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Case Title Date & Status Case Number(s) Judge & PDF Summary

R.D. Bailey Rigging, Inc. v. United States (In re R.D. Bailey Rigging, Inc.)

(Internal Ref: Opinion 278)




Judge Boulden

PDF icon 278.pdf

For many years prior to its bankruptcy, debtor provided freight-hauling services to the United States, for which it was paid in accordance with bills of lading it submitted. The court was presented with debtor's claim that the United States had been undercharged for some services, and the United States' claim that it had been overcharged for some. Based on evidence presented in the adversary proceeding, the court ruled that debtor was entitled to recover some of its claimed undercharges, the United States was entitled to include all of its overcharges in its claim in debtor's bankruptcy, and the United States could setoff receivables of the debtor against the overcharges.

In re Vasilacopulos

(Internal Ref: Opinion 277)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 277.pdf

Bankruptcy trustee, through its attorneys, filed an adversary proceeding against third party defendants, seeking to recover allegedly fraudulent transfers. The attorneys subsequently discovered that other members of their law firm had previously represented defendants. The potential conflict of interest was immediately disclosed, and both trustee and the defendants waived any conflict. Debtor later moved for removal of the law firm that represented trustee, claiming conflict of interest. Debtor also filed a motion to remove the bankruptcy trustee, claiming that inadequate notice had been given of the conversion of debtor's involuntary bankruptcy from chapter 7 to chapter 11. Both of debtor's motions were denied by the bankruptcy court, and debtor appealed. The district court held that the bankruptcy court had properly denied both of debtor's motions.

Main Hurdman v. Anderson (In re Vasilacopulos)

(Internal Ref: Opinion 276)




Judge Clark

PDF icon 276.pdf

The court previously ordered that bankruptcy trustee could recover amounts transferred by debtor to defendants, plus interest, as fraudulent conveyances under 11 U.S.C. § 548(a)(2). That order was affirmed by the district court in 259.pdf. In this proceeding, the court determined the amounts trustee could recover from each defendant. The majority of defendants did not present evidence in opposition to trustee's claim against them, and the court found that trustee had sufficiently proven the amounts of each of those claims. The court then separately considered the evidence relating to trustee's claim against each defendant who disputed the claim against them. After determining the amount of each avoidable payment, the court concluded that trustee could recover interest on those amounts, at the rate applicable under Utah law as of the day trustee sent demand letters to defendants.

BancBoston Fin. Co. v. Dunyon (In re Dunyon)

(Internal Ref: Opinion 275)




Judge Boulden

PDF icon 275.pdf

Bank filed a complaint against debtor seeking non-dischargeability, under 11 U.S.C. § 523(a)(2)(B), of a debt arising from debtor's personal guaranty of a loan that bank had made to a company controlled by debtor. The court denied bank's complaint on the ground that bank had failed to present sufficient evidence to establish the necessary elements of its claims. Although bank had established that the borrower had provided false information to bank with intent to defraud, bank had not sufficiently tied debtor to that false information to establish debtor's intent to defraud. Bank also failed to establish that it had reasonably relied on the false statements in lending money to the borrower.

In re Dunyon

(Internal Ref: Opinion 274)


APPEAL Unpublished See 251.pdf


U.S. District Court, Utah

PDF icon 274.pdf

The bankruptcy court imposed sanctions under 11 U.S.C. § 362(h) against creditor and its counsel for violating the bankruptcy automatic stay. On appeal, the district court concluded that the bankruptcy court's findings, to the effect that appellants had violated the stay by re-filing state court claims against debtor and debtor's companies, were not clearly erroneous. The district court noted, however, that not all of the fees awarded as sanctions were a direct, foreseeable consequence of appellants' actions. The matter was remanded to the bankruptcy court for recalculation of the sanctions amount.

Rothey v. Shah (In re Shah)

(Internal Ref: Opinion 273)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 273.pdf

Creditor claimed the debt owed it by chapter 7 debtor was non-dischargeable under 11 U.S.C. § 523(a)(2), but the bankruptcy court held that creditor's forbearance from calling his demand note did not constitute an extension, renewal, or refinance of credit within the meaning of § 523(a)(2). Creditor appealed, and the district court held that, if proven, a creditor's forbearance from demanding payment of a demand note, resulting from creditor's reliance on debtor's false statements, would constitute an extension of credit subject to § 523(a)(2). Since creditor had claimed that he did not demand payment because debtor provided him with false financial statements, his claim was that those statements allowed debtor to continue the parties' debtor-creditor relationship, which was an extension of credit subject to § 523(a)(2). The case was remanded to the bankruptcy court for determinations of fact with respect to whether debtor's statements were false and intended to deceive creditor and, if so, whether creditor's reliance on them was reasonable.

Calder v. Segal (In re Calder), 94 B.R. 200 (Bankr.D.Utah)

(Internal Ref: Opinion 272)




Judge Allen

PDF icon 272.pdf

The Chapter 13 Trustee sent fee payments for legal services rendered by the chapter 7 debtor, an attorney, to debtor's chapter 7 trustee. Debtor filed an adversary proceeding against the chapter 7 trustee, in which he asserted that the legal fees were not property of the estate. Debtor argued that the fees were not estate property because payment of them had been contingent on confirmation of his clients' plans, and that the fees were therefore postpetition payments for services rendered, which belong to the debtor. The court considered 11 U.S.C. § 541, which defines property of the estate. Specifically, § 541(a)(6) includes "proceeds" of estate property within that definition, but excepts earnings from services performed by an individual debtor after the petition was filed. The court concluded that all postpetition payments that were for services actually performed prepetition were "proceeds" of debtor's estate, and therefore property of the estate.

Deseret Fed. Savings & Loan Assn. v. Brianhead Royale Dev. Corp. (In re Brianhead Royale Dev. Corp.)

(Internal Ref: Opinion 271)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 271.pdf

In connection with appellee's motion to dismiss, the district court considered whether the notice of appeal was sufficient to provide it jurisdiction over the appeal. The district court found, first, that parties not named as appellants in the notice of appeal had forfeited their right to appeal. Next, the court determined that appellant sought only to appeal that portion of the bankruptcy court's order that granted partial summary judgment. Based on that finding, the court considered whether the appeal met the 28 U.S.C. § 1292(b) standards for interlocutory appeals, concluding that it did not. The motion to dismiss the appeal was granted.

Styler v. Tall Oaks, Inc. (In re Hatch), 93 B.R. 263 (Bankr.D.Utah)

(Internal Ref: Opinion 270)




Judge Allen

PDF icon 270.pdf

Trustee's attorney filed a complaint alleging a fraudulent transfer under 11 U.S.C. § 548, which defendant moved to dismiss on the ground that it had not been timely served with the complaint as required by Bankruptcy Rule 7004(a) and Fed.R.Civ.P. 4(j). Those rules require that a complaint be served on the defendant within 120 days of its filing, unless good cause is established for failing to do so. Trustee's attorney admitted taking no steps to serve the complaint after filing it, claiming that he had filed the complaint based on summary information and, thereafter, attempted to obtain documentation from which he could prove the claims made. The court found that this explanation did not satisfy the standard of "good cause" for failing to serve the complaint, and that dismissal of the complaint was therefore mandatory, despite the fact that refiling would be barred by the statutory time period set forth in 11 U.S.C. § 546(a)(1). Based on the admissions by trustee's attorney, the court further held that the complaint had been filed for an improper purpose, which was to toll the § 546(a)(1) time period so that trustee could develop the evidence needed to prove the complaint's allegations. Therefore, the court determined that sanctions were mandatory under Bankruptcy Rule 9011, and awarded defendant all fees and costs it had incurred since the filing of the complaint, payable equally by trustee and her attorney.

In re Calder, 93 B.R. 739 (Bankr.D.Utah)

(Internal Ref: Opinion 268)




Judge Allen

PDF icon 268.pdf

Based on the unique facts of the case before it, the court denied debtor's one-time absolute right, under 11 U.S.C. § 706(a), to convert his chapter 7 bankruptcy to chapter 13, relying on its authority under 11 U.S.C. § 105(a) to take any action necessary or appropriate to prevent an abuse of process.

In re Hofheins

(Internal Ref: Opinion 269)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 269.pdf

Creditor bank, with knowledge of chapter 12 debtors' pending bankruptcy, repossessed fence panels that were fixtures on debtors' property and were being used by the estate. The bankruptcy court awarded sanctions against bank for its violation of the automatic stay, in the amounts of $4,000 actual, and $10,000 punitive, damages. Bank appealed, and the district court affirmed, concluding that there was ample evidence before the bankruptcy court that justified imposition of sanctions, based on either 11 U.S.C. § 362(h) or 11 U.S.C. § 105(a). The district court determined that the bankruptcy court's finding that bank had willfully violated the stay was not clearly erroneous, and that the awards of actual and punitive damages were appropriate to the facts. The case was remanded for the bankruptcy court's consideration of whether debtors' appeal expenses should be added to the sanction awards.

Billings v. Cinnamon Ridge, Ltd. (In re Granada, Inc.),92 B.R. 501 (Bankr.D.Utah)

(Internal Ref: Opinion 267)




Judge Clark

PDF icon 267.pdf

Chapter 11 trustee filed an adversary complaint against a limited partnership, of which debtor was the general partner, seeking to quiet title to a mobile home park and adjacent unimproved property. The partnership responded that, since it held equitable title to the subject real property, trustee's 11 U.S.C. § 544(a)(3) right to stand in the shoes of a bona fide purchaser was limited by 11 U.S.C. § 541(d) to debtor's bare legal title. Therefore, the partnership argued, trustee lacked the power to avoid partnership's equitable interest under § 544. The court disagreed that § 541(d) limits trustee's avoidance powers, since § 541(d) relates only to property made part of the estate by § 541(a)(1) or (2), or to debtor's prepetition property; whereas property recovered pursuant to a trustee's avoidance powers becomes part of the bankruptcy estate through § 541(a)(3) or (4). Thus, a bankruptcy estate consists of both debtor's prepetition property and property that the trustee recovers by avoidance. In any event, the court concluded that, under Utah law, one with legal title could transfer that property to a bona fide purchaser free and clear of an unrecorded equitable interest. Partnership also claimed that trustee could not be a bona fide purchaser under 11 U.S.C. § 544(a)(3), because partnership's actual, open, and unambiguous possession of the property when the petition was filed gave trustee inquiry notice, requiring him to investigate partnership's interest. However, the court found that the facts did not support partnership's claim, since nothing about the operation/possession of the property was in conflict with debtor's record title.

Walker v. Wilde (In re Walker), 91 B.R. 968 (Bankr.D.Utah)

(Internal Ref: Opinion 266)


PUBLISHED See 282.pdf


Judge Boulden

PDF icon 266.pdf

In chapter 7 debtor's adversary proceeding against them for violating the automatic stay, creditors moved for annulment of the stay, relief from the discharge injunction, and either an order of non-dischargeability or an extension of time to file objections to dischargeability of their debt. The court held that creditors had failed to establish their claim that any violation by them of the automatic stay was only a good-faith technical violation. Therefore, creditors were not entitled to annul the stay in order to validate any technical violations of it. The court also concluded that, even if creditors' state court judgment against debtor, which was void because it was entered in violation of the automatic stay, were validated, the judgment's conclusions that debtor's actions constituted misrepresentations or deceptive practices were insufficient to support creditors' claim that debtor was precluded by collateral estoppel from challenging non-dischargeability of creditors' debt. Finally, debtor's failure to provide creditors' correct names and address in the bankruptcy, which caused them not to receive formal notice of debtor's petition filing, did not entitle creditors to an extension of time to object to dischargeability of their debt because creditors had actual knowledge of the bankruptcy filing. This decision was affirmed by the district court in 282.pdf.

Job v. Calder (In re Calder), 93 B.R. 734 (Bankr.D.Utah)

(Internal Ref: Opinion 265)


PUBLISHED See 907 F.2d 953


Judge Allen

PDF icon 265.pdf

Plaintiffs filed a complaint against chapter 7 debtor under 11 U.S.C. § 727(a)(4)(A), alleging debtor failed to list property and to disclose bank accounts and partnership income in his schedules and statement of affairs. Debtor responded that the assets he failed to list were worthless or unavailable to creditors, and that he had revealed the assets to the trustee, both at the meeting of creditors and thereafter. The court held that deliberate omissions by a debtor may result in a denial of the debtor's discharge, and that debtor's assertions of lack of value were insufficient to relieve him from his duty to disclose all of his property interests in the bankruptcy. Additionally, debtor's alleged disclosures to the trustee were insufficient to satisfy his disclosure duty. Based on debtor's cumulative omissions, and the fact that debtor was an attorney professing knowledge of bankruptcy law, the court found that plaintiffs had established that debtor's failure to fully disclose assets was knowing and fraudulent, and debtor's discharge was denied.

Joseph v. Stone (In re Stone)

(Internal Ref: Opinion 264)


APPEAL 91 B.R. 589 (D.Utah)


U.S. District Court, Utah

PDF icon 264.pdf

Plaintiffs, who were all limited partners in a partnership in which debtor was the general partner, filed an adversary complaint alleging non-dischargeability of their claims against debtor, which the bankruptcy court dismissed. On appeal, the district court affirmed, concluding that plaintiffs had failed to meet the burden of proving their claims under 11 U.S.C. § 523(a)(2)(A) and (a)(4). Specifically, the district court determined that plaintiffs had failed to provide clear and convincing evidence that debtor's statements that induced them to invest in the partnership satisfied the elements of § 523(a)(2)(A), or that debtor was a "fiduciary" within the meaning of § 523(a)(4).

Cottonwood Leasing v. Cossey (In re Cossey)

(Internal Ref: Opinion 263)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 263.pdf

Plaintiff leased tanning equipment to debtors, and the lease was secured by both the equipment and debtors' home. Debtors filed a chapter 13 petition and submitted a plan providing that the equipment would be surrendered to plaintiff, and that any deficiency would become an unsecured claim, the amount of which would be determined at the confirmation hearing. Prior to confirmation, debtors returned the leased equipment to plaintiff. Plaintiff then filed a proof of claim for the full amount owed under the lease, inadvertently listing its claim as unsecured. No reduction for the value of the returned equipment was made. Debtors did not object to the proof of claim, and plaintiff did not attend the confirmation hearing. The order confirming the plan provided that surrender of the equipment fully satisfied plaintiff's claim. Plaintiff filed an action to set aside the confirmation order and to modify the plan to reflect it as a secured creditor. The bankruptcy court granted debtors' motion to dismiss, and plaintiff appealed. The district court affirmed on the ground that plaintiff's lien had been satisfied, but specifically rejected the bankruptcy court's position that an order of confirmation could avoid an otherwise valid lien by operation of law. The court considered the bankruptcy court's ruling to implicitly value the surrendered equipment as equal to the value of plaintiff's claim, and concluded that plaintiff, by its failures to object to the plan, appeal the order confirming the plan, or argue on appeal that the plan did not satisfy the requirements of 11 U.S.C. § 1325(a)(5), was estopped from asserting that surrender of the equipment did not fully satisfy its claim.

Bryant v. Straup (In re Straup)

(Internal Ref: Opinion 262)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 262.pdf

Plaintiff had a pending state court action against debtor in which she alleged that debtor had killed her husband by driving while intoxicated. Debtor's default had been entered in the state court action, and a motion to enter a default judgment had been filed and argued, but further proceedings were stayed by the filing of debtor's bankruptcy petition. Plaintiff filed an adversary complaint in the bankruptcy, alleging that the debt owed her by debtor was non-dischargeable under 11 U.S.C. § 523(a)(9). Plaintiff's motion for relief from stay to allow entry of a default judgment by the state court was denied by the bankruptcy court, as was her motion for partial summary judgment in the adversary action. The bankruptcy court dismissed plaintiff's case so she could appeal. Without a transcript of the bankruptcy court hearing, the district court assumed that summary judgment had been denied because plaintiff had no judgment and, therefore, could not make a claim pursuant to § 523(a)(9). The district court concluded that judgments based on drunk driving accidents could be entered postpetition, and that the bankruptcy court erred by denying plaintiff's motion for relief from stay. The district court instructed the bankruptcy court to allow plaintiff to liquidate her claim and seek a judgment in the district court action and, thereafter, to dispose of her dischargeability claim.

Merrill v. Nelson Family Trust (In re UCH)

(Internal Ref: Opinion 261)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 261.pdf

The bankruptcy court granted judgment in favor of chapter 11 trustee, concluding that debtors had made several preferential and fraudulent transfers to defendant. The sole issue on appeal was whether defendant's investments in a diamond and gold exchange should be considered value given to debtor clearinghouses, based on identity of interest between the exchange and debtors. The district court affirmed the bankruptcy court's judgment, concluding that there was no evidence that investments in the exchange constituted value and consideration for transfers made by debtor clearinghouses.

Rupp v. Codale Elec. Supply, Inc. (In re Henningsen)

(Internal Ref: Opinion 260)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 260.pdf

Defendant, a wholesale supplier to debtor, appealed a bankruptcy court judgment granting chapter 7 trustee's claim that payments made by debtor to defendant were preferences under 11 U.S.C. § 547(b). On appeal, the district court considered defendant's arguments that various payments made to it were excepted from § 547(b) preference treatment by § 547(c)(1), (2), and (4). Finding that none of the exceptions applied, the district court affirmed the bankruptcy court judgment.

Main Hurdman v. Anderson (In re Vasilacopulos)

(Internal Ref: Opinion 259)


APPEAL Unpublished See 276.pdf


U.S. District Court, Utah

PDF icon 259.pdf

Defendants appealed the bankruptcy court's order that trustee could recover the amounts debtor paid to defendants that exceeded their deposits with debtor, plus interest, as fraudulent conveyances under 11 U.S.C. § 548(a)(2). The district court affirmed, concluding that defendants had failed to establish that the bankruptcy court's finding that debtor's operation was a "Ponzi scheme" was clearly erroneous.

In re Skinner

(Internal Ref: Opinion 258)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 258.pdf

The bankruptcy court determined that creditor had willfully violated the automatic stay by selling debtors' previously repossessed vehicle after receiving notice of debtors' bankruptcy filing, and awarded sanctions to debtors under 11 U.S.C. § 362(h). Creditor appealed. The district court concluded that the bankruptcy court's findings, that the notice of bankruptcy was received at creditor's post office box prior to the sale and that creditor's employees did not intend to violate the stay, were not clearly erroneous. Noting that creditor could only act through its employees, and that § 362(h) requires willful and intentional violation of the stay, the district court determined that the bankruptcy court had improperly imposed sanctions under § 362(h). However, concluding that bankruptcy courts have authority, under 11 U.S.C. § 105, to impose civil contempt sanctions, the district court remanded the matter to the bankruptcy court for imposition of such sanctions, within its discretion.

Clendenen v. Van Dyk Oil Co., Inc. (In re By-Rite Distrib., Inc.)

(Internal Ref: Opinion 257)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 257.pdf

The court considered whether payments by check that were delivered to payee shortly before debtor filed its bankruptcy petition were "transferred" when delivered, or when paid by debtor's bank postpetition, for purposes of both avoidance under 11 U.S.C. § 549(a)(1) and the limitations period applicable to such claims in § 549(d). Payee appealed the bankruptcy court's ruling that the transfer occurred on the date debtor's bank actually disbursed funds belonging to debtor, which meant the funds were avoidable as postpetition transfers. The district court affirmed.

Eggett v. Shaffer (In re Shaffer)

(Internal Ref: Opinion 256)




Judge Clark

PDF icon 256.pdf

Plaintiffs filed an adversary complaint alleging that a judgment they had obtained in state court was not dischargeable in debtor's bankruptcy pursuant to 11 U.S.C. § 523(a)(2). On the parties' cross-motions for summary judgment, the court ruled that § 523(a)(2) requires a showing of intentional misrepresentation. Plaintiffs' state judgment was based on negligent misrepresentation, which is not sufficient. The court indicated that debtor's motion would be granted unless plaintiffs amended their complaint to state an intentional misrepresentation claim pursuant to § 523(a)(2).

Megabar Corp. v. First Sec. Bank of Utah (In re Megabar Corp.)

(Internal Ref: Opinion 255)




Judge Clark

PDF icon 255.pdf

Debtor-in-possession filed an adversary complaint against defendant bank, alleging that payment on a loan from bank to debtor that was made by debtor's licensee constituted a preference under 11 U.S.C. § 547. Debtor argued that the payment was an indirect transfer of its property to bank, as licensee simply paid to bank what licensee owed to debtor. Bank argued that the payment was made pursuant to licensee's independent obligation as guarantor of debtor's loan. The court defined the issue as whether the payment depleted estate assets in favor of one creditor over others. The court determined that licensee had made the payment to bank in order to protect its own interests as a guarantor on the loan, and that the result did not diminish debtor's estate because bank essentially gave its claim for the payment amount to licensee. Therefore, the payment was not a preference subject to § 547.

ANR Ltd. Inc. v. Chattin [Utex Oil Co., debtor]

(Internal Ref: Opinion 254a)


RELATED CASE 89 B.R. 898 (D.Utah)

(Utex Oil Co., debtor)

U.S. District Court, Utah

PDF icon 254a.pdf

After settling its adversary proceeding against a chapter 11 debtor in bankruptcy court, plaintiff filed an action in district court against debtor's former officers and directors. Plaintiff alleged that defendants assisted debtor's mismanagement of funds for which debtor owed plaintiff a fiduciary duty. The district court defined the issue before it as whether plaintiff had standing to bring the causes of action in the complaint, which would depend on whether the claims were personal to plaintiff or belonged to the debtor's bankruptcy estate. The court determined that, under Utah law, the corporation is the proper party to assert claims against its insiders for corporate management and, therefore, such claims belonged to the debtor corporation's estate. However, claims by creditors that they were specifically harmed by insider conduct are personal to the creditor, and are not part of the corporation's bankruptcy estate. A personal claim is one in which no one else has an interest. Plaintiff's claim sought an alter ego remedy against defendants, seeking to have them held personally liable for the corporation's debts, which the district court determined could be either a corporate claim or a personal claim of a creditor under Utah law. The court then held that a determination of that issue depended on whether placing the claim within the bankruptcy estate would further federal bankruptcy policies. Since a successful alter ego claim concludes that insiders are personally liable for all of the corporation's debts, fundamental principles of bankruptcy compel a conclusion that the bankruptcy trustee should be the one to assert such a claim, on behalf of all creditors. Plaintiff did have standing to bring its tort claims against the defendants because those claims alleged direct injury to plaintiff and not to others.

In re Smith & Son Septic & Sanitation Serv., 88 B.R. 375 (Bankr.D.Utah)

(Internal Ref: Opinion 254)




Judge Boulden

PDF icon 254.pdf

Debtor partnership moved to dismiss its chapter 11 case due to changes in financial circumstances that made confirmation of a plan impossible. The US Trustee objected to dismissal on the ground that debtor had failed to pay quarterly fees imposed by 28 U.S.C. § 1930(a)(6). Both parties agreed that conversion of the case to chapter 7 would serve no purpose. No other party objected to dismissal. Noting that Congress had failed to provide a means of enforcing payment of the § 1930(a)(6) fees, the court considered and rejected trustee's suggested alternatives to dismissal, including imposition of a contempt order against debtor, or awarding trustee a money judgment for the fees. The court concluded that trustee's interpretation of the fees statute, to the effect that debtors must pay the minimum fee for each quarter even if no disbursements were made, was not supported by the statute's legislative history. The court dismissed debtor's case, but allowed time for the trustee to determine whether it wanted to file an adversary proceeding to recover unpaid fees in accordance with the court's interpretation of § 1930(a)(6).

DLB Collection Trust v. Harline (In re Harline)

(Internal Ref: Opinion 253a)


APPEAL Unpublished

87-0184 and -0185

U.S. District Court, Utah

PDF icon 253a.pdf

When debtor's chapter 11 case was converted to chapter 7, the bankruptcy court issued a notice that listed February 11 of the previous year as the last day to file non-dischargeability complaints. The correct date should have been February 9, 1987. Plaintiffs' complaints, filed on February 11, 1987, were dismissed by the bankruptcy court as untimely, finding that plaintiffs could not reasonably rely on a date that had already passed, and had a duty to compute the date themselves from the date of the creditors meeting. On appeal, the district court reversed, concluding that the bankruptcy court should have, sua sponte, used its power under Bankruptcy Rule 4004(b) to correct its own mistake by extending the time for filing plaintiffs' complaints, even though plaintiffs had not requested an extension.

In re Granada, Inc., 88 B.R. 369 (Bankr.D.Utah)

(Internal Ref: Opinion 253)




Judge Clark

PDF icon 253.pdf

The court considered a claim for non-residential rent that was incurred by debtor postpetition. Lessor asserted that, under 11 U.S.C. § 365(d)(3), its claim for rent must be paid immediately. However, trustee claimed that, as the estate did not have sufficient liquid assets at that time to pay all administrative claims, paying lessor's claim would give that claim improper superpriority over other administrative claims. The court determined that such priority was not supported by the statute, its legislative history, or case authority, and held that § 365(d)(3) claims do not have superpriority status over other 11 U.S.C. § 507(a)(1) administrative claims. However, the court held that, when immediate payment of a § 365(d)(3) claim has been properly sought, full payment must be made unless the trustee establishes a "substantial doubt" that there will ultimately be sufficient funds available to pay all administrative expenses. The court concluded that trustee had not made such a showing in the case before the court.

Dewsnup v. Timm (In re Dewsnup), 87 B.R. 676 (Bankr.D.Utah)

(Internal Ref: Opinion 252)


PUBLISHED See 908 F.2d 588


Judge Clark

PDF icon 252.pdf

Debtors filed an adversary action against a secured creditor, asserting that they could redeem abandoned secured property, pursuant to 11 U.S.C. § 506(d), by paying creditor the property's fair market value. Debtors argued that, since an allowed secured claim is limited to the value of the collateral by § 506(a), they should be able to pay creditor that value and take the property free and clear of creditor's security interest. The court extensively discussed the role of § 506 in bankruptcy, concluding that it only applies to property in which the estate has an interest. Since the estate has no interest in property that has been abandoned, that provision is not applicable to abandoned property. In addition, rights in abandoned property are considered the same as if no bankruptcy had been filed. Therefore, § 506(d) does not grant debtors any greater rights in abandoned property than they had under prepetition non-bankruptcy law. This decision was affirmed by the district court, and later by the Tenth Circuit.

In re Dunyon

(Internal Ref: Opinion 251)




Judge Boulden

PDF icon 251.pdf

Creditor obtained a prepetition judgment against debtor, and continued its efforts to collect that judgment after debtor filed a chapter 7 petition. The court found that creditor's conduct constituted a willful violation of the automatic stay, without justification, and awarded sanctions pursuant to 11 U.S.C. § 362(h). This decision was upheld, but remanded for recalculation of the amount of fees that were a direct, foreseeable consequence of creditor's conduct in 274.pdf.