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Opinions
| Case Title | Date & Status | Case Number(s) | Judge & PDF | Summary | |
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Value Oil, Inc. v. Green River Dev. Assocs., Inc. (In re Value Oil, Inc.) (Internal Ref: Opinion 222) |
Mar-18-1987 APPEAL Unpublished |
85PA-0200 |
U.S. District Court, Utah |
Debtor filed an adversary proceeding that was dismissed by the bankruptcy court based on debtor's failure to file a timely pre-trial order. Debtor's motion to set aside the dismissal order was denied by a minute entry that directed defendant to prepare an order for the court's signature. Debtor filed a notice of appeal prior to entry of a written order denying its motion. Under Bankruptcy Rule 8002, debtor's notice of appeal was untimely from the dismissal order, but debtor argued that the motion to set aside had tolled the appeal time, relying on Bankruptcy Rule 9023 (FRCP 59). The district court rejected debtor's characterization of the motion, concluding that the motion had been based on excusable neglect, and was therefore a motion under Bankruptcy Rule 9024 (FRCP 60(b)). Since Rule 9024 motions do not toll appeal time, debtor's notice of appeal was untimely with respect to the dismissal order. Additionally, as no separate order had been entered denying debtor's Rule 9024 motion, the district court held that it lacked jurisdiction to hear an appeal of that order under the separate document rule. The appeal was dismissed. | |
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I.F.S. Inc. v. Nat'l Credit Union Admin. Bd. (In re I.F.S. Inc.) (Internal Ref: Opinion 221) |
Mar-13-1987 APPEAL Unpublished See 201.pdf |
86PC-0334 |
U.S. District Court, Utah |
On appeal, debtor argued that a stock purchase agreement between its secured lender and a third party was not a U.C.C. § 9-504 contract because (1) all seller could transfer was its security interest in the stock, and (2) the contract included conditions that precluded termination of debtor's redemption rights. The district court held that a secured party's § 9-504 contract for sale of its collateral transfers all of debtor's rights to that collateral. Moreover, debtor could not assert conditions, which were expressly for buyer's benefit, to defeat a contract to which it was not a party. The bankruptcy court's decision was affirmed. | |
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In re Anderson, 70 B.R. 883 (Bankr.D.Utah) (Internal Ref: Opinion 220) |
Mar-6-1987 PUBLISHED |
86A-0085 |
Judge Allen |
The court considered chapter 11 debtors' motion to convert their case to chapter 12. Although the newly enacted Family Farmer Bankruptcy Act provided that the family farmer provision would not apply to cases commenced before the Act's effective date, the court concluded that the legislative history supported an interpretation of that language to mean that the Act would not apply retroactively, and refused to interpret it to penalize farmers already in bankruptcy by requiring them to remain under a chapter that was unworkable. The court then concluded that debtors' requested conversion could only be granted under 11 U.S.C. § 1112(b) after 20 days' notice to all parties in interest, as provided in Bankruptcy Rule 2002(a)(7). The court held that, after such notice, debtors would have to convince the court that conversion would be equitable under the facts of their case. | |
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Rushton v. Traub (In re Nell) (Internal Ref: Opinion 219) |
Feb-23-1987 APPEAL 71 B.R. 305 (D.Utah) |
86PA-0104 |
U.S. District Court, Utah |
The bankruptcy court entered a final order dismissing trustee's adversary complaint for recovery under a prepetition contract. Concluding that the trustee's adversary was "non-core," under N. Pipeline Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982), the district court held that the bankruptcy court was without jurisdiction to enter a final order unless all parties consented, and that such consent should ordinarily be explicit and on the record. Absent consent, the bankruptcy court could only prepare proposed findings and conclusions for the district court's de novo review. As there was no record evidence that the parties had consented to the bankruptcy court entering a final order, the case was remanded for further proceedings. | |
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In re Bajan Resorts, Inc., 71 B.R. 53 (Bankr.D.Utah)In re Bajan Dev. Co., Ltd. (Internal Ref: Opinion 218) |
Feb-6-1987 PUBLISHED |
84C-3443 and -3444 |
Judge Clark |
Movant sought leave to file an untimely proof of claim in debtors' chapter 11 bankruptcies, asserting it was unaware of its potential claim until discovery had been conducted in a different district court action. The court held that Bankruptcy Rules 3003(c)(3) and 9006(b)(1) require a showing of "cause" for extensions of time and, even then, such relief was in the court's discretion. As the extension request was made after expiration of the claims bar, the court ruled that it could only use its discretion to grant the relief if the failure to meet the deadline resulted from "excusable neglect." Given the procedural posture of the case, allowing a new claim would require reworking of the proposed plan and a new disclosure statement. In addition, movant failed to show a probability of success of its claim in debtors' bankruptcy. The court concluded that, even if excusable neglect had been established, it would be inappropriate to exercise its discretion to allow the filing of a late claim. | |
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In re Durfee (Internal Ref: Opinion 217) |
Dec-12-1986 APPEAL Unpublished |
86C-1501 |
U.S. District Court, Utah |
Lender, which had a security interest in debtors' accounts receivable, appealed a bankruptcy court order finding it to be in contempt of court and in violation of the 11 U.S.C. § 362 automatic stay. Prepetition, debtors defaulted on their debt to lender and, pursuant to its rights under the parties' agreement, lender sent demand letters to debtor's accounts receivable, directing that payment be made to it rather than to debtor. Lender also obtained a prepetition restraining order to prevent debtors' use or disposal of collateral. Postpetition, debtors requested that lender advise their account debtors that the demand letters were no longer in effect. Lender refused to do so without a court order, and filed a motion to lift the stay, while debtors filed a motion to use cash collateral. Ultimately, the bankruptcy court granted lender relief from stay to pursue prepetition accounts, and granted debtors' request to use cash collateral consisting of postpetition accounts. Debtors blamed their inability to collect postpetition accounts on lender's prepetition demand letters and obtained an order to show cause why lender's failure to cancel the letters was not contempt of court. The bankruptcy court ruled that lender's inaction constituted contempt. On appeal, the district court noted that lender had not collected any prepetition accounts receivable after debtors filed their petition, although lender could now do so based on the order lifting stay. The district court rejected debtors' claim that lender's unrescinded demand letters constituted a continuing attempt to enforce a lien in violation of the stay. Finally, the district court rejected debtors' claim that lender had a duty to advise postpetition accounts receivable customers to pay debtor rather than lender, noting that such was the duty of the trustee. The order finding lender in contempt was reversed. | |
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Elton, Inc. v. United States (In re Boswell Land & Livestock, Inc.) (Internal Ref: Opinion 216) |
Dec-9-1986 UNPUBLISHED |
85PC-0777 |
Judge Clark |
Debtor obtained a loan and, in exchange, gave lender a trust deed covering five parcels of real property. Debtor subsequently sold one of the five parcels to plaintiff pursuant to a Uniform Real Estate Contract, and plaintiff filed notice of that contract with the county recorder. Debtor then granted lender another trust deed to the five parcels in exchange for a new loan. After plaintiff had fully paid debtor for its parcel, debtor issued it a warranty deed for that parcel, which plaintiff recorded. However, although plaintiff paid debtor in full for its parcel, debtor had not fully paid lender on its loans. After debtor filed its bankruptcy petition, plaintiff filed an action to determine the rights of the parties in the parcel it had purchased. Plaintiff first asserted that the doctrine of inverse order of alienation was applicable and required lender to first look to property retained by debtor for satisfaction of its lien. The court rejected that argument, concluding that the doctrine was inapplicable because the documents related to the sale to plaintiff indicated that plaintiff intended to take the parcel subject to lender's lien. Plaintiff's second argument was that lender's lien was invalid, having been extinguished when the real estate contract payments were completed. The court agreed, based on the doctrine of equitable conversion, concluding that debtor's rights to the property after it was sold under the real estate contract were considered "personalty" since its rights were limited to receipt of payments. Purchaser's rights under such a contract are considered "realty." Once the contract payments were completed, seller's rights to the property were terminated. Since all debtor could transfer to lender was the interest it had, lender's lien terminated upon plaintiff's full payment of the contract, even though debtor had failed to use plaintiff's payments to fully satisfy lender's loan. Judgment was granted to plaintiff. | |
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Main Hurdman v. Trailer-Train, Inc. (In re IML Freight, Inc.) (Internal Ref: Opinion 215) |
Nov-26-1986 APPEAL Unpublished |
85PC-0283 |
U.S. District Court, Utah |
Trustee filed adversary complaint against defendant shipping agent, seeking to recover payments defendant received from debtor as preferences. Defendant filed a third-party complaint against four railroads, claiming that it was simply a conduit for debtor's payment of railroad shipping charges. Railroads moved to dismiss the third-party complaint, arguing that the bankruptcy court lacked jurisdiction over defendant's claims against them. The bankruptcy court entered an order dismissing the third-party complaint, which incorporated oral findings made from the bench. Defendant failed to designate the transcript of the bankruptcy court's findings as part of the appellate record. Concluding that it could not determine why the complaint had been dismissed from the record before it, the district court vacated the bankruptcy court order and remanded for further proceedings on subject matter jurisdiction issues. | |
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In re Black, 70 B.R. 645 (Bankr.D.Utah) (Internal Ref: Opinion 214) |
Nov-18-1986 PUBLISHED |
85C-2395 |
Judge Clark |
While debtor's chapter 13 case was pending, prepetition sellers of a business to debtor filed suit in state court against debtor and the sale brokers, alleging fraud in connection with the sale. Brokers sought relief from the bankruptcy stay in order to file a claim for indemnity against debtor, arguing that the indemnity claim did not arise until brokers were sued by sellers and, therefore, it was a postpetition claim that is not subject to the 11 U.S.C. § 362 stay. The court rejected the reasoning in Avellino & Bienes v. M. Frenville Co., Inc. (In re M. Frenville Co., Inc.), 744 F.2d 332 (3rd Cir. 1984) cert. denied, 105 S.Ct. 911 (1985), upon which brokers relied, based on the Bankruptcy Code's inclusion of "contingent" and "unmatured" in the definition of "claim" in 11 U.S.C. § 101(4). The court further held that the Bankruptcy Code also provides an alternate remedy in 11 U.S.C. § 523 for claimants that were unaware of their claims prepetition, which provides that the debtor's discharge does not extend to debts that are not listed or scheduled in time to permit a timely proof of claim. Concluding that brokers' claim against debtor was covered by the automatic stay, and that no cause had been shown for lifting it, the court denied brokers' motion. | |
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Mosier v. Schwenke (In re Dennis L. Carlson, Inc.) (Internal Ref: Opinion 213) |
Nov-12-1986 APPEAL Unpublished |
86PC-0575 |
U.S. District Court, Utah |
Shortly before filing a chapter 11 petition on debtor's behalf, debtor's attorney entered into a real property purchase contract with debtor. Under that agreement, attorney paid some cash to debtor, offset some legal fees owed to him by debtor, and agreed to assume debtor's mortgage, which was about to be foreclosed. The contract between debtor and attorney was noted on debtor's schedule of assets. A trustee was appointed for debtor, based on a motion by the mortgage holder on the property, and trustee received an offer to purchase the property from an unrelated party. Debtor's attorney received trustee's motion to approve the sale, and notified trustee of his interest in the property. Trustee filed an adversary action to quiet title to the property, but went forward with the hearing on his motion to approve sale. Attorney did not attend the sale hearing, and the motion to sell was approved. Attorney's motion to vacate the sale approval was denied, and attorney appealed. The district court ruled that attorney's failure to appear at the sale hearing was not due to "excusable neglect." However, the court indicated that the quiet title action had not been tried and that trustee could only sell the estate's interest in the property. Therefore, in order for trustee to convey clear title to the property by sale, trustee needed to pursue the quiet title action, or bring some other proceeding that could establish the respective rights in the subject property. Therefore, the district court stayed the closing of the property sale until attorney's interest in the property, if any, was determined. | |
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In re Am. Tierra, Inc. (Internal Ref: Opinion 212) |
Nov-4-1986 APPEAL Unpublished |
81-3073 |
U.S. District Court, Utah |
Law firm obtained approval to represent debtor in its chapter 11 case, but a number of potential conflicts of interest were revealed in connection with an objection to firm's subsequent request for fees. Based on those conflicts, which had not been revealed initially, the bankruptcy court denied all of the requested fees and disqualified law firm from further representation of debtor, pursuant to 11 U.S.C. § 328(c). The district court affirmed, noting that law firm should not have even applied for appointment in the case. | |
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In re Paiute Oil & Mining Corp. (Internal Ref: Opinion 211) |
Oct-21-1986 APPEAL Unpublished |
84C-3451 |
U.S. District Court, Utah |
The parties to this appeal, debtor and buyer, had a dispute over buyer's payment of a deposit to debtor, after the purchase was not consummated. Buyer obtained a district court judgment against debtor, in the amount of $30,000 plus interest, which debtor appealed to the Tenth Circuit. In taking the appeal, debtor posted a $40,000 supersedeas bond. Debtor assigned its interest in the supersedeas bond to its attorney and, approximately seven months later, filed a chapter 11 bankruptcy petition. Despite the pending bankruptcy, the Circuit reversed the judgment in favor of buyer and released the supersedeas bond to debtor. Buyer's motions seeking various alternative relief were all denied by the bankruptcy court. On appeal, the district court denied the bankruptcy trustee's motion to dismiss, concluding that it had jurisdiction to hear both final and interlocutory bankruptcy orders, and that there was ample cause to review the bankruptcy court's decision. The district court agreed with the bankruptcy court's ruling that buyer improperly sought to establish a constructive trust on the supersedeas bond by motion instead of by adversary complaint. However, the district court disagreed that the case was "inappropriate" for such a trust, concluding that such a determination would depend on fact-findings that had not been made. The district court also concluded that the bankruptcy court had erred by failing to state reasons for denial of buyer's motion for stay relief. The case was remanded to the bankruptcy court for further proceedings. | |
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Aetna Fin. Co. v. Bedford (In re Bedford) (Internal Ref: Opinion 210) |
Oct-8-1986 APPEAL Unpublished |
84PC-1914 |
U.S. District Court, Utah |
The bankruptcy court found that a debt owed to creditor was non-dischargeable under both 11 U.S.C. § 523(a)(2)(A) and (a)(2)(B). The district court affirmed, concluding that the bankruptcy court's fraud findings were not clearly erroneous. | |
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C & C Co. v. Seattle-First Nat'l Bank (In re Coal-X Ltd., "76") (Internal Ref: Opinion 209) |
Oct-7-1986 APPEAL Unpublished See 184.pdf |
84PC-1914 |
U.S. District Court, Utah |
Debtor was the sub-lessee of a 15-year lease to mine coal on real property located in West Virginia. In May 1984, debtor failed to make its annual rent payment for the first time and, shortly thereafter, filed a bankruptcy petition. Landlords in West Virginia have a statutory lien on any personal property brought onto their property by the lessee. Subsequent to debtor's sub-lease, debtor granted bank a security interest in its assets, the majority of which were located on the leased property. The bankruptcy court granted trustee's request to sell debtor's coal mining equipment free of liens, with valid liens to attach to the proceeds, and the equipment was sold. Later, trustee avoided the statutory landlord's lien on debtor's property, pursuant to 11 U.S.C. § 545, and the lien was preserved for the benefit of the estate by 11 U.S.C. § 551. Trustee then filed an adversary action against bank to determine the validity, priority, and extent of the competing liens. On cross-motions for summary judgment, the bankruptcy court ruled that the landlord's lien had priority over bank's security interest, and that the annual rent payment would be apportioned from the date it was due to the date when the trustee rejected the lease and surrendered the real property. On appeal, the district court considered whether the amount of the landlord's lien was the entire annual missed payment, or whether it was subject to apportionment. The court held that it had the equitable power under the Bankruptcy Code to apportion the rent, even though the state statute may apply the rule of non-apportionment. The district court further held that, although the bankruptcy court had properly applied apportionment to the rent, it had not properly defined the apportionment period, which should have been from the rent's due date to the date the petition was filed. Postpetition, lessor is entitled to the reasonable value of debtor's use of the premises as an administrative claim. Finally, the district court ruled that the bankruptcy court erred in not adding interest to the landlord's lien amount, which was clearly provided by state law. | |
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Rupp v. Graybar Elec. Co., Inc. (In re L & M Elec. Contractors, Inc.) (Internal Ref: Opinion 208) |
Oct-2-1986 APPEAL Unpublished |
85PA-0096 |
U.S. District Court, Utah |
Trustee filed an adversary complaint seeking to recover allegedly preferential payments made to defendant by debtor, pursuant to 11 U.S.C. § 547(b). Relying on § 547(c), defendant claimed to have given new value to debtor by releasing its mechanics' lien rights and other claims, in exchange for the payments. Relying on the parties' stipulated facts, the bankruptcy court ruled in favor of trustee, and defendant appealed. The district court rejected defendant's new value defense, concluding that debtor's release of mechanic's liens from property on which debtor, an electrical contractor, had used defendant's supplies had only changed the identity of the holder of the claim against debtor, which does not constitute new value. Any value that was transferred by defendant's releases inured to the owner of the property or its insurer, rather than to debtor's estate. While recognizing that its ruling represented a substantial hardship for the construction industry, the district court indicated that it could not amend the plain meaning of § 547(a). The bankruptcy court's order was affirmed. | |
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In re Gibson Prods. Co., Inc. (Internal Ref: Opinion 207) |
Sep-30-1986 APPEAL Unpublished |
86C-0933 |
U.S. District Court, Utah |
Debtor, which had sublet retail property from Albertson's, appealed the bankruptcy court's denial of its motion to extend its time to assume or reject the sublease. On appeal, debtor moved to both stay the bankruptcy court's order and enjoin Albertson's from alienating debtor's leasehold interest during the appeal. The district court determined that it had authority under Bankruptcy Rule 8005 to grant the relief debtor sought, and identified four factors that should be weighed in making a decision to either grant or deny such relief. Those factors are (1) irreparable injury to debtor, (2) likelihood of the appeal's success, (3) harm suffered by Albertson's, and (4) harm to the public interest. Based on its consideration of those factors, the district court determined that the bankruptcy court's order should be stayed, and Albertson's should be enjoined from transferring debtor's leasehold interest, while the appeal was pending. | |
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In re Ralsu, Inc. (Internal Ref: Opinion 206) |
Sep-30-1986 APPEAL Unpublished |
85A-2848 |
U.S. District Court, Utah |
Undersecured creditor appealed the bankruptcy court's denial of its motion to either dismiss or grant relief from stay. The district court concluded that the bankruptcy court had not abused its discretion by denying the motion to dismiss debtor's chapter 11 petition based on creditor's failure to establish that debtor filed its petition in bad faith. The district court also considered whether the bankruptcy stay should be lifted, based on lack of adequate protection, concluding that a claim secured by real property having lesser value than the claim is adequately protected by preservation of the status quo, which is accomplished by protection of the property from diminution in value, rejecting an "equity cushion" approach. The district court agreed with the bankruptcy court that transfer of the secured property by an individual to a newly created corporate debtor that immediately filed its bankruptcy petition did not make the transfer fraudulent and thus remove the property from debtor's estate, particularly since the individual could have accomplished the same thing by filing her own chapter 11 petition. Finally, the district court held that, even if the stay had terminated pursuant to Bankruptcy Rule 4001(b)'s 30-day limit between the hearing on the motion for relief and issuance of an order on that motion, the bankruptcy court's order denying stay relief, entered outside of that time period, invoked the court's equitable power under 11 U.S.C. § 105 to reinstate the stay. Additionally, the court's § 105 equitable powers need not be specifically referenced for them to be deemed invoked. The bankruptcy court's decision was affirmed. | |
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Main Hurdman v. Baldwin (In re Vasilacopulos) (Internal Ref: Opinion 205) |
Sep-14-1986 UNPUBLISHED |
84PC-1094 |
Judge Clark |
Trustee for Ponzi scheme debtor filed an adversary complaint seeking recovery of payments made by debtor to defendant as fraudulent conveyances under 11 U.S.C. § 548(a)(2). The court found that trustee had failed to offer sufficient evidence of debtor's insolvency at the time of the payments, which was an element of its claim against defendant. The court considered whether it could take judicial notice of debtor's schedules and a stipulation entered in another adversary proceeding in which defendant was not a party, as proof of debtor's insolvency. The court concluded that it could not take judicial notice of those documents as proof of insolvency because they did not meet the "not subject to reasonable dispute" standard of Fed. R. Evid. 201 (FRBP 9017). Trustee's complaint was dismissed. | |
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Main Hurdman v. A & W Invs., Inc. (In re IML Freight, Inc.) (Internal Ref: Opinion 203) |
Sep-4-1986 UNPUBLISHED |
85PC-1265 |
Judge Clark |
Chapter 7 trustee filed adversary complaint against defendants, alleging fraudulent conveyances under 11 U.S.C. § 548 and Utah law, and breach of fiduciary duty by former officers and directors of debtor. Defendants filed a motion to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6) and Bankruptcy Rule 7012. The court granted the motion with respect to some of the defendants, and allowed trustee to amend the complaint to clearly specify which defendants were subject to each cause of action. The court rejected defendants' principal claim, which was that trustee's claims were barred by the limitations period in 11 U.S.C. § 108(a), concluding that the applicable limitations period was three years, as provided by Utah law. | |
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Nat'l Acceptance Co. v. Salina Truck & Auto Parts, Inc. (In re Salina Truck & Auto Parts, Inc.) (Internal Ref: Opinion 204) |
Sep-4-1986 UNPUBLISHED |
84PC-1082 |
Judge Clark |
In considering competing claims to an assignment of the seller's interest in a Utah Uniform Real Estate Contract, the court concluded that the contract was personal property, and therefore subject to Article 9 of Utah's Uniform Commercial Code. The court also determined that the contract did not fall within the definition of an "instrument" under Article 9, and would therefore be considered a "general intangible." Under Article 9, security interests in "instruments" are perfected by possession, while "general intangible" interests are perfected by filing a financing statement with the Secretary of State. Although debtor had possession of the original contract, lender's previously filed financing statement perfected its interest in that document, and the court ruled in favor of lender. | |
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Wasatch Bank of Lehi v. Hunter (In re Hunter) (Internal Ref: Opinion 202) |
Sep-4-1986 APPEAL Unpublished |
85PA-0581 |
U.S. District Court, Utah |
Bank filed an adversary complaint seeking non-dischargeability of its claim against chapter 7 debtors, pursuant to 11 U.S.C. § 523(a)(2)(A). Debtors obtained loan from bank secured by a trust deed on their property, and bank alleged they had intentionally withheld information regarding a zoning violation on the property. The bankruptcy court dismissed the complaint, and bank appealed. The district court agreed with the bankruptcy court's conclusion that bank had failed to establish, by clear and convincing evidence, that debtors obtained the loan by false pretenses, misrepresentation, or actual fraud. Dismissal of bank's complaint was affirmed. | |
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I.F.S., Inc. v. Nat'l Credit Unions Admin. Bd. (In re I.F.S., Inc.) (Internal Ref: Opinion 201) |
Aug-27-1986 UNPUBLISHED See 221.pdf |
86PC-0334 |
Judge Clark |
Debtor pledged stock in one of its companies to secure its guaranty of obligations owing to credit union. The pledge agreement provided that, in the event of debtor's default, credit union would have all rights with respect to the shares "as if it were the absolute owner" of them. Debtor defaulted on a payment, and credit union demanded immediate payment of all principal and interest. As payment was not made, credit union notified debtor that it would begin efforts to sell the pledged stocks. Credit Union, representing itself to be the lawful owner of the stock, ultimately entered into a sale agreement with a third party buyer, subject to some conditions. Debtor filed a chapter 11 bankruptcy petition and, shortly thereafter, credit union and buyer closed the sale. Debtor filed an adversary complaint, seeking to avoid the sale of the stock under 11 U.S.C. § 549, as an unauthorized transfer of estate property in violation of 11 U.S.C. § 362(a). On competing motions for summary judgment, the court held that "title" to the stock was irrelevant under the Missouri version of the Uniform Commercial Code. Because credit union perfected its security interest in the stock by possession and gave debtor notice of its intent to sell, the court determined that debtor's only right with respect to the stock was a right of redemption under U.C.C. § 9-504, which terminated when credit union entered into the sale contract with third party. The court determined that the fact that conditions for purchaser's performance under the sale contract were only available to purchaser and, at most, gave debtor a redemption right that was contingent on purchaser's non-performance, and it would be improvident to grant debtor any relief under § 549 based on such a contingency. For similar reasons, the court ruled that closing of the sale to purchaser was not a violation of the automatic stay that would entitle debtor to relief. Debtor's motion for summary judgment was denied, and the motions by credit union and purchaser for summary judgment were granted. This decision was affirmed by the district court in 221.pdf. | |
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Stuart v. Pingree (In re Afco Dev. Corp.), 65 B.R. 781 (Bankr.D.Utah) (Internal Ref: Opinion 199) |
Aug-22-1986 PUBLISHED |
85PC-0795 |
Judge Clark |
Chapter 7 trustee filed preference action, which defendants moved to dismiss as untimely under 11 U.S.C. § 546(a). Noting that the roles of chapter 11 and chapter 7 trustees are very different, the court held that trustee had two years after the date of his appointment as chapter 7 trustee within which to file his preference complaint, even though he had served as chapter 11 trustee prior to conversion of debtor's case. | |
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Tradex, Inc. v. United States (In re IML Freight, Inc.), 65 B.R. 788 (Bankr.D.Utah) (Internal Ref: Opinion 200) |
Aug-22-1986 PUBLISHED |
83PC-3254 |
Judge Clark |
In an action filed against it for shipping fees owed to debtor, the government counterclaimed to offset its claim against debtor for fees and penalties incurred due to insufficient funds tax payments. The parties stipulated to the facts and requested that the court decide the matter on summary judgment. Noting that, under certain circumstances, 11 U.S.C. § 553 allows a creditor to offset a debt owed to debtor against debtor's claim against it, the court emphasized that the availability of offset is left to the court's discretion. The court concluded that § 553 requires that the two debts be "mutual," which does not mean they must arise from the same transaction, and that both debts arise prepetition and are owed directly to each party. Under the stipulated facts, the court determined that offset should be allowed in the case before it. | |
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In re Tri-L Corp., 65 B.R. 774 (Bankr.D.Utah) (Internal Ref: Opinion 198) |
Aug-21-1986 PUBLISHED |
81C-2084 |
Judge Clark |
Chapter 7 trustee objected to administrative expense claim by debtor's attorney for fees incurred after debtor's chapter 11 plan was confirmed, but before case was converted to chapter 7. Because the court had retained post-confirmation jurisdiction in the plan, it held that the fees were entitled to administrative priority under 11 U.S.C. §330(a), 503(b)(2), and 507(a). | |
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In re Jeppson, 66 B.R. 269 (Bankr.D.Utah) (Internal Ref: Opinion 197) |
Aug-15-1986 PUBLISHED |
84C-0380 |
Judge Clark |
Bank, chapter 11 debtors' largest secured creditor, sought confirmation of a plan it submitted to the court without having obtained approval of a disclosure statement and without soliciting votes on its plan from all parties in interest. Bank argued it could "cram down" its liquidating plan and, therefore, voting would be meaningless. The court held that submission of an approved disclosure statement and ballots with a proposed plan is a prerequisite to commencement of a confirmation hearing. Therefore, bank's failure to obtain approval of a disclosure statement and to solicit votes on its proposed plan rendered the plan not confirmable, even if creditor could cram down a liquidating plan over dissenting votes. | |
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In re J.R. Research, Inc., 65 B.R. 747 (Bankr.D.Utah) (Internal Ref: Opinion 196) |
Aug-7-1986 PUBLISHED |
86C-1501 |
U.S. District Court, Utah |
Former chapter 11 trustee sought to recover expenses from secured creditor, relying on 11 U.S.C. § 506(c). The court held that only the current, chapter 7, trustee had standing to assert a § 506(c) claim, and that any recovery under that provision would belong to the estate, rather than the trustee. Former trustee's expenses must be recovered pursuant to 11 U.S.C. § 726(b). | |
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In re Kerr, 65 B.R. 739 (Bankr.D.Utah)In re McClean, Sr.In re McClean, Jr. (Internal Ref: Opinion 195) |
Aug-1-1986 PUBLISHED |
84C-3028 84C-1280 84C-1279 |
Judge Clark |
Debtors, all self-employed professionals, listed ERISA-qualified pension plan funds as assets in their bankruptcies, but claimed them as exempt under Utah law. Trustee objected to the exemptions. Debtors offered three rationales for either excluding or exempting the pension funds: (1) the funds are excluded from estate property under 11 U.S.C. § 541(c)(2); (2) ERISA-qualified pension plans are exempt under 11 U.S.C. § 522(b)(2)(A); and (3) the funds are exempt under Utah law. The court concluded that, since debtors' pension plans did not constitute spendthrift trusts under Utah law, they were not excluded from debtors' estates by § 541(c)(2). The court also concluded that the funds were not exempt under § 522(a)(2)(A), which allows debtors to exempt both property subject to state exemptions and property that is exempt under federal law, except under the alternative federal exemptions in § 522(d), because a majority of courts have held that ERISA plans are not so included. Finally, the court concluded that debtors' plans were exempt under Utah Code Ann. § 78-23-6(3), but only to the extent the funds were "reasonably necessary" for the support of debtors and their dependents. | |
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In re Parkinson (Internal Ref: Opinion 194) |
Jul-31-1986 UNPUBLISHED |
85C-0545 |
Judge Clark |
Property lessor entered into a prepetition stipulation with debtor in settlement of a state court lawsuit. After filing his chapter 11 petition, debtor moved to assume his lease agreement with lessor, which the court approved, finding that lessor was adequately protected, and ordered debtor to pay lessor the amount determined to be in default. Debtor paid the default amount to lessor. Lessor subsequently requested that the prepetition stipulation be treated as valid and binding or, in the alternative, that debtor be compelled to assume or reject it as an executory contract. Thereafter, debtor filed an objection to lessor's claim. Pursuant to the parties' agreement, the court entered an order finding that the prepetition stipulation was a valid and binding executory contract, and directing debtor to either assume or reject it within 30 days. Debtor untimely filed a rejection of the stipulation/executory contract. At a hearing on debtor's objection to lessor's claim, lessor did not testify and debtor testified that the amounts lessor claimed were unfounded. Shortly thereafter, lessor filed a motion to set aside debtor's rejection of the stipulation. The court considered the pending issues between the parties, concluding that lessor's motion to set aside debtor's rejection should be denied, and that debtor's rejection of the executory contract was justified under any standard applicable to such decisions. Finally, the court found that debtor had sufficiently rebutted lessor's proof of claim, and that lessor's failure to offer any evidence in support of its claim, beyond the proof of claim itself, left the court with no evidence upon which to allow the claim. Lessor's claim was denied, and debtor's rejection of the executory stipulation agreement was approved. | |
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Greenwell v. Greenwell (In re Greenwell) (Internal Ref: Opinion 193) |
Jul-28-1986 UNPUBLISHED |
85PC-0011 |
Judge Clark |
Debtor's ex-wife filed an adversary complaint alleging that debtor materially misrepresented his own financial condition and that of his two convenience stores in connection with the parties' divorce. After trial, the court found that plaintiff had proven the first four elements of her fraud claim (that debtor made a representation, knowing it to be false, with intent to deceive, which plaintiff reasonably relied on), but that she had failed to establish the fifth element (that her damages were the proximate result of debtor's misrepresentations). Plaintiff's 11 U.S.C. § 523(a)(2)(A) claim was therefore denied. |
