring his company into compliance with the Bankruptcy Code and local practice which was a mitigating factor in issuing sanctions.


(467) 1/21/2005, PUBLISHED, Pamela J. Norton, 04-22581, Westlaw Citation: 2005 WL 150641 (Bankr.D.Utah Jan. 20, 2005), Judge Boulden.

Debtor’s case was dismissed with prejudice barring the discharge of the Debtor’s current debts in any future bankruptcy case under § 349(a) after the Debtor filed nine unsuccessful Chapter 13 petitions. The Court found that the Debtor’s defiant and abusive conduct established “cause” under § 349(a). The opinion also distinguishes § 349(a) from other Bankruptcy Code provisions that allow for dismissal, and specifically examines what type of debtor misconduct warrants a “for cause” dismissal with prejudice under § 349(a) as allowed under Frieouf v. United States (In re Frieouf), 938 F.2d 1099 (10th Cir. 1991), cert denied, 502 U.S. 1091 (1992).

(471) 3/4/05, UNPUBLISHED, In re MARK JAMES SHAW and KIMBERLY SHAW, 03-30305, Judge Boulden.

Following the debtors’ receipt of a Chapter 7 discharge in a no-asset case, a creditor filed suit against the debtors in state court seeking to collect damages resulting from the post-petition destruction of a leased vehicle the debtors failed to surrender as specified in their statement of intent. Despite the debtors’ efforts to raise discharge in bankruptcy as a defense in the state court action, the creditor continued to prosecute the debtors because, it asserted, the damages to the vehicle occurred post-petition and were not discharged in the debtors’ bankruptcy. As a result, the debtors filed a motion for sanctions against the creditor for willful violation of the discharge injunction imposed by 11 U.S.C. § 524. The Court found that a debt arising from a lease of personal property which is rejected by the Chapter 7 trustee but the personal property is retained by the debtors, despite material default, is nonetheless discharged under the Code. The creditor’s state court action is therefore a violation of the discharge injunction. The Court found that the debtors are entitled to recover compensatory damages of actual attorney fees and costs incurred in answering the creditor’s complaint in the state court action and in bringing this motion before the Court but was not entitled to punitive damages as there was no evidence supporting the request.

(473) 3/29/05, UNPULISHED, Adrian Mathai, Zubin Mathai, OTE Development U.S.A., Inc., 9056-0566 Quebec, Inc., dba OTE Canada vs. Daniel David Warren and Kathleen Ann Warren, 04-2671, Judge Boulden.

Plaintiff creditors filed a complaint against the Debtors seeking denial of discharge under 11 U.S.C. §§ 727(a)(2)(A) and (4)(A) for the Debtors’ conduct prior to filing bankruptcy. In anticipation of filing a chapter 7 petition, the Debtors generated $90,000 in cash by selling many of their assets, some at fire-sale prices. The Debtors then utilized the funds to purchase exempt assets and prepay future living expenses. Upon completion of all the pre-bankruptcy transactions, the Debtors had no realizable assets that could be liquidated to repay their over 6,000 creditors. When the Debtors filed their bankruptcy papers, they did not list some of the sales and expenditures, and only added some of the omitted transactions after they were discovered by the Plaintiffs. The Debtors excused their conduct by describing it as their desperate attempt to provide post-petition food and housing for themselves and their five children, and justified their failure to list the various transactions merely as an unfortunate, unintentional oversight. The Plaintiffs asserted in their complaint that the pre-bankruptcy activity was a calculated scheme by the Debtors to engage in an extraordinary, deliberate, and sustained selling frenzy and spending spree designed to hinder, delay, or defraud their creditors and then hide their actions through a false oath on their bankruptcy papers. The Court was struck by the Debtors’ animosity toward the Plaintiffs and determined that the Debtors would do just about anything to prevent their assets from falling into the Plaintiffs’ possession. The Debtors abused pre-bankruptcy planning because their purpose was to place assets out of reach of the Plaintiffs. The Court rejected the excuse, under § 727(a)(4)(A), that the Debtors were too busy, did not understand, were forgetful, or simply were inadvertently mistaken in their answers submitted in their Statement of Financial Affairs and Schedules. Instead, the Court concluded that the Debtors attempted to use up all their assets so that the Plaintiffs would receive nothing, and they intended to hide the transactions in their bankruptcy papers. The Court found that the Plaintiffs carried their burden of proof and denied the Debtors’ discharge under both §§ 727(a)(2)(A) and (4)(A).

(474) 4/15/05 UNPUBLISHED, FreeLife International, Inc. v. David F. Butler and Colleen A. Butler, 04-3012, Judge Boulden.

The Plaintiff brought a motion for summary judgment on its third claim for relief seeking to have declared nondischargeable contempt judgments issued by a state trial court totaling more than $900,000. The state court contempt judgments encompassed civil penalties assessed against the Debtors for contempt sanctions and attorney fees. The Plaintiff argued that the monetary sanctions imposed upon the Debtors by the state court are nondischargeable under § 523(a)(7) because they were fines or penalties which, even though not payable to a government entity, were for its benefit and in furtherance of vindicating the dignity and authority of the court. The Debtors claimed the contempt judgments fell outside the exception to discharge because they were not payed directly to a governmental unit as the statute requires. The Court acknowledged that there are good policy arguments favoring an exception to discharge which would uphold a court’s authority to impose sanctions and not allow a party to circumvent that authority through a bankruptcy filing. However, the Court ultimately decided that the better-reasoned approach is to rely upon the plain meaning of the statute and declined to follow non-controlling case law from other jurisdictions which expands the exception to civil sanctions. The Court found that § 523(a)(7) does not except from discharge the debts arising from a civil penalty payable directly to a creditor imposed on the Debtors by a state court.

(485) 11/23/05, PUBLISHED, In re Montoya, 05-80022, Judge Boulden, 333 B.R. 449 (Bankr. D. Utah 2005).

Individual debtor asked the Court to extend the automatic stay beyond the 30-day period provided for in § 362(c)(3)(A). The debtor had a Chapter 13 pending within the preceding one year period and that case was dismissed because the debtor failed to make her ongoing plan payments. Because the debtor’s prior case had been dismissed for failing to perform the terms of a plan confirmed by this Court, a presumption arose under § 362(c)(3)(C) that the debtor had "filed not in good faith." After finding that § 362(c)(3)(B) notice was proper, the Court found that the debtor had not met her burden of proving by clear and convincing evidence that the case had been filed in good faith as to the creditors to be stayed, and the Court denied the debtor’s motion. In so doing, the Court examined whether the debtor had filed in good faith as to the creditors to be stayed by employing the good faith filing factors articulated in Gier. The Court found that even though some of the Gier factors were less applicable in this context, they still gave the Court guidance in examining whether the present case was filed in good faith as to the creditors to be stayed.

(486) 11/23/2005, PUBLISHED, In re Sukmungsa, 05-80029, Judge Boulden, 2005 WL 3160607.

Section 109(h) of the Bankruptcy Code, as enacted by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, provides that individual debtors must either complete a briefing from an approved nonprofit budget and credit counseling agency within 180 days prepetition or request a waiver. In accordance with this statutory bar to bankruptcy relief, Local Rule 1007-2(d)(1) requires the Clerk of Court to dismiss a case if a debtor fails to certify compliance with § 109(h) on the petition. The debtors in this case failed to check either box on the petition certifying such compliance, and an Order of Dismissal was entered. The debtors moved to vacate the Order of Dismissal on grounds of excusable neglect under Fed. R. Civ. P. 60(b) and Fed. R. Bankr. P. 9024. The Court conducted an excusable neglect analysis in accordance with the Supreme Court’s decision in Pioneer Investment Services Company v. Brunswick Associates Limited Partnership et al., 507 U.S. 380 (1993), and found that excusable neglect in failing to certify § 109(h) compliance on the petition had not been shown by either the debtors or debtors’ counsel. Most importantly, the Court found that the reason for the omission and the concomitant delay were within the reasonable control of the debtors and their counsel. The inconsistent testimony and documentary evidence demonstrated counsel’s failure to make reasonable inquiries under Fed. R. Bankr. P. 9011 and established uncertainty as to whether the debtors had even received the prepetition briefing. Although Rule 9011 sanctions were not imposed, the Court did note counsel’s obligations under the Rule to make reasonable inquiries into the underlying factual assertions of filed documents.


(488) 2/21/2006, PUBLISHED, In re Jason Fawson, 05-80224, In re Francis Webster and Diana Webster, 05-80217,338 B.R. 505, (Bankr. D. Utah 2006), Judge Boulden.

Chapter 7 debtors failed to file their payment advices within 45 days of filing their petitions. The debtors filed motions or requests to enlarge the time to file their payments advices (which are required to be filed within 15 days of filing the petition) but these requests were not made until the 45-day time limit articulated in 11 U.S.C. § 521(i)(1) had expired. The Court found that the belated requests for enlargement of time due to excusable neglect were time barred, and that § 521(i)(1) mandates the dismissal of cases when debtors fail to timely comply with the requirements of § 521(a)(1). In the absence of a § 521(i)(3) or (4) motion, and at the expiration of the 45-day time period, the cases were dismissed by operation of the statute effective the 46th day after filing.

(492) 3/29/2006, PUBLISHED, In re Easthope, 06-20366, 2006 WL 851829 (Bankr. D. Utah), Judge Boulden.

A secured creditor moved for an order under § 362(c)(4)(A)(ii) confirming that no stay was in effect arguing that the individual debtor had two cases pending within the previous year. The debtor had one prior Chapter 13 case that was dismissed within the previous year and another prior Chapter 13 case that was closed within the previous year. This earlier Chapter 13 case had been dismissed more than a year prior to the filing of the current case. The secured creditor argued that a case is still “pending” for § 362(c) purposes until it is closed and, therefore, the debtor had two cases pending in the previous year. The Court determined that both the plain meaning of the word “pending” and policy considerations demonstrate that a case is no longer pending once it has been dismissed. Given this definition, the debtor only had one case pending withing the previous year and the 30-day automatic stay did go into effect under § 362(c)(3). The secured creditor’s order seeking confirmation that no stay was in effect was, therefore, denied.

(493) 4/10/2006, PUBLISHED, In re Montoya (Montoya II), 05-80022,_ B.R. _, 2006 WL 931562, No. 05-80022 (Bankr.D. Utah April 10, 2006), Judge Boulden.

The Debtor proposed a Chapter 13 plan in which she sought to pay for a car that was purchased within 910 days of filing her petition (910-vehicle claim) by bifurcating the secured claim under 11 U.S.C. § 506(a)(1), paying the secured value of the car in full, and paying only a small percentage of the unsecured balance. Although the hanging paragraph found after § 1325(a)(9) now prohibits bifurcation under § 506(a)(1) in certain instances, the Debtor and the Chapter 13 Trustee argued that bifurcation is still allowed because the creditor secured by the car failed to file an objection to the Debtor’s Chapter 13 plan and, therefore, should be deemed to accept the plan under § 1325(a)(5)(A). The Court found (1) that under the BAPCPA, § 1325(a)(5) can no longer be used to cram down a 910-day vehicle claim; (2) that a creditor’s failure to object to a plan is not deemed implied acceptance of that plan when the plan proposes treatment that is contrary to the statute; and (3) a plan that incorrect bifurcates a 910-day vehicle claim does not comply with the provisions of Chapter 13 and, therefore, cannot be confirmed under § 1325(a)(1).

(497) 5/30/06, UNPUBLISHED, In re Wilkinson, 06-20441, Judge Boulden.

Chapter 13 debtor attempted to comply with 11 U.S.C. § 521(a)(1)(B)(iv) by filing all pay advices received during the 60 days prepetition but erroneously filed one pay advice for the wrong year. The missing pay advice was filed immediately prior to the confirmation hearing but outside the 45-day time limit articulated in § 521(i). The debtor filed a Motion to Find Compliance with 11 U.S.C. § 521 or, in the Alternative, Motion to Vacate Order of Dismissal arguing either that the debtor had “substantially complied” with the requirements of § 521 or that the Court otherwise had discretion to not dismiss the case. Elaborating on the Court’s decision in In re Fawson, 338 B.R. 505 (Bankr. D. Utah 2006), the Court rejected the debtor’s interpretation of the statute and reiterated the holding that automatic dismissals occur on the 46th day after the petition is filed without judicial intervention unless a timely extension motion is filed. The Court also rejected an argument based on substantial compliance in light of the strict statutory scheme of § 521(a)(1) and (i). Finally, the Court held that Federal Rule of Bankruptcy Procedure 9024, incorporating Federal Rule of Civil Procedure 60(b), cannot be used to vacate a dismissal that occurred automatically by operation of statute.

(500) 7/11/2006, PUBLISHED, In re Travis Lane Curtis, 06-20001, Judge Boulden.

The Debtor proposed a Chapter 13 plan in which he sought to bifurcate the secured claims of two different creditors under 11 U.S.C. § 506(a)(1). These creditors had provided financing to the Debtor within the previous year that allowed him to purchase two semi-tractors used in his business. The Debtor argued that the hanging paragraph of § 1325(a) requires that a creditor whose collateral consists of “any other thing of value” purchased within one year of filing can only avoid having its secured claim crammed down under § 506(a)(1) if it has a purchase money interest in the collateral. Furthermore, the Debtor argued that a creditor can never have a purchase money security interest in a motor vehicle in Utah. The Court found that the hanging paragraph does require a creditor whose collateral consists of “any other thing of value” to have a purchase money security interest in the collateral to avoid the cram down of its secured claim. The Court also found that the Utah Uniform Commercial Code regulates the creation of security interests in motor vehicles in Utah meaning that Creditors can have purchase money security interests in motor vehicles. The Debtor’s objections were overruled and his plan was denied confirmation without prejudice.

(503) 9/12/2006, UNPUBLISHED, In re Landers, 06-22265, Judge Boulden.

As the Court has previously discussed in In re Fawson, 338 B.R. 505 (Bankr. D. Utah 2006) and In re Wilkinson, 346 B.R. 539 (Bankr. D. Utah 2006), § 521(a)(1)(B)(iv) and (i)(1) operate to automatically dismiss individual debtors’ cases 46 days after the petition date if “copies of all payment advices or other evidence of payment received within 60 days before the date of the filing of the petition, by the debtor from any employer of the debtor” are not filed by the 45th day. In this case, it appeared that the Chapter 13 Debtor failed to timely file one payment advice for the pay period ending April 30, 2006 and that the case had potentially been dismissed effective August 9, 2006. At the confirmation hearing, the Debtor testified only that he could not recall whether he received a payment advice for the April 30th pay period although he had no breaks in employment and always received such payment advices from his employer for his bi-weekly paychecks. The Debtor then argued that his belief as to whether all required payment advices were filed was controlling under § 521(a)(1)(B)(iv). The Court ruled that the weight of the evidence contradicted any alleged belief by the Debtor that he had timely filed all required payment advices. The Court also ruled that there is no statutory basis for concluding that a debtor’s subjective belief is controlling rather than the objective facts of whether qualifying payment advices were received and filed.


(506) 1/9/2007, PUBLISHED, In re Hanks, 06-22777 , Judge Boulden.

As calculated using historical income figures in their Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income (Form B22C), the chapter 13 Debtors’ income was above the median for Utah households of the Debtors’ size. But the Debtors’ actual income had decreased prepetition and continued to be lower postpetition than the historical Form B22C numbers suggested. The Debtors proposed a chapter 13 plan that provided for monthly payments to the trustee based on their actual current disposable income rather than the larger payments required by strict adherence to Form B22C, and the chapter 13 trustee filed an objection to confirmation. The Debtors presented evidence and argued that the monthly disposable income amount generated by Form B22C’s income and expense calculations is not dispositive of the return to general unsecured creditors if the Debtors could show a “substantial and material change” in their actual financial circumstances. The Court denied confirmation of the Debtors’ plan without prejudice, holding that the calculations set forth in Form B22C are determinative with respect to the amount that above-median debtors must return to their general unsecured creditors unless “special circumstances” can be shown as set forth in § 707(b)(2)(B) of the Bankruptcy Code

(508) 1/25/2007, PUBLISHED, In re Lawson, 06-22766 and In re Boynton, 06-22812, Judge Boulden.

In each of two chapter 13 cases, the Debtors’ income was above the median for Utah households of the Debtors’ size, but the Debtors each had negative monthly disposable income as calculated on their Statements of Current Monthly Income and Calculation of Commitment Period and Disposable Income (Form B22C). The Debtors each proposed a plan providing for regular monthly payments to the trustee but a return of only $500 pro rata to general unsecured creditors. Although both plans would apparently run for more than 36 months, neither plan was expected to run for a full 60 months. The chapter 13 trustee objected to confirmation on two grounds: (1) that the plans for these above-median Debtors must continue for a full five years; and (2) that their plans must provide for the submission to the trustee of postpetition tax refunds received by the Debtors in addition to their monthly plan payments in accordance with pre-BAPCPA practice in the District of Utah. On the second point, the trustee argued in the alternative that if the turnover of postpetition tax refunds was no longer required, then the Debtors must only be allowed to deduct their actual anticipated future tax expense on line 30 of Form B22C rather than whatever amount they had withheld from their paychecks. The Debtors argued both that they do not have to contribute their tax refunds to the plan and that they are entitled to deduct the full amount withheld from their income as the tax expense on line 30 of Form B22C. The Court held that the “applicable commitment period” concept in § 1325(b)(4) is “fundamentally irrelevant” for above-median debtors with negative monthly disposable income. The Court also held that although the submission of postpetition tax refunds was no longer required under § 1325(b)(1)(B), above-median debtors are only permitted to deduct their actually incurred future tax expense on line 30 of Form B22C rather than the full amount of their withholdings.

(515) 7/12/2007, PUBLISHED, In re Miller, 07-20270, Judge Boulden.

Chapter 13 debtor attempted to comply with 11 U.S.C. § 521(a)(1)(B)(iv) by filing three of the four payment advices he received during the 60 days prepetition, arguing that the year-to-date information on the fourth payment advice constituted adequate “other evidence of payment” as to the information that would be contained on the missing third payment advice. The Court rejected the debtor’s interpretation of the statute, holding that the plain language of § 521(a)(1)(B)(iv) is focused on the evidence received from an employer during the 60-day prepetition period rather than the payment received during that period. Further, evidence from the employer must be for the specific pay period, and a non-employer’s extrapolation of what the pay advice might have shown using other data received from the employer is insufficient. The Court also rejected the debtor’s alternative arguments that the automatic dismissal provision in § 521(i)(1) is unconstitutional both facially and as applied in the debtor’s case as a violation of procedural due process. As such, the debtor’s case was automatically dismissed by § 521(i)(1) on the 46th day after the petition was filed


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