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Opinions
| Case Title | Date & Status | Case Number(s) | Judge & PDF | Summary | |
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In re Curlew Valley Assocs., 14 B.R. 506 (Bankr.D.Utah) (Internal Ref: Opinion 43) |
Oct-8-1981 PUBLISHED |
80-0876 |
Judge Mabey |
Chapter 11 debtor, the owner and operator of a large farm, disagreed with trustee's decisions regarding farm operation, specifically, trustee's decision to bale hay instead of cubing it. On an emergency basis, the court denied debtor's request for an injunction, in which debtor asked the court to make its own determination regarding the hay dispute. The court held that, under 11 U.S.C. § 1108, the trustee has discretion to operate the debtor's business as a going concern, rather than to liquidate it. The court explained that the "[u]nless the court orders otherwise" language in § 1108, at most, allows the court to direct the trustee to discontinue an enterprise, and does not give the court power to impose conditions on trustee's management of the estate. The court also determined that policy reasons discouraged court supervision of the trustee, and concluded that it would not entertain objections to a trustee's management of an estate where trustee's conduct involved a business judgment made in good faith, that had a reasonable basis, and is within the scope of trustee's authority under the Code. The court also denied debtor's request to terminate trustee's appointment and restore it as debtor-in-possession, pursuant to 11 U.S.C. § 1105, finding that such relief was not warranted under either an "improvident appointment" or a "change in circumstances" test. | |
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Segal v. Grooms (In re Grooms), 13 B.R. 376 (Bankr.D.Utah) (Internal Ref: Opinion 42) |
Aug-24-1981 PUBLISHED |
80-0234 |
Judge Mabey |
Chapter 7 trustee sought to avoid debtor's transfer of his wholly owned residence to his son and daughter-in-law, claiming the transfer was fraudulent under 11 U.S.C. § 544(b) and Utah Code Ann. § 25-1-4. After losing his case at trial, trustee moved for a new trial, asserting that the court had applied the wrong burden of proof. The court held that the burden of proof had been properly placed on trustee, that trustee's failure to object to the court's jury instruction on that issue constituted a waiver, and that the facts of the case supported not shifting the burden to the defendants. | |
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Summit Land Co. v. Allen (In re Summit Land Co.), 13 B.R. 310 (Bankr.D.Utah) (Internal Ref: Opinion 41) |
Aug-18-1981 PUBLISHED |
81-0122 |
Judge Mabey |
Chapter 11 debtor owned a large property in Utah that was operated as a recreational park for the use of members. Debtor sold perpetual, non-exclusive interests in the property by real estate contract, each of which included one membership. Debtor's goal of selling a certain number of membership interests was not met, which led to its petition and a decision to sell the property. Sale of the property would require termination of members' continuing interests, which some of them opposed. The court ruled that the contracts with members were executory and could be rejected by the debtor or the trustee under 11 U.S.C. § 365(a). The parties agreed that the proposed rejection was subject to court approval, but the court ruled, based on § 365(d), that approval should be granted as a matter of course. The court rejected members' argument that land sale contracts receive special treatment under the Code and should not be rejected unless burdensome, noting that Congress did not grant special treatment to land contracts, as it did to other types of contracts. Finally, the court ruled that members were not "in possession" of the property, as required by § 365(i) and (j), and thus those provisions did not allow them to retain possession. | |
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Bankers Life Ins. Co. v. Alyucan Interstate Corp. (In re Alyucan Interstate Corp.), 12 B.R. 803 (Bankr.D.Utah) (Internal Ref: Opinion 39) |
Jul-16-1981 PUBLISHED |
81-0383 |
Judge Mabey |
Creditor, with a claim wholly secured by chapter 11 debtor's real property, sought relief from stay to foreclose its interest. The debt owed to creditor equaled approximately 93% of the value of the property, and was increasing at the rate of approximately $8,000 per month, in interest. The court found that the property's value was stable, but that creditor's "equity cushion" would dissipate within a year due to the interest. Creditor asserted that these facts left it without the adequate protection that would be provided by an equity cushion. The court, noting that "adequate protection" was not defined in the Code, found it to be dependent on the factual circumstances of each case and, while an equity cushion may be helpful to adequate protection, it does not define it. The facts before the court were that the property was necessary to debtor's reorganization, creditor was a first lien holder, and had ample collateral to cover its debt. Therefore, creditor was adequately protected and was not entitled to relief from stay. | |
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Borg-Warner Acceptance Corp. v. Twelves (In re Utah Agricorp, Inc.), 12 B.R. 573 (Bankr.D.Utah) (Internal Ref: Opinion 40) |
Jul-16-1981 PUBLISHED |
79-0037 |
Judge Mabey |
In a case subject to the Bankruptcy Act, the court considered plaintiff's claim that it held a perfected security interest in a harvester that was repurchased by debtor from a dealer in Idaho. At issue was whether plaintiff's security interest became unperfected under Utah law when the harvester was transported from Idaho to Utah. The court rejected plaintiff's claims of constructive possession and re-perfection, concluding that Utah Code Ann. §70A-9-103(1)(d) and 70A-9-302 required a security agreement to be filed in Utah within four months of the harvester's arrival there, in order for the lien to remain perfected. Plaintiff's failure to file a security agreement in Utah within four months rendered its lien unperfected back to the date of the harvester's arrival in the state. | |
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In re Adams, 12 B.R. 540 (Bankr.D.Utah) (Internal Ref: Opinion 38) |
Jul-15-1981 PUBLISHED |
80-0970 |
Judge Mabey |
The court considered a claim for alimony and child support by chapter 13 debtor's ex-wife, which is non-dischargeable under 11 U.S.C. § 523(a)(5), and is excepted from the automatic stay pursuant to 11 U.S.C. § 363(b)(2) to the extent that recovery is sought from non-estate property. After confirmation of debtor's plan, ex-wife obtained a judgment in state court for past alimony and child support, which she sought to collect. Debtor moved for an order to show cause, and the court identified the issue before it as what property was not estate property that could be executed on by ex-wife while the stay was in place. The court concluded that virtually no property remains property of the debtor in a chapter 13 proceeding, prior to confirmation, since even property within debtor's possession and control and exempt property are considered to be estate property in a chapter 13. However, unless the plan or confirmation order provides otherwise, plan confirmation re-vests all of the estate property in the debtor. The court suggested that chapter 13 debtors might want to include full payment of non-dischargeable debts to ex-spouses in their plans, thereby relieving the ex-spouses from pursuing collection outside of the bankruptcy, and providing monitoring of their payments by the trustee. | |
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In re Case, 11 B.R. 843 (Bankr.D.Utah) (Internal Ref: Opinion 37) |
Jun-10-1981 PUBLISHED |
80-0294 |
Judge Mabey |
In a chapter 13 case, the court established the value of the secured and unsecured portions of two creditors' claims. Debtors then agreed with those creditors to make payments on the secured portions directly, rather than having trustee make the payments, in order to avoid paying the trustee's fee under 11 U.S.C. § 1302(e)(2) on "all payments under the plan." The court ruled that, since it had limited creditors' secured claims under 11 U.S.C. § 1325(a)(5), those claims were "provided for by the plan," and trustee was entitled to a fee on each payment made on those claims, whether they were made by trustee or debtor directly. However, some secured creditors may be "handled wholly outside of the plan," and those payments would not be subject to a trustee's fee. The court indicated, however, that its view regarding such outside-of-plan handling would not necessarily apply to an unsecured claim. Based on the facts before it, including that a trustee's fee would be charged on any payments made on the secured obligations, debtors were ordered to amend their plan to include the payments to the creditors at issue, which would be paid by the trustee. | |
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Alpa Corp. v. Internal Revenue Serv. (In re Alpa Corp.), 11 B.R. 281 (Bankr.D.Utah) (Internal Ref: Opinion 35) |
May-15-1981 PUBLISHED |
80-0445 |
Judge Mabey |
The IRS seized all of debtor's inventory, equipment, and other property from its business, causing debtor to cease its operations. Debtor filed a chapter 11 petition while the property was still in possession of the IRS and had not been sold, and filed an adversary complaint for turnover. The court held that a debtor's interest in property that was seized by the IRS prepetition is property of the estate, subject to turnover under 11 U.S.C. § 542. The court rejected the IRS' argument, based on pre-Code case law, that a levy on property under 26 U.S.C. § 6331 divests the debtor of any interest in the property, concluding that the IRS levy gave it a perfected lien, and therefore a substantial interest in the property, but not one that equals absolute ownership. Since all of the property seized was necessary to debtor's business, turnover was appropriate, subject to adequate protection of the IRS' interest. | |
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In re Reed, 11 B.R. 258 (Bankr.D.Utah)In re Hubbard (Internal Ref: Opinion 36) |
May-15-1981 PUBLISHED |
80-1785, -0082 |
Judge Mabey |
In two cases involving orders to show cause for stay violations, the court explained the difference between criminal and civil contempt, as well as what constitutes sufficient knowledge of the automatic stay for imposition of civil contempt. Sellers of a restaurant to debtors were found in violation of the stay due to having spread garbage taken from debtors' closed restaurant around debtors' home. The court ordered them to pay $500 in damages, and $300 for attorney's fees. Another debtor's boss was found in violation of the stay based on his demand that debtor pay a phone bill or risk losing his job. He was ordered to repay the money debtor had paid to him due to that demand, and to pay trustee's attorney's fees. However, a previously imposed $500 fine against respondent was withdrawn. | |
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In re Cruseturner, 8 B.R. 581 (Bankr.D.Utah)In re ReidIn re Nelson (Internal Ref: Opinion 34) |
Jan-29-1981 PUBLISHED |
80-0133, -0598, -0800 |
Judge Mabey |
The court considered two issues common to three chapter 7 bankruptcies, which were: (1) whether debtors may redeem property pursuant to 11 U.S.C. § 722 by paying the redemption amount in installments, over creditors' objections; and (2) does the automatic stay under 11 U.S.C. § 362(a)(5) continue to prevent action against property that reverts to debtor, either by abandonment or exemption? The court determined that debtors must pay their redemption payment in full in order to impose a redemption right on an unwilling creditor, but courts may allow debtors up to 30 days from the determination of the redemption amount within which to make that payment. Installment payments may be negotiated with a creditor, but an enforceable agreement is required, subject to the provisions of 11 U.S.C. § 524(c) for reaffirmation agreements. The court further concluded that the automatic stay continues to cover property that reverts to debtors, or that is acquired postpetition, until one of three acts set forth in § 362(c)(2) occurs. Debtors' requests to redeem property in installments were denied, and debtors were given 10 days in which to redeem in full. However, creditors could not repossess their collateral until either they obtained relief from stay, their debtors' case was closed or dismissed, or a discharge decision was entered. | |
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In re Smith, 8 B.R. 543 (Bankr.D.Utah) (Internal Ref: Opinion 33) |
Jan-26-1981 PUBLISHED |
79-1293 |
Judge Mabey |
In a chapter 13 proceeding, student loan creditor objected to debtors' proposed plan, alleging that student loans were not dischargeable under chapter 13. The court disagreed, finding that Congress had specifically rejected non-dischargeability of such loans in chapter 13, in order to incentivize long-term efforts by debtors to repay their debts. The court also rejected creditor's argument that student loan debt is "long-term debt" under 11 U.S.C. § 1322(a)(5), concluding that treatment of debt as "long-term" is a benefit afforded to debtors rather than creditors. However, under the circumstances of the case, including a high percentage of total debt comprised by student loans and the relatively small payment proposed, the court concluded that debtors' proposed plan failed to meet the "good faith" standard under 11 U.S.C. § 1325(a)(3). The court rejected the reasoning of cases from other jurisdictions that questioned whether determinations of good faith should be predicated on debtors' treatment of debts that would be dischargeable under chapter 7, concluding that the existence of such debts is a relevant factor to consider. | |
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Pillow v. Avco Fin. Servs. (In re Pillow), 8 B.R. 404 (Bankr.D.Utah)Geigle v. Avco Fin. Servs. (In re Geigle)Horton v. Avco Fin. Servs. (In re Horton)Revello v. Avco Fin. Servs. (In re Revello) (Internal Ref: Opinion 32) |
Jan-8-1981 PUBLISHED |
80-0059, -0061, -0060, -0058 |
Judge Mabey |
Debtors in four cases filed complaints against Avco seeking to avoid its liens on their personal property, and Avco moved to dismiss. The court considered whether the 11 U.S.C. § 522(f)(2) lien avoidance provisions applied to security interests created prior to enactment of the Bankruptcy Code, and if so, whether the provisions were constitutional. The court explained that § 522(f)(2) was intended to avoid nonpossessory, non-purchase money liens to the extent they impair exemptions for certain living necessities, tools of trade, and health aids, then concluded that both the statute's language and legislative analysis indicated that § 522(f) was intended by Congress to be retroactive. In considering whether retroactive application of the statute was constitutional, the court concluded that no substantive due process rights outweighed the congressional power to regulate bankruptcies. At most, the court held that the Constitution required a rational connection between § 522(f) and the purpose of its enactment, which was to eliminate certain "evils" in the credit industry. The court held that, under the presumption of constitutionality that was afforded the statute, it would be inappropriate to conclude that § 522(f) does not rationally relate to that purpose and, therefore, the statute was constitutional. Avco's motions to dismiss were denied. | |
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In re Kennard (Internal Ref: Opinion 31) |
Oct-24-1980 UNPUBLISHED |
78-0922 |
Judge Mabey |
In a case subject to the Bankruptcy Act, attorneys who represented debtor prepetition filed a secured claim for fees incurred in a successful litigation. Trustee objected to treatment of the claim as secured. Section 67b of the Act made certain state law statutory liens superior to the trustee's claim, and Utah provided such a statutory lien for attorney's fees. The court determined that the Utah lien was perfected upon the filing of a complaint. All of trustee's arguments of invalidity of the statutory charging lien were rejected by the court, and trustee's objection to the claim was denied. | |
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Styler v. Local Loan Fin. Servs. (In re Lanctot), 6 B.R. 576 (Bankr.D.Utah) (Internal Ref: Opinion 30) |
Oct-10-1980 PUBLISHED |
80P-0078 |
Judge Mabey |
Debtors purchased two motorcycles from lender pursuant to a purchase money security agreement, which was never perfected. In debtors' chapter 7 proceeding, trustee filed an adversary complaint against lender seeking to set aside its interest under 11 U.S.C. § 544, and to preserve the lien for the estate under 11 U.S.C. § 551. Lender stipulated to the relief sought by trustee. The court ruled that trustee's hypothetical judicial lien was automatically preserved for the estate by § 551, but that debtors were still subject to lender's contractual claim. Debtors claimed an exemption in the motorcycles under 11 U.S.C. § 522(d)(5), which the court determined would not be available to them unless they established an "aggregate interest" in the property, which would require them to either avoid lender's lien, which still bound them under state law and exceeded the property's value, or obtain the benefit of trustee's avoidance of that lien. Such powers would only be provided by the exemption statute, and the court considered subsections (c), (f), (g), and (h) of § 522, concluding that none of those provisions would allow debtors' to claim an exemption. | |
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Davies v. Platt (In re Yellow House Rest.) (Internal Ref: Opinion 29) |
Oct-4-1980 UNPUBLISHED |
79-0744, -0745, -0763 |
Judge Mabey |
Debtors, former spouses, filed separate bankruptcy petitions, and both claimed a state law homestead exemption. The parties occupied different parts of the same house, jointly ran a restaurant, and had one minor child together. The Utah statute makes a homestead exemption available only to a "head of family," which requires a relative, who is under debtor's care, to reside with them. Since the minor child was the only qualifying relative, the court ruled that only one exemption could be claimed. The debtors' child primarily lived with his mother in her part of the house, mother had more responsibility for his care, and the child's support was provided, indirectly, by the restaurant. Therefore, the court ruled that only wife could claim the head of family exemption. | |
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Peale v. Bates (In re Bates) (Internal Ref: Opinion 28) |
Oct-3-1980 UNPUBLISHED |
80P-0046 |
Judge Mabey |
Debtors sold a home in Washington state to plaintiffs, who incurred expenses getting the home up to code. In a state court action, plaintiffs obtained a judgment against debtors, in which that court found that debtors had "materially misrepresented the condition of" the home, which proximately caused plaintiffs' damages. Debtors filed a bankruptcy petition, and plaintiffs filed a complaint in the bankruptcy court under 11 U.S.C. § 523(a)(2), alleging their judgment was non-dischargeable. The court noted that, based on principles of res judicata, a valid final judgment could not be re-litigated. However, when the issue between the parties is dischargeability, res judicata is inapplicable, but collateral estoppel might bar the re-litigation of issues that were litigated to the same standards that apply in bankruptcy. Comparing Washington state law misrepresentation standards with the standards of § 523(a)(2), the court concluded the standards were essentially the same. Therefore, plaintiff's motion for summary judgment was granted. | |
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In re Lovett, 6 B.R. 270 (Bankr.D.Utah) (Internal Ref: Opinion 27) |
Sep-26-1980 PUBLISHED |
80-0108 |
Judge Mabey |
Debtor's ex-wife initiated a prepetition action in state court against debtor for delinquent child support. After debtor's petition was filed, the state court entered a judgment in favor of ex-wife. Debtor moved to stay the judgment and its enforcement in the bankruptcy case. The court held that the state judgment was valid and binding, pursuant to 11 U.S.C. § 362(b)(2), as to the existence of the debt, which is determined under state law. However, the dischargeability of the debt is determined under federal law. Thus, the court must examine the nature of the judgment, and must determine what property of debtor's does not belong to the estate. Debtor's motion was denied, and the court indicated that ex-wife could file a dischargeability complaint under 11 U.S.C. § 523(a)(5), which may receive an accelerated hearing. | |
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Novinski-Durando v. Heaps (In re Heaps) (Internal Ref: Opinion 26) |
Sep-26-1980 UNPUBLISHED |
78-0743, -0744 |
Judge Mabey |
Trustee sought to set aside debtors' transfer of their residence to their son, as a fraudulent transfer. The court concluded that, at the time of the transfer, debtors did not intend or believe that they would incur debts beyond their ability to pay and, therefore, trustee's 11 U.S.C. § 107d(2)(c) claim failed. The issues with respect to trustee's claim under § 107d(2)(a) were whether debtors were rendered insolvent by the transfer and whether fair consideration was paid by their son. The court found that debtors were rendered insolvent by the transfer of the property, and that son's assumption of a $25,000 first mortgage on a $62,000 property was not fair consideration, and refused to include the value of a life estate in the property as part of son's consideration, as no written agreement had been produced that created such a property right in debtors. | |
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Ingersoll-Rand Fin. Corp. v. Hyland (In re Atlas Dirty Devil Mining Co.) (Internal Ref: Opinion 25) |
Sep-16-1980 UNPUBLISHED |
79-0327 |
Judge Mabey |
Plaintiff leased mining equipment to debtor, which was in debtor's possession when it filed its petition and when personal property taxes were assessed against it by the County. In a dispute between plaintiff and County, the court ruled that plaintiff, as the owner of the property, was liable for the taxes on that property, and that assessment of taxes does not violate the stay even if a debtor is assessed. Likewise, County's seizure of the property, which took place after plaintiff obtained relief from stay to foreclose on the property, also did not violate the stay. Finally, County obtained a lien on the property under state law when it took possession of it. However, plaintiff may have a claim against debtor for the taxes that it paid, as the parties' lease required debtor to pay the taxes. | |
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Cutler v. Tebbs (In re Tebbs) (Internal Ref: Opinion 24) |
Aug-19-1980 UNPUBLISHED |
79-0965 |
Judge Mabey |
Plaintiffs obtained a judgment against debtor in state court on the basis that debtor's conduct was "willful, intentional and malicious." Finding that the tort and bankruptcy standards for what is willful and malicious were substantially the same, the court granted summary judgment to plaintiffs on their non-dischargeability claim, based on collateral estoppel. | |
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Warner v. Warner (In re Warner), 5 B.R. 434 (Bankr.D.Utah)Long v. Long (In re Long) (Internal Ref: Opinion 23) |
Aug-7-1980 PUBLISHED |
80-0024 |
Judge Mabey |
In a case subject to the Bankruptcy Act and a case subject to the Bankruptcy Code, the court considered the collateral estoppel effect of a divorce decree on the issue of "alimony, maintenance or support," as well as whether the court should consider the parties' financial circumstances subsequent to entry of the decree, concluding that what constitutes alimony, maintenance or support for purposes of non-dischargeability is a matter of federal law, although a duty of support is dependent on state law. Bankruptcy courts must look behind the language used in the decree to determine whether a provision is actually in the nature of support. Moreover, bankruptcy courts must consider whether an award in the nature of support is still reasonably necessary for support at the time of discharge in bankruptcy. | |
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In re Patio Springs, Inc., 6 B.R, 428 (Bankr.D.Utah) (Internal Ref: Opinion 22) |
Jul-30-1980 PUBLISHED |
78-0008 |
Judge Mabey |
With respect to a chapter XI debtor's redemption right, the court held that the 60-day extension period in Bankruptcy Act § 11(e) begins to run on the date debtor is adjudicated a bankrupt, not on the date of filing the chapter XI petition, despite Bankruptcy Act § 378(a)(2) and Bankruptcy Rule 122, which require that, upon adjudication, a case be treated "as far as possible" as if adjudication took place on the date the chapter XI proceeding was commenced. | |
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Barker v. Stacey (In re Stacey) (Internal Ref: Opinion 21) |
Jul-17-1980 UNPUBLISHED |
78-0307 and -0308 |
Judge Mabey |
In rejecting a challenge to its jurisdiction made by the sellers of real property to debtors, the court found that debtors were in possession of the property and were equitable owners of it, and that a state court forfeiture action filed by sellers less than a month prior to initiation of debtors' bankruptcy had not advanced beyond the initial pleadings and had not changed debtors' property rights and, therefore, it could exercise summary jurisdiction over the property that was the subject of the parties' uniform real estate contract. | |
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Hoskins v. Hoskins (In re Hoskins) (Internal Ref: Opinion 20) |
Jul-14-1980 UNPUBLISHED |
79-0074 |
Judge Mabey |
In an adversary action filed by debtor's ex-wife, in which it was not clear from the parties' divorce decree what amount of an award to plaintiff was intended to be alimony, maintenance or support, the court determined, based on Brown v. Felsen, 442 U.S. 127 (1979), that it was not bound by the decree because the issue of non-dischargeability under § 17 of the Bankruptcy Act is a federal law question on which the court has exclusive jurisdiction. While characterization of certain debts under state law may be relevant to the dischargeability determination, such characterizations are not binding on the issue of dischargeability in bankruptcy. Although a clear state court record indicating that an award was intended as support would be both admissible and highly relevant, there was no such clear record in this case. The matter would therefore need to be tried in the bankruptcy court. | |
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Fisher v. Smith (In re Mrs. J.G. McDonald's Chocolate Co.) (Internal Ref: Opinion 18) |
Jul-10-1980 UNPUBLISHED |
78-0739 |
Judge Mabey |
In an adversary action seeking to avoid, as preferences, certain payments made to defendant, the court considered defendant's request for change of venue to the bankruptcy court in Georgia. The court noted that, although different elements for determining proper venue were not applied to adversary actions and bankruptcy cases, or to different types of bankruptcy cases, certain elements could be given more or less weight based on those facts. Finding no real difference in the inconvenience to the parties that would result from retention or venue change, the court determined that any recovery from defendant would necessarily take place in Georgia, that defendant had little or no contact with this district, that he owned and ran a small business in Georgia, and was already litigating a different matter in that forum, all of which weighed in favor of that jurisdiction. Therefore, defendant had met his burden of proving that a venue transfer was required by the "interests of justice" and the relative "convenience of the parties." | |
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Kesler v. Wilkins (In re Fashion Bowling Lanes) (Internal Ref: Opinion 19) |
Jul-10-1980 UNPUBLISHED |
76-0837 |
Judge Mabey |
In a case involving two trust deeds on debtor's real property, payments made on the first trust deed by both debtor and the second trust deed holder, funds in a "reserve account" set up to cover taxes, assessments, and insurance on the property, foreclosure of the second trust deed, transfer of the foreclosed interest, and a sale in the bankruptcy of personal property relating to debtor's previous operation of a bowling alley, the court was required to determine the respective rights of the bankruptcy trustee and the transferees from the second trust deed holder to funds in the reserve account. The court held that the amount of money in the reserve account, on the date title to the real property transferred to second trust deed holder pursuant to the foreclosure, was personal property of the debtor, and was therefore estate property. However, taxes paid on the property for the year in which debtor lost title were prorated, based on the date on which ownership transferred, and that amount was subtracted from those funds, and a 3-year prospective insurance premium paid from the account prior to the change in ownership was also prorated, and was added to the amount that was considered to be estate property. The court also ruled that a personal property sale in the bankruptcy did not include the reserve account funds. | |
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Tunex, Inc. v. Harrington (In re Tunex, Inc.) (Internal Ref: Opinion 17) |
Jul-2-1980 UNPUBLISHED |
79-0272 |
Judge Mabey |
Debtor filed an action against defendants, husband and wife, for damages and an injunction based on termination of a license agreement. The complaint and two summonses were sent to the parties' home, by mail, in an envelope addressed to both parties, and the return receipt was signed by wife. Defendants claimed lack of personal jurisdiction. The court held that Bankruptcy Rule 704(c) does not limit service by mail to only when authorized by state or federal law, as does Civil Procedure Rule 4. However, Rule 704(c)(1) does require service by mail to be made on "an individual," which the court ruled meant that each party must be separately served with a copy of the summons, complaint, and notice. As husband had not been separately served under the rule, the court held that it lacked in personam jurisdiction over him, whether or not he had actual notice. Service had been proper on wife, and the court held that it had both in personam and subject matter jurisdiction with respect to debtor's claims against her. | |
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Cole Assocs., Inc. v. Howes Jewelers, Inc. (In re Cole Assocs., Inc.), 7 B.R. 154 (Bankr.D.Utah)Cole Assocs., Inc. v. Jensen Jewelers, Inc.Cole Assocs., Inc. v. London Star, Ltd. (Internal Ref: Opinion 16) |
Jun-23-1980 PUBLISHED |
80-0017, -0016, and -0019 |
Judge Mabey |
Debtor filed complaints against three of its creditors seeking to recover property held by them. Each of the defendant creditors asserted that the property was held pursuant to a perfected security interest securing a debt owed them by debtor. Each creditor also moved that venue of their case be transferred to their home state. Prior to considering whether change of venue was appropriate under 28 U.S.C. § 1475, the court determined that venue was proper in its jurisdiction, under 28 U.S.C. § 1473(a), because the bankruptcy case was pending there. The court noted that the party seeking change of venue has the burden of establishing cause for change of venue, and the decision is typically based on practicalities that relate to efficient and inexpensive resolution of the issues. However, in bankruptcy cases, the courts also give significant weight to factors that may affect the remedial purposes of bankruptcy laws. On the facts before it, the court determined that retention of venue in all three cases was appropriate, and that on consideration of bankruptcy factors, retention was compelling. The most significant of such factors was the economic administration of the estate, which the court found weighed heavily in favor of retention. | |
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Rushton v. Adams (In re Payless Bldg. & Remodeling, Inc.) (Internal Ref: Opinion 15) |
Jun-12-1980 UNPUBLISHED |
79-0107 |
Judge Mabey |
Trustee sought to avoid two payments debtor had made to defendant, within four months of bankruptcy, as preferential under 11 U.S.C. § 96. The payments were to repay a loan defendant made to debtor that was not secured. The court found, based on the parties' stipulated facts, that both payments satisfied all of the elements of a preference under the statute. The court focused on whether the payments had depleted the estate, which would not be the case if the loan had been secured. Since the loan was not secured, the payments were not made in exchange for release of a secured interest, which would prevent depletion of the estate. In addition, the court noted that the facts before it would not support an equitable lien, whether or not such liens remained valid to defeat § 96. | |
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Burkehart v. Polychronis (In re Polychronis) (Internal Ref: Opinion 14) |
Jun-3-1980 UNPUBLISHED |
79-0032 |
Judge Mabey |
Plaintiff filed a negligence complaint against debtor in state court on the last day of the limitations period. Debtor subsequently filed a bankruptcy petition, listing plaintiff as a creditor. Plaintiff filed a complaint in the bankruptcy case, alleging non-dischargeability of her claim under 11 U.S.C. § 35a(8). Debtor moved for summary judgment, asserting plaintiff's claim was barred by the statute of limitations. The court disagreed, concluding that plaintiff's claim was based on her timely filed state complaint, and that it had jurisdiction to litigate that claim or grant relief from stay to allow plaintiff to continue litigating it in state court. The fact that her state claim was based on negligence was irrelevant, since jurisdiction to determine the dischargeability of that claim was exclusively in the bankruptcy court. Based on plaintiff's preference, the court retained the case for both the amount and the dischargeability of her claim. |
