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Opinions
| Case Title | Date & Status | Case Number(s) | Judge & PDF | Summary | |
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Billings v. Key Bank of Utah (In re Granada, Inc.) (Internal Ref: Opinion 316) |
Nov-19-1990 APPEAL 156 B.R. 303 (D.Utah) See also 305.pdf |
89PC-0420 |
U.S. District Court, Utah |
Chapter 11 debtor was a partner in three partnerships, each of which obtained a loan from bank that was guaranteed by debtor's president. As the partnerships' manager, debtor would "upstream" excess partnership funds to itself, and then "downstream" funds to the partnerships for expenses, as needed. Such transfers were documented by bookkeeping entries that indicated increases or decreases in the debt balance between debtor and the partnerships. The chapter 11 trustee filed an adversary action against bank, seeking avoidance and recovery of transfers made by debtor to the partnerships, which the partnerships then transferred to bank in payment of their loans. Trustee claimed that debtor had essentially paid bank directly, arguing that the partnerships were mere "conduits" between debtor and the bank. The bankruptcy court agreed, and bank appealed. The district court accepted the bankruptcy court's conclusion that all of the elements of a preference under 11 U.S.C. § 547(b) had been satisfied, noting that debtor's transfers benefitted a creditor whether they were to the partnerships or to the bank. The district court then turned to the issue of liability under 11 U.S.C. § 550, which only allows recovery of preferential transfers from the initial transferee. The bankruptcy court had concluded that, since the partnerships were mere conduits for debtor's transfers, bank was the initial transferee. Although several tests for determining whether an entity is a "conduit" had been used by other courts, the bankruptcy court had held that the partnerships' failure to exercise "dominion and control" over the transferred funds rendered all other tests unnecessary. The district court disagreed, both because it found the bankruptcy court's position to be unnecessarily restrictive, and because the partnerships retained the right to use money received from debtor for their own purposes and, as such, were not mere conduits for debtor. | |
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Household Bank, N.A. v. Touchard (In re Touchard), 121 B.R. 397 (Bankr.D.Utah) (Internal Ref: Opinion 315) |
Nov-2-1990 PUBLISHED |
89PB-0771 |
Judge Boulden |
Creditor sought non-dischargeability of credit card debt pursuant to 11 U.S.C. § 523(a)(2)(A). Debtor had been issued a Visa credit card in 1986, which she used regularly. Beginning in early 1989, debtor's credit limit for the card was raised to $2,500, which limit debtor did not exceed prior to July 1989. The balance on debtor's July 9, 1989 Visa bill was approximately $2,200, but that balance had ballooned to more than $11,000 by September 19, 1989, when debtor filed her chapter 7 petition. Purchases made by debtor on July 1, 1989 put her balance over the credit limit, and her purchases thereafter totaled approximately $8,650. When debtor made those purchases, she was insolvent. The court adopted the "implied representation" doctrine, to the effect that credit card purchases include an implied representation that the cardholder has the ability and intention to pay the charge, to conclude that creditor had established that debtor made a materially false representation, upon which creditor relied to its detriment, as required for non-dischargeability by § 523(a)(2)(A). In considering whether creditor had established debtor's intent to deceive, the court sought guidance from factors other courts within the Tenth Circuit had used, concluding that nearly all of those factors supported a finding that debtor intended to deceive creditor. The court additionally found that debtor's demeanor and credibility also supported a finding of intent to deceive. The court concluded that the charges in excess of debtor's credit limit were non-dischargeable under § 523(a)(2)(A), and that creditor was entitled to a non-dischargeable judgment for that amount, plus interest and attorney's fees. | |
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Billings v. Richards Woodbury Mortg. Corp. (In re Granada, Inc.) (Internal Ref: Opinion 314) |
Oct-29-1990 UNPUBLISHED See also 345.pdf |
89PC-0401 |
Judge Clark |
Chapter 11 trustee filed an adversary proceeding, seeking to avoid certain prepetition payments by debtor to a secured creditor as preferences under 11 U.S.C. § 547(b). The court considered whether the transfers in question satisfied the requirements of § 547(b)(5), which requires a determination of whether the creditor obtained more from the payments it received than it would have received from a liquidation. The court considered it "generally settled" that payments to a fully secured creditor will not meet the § 547(b)(5) standard, since each payment to a fully secured creditor proportionately reduces the secured debt, and thereby does not diminish the estate. Since the creditor that had received the targeted payments had been oversecured, the court concluded that the payments had not been preferential under § 547(b). Trustee's argument that security for the debt should be valued based solely on the debtor's own interest in it, which would render creditor under-secured, was rejected by the court, noting that creditor would have the ability to foreclose on the entire property in a liquidation, not just on the part of it that was owned by debtor. | |
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Research-Planning, Inc. v. Segal (In re First Capital Mortg. Loan Corp.) (Internal Ref: Opinion 313a) |
Oct-12-1990 APPEAL 917 F.2d 424 (10th Cir.) See 189.pdf & 226.pdf |
84PC-0129 |
Tenth Circuit Court of Appeals (en banc) |
Debtor, who had agreed to act as escrow agent on a loan from plaintiff to a third party, improperly used escrowed funds to pay its own debts to a good faith creditor. After debtor was involuntarily placed in bankruptcy, the chapter 7 trustee recovered the funds from debtor's creditor on the ground that the payments had been avoidable preferences. Plaintiff filed an adversary proceeding, contending that the recovered amount was subject to a trust in its favor, and was thus not available for distribution to other creditors. Both the bankruptcy and district courts had ruled in favor of trustee, finding that the recovered funds were part of the bankruptcy estate. A divided Circuit panel reversed, leading to the Circuit's en banc hearing. The en banc court agreed with the lower courts that, once the recovered funds were transferred to a good faith creditor, plaintiff's interest in them was extinguished. Additionally, pursuant to 11 U.S.C. § 550(a), a trustee's power to recover preferences must be exercised "for the benefit of the estate." Therefore, the Circuit held that, while plaintiff had an unsecured claim against the estate, the recovered funds were estate property available for the benefit of all creditors. | |
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In re Group Commc'ns, Inc. (Internal Ref: Opinion 313) |
Oct-2-1990 UNPUBLISHED |
88B-3045 |
Judge Boulden |
Chapter 11 debtor objected to two proofs of claim filed by creditor, asserting that interest on under-secured notes ceased to accrue upon co-makers' filing of a bankruptcy petition. The court held that interest continued to accrue on debtor's obligation until the filing of debtor's own petition. The court also held that an order in the co-makers' bankruptcy case, which incorporated the terms of a stipulation between creditor and the co-makers regarding the fair market value of the property, the amounts secured, and the amounts owed by co-makers, had no res judicata effect in debtor's case. Debtor's objection to the claims was denied. | |
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Walker, McElliott, Wilkinson Assocs. v. Smith, Halander, Smith Assocs. (In reWalker, McElliott, Wilkinson Assocs.) (Internal Ref: Opinion 312) |
Sep-24-1990 UNPUBLISHED |
88PB-0669 |
Judge Boulden |
Debtor had filed an action against defendant to avoid a property transfer, alleging defendant's conduct violated the automatic stay in debtor's Missouri bankruptcy, and that it constituted a fraudulent conveyance. The court found that the Missouri bankruptcy filing was ineffective, and ruled in favor of defendant. Defendant then sought sanctions from debtor under both Fed. R. Bankr. P. 9011 and 28 U.S.C. § 1927. The court found that, even though the Missouri filing was later determined to be ineffective, debtor's counsel had made reasonable inquiry into the facts and law in relation to debtor's stay violation claim. Defendant's Rule 9011 and § 1927 fee claims were therefore denied as to the stay violation claim. However, the court found that debtor's counsel had failed to sufficiently ascertain the legal requirements of the fraudulent conveyance claim under the Utah Fraudulent Conveyance Act, and had thereby violated both Rule 9011 and § 1927 as to that claim. The court imposed sanctions under Rule 9011, which are mandatory, and denied sanctions under § 1927, which are discretionary, concluding that the Rule 9011 sanction was sufficient for both statutes. | |
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Am. First Credit Union v. Shaw (In re Shaw) (Internal Ref: Opinion 311) |
Sep-21-1990 UNPUBLISHED |
89PB-0668 |
Judge Boulden |
Creditor had brought a non-dischargeability action that was based on an incomplete investigation of the facts, and the court had declined to award attorney's fees to debtor under 11 U.S.C. § 523(d). Debtor then requested fees under Utah Code Ann. § 78-27-56.5, which allows an award of fees to the prevailing party if the parties' contract allows at least one party to recover fees. The court found that creditor had a contractual right to attorney's fees in the contract, but that right was limited to fees incurred in taking possession of collateral. The court concluded that fees incurred by creditor in its non-dischargeability action could not be considered a cost of obtaining collateral, as the debt at issue was unsecured. Therefore, creditor did not have a contractual right to attorney fees in the adversary proceeding and, as debtor's right to fees was predicated on creditor's right to fees under the state statute, debtor could not rely on that statute to recover attorney's fees. | |
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In re Lopez (Internal Ref: Opinion 310) |
Sep-17-1990 UNPUBLISHED |
90B-21420 |
Judge Boulden |
Creditor filed a motion for sanctions against both debtor and debtor's counsel under Bankruptcy Rule 9011, based on their filing of a chapter 13 petition while a prior chapter 13 case dealing with substantially the same debt was still pending. Because of the second filing, creditor had been forced to seek relief from stay in that proceeding, despite having already obtained that relief in the prior one. The court found that debtor had merely relied on counsel, and had not refiled to either cause delay or harass his creditors. However, the court found that debtor's counsel knowingly and improperly filed a new petition while the previous case was still pending, and that his doing so had not been objectively reasonable. Sanctions were awarded against debtor's counsel. | |
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Haymond v. Grant (In re Grant) (Internal Ref: Opinion 309) |
Sep-14-1990 UNPUBLISHED See 340.pdf |
88PB-0972 |
Judge Boulden |
Plaintiffs sought a non-dischargeable judgment against debtor under 11 U.S.C. § 523(a)(2)(B), alleging that debtor had provided a materially false financial statement in support of his personal guarantee to repay the price of stock purchased from plaintiffs by a company debtor controlled. After hearing and analyzing extensive evidence, the court found that plaintiffs had failed to prove by clear and convincing evidence that debtor intended to deceive them, as required for non-dischargeability by § 523(a)(2)(B). The debt to plaintiffs was therefore discharged. This decision was reversed and remanded by the district court in 340.pdf for the bankruptcy court's reconsideration of the outcome, using a preponderance of the evidence standard. | |
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In re TS Indus., Inc., 117 B.R. 682 (Bankr.D.Utah) (Internal Ref: Opinion 308) |
Aug-14-1990 PUBLISHED |
89C-4919 through -4921 |
Judge Clark |
Chapter 11 debtor-in-possession moved to reject a prepetition executory contract, which the court described as "clearly a pre-bankruptcy workout." The court considered whether the contract, which involved the extension of financial accommodations to debtor, could be assumed under 11 U.S.C. § 365(a), notwithstanding the prohibitions of § 365(c)(2), since the contract had been entered in anticipation of debtor's bankruptcy. Concluding that § 365(c)(2) was intended to protect creditors that were unaware of an impending bankruptcy, the court determined that assumption of the contract at issue was not precluded by that provision. Therefore, the court held that the contract could be assumed or rejected by the debtor-in-possession, subject to claims by interested parties that debtor's choice was an abuse of business judgment. The court concluded that such issues could be addressed at the confirmation hearing. | |
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Elggren v. Enoch Smith Sons Co. (In re Park Meadows Inv. Co.) (Internal Ref: Opinion 307) |
Jun-29-1990 UNPUBLISHED |
89PC-0510 |
Judge Clark |
Chapter 7 trustee sought to avoid a transfer debtor had made to a related entity, alleging it was a preference under 11 U.S.C. § 547(b), and defendant moved for partial summary judgment. The transaction at issue was part of a three-way debt forgiveness between debtor, defendant, and another related entity. Defendant argued that the transaction constituted a setoff rather than a transfer, and thus § 547(b) was inapplicable. The court agreed that § 547(b) does not apply to setoffs, and considered whether the "triangular setoff" at issue fell within the protection of 11 U.S.C. § 553(a). The court held that creditors only have the right to setoff "mutual debt," which generally requires that debtor and creditor owe debts to each other, and as such, triangular offsets are not typically considered "mutual." The court recognized narrow exceptions to that outcome, however, where the debtor "formally agreed" that two related entities could aggregate debts owed to and from debtor as a setoff, or where the other entities were alter egos of one another. Concluding that these scenarios were fact-dependent, the court denied defendant's summary judgment motion. | |
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In re Martin, 115 B.R. 311 (Bankr.D.Utah)In re VerwerIn re Fullmer (Internal Ref: Opinion 306) |
Jun-19-1990 PUBLISHED See 330.pdf |
89B-5149 89B-5263 89B-6063 |
Judge Boulden |
Trustees in three chapter 7 cases objected to debtors' exemption claims with respect to funds held in ERISA-qualified retirement plans. The court held that an ERISA retirement fund was an asset of debtors' estate that was not exempt within the meaning of 11 U.S.C. § 522(b)(2)(A), because the Utah statutes seeking to exempt such funds were preempted by ERISA pursuant to 29 U.S.C. § 1144(a). The district court affirmed the bankruptcy court's decision in 330.pdf. | |
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Billings v. Key Bank of Utah (In re Granada, Inc.), 115 B.R. 702 (Bankr.D.Utah) (Internal Ref: Opinion 305) |
May-25-1990 PUBLISHED See 316.pdf |
89PC-0420 |
Judge Clark |
Relying on 11 U.S.C. § 547(b), chapter 11 trustee sought to avoid payments made by debtor to three partnerships, in which debtor was a partner, that were then used by the partnerships to make loan payments to defendant bank. The bankruptcy court held that trustee could recover the payments from bank, as the "initial transferee" under 11 U.S.C. § 550, finding that the partnerships were mere "conduits" between debtor and bank. This decision was reversed by the district court in 316.pdf. | |
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Stoddard v. Stoddard (In re Stoddard) (Internal Ref: Opinion 304) |
May-10-1990 UNPUBLISHED |
89PB-0694 |
Judge Boulden |
Prior to the filing of debtor's chapter 7 petition, debtor's wife had placed money into an account she owned jointly with him, with the understanding that debtor would manage those funds on her behalf. Instead, debtor used wife's funds for his own purposes. Wife claimed entitlement to a non-dischargeable judgment against debtor pursuant to 11 U.S.C. § 523(a)(4). The court found that, as wife had not proven the existence of an express, technical, or statutory trust, she had not proven a claim for breach of fiduciary duty under § 523(a)(4). However, the court found that debtor's conduct was an embezzlement within the scope of § 523(a)(4), and awarded wife a non-dischargeable judgment for the funds debtor had appropriated to his own use. | |
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In re Isakson (Internal Ref: Opinion 303) |
May-2-1990 UNPUBLISHED |
90B-0604 |
Judge Boulden |
Creditor repossessed business equipment from chapter 13 debtor without seeking relief from stay, and asserted as a defense to a stay violation claim that it believed its contract to be with a corporate entity rather than with debtor individually. The court found that debtor had informed creditor that her business had not filed its articles of incorporation, and had signed the agreement without listing any corporate capacity. The court further found that creditor had failed to either confirm the existence of a corporate entity or take any other action in response to debtor's disclosure that she was under the court's protection. The court concluded that creditor had willfully violated the stay, and awarded debtor actual damages, attorney's fees, and punitive damages pursuant to 11 U.S.C. §105(a) and 362(h). | |
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In re Mann (Internal Ref: Opinion 302) |
Apr-20-1990 UNPUBLISHED |
89C-3445 |
Judge Clark |
Creditor had obtained relief from stay to foreclose on chapter 13 debtors' residence, due to their failure to make postpetition mortgage payments. Before the foreclosure sale had taken place, the court denied confirmation of debtors' proposed plan, and specifically kept the case open until the foreclosure sale was completed. Shortly before the foreclosure sale, and while their chapter 13 was still pending, debtors filed a second chapter 13, thereby forcing cancellation of the property sale. Creditor sought sanctions under Fed. R. Bankr. P. 9011. Finding that the second petition had been filed as a bad faith attempt to forestall the foreclosure sale, especially since 11 U.S.C. § 109(g)(2) would have barred debtors from refiling their case for 180 days if they had voluntarily dismissed it, the court awarded sanctions against debtors' attorney, but not from debtors themselves. | |
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Am. First Credit Union v. Shaw (In re Shaw), 114 B.R. 291 (Bankr.D.Utah) (Internal Ref: Opinion 300) |
Apr-13-1990 PUBLISHED |
89PB-0668 |
Judge Boulden |
Creditor filed a non-dischargeability complaint against chapter 7 debtor under 11 U.S.C. § 523(a)(2)(B), then later stipulated to dismissal of the complaint with prejudice. Debtor requested attorney's fees from plaintiff under § 523(d). Noting that the purpose of the § 523(d) fee-shifting provision was to protect an honest debtor from claims that have no basis in fact or law, the court found that plaintiff could have discovered facts, with little cost or inconvenience, that would have led it to conclude that its legal claim was not supported. Therefore, the claim against debtor was not substantially justified. However, because creditor had relied on debtor's schedules and her sworn testimony at the creditors' meeting, the court concluded that special circumstances made an award of fees unjust, and debtor's request was denied. | |
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Commercial Factors of Salt Lake City, Inc. v. Jensen (In re Jensen), 113 B.R. 51 (Bankr.D.Utah) (Internal Ref: Opinion 301) |
Apr-13-1990 PUBLISHED |
88PB-0679 |
Judge Boulden |
Creditor successfully asserted that its debt was non-dischargeable under 11 U.S.C. § 523(a)(2)(A), after having incurred both prepetition and postpetition attorney's fees in its collection efforts. The court determined that § 523(d) only authorizes debtors to recover their attorney's fees, and even then, only if the claims against the debtor were not substantially justified. However, the court held that, where the contract sought to be enforced was freely entered into between parties of relatively equal bargaining power, and provides that the winning party is entitled to recover its fees, the attorney's fees and costs incurred in enforcing the contract become part of the debt, as defined in 11 U.S.C. § 101(11). Therefore, a creditor who successfully obtains a non-dischargeable judgment against a debtor is entitled to recover the fees and costs it incurred, both before and after debtor's bankruptcy filing, as part of the non-dischargeable judgment on the contract. | |
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Dahlstrom v. Placer U.S., Inc. (In re Dahlstrom) (Internal Ref: Opinion 298) |
Apr-3-1990 UNPUBLISHED |
89PC-0653 |
Judge Clark |
The court granted creditor's motion to dismiss the chapter 11 debtor's complaint that had sought to prevent creditor from enforcing its state court judgment. Debtor argued that creditor's claim had been discharged, pursuant to 11 U.S.C. § 1141(d)(1)(A), when debtor's plan of reorganization was confirmed. Creditor had filed a proof of claim in debtor's bankruptcy, but debtor had not amended his schedules or his mailing matrix to reflect that claim. As such, creditor did not receive formal notice of matters in the bankruptcy proceeding. Relying on Reliable Elec. Co. v. Olson Constr. Co., 726 F.2d 620 (10th Cir. 1984), the court concluded that debtor's failure to give defendant reasonable notice of the plan confirmation hearing constituted a denial of due process that rendered creditor's claim not subject to the plan and, therefore, not discharged. The court further ruled that creditor, similar to the one in the Reliable case, had acted reasonably by expecting that it would receive the same formal notice of the confirmation hearing as did debtor's other creditors. Finally, the court ruled that debtor's attempt to attack the validity of creditor's judgment was an attempt to use Fed. R. Civ. P. 60(b) as a substitute for appeal, which was not permitted. | |
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In re Dillon, 113 B.R. 46 (Bankr.D.Utah) (Internal Ref: Opinion 299) |
Apr-3-1990 PUBLISHED |
89B-6914 |
Judge Boulden |
Chapter 7 debtor claimed a car and a rifle as exempt under Utah law, asserting that both items had particular sentimental value, and that the car was used in her businesses. Trustee objected to the exemption claims. The court determined that the sentimental value exemption could only be claimed as to one item, and was intended to apply only when the estate's potential monetary gain from the asset would be minimal compared to the emotional harm suffered by debtor as a result of its loss. The court then considered what types of sentimental attachment were protected by the exemption, concluding that a bona fide emotional attachment is required. Debtor failed to establish such a sentimental attachment, either to the car that she won in a contest, or to the rifle that she purchased to replace one she owned as a child but lost in a divorce. The court also concluded that debtor failed to establish that the car was subject to a business use exemption, in that she had not provided any evidence of an ongoing business. | |
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In re Fossey (Internal Ref: Opinion 297a) |
Feb-27-1990 APPEAL 119 B.R. 268 (D.Utah) |
87B-6187 |
U.S. District Court, Utah |
District court reversed a bankruptcy court decision that denied an unsecured creditor's motion to reopen a chapter 7 case to administer unadministered assets. The district court first ruled that debtor's assertion that creditor was barred from making its current claim by its failure to directly appeal the abandonment was without merit, since creditor had not been properly notified of the abandonment, as required by 11 U.S.C. § 554(a) and Bankruptcy Rule 6007. In addition, the fraudulent conveyance claim could not be deemed abandoned under § 554(c), as it had not been "scheduled" by debtor. The district court then concluded that the bankruptcy court had abused its discretion by denying the motion to reopen because trustee's failure to comply with the requirements for abandonment of the claim at issue left an asset unadministered. | |
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In re Vanderbilt Assoc., Ltd., 111 B.R. 347 (Bankr.D.Utah)In re Sandal Ridge Assocs. (Internal Ref: Opinion 297) |
Jan-31-1990 PUBLISHED See 117 B.R. 678 (D.Utah 1990) |
89PB-2556 89PB-4314 |
Judge Boulden |
Law firm sought to represent two chapter 11 debtor limited partnerships, which shared a common general partner, in their bankruptcies. The court concluded that the proposed dual representation presented an actual conflict of interest that precluded the law firm's representation of both debtors. Specifically, the court was concerned with each debtor's independent choice to either assert, or not assert, claims against their joint general partner. This decision was subsequently reversed by the Utah district court in 117 B.R. 678. | |
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Billings v. Zions First Nat'l Bank (In re Granada, Inc.), 110 B.R. 548 (Bankr.D.Utah) (Internal Ref: Opinion 296) |
Jan-26-1990 PUBLISHED |
89PC-0418 |
Judge Clark |
Defendant lenders moved to dismiss chapter 11 trustee's complaint against them, which sought to avoid alleged preferential payments under 11 U.S.C. § 547(b) and fraudulent transfers under 11 U.S.C. § 548(a)(2). The court denied the motion after finding that, for the most part, trustee had alleged sufficient facts in support of his claims under §547, 548, and 11 U.S.C. § 550 to avoid dismissal. In so ruling, the court considered the Tenth Circuit's recent decision in Lowrey v. Mfrs. Hanover Leasing Corp. (In re Robinson Bros. Drilling, Inc.), 892 F.2d 850 (10th Cir. 1989). | |
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In re Naka Indus., Inc. (Internal Ref: Opinion 295) |
Jan-2-1990 UNPUBLISHED |
86B-3178 |
Judge Boulden |
Both the corporate debtor and its related individuals filed petitions in bankruptcy, and separate counsel was appointed to represent them. Eventually, the two bankruptcy cases were consolidated for administrative purposes, and counsel for the individual debtors began acting as counsel for the corporation, without having been appointed to do so. Subsequently, counsel filed a motion to appoint him as counsel for the corporate debtor, nunc pro tunc to the date its petition had been filed. The court denied the motion, concluding that counsel was not disinterested and had failed to make full and adequate disclosure in his application. The court restated the law regarding nunc pro tunc motions, noting the appropriate use of such a motion is to correct a mistake or error that actually occurred rather than to change the record to reflect something that did not occur or to cure the omissions of counsel. | |
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Assoc. Builders & Contractors of Utah, Inc. v. United Bank (In re Lindsay) (Internal Ref: Opinion 294) |
Dec-15-1989 UNPUBLISHED |
89PB-0550 |
Judge Boulden |
Plaintiff corporation filed a state court action against bank, alleging that it had negligently issued a credit card to debtor, who was neither an officer nor a director of plaintiff, and had improperly collateralized the credit card debt using plaintiff's funds. Bank responded and counterclaimed against plaintiff for failure to pay card balances, and filed a third-party complaint against debtor. Debtor filed a chapter 7 petition, and bank removed the state court action and amended its complaint against debtor to allege non-dischargeability under 11 U.S.C. § 523(a)(2)(A). Plaintiff moved to remand the original action back to state court or, if the court would not remand, to abstain pursuant to 28 U.S.C. § 1334(c)(2). The bankruptcy court submitted its decision as a report and recommendation to the district court on the requested relief. The court first determined whether the case had been properly removed, and concluded that neither the initial state court action nor the third party action was a "core" proceeding, but that both claims sought to establish liability for debtor's pledge of plaintiff's property, and the matters in their entirety were therefore "related to" the bankruptcy and were subject to removal. The court also determined that plaintiff's claims against bank were "intertwined" with bank's claims against debtor, and, therefore, could not realistically be severed. Finally, although the court questioned applicability of § 1334(c)(2) to the remand issue, it determined that abstention was not required by that provision. The court recommended that plaintiff's motion be denied. | |
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In re Creech (Internal Ref: Opinion 293) |
Nov-13-1989 UNPUBLISHED |
86C-5249 |
Judge Clark |
Creditor that had sold farm equipment to chapter 12 debtors moved to dismiss their bankruptcy case pursuant to 11 U.S.C. § 1208(c)(6) and Bankruptcy Rule 1017, based on their failure to make payments on the confirmed plan. Although debtors continued making plan payments to their other creditors, they had decided approximately one year after their plan had been confirmed that the equipment was not productive or cost-efficient. Debtors proposed to surrender the farm equipment on the ground that surrender would be in the best interests of the estate. Debtors also attempted to assert defenses to their contract with lender. The court found debtors' proffered cure to be unacceptable, since it would require amendment of their confirmed plan and such an alteration would threaten the integrity of confirmed reorganization plans generally. The court further concluded that the confirmed plan was res judicata as to all issues that could have been raised in defense of a claim prior to confirmation, and debtors' defenses were thereby precluded. Finally, the court determined that dismissal was an appropriate remedy in the case, in part, because no creditors had objected to the motion to dismiss. | |
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Rushton v. Holy Land Christian Mission (In re Jensen) (Internal Ref: Opinion 292) |
Nov-7-1989 APPEAL Unpublished |
88PA-0763, -0769, -0783, -0796, -0837,-0839, -0841 |
U.S. District Court, Utah |
The sole issue on appeal was whether the two year limitations period set forth in 11 U.S.C. § 546(a)(1) begins to run from the date of the trustee's actual permanent appointment at the first meeting of creditors, or from an earlier date if the creditors' meeting is held later than the 20 to 40-day time period dictated by Bankruptcy Rule 2003(a). Based on the facts, the statutory language, and the policies behind the Bankruptcy Code, the district court concluded that the limitations period does not begin to run until the trustee is actually appointed, despite the rule requirement that the creditors' meeting be held within 40 days of the order for relief. Therefore, the trustee's adversary actions had been timely filed, and the bankruptcy court's orders were affirmed. | |
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Peoples Nat'l Bank v. Tracy Bancorp (In re Tracy Bancorp) (Internal Ref: Opinion 291) |
Sep-29-1989 UNPUBLISHED |
86PC-0861 |
Judge Clark |
The court considered whether claims made by trustee and creditor against a bank purchased by the FDIC were barred by the "estoppel doctrine," established in D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447 (1942), and later codified in 12 U.S.C. § 1823(e). The estoppel doctrine bars makers of facially valid promissory notes from asserting claims, such as fraud, conspiracy, or lack of consideration, premised on the claimant's dealings with a bank later purchased by the FDIC. Concluding that none of the reasons given by the plaintiffs for inapplicability of the doctrine was valid, the court granted the FDIC's motion to dismiss. | |
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Telecash Indus., Inc. v. Universal Assets (In re Telecash Indus., Inc.), 104 B.R. 401 (Bankr.D.Utah) (Internal Ref: Opinion 290) |
Aug-11-1989 PUBLISHED |
89PC-0232 |
Judge Clark |
Debtor-in-possession sought to avoid creditor's security interest under 11 U.S.C. § 547(b). Debtor claimed that creditor's perfection of its security interest had been preferential because creditor filed its UCC-1 financing statement more than ten days after the security interest was granted, and that such delayed perfection constituted a transfer for or on account of an antecedent debt, which is prohibited by § 547(e)(2). The court agreed that creditor's delayed perfection constituted a transfer on account of an antecedent debt within the meaning of the preference statute, but disagreed that creditor was thereby precluded from claiming that the perfection was subject to the § 547(c) preference exception . Because fact issues needed to be resolved on the issue of whether the perfection was part of a "substantially contemporaneous exchange" within the meaning of the exception, the court denied debtor's motion for summary judgment. | |
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In re Coll. Terrace, Ltd. (Internal Ref: Opinion 289) |
Aug-4-1989 UNPUBLISHED |
88PB-4591 |
Judge Boulden |
Oversecured creditor moved for relief from stay under 11 U.S.C. § 362(d) to foreclose on real property that was the sole asset of chapter 11 debtor, the owner/operator of an apartment complex. After considering numerous factors related to plan prospects, the court found that a reasonable likelihood existed that debtor would be able to make the payments set forth in its plan, and that debtor had evinced an attitude and willingness to make the plan work. Additionally, creditor failed to establish "cause" for relief from stay under § 362(d)(1), despite what the court considered to be debtor's "serious breaches" of a court order and of its obligations as a debtor-in-possession. Particularly, the court found that debtor had changed management, had shown recent improvement in compliance, and that less drastic measures could be used to ensure further compliance. The court concluded that debtor had established both that the property was necessary for its effective reorganization and that reorganization was "in prospect," and denied creditor's motion. |
