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Motions for dismissal and remand are before the Court. The fact that a dispute may require an interpretation of a confirmed plan does not necessarily make the dispute a core proceeding. A confirmed plan has characteristics of both a contract and a judgment. State courts are well qualified to adjudicate contract disputes and to enforce judgments. The removed adversary proceeding existed outside of bankruptcy and the adversary proceeding filed in this Court, which is nearly identical to the removed adversary, could exist outside of bankruptcy. The Court finds that the controversy before the Court is in the nature of a contract dispute which can be adjudicated in state court. Accordingly, neither the removed adversary proceeding nor the adversary proceeding is a core proceeding. The Court can find nothing in the adversary proceeding or the removed adversary proceeding that would affect the reorganized debtor's rights, liabilities, options or freedom of action in any way, nor can the Court find that this litigation will affect, in any conceivable way, the handling or administration of the bankruptcy estate. The Court finds that there is no bankruptcy estate to administer. The bankruptcy estate ceased to exist at the point when the transfer of estate property from the reorganized debtor to RSH became effective. The Court orders that adversary proceeding no. 96PC-2270 is dismissed for lack of jurisdiction, and orders that adversary proceeding no. 96PC-2316 is remanded to state court for the reason that this Court lacks jurisdiction to adjudicate the matter.
The matter before the Court is the second and final application for fees filed by the debtor's attorney. Novell, Inc. objected to the application arguing that debtor's attorney's fees and costs associated with defending a motion to appoint a trustee were not beneficial to the estate under § 330 and that, as a professional appointed to represent the debtor-in-possession, debtor's attorney failed in his duty to the estate to see to it that certain avoiding actions were commenced against insiders of the debtor. The Court finds that the time spent on services and rates charged for the services are reasonable and that the services were necessary to the administration of the estate and were beneficial at the time at which the services were rendered.
226 B.R. 123 Creditor, Chapter 7 debtor-employer's group health insurance carrier, filed motion for allowance of administrative expense for unpaid premiums for postpetition insurance coverage provided to debtor's employees. The bankruptcy court held that creditor was not entitled to administrative priority for its claim.
Debtor’s motion for authorization to implement a employee retention program is before the court. In view of the objection by the United Steelworkers of America, the court finds that to propose this retention program without first having discussed its provisions with the Steelworkers is not an example of good business judgment, especially when the continued existence of the business is in question. Granting the motion may jeopardize the continuing support of the Steelworkers in the reorganization process. To be acceptable to this court, the severance plan must contain a mitigation provision that reduces the amount payable in the event the executive obtains other employment during the six or nine month reimbursement period. The severance plan is unacceptable because of the adverse impact the provision could have on the administration of the case in chapter 7. Further, the court will construe the payment of the emergence bonus only in the event that a plan of reorganization is confirmed and not an chapter 11 liquidating plan. The motion is denied without prejudice. The debtor is granted leave to set a hearing on ten days notice for approval of a retention program consistent with this order.
(413) 5-18-00 APPEAL In re Donald E. Armstrong v. Steven R. Bailey and Duane H. Gillman (In re Willow Brook Cottages, LLC), 99PC-2187, (case number for appeal is 2-99-CV-0725K), Judge Kimball, U.S. District Court.
After holding a hearing to show cause, the bankruptcy court held that Armstrong had violated the bankruptcy automatic stay provision, § 362, by filing his adversary proceeding without the court’s permission. The bankruptcy court held him in contempt, awarded the trustee attorney’s fees and punitive damages, and dismissed the adversary proceeding with prejudice. The review of the dismissal with prejudice for the alleged violation of the automatic stay was reviewed de novo. The factual determinations of the bankruptcy court as to the awarding of fees and damages were reviewed under an abuse of discretion standard. The district court ruled that the bankruptcy court properly dismissed Armstrong’s action with prejudice for violating the stay and that it was acting within its discretion in awarding compensatory damages to a corporation. The district court determined that the punitive damage award is an abuse of discretion and that Armstrong’s procedural defect does not merit the awarding of punitive damages based upon criminal contempt. The punitive damages award is reversed and the contempt charges are set aside.
The issue before the court is the willful violation of the automatic stay and the failure of the creditor to turn over property of the estate. The court awarded debtor compensation but declined to award punitive damages because it believed that punitive damages were not necessary to deter similar conduct in the future.
The matter before the court is a motion to dismiss a chapter 7 bankruptcy case for substantial abuse under § 707(b). The bankruptcy court relied upon In re Stewart, 175 F.3d 796 (10th Cir. 1999) and its "totality of the circumstances" test to determine if substantial abuse exists. Under the totality of the circumstances test, the debtors can reduce expenses without being deprived of adequate food, clothing, shelter, or other necessities; therefore, unless the case is converted to another chapter within ten days, the case is dismissed for substantial abuse of the bankruptcy laws.
The objections to the Bankruptcy Court’s Proposed Findings of Fact, Conclusions of Law, and Judgment Pursuant to 28 U.S.C. § 157(c)(1) (included) came before the district court, Judge Stewart presiding. Affirmed.
Order Allowing Reduced Fees and Expenses. The fourth fee application of The Blackstone Group, financial advisor to the debtor, came before the Court. Even though the advisor’s appointment provided for a fixed fee, the Court adjusted downward the award of fees because the number of hours spent by the advisor went downward in subsequent fee periods. The advisor was entitled to recover, as part of its allowable expenses, a reasonable fee for legal services of law firm that it hired to defend its fee application, although law firm had never been appointed to serve as a professional in the case.
This dispute involves a transfer that resulted in $725,000.00 being credited to debtor's bank account instead of $7,250.00 because of a bank encoding error. The encoding error and transfer of disputed funds took place postpetition. The Court finds that the debtor was unjustly enriched in the amount of $717,750.00. Unjust enrichment will support a constructive trust. The funds were commingled with other funds to which general creditors have a claim. Therefore, the bank must trace its funds held in constructive trust utilizing the lowest intermediate balance rule. Because the funds held in constructive trust have always belonged to the bank, it is entitled to the interest actually earned by the $394,460.53 in constructive trust funds held. The bank is entitled to a postpetition administrative priority claim in the amount of $323,289.53 which represents the difference between the $717,750.00 originally transferred by mistake and the amount successfully traced using the lowest intermediate balance method. Because the $323,289.53 is unsecured, it is not entitled to the accrual of interest.
The debtor filed a Chapter 7 petition in bankruptcy less than one year after she transferred her 401(K) plan into an IRA. The trustee objected to the debtor's claimed exemption. It is the opinion of this Court that Tae Sun Hong (see opinion #427) correctly interprets the effect of U.C.A. § 78-23-5(1)(b)(ii) on debtor's claimed exemption. The trustee's objection to the claimed exemption is sustained.
Following entry of order confirming sale of Chapter 11 debtors' assets to insider used as stalking horse, debtors filed supplemental motion for assumption and assignment of trade-back agreements allegedly included in assets sold. The court held that (1) insider used as stalking horse in connection with sale of debtors' assets did not pay anything for trade-back agreements which it later claimed to have purchased as part of its total bid of $51 million, so that motion to assume and assign such agreements to insider would not be approved as not being in best interests of estate; and (2) options which debtors had pursuant to terms of trade-back agreements with company from which they acquired refrigerated trucks, to require company to buy trucks back at price equal to 55 percent of original purchase price, were in nature of "executory contracts," that debtors could assume and assign.
A Chapter 11 plan was confirmed with no mention or treatment of a claim that debtor asserted against the defendant in this adversary proceeding. There was also no specific disclosure of the claim or its value in the debtor's schedules, statements or monthly financial reports. Post confirmation, debtor commenced a lawsuit against defendant. Defendant removed the matter to this Court and filed a motion to dismiss based upon res judicata and judicial estoppel arguing that because the claim had not been disclosed, the debtor is barred by res judicata and judicial estoppel from suing on the claim. Because affidavits were submitted by both parties, the Court treated the motion as a motion for summary judgment and ruled that res judicata did not apply because the plan relied solely on the sale of debtor's real property to pay all claimants in full plus interest. As such, it never became necessary to consider the existence and value of the claim at confirmation. The Court denied defendant's motion based upon the judicial estoppel argument because the Tenth Circuit Court of Appeals has repeatedly stated that the doctrine of judicial estoppel is not recognized in this Circuit.
The matter before the court is on plaintiff’s application to proceed without prepayment of fees which seeks waiver of the fees under 28 U.S.C. § 1915 (proceedings in forma pauperis). Because the United States Bankruptcy Court is an Article I Court and not an Article III Court, it has no authority to waive filing fees under 28 U.S.C. § 1915.
Issue: subject matter jurisdiction.
No case summary available at this posting.
No case summary available at this posting.
No case summary available at this posting.
No case summary available at this posting.
The Court was faced with competing motions for summary judgment regarding issues of whether assignments or the sale of certain consumer accounts owned by the debtor and purported to be assigned or sold to one of the principal creditors in debtor's Ponzi scheme were effective. The Court ruled that as a matter of law, a document that does not identify specific accounts and refers to the creditor as an investor and not as a purchaser does not effectively assign an account and does not transfer ownership. A facsimile transmission that is labeled "For information only - Not a Legal Document" has no legal force or effect.
The Court dismissed defendant's third-party complaint based upon a lack of jurisdiction. Defendant to a preference action under § 547 and brought a third-party complaint against insurance company arguing that if defendant were required to return funds received from the debtor as a preference, then insurance company would be liable to defendant under the uninsured motorist clause of defendant's insurance policy. The court found that the dispute between defendant and insurance company to be outside the Court's "related to" jurisdiction and dismissed without prejudice to refile before a court of competent jurisdiction.
(476) 3/8/04, UNPUBLISHED, JASON DEREK TROFF v. STATE OF UTAH, CAMILLE ANTHONY, in her official capacity as Executive Director of the Utah Department of Administrative Services, and GWEN ANDERSON, in her official capacity as Director of the Office of State Debt Collection, 04-2491, Judge Clark.
Debtor brought an adversary seeking a ruling that a state court restitution order was discharged in the debtor's Chapter 7 bankruptcy proceeding. In 1997, the Debtor was ordered to pay $239,969 in restitution by the Third District Court for the State of Utah. When debtor filed for Chapter 7 relief, the debtor properly listed the State of Utah in his schedules and statements and received a Chapter 7 discharge. It was uncontested that all restitution payments received by the State were turned over to the victim of the crime. The Court found that under § 523(a)(7), because the restitution payments were turned over to the victim, the restitution payments were not to and for the benefit of a governmental unit and because the restitution payments were compensatory for actual pecuniary loss, the state ordered restitution was discharged in debtor's Chapter 7 bankruptcy.
After granting Debtor's motion for Partial Summary Judgment and denying the State's motion for Summary Judgment, the State appealed and filed a motion for a stay pending appeal. In denying the State's motion for stay pending appeal, the Court pointed out that the factors to be considered in determining a stay pending appeal motion are: (1) the likelihood that the party seeking the stay will prevail on the merits of the appeal; (2) the likelihood that the moving party will suffer irreparable injury unless the stay is granted; (3) whether granting the stay will result in substantial harm to the other parties to the appeal and; (4) the effect of granting the stay upon the public interest. The Court found that the State had not satisfied the requirements for a stay pending appeal even under the more liberal standards announced in Prairie Band of Potawomi Indians v. Pierce, 253 F.3d 1234 (10th Cir. 2001), and that a stay pending appeal would not be granted.
The Chapter 11 trustee brought an adversary proceeding against certain members of Geneva's Board of Directors alleging breach of duty of care, breach of duty of good faith, breach of duty of loyalty and breach of fiduciary duty. Two of the defendants filed a motion with the Court to have the trustee's causes of action declared as "non-core" matters under 28 U.S.C. § 157(b)(3). Both of the moving directors had filed proofs of claim in the Geneva bankruptcy proceeding. An element of the Director's proofs of claim included an indemnity claim asserting claimant's rights to be indemnified, defended, or held harmless by Geneva for any liability that may arise from the Director's service on the Board of Directors. Upon being served with the trustee's complaint, both directors filed a counterclaim in the adversary proceeding asserting their indemnification rights. The Court ruled that the causes of action in the trustee's adversary proceeding against the directors were a compulsory counterclaims to the director's proofs of claim and the Court ruled that the director's counterclaims were compulsory counterclaims to the causes of action brought by the trustee in the adversary proceeding. The Court held that under 28 U.S.C. § 157(b)(2)(C), and 28 U.S.C. § 157(b)(2)(O), the causes of action asserted by the trustee are "core" matters.
Creditor filed adversary to have creditor's debt excepted from discharge under § 523(a)(2), but filed the adversary proceeding after debtor had been issued a discharge and after debtor's case had been closed. Creditor served a summons and complaint upon debtor after closure of Debtor's case as well. Debtor did not file an answer to the summons and complaint or otherwise defend. Creditor submitted an application for default judgment and the matter came before the court on hearing. Creditor argues that under Knotrick v. Ryan, 540 U.S. 443 (2004). Creditor is entitled to a default judgment because Debtor failed to assert Creditor's late filing of the adversary proceeding as an affirmative defense. Creditor argued that service upon Debtor was effective because the debtor is an individual and that service upon individuals is governed by F.R.B.P. 7004(b)(1). The Court held that service of process upon a debtor is governed by Rule 7004(b)(9) rather than Rule 7004(b)(1), that Creditor's service upon the Debtor was ineffective because the Debtor's case was closed at the time that Debtor was served with the summons and complaint, and that Creditor must reopen debtor's case in order to effectuate service of process upon the Debtor under Rule 7004(b)(9).
Debtor brought a motion under § 362(c)(3)(B) to extend the automatic stay. The debtor had been a debtor in one previous bankruptcy proceeding within one year of the debtor's present case. The reason for the present bankruptcy proceeding, as stated in the debtor's motion to extend the automatic stay, was to protect the debtor's home from foreclosure. Pursuant to § 1306, the debtor's home is property of the estate. The Court adopts the reasoning set forth in In re Johnson, 335 B.R. 805 (Bankr. W.D. Tenn. 2006) which finds that the plain language of § 362(c)(3)(A) dictates that the 30-day time limit applies only to "debts" or "property of the debtor" and not to "property of the estate". Because the automatic stay continues to protect "property of the estate" after expiration of the 30-day time limit found in § 362(c)(3)(A), relief under § 362(c)(3)(B) is unnecessary. The Court found that debtor's motion did not contain a present controversy and the motion was denied.
Upon filing bankruptcy, the debtor, pro se, indicated an intention to reaffirm debt with Credit Union secured by debtor’s vehicle. Within 30 days of the 341 meeting, Debtor entered into the reaffirmation agreement. Because debtor is pro se, § 524(c)(6)(A) requires that the Court find that the reaffirmation agreement not impose an undue hardship and is in the best interest of creditors. Debtor was under the impression that if the Court did not approve the reaffirmation agreement, Credit Union would be free to repossess the vehicle notwithstanding the fact that Debtor was current on all payments required under the contract and the vehicle was insured. The Court found that because debtor had timely complied with all requirement found under §§ 521(a)(2), 521(a)(6), 362(h)(1) and 521(d), that it was not necessary for the Court to approve the reaffirmation agreement in order for the debtor to “ride through” the bankruptcy and retain possession of the vehicle. Because Debtor complied with the requirements found under § 521(d), the Bankruptcy Code’s limitation on contract ipso facto clauses remain in effect and Credit Union is prevented from declaring the contract in default by virtue of the Debtor’s insolvency or bankruptcy.
Creditor filed an adversary proceeding seeking exception to debtor’s discharge under § 523(a)(6) - willful and malicious conduct. Although the complaint sounded in other grounds, no other subsections of § 523 were pled by creditor. The debtor filed a motion to dismiss the adversary proceeding and a motion an award of fees and costs under § 523(d). The Court granted debtor’s motion to dismiss with prejudice, but denied debtor’s motion for fees and costs. Noting that § 523(d) refers only to determinations of dischargeability brought under § 523(a)(2), and does not mention determinations of dischargeability brought under § 523(a)(6), the Court applied the maxim expression unius est exclusio alterius, a canon of statutory construction which holds that to include one thing in a statute implies the exclusion of the other. In so doing, the Court found that the award of fees and costs incurred by a debtor defending an adversary proceeding brought under § 523(a)(6) is beyond the scope of §523(d).
The Debtors purchased a van using Zions Bank to finance the purchase. Debtors traded in an older vehicle receiving a $2,500 trade-in credit and rolling over a $5,500 balance owed on the older vehicle into the financing of new vehicle. The net effect of the trade-in was for Zions to roll $3,000 of negative equity into the financing. After filing Chapt 13, the Debtor's objected to Zions' proof of claim arguing that the negative equity portion of the proof of claim was not entitled to purchase money interest treatment and therefore not protected from bifurcation by the "hanging paragraph" found under § 1325(a)(9). Zions introduced evidence at the hearing to the effect that rolling the negative equity into the financing was a necessary part of the transaction, that Debtors would not have financially qualified for the loan but for the negative equity financing, and that the negative equity financing was in fact used by the Debtors in conjunction with the purchase of the van. The Court found that Zions' financing met the criteria of Utah Code Annotated § 70A-9a-103(1)(b), and ruled that the entire transaction, including the negative equity financing, was entitled to purchase money interest status. Debtors' objection to Zions' proof of claim was denied.
Defendants sought summary judgment arguing that the adversary proceeding brought to avoid a transfer was commenced more than 3 years after the petition and thereby barred under § 546(a)(1). Plaintiff, a Chapter 11 trustee appointed more than 3 years after the petition date filed a cross motion for summary judgment arguing that because of misleading information filed with the court by the debtor, and because of the lack of accurate information available to creditors of the estate, that equitably tolling should apply. The Court ruled that based upon the undisputed facts, creditors of the estate were never put on inquiry notice that a fraudulent transfer may have taken place, that creditors of the estate had exercised reasonable diligence and that equitable tolling would apply to the adversary proceeding.
On the eve of foreclosure by a third party, Debtor and Creditor entered into an agreement wherein Creditor agreed to acquire the debt secured by Debtor’s real property and bid in the full amount of the debt owed at foreclosure thereby leaving no deficiency claim. In return, Debtor agreed to not file bankruptcy. Shortly after the date of the agreement, another creditor put the Debtor into involuntary bankruptcy. Creditor eventually obtained relief from the automatic stay to proceed with foreclosure, but only after one million dollars worth of the property was sold to various third parties. Approximately $700,000 of the sale proceeds was placed in escrow. At the foreclosure sale, Creditor mistakenly bid-in an incorrect at auction by forgetting to take into account the $700,000 held in escrow. Both Creditor and Debtor claimed entitlement to the $700,000 held in escrow. Creditor filed an adversary proceeding seeking reformation of the foreclosure bid to correct the error. The Court, finding that equitable relief was available to Creditor only if the Court could place the parties in the status quo at the moment of the bid, ruled that: 1) Creditor would be permitted to rescind its incorrect bid and bid-in the correct amount, and 2) Creditor must compensate the Debtor and the insiders for the attorney fees and costs incurred by them as a result of Creditor’s mistaken bid.
Debtor filed a number of bankruptcies. In the Debtor’s most recent bankruptcy, he received a Chapter 7 discharge. After receiving the Chapter 7 discharge, Debtor’s wages continued to be garnished, and tax liens were filed on his property by the IRS. Debtor argued that his tax debts for 1992 and other years had been discharged in the Chapter 7 bankruptcy and that the IRS had violated his discharge injunction under § 524(a). The IRS conceded that Debtor’s tax debts from prior years had been discharged, but argued that Debtor’s 1992 tax debt had not been discharged because equitable tolling (triggered by the automatic stay imposed by the intervening bankruptcies) prevented the 3 year period under § 507(a)(8)(A)(I) from running. The Court ruled that under Young v. United States, 535 U.S. 43 (2002), equitable tolling prevented the 3 year period from running, and that Debtor’s 1992 taxes were not discharged. With respect to the prior year’s tax debts, the Court found that no violation of Debtor’s discharge injunction could be found with respect to the IRS’s efforts to collect discharged tax debts prior to Young v. United States, but after Young v. United States, the IRS efforts to collect the discharged debt was a knowing and willful violation of Debtor’s discharge injunction.