United States Bankruptcy Court
Opinions entered before 1997 can be accessed by clicking this link. Associated documents are kept at the court house and can be viewed upon request.
The District of Utah offers a database of opinions for the years 1997 to present, listed by year and judge. For a more detailed search, enter the keyword or case number in the search box above.
Chapter 13 debtors filed a motion to avoid a judicial lien impairing their homestead exemption per 11 U.S.C. § 522(f). The Debtors sought to avoid the lien immediately and argued that the Code allowed for the same. The Chapter 13 Trustee objected to the motion and argued that the lien should only be avoided after debtors' completion of their chapter 13 plan and a discharge relying on §§ 105(a) and 349(b)(1)(B). The Trustee urged the Court to follow its line of reasoning in In re Woolsey, 438 B.R. 432 (Bankr. D. Utah 2010), aff’d, 696 F.3d 1266 (10th Cir. 2012), which analyzed lien avoidance under § 506(d), because of the potential harm to creditors if the property is sold without the lien attached and the case is thereafter dismissed without a discharge. The Court granted the motion and created a two-step process for avoiding a judicial lien. In ruling, the Court explained that the lien may be avoided immediately for plan consummation purposes and once the debtors complete their plan, the lien could be completely avoided by the recordation of an order and discharge with the county recorder's office.
In this business chapter 13 case, the trustee and creditor objected to confirmation of debtors’ plan and the creditor also moved to dismiss or convert the case to chapter 7. The creditor argued that the debtors lacked good faith in filing their petition and plan because the debtors took inappropriate deductions in calculating their net disposable income, which left Debtors' business budget inaccurate. The Court looked at the Flygare and Gier cases from the 10th Circuit as compared to the Debtors' case and concluded the petition and plan were filed in good faith. Debtors’ miscalculation of net disposable income was not indicia of lack of good faith. However, since the debtors’ calculation of their net disposable income was incorrect, confirmation of the plan was denied with leave to amend.
Chapter 7 trustee brought an adversary proceeding to deny debtor a discharge and moved for partial summary judgment under 11 U.S.C. § 727(a)(3) and 727(a)(5). The Court denied the Debtor his discharge and found: (1) the term “keep,” as used in discharge exception for debtors who fail to “keep or preserve” adequate financial records, is not synonymous with preserve; (2) debtor-attorney was a sophisticated individual with experience in bankruptcy law and so had no excuse for failing to create and preserve records sufficient to allow trustee and creditors to ascertain his business transactions; and (3) debtor’s explanation that he could not keep records because he could not afford a bookkeeper, did not have time to keep records himself, and his computer hard drive crashed was inadequate.
The Debtor, joined by the Official Committee of Unsecured Creditors, moved to dismiss its Chapter 11 case and requested that the Court’s orders remain in full force and effect. The United States Trustee objected, arguing that the Court lacked statutory authority to grant a structured dismissal. The Court found that where cause is shown under § 305(a) or §1112(b), the Bankruptcy Code authorizes structured dismissal pursuant to the plain language of § 349(b). Finding that the Debtor had met its burden under § 305(a), the Court accordingly granted the structured dismissal.
The Court consolidated various adversary proceedings to resolve the question of who was entitled to the coal mined by the Debtor and the accounts created by the Debtor’s contracts with coal purchasers, which were subsequently assigned or sold to the Debtor’s agent. On summary judgment, the Court held that the Uniform Commercial Code governs the assignment or sale of the accounts. But the Court also held that the accounts were, for purposes of the trustee’s motion, not property of the Debtor or the bankruptcy estate. The trustee’s motion assumed that the Debtor sold the accounts to its agent, and a seller of accounts does not retain a legal or equitable interest in them pursuant to Utah Code Ann. § 70A-9a-318(1). The Court further held that, because the Debtor’s agent had not perfected its security interests in the accounts, the trustee could avoid those interests using his power as a hypothetical lien creditor under § 544(a)(1). But because § 544(a)(1) does not provide a basis to avoid a prepetition transfer of property, the trustee did not have the ability to recover the payments made to the Debtor’s agent before the petition date.
Debtors brought adversary proceeding seeking declaratory judgment that Creditor had notice or actual knowledge of Debtors’ bankruptcy under § 523(a)(3)(A). Although Creditor did not receive formal notice, Debtors argued that Creditor was given notice of the bankruptcy in two ways: 1) by a telephone call to the Creditor’s accountant who in turn advised Creditor’s attorney, and 2) by a telephone call between the Debtor and the Creditor’s attorney. Because the bankruptcy information provided by the Debtors during the telephone calls was within the scope of the agency of the Creditor’s attorney, Creditor was put on notice or inquiry notice of the Debtors’ bankruptcy. The Creditor was found to have sufficient notice or actual knowledge of the case in time to file a timely proof of claim.
Debtor financed the purchase of six luxury automobiles at the urging of an auto rental company who told the Debtor that the various banks used to finance the automobiles were aware of Debtor’s intent to lease the vehicles to the rental company notwithstanding Debtor’s representations contained in the loan documents that the vehicles were for the Debtor’s personal use only. Debtor defended the § 523(a)(2)(A) complaint arguing that because he believed the auto rental company’s representations, he therefore lacked the necessary intent to defraud. The Court held that the auto rental company’s fraud upon the Debtor does not absolve the Debtor of his fraud upon the bank. The Debtor’s failure to verify that the Bank was aware of the Debtor’s true intention to lease the vehicle amounted to willful blindness. The Court did not countenance a “pure heart, empty head” defense, and the Debtor’s intent to deceive can be inferred from the totality of the circumstances.
Chapter 13 Debtors received inheritances 180 days after the date of petition. Addressing the interaction between 11 U.S.C. §§ 1306(a) and 1327(b), the Court held that upon confirmation of a Chapter 13 plan, the property of the Chapter 13 estate vests in the debtor pursuant to 11 U.S.C. § 1327(b) and (c), but the Chapter 13 estate is not extinguished and is augmented by any property acquired after confirmation until closure, dismissal, or conversion of the case pursuant to 11 U.S.C. § 1306(a). Zisumbo’s plan was modified and she was ordered to turn over the inheritance to the Chapter 13 Trustee. However, because the motion to modify the Brumfield plan was filed after the completion of plan payments, the motion was denied pursuant to 11 U.S.C. § 1329(a).
The U.S. Trustee filed motions in two cases to assess fines against a bankruptcy petition preparer as well as require him to disgorge his fees and pay damages to the Debtors. The U.S. Trustee alleged that the bankruptcy petition preparer had violated 11 U.S.C. § 110 by failing to disclose his identity on certain documents and by providing legal advice to the Debtors. After an evidentiary hearing, the Court concluded that the bankruptcy petition preparer had violated § 110 24 separate times, warranting $8,080 in fines, disgorgement of fees, payment of $6,681 in damages to the Debtors in each case, and submission of biannual disclosures to the U.S. Trustee.
Debtors filed a request for “special notice,” through which all pleadings would be served personally on the Debtors in addition to their counsel. The Chapter 13 Trustee objected, which did not serve as a bar to confirmation. The Court held that Debtors did not have standing because there was no injury in fact nor certainly impending injury. Alternatively, the Court held that denying the special notice request would not violate the Debtors’ rights to due process or equal protection.
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