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Opinions
| Case Title | Date & Status | Case Number(s) | Judge & PDF | Summary | |
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In re VidAngel, Inc. (Internal Ref: Opinion 612) |
Nov-9-2018 PUBLISHED |
17-29073 |
Judge Anderson |
The Court granted creditors' motion for relief from stay, holding that debtor would not be prejudiced in its reorganization efforts if the creditors' continued with the California Copyright Litigation. | |
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Arma Yates, LLC v. Robertson (In re Robertson) (Internal Ref: Opinion 611) |
Oct-10-2018 PUBLISHED |
18-02059 |
Judge Anderson |
The Court granted plaintiffs'/counterclaim defendants' motion to dismiss the debtors' counterclaim, holding that the bankruptcy court lacked constitutional authority to enter final judgment on debtors' claims, and even if it did, debtors' lacked standing and the counterclaims were barred by doctrines of collateral estoppel and res judicata. | |
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Hofmann v. Damarc Quality Inspection Servs., LLC (In re Mt. West Indus., LLC) (Internal Ref: Opinion 610) |
Sep-26-2018 PUBLISHED |
15-02262 |
Judge Anderson |
The Court dismissed trustee's claims for breach of contract and professional negligence arising from faulty inspection of tanker trailers. The Court held that the economic loss rule applied and the exculpatory clauses in the contract were clear and unequivocal and would be enforced. | |
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Bird v. Ryan and Myrna White (In re White) (Internal Ref: Opinion 609) |
Sep-6-2018 PUBLISHED |
16-02090 |
Judge Anderson |
Debtor signed a $1 million note to his family, who provided him with monetary and other support in a lawsuit that ultimately resulted in a $15 milliion judgment. Three years before his bankruptcy filing, the debtor repaid the note from the judgment proceeds. The Court granted summary judgment in favor of defendants based on a finding that the trustee was time barred from avoiding the note under SS 544 and the Utah Uniform Fraudulent Transfer Act. Further, the trustee could not avoid the note under SS 541 due to the debtor's pre-petition waiver of any defenses to the note when he paid it. Finally, the makers of the note gave good consideration by providing funds to support the debtor and by waiting years to receive payment. | |
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In re Reynolds (Internal Ref: Opinion 608) |
May-9-2018 PUBLISHED |
16-22038 |
Judge Anderson |
Discussion of standards to be followed by Trustee's counsel when requesting fees that render the estate insolvent. | |
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Hofmann v. Damarc Quality Inspection Servs., LLC (In re Mt. West Indus., LLC) (Internal Ref: Opinion 607) |
Mar-30-2018 PUBLISHED |
15-02262 |
Judge Anderson |
The Court denied Trustee's motion on choice-of-law issue and held that Utah law governed claims for tort and breach of contract. Extensive discussion on Utah jurisdprudence on choice of law. | |
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Bird v. Wardley (In re White) (Internal Ref: Opinion 606) |
Mar-28-2018 PUBLISHED |
16-02089 |
Judge Anderson |
Summary judgment granted for defendant because debtor received reasonably equivalent value under the Utah Uniform Fraudulent Transfer Act in connection with notes and a guaranty used to start-up a much-desired business for the debtor that paid him a $235,000 salary. | |
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Hunt v. Citibank N.A. (In re Telford) (Internal Ref: Opinion 605) |
Mar-7-2018 PUBLISHED |
17-02120 |
Judge Anderson |
Court denied Trustee's motion for default judgment, finding that the the facts as alleged in the complaint were insufficient for the Court to determine the start date of the statute of limitations regarding a creditor's trust deed. | |
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Bird v. Wardley (In re: White) (Internal Ref: Opinion 604) |
Jan-17-2018 PUBLISHED |
16-02089 |
Judge Anderson |
The Court denied Trustee's motion for summary judgment, holding there were insufficient, undisputed facts to conclude that the debtor was not paying his debts as they came due so as to shift burden of insolvency to the debtor under the Utah Uniform Fraudulent Transfer Act. | |
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Banner Bank v. Robertson (In re Robertson) (Internal Ref: Opinion 599) |
Mar-30-2017 UNPUBLISHED |
14-2189 |
Judge Mosier |
Defendant submitted personal financial statements and documents he represented to be his tax returns to a bank in order to obtain loans. The purported tax returns were not the returns he had filed with the IRS and showed significantly greater income than the ones filed with the IRS. The bank made the loans, the defendant subsequently defaulted, and the bank obtained a deficiency judgment. When the defendant filed for bankruptcy, the bank commenced an adversary proceeding to except the judgment from discharge under § 523(a)(2)(B). The parties filed cross-motions for summary judgment, with the defendant arguing that the bank’s complaint should be dismissed under the unclean hands doctrine. The Court denied the defendant’s motion, concluding that the bank did not have unclean hands based on the findings made in the state court proceedings. The Court granted the bank’s motion and excepted the debt from discharge under § 523(a)(2)(B), finding in particular that the defendant’s purported tax returns were materially false because they were not, in fact, his tax returns. | |
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Miller v. Stone (In re Waterford Funding, LLC) (Internal Ref: Opinion 598) |
Feb-1-2017 UNPUBLISHED |
11-2093 |
Judge Mosier |
Chapter 11 trustee obtained a default judgment on an avoidance action and assigned the judgment to a third party. Subsequent to the assignment, the defendant successfully set aside the default judgment. The assignee then filed an amended complaint and a motion to substitute as the plaintiff, while the defendant filed a motion to dismiss the amended complaint, and the trustee filed a motion to approve settlement of the adversary proceeding with the defendant. The assignee took the position that it had the ability to substitute as plaintiff because the trustee had assigned the underlying claims to it. The Court concluded that the assignee could not substitute as plaintiff and pursue the claims because even if the trustee had intended to assign those claims, he was legally precluded from doing so. While noting certain limited circumstances in which parties can exercise a trustee’s avoidance powers, the Court held that such circumstances were not present in this case and distinguished them from an outright sale of avoidance claims. The Court then approved the trustee’s settlement of the adversary proceeding. | |
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In re Christensen (Internal Ref: Opinion 597) |
Dec-14-2016 PUBLISHED |
15-29773, 15-29783 |
Judge Mosier |
Former chapter 7 trustee and his firm filed applications for compensation in two cases after they were converted to chapter 13. The applications sought fees and costs incurred in furtherance of sales of the debtors’ homes, which were encumbered by substantial federal tax liens. The trustee had reached stipulations with the IRS whereby a $10,000 carve-out would go to each estate from proceeds that otherwise would have gone to the IRS. The Court disallowed the fee applications in their entirety, concluding that the services therein were not necessary to the administration of the case and were not reasonably likely to benefit the estate. The Court held that the sales could not go forward unless the debtors’ homestead exemptions were paid in full. The trustee had objected to the exemptions because there was no equity in the property, but the Court concluded that was not a valid basis to disallow a homestead exemption. The Court also held that the asserted basis for the sales—that the carve-outs would be distributed to unsecured creditors—could not occur because the debtors were entitled to exempt the carve-outs as proceeds from the sales of their homes. Because the sales would not have provided a benefit to unsecured creditors, the Court held that the services performed in furtherance of those sales were not compensable under § 330(a). | |
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Ray Klein, Inc. v. Daniel Jeff Webb (In re Call and Webb) (Internal Ref: Opinion 603) |
Nov-14-2016 PUBLISHED |
15-02119 |
Judge Anderson |
Debtor made false representations to lender regarding his financial condition in connection with the purchase of a commercial boat (debtor stated he had the backing of Kraft Foods and the LDS church). The Court excepted the debt from discharge for false pretenses, false representation, or actual fraud, but denied cause of action for willful and malicious injury. | |
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In re Castle Service, LLC (Internal Ref: Opinion 602) |
Nov-9-2016 PUBLISHED |
16-26302 |
Judge Anderson |
The Court denied creditor's motion for relief from stay holding that the real property at issue was an asset of the estate, and the creditor did not establish sufficient cause to grant relief from the automatic stay. | |
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In re Petersen (Internal Ref: Opinion 591) |
Nov-8-2016 PUBLISHED |
16-20042 |
Judge Thurman |
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. | |
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In re Bench (Internal Ref: Opinion 601) |
Aug-26-2016 PUBLISHED |
12-26827 |
Judge Anderson |
Debtor failed to comply with the trustee's requests that ultimately resulted in the entry of a default judgment denying his discharge. Some 2.5 years later, the Debtor moved to set aside the judgment because he was now willing to cooperate with the trustee and to pay in $2,793 for creditors. Based on the circumstances and the passage of time, the Court denied the Debtor's request to set aside the default judgment under Rule 60. | |
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Lee v. McCardle (In re Peeples) (Internal Ref: Opinion 596) |
Jul-14-2016 PUBLISHED |
14-2159 |
Judge Mosier |
Creditor filed a pre-petition state court lawsuit against the trustee of a trust of which the debtor at one time had been a beneficiary. The creditor lost the suit and, after the debtor filed bankruptcy, the trustee obtained a judgment against the creditor. The creditor then filed a declaratory judgment action in bankruptcy court against the trustee, arguing that the automatic stay of § 362(a) had stayed the state court lawsuit because the creditor sued the trustee with the subjective intent to recover against the debtor. On cross-motions for summary judgment, the Court denied the creditor’s motion because the state court lawsuit had not been an action to recover a claim against the debtor. The Court held that the automatic stay does not stay an action whose basis is independent of a claim against the debtor. The Court also held that whether the automatic stay applies to an action is not determined by a party’s subjective intent in undertaking that action. Accordingly, the Court denied the creditor’s request for stay violation damages under § 362(k). | |
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In re Wareham (Internal Ref: Opinion 590) |
Jul-6-2016 PUBLISHED |
15-30297 |
Judge Thurman |
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. | |
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Miller v. Stone (In re Waterford Funding, LLC) (Internal Ref: Opinion 595) |
Jun-30-2016 UNPUBLISHED |
11-2093 |
Judge Mosier |
Defendant moved to set aside a default judgment because he was not properly served with the summons and complaint. The plaintiff had mailed the summons and complaint to the address the defendant had vacated about eight months before. Even though the U.S. Postal Service was forwarding the defendant’s mail to his new address and his wife signed a certified mail receipt for the summons and complaint, the Court held that service did not comply with Rule 7004(b). That rule requires that notice be sent to “the individual’s dwelling house or usual place of abode or to the place where the individual regularly conducts a business or profession,” which was not accomplished in this case. The Court also held that Rule 7004(b) requires that a plaintiff make a reasonable inquiry to determine the defendant’s dwelling house or usual place of abode, which the plaintiff did not do. Because proper service of process is necessary to obtain personal jurisdiction over a defendant, and a default judgment obtained without personal jurisdiction is void, the Court granted the defendant’s motion and set aside the default judgment under Rule 60(b)(4). | |
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In re Robertson (Internal Ref: Opinion 594) |
Mar-24-2016 UNPUBLISHED |
14-20984 |
Judge Mosier |
Chapter 7 debtor sought a determination that a claim against a creditor had been abandoned to him. The debtor had scheduled the claim, which arose as a result of pre-petition state court litigation between the debtor and the creditor. The chapter 7 trustee communicated with debtor’s and creditor’s counsel regarding the claim, but the creditor declined to purchase or settle the claim. Thereafter, the trustee filed a report of no distribution, the case was closed, and the parties resumed the state court litigation. The state court of appeals then stayed the litigation pending a determination that the debtor’s claim was abandoned to him. The Court determined that because the claim was scheduled and not administered at the time the case was closed, it was abandoned to the debtor under § 554(c). The Court further held that a trustee is not required to give notice of a final report in cases where there is no distribution in order for abandonment to be effected under § 544(c). | |
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Bird v. SKR Credit, Ltd. (In re Digital Bridge Holdings, Inc.) (Internal Ref: Opinion 593) |
Sep-30-2015 UNPUBLISHED |
12-02373 |
Judge Mosier |
Corporate debtor borrowed money from three lenders pre-petition. The promissory notes provided that the debtor would file UCC financing statements to perfect the lenders’ security interests. The debtor filed the statements incorrectly, leaving the lenders’ interests unperfected. Subsequently the debtor borrowed money from a fourth lender, which properly perfected its security interest. After an involuntary chapter 11 petition was filed against the debtor, the case was later converted to chapter 7, where the trustee sought equitable subordination of the fourth lender’s lien under § 510(c). The trustee argued that equitable subordination was proper because the fourth lender had injured the three other lenders. The Court held that § 510(c) only subordinates claims, not liens. In addition, the Court held that the trustee lacked standing to assert equitable subordination claims on behalf of individual creditors. Ordinarily, a trustee can bring a general equitable subordination claim on behalf of the estate as a whole. Lastly, the Court held that § 510(c) was inapplicable by its own terms because the trustee was not proposing to make a distribution to general unsecured creditors. | |
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Hunt v. Steffensen (In re Steffensen) (Internal Ref: Opinion 589) |
Jul-23-2015 PUBLISHED |
13-2192 |
Judge Thurman |
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. | |
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In re Naartjie Custom Kids, Inc. (Internal Ref: Opinion 588) |
Jul-13-2015 PUBLISHED |
14-29666 |
Judge Thurman |
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. | |
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Withers v Trust Funds (In re Withers) (Internal Ref: Opinion 586) |
Mar-31-2015 UNPUBLISHED |
13-2096 |
Judge Mosier |
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. | |
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Jubber v. Defendants re C.W. Mining Company Coal Proceeds (In re C.W. Mining Company) (Internal Ref: Opinion 587) |
Mar-31-2015 PUBLISHED |
11-8002 |
Judge Mosier |
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. | |
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Jubber v. Defendants re C.W. Mining Co. Coal Proceeds (In re C.W. Mining Co.) (Internal Ref: Opinion 592) |
Mar-31-2015 PUBLISHED |
11-8002 |
Judge Mosier |
Pre-petition, the debtor entered into two contracts to supply coal to two coal purchasers. Subsequently, the debtor assigned the right to receive payment under these contracts to a related party, but it did not assign the underlying contracts themselves. Post-petition, the trustee sought a determination that the accounts created by these assignments were property of the debtor or the estate, that the trustee could avoid any security interest in the accounts, and that the trustee could recover pre-petition payments made on the accounts under § 544(a)(1). On summary judgment, the Court held that the assignment of the accounts was subject to the perfection rules of Article 9 of the UCC, and that because the related party’s security interest in the accounts was unperfected, the trustee could avoid that interest. On the issue of ownership, the trustee conceded the debtor had sold the accounts to the related party. Accordingly, under § 318 of Article 9, the Court concluded that the debtor held no legal or equitable interest in the accounts, which were therefore not property of the debtor or the estate. Lastly, the Court held that § 544(a)(1) did not give the trustee the power to avoid pre-petition payments that had been made on the accounts to the related party. | |
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Zions v Taylor (In re Taylor) (Internal Ref: Opinion 585) |
Mar-26-2015 UNPUBLISHED |
13-2186 |
Judge Mosier |
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. | |
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In re Monson (Internal Ref: Opinion 583) |
Nov-24-2014 PUBLISHED |
12-31811, 12-02354 |
Judge Thurman |
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. | |
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In re Zisumbo, In re Brumfield (Internal Ref: Opinion 584) |
Oct-6-2014 PUBLISHED |
10-35907, 11-25031 |
Judge Thurman |
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). | |
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Gillman v. Geis (In re Twin Peaks Financial Services) (Internal Ref: Opinion 579) |
Aug-13-2014 UNPUBLISHED |
09-02574 |
Judge Mosier |
The Trustee brought an avoidance action against the defendants under § 548 to recover payments they received in excess of their investment in the debtor's ponzi scheme. The defendants argued that they were entitled to offset their potential claim for securities fraud under Utah state law or retain the payments under § 548(c). Held: Defendant's may not offset a pre-petition claim against the Trustee's avoidance claim. The defendant's potential statutory claim does not constitute value for purposes of § 548(c) and the payments the defendants received were not in satisfaction of the potential statutory claim. |
