Recent Opinion Index For Judge Thurman with Case Summaries 2001-Present

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(421) 10-10-01 UNPUBLISHED In re Bowen, 98-28722, Judge Thurman.

Creditor in Chapter 7 case filed a motion for relief from this Court’s sanctions order pursuant to Fed. R. Bankr. P. 9024 and Fed. R. Civ. P. 60(b) or, alternatively, to alter or amend the order or grant a new hearing pursuant to Fed. R. Bankr. P. 9023 and Fed. R. Civ. P. 59. Although creditor’s motion was timely filed under Rule 59, the facts germane to the motion, the arguments of counsel and the testimony at the hearing on the motion first required analysis under Rule 60. Creditor argued that its paralegal mishandled debtors’ motion for sanctions and, as a result, the matter was not given the attention it required. Balancing the circumstances surrounding creditor’s failure to respond to debtors’ sanctions motion, the Court concluded that this mishandling constituted excusable neglect for the purpose of Rule 60(b). The Court also concluded that creditor’s timely filed Rule 59 motion raised concerns requiring a new hearing on debtors’ motion.


(423) 1-17-02 UNPUBLISHED In re Northington, 00-34258, Judge Thurman.

Debtors filed an objection to claim 4 of Household Finance Corp. and motion to avoid security interest as an undersecured second mortgage under 11 U.S.C. § 506(a) and (b). The Court overruled the objection and denied the motion to avoid the mortgage holding that it was improper to attempt to avoid a mortgage pursuant to Bankruptcy Rule 3007 instead of utilizing the correct procedure of an adversarial proceeding according to Bankruptcy Rule 7001. Rule 7001(2) specifically states that "a proceeding to determine the validity, priority, or extent of a lien" is an adversary proceeding and a lien should not be avoided through an otherwise properly noticed hearing on objection to claim.

(425) 2-25-02 PUBLISHED Pierce v. Beneficial Mortgage Co. of Utah (In re Pierce), 01P-2367, Judge Thurman, 282 B.R. 26.

The debtors filed a complaint, arguing that the second mortgage holder's trust deed on the debtors' personal residence was completely unsecured and should be voided or "stripped" pursuant to 11 U.S.C. § 506(a) and (d) and that the claim filed by the creditor should be treated as an unsecured claim under the debtors' chapter 13 plan. The debtors argued that because the value of the collateral was only $66,000.00 and the first mortgage holder's claim exceeded that value, any remaining claim holder must be entirely unsecured and, therefore, the lien on the property held by the creditor may be voided. The Court held that under § 506(a), a completely unsecured mortgage holder does not have a secured claim, and is therefore not protected by the antimodification statute under § 1322(b)(2) and its lien can be stripped. The Court determined that a party should first look to § 506(a) for a valuation of the collateral and if the collateral has no remaining value after giving credit for senior secured debt, the claim is unsecured. Once it is determined that a claim is not "secured only by a security interest in real property that is the debtor's principal residence," § 1322(b)(2), then the lien is void under § 506(d).

432 11/6/2002 Published In re Sorrell; 02-28611, Judge Thurman 286 B.R. 798.

The Debtors filed a bankruptcy petition under Chapter 12 of the Bankruptcy Code and moved for confirmation of their plan of reorganization. The Debtors proposed a plan wherein they surrendered one piece of real property to the secured creditor but kept another piece, providing for a twenty-year amortization of the remaining amount due under the secured claim. In addition, certain additional obligations were secured by personal property and were treated in the plan. The secured creditor objected on several grounds including that the Debtors did not meet the definition of family farmer as contemplated by Congress when drafting Chapter 12 and that the Debtors’ plan was not proposed in good faith. The Court concluded the Flygare Chapter 13 factors of good faith are equally applicable in Chapter 12 cases and determined that if certain conditions were met, the plan met the good faith test as required under 11 U.S.C. § 1225(a)(3). See Flygare v. Boulden 709 F.2d 1344, 1347-48 (10th Cir.1983). In addition, the Court held that because the Debtors satisfied the criteria of the family farmer definition in the previous year that they could go forward under Chapter 12 despite evidence that the Debtors’ current farming operations were minimal.

433 11/14/2002 Published In re Medical Software Solutions, dba PerfectPractice.MD; 02-32330, Judge Thurman, 286 B.R. 431.

The issue before the Court was whether the Debtor’s proposed sale of substantially all of its assets outside the ordinary course of business, and before a Chapter 11 Plan of Reorganization and Disclosure Statement had been proposed, should be approved by the Court. Complicating matters further, the proposed buyers were insiders as that term is defined within the Bankruptcy Code. The Court concluded that in order to approve a sale of substantially all the Debtor’s assets outside the ordinary course of business, the following elements must be met. The Debtor must show (1) that a sound business reason exists for the sale; (2) there has been adequate and reasonable notice to interested parties, including full disclosure of the sale terms and the Debtor’s relationship with the buyer; (3) that the sale price is fair and reasonable; and (4) that the proposed buyer is proceeding in good faith. See e.g., In re Delaware & Hudson Ry. Co., 124 B.R. 169, 176 (D. Del. 1991); WBQ Partnership v. Virginia Dep’t of Med. Assistance Serv. (In re WBQ Partnership), 189 B.R. 97, 102 (Bankr. E.D. Va. 1995). The Court specifically found that because of the proposed purchaser’s insider status that the purchaser has a heightened responsibility to show that the sale is proposed in good faith and for fair value. Relying upon the court-appointed examiner’s reports in this case, the Court found no evidence of fraud or collusion or other actions indicative of bad faith and approved the sale free and clear of all liabilities including possible successor liability claims by the former president of the company.


(499) 2/14/2003 UNPUBLISHED, In re Craig M. Blansett and Jennifer R. Blansett, 00-21397, Judge Thurman. (opinion posted out of date and number sequence, also in the year 2006)

(439)7/23/2003 UNPUBLISHED In re Snow, 03-20144, Judge Thurman

The United States Trustee brought a motion to dismiss the Debtors' case for substantial abuse of the bankruptcy system as provided by 11 U.S.C. § 707(b). The Debtors had filed a Chapter 7 case but their household income was greater than $150,000 per year. Applying the "totality of the circumstances" test set forth by the Tenth Circuit Court of Appeals in the case of Stewart v. United States Trustee (In re Stewart), 175 F.3d 796, 809 (10th Cir. 1999), the Court granted the Trustee's motion but stayed the effectiveness of the order for ten days to allow the Debtors to convert their case to one under Chapter 11 or Chapter 13. Although the Court determined that the Debtors' ability to repay debt was the primary factor in its analysis, the Court considered other factors as well including whether the Debtors suffered any unique hardships, whether cash advances and purchases exceeded the Debtors' ability to pay at the time they were incurred, whether the Debtors had a stable source of future income, whether the Debtors current expenses could be reduced without deprivation of necessities, whether the Debtors qualify for Chapter 13 relief, and the Debtors' good faith. The Court determined, based on an analysis of each factor, that the case should be dismissed primarily due to the amount of surplus income that the Debtors should have under a plan of reorganization and the Debtors' failure to provide accurate information regarding their household income and expenses on their bankruptcy schedules at the time the case was filed or in any written amendments.

(441) 7/10/2003 UNPUBLISHED In re David, 02-21500, Judge Thurman

The Chapter 7 Trustee brought a motion to require the Debtors to turnover property of the estate to the Trustee. The property consisted of $825.74 that existed in the Debtors' bank checking account at the time the case was filed. The Debtors originally filed the case as a Chapter 7 case, but following their 341 meeting, the Debtors converted their case to one under Chapter 13. Approximately four months after the case was converted, the Debtors reconverted the case back to one under Chapter 7. Several months after the conversion back to Chapter 7, the Chapter 7 Trustee brought his motion for turnover seeking the money that existed in the checking account at the time the case was originally initiated. During the course of their case, the Debtors had spent the money in their checking account on moving expenses and on other ordinary living expenses. The Debtors were never put on notice that the Trustee would seek turnover of those funds until nearly sixteen months after the case was filed. The Court held that under 11 U.S.C. § 348(f) property of the Debtors' Chapter 7 estate after conversion from Chapter 13 consisted of property that remains in possession of the debtor or is under the control of the debtor on the date of the conversion and, therefore, did not include the checking account funds that had been subsequently consumed before the conversion back to Chapter 7. The Court also concluded that it may not rule the same in a case where a debtor converted to another chapter in bad faith.

(442) 6/16/2003, UNPUBLISHED In re Scarbrough, 02-32949, Judge Thurman

Goldenwest Credit Union filed a motion to extend the time to file a proof of claim in the case. The Debtors case was filed on August 5, 2002. When the Debtors filed their bankruptcy petition, they also filed a creditor matrix. For some unknown reason, an error occurred in the bankruptcy clerk's office and the matrix was not entered into the system. Subsequently, on August 21, 2002, notice of the meeting of creditors, as well as notice of the last day to file proofs of claim was sent to all parties in the case, but due to the error in failing to correctly enter the matrix, only one creditor, the Chapter 13 Trustee, the Debtors and Debtors' counsel received notice of the filing and of the claims bar date. The claims bar date was set for December 12, 2002. On April 2, 2003, Goldenwest Credit Union filed its motion to extend the time to file proofs of claim alleging that the failure to receive notice was cause to extend the deadline. The Court denied the motion under Bankruptcy Rules 9006(b)(3) and 3002(c) as interpreted by the Tenth Circuit Court of Appeals in Jones v. Arros, 9 F.3d 79 (10th Cir. 1993). While Jones was a case under Chapter 12, the Bankruptcy Court held that its holding was equally applicable to Chapter 13 cases and, therefore, held that, despite a creditor not receiving notice of a case, that the claims bar date is absolute and may not be extended. However, recognizing that a creditor may be deprived of due process if never given notice of the claims bar date, the Bankruptcy Court held a Debtor may be able to enlarge the time to file proofs of claim on behalf of creditors under Bankruptcy Rule 3004. The Bankruptcy Court held that the deadline for debtors filing proofs of claim on behalf of creditors may be enlarged upon a showing of "excusable neglect" on the part of the Debtors in not filing a proof of claim prior to the deadline set forth in Bankruptcy Rule 3004.

(446)10/7/2003 UNPUBLISHED, In re Brewer v. Brewer, 02-2465, Judge Thurman

Plaintiff/Debtor filed a declaratory action against Defendant, former husband, seeking sanctions and a determination that his state court proceeding to enforce divorce-ordered payments were in violation of her discharge. The Debtor and the Defendant were divorced prior to the Debtor filing for Chapter 7 relief. The Divorce Decree ordered the Debtor to assume and pay two debts that had been co-signed by the parties. The Debtor ceased paying the debts and subsequently filed her Chapter 7 case. The Defendant began paying and eventually paid off the debts. The Debtor did not schedule the Defendant in her bankruptcy papers, but did list the two debts and the corresponding creditors. The Trustee filed a No Asset Report and the Debtor received a discharge. Three years later, the Defendant sought reimbursement from the Debtor for the amounts he had paid on the debts by filing a Motion for Order to Show Cause in state court. The state court ruled that the payments made by the Defendant on the debts were post petition obligations and ordered the obligations non-dischargeable because the Defendant was not scheduled in the Debtor’s bankruptcy papers.

At trial, the Bankruptcy Court ruled that the state court order was void ab initio because the state court lacked jurisdiction. The state court order was void under the Ellis v. Consolidated Diesel Electric Corp. decision of the Tenth Circuit. As a result, the Rooker-Feldman doctrine did not apply and the Bankruptcy Court had jurisdiction to considering a collateral attack on the state court’s ruling. The Court found that the debts were not in the nature of alimony or support and were incurred by the parties pre-petition. Notwithstanding the lack of scheduling in the bankruptcy papers, the debts were discharged by operation of law because Debtor’s case was a no asset case, there was no bar date set for filing proofs of claims, and the claims were not in the nature of otherwise non-dischargeable claims. Sanctions were imposed on the Defendant because he refused to cease his collection efforts, even though he had been placed on notice of the Debtor’s bankruptcy and the Tenth Circuit’s decision of In re Parker, at least by the time the Order to Show Cause was heard in state court.

(448)12/18/2003 UNPUBLISHED, In re Marker, Trustee v. Robert H. Fullerton, 03-2301, Judge Thurman

The Court granted partial summary judgment on the Plaintiff Trustee’s motion in an adversary proceeding commenced for recovery of property fraudulently transferred pursuant to § 25-6-6 of the Utah Code. In this proceeding, the Trustee relied on state law to reach back a period of 4 years prior to the filing of the Debtor’s bankruptcy case to challenge a transfer by the Debtor to a former spouse. The Trustee alleged that the Debtor transferred certain real property to the Defendant for less than reasonably equivalent value. The Court ruled that a conveyance where a substantial portion of the consideration consisted of a promise of reduced future rents valued at approximately $98,550 did not constitute reasonably equivalent value. Other issues of fact remained to be tried.

(449) 12/19/2003 PUBLISHED In re Holli Lundahl, 03-21660, Judge Thurman

The Court dismissed the Debtor’s Chapter 13 case with prejudice where there was sufficient evidence to support a finding that the Debtor’s plan was not proposed in good faith and that the case was filed in bad faith. The Court found that parties who were disputed by the Debtor but who were not scheduled or listed on any mailing matrix filed by the Debtor had standing to object to the Debtor’s plan, and could be heard regarding their motion to dismiss or convert. The Court analyzed the Debtor’s case in light of the standards adopted by the Tenth Circuit Court of Appeals in the cases of In re Flygare and In re Gier. The Court analyzed four particular areas: 1) the accuracy of the Debtor’s income and expenses; 2) the existence of creditors’ claims to be paid through the plan; 3) the motivation of the Debtor filing the case solely for the purpose of having a forum for litigation; and 4) the inaccuracy and misleading nature of the Statement of Affairs and Schedules filed by the Debtor. In each instance, the Court found that the Plan had not been proposed in good faith as required by 11 U.S.C. § 1307(e) and that the case had been filed in bad faith.



(452) 3/5/2004 UNPUBLISHED Jared W. Campbell 03-23673, Judge Thurman

Chapter 13 Debtor filed a Plan proposing payments for thirty-six months to return 16% to non-priority, unsecured creditors. The Plan also provided for monthly payments to be made directly to the Utah Higher Education Assistance Authority ("UHEAA") for outstanding student loans, pursuant to §1322(b)(5). The Chapter 13 Trustee filed an Objection to Confirmation of Plan, alleging that the payments to UHEAA, who would receive 71% of the principal amount of its claim over the projected term of the plan, constituted unfair discrimination as to the Debtor’s other unsecured creditors. The Court found that, absent proof of extraordinary or compelling circumstances, the Debtor’s Plan "unfairly" discriminated against the other classes of unsecured creditors, pursuant to §1322(b)(1). Accordingly, the Court denied confirmation of the Debtor’s Plan.

(477) 4/27/04, UNPUBLISHED, Alan Leigh and Tanya Lynn Leigh, 03-33764, Judge Thurman. (see opinion # 477 below)

(455) 4/28/04 UNPUBLISHED, Quality Press, Inc.v. Heidelberg Print Finance Americas, Inc., Judge Thurman

The Court granted summary judgment in favor of creditor Heidelberg against the Debtor, Quality Press. A Chapter 11 Plan had been confirmed for the same Debtor in 1994, granting Heidelberg secured creditor status. Heidelberg's financing statement lapsed years later and subsequently it filed a new financing statement. Thereafter, the Debtor filed the current bankruptcy case. The Debtor challenged the effectiveness of Heidelberg's lien under several theories. The Court determined that the filing of the new financing statement without the signature of the Debtor following the lapse was allowed under 70A-9a-509 of the Revised Utah Article 9. The Court next determined that the description of the collateral in the new financing statement as "All of Debtor's Equipment" adequately described the several pieces of printing equipment secured in favor of the creditor and that such was not seriously misleading or overbroad. The Court also determined that the "plain meaning" of the 1994 Plan did not enjoin Heidelberg from filing the financing statement after the earlier statement had lapsed. Finally, the Court determined that the Heidelberg's §1111(b) election in the prior bankruptcy did not bar it from the possibility of seeking a deficiency in the current case.

(460) 10/5/2004 UNPUBLISHED, Francisco Villegas and Elsa P. Villegas, 03-40485, Judge Thurman.

The Court was presented with the issue of whether private school tuition was a reasonably necessary expense for chapter 13 Debtors where they were not paying their creditors 100% in their plan. The Court analyzed section 1325(b) of the Bankruptcy Code which requires that all income, less expenses that are reasonably necessary for the maintenance or support of the Debtors or their dependents be contributed to the plan. The Court determined that private school expenses are presumptively not reasonably necessary, but that such presumption can be rebutted by a showing of compelling circumstances. Such circumstances in this case included evidence that the children of the Debtors had always attended private schools, that the Debtors perceived that such education was superior to the local public schools, that the Debtors had voluntarily reduced expenses in other areas, that the vehicles of the Debtors were at least ten years old and that the Debtors were living with relatives to reduce living expenses. Finally, the Debtors had proposed a 55 month plan rather than a minimum 36 month plan, returning 32% to their creditors. Under these specific circumstances, the Court determined that the Debtors had shown compelling circumstances and the Court confirmed the Debtors’

(461) 11/22/04 UNPUBLISHED, Gregory A. Smith and Allison D. Smith, 03-36469, Judge Thurman.

Upon a motion brought by the United States Trustee, the Court ruled on dismissing a chapter 13 case with prejudice to the Debtors receiving any discharge on their scheduled debts pursuant to §349(a) of the Bankruptcy Code. The Court ruled that Debtors who had filed eight bankruptcy petitions over the preceeding nine years including chapter 7 petitions in 1995 and 2001 where discharges were obtained and had filed chapter 13 petitions in 1996, 1997, 1998, 2000, 2002 and 2003 where no significant activity or confirmation of plan had occured; who had failed to make any pre-confirmation plan payments except for the initial payment to the Trustee in the present case and were otherwise delinquent a total of five pre-confirmation payments to the Trustee in the present case, should have their case dismissed with prejudice from receiving any discharge for the debts listed on their schedules.

The Court reviewed the history of §349(a) of the code going back to the Chandler Act of 1898 and determined that such history coupled with the plain meaning of that section all direct that a case may be dismissed with this type of prejudice under egregious facts. The Court adopted the Flygare (In re Flygare, 709 F.2d 1344 (10th Cir. 1983) for badges of bad faith as a beginning point of analysis. The Court further concluded that this type of dismissal with prejudice was consistent with the Tenth Circuit's decision in Frieouf (In re Frieouf, 938 F. 2d 1099, (10th Cir. (1991) which forbade denial to bankruptcy court access for more than 180 days, but authorized denial of discharge of scheduled debts for cause.


(468) 1/24/2005, UNPUBLISHED, Jones v. Homecomings Financial Network and Residential Funding Corporation 04-2636, Judge Thurman

Defendants sought an order dismissing Counts 3-12 and 14 in the Plaintiff’s Complaint for failure to state a claim upon which relief can be granted because, Defendants argued, the applicable statutes of limitation created a complete bar to Plaintiffs’ recovery on those claims. Defendants further argued that the Wrongful Foreclosure claim was not ripe because Defendants had not conducted a foreclosure sale, and that the Objection to the Proof of Claim was not ripe because Defendants had not filed a proof of claim in this case. The Court found that 1) Debtor’s wife could not utilize § 108(a) because she is not a debtor in this bankruptcy case; 2) Debtor himself could not utilize § 108(a) because that section was meant to benefit solely trustees or debtors in possession; 3) Debtor is not afforded the benefits of § 1640(e) because it is inapplicable to this case; and 4) Debtor’s objection to proof of claim is unripe because neither Defendant had filed a proof of claim in this case. Accordingly, the Defendants’ Motion to Dismiss Counts 3 through 12 and Count 14 of Plaintiffs’ Complaint was granted.

(470) 3/1/05, UNPUBLISHED, In re Wayne E. Olson and Debra E. Olson, 04-23551, Judge Thurman.

United States Trustee brought a Motion to Dismiss Case Pursuant to § 707(b). The Court denied the motion, finding that the U.S. Trustee had not met the burden of showing substantial abuse. Specifically, the Court held that expenses incurred in caring for 1) a daughter who had become unexpectedly pregnant and 2) a puppy with severe medical conditions that were unknown at the time of acquiring the dog did not constitute abuse or bad faith.

(472) 3/23/05, PUBLISHED, Chase Manhattan Mortgage Corporation vs. J. Kevin Bird, Chapter 7 Trustee, 04-2515, Judge Thurman.

This proceeding involved interpretation of Utah’s constructive and inquiry notice law regarding the recording of a bank’s trust deed in the tract and grantor/grantee indices. The Court was called upon to determine whether the bank’s trust deed was avoidable pursuant to 11 U.S.C. § 544(a)(3) and whether there were facts that gave rise to placing the chapter 7 Trustee on constructive or inquiry notice of the same.
The Court ruled on cross motions for summary judgment that the Trustee lacked constructive and inquiry notice of the Plaintiff’s trust deed because it incorrectly described the location of the Debtors property. Under Utah law, liens must be accurately described in recorded instruments and placed in the tract index maintained by each county recorder to give constructive notice. Here, although the trust deed was recorded, the legal description referred to property miles away from the Debtor’s property and was recorded against another tract of land. Although the county recorder maintained a grantor/grantee index, the Court determined that the recording of the trust deed in that index did not constitute constructive notice of the existence of the Plaintiff’s trust deed in furtherance of the legislative intent to interpret land titles strictly. Further, there were no facts that suggested that anyone should investigate further regarding the existence of the Plaintiff’s trust deed and accordingly, the Trustee was not on any inquiry notice regarding the existence of the trust deed.

(477) 4/27/04, UNPUBLISHED, Alan Leigh and Tanya Lynn Leigh, 03-33764, Judge Thurman.
(Opinion posted out of date sequence)


(479) 6/6/2005, UNPUBLISHED, James E. Love, successor trustee of the Chaille M. Love 1989 Revocable Trust v. Constance Love Norman; 03-2092, Judge Thurman.

After a three day trial, the Court ruled that the Defendant was liable for damages in excess of $1.0 million which were determined to be non-dischargeable pursuant to 11 U.S.C. 523(a)(4), where the Defendant defalcated while acting as a fiduciary and embezzled assets in a trust. The Court also awarded sanctions against the Defendant for improper delay of trial. The Plaintiff, who is the Defendant’s brother, commenced an adversary proceeding against his sister while acting as successor trustee of their father’s estate. The Defendant had taken physical control of her aged father, moved him from California to Utah, and convinced him to sign documents naming her as trustee of his estate. Thereupon, the Defendant spent virtually all of the cash and securities in the trust for her own benefit, except some modest living expenses for her father, over a period of approximately two years. In addition, she encumbered and or sold all of the real properties of the father for substantially her own benefit to the exclusion of her father. In so ruling the Court followed the Tenth Circuit BAP’s definition of embezzlement in Cousatte v. Lucas, 300 B.R. 526 (10th Cir. BAP 2003).

The Court declined to find fraud pursuant to 11 U.S.C. 523(a)(2) because there was no evidence of the Plaintiff’s reliance on statements by the Defendant. The Court also declined to find willful and malicious injury pursuant to §523(a)(6) because adequate evidence of maliciousness was not presented.. Finally, the Court sanctioned the Defendant for attorneys fees for improperly seeking a continuance on the eve of trial when she purportedly needed additional time for discovery, and, once given that time, she undertook no further discovery.


(480) 7/19/2005, UNPUBLISHED,  In re Alaina Hopkins, 03-40481, Judge Thurman.

In a contested matter, the Court considered the application of Utah’s anti-deficiency statute, §57-1-32 Utah Code, the scope of issues presented in a pre-trial order and the qualifications of a creditor corporate officer to render opinion testimony on real property.  The Court ordered the matter to proceed as an adversary proceeding and overruled the multiple objections of the Debtor to the creditor’s proof of claim asserting a secured claim on two parcels of real property. The Debtor’s son owned a construction company and convinced his mother, the Debtor, to take out a loan to finance a Model Home for the business. To secure the loan, the Debtor pledged both the Model Home and her personal residence. The son’s business failed and neither he nor his business paid the Creditor on the loan. As a result, the Creditor commenced foreclosure actions on both the Model Home and the Debtor’s residence. In response, the Debtor filed for chapter 13 relief. Among other claims, the Debtor alleged that the Creditor failed to properly advise her as to the consequences of signing the trust deed on her residence. The creditor obtained relief from stay as to the Model home early in the case. While the sale resulted in a loss, the Creditor did not amend its proof of claim or commence other action to assert a deficiency. The Debtor then argued that Utah’s Anti-Deficiency Statute (§57-1-32) prevented the Creditor from asserting a deficiency.

The Court found that the Debtor had been properly apprised of the terms of the trust deeds, that she voluntarily and knowingly signed the trust deed on her home and found no inappropriate conduct on the part of the Creditor in closing on the loan with the Debtor or that the Creditor committed any other improper act. In addition, the Court determined as a matter of law that §57-1-32 did not require the Creditor to amend its proof of claim or commence other action following the foreclosure on the Model Home to allow it to assert a deficiency, and as such, the Creditor maintained a security interest in the Debtor’s residence. In addition to affecting jurisdiction, §57-1-32 requires that the Court determine the fair market value of a property at the date of its sale before a judgment for any deficiency may be rendered. The Debtor argued that the pre-trial order did not specifically preserve this issue for trial and thus the Court could not take evidence of the fair market value of the Model Home. The Court overruled this objection, finding that parties had stipulated in the pre-trial order that there was a question as to whether the Creditor was "prevented from enforcing its rights against the Debtor because of...’anti-deficiency law.’" In so doing, the Court determined that such issue was broad enough to allow the Court’s inquiry into the fair market value of the Model Home. Finally, the Court found that the vice-president of the corporate Creditor was sufficiently qualified as an owner to give an opinion of value of the Model Home.

(481) 9/26/2005, PUBLISHED, In re Kenneth L. Perry, Loveridge v. The Ark of Little Cottonwood, 05-2183, Judge Thurman.

Chapter 7 Trustee sought to avoid a pre-petition use of a credit card to pay the Defendant Creditor. The Trustee alleged that the Debtor's use of credit pre-petition was avoidable as either a preference under § 547 or a fraudulent transfer under § 548. At issue in this case was whether use of credit, on its own, constitutes “a transfer of an interest of the debtor in property.”

The Court held that credit is not an interest of the debtor in property because credit is not property of the estate under § 541(a)(1). Citing to Begier v. IRS, 496 U.S. 53 (1990), the Court held that an interest of the debtor in property follows the standard for deciding whether credit is property of the estate. The Court held that credit is not property of the estate because it does not reduce to liquidity for creditors. Accordingly, the Court granted summary judgment in favor of the defendant and dismissed the complaint.

(482) 9/27/2005, UNPUBLISHED. In re Thomas Michael Tuttle and Heather Lee Tuttle, 05-26753, Judge Thurman.

Chapter 7 Trustee challenged the validity of the Debtors’ claimed exemptions for various wood-working tools and machines. The Trustee alleged that the tools were, in fact, property of a closely-held corporation, founded and operated by the Debtors. The Debtors argued that they owned the tools personally, pointing to evidence that they purchased the tools before forming the corporation.

The Court held that the Debtors may not claim exemptions for the tools. First, the Court held that under the alter ego theory, the Debtors had commingled corporate assets with individual assets to the extent that the fiction of corporate formalities should be disregarded to better reflect reality. Alternatively, the Court held that Debtors were equitably estopped from arguing that they owned the tools. The Court emphasized that the Debtors allowed the tools to stay at the corporation’s place of business throughout the life of the corporation. A creditor of the corporation could rationally believe that the corporation owned the tools.

The Debtors also argued that the tools were encumbered by a security interest orally granted to the father of one of the Debtors. The Court held that a valid security interest was not created. The Court noted that even where there is a judicial admission satisfying the statute of frauds, the admission is not sufficient to disregard the requirement under the UCC that a security agreement be in a writing.

(483) 10/19/2005, UNPUBLISHED, In re Mark R. Scott, 05-26202, Judge Thurman.

In this chapter 7 case, the court considered whether the debtor’s involuntary absence from his home barred him from asserting a $20,000 homestead exemption as his primary personal residence. The Chapter 7 Trustee objected to the Debtor’s claimed homestead exemption of $20,000, arguing that the Debtor had not lived in the home for the past two and a half years and that it wasn’t his primary personal residence as of the petition date. The Debtor argued that he did not leave the home wilfully, but was ordered out by a Protective Order of a Utah State Court.

The Court held that the Debtor could only claim a homestead exemption of $5,000 because the home was not his primary personal residence under Utah Code § 78-23-3. The Court determined that a Debtor must reside in a home as of the petition date to assert a homestead exemption of $20,000. Because the Debtor did not live in the home at the time of filing, he could not claim the home as a primary personal residence. The Court determined that under Utah law, it made no difference that the Debtor left the home involuntarily.

(484) 11/15/05, PUBLISHED, In re Green, 04-2889, Judge Thurman.

The Chapter 7 Trustee sought to revoke the debtor's discharge because she failed to obey a lawful order of the Court to turn over tax refunds. The Court determined that 11 U.S.C. 727(a)(6) required the Trustee to show more than a failure to comply with an order. Under section 727(a)(6), the Trustee must show that the debtor willfully disobeyed the Court's order. Because the Trustee did not initially direct the debtor to turn over her tax return, the debtor spent the money believing she had no obligation to turn it over. The Court ordered the debtor to turn over the money only after the debtor had spent it. Because the debtor did not have notice of her obligation to turn over the money before she spent it, the Court found that the debtor's failure to comply with its order was not willful, and entered judgment for the debtor.

(487) 12/07/2005, PUBLISHED, In re Galanis, et al, 05-80037, 2005 WL 3454411 (Bankr. D. Utah Dec. 7, 2005), Judge Thurman. 

Under § 362(c)(3) of the BAPCPA, a debtor who had a prior case pending within one year of filing the present case receives an automatic stay lasting for thirty days only, unless the debtor shows that he or she filed the present case in good faith. Each debtor in these cases had a prior case pending within one year of filing their present cases. They each argued that the Court should extend the stay because they filed in good faith. The Court determined that a debtor’s good faith under § 362(c)(3) should be governed by a totality of the circumstances test, and looked to some of the factors historically used to determine a debtor’s good faith under § 1307(c), as applied in In re Geir, 986 F.2d 1326 (10th Cir. 1993). The Court also considered three additional factors, not traditionally part of the Gier factors: 1) why the debtor's prior case was dismissed; 2) the likelihood that the debtor will be able to fund a chapter 13 plan; and 3) whether the Trustee or any creditors objected to the motion. Under this analysis, the Court determined that each debtor met their burden under § 362(c)(3) to show they filed in good faith, and accordingly, the Court granted the motions in this case.


(489) 3/8/2006, PUBLISHED, In re Tomasini, 05-80115, Judge Thurman.

The Court was presented with the issue of whether a Debtor who failed to show that his case was filed in good faith at a hearing on a motion to extend the stay under section 362(c)(3)(B) could obtain confirmation of a chapter 13 plan under 1325(a)(7) by showing good faith for confirmation purposes. The Debtor had a bankruptcy case pending and dismissed within one year of filing the present case. The Debtor moved to extend the automatic stay in this case under section 362(c)(3)(B), arguing that he filed the present case in good faith as to all creditors. The Court denied that motion, finding that the Debtor failed to carry his burden under section 363(c)(3)(B) to show that he filed the present case in good faith as to all creditors by clear and convincing evidence.

At the hearing on confirmation of the debtor's chapter 13 plan, the Chapter 13 Trustee argued that the case could not be confirmed because the Court had already found the case was not filed in good faith. The Court determined that the good faith determinations under sections 362(c)(3)(B) and 1325(a)(7) are both governed by a totality of the circumstances analysis, as discussed by the Court's ruling in In re Galanis, 334 B.R. 658 (Bankr. D. Utah 2005) and that a lack of finding of good faith at a motion to extend does not bar the Court's good faith determination at confirmation. The application and focus of the Galanis factors is different when determining good faith at confirmation. The focus of motion to extend must be on creditors, whereas the focus of the Court's good faith determination for purposes of confirmation must be on the debtor.

In considering good faith under section 1325(a)(7), the Court determined that it will look first to the debtor's stated motivation in filing from the debtor's perspective. If the debtor's motivation is considered a good faith motivation, the Court will then consider the remaining Galanis factors.

(490) 3/16/2006, PUBLISHED, In re Clay, 05-80043, Judge Thurman.

The Chapter 13 Trustee objected to the Debtor's proposed chapter 13 plan because it proposed to pay the Debtor's secured creditors directly. The Trustee argued that the Bankruptcy Code does not generally allow a Debtor to make payments directly to a secured creditor. The Trustee also argued that changes to the Bankruptcy Code under the BAPCPA overruled any caselaw which might have allowed for direct payments.

Citing to In re Case, 11 B.R. 843 (Bankr. D. Utah 1981), the Court held that before the BAPCPA a debtor could choose to pay a secured creditor directly so long as the creditor is paid pursuant to the terms of the underlying contract. The Court analyzed changes to the Bankruptcy Code under the BAPCPA, and concluded that In re Case was not overruled by the BAPCPA. A debtor may propose a chapter 13 plan to pay secured creditors directly so long as the creditor is paid pursuant to the underlying contract.

(491) 3/22/2006, PUBLISHED, In re Jass, 05-80088, Judge Thurman.

Section 1325(b)(1)(B) provides that where a creditor or a chapter 13 trustee objects to a proposed plan, the debtor must provide all of his or her "projected disposable income" to unsecured creditors. Section 1325(b)(2) provides a detailed definition for "disposable income." The BAPCPA did not alter the term "projected disposable income," nor did it alter the defined term, "disposable income." The changes did change the definition of "disposable income" to refer to the number resulting from a debtor's Current Monthly Income Form (Form B22C).

The debtor proposed a plan which provides to unsecured creditors less than the amount resulting from Form B22C. The chapter 13 trustee objected, arguing that the debtors were bound by their Form B22C. The Court held that the word "projected" modifies the defined term, "disposable income." The Court held that Form B22C will always be the starting point for the Court's inquiry under section 1325(b), and the Court will presume that the number resulting from Form B22C is a debtor's "projected disposable income." Nevertheless, if a debtor can show a substantial change in circumstances such that the numbers reflected on Form B22C are not representative of the debtor's projected finances, the Court held that a debtor may propose a plan commensurate with his or her Schedules I and J. Nevertheless, if a debtor can show a substantial change in circumstances such that the calculation reflected on Form B22C is not representative of the debtor's reasonable foreseeable income and expenses, the Court will consider confirming a plan that proposes payment to unsecured creditors commensurate with proper calculations on Schedules I and J. This ruling should not be considered carte blanch authority for approving any changes, but only in rare situations.

(495) 4/26/2006, UNPUBLISHED, In re Beckstead, 05-35213, Judge Thurman.

The Court was called upon to determine whether a real estate commission was property of the estate and if so, whether it was exempt. One of the Debtors in this case was employed as a real estate agent under the supervision of her principal broker. Before filing for chapter 7 bankruptcy relief, the Debtor produced buyers to certain sellers, who were ready, willing and able to purchase the sellers' real property. The Debtor, acting as a real estate agent, performed the bulk of her services before the filing of the Debtor's case. The sale did not close until after the Debtor filed this bankruptcy case. Upon reciept of the commission from the sale, the Debtors amended their statements and schedules to include the commission and claimed an exemption for 75% of the commission under Utah R. Civ. P. 64D. The chapter 7 trustee assigned to the Debtors' case objected to their claimed exemption, arguing that a commission is not subject to an exemption under Rule 64D.

The Court first held that under Utah law the commission is property of the estate because the Debtor had an agreement with her broker that she was entitled to a commission whenever the broker became entitled to its commission. Under Utah law a broker is entitled to a commission when the broker presents a seller with a buyer who is ready, willing and able to purchase the property at issue, regardless of whether the sale actual goes to completion. Because the broker was entitled to collect its commission before the Debtor filed for bankruptcy relief, so too was the Debtor entitled to collect the commission. Thus, the Court concluded that the commission was property of the estate.

The Court also held that under Utah law a commission is subject to an exemption under Rule 64D. The Court reached this conclusion by considering the language and history of Rule 64D, applying Utah rules of statutory construction.

(498) 6/21/06, PUBLISHED, In re Wilbur, 06-20104, Judge Thurman.

In this case, the Court was called upon to determine the scope of the phrase "unsecured creditors" in the context of Section 1325(b)(1)(B) relating to confirmation of a chapter 13 plan. That section provides that upon objection to confirmation by a party in interest, the Court may confirm a debtor's proposed chapter 13 plan only if the debtor proposes to pay unsecured creditors in full, or proposes to pay the debtor's projected disposable income for the applicable commitment period to "unsecured creditors." The Debtors in this case urged the Court to adopt the plain language of §1325(b)(1)(B). They contended that the phrase "unsecured creditors" refers to both priority and non-priority unsecured creditors which resulted in a lower payment to the unsecured creditors. The chapter 13 Trustee disagreed and objected to the plan.

The Court declined to enforce the plain language of section 1325(b)(1)(B) because that interpretation conflicts with manifest Congressional intent, and would bring an absurd result. The Court concluded that the reference in section 1325(b)(1)(B) to "unsecured creditors" refers to non-priority unsecured creditors only, requiring the Debtors' proposed chapter 13 plan to return to non-priority unsecured creditors at least the amount calculated on Form B22C, which in this case would be a much greater amount than proposed. Since the Debtors' proposed plan did not comply with this requirement, the Court held that the Debtors' proposed plan did not meet the requirements of section 1325(b)(1)(B) and was not confirmable.

(501) 6/29/2006, PUBLISHED, In re Fuger, 06-20801, Judge Thurman.

The Court was called upon to determine the meaning of the phrase, “applicable commitment period” found in Section 1325(b)(1)(B) under the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”). Through an analysis of plain language of the statute and prior case law, the Court ruled that a chapter 13 Debtor may propose a plan which does not require a set length of time to be in a plan, but which pays a specific amount to unsecured creditors. This amount would normally be calculated and paid over the applicable commitment period. The 'applicable commitment period,’ 3 or 5 years, serves to aid the Debtor in determining the amount he or she must return.

(502) 8/22/2006, PUBLISHED, In re Clemens, 06-20124, Judge Thurman.

The Court interpreted the BAPCPA amendments to section 330(a)(3) and 330(a)(7) regarding allowance of chapter 7 trustees' fees. The Court held that under these amendments, the 10th Circuit's opinion of In re Miniscribe, 309 F.3d 1234 (2002) was not overruled but that section 326 must now be a part of the Court's Lodestar analysis, instead of simply acting as a cap against Trustee's fees.

In reviewing trustee fee requests, the Court will now consider: 1) the time and labor required; 2) the novelty and difficulty of the issues involved; 3) the skill requisite to perform the service properly; 4) the preclusion of other employment by the trustee due to his or her acceptance of the appointment as trustee in the case; 5) the customary charges by other professionals involved in the case and by the field in general; 6) the contingent nature of the fee; 7) time limitations imposed by acceptance of the appointment; 8) the amount generated by the trustee's efforts for creditors and the results obtained; 9) the experience, reputation, and ability of the trustee; 10) the 'undesireability' of the case; 11) awards in similar cases; 12) computation of any multiplier for extraordinary results obtained by the trustee; 13) the amount resulting from the calculations under section 326(a); 14) whether the trustee has engaged in conduct which might justify denial of compensation under section 326(d); 15) whether notice of the trustee's fee request is appropriate, and whether any party in interest objects to the fees; and 16) whether the fees are to be paid from cash collateral and whether the creditor secured by the collateral consents.

In this case, the chapter 7 Trustee's request for fees was not accompanied by any documentation of the hours spent in prosecuting the case. The Court held that without such documentation, it could not undergo the required "Lodestar" analysis discussed above. Accordingly, the Court denied the Trustee's request for fees without prejudice.

(504) 12/12/2006 UNPUBLISHED, In re Potter, 06-23025, Judge Thurman.

The Court was called upon to determine whether the Debtors' motor vehicle was subject to a purchase money security interest where they inherited the vehicle and assumed the decedent's debt on the vehicle. The court held that the debt created a security interest, but not a purchase money security interest. Because the security interest at issue was not purchase money, the Court held that the Debtors could cram down the creditor's claim under section 1325(a) even though the debt was incurred within 910 days of filing.



(507) 1/19/2007, UNPUBLISHED, In re Giles, 06-23988, Judge Thurman.

The debtors in this chapter 13 case obtained credit counseling 182 days before filing for bankruptcy relief. Section 109(h), by its terms, requires debtors to obtain credit counseling 180 days before filing. The Court held that it lacks discretion to waive a debtor's failure to obtain the required credit counseling required by section 109(h). To that end, the Court also held that it lacked discretion to find that the debtors had complied section 109(h) by satisfying the "spirit" of the bankruptcy provision. . The Court granted the Trustee's Motion to Dismiss, finding that it lacked jurisdiction over the case.

(509) 2/6/2007, PUBLISHED, In re Tonioli, 06-21049, Judge Thurman.

The Court was called upon to determine whether chapter 13 debtors could modify their plan to abate delinquent payments where the effect of the modification would be unequal monthly payments made to a secured creditor. Section 1329(b)(1) provides that the Court may allow a proposed modification so long as the modified plan would comply with section 1325(a). Section 1325(a)(5) provides that if a debtor pays a secured creditor in periodic payments, those payments must be in equal monthly amounts. The Court held that the proposed modification did not comply with this provision, but was still permissible because the creditor's silence to the proposed modification constitutes implied consent.

(512) 2/23/2007, UNPUBLISHED, In re Birch, 06-23273, Judge Thurman.

The Court determined that under Utah law, the Debtor who was the purchaser under a real estate purchase contract obtained equitable ownership of the real property under the doctrine of equitable conversion, while the seller retained bare legal title. The Court further determined that forfeiture provisions in real property contracts should be enforced so long as the seller strictly complies with its terms. Where a forfeiture provision is not automatic and gives the seller the right to declare a forfeiture, the buyer retains rights in the property until the seller specifically declares a forfeiture. In this case, the Court determined that the Debtor still held an interest in the property because, although the seller had declared a default, the seller failed to declare a pre-petition forfeiture of the buyer's (Debtor's) interest.

Debtor executed a real estate purchase contract pre-petition to purchase real property in installment payments. The contract contained a forfeiture provision which could be exercised at the election of the seller upon the Debtor's breach. The Debtor breached the contract and the seller sent the Debtor a letter demanding cure. The seller did not declare a forfeiture of the Debtor's interest in the property pre-petition. The Debtor's chapter 13 plan proposed to fund the plan in principle part by selling the real property. The seller objected to confirmation, arguing that he owns the property because of the forfeiture provision and the notice he had sent. The Court overruled the objection and at a later date, confirmed the plan.

(513) 3/23/2007, PUBLISHED, In re George Love Farming, 06-20612, Judge Thurman.

Interpreting In re Marrama, 127 S.Ct. 1105 (2007), the Court held that it has authority to deny a Motion to Convert a case from chapter 7 to 11 where the conversion is sought in bad faith. The Court held that the burden to show bad faith is on the parties objecting to the conversion, and applied the factors considered by the Tenth Circuit Court of Appeals in In re Nursery Land Dev., Inc., 91 F.3d 1414 (10th Cir. 1996) to determine whether bad faith exists in this case. The Court determined that bad faith had been established and denied the Motion to Convert.

(514) 5/9/2007, UNPUBLISHED, In re Martin, 07-20209, Judge Thurman.

In this chapter 13 case, the Court was presented with the issue of whether the Debtors could deduct secured claim payments in calculating their Disposable Income and whether they had proposed their plan in good faith. The Debtors proposed to retain a boat and trailer both of which were unrelated to the debtors' business and were subject to secured claims which were proposed to be paid in full. The chapter 13 Trustee objected.

The Court determined that under post-BAPCPA law, a debtor need not show that a proposed expense is "reasonably necessary" for the debtor's maintenance and support to comply with section 1325(b). The court held that under the terms of sections 707(b) and 1325(b), a debtor may claim deductions in calculating Disposable Income for any secured payments owing, regardless of whether those payments are reasonably necessary for a debtor's maintenance and support. However, the Court also determined that the debtors' proposal to retain the boat and trailer was not made in good faith and denied confirmation.

(516) 7/25/2007, UNPUBLISHED, In re Carrillo, 07-20423, Judge Thurman

The Debtor filed a motion to reopen his case, vacate his discharge as to one creditor and allow the debtor to file a reaffirmation agreement between he and a secured creditor, and then reimpose the discharge. The Court determined that under sec. 524(c)(1), a reaffirmation agreement is not enforceable if it is entered post-discharge and denied the motion to reopen as granting the relief to vacate the discharge would be futile.

(517) 10/24/2007, PUBLISHED, In re Darin L. Burt, 07-23193, Judge Thurman.

In this chapter 13 case, the issue before the Court was whether Ford Motor Credit held a purchase money security interest in the Debtor’s vehicle. Ford Motor Credit filed an objection to the confirmation of the Debtors’ proposed Chapter 13 plan on the basis that the Debtors’ plan improperly crammed down Ford Motor Credit’s secured claim in violation of 11 U.S.C. §1325(a). BAPCPA amended §1325 to give special protection to creditors who finance automobile transactions that occur within 910 prior to the debtors’ filing for chapter 13 relief. This special protection is given to creditors that hold a purchase money security interest in the vehicle. The Court determined that Ford Motor Credit’s entire claim, including the portion of the claim attributable to negative equity and costs associated with the purchase of the vehicle, qualified as a purchase money security interest and must be paid in full as a secured claim. Accordingly, the Court concluded that the hanging paragraph of §1325(a) applied in this case and the Debtor could not “cram down” Ford Motor Credit’s claim pursuant to §506. Therefore, Ford Motor Credit’s objection to confirmation was sustained and confirmation of the Debtor’s plan was denied without prejudice.



(519) 4/ 21/2008, PUBLISHED, In re Godfrey, 07-24065, Judge Thurman.

The Court in this case clarified the breadth of Utah’s homestead exemption law as it applied to a pre-petition sale of a home. The Chapter 13 Trustee objected to the Debtor’s claimed homestead exemption because the Debtor voluntarily transferred a portion of the proceeds derived from the sale of his home prior to filing, but failed to disclose the transfers on his initial Statement or Schedules. The Chapter 13 Trustee asserted that “proceeds” must be kept in their original form and not used to pay for other items in order to qualify for the homestead exemption under Utah law. The Chapter 13 Trustee further asserted that the Debtor’s homestead exemption should be denied under bankruptcy law because the Debtor’s voluntary transfers were concealed in violation of § 522(g). The Court determined that proceeds from the sale of a home need not be retained in their original form to qualify for the homestead exemption, and sale proceeds may be disbursed for other purposes without jeopardizing the exemption. The Court further determined that the Debtor’s homestead exemption should be allowed because there was no evidence of fraudulent intent and, under the facts of this case, sufficient disclosure was made by the Debtor.

(520) 5/06/2008, PUBLISHED, In re Andrews, 07-22924, Judge Thurman.

The Court determined that the Debtors’ entitlement to payments pursuant to the Economic Stimulus Act of 2008 were not property of the estate where the Debtors filed for bankruptcy on June 28, 2007.

(524) 8/1/2008, PUBLISHED, In re Espinoza, 08-20778, Judge Thurman.

In this chapter 13 case, the Court considered whether a plan that defers the start of equal monthly payments to a secured creditor beyond confirmation and proposes to pay adequate protection payments of lesser amounts in the interim complies with 11 U.S.C. § 1325(a)(5)(B)(iii)(I). CitiFinancial Auto Corporations objected to confirmation of the plan, arguing that it failed to provide for equal monthly payments in an amount sufficient to adequately protect its interests during the term of the plan. Relying on the reasoning of In re Denton, 370 B.R. 441 (Bankr. S.D. Ga. 2007) and In re Sanchez, 384 B.R. 574 (Banrk. D. Or. 2008), the Court concluded that the Debtor’s plan did not comply with chapter 13's equal monthly payment requirement. The Court explained that the term “periodic payments” in § 1325(a)(5)(B)(iii) referred to all regularly-recurring post-confirmation payments to be made to a secured creditor such as CitiFinancial. It follows, then, that unless CitiFinancial agrees otherwise, it must receive equal monthly payments beginning with the first post-confirmation distribution and continuing until its claim is paid in full.

(525) 08/15/2008, PUBLISHED, In re Parker, 99-31207, Judge Thurman.

The court determined that a default judgment entered 7 years ago awarding the debtor sanctions against a corporate creditor was void because the debtor failed to properly serve the creditor with the sanctions motion and notice of hearing. The Court determined that Bankruptcy Rule 7004(b)(3) required the debtor to direct her motion and notice of hearing to an officer or an authorized agent of the creditor. Because the motion and the notice of hearing was only sent to a P.O. Box or a street address, and did not identify an officer or a registered agent of the creditor, service was inadequate. Accordingly, when the creditor moved to reopen the case and vacate the judgment, the court concluded that cause existed to grant both motions.



(526) 1/6/2009, PUBLISHED, In re Garner, 08-24899, Judge Thurman.

In this chapter 13 case, the issue before the Court was whether a plan that proposed to bifurcate a secured claim under 11 U.S.C. § 506(a)(1) for a vehicle purchased within 910 days, and that was not objected to by the creditor, may be confirmed under 11 U.S.C. § 1325(a). The Debtors argued that Citizens Auto Finance’s failure to object to the bifurcation of its claim in their chapter 13 plan constituted acceptance of the plan. The Bankruptcy Abuse Prevention and Consumer Protection Act, however, amended § 1325 to give special protection to creditors who finance automobile transactions that occur within 910 days prior to the debtor’s filing for chapter 13 relief. The Court concluded that the requirements of § 1325(a) are “clearly mandatory,” and where a plan violates the hanging paragraph of § 1325(a), it cannot be confirmed even if the creditor does not object to the plan. Accordingly, the Court concluded that the hanging paragraph of § 1325(a) applied in this case, and the Debtors could not bifurcate Citizens Auto Finance’s claim pursuant to § 506. Therefore, confirmation of the Debtors’ plan was denied.

(527) 3/31/2009, PUBLISHED, In re Christensen, 08-02223, Judge Thurman.

The chapter 7 trustee sought to reopen the Debtors’ case and revoke their discharge under 11 U.S.C. § 727(d)(2). Although the request appeared untimely under § 727(e)(2), the Trustee argued that the case was never properly closed pursuant to § 350, and even it was, there are proper basis for tolling the deadlines in § 727(e)92) because the Debtors had fraudulently concealed assets of the estate. The Court concluded that the case was properly closed pursuant to § 350(a), and equitable tolling did not apply to extend the deadlines in § 727(e). Therefore, the Trustee’s claims under §727(d)(2) were time barred, and the request to revoke the Debtors’ discharge was denied.

(528) 4/27/2009, PUBLISHED, In re Jubber v. Sleater, Case No. 08-02077, Judge Thurman.

This was a hearing on a motion for summary judgment, where the Court considered whether to strike Defendant’s declarations and to grant Plaintiff’s motion for summary judgment based on the Defendant’s default on two promissory notes held by the Debtors. The Court concluded that the majority of the statements contained in declarations constituted inadmissible hearsay, parole evidence, lack of personal knowledge, and inappropriate legal conclusions, and were, therefore, stricken. Relying on sections 70A-3-104 and 70A-3-303 of the Utah Code, the Court concluded that the certain promissory notes were negotiable instruments, that the Defendant was their “maker” under Utah law, and that antecedent debt was sufficient consideration for the notes. Accordingly, the Court granted the Trustee’s motion for summary judgment.

(530) 5/27/2009, PUBLISHED, In re Wilburgene v. Kwon et. al., Case No. 08-02101, Judge Thurman.

In this adversary proceeding, the Plaintiff Wilburgene LLC (the “LLC”) and certain defendants filed cross-motions for summary judgement seeking the determination of whether those defendants held a valid trust deed on the Plaintiff’s property that was granted by a purported member of the Plaintiff to secure a personal loan. The Plaintiff argued that the grantor was not a member of the LLC, and could not encumber the its property. It further claimed that even if the grantor were considered a member, his actions could not bind the Plaintiff because they were not in the “ordinary course of the company business” as required by § 48-2c-802(1) of the Utah Code. The Court concluded that the grantor was a member of the LLC at the time the trust deed was granted, he had authority to sign the trust deed, and the exception contained subsection (3) rather than the general rule in subsection (1) of § 48-2c-802 governed. The Court held that under § 48-2c-802(3), the trust deed would be conclusive in favor of the defendants if they gave value without knowledge of the grantor’s lack of authority. Although the Court determined that the defendants did give value in exchange for the trust deed, it held that there was a genuine dispute of material fact as to whether they had knowledge of the grantor’s lack of authority. That issue was, therefore, reserved for trial.

(531) 6/8/2009, UNPUBLISHED, In re 3H River Turf Farm LLC, Case No. 08-22543, Judge Thurman.

In this chapter 7 case, the issue before the Court was whether the Court should take into account all of the liens and encumbrances against real property when considering a motion for relief from stay under 11 U.S.C. § 362(d)(2), or just those liens and encumbrances of the moving party and any senior lienholders. The Court held that the word “equity” in section 362(d)(2) meant that the Court must consider all liens and encumbrances against real property, not just those of the movant and the senior lienholders. The Court granted relief from stay because after subtracting the total amount of the secured encumbrances from the total value of the real property as calculated in the Trustee’s Appraisal, there was no equity in the property.

(532) 7/6/2009, UNPUBLISHED, In re Lazerus, Case No. 05-34150, Judge Thurman.

In this chapter 7 case, the Court ruled on the appropriate manner to object to the form of order submitted for the Court's signature, and in what instances a Trustee may surcharge exemptions pursuant to 11 U.S.C. § 522(k). The Trustee filed several motions attempting to modify the substance of a prior ruling by this Court, and to compel the turnover of additional records and funds, all after having submitted the Trustee’s Final Report. The Court concluded that an objection as to the form of the order is not the mechanism by which the substance of the Court’s prior ruling should be challenged. Additionally, the Court held that the Trustee could not surcharge the Debtor’s exempted wages under § 522(k) after collecting those unpaid wages from the Debtor’s employer, without a showing that there has been an avoidable transfer. The Court finally concluded that it had appropriately ruled on the surcharge issue at a prior hearing, where albeit the Trustee had not formally pled the issue it had nevertheless argued the issue at a hearing on the Debtor’s objection to the Trustee’s final report.

(534) 7/29/2009, PUBLISHED, In re Rupp v. Ayres, Case No. 07-2002, Judge Thurman.

In this adversary proceeding, the Court considered allegations of fraud asserted by the Chapter 7 Trustee against a number of defendants who participated pre-petition in an alleged short sale of the Debtor’s residence. A realtor who specializes in short sales convinced the Debtor to proceed with a listing by producing a sham buyer for the residence and convincing the Debtor’s lenders to discount their claims. All the while, and without the knowledge of the Debtor or her lenders, the realtor and his business associates were marketing the property to a third party who had money and financing to buy the home for approximately $100,000 more than the short sale offer. After the sale to the third party closed, the Debtor was induced to sign the documents necessary for the alleged short sale. The Court found fraud, fraudulent transfer under both state and federal law, and negligence, and allowed for an additional hearing for determination of punitive damages.

(535) 8/19/2009, PUBLISHED, In re Jubber v. Search Market Direct, Case No. 06-02299, Judge Thurman.

In this adversary proceeding, the chapter 11 Trustee sued multiple defendants seeking to recover and/or quiet title to an Internet domain name, <> (the “Domain Name”). The Court found that the Trustee was entitled to recover the domain name from a third party under 11 U.S.C. § 362 where yet another third party surreptitiously acquired the rights to the Domain Name, and purportedly sold it while the Debtor clandestinely and without Trustee’s or Court’s approval tried to sell the same post petition. The Court concluded that the post-petition transfers of the Domain Name violated the automatic stay under § 362 and, as such, §549 was inapplicable. The Court also determined that the Trustee and a co-plaintiff had standing to prosecute the adversary proceeding under the terms of a confirmed plan, and that the same conferred a benefit on the estate.



(537) 3/10/2010, UNPUBLISHED, In re Roger Bryner, Case No. 08-26804, Judge Thurman.

The Court ruled that in a chapter 13 case, the mother of two minor children has standing to represent their interests with respect to a proof of claim filed by the putative trustee of a trust for their benefit. The Court further ruled that on a motion to reconsider a ruling on a proof of claim, the Court will consider factors outlined in a rule 60(b) type motion, i.e. mistake, inadvertence, surprise or excusable neglect, reiterating the holding of the U.S. Supreme Court in Pioneer Investment Services v. Brunswick 507 U.S. 380 that excusable neglect is a somewhat elastic concept. Finally, the Court ruled that a trustee of a trust may only be represented by an attorney with respect to contested matters before the Court.

(538) 6/29/2010, PUBLISHED, In re Cranmer, Case No. 10-22994, Judge Thurman.

In this chapter 13 case, the Court held that social security income must be included in calculation of projected disposable income under § 1325(b)(1)(B) even though social security income is not included in the calculation for the means test on Official Form 22C and any calculations using that form. In addition, the Court held the Debtor could not exclude part of the social security income by creating a line item expense on Schedule J. Furthermore, the Debtor did not propose the plan in good faith when he excluded part of his social security income from the projected disposable income calculation. Accordingly, the Court denied confirmation of the plan.

(539) 10/12/2010, PUBLISHED, In re Woolsey, Case No. 10-25893, Judge Thurman.

A plan proposed by chapter 13 debtors did not contain language permitting the retention of a wholly unsecured creditor’s lien or requiring the reinstatement of the lien in the event of dismissal or conversion to a chapter 7 case. The Court found that Dewsnup v. Timm, 502 U.S. 410 (1992), prohibited avoiding the lien under 11 U.S.C. § 506(d) as argued by the debtors. Although the only collateral for the loan was the debtors’ principal residence, because the loan was wholly unsecured, modification was not prohibited by 11 U.S.C. § 1322(b)(2). See Griffey v. U.S. Bank (In re Griffey), 335 B.R. 166 (10th Cir. B.A.P. 2005); Pierce v. Beneficial Mortgage Co. (In re Pierce), 282 B.R. 26 (Bankr. D. Utah 2002). Thus the rights of the creditor could be modified under 11 U.S.C. § 1322(b)(2) as long as the debtors’ plan complied with the provisions of 11 U.S.C. § 1325(a)(5). The Court found further support for its position in the statistics showing the number of cases commenced under chapter 13 that are either dismissed or converted that could become a source of easily disguised bad faith filings.

(545) 12/9/2010, UNPUBLISHED, In re Childs, 09-33970, Judge Thurman.

Under the BAPCPA, chapter 11 debtors may be categorized as small business debtors depending on their type of business and amount of debt. Debtors may not voluntarily elect to be a small business, but must disclose their existence as a small business if they qualify. In this case, a designation by Debtors to be considered small business debtors was erroneous because Debtors did not qualify under 11 U.S.C. § 101(51D)(A). Upon a subsequent objection by Debtors to their designation as small business debtors under Federal Rule of Bankruptcy Procedure 1020(b), the Court entered an order finding the original designation incorrect. Such a finding and order made the designation void ab initio. Thus, although Debtors had failed to present and confirm a plan within the deadlines that pertain to a small business debtor, because Debtors were not small business debtors, those deadlines no longer applied and Debtors could continue their efforts toward confirmation.

(546) 10/27/2010, PUBLISHED, In re Skougard, 10-26950, Judge Thurman.

Yearly tax refunds are property of the chapter 13 estate. However, refunds up to $2,000 may be retained by below median chapter 13 debtors in Utah if the debtors are receiving Earned Income Credit or Additional Child Tax Credit. The principles of In re Lawson previously decided by this Court still apply and factor into the determination of the amount of refund allowed to be retained.



(549) 3/8/11, PUBLISHED, In re Dennett, 10-21685, Judge Thurman.

The Court ruled upon the requirements for a Trustee to meet in connection with a contested motion to approve a compromise and settlement under Federal Rule of Bankruptcy Procedure 9019. Here, the Trustee sought to compromise the claims that the Debtor had initiated in state court by settling with the Defendants for $25,000. The Debtor sought an order of abandonment so he could pursue the claims. The Court ruled that the Trustee had met the standard of Kopp v. All Am. Life Ins. Co. (In re Kopexa Realty Venture Co.), 213 B.R. 1020 (10th Cir. B.A.P. 1997), and thus approved the compromise. The Court commented on whether an auction procedure was required as held in the 5th Circuit case of Cadle Co. v. Mims (In re Moore), 608 F.3d 253 (5th Cir. 2010), where the trustee in that case attempted to compromise a claim in litigation with the defendants and a creditor offered more than the proposed settlement. In the appropriate case, an auction procedure under § 363 may be required for settlements but not here.

(551) 6/16/2011, UNPUBLISHED, Strong v. Western United Life Assurance Co., 04-2453, Judge Thurman.

The Court dealt with multiple claims of the Examiner seeking to reclaim property transferred from the Debtor’s estate, including claims under 11 U.S.C. §§ 362, 363, and 549, and Utah law. The Court determined that real property transferred by the Debtor postpetition to an affiliate which then transferred a security interest in that property to the Defendant could not be brought back into the estate because the Defendant successfully invoked the good faith defense under Utah law and under the Bankruptcy Code. In addition, the Examiner could not establish that the Defendant had not given reasonably equivalent value under Utah law or present fair equivalent value under § 549 for the transfer because the Court did not see it proper to collapse two separate loans into one. Finally, insufficient evidence prevented the Court from finding that the transferor (the Debtor’s affiliate) was insolvent at the time of the transfer. On the other causes of action, the Court found that § 549 was the proper mechanism to attempt to avoid the initial transfer from the Debtor, rather than §§ 362 or 363.

(552) 6/24/2011, UNPUBLISHED, In re JL Building, LLC, 08-27671, Judge Thurman.

On the trustee’s motion for a § 363 sale of the debtor’s principal asset, the Court reviewed the factors established in In re Medical Software Solutions, 286 B.R. 431 (Bankr. D. Utah 2002), and approved the sale as being an appropriate use of the trustee’s business judgment and in the best interest of creditors. Further, the value obtained by the sale was consistent with listing agreements and offers the debtor had made while operating as a debtor in possession, so the former-debtor-in-possession management’s objection was overruled. The Court also discussed the ability of former management and/or equity holders to object to a sale. In applying C.W. Mining v. Aquila (In re C.W. Mining), 636 F.3d 1257 (10th Cir. 2011), the Court determined that the trustee was the only party who could cause the debtor to object to the sale and thus former management or equity holders must independently establish their standing to object.

(553) 8/26/2011, UNPUBLISHED, In re Nathan D. Harward and Katie C. Harward, 11-20649, Judge Thurman.

The Court denied a motion for sanctions against Key Bank however, the Court did award sanctions against the Debtors for bringing this frivolous motion. The Debtors had alleged that the bank had violated the stay by sending a notice to them after a lift of stay order was entered. The order gave permission to the bank to take appropriate action to insure its rights to a deficiency claim. The Court noted that every notice that is sent by a creditor after a bankruptcy is filed is not a per se violation of the stay. Some degree of reasonableness is needed. Sanctions against the debtors in the amount of the attorneys fees incurred by the bank for defending against the motion were awarded to the bank.

(555) 10/5/2011, UNPUBLISHED, In re Colon, 10-25669, Judge Thurman.

The Court denied a homeowner’s association’s (“HOA”) motion for relief from the automatic stay in a chapter 13 case, finding that postpetition HOA assessments were dischargeable under § 1328(a) where the debtors had vacated the property more than one year prior to filing bankruptcy and surrendered the property to the secured lienholder who failed to foreclose after relief from stay was granted. Despite the fact that the debtors were listed on the title to the property, the Court found that they had no consequential interest in the property that measured up to rights to exercise ownership and control. The Court held that postpetition HOA assessments meet the definition of “claim” under § 101(5) and “claims” can be provided for in chapter 13 plans. See In re Turner, 101 B.R. 751 (Bankr. D. Utah 1989). Furthermore, § 523(a)(16), which excepts HOA postpetition assessments from discharge, does not apply to a discharge under § 1328(a).

(556) 12/13/11, UNPUBLISHED, In re South Station, LLC, 08-27583, Judge Thurman.

The Court denied the fee application for the attorneys who represented the Debtor while it was in chapter 11 bankruptcy. The Court found that the attorneys had failed to disclose a significant amount of payments and who had paid them until the fee application hearing that occurred many months after the services were provided. Further, the Court found that the attorneys had received money directly from the principals of the owner of the Debtor. The Court concluded that without proper and complete disclosure, the application could not be approved under the mandates of § 328, § 329, and Fed. R. Bankr. P. 2016. As an additional and alternative basis to its denial of the fee application, the Court concluded that the attorneys were not disinterested due to their acceptance of payments directly from the principals of the owner of the Debtor who were also the principals of the largest unsecured creditors of the estate.


(557) 3/13/12, PUBLISHED, Richins v. Bank of America Home Loans, Case No. 10-02754, Judge Thurman.

The Court denied a Debtors’ motion for judgment against a creditor who held a wholly unsecured mortgage against their primary residence in a chapter 7 case under 11 U.S.C. § 506(a) and (d). In its examination of Dewsnup v. Timm, 502 U.S. 410 (1992), which disallowed the strip down of a partially unsecured junior lien on a chapter 7 debtor’s real property, the Court discerned no reason that the analysis underlying the Dewsnup decision should differ depending on whether the chapter 7 debtor is attempting to strip a partially secured or wholly unsecured lien. Morever, the Court found Nobelman v. American Savings Bank, 508 U.S. 324 (1993) inapplicable, as it was a chapter 13 case dealing with § 1322 that is inapplicable to a chapter 7 case. The Court concluded that while strip off of a wholly unsecured junior lien in a chapter 13 case is generally permissible, the differing purposes and intent of chapter 7 make it distinguishable from a chapter 13 case such that strip off of wholly unsecured junior lien is inappropriate in chapter 7 cases.

(558) 6/13/12, UNPUBLISHED, In re Fehrenbacker, 12-20883, Judge Thurman.

In this chapter 7 case, the Creditor filed a motion for relief from stay on the Debtor’s real property. The Debtor alleged that the Creditor did not have standing as a party in interest to request relief from stay because the Creditor did not provide evidence that the original promissory note was in the Creditor’s possession. The Court relied on In re Thomas, No. 10-17039, 2012 WL 1574418, at *1 (10th Cir. B.A.P. May 7, 2012), which held that while the original note is not required to be placed into evidence, “the bankruptcy court must make a cognizable determination of standing in a contested matter . . . which requires some review of the standing documents, whether they be admitted into evidence or proffered to the court without objection.” In re Thomas, 2012 WL 1574418, at *5 n.32. In this case, the Creditor’s attorney represented that the original note was on its way to his office, but could not provide evidence that the Creditor was otherwise in possession of the original note. Moreover, the Court determined that under 11 U.S.C. § 362(c)(1) the motion for relief from the automatic stay was not moot as to property of the estate when the Debtor received a discharge. The Court continued the Creditor’s motion without date and ordered the stay remain in place pending further order of the Court.

(562) 12/4/2012, UNPUBLISHED, In re Kathy Lynn Kofford, 12-29134, Judge Thurman.

The Court concluded that a chapter 13 plan could not be confirmed where the Debtor was proposing to deduct on Line 55 of the Form 22C the actual contractual monthly amounts due under 401(k) repayment loans where the repayments would conclude before the end of the 60-month plan. The Court found that requiring the Debtor to prorate the amount of her retirement loan payments over the 60-month plan term for the purposes of Line 55 of the Form 22C “is the only way to ensure that the amount required to repay the loan (and only the amount required to repay the loan) will be excluded from the disposable income calculation.” In re Novak, 379 B.R. 908, 911 (Bankr. D. Neb. 2007). In addition, the Court found that the Debtor should provide for step-increases in plan payments at the maturity of each of the Debtor’s retirement loans.


(563) 11/29/2012, UNPUBLISHED, In re Randall and Susan Krantz , 10-28557, Judge Thurman.

The chapter 7 debtors brought a motion to avoid a creditor’s judgment lien 19 months after their petition date, after the property to which the judgment lien was fixed had been transferred out of and back into the debtors’ possession, and after the creditor had obtained unopposed relief from stay. The Court found that the debtors had standing to avoid the lien as § 522(f) serves to undo the “fixing” of a lien, and so a court looks to the time period the lien fixed to determine a debtor’s interest in the property. The Court determined that the date of the filing of the § 522(f) motion is irrelevant to the standing analysis, and postpetition transfers have no bearing on the debtor’s standing to avoid a judgment lien. The Court declined the creditor’s request to abstain from ruling on the § 522(f) motion. The Court also declined to deny the Debtors’ motion on the basis of laches. The Court found that the debtors lacked diligence in bringing their § 522(f) motion and that the creditor suffered some prejudice when its motion for relief from stay went unopposed and it pursued state court action. The Court determined that an appropriate equitable remedy would be to require the Debtors to compensate the creditor for reasonable attorneys fees and costs the creditor incurred in pursuing state court relief.

(564) 12/12/12, UNPUBLISHED, In re Tejal Investment, LLC, 12-28606, Judge Thurman.

The Court granted a creditor’s motion for relief from stay on the debtor’s real property pursuant to 11 U.S.C. § 362(d)(2) and (d)(4)(B). The parties stipulated that debtor did not have equity in the property. Under the second prong of § 362(d)(2), the Court found that the debtor failed to meet its burden of proof in establishing that the property was necessary to an effective reorganization because the proposed plan was “essential for an effective reorganization that is in prospect” given the debtor’s financial circumstances. United Sav. Ass’n of Tex. v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365, 375-76 (1988). The Court also granted relief under § 362(d)(4)(B), concluding that the Debtor’s filing of two cases – one on the eve of receivership and one of the eve of foreclosure – was enough to constitute a “scheme” to delay or hinder creditors that involved multiple bankruptcy filings affecting such property, especially where the Debtor did not show a change in financial circumstances between the filings.


(565) 4/5/2013, UNPUBLISHED, In re Wensel, 12-30207, Judge Thurman.

The debtors’ proposed plan failed to provide for all projected disposable income as required by § 1325(b)(1)(B), particularly tax refunds received during the applicable commitment period. Pursuant to Skougard, 438 B.R. 738 (Bankr. D. Utah 2010), tax refunds in excess of $1,000 or up to $2,000, if a debtor receives certain tax credits, are surrendered to the Trustee. The debtors proposed to include an annualized amount on Schedule I for tax refunds and retain all refunds over the course of the plan. However, the Court noted the debtors’ employment had changed prior to filing and the annualization of tax refunds skewed the refund amount. Additionally, because of the difficulty in predicting actual tax liabilities the Court found that the current practice was more accurate and fairer to all parties and did not allow annualization of tax refunds.

(567) 7/9/2013, UNPUBLISHED, In re Kealamakia, 12-31822, Judge Thurman.

As a matter of first impression, the Court considered a creditor's motion to dismiss a chapter 7 case for bad faith under § 707(a). The creditor argued that "cause" for dismissal under § 707(a) encompassed a debtor's bad faith, and that the Court should dismiss this case because the facts showed that the debtor was not acting in good faith. In support of its position, the creditor pointed to the three bankruptcy cases the debtor had been in during a period of under four years, inconsistencies in information placed on the various Statements of Financial Affairs and Schedules and what it considered a dearth of creditors. The Court determined that a chapter 7 case may be dismissed for lack of good faith. However, applying the factors found in In re O'Brien, from the bankruptcy court of the W.D.N.Y., the Court found under a totality of circumstances that the evidence did not support dismissal.

(568) 7/26/2013, PUBLISHED, In re Jensen, 12-33826 , Judge Thurman.

Chapter 13 Debtors commenced voluntary contributions to wife’s retirement plan less than three months prior to the date of petition and deducted such contributions as an expense on their Form 22C. The Chapter 13 Trustee objected to confirmation of Debtors’ Plan, arguing that Debtors were not contributing all of their projected disposable income to the repayment of unsecured creditors as required by § 1325(b). The Trustee also objected on the grounds that beginning voluntary retirement contributions so close to the petition date showed that the Debtors were not proceeding in good faith. The Court concluded that voluntary contributions to qualified retirement plans are not disposable income as long as they are being made as of the date of petition, adopting the reasoning of the Sixth Circuit Bankruptcy Appellate Panel in Burden v. Seafort (In re Seafort), 437 B.R. 204 (B.A.P. 6th Cir. 2010). Turning to the issue of good faith, the Court held that this and other cases involving voluntary contributions to qualified retirement plans must be subjected to a good faith analysis. The Court applied the totality of the circumstances test and found that, on the facts of the case, the Debtors were not proceeding in bad faith.

(570) 12/11/2013, UNPUBLISHED, In re Cannon, 13-24366, Judge Thurman.

The Chapter 13 Trustee and PNC Bank moved to dismiss the Debtor’s Chapter 13 case because his secured debts exceeded the $1,149,525 limit imposed by § 109(e). The Court found, despite the Debtor’s objections, that the motions were timely, PNC had standing to file proofs of claim, and those claims were prima facie valid. Following the § 109(e) analysis prescribed by Kanke v. Adams (In re Adams), 373 B.R. 116 (B.A.P. 10th Cir. 2007), the Court reviewed the Debtor’s schedules and PNC’s proofs of claim and found that the facial amount of his debts surpassed the statutory threshold. The Court held that neither a dispute over liability on the debts nor the Debtor’s assertion of offsets against PNC rendered his debts unliquidated, and the Court ruled that the debt limit of § 109(e) did not violate the Debtor’s due process rights. The Court therefore dismissed the Debtor’s case.

(571) 12/19/2013, UNPUBLISHED, In re Akbarian , 12-21670, Judge Thurman.

The Court denied the Debtor’s motion to dismiss her chapter 7 case under § 707(a). The Court applied the factors enumerated by the Tenth Circuit BAP in Isho v. Loveridge, 2013 WL 1386208 (B.A.P. 10th Cir. Apr. 5, 2013), and concluded that the Debtor had not demonstrated cause to dismiss. In addition, the Court found that the objecting creditors would be prejudiced by dismissal because, after twenty months in bankruptcy court, they would be required to return to state court to litigate their claims, which would deny them the possibility of a return through the Trustee’s pending avoidance actions. The Court also held that the presence of denial of discharge proceedings and the potential that dismissal would reorder the payment priority established by bankruptcy law were factors favoring denial of the motion. While not present here, the Court opined that there could be circumstances that would permit dismissal, such as where all parties consented, or where the debtor demonstrated a precise mechanism to satisfy all creditors.


(572) 02/5/2014, PUBLISHED, In re Akbarian , 12-21670, Judge Thurman.

The Court approved the Debtor’s waiver of her chapter 7 discharge, concluding that it met the statutory requirements of § 727(a)(10) and was voluntary, knowing, informed, and made with awareness of the consequences of foregoing a discharge in bankruptcy. As a consequence, the Court granted the Debtor’s request to dismiss two consolidated denial of discharge adversary proceedings, which were rendered moot by the waiver. In approving the waiver and dismissing the adversary proceedings, the Court overruled the objections of the Chapter 7 Trustee and two creditors, who had filed the adversary proceedings. The Court concluded that the objecting parties had not raised concerns sufficient to deny approval of the Debtor’s waiver.

(575) 05/08/2014, UNPUBLISHED, West v. Christensen (In re Christensen), 13-2248, Judge Thurman.

In this adversary proceeding, the Court addressed the parties’ compliance with new Local Rule 7056-1. It ruled that the Plaintiff’s opposition to the Defendant’s motion for summary judgment was not untimely because the Defendant had not filed a Notice of Summary Judgment Motion and Notice of Hearing. Nor did the Defendant set an opposition deadline as required by Local Rule 7056-1(c). The Court also ruled that the Defendant’s motion for summary judgment was not in compliance with Local Rule 7056-1(b) as it was not contained in one document and was not organized as required by that rule. The Court cautioned the parties to hew to the rule in the future. As to the merits, the Court held that a debtor’s spouse is related to the debtor by affinity and therefore an insider of the debtor under § 101(31) for this avoidance action.

(576) 5/23/2014, PUBLISHED, Hunt v. Steffensen (In re Steffensen), 13-2192, Judge Thurman.

The Defendant filed a motion to dismiss the Plaintiff’s complaint, which the Court treated as a motion for summary judgment pursuant to Fed. R. Civ. P. 12(d), yet permitting the Defendant to argue his motion merged with a motion for summary judgment. After the parties submitted additional briefing, the Court examined the Defendant’s revised motion separately under Fed. R. Civ. P. 12(b)(6) and 56. The Defendant provided sworn statements of fact with his revised motion, which he argued contradicted the factual allegations in the complaint, requiring it to be dismissed. The Court held to the contrary, reasoning that all well-pleaded factual allegations in a complaint are assumed true on a motion to dismiss, which is not a proper means to contest the truthfulness of the allegations.

(578) 8/11/2014, PUBLISHED, Hofmann v. Drabner (In re Baldwin) , 13-2515, Judge Thurman.

Less than a month before the Debtor filed bankruptcy, her mother transferred funds to the trust account of the Debtor’s criminal defense attorney, who in turn transferred the money to the Defendants to settle criminal charges against the Debtor. The Trustee sought to avoid the transfer to the Defendants as a preferential or fraudulent transfer, and both parties moved for summary judgment. Applying the dominion or control and diminution of the estate tests found in Parks v. FIA Card Services, N.A. (In re Marshall), 550 F.3d 1251 (10th Cir. 2008), the Court granted summary judgment to the Defendants, concluding that the transfer was not of “an interest of the debtor in property” under 11 U.S.C. § 547 or § 548.