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Opinions
| Case Title | Date & Status | Case Number(s) | Judge & PDF | Summary | |
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American General Finance of Utah v. Stauffer (In re Stauffer) (Internal Ref: Opinion 511) |
Mar-19-2007 UNPUBLISHED |
04-02573 |
Judge Clark |
Creditor filed an adversary proceeding seeking exception to debtor's discharge under § 523(a)(6) - willful and malicious conduct. Although the complaint sounded in other grounds, no other subsections of § 523 were pled by creditor. The debtor filed a motion to dismiss the adversary proceeding and a motion an award of fees and costs under § 523(d). The Court granted debtor's motion to dismiss with prejudice, but denied debtor's motion for fees and costs. Noting that § 523(d) refers only to determinations of dischargeability brought under § 523(a)(2), and does not mention determinations of dischargeability brought under § 523(a)(6), the Court applied the maxim expression unius est exclusio alterius, a canon of statutory construction which holds that to include one thing in a statute implies the exclusion of the other. In so doing, the Court found that the award of fees and costs incurred by a debtor defending an adversary proceeding brought under § 523(a)(6) is beyond the scope of §523(d). | |
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In re Birch (Internal Ref: Opinion 512) |
Feb-23-2007 UNPUBLISHED |
06-23273 |
Judge Thurman |
The Court determined that under Utah law, the Debtor who was the purchaser under a real estate purchase contract obtained equitable ownership of the real property under the doctrine of equitable conversion, while the seller retained bare legal title. The Court further determined that forfeiture provisions in real property contracts should be enforced so long as the seller strictly complies with its terms. Where a forfeiture provision is not automatic and gives the seller the right to declare a forfeiture, the buyer retains rights in the property until the seller specifically declares a forfeiture. In this case, the Court determined that the Debtor still held an interest in the property because, although the seller had declared a default, the seller failed to declare a pre-petition forfeiture of the buyer's (Debtor's) interest.Debtor executed a real estate purchase contract pre-petition to purchase real property in installment payments. The contract contained a forfeiture provision which could be exercised at the election of the seller upon the Debtor's breach. The Debtor breached the contract and the seller sent the Debtor a letter demanding cure. The seller did not declare a forfeiture of the Debtor's interest in the property pre-petition. The Debtor's chapter 13 plan proposed to fund the plan in principle part by selling the real property. The seller objected to confirmation, arguing that he owns the property because of the forfeiture provision and the notice he had sent. The Court overruled the objection and at a later date, confirmed the plan. | |
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In re Blakeley (Internal Ref: Opinion 510) |
Feb-22-2007 PUBLISHED |
06C-23646 |
Judge Clark |
Upon filing bankruptcy, the debtor, pro se, indicated an intention to reaffirm debt with Credit Union secured by debtor's vehicle. Within 30 days of the 341 meeting, Debtor entered into the reaffirmation agreement. Because debtor is pro se, § 524(c)(6)(A) requires that the Court find that the reaffirmation agreement not impose an undue hardship and is in the best interest of creditors. Debtor was under the impression that if the Court did not approve the reaffirmation agreement, Credit Union would be free to repossess the vehicle notwithstanding the fact that Debtor was current on all payments required under the contract and the vehicle was insured. The Court found that because debtor had timely complied with all requirement found under §521(a)(2), 521(a)(6), 362(h)(1) and 521(d), that it was not necessary for the Court to approve the reaffirmation agreement in order for the debtor to “ride through” the bankruptcy and retain possession of the vehicle. Because Debtor complied with the requirements found under § 521(d), the Bankruptcy Code's limitation on contract ipso facto clauses remain in effect and Credit Union is prevented from declaring the contract in default by virtue of the Debtor's insolvency or bankruptcy. | |
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In re Tonioli (Internal Ref: Opinion 509) |
Feb-6-2007 PUBLISHED |
06-21049 |
Judge Thurman |
The Court was called upon to determine whether chapter 13 debtors could modify their plan to abate delinquent payments where the effect of the modification would be unequal monthly payments made to a secured creditor. Section 1329(b)(1) provides that the Court may allow a proposed modification so long as the modified plan would comply with section 1325(a). Section 1325(a)(5) provides that if a debtor pays a secured creditor in periodic payments, those payments must be in equal monthly amounts. The Court held that the proposed modification did not comply with this provision, but was still permissible because the creditor's silence to the proposed modification constitutes implied consent. | |
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In re Lawson, In re Boynton (Internal Ref: Opinion 508) |
Jan-25-2007 PUBLISHED |
06-22766, 06-22812 |
Judge Boulden |
In each of two chapter 13 cases, the Debtors' income was above the median for Utah households of the Debtors' size, but the Debtors each had negative monthly disposable income as calculated on their Statements of Current Monthly Income and Calculation of Commitment Period and Disposable Income (Form B22C). The Debtors each proposed a plan providing for regular monthly payments to the trustee but a return of only $500 pro rata to general unsecured creditors. Although both plans would apparently run for more than 36 months, neither plan was expected to run for a full 60 months. The chapter 13 trustee objected to confirmation on two grounds: (1) that the plans for these above-median Debtors must continue for a full five years; and (2) that their plans must provide for the submission to the trustee of postpetition tax refunds received by the Debtors in addition to their monthly plan payments in accordance with pre-BAPCPA practice in the District of Utah. On the second point, the trustee argued in the alternative that if the turnover of postpetition tax refunds was no longer required, then the Debtors must only be allowed to deduct their actual anticipated future tax expense on line 30 of Form B22C rather than whatever amount they had withheld from their paychecks. The Debtors argued both that they do not have to contribute their tax refunds to the plan and that they are entitled to deduct the full amount withheld from their income as the tax expense on line 30 of Form B22C. The Court held that the “applicable commitment period” concept in § 1325(b)(4) is “fundamentally irrelevant” for above-median debtors with negative monthly disposable income. The Court also held that although the submission of postpetition tax refunds was no longer required under § 1325(b)(1)(B), above-median debtors are only permitted to deduct their actually incurred future tax expense on line 30 of Form B22C rather than the full amount of their withholdings. | |
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In re Giles (Internal Ref: Opinion 507) |
Jan-19-2007 UNPUBLISHED |
06-23988 |
Judge Thurman |
The debtors in this chapter 13 case obtained credit counseling 182 days before filing for bankruptcy relief. Section 109(h), by its terms, requires debtors to obtain credit counseling 180 days before filing. The Court held that it lacks discretion to waive a debtor's failure to obtain the required credit counseling required by section 109(h). To that end, the Court also held that it lacked discretion to find that the debtors had complied section 109(h) by satisfying the "spirit" of the bankruptcy provision. . The Court granted the Trustee's Motion to Dismiss, finding that it lacked jurisdiction over the case. | |
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In re Hanks (Internal Ref: Opinion 506) |
Jan-9-2007 PUBLISHED |
06-22777 |
Judge Boulden |
As calculated using historical income figures in their Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income (Form B22C), the chapter 13 Debtors' income was above the median for Utah households of the Debtors' size. But the Debtors' actual income had decreased prepetition and continued to be lower postpetition than the historical Form B22C numbers suggested. The Debtors proposed a chapter 13 plan that provided for monthly payments to the trustee based on their actual current disposable income rather than the larger payments required by strict adherence to Form B22C, and the chapter 13 trustee filed an objection to confirmation. The Debtors presented evidence and argued that the monthly disposable income amount generated by Form B22C's income and expense calculations is not dispositive of the return to general unsecured creditors if the Debtors could show a “substantial and material change” in their actual financial circumstances. The Court denied confirmation of the Debtors' plan without prejudice, holding that the calculations set forth in Form B22C are determinative with respect to the amount that above-median debtors must return to their general unsecured creditors unless “special circumstances” can be shown as set forth in § 707(b)(2)(B) of the Bankruptcy Code | |
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In re Hollingsworth (Internal Ref: Opinion 505) |
Dec-21-2006 PUBLISHED |
06-24498 |
Judge Clark |
Debtor brought a motion under § 362(c)(3)(B) to extend the automatic stay. The debtor had been a debtor in one previous bankruptcy proceeding within one year of the debtor's present case. The reason for the present bankruptcy proceeding, as stated in the debtor's motion to extend the automatic stay, was to protect the debtor's home from foreclosure. Pursuant to § 1306, the debtor's home is property of the estate. The Court adopts the reasoning set forth in In re Johnson, 335 B.R. 805 (Bankr. W.D. Tenn. 2006) which finds that the plain language of § 362(c)(3)(A) dictates that the 30-day time limit applies only to "debts" or "property of the debtor" and not to "property of the estate". Because the automatic stay continues to protect "property of the estate" after expiration of the 30-day time limit found in § 362(c)(3)(A), relief under § 362(c)(3)(B) is unnecessary. The Court found that debtor's motion did not contain a present controversy and the motion was denied. | |
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In re Potter (Internal Ref: Opinion 504) |
Dec-12-2006 UNPUBLISHED |
06-23025 |
Judge Thurman |
The Court was called upon to determine whether the Debtors' motor vehicle was subject to a purchase money security interest where they inherited the vehicle and assumed the decedent's debt on the vehicle. The court held that the debt created a security interest, but not a purchase money security interest. Because the security interest at issue was not purchase money, the Court held that the Debtors could cram down the creditor's claim under section 1325(a) even though the debt was incurred within 910 days of filing. | |
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In re Landers (Internal Ref: Opinion 503) |
Sep-12-2006 UNPUBLISHED |
06-22265 |
Judge Boulden |
As the Court has previously discussed in In re Fawson, 338 B.R. 505 (Bankr. D. Utah 2006) and In re Wilkinson, 346 B.R. 539 (Bankr. D. Utah 2006), § 521(a)(1)(B)(iv) and (i)(1) operate to automatically dismiss individual debtors' cases 46 days after the petition date if “copies of all payment advices or other evidence of payment received within 60 days before the date of the filing of the petition, by the debtor from any employer of the debtor” are not filed by the 45th day. In this case, it appeared that the Chapter 13 Debtor failed to timely file one payment advice for the pay period ending April 30, 2006 and that the case had potentially been dismissed effective August 9, 2006. At the confirmation hearing, the Debtor testified only that he could not recall whether he received a payment advice for the April 30th pay period although he had no breaks in employment and always received such payment advices from his employer for his bi-weekly paychecks. The Debtor then argued that his belief as to whether all required payment advices were filed was controlling under § 521(a)(1)(B)(iv). The Court ruled that the weight of the evidence contradicted any alleged belief by the Debtor that he had timely filed all required payment advices. The Court also ruled that there is no statutory basis for concluding that a debtor's subjective belief is controlling rather than the objective facts of whether qualifying payment advices were received and filed. | |
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In re Clemens (Internal Ref: Opinion 502) |
Aug-22-2006 PUBLISHED |
06-20124 |
Judge Thurman |
The Court interpreted the BAPCPA amendments to section 330(a)(3) and 330(a)(7) regarding allowance of chapter 7 trustees' fees. The Court held that under these amendments, the 10th Circuit's opinion of In re Miniscribe, 309 F.3d 1234 (2002) was not overruled but that section 326 must now be a part of the Court's Lodestar analysis, instead of simply acting as a cap against Trustee's fees.In reviewing trustee fee requests, the Court will now consider: 1) the time and labor required; 2) the novelty and difficulty of the issues involved; 3) the skill requisite to perform the service properly; 4) the preclusion of other employment by the trustee due to his or her acceptance of the appointment as trustee in the case; 5) the customary charges by other professionals involved in the case and by the field in general; 6) the contingent nature of the fee; 7) time limitations imposed by acceptance of the appointment; 8) the amount generated by the trustee's efforts for creditors and the results obtained; 9) the experience, reputation, and ability of the trustee; 10) the 'undesireability' of the case; 11) awards in similar cases; 12) computation of any multiplier for extraordinary results obtained by the trustee; 13) the amount resulting from the calculations under section 326(a); 14) whether the trustee has engaged in conduct which might justify denial of compensation under section 326(d); 15) whether notice of the trustee's fee request is appropriate, and whether any party in interest objects to the fees; and 16) whether the fees are to be paid from cash collateral and whether the creditor secured by the collateral consents.In this case, the chapter 7 Trustee's request for fees was not accompanied by any documentation of the hours spent in prosecuting the case. The Court held that without such documentation, it could not undergo the required "Lodestar" analysis discussed above. Accordingly, the Court denied the Trustee's request for fees without prejudice. | |
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In re Curtis (Internal Ref: Opinion 500) |
Jul-11-2006 PUBLISHED |
06-20001 |
Judge Boulden |
The Debtor proposed a Chapter 13 plan in which he sought to bifurcate the secured claims of two different creditors under 11 U.S.C. § 506(a)(1). These creditors had provided financing to the Debtor within the previous year that allowed him to purchase two semi-tractors used in his business. The Debtor argued that the hanging paragraph of § 1325(a) requires that a creditor whose collateral consists of “any other thing of value” purchased within one year of filing can only avoid having its secured claim crammed down under § 506(a)(1) if it has a purchase money interest in the collateral. Furthermore, the Debtor argued that a creditor can never have a purchase money security interest in a motor vehicle in Utah. The Court found that the hanging paragraph does require a creditor whose collateral consists of “any other thing of value” to have a purchase money security interest in the collateral to avoid the cram down of its secured claim. The Court also found that the Utah Uniform Commercial Code regulates the creation of security interests in motor vehicles in Utah meaning that Creditors can have purchase money security interests in motor vehicles. The Debtor's objections were overruled and his plan was denied confirmation without prejudice. | |
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In re Fuger (Internal Ref: Opinion 501) |
Jun-29-2006 PUBLISHED |
06-20801 |
Judge Thurman |
The Court was called upon to determine the meaning of the phrase, “applicable commitment period” found in Section 1325(b)(1)(B) under the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”). Through an analysis of plain language of the statute and prior case law, the Court ruled that a chapter 13 Debtor may propose a plan which does not require a set length of time to be in a plan, but which pays a specific amount to unsecured creditors. This amount would normally be calculated and paid over the applicable commitment period. The 'applicable commitment period,' 3 or 5 years, serves to aid the Debtor in determining the amount he or she must return. | |
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In re Wilbur (Internal Ref: Opinion 498) |
Jun-21-2006 PUBLISHED |
06-20104 |
Judge Thurman |
In this case, the Court was called upon to determine the scope of the phrase "unsecured creditors" in the context of Section 1325(b)(1)(B) relating to confirmation of a chapter 13 plan. That section provides that upon objection to confirmation by a party in interest, the Court may confirm a debtor's proposed chapter 13 plan only if the debtor proposes to pay unsecured creditors in full, or proposes to pay the debtor's projected disposable income for the applicable commitment period to "unsecured creditors." The Debtors in this case urged the Court to adopt the plain language of §1325(b)(1)(B). They contended that the phrase "unsecured creditors" refers to both priority and non-priority unsecured creditors which resulted in a lower payment to the unsecured creditors. The chapter 13 Trustee disagreed and objected to the plan.The Court declined to enforce the plain language of section 1325(b)(1)(B) because that interpretation conflicts with manifest Congressional intent, and would bring an absurd result. The Court concluded that the reference in section 1325(b)(1)(B) to "unsecured creditors" refers to non-priority unsecured creditors only, requiring the Debtors' proposed chapter 13 plan to return to non-priority unsecured creditors at least the amount calculated on Form B22C, which in this case would be a much greater amount than proposed. Since the Debtors' proposed plan did not comply with this requirement, the Court held that the Debtors' proposed plan did not meet the requirements of section 1325(b)(1)(B) and was not confirmable. | |
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In re Wilkinson (Internal Ref: Opinion 497) |
May-30-2006 UNPUBLISHED |
06-20441 |
Judge Boulden |
Chapter 13 debtor attempted to comply with 11 U.S.C. § 521(a)(1)(B)(iv) by filing all pay advices received during the 60 days prepetition but erroneously filed one pay advice for the wrong year. The missing pay advice was filed immediately prior to the confirmation hearing but outside the 45-day time limit articulated in § 521(i). The debtor filed a Motion to Find Compliance with 11 U.S.C. § 521 or, in the Alternative, Motion to Vacate Order of Dismissal arguing either that the debtor had “substantially complied” with the requirements of § 521 or that the Court otherwise had discretion to not dismiss the case. Elaborating on the Court's decision in In re Fawson, 338 B.R. 505 (Bankr. D. Utah 2006), the Court rejected the debtor's interpretation of the statute and reiterated the holding that automatic dismissals occur on the 46th day after the petition is filed without judicial intervention unless a timely extension motion is filed. The Court also rejected an argument based on substantial compliance in light of the strict statutory scheme of § 521(a)(1) and (i). Finally, the Court held that Federal Rule of Bankruptcy Procedure 9024, incorporating Federal Rule of Civil Procedure 60(b), cannot be used to vacate a dismissal that occurred automatically by operation of statute. | |
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GE Money Bank v. Belinda Marek (In re Marek) (Internal Ref: Opinion 496) |
May-10-2006 UNPUBLISHED |
05-02766 |
Judge Clark |
Creditor filed adversary to have creditor's debt excepted from discharge under § 523(a)(2), but filed the adversary proceeding after debtor had been issued a discharge and after debtor's case had been closed. Creditor served a summons and complaint upon debtor after closure of Debtor's case as well. Debtor did not file an answer to the summons and complaint or otherwise defend. Creditor submitted an application for default judgment and the matter came before the court on hearing. Creditor argues that under Knotrick v. Ryan, 540 U.S. 443 (2004). Creditor is entitled to a default judgment because Debtor failed to assert Creditor's late filing of the adversary proceeding as an affirmative defense. Creditor argued that service upon Debtor was effective because the debtor is an individual and that service upon individuals is governed by F.R.B.P. 7004(b)(1). The Court held that service of process upon a debtor is governed by Rule 7004(b)(9) rather than Rule 7004(b)(1), that Creditor's service upon the Debtor was ineffective because the Debtor's case was closed at the time that Debtor was served with the summons and complaint, and that Creditor must reopen debtor's case in order to effectuate service of process upon the Debtor under Rule 7004(b)(9). | |
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In re Beckstead (Internal Ref: Opinion 495) |
Apr-26-2006 UNPUBLISHED |
05-35213 |
Judge Thurman |
The Court was called upon to determine whether a real estate commission was property of the estate and if so, whether it was exempt. One of the Debtors in this case was employed as a real estate agent under the supervision of her principal broker. Before filing for chapter 7 bankruptcy relief, the Debtor produced buyers to certain sellers, who were ready, willing and able to purchase the sellers' real property. The Debtor, acting as a real estate agent, performed the bulk of her services before the filing of the Debtor's case. The sale did not close until after the Debtor filed this bankruptcy case. Upon reciept of the commission from the sale, the Debtors amended their statements and schedules to include the commission and claimed an exemption for 75% of the commission under Utah R. Civ. P. 64D. The chapter 7 trustee assigned to the Debtors' case objected to their claimed exemption, arguing that a commission is not subject to an exemption under Rule 64D.The Court first held that under Utah law the commission is property of the estate because the Debtor had an agreement with her broker that she was entitled to a commission whenever the broker became entitled to its commission. Under Utah law a broker is entitled to a commission when the broker presents a seller with a buyer who is ready, willing and able to purchase the property at issue, regardless of whether the sale actual goes to completion. Because the broker was entitled to collect its commission before the Debtor filed for bankruptcy relief, so too was the Debtor entitled to collect the commission. Thus, the Court concluded that the commission was property of the estate.The Court also held that under Utah law a commission is subject to an exemption under Rule 64D. The Court reached this conclusion by considering the language and history of Rule 64D, applying Utah rules of statutory construction. | |
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Markus v. Fried (In re Geneva Steel) (Internal Ref: Opinion 494) |
Apr-18-2006 PUBLISHED |
05P-02578 |
Judge Clark |
The Chapter 11 trustee brought an adversary proceeding against certain members of Geneva's Board of Directors alleging breach of duty of care, breach of duty of good faith, breach of duty of loyalty and breach of fiduciary duty. Two of the defendants filed a motion with the Court to have the trustee's causes of action declared as "non-core" matters under 28 U.S.C. § 157(b)(3). Both of the moving directors had filed proofs of claim in the Geneva bankruptcy proceeding. An element of the Director's proofs of claim included an indemnity claim asserting claimant's rights to be indemnified, defended, or held harmless by Geneva for any liability that may arise from the Director's service on the Board of Directors. Upon being served with the trustee's complaint, both directors filed a counterclaim in the adversary proceeding asserting their indemnification rights. The Court ruled that the causes of action in the trustee's adversary proceeding against the directors were a compulsory counterclaims to the director's proofs of claim and the Court ruled that the director's counterclaims were compulsory counterclaims to the causes of action brought by the trustee in the adversary proceeding. The Court held that under 28 U.S.C. § 157(b)(2)(C), and 28 U.S.C. § 157(b)(2)(O), the causes of action asserted by the trustee are "core" matters. | |
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In re Montoya, 2006 WL 931562 (Bankr.D. Utah) (Internal Ref: Opinion 493) |
Apr-10-2006 PUBLISHED |
05-80022 |
Judge Boulden |
The Debtor proposed a Chapter 13 plan in which she sought to pay for a car that was purchased within 910 days of filing her petition (910-vehicle claim) by bifurcating the secured claim under 11 U.S.C. § 506(a)(1), paying the secured value of the car in full, and paying only a small percentage of the unsecured balance. Although the hanging paragraph found after § 1325(a)(9) now prohibits bifurcation under § 506(a)(1) in certain instances, the Debtor and the Chapter 13 Trustee argued that bifurcation is still allowed because the creditor secured by the car failed to file an objection to the Debtor's Chapter 13 plan and, therefore, should be deemed to accept the plan under § 1325(a)(5)(A). The Court found (1) that under the BAPCPA, § 1325(a)(5) can no longer be used to cram down a 910-day vehicle claim; (2) that a creditor's failure to object to a plan is not deemed implied acceptance of that plan when the plan proposes treatment that is contrary to the statute; and (3) a plan that incorrect bifurcates a 910-day vehicle claim does not comply with the provisions of Chapter 13 and, therefore, cannot be confirmed under § 1325(a)(1). | |
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In re Easthope, 2006 WL 851829 (Bankr. D. Utah) (Internal Ref: Opinion 492) |
Mar-29-2006 PUBLISHED |
06-20366 |
Judge Boulden |
A secured creditor moved for an order under § 362(c)(4)(A)(ii) confirming that no stay was in effect arguing that the individual debtor had two cases pending within the previous year. The debtor had one prior Chapter 13 case that was dismissed within the previous year and another prior Chapter 13 case that was closed within the previous year. This earlier Chapter 13 case had been dismissed more than a year prior to the filing of the current case. The secured creditor argued that a case is still “pending” for § 362(c) purposes until it is closed and, therefore, the debtor had two cases pending in the previous year. The Court determined that both the plain meaning of the word “pending” and policy considerations demonstrate that a case is no longer pending once it has been dismissed. Given this definition, the debtor only had one case pending withing the previous year and the 30-day automatic stay did go into effect under § 362(c)(3). The secured creditor's order seeking confirmation that no stay was in effect was, therefore, denied. | |
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In re Jass (Internal Ref: Opinion 491) |
Mar-22-2006 PUBLISHED |
05-80088 |
Judge Thurman |
Section 1325(b)(1)(B) provides that where a creditor or a chapter 13 trustee objects to a proposed plan, the debtor must provide all of his or her "projected disposable income" to unsecured creditors. Section 1325(b)(2) provides a detailed definition for "disposable income." The BAPCPA did not alter the term "projected disposable income," nor did it alter the defined term, "disposable income." The changes did change the definition of "disposable income" to refer to the number resulting from a debtor's Current Monthly Income Form (Form B22C).The debtor proposed a plan which provides to unsecured creditors less than the amount resulting from Form B22C. The chapter 13 trustee objected, arguing that the debtors were bound by their Form B22C. The Court held that the word "projected" modifies the defined term, "disposable income." The Court held that Form B22C will always be the starting point for the Court's inquiry under section 1325(b), and the Court will presume that the number resulting from Form B22C is a debtor's "projected disposable income." Nevertheless, if a debtor can show a substantial change in circumstances such that the numbers reflected on Form B22C are not representative of the debtor's projected finances, the Court held that a debtor may propose a plan commensurate with his or her Schedules I and J. Nevertheless, if a debtor can show a substantial change in circumstances such that the calculation reflected on Form B22C is not representative of the debtor's reasonable foreseeable income and expenses, the Court will consider confirming a plan that proposes payment to unsecured creditors commensurate with proper calculations on Schedules I and J. This ruling should not be considered carte blanch authority for approving any changes, but only in rare situations. | |
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In re Clay (Internal Ref: Opinion 490) |
Mar-16-2006 PUBLISHED |
05-80043 |
Judge Thurman |
The Chapter 13 Trustee objected to the Debtor's proposed chapter 13 plan because it proposed to pay the Debtor's secured creditors directly. The Trustee argued that the Bankruptcy Code does not generally allow a Debtor to make payments directly to a secured creditor. The Trustee also argued that changes to the Bankruptcy Code under the BAPCPA overruled any caselaw which might have allowed for direct payments.Citing to In re Case, 11 B.R. 843 (Bankr. D. Utah 1981), the Court held that before the BAPCPA a debtor could choose to pay a secured creditor directly so long as the creditor is paid pursuant to the terms of the underlying contract. The Court analyzed changes to the Bankruptcy Code under the BAPCPA, and concluded that In re Case was not overruled by the BAPCPA. A debtor may propose a chapter 13 plan to pay secured creditors directly so long as the creditor is paid pursuant to the underlying contract. | |
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In re Tomasini (Internal Ref: Opinion 489) |
Mar-8-2006 PUBLISHED |
05-80115 |
Judge Thurman |
The Court was presented with the issue of whether a Debtor who failed to show that his case was filed in good faith at a hearing on a motion to extend the stay under section 362(c)(3)(B) could obtain confirmation of a chapter 13 plan under 1325(a)(7) by showing good faith for confirmation purposes. The Debtor had a bankruptcy case pending and dismissed within one year of filing the present case. The Debtor moved to extend the automatic stay in this case under section 362(c)(3)(B), arguing that he filed the present case in good faith as to all creditors. The Court denied that motion, finding that the Debtor failed to carry his burden under section 363(c)(3)(B) to show that he filed the present case in good faith as to all creditors by clear and convincing evidence.At the hearing on confirmation of the debtor's chapter 13 plan, the Chapter 13 Trustee argued that the case could not be confirmed because the Court had already found the case was not filed in good faith. The Court determined that the good faith determinations under sections 362(c)(3)(B) and 1325(a)(7) are both governed by a totality of the circumstances analysis, as discussed by the Court's ruling in In re Galanis, 334 B.R. 658 (Bankr. D. Utah 2005) and that a lack of finding of good faith at a motion to extend does not bar the Court's good faith determination at confirmation. The application and focus of the Galanis factors is different when determining good faith at confirmation. The focus of motion to extend must be on creditors, whereas the focus of the Court's good faith determination for purposes of confirmation must be on the debtor.In considering good faith under section 1325(a)(7), the Court determined that it will look first to the debtor's stated motivation in filing from the debtor's perspective. If the debtor's motivation is considered a good faith motivation, the Court will then consider the remaining Galanis factors. | |
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In re Fawson, In re Webster, 338 B.R. 505 (Bankr. D. Utah) (Internal Ref: Opinion 488) |
Feb-21-2006 PUBLISHED |
05-80224, 05-80217 |
Judge Boulden |
Chapter 7 debtors failed to file their payment advices within 45 days of filing their petitions. The debtors filed motions or requests to enlarge the time to file their payments advices (which are required to be filed within 15 days of filing the petition) but these requests were not made until the 45-day time limit articulated in 11 U.S.C. § 521(i)(1) had expired. The Court found that the belated requests for enlargement of time due to excusable neglect were time barred, and that § 521(i)(1) mandates the dismissal of cases when debtors fail to timely comply with the requirements of § 521(a)(1). In the absence of a § 521(i)(3) or (4) motion, and at the expiration of the 45-day time period, the cases were dismissed by operation of the statute effective the 46th day after filing. | |
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In re Galanis, In re Vehikite, 2005 WL 3454411 (Bankr. D. Utah) (Internal Ref: Opinion 487) |
Dec-7-2005 PUBLISHED |
05-80037 |
Judge Thurman |
Under § 362(c)(3) of the BAPCPA, a debtor who had a prior case pending within one year of filing the present case receives an automatic stay lasting for thirty days only, unless the debtor shows that he or she filed the present case in good faith. Each debtor in these cases had a prior case pending within one year of filing their present cases. They each argued that the Court should extend the stay because they filed in good faith. The Court determined that a debtor's good faith under § 362(c)(3) should be governed by a totality of the circumstances test, and looked to some of the factors historically used to determine a debtor's good faith under § 1307(c), as applied in In re Geir , 986 F.2d 1326 (10th Cir. 1993). The Court also considered three additional factors, not traditionally part of the Gier factors: 1) why the debtor's prior case was dismissed; 2) the likelihood that the debtor will be able to fund a chapter 13 plan; and 3) whether the Trustee or any creditors objected to the motion. Under this analysis, the Court determined that each debtor met their burden under § 362(c)(3) to show they filed in good faith, and accordingly, the Court granted the motions in this case. | |
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In re Montoya, 333 B.R. 449 (Bankr. D. Utah) (Internal Ref: Opinion 485) |
Nov-23-2005 PUBLISHED |
05-80022 |
Judge Boulden |
Individual debtor asked the Court to extend the automatic stay beyond the 30-day period provided for in § 362(c)(3)(A). The debtor had a Chapter 13 pending within the preceding one year period and that case was dismissed because the debtor failed to make her ongoing plan payments. Because the debtor's prior case had been dismissed for failing to perform the terms of a plan confirmed by this Court, a presumption arose under § 362(c)(3)(C) that the debtor had "filed not in good faith." After finding that § 362(c)(3)(B) notice was proper, the Court found that the debtor had not met her burden of proving by clear and convincing evidence that the case had been filed in good faith as to the creditors to be stayed, and the Court denied the debtor's motion. In so doing, the Court examined whether the debtor had filed in good faith as to the creditors to be stayed by employing the good faith filing factors articulated in Gier . The Court found that even though some of the Gier factors were less applicable in this context, they still gave the Court guidance in examining whether the present case was filed in good faith as to the creditors to be stayed. | |
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In re Sukmungsa, 2005 WL 3160607 (Internal Ref: Opinion 486) |
Nov-23-2005 PUBLISHED |
05-80029 |
Judge Boulden |
Section 109(h) of the Bankruptcy Code, as enacted by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, provides that individual debtors must either complete a briefing from an approved nonprofit budget and credit counseling agency within 180 days prepetition or request a waiver. In accordance with this statutory bar to bankruptcy relief, Local Rule 1007-2(d)(1) requires the Clerk of Court to dismiss a case if a debtor fails to certify compliance with § 109(h) on the petition. The debtors in this case failed to check either box on the petition certifying such compliance, and an Order of Dismissal was entered. The debtors moved to vacate the Order of Dismissal on grounds of excusable neglect under Fed. R. Civ. P. 60(b) and Fed. R. Bankr. P. 9024. The Court conducted an excusable neglect analysis in accordance with the Supreme Court's decision in Pioneer Investment Services Company v. Brunswick Associates Limited Partnership et al. , 507 U.S. 380 (1993), and found that excusable neglect in failing to certify § 109(h) compliance on the petition had not been shown by either the debtors or debtors' counsel. Most importantly, the Court found that the reason for the omission and the concomitant delay were within the reasonable control of the debtors and their counsel. The inconsistent testimony and documentary evidence demonstrated counsel's failure to make reasonable inquiries under Fed. R. Bankr. P. 9011 and established uncertainty as to whether the debtors had even received the prepetition briefing. Although Rule 9011 sanctions were not imposed, the Court did note counsel's obligations under the Rule to make reasonable inquiries into the underlying factual assertions of filed documents. | |
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In re Green (Internal Ref: Opinion 484) |
Nov-15-2005 PUBLISHED |
04-2889 |
Judge Thurman |
The Chapter 7 Trustee sought to revoke the debtor's discharge because she failed to obey a lawful order of the Court to turn over tax refunds. The Court determined that 11 U.S.C. 727(a)(6) required the Trustee to show more than a failure to comply with an order. Under section 727(a)(6), the Trustee must show that the debtor willfully disobeyed the Court's order. Because the Trustee did not initially direct the debtor to turn over her tax return, the debtor spent the money believing she had no obligation to turn it over. The Court ordered the debtor to turn over the money only after the debtor had spent it. Because the debtor did not have notice of her obligation to turn over the money before she spent it, the Court found that the debtor's failure to comply with its order was not willful, and entered judgment for the debtor. | |
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In re Scott (Internal Ref: Opinion 483) |
Oct-19-2005 UNPUBLISHED |
05-26202 |
Judge Thurman |
In this chapter 7 case, the court considered whether the debtor's involuntary absence from his home barred him from asserting a $20,000 homestead exemption as his primary personal residence. The Chapter 7 Trustee objected to the Debtor's claimed homestead exemption of $20,000, arguing that the Debtor had not lived in the home for the past two and a half years and that it wasn't his primary personal residence as of the petition date. The Debtor argued that he did not leave the home wilfully, but was ordered out by a Protective Order of a Utah State Court.The Court held that the Debtor could only claim a homestead exemption of $5,000 because the home was not his primary personal residence under Utah Code § 78-23-3. The Court determined that a Debtor must reside in a home as of the petition date to assert a homestead exemption of $20,000. Because the Debtor did not live in the home at the time of filing, he could not claim the home as a primary personal residence. The Court determined that under Utah law, it made no difference that the Debtor left the home involuntarily. | |
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In re Tuttle (Internal Ref: Opinion 482) |
Sep-27-2005 UNPUBLISHED |
05-26753 |
Judge Thurman |
Chapter 7 Trustee challenged the validity of the Debtors' claimed exemptions for various wood-working tools and machines. The Trustee alleged that the tools were, in fact, property of a closely-held corporation, founded and operated by the Debtors. The Debtors argued that they owned the tools personally, pointing to evidence that they purchased the tools before forming the corporation.The Court held that the Debtors may not claim exemptions for the tools. First, the Court held that under the alter ego theory , the Debtors had commingled corporate assets with individual assets to the extent that the fiction of corporate formalities should be disregarded to better reflect reality. Alternatively, the Court held that Debtors were equitably estopped from arguing that they owned the tools. The Court emphasized that the Debtors allowed the tools to stay at the corporation's place of business throughout the life of the corporation. A creditor of the corporation could rationally believe that the corporation owned the tools.The Debtors also argued that the tools were encumbered by a security interest orally granted to the father of one of the Debtors. The Court held that a valid security interest was not created. The Court noted that even where there is a judicial admission satisfying the statute of frauds, the admission is not sufficient to disregard the requirement under the UCC that a security agreement be in a writing. |
