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Opinions
| Case Title | Date & Status | Case Number(s) | Judge & PDF | Summary | |
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State Farm Fire and Casualty Company v. Edie (In re Edie) (Internal Ref: Opinion 459) |
Sep-7-2004 PUBLISHED |
03-2449 |
Judge Boulden |
Plaintiff insurance company filed a nondischargeability action under 11 U.S.C. §523(a)(6) to except a California state court default judgment from the debtor's discharge. The debtor admitted she intentionally started a fire in the home of the plaintiff's insured but claimed her intent was limited to a desire to burn shirts hanging in a closet, not to destroy the entire home. The debtor further defended her actions by claiming she was not able to foresee the potential and likely consequences of her conduct due to a mental defect or illness from which she suffered at the time she started the fire. The plaintiff filed a summary judgment motion claiming the debtor's admission of intent to start the fire and application of collateral estoppel to the previously obtained default judgment left no material issue of fact to be determined at trial. The court granted summary judgment and determined California's collateral estoppel doctrine applies to default judgments and barred the debtor from presenting new defenses not raised in the state court litigation. The court also found that even absent the application of collateral estoppel, the debtor's admission of intentionally igniting a fire to the plaintiff's insured's property amounts to a willful and malicious injury to the plaintiff and the defendant did not offer any evidence to support a defense of mental impairment. | |
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In re Cluff, In re Medina (Internal Ref: Opinion 458) |
Aug-23-2004 PUBLISHED |
03-32779, 03-39152 |
Judge Boulden |
The Debtors sought disallowance of certain unsecured claims because creditors failed to attach sufficient documentation under Bankruptcy Rule 3001(c). The Court overruled the Debtors' objections because (1) Bankruptcy Rule 3001(c) does not create an independent ground to disallow claims; (2) failure to comply with the documentation requirements in Bankruptcy Rule 3001(c) is an evidentiary defect that only deprives a claim of its prima facie validity; and (3) failure to comply with Bankruptcy Rule 3001(c) merely results in the claimant having the burden of proof if an objection to the claim is filed, but that objection must meet or surpass the evidence set forth in the claim. The Debtors' objections were found insufficient because many of the claims were entitled to prima facie validity and the Debtors did not rebut that presumption with sufficient evidence. The Debtors' objections to proofs of claim not entitled to prima facie validity were overruled because the Debtors did not come forward with any evidence that was of equal force to that contained in the claim to rebut the allegations made in the proofs of claim. | |
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In re GloBill.com (Internal Ref: Opinion 457) |
Aug-18-2004 UNPUBLISHED |
04-26754 |
Judge Boulden |
A motion to dismiss or suspend case under 11 U.S.C. §305(a)(1) was filed by parties claiming ownership and/or control of the debtor. The moving parties raised the question of whether or not the filing of the debtor's petition by the person allegedly in control of the debtor at the time of filing, was authorized. The questions of control and ownership of the debtor were the subject of extensive litigation which was being pursued prior to filing in California litigation. The court determined it was in the best interest of the creditors of the estate and the debtor to dismiss the case pursuant to §305. | |
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In re Bushman (Internal Ref: Opinion 456) |
Jun-10-2004 UNPUBLISHED |
01-26116 |
Judge Boulden |
The debtors filed a motion for partial reconsideration to reopen a sanctions hearing to present evidence regarding actual and punitive damages that was not presented in a prior sanctions hearing. The court determined that the debtors' failure to present evidence regarding damages at the sanctions hearing was not due to mistake or inadvertence or any other reason allowed under Federal Rule Civil Procedure 60(b) but was part of counsel's calculated litigation strategy and the motion for reconsideration was denied. | |
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Quality Press v. Heidelberg Print Finance Americas (In re Quality Press) (Internal Ref: Opinion 455) |
Apr-28-2004 UNPUBLISHED |
03-2446 |
Judge Thurman |
The Court granted summary judgment in favor of creditor Heidelberg against the Debtor, Quality Press. A Chapter 11 Plan had been confirmed for the same Debtor in 1994, granting Heidelberg secured creditor status. Heidelberg's financing statement lapsed years later and subsequently it filed a new financing statement. Thereafter, the Debtor filed the current bankruptcy case. The Debtor challenged the effectiveness of Heidelberg's lien under several theories. The Court determined that the filing of the new financing statement without the signature of the Debtor following the lapse was allowed under 70A-9a-509 of the Revised Utah Article 9. The Court next determined that the description of the collateral in the new financing statement as "All of Debtor's Equipment" adequately described the several pieces of printing equipment secured in favor of the creditor and that such was not seriously misleading or overbroad. The Court also determined that the "plain meaning" of the 1994 Plan did not enjoin Heidelberg from filing the financing statement after the earlier statement had lapsed. Finally, the Court determined that the Heidelberg's §1111(b) election in the prior bankruptcy did not bar it from the possibility of seeking a deficiency in the current case. | |
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In re Leigh (Internal Ref: Opinion 454a) |
Apr-27-2004 UNPUBLISHED |
03-33764 |
Judge Thurman |
At a confirmation hearing on debtor's chapter 13 plan, the court asked the trustee to submit a memorandum regarding treatment of a tax refund received by debtors, which was at least partially attributable to the Earned Income Credit. Debtors were directed to respond to trustee's memorandum once it was filed, which they failed to do. The court ruled that tax refunds must be disclosed by debtors to the chapter 13 trustee and included as projected disposable income in their plan, even where some portion of the refund is attributable to EIC. The court concluded that debtors' failure to do so meant that their plan failed to comply with 11 U.S.C. § 1322(b)(1), and could not be confirmed. | |
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In re Leigh (Internal Ref: Opinion 477) |
Apr-27-2004 UNPUBLISHED See 454a.pdf |
03-33764 |
Judge Thurman |
This decision was inadvertantly filed out of order. See 454a.pdf for summary. | |
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In re Harmsen (Internal Ref: Opinion 454) |
Apr-13-2004 UNPUBLISHED |
03-33637 |
Judge Boulden |
One of the debtor's creditors filed an involuntary chapter 7 petition against him as a single petitioning creditor under 11 U.S.C. §303(b)(2) seeking adjudication in an attempt to collect upon a foreign judgment. The debtor responded to the involuntary petition claiming he had more than eleven holders of claims and the involuntary petition filed by a single petitioner was therefore improper. The petitioning creditor challenged whether the alleged debtor's listed holders of claims were eligible under §303, asserting some entities could not be counted because they were insiders or subject to voidable transfers under §§547, 548, or 549. The court found it unnecessary to reach the determination of the required number of qualifying petitioners because the petitioner could not prove that the alleged debtor was not generally paying his debts as they became due and dismissed the petition. | |
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Troff v. State of Utah (In re Troff) (Internal Ref: Opinion 452a) |
Mar-8-2004 UNPUBLISHED |
04-2491 |
Judge Clark |
Debtor brought an adversary seeking a ruling that a state court restitution order was discharged in the debtor's Chapter 7 bankruptcy proceeding. In 1997, the Debtor was ordered to pay $239,969 in restitution by the Third District Court for the State of Utah. When debtor filed for Chapter 7 relief, the debtor properly listed the State of Utah in his schedules and statements and received a Chapter 7 discharge. It was uncontested that all restitution payments received by the State were turned over to the victim of the crime. The Court found that under § 523(a)(7), because the restitution payments were turned over to the victim, the restitution payments were not to and for the benefit of a governmental unit and because the restitution payments were compensatory for actual pecuniary loss, the state ordered restitution was discharged in debtor's Chapter 7 bankruptcy. | |
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Troff v. State of Utah (In re Troff) (Internal Ref: Opinion 476) |
Mar-8-2004 UNPUBLISHED See 452a.pdf |
04-2491 |
Judge Clark |
This decision was inadvertantly filed out of order. See 452a.pdf for summary. | |
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In re Campbell (Internal Ref: Opinion 452) |
Mar-5-2004 UNPUBLISHED |
03-23673 |
Judge Thurman |
Chapter 13 Debtor filed a Plan proposing payments for thirty-six months to return 16% to non-priority, unsecured creditors. The Plan also provided for monthly payments to be made directly to the Utah Higher Education Assistance Authority ("UHEAA") for outstanding student loans, pursuant to §1322(b)(5). The Chapter 13 Trustee filed an Objection to Confirmation of Plan, alleging that the payments to UHEAA, who would receive 71% of the principal amount of its claim over the projected term of the plan, constituted unfair discrimination as to the Debtor's other unsecured creditors. The Court found that, absent proof of extraordinary or compelling circumstances, the Debtor's Plan "unfairly" discriminated against the other classes of unsecured creditors, pursuant to §1322(b)(1). Accordingly, the Court denied confirmation of the Debtor's Plan. | |
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In re Bushman (Internal Ref: Opinion 453) |
Feb-17-2004 UNPUBLISHED |
01-26116 |
Judge Boulden |
The debtors filed a motion for sanctions against a creditor for willful violation of the discharge injunction of 11 U.S.C. §524. Following the debtors' receipt of a chapter 7 discharge in a no asset case, a creditor filed suit against the debtors in state court seeking to collect on a pre-petition guaranty that one of the debtors executed for the benefit of his corporation. The debtors attempted to defend the state court action by claiming the debt received discharge in bankruptcy but the creditor continued to prosecute the case claiming the debtors had continuing liability on the guaranty, the debt did not exist as of the date of filing, and the debtors remained obligated because the creditor was not listed on the debtors' schedules. The court found the creditor acted in violation of the injunction imposed by §524 when it pursued its collection action against the debtors in state court. The court determined the personal guaranty executed by one of the debtor's was an executory contract for financial accommodation which was extinguished as of the date of petition. The court was unable to sanction the creditor because the debtors did not offer any proof of actual damages. | |
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Great American Fidelity Insurance Co. v. Arrow Dynamics (In re Arrow Dynamics) (Internal Ref: Opinion 450) |
Jan-20-2004 UNPUBLISHED |
02-2441 |
Judge Boulden |
Plaintiff insurance company filed declaratory judgment action against Debtor and other Claimants involved in state court litigation to resolve insurance coverage questions. The insurance company and Debtor are parties to a policy which the insurance company claims does not provide coverage to the debtor for claims brought in state court litigation. The insurance company filed for summary judgment and certain of the defendants (excluding the debtor) filed cross motions for summary judgment seeking declaratory judgment on whether or not the policy provides coverage for all claims asserted. The Court reached the following conclusions. A declaratory judgment action is not a core proceeding but relates to the bankruptcy because a determination of insurance coverage may increase or decrease the payment to creditors from assets fo the estate. A waiver of claims against the Debtor by the Claimants in an agreed order lifting the automatic stay to pursue state court litigation does not prohibit Claimants from recovering insurance proceeds from the policy. The Court further held that while the general rule under Utah law is that an ambiguous consumer insurance contract should be strictly interpreted against the insurer in favor of coverage, the facts of this case warrant reference to the intent of the parties in agreeing to the bargained for contractual terms of the policy. The intention of the parties to the insurance policy was that the self-insured retention endorsement attached to the policy is applicable despite some confusion by reference to a separate type of policy. However, contrary to the plaintiff's argument, no breach of the self-insured retention has occurred which would void coverage. Finally, the Court was asked to determine whether there is contractual indemnity coverage in the policy under certain contracts between the debtor and one of the claimants. In interpreting the contracts the Court found that the language of the policy included indemnification of another party for the debtor's own negligent acts but excluded indemnification for that parties' negligent acts, and found other indemnification issues unripe. | |
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In re Lundahl (Internal Ref: Opinion 449) |
Dec-19-2003 PUBLISHED |
03-21660 |
Judge Thurman |
The Court dismissed the Debtor's Chapter 13 case with prejudice where there was sufficient evidence to support a finding that the Debtor's plan was not proposed in good faith and that the case was filed in bad faith. The Court found that parties who were disputed by the Debtor but who were not scheduled or listed on any mailing matrix filed by the Debtor had standing to object to the Debtor's plan, and could be heard regarding their motion to dismiss or convert. The Court analyzed the Debtor's case in light of the standards adopted by the Tenth Circuit Court of Appeals in the cases of In re Flygare and In re Gier . The Court analyzed four particular areas: 1) the accuracy of the Debtor's income and expenses; 2) the existence of creditors' claims to be paid through the plan; 3) the motivation of the Debtor filing the case solely for the purpose of having a forum for litigation; and 4) the inaccuracy and misleading nature of the Statement of Affairs and Schedules filed by the Debtor. In each instance, the Court found that the Plan had not been proposed in good faith as required by 11 U.S.C. § 1307(e) and that the case had been filed in bad faith. | |
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Marker v. Fullerton (In re Fullerton) (Internal Ref: Opinion 448) |
Dec-18-2003 UNPUBLISHED |
03-2301 |
Judge Thurman |
The Court granted partial summary judgment on the Plaintiff Trustee's motion in an adversary proceeding commenced for recovery of property fraudulently transferred pursuant to § 25-6-6 of the Utah Code. In this proceeding, the Trustee relied on state law to reach back a period of 4 years prior to the filing of the Debtor's bankruptcy case to challenge a transfer by the Debtor to a former spouse. The Trustee alleged that the Debtor transferred certain real property to the Defendant for less than reasonably equivalent value. The Court ruled that a conveyance where a substantial portion of the consideration consisted of a promise of reduced future rents valued at approximately $98,550 did not constitute reasonably equivalent value. Other issues of fact remained to be tried. | |
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In re Grogan, 300 B.R. 804 (Bankr.D.Utah) (Internal Ref: Opinion 447) |
Oct-27-2003 PUBLISHED |
02-36231 |
Judge Boulden |
Debtors failed to disclose settlement proceeds and the bank account into which the funds were deposited on their statements and schedules. The Chapter 7 trustee discovered the undisclosed assets and sought turnover of the settlement proceeds to the estate. After several months of delay, the debtors amended their schedules by listing the settlement proceeds as an asset and also claiming the funds as exempt property. The trustee objected to the amended objection claiming the omission of the settlement proceeds was intentional. The Court found that the debtors acted in bad faith in claiming the exemption on assets belatedly disclosed in amended schedules. The delayed exemption claim was disallowed for both bad faith and prejudice to creditors of the estate and debtors were required to turnover the settlement proceeds to the trustee. | |
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Gillman v. Carson (In re Carson) (Internal Ref: Opinion 451) |
Oct-24-2003 UNPUBLISHED |
01-2326 |
Judge Boulden |
Trustee brought a nondischargeability action against the Debtor alleging that the Debtor failed to comply with the requirements of 11 U.S.C. § 727(a)(3) and (a)(4)(A). Court denied the Debtor his discharge and found: (1) that the Debtor, not the Trustee, has the burden of compiling and reconstructing the Debtor's financial history; and (2) that the Debtor knowingly and fraudulently omitted property from his statements and schedules. (Posted 1/26/2003) | |
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Brewer v. Brewer (In re Brewer) (Internal Ref: Opinion 446) |
Oct-7-2003 UNPUBLISHED |
02-2465 |
Judge Thurman |
Plaintiff/Debtor filed a declaratory action against Defendant, former husband, seeking sanctions and a determination that his state court proceeding to enforce divorce-ordered payments were in violation of her discharge. The Debtor and the Defendant were divorced prior to the Debtor filing for Chapter 7 relief. The Divorce Decree ordered the Debtor to assume and pay two debts that had been co-signed by the parties. The Debtor ceased paying the debts and subsequently filed her Chapter 7 case. The Defendant began paying and eventually paid off the debts. The Debtor did not schedule the Defendant in her bankruptcy papers, but did list the two debts and the corresponding creditors. The Trustee filed a No Asset Report and the Debtor received a discharge. Three years later, the Defendant sought reimbursement from the Debtor for the amounts he had paid on the debts by filing a Motion for Order to Show Cause in state court. The state court ruled that the payments made by the Defendant on the debts were post petition obligations and ordered the obligations non-dischargeable because the Defendant was not scheduled in the Debtor's bankruptcy papers.At trial, the Bankruptcy Court ruled that the state court order was void ab initio because the state court lacked jurisdiction. The state court order was void under the Ellis v. Consolidated Diesel Electric Corp. decision of the Tenth Circuit. As a result, the Rooker-Feldman doctrine did not apply and the Bankruptcy Court had jurisdiction to considering a collateral attack on the state court's ruling. The Court found that the debts were not in the nature of alimony or support and were incurred by the parties pre-petition. Notwithstanding the lack of scheduling in the bankruptcy papers, the debts were discharged by operation of law because Debtor's case was a no asset case, there was no bar date set for filing proofs of claims, and the claims were not in the nature of otherwise non-dischargeable claims. Sanctions were imposed on the Defendant because he refused to cease his collection efforts, even though he had been placed on notice of the Debtor's bankruptcy and the Tenth Circuit's decision of In re Parker , at least by the time the Order to Show Cause was heard in state court. | |
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Dayton v. Newman (In re Dayton) (Internal Ref: Opinion 445) |
Sep-24-2003 UNPUBLISHED |
03P-2034 |
Judge Clark |
Issue: subject matter jurisdiction. | |
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Lundahl v. Telford (In re Telford) (Internal Ref: Opinion 444) |
Sep-22-2003 UNPUBLISHED |
03-2381 |
Judge Clark |
The matter before the court is on plaintiff's application to proceed without prepayment of fees which seeks waiver of the fees under 28 U.S.C. §1915 (proceedings in forma pauperis). Because the United States Bankruptcy Court is an Article I Court and not an Article III Court, it has no authority to waive filing fees under 28 U.S.C. §1915. | |
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The William W. Barney, M.D. P.C. Retirement Fund v. Perkins (In re Perkins), 298 BR 778 (Bankr.D.Utah) (Internal Ref: Opinion 443) |
Sep-16-2003 PUBLISHED |
02-2163 |
Judge Boulden |
Creditor, a retirement fund, filed a nondischargeability action against Debtor under 11 U.S.C. §523(a)(2)(A) alleging the Debtor's omissions and misrepresentations to Creditor were material and thus nondischargeable. The Debtor previously operated an investment firm in which Creditor placed funds for retirement. The Debtor failed to disclose personal ties and interests to a company to which the investment firm extended a loan that was funded by the Creditor. In analyzing whether the Debtor incurred a debt to the Creditor by soliciting, receiving and refusing to account for assets through false representations and material omissions, the Court looked to the Restatement (Second) of Torts §551(2). The Court concluded that the parties' relationship was one of trust and confidence which triggered the Debtor's duty to exercise reasonable care to disclose material information. The Debtor failed to uphold this duty to disclose by omitting and misrepresenting significant information that was material to the Creditor's investment decisions. The Creditor justifiably relied on the Debtor's representations and omissions in making investment decisions and was harmed as a result. | |
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In re Marshall (Internal Ref: Opinion 440) |
Jul-29-2003 UNPUBLISHED |
01-36611 |
Judge Boulden |
Chapter 12 Trustee objected to allowance of debtors' counsel's fee applications in a case originally filed as a Chapter 11 case. The Trustee objected on the grounds that while counsel did file an Application to Employ while the debtor was in possession in the Chapter 11 case, the law firm was never appointed under 11 U.S.C. § 327 and was thus never employed as a professional person entitled to compensation under 11 U.S.C. § 330. Counsel for the debtors argued appointment by the court under 11 U.S.C. § 327 is not necessary for debtors counsel to receive compensation when representing individual debtors under Chapter 12.The Court found that 11 U.S.C. § 330(a)(4)(B), added to the Code by The Bankruptcy Reform Act of 1994, Pub.L.No. 103-394, 108 Stat. 4106 (1994), obviates the need for court appointment of debtor's counsel in a Chapter 12 case in which the debtor is an individual. However, while the Court held fees and costs were allowed, it also discovered that no payment of fees is authorized under the express terms of the confirmed Plan which only allows payment to professionals appointed under 11 U.S.C. § 327. | |
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C and M Properties v. Burbidge (In re C and M Properties) (Internal Ref: Opinion 438) |
Jul-23-2003 UNPUBLISHED |
03P-2024 |
Judge Clark |
A Chapter 11 plan was confirmed with no mention or treatment of a claim that debtor asserted against the defendant in this adversary proceeding. There was also no specific disclosure of the claim or its value in the debtor's schedules, statements or monthly financial reports. Post confirmation, debtor commenced a lawsuit against defendant. Defendant removed the matter to this Court and filed a motion to dismiss based upon res judicata and judicial estoppel arguing that because the claim had not been disclosed, the debtor is barred by res judicata and judicial estoppel from suing on the claim. Because affidavits were submitted by both parties, the Court treated the motion as a motion for summary judgment and ruled that res judicata did not apply because the plan relied solely on the sale of debtor's real property to pay all claimants in full plus interest. As such, it never became necessary to consider the existence and value of the claim at confirmation. The Court denied defendant's motion based upon the judicial estoppel argument because the Tenth Circuit Court of Appeals has repeatedly stated that the doctrine of judicial estoppel is not recognized in this Circuit. | |
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In re Snow (Internal Ref: Opinion 439) |
Jul-23-2003 UNPUBLISHED |
03-20144 |
Judge Thurman |
The United States Trustee brought a motion to dismiss the Debtors' case for substantial abuse of the bankruptcy system as provided by 11 U.S.C. § 707(b). The Debtors had filed a Chapter 7 case but their household income was greater than $150,000 per year. Applying the "totality of the circumstances" test set forth by the Tenth Circuit Court of Appeals in the case of Stewart v. United States Trustee (In re Stewart), 175 F.3d 796, 809 (10th Cir. 1999), the Court granted the Trustee's motion but stayed the effectiveness of the order for ten days to allow the Debtors to convert their case to one under Chapter 11 or Chapter 13. Although the Court determined that the Debtors' ability to repay debt was the primary factor in its analysis, the Court considered other factors as well including whether the Debtors suffered any unique hardships, whether cash advances and purchases exceeded the Debtors' ability to pay at the time they were incurred, whether the Debtors had a stable source of future income, whether the Debtors current expenses could be reduced without deprivation of necessities, whether the Debtors qualify for Chapter 13 relief, and the Debtors' good faith. The Court determined, based on an analysis of each factor, that the case should be dismissed primarily due to the amount of surplus income that the Debtors should have under a plan of reorganization and the Debtors' failure to provide accurate information regarding their household income and expenses on their bankruptcy schedules at the time the case was filed or in any written amendments. | |
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In re David (Internal Ref: Opinion 441) |
Jul-10-2003 UNPUBLISHED |
02-21500 |
Judge Thurman |
The Chapter 7 Trustee brought a motion to require the Debtors to turnover property of the estate to the Trustee. The property consisted of $825.74 that existed in the Debtors' bank checking account at the time the case was filed. The Debtors originally filed the case as a Chapter 7 case, but following their 341 meeting, the Debtors converted their case to one under Chapter 13. Approximately four months after the case was converted, the Debtors reconverted the case back to one under Chapter 7. Several months after the conversion back to Chapter 7, the Chapter 7 Trustee brought his motion for turnover seeking the money that existed in the checking account at the time the case was originally initiated. During the course of their case, the Debtors had spent the money in their checking account on moving expenses and on other ordinary living expenses. The Debtors were never put on notice that the Trustee would seek turnover of those funds until nearly sixteen months after the case was filed. The Court held that under 11 U.S.C. § 348(f) property of the Debtors' Chapter 7 estate after conversion from Chapter 13 consisted of property that remains in possession of the debtor or is under the control of the debtor on the date of the conversion and, therefore, did not include the checking account funds that had been subsequently consumed before the conversion back to Chapter 7. The Court also concluded that it may not rule the same in a case where a debtor converted to another chapter in bad faith. | |
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In re Scarbrough (Internal Ref: Opinion 442) |
Jun-16-2003 UNPUBLISHED |
02-32949 |
Judge Thurman |
Goldenwest Credit Union filed a motion to extend the time to file a proof of claim in the case. The Debtors case was filed on August 5, 2002. When the Debtors filed their bankruptcy petition, they also filed a creditor matrix. For some unknown reason, an error occurred in the bankruptcy clerk's office and the matrix was not entered into the system. Subsequently, on August 21, 2002, notice of the meeting of creditors, as well as notice of the last day to file proofs of claim was sent to all parties in the case, but due to the error in failing to correctly enter the matrix, only one creditor, the Chapter 13 Trustee, the Debtors and Debtors' counsel received notice of the filing and of the claims bar date. The claims bar date was set for December 12, 2002. On April 2, 2003, Goldenwest Credit Union filed its motion to extend the time to file proofs of claim alleging that the failure to receive notice was cause to extend the deadline. The Court denied the motion under Bankruptcy Rules 9006(b)(3) and 3002(c) as interpreted by the Tenth Circuit Court of Appeals in Jones v. Arros, 9 F.3d 79 (10th Cir. 1993). While Jones was a case under Chapter 12, the Bankruptcy Court held that its holding was equally applicable to Chapter 13 cases and, therefore, held that, despite a creditor not receiving notice of a case, that the claims bar date is absolute and may not be extended. However, recognizing that a creditor may be deprived of due process if never given notice of the claims bar date, the Bankruptcy Court held a Debtor may be able to enlarge the time to file proofs of claim on behalf of creditors under Bankruptcy Rule 3004. The Bankruptcy Court held that the deadline for debtors filing proofs of claim on behalf of creditors may be enlarged upon a showing of "excusable neglect" on the part of the Debtors in not filing a proof of claim prior to the deadline set forth in Bankruptcy Rule 3004. | |
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In re Tilson (Internal Ref: Opinion 437) |
Jun-10-2003 UNPUBLISHED |
03-22735 |
Judge Boulden |
A creditor filed a motion to dismiss the case with prejudice pursuant to 11 U.S.C. § 109(g)(1). Based upon the debtor's failure to file required papers or attend the first meeting of creditors, combined with his admission that the debtor had no intent to prosecute the case, the Court granted the motion.The debtor filed a chapter 13 petition in order to stave off a pending foreclosure and allow time to consummate a sale of the property. The debtor failed to file a list of creditors and their addresses, failed to file any statements or schedules and failed to file a plan of reorganization in violation of 11 U.S.C. § 521, Fed. R. Bankr. P. 1007, LR 2002-1(d) and LR 5005-1. These failures are also failures to appear before the court in proper prosecution of the case within the meaning of 11 U.S.C. § 109(g)(1).The debtor offered several explanations for his conduct, but the Court found only one explanation to be credible. The debtor intended to satisfy all of his creditors through a sale of the property on which foreclosure was pending, and had no intent to pursue reorganization under the Bankruptcy Code. On that basis, the Court concluded that the debtor's failures to appear noted above were willful and dismissed the case with prejudice. | |
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In re Williamson (Internal Ref: Opinion 436) |
May-8-2003 UNPUBLISHED |
02-40943 |
Judge Boulden |
The United States trustee objected to dismissal and filed a motion to disgorge fees under 11 U.S.C. § 329 due to unusual circumstances that led to two cases being open for the debtor simultaneously. Due to serious violations of the Bankruptcy Code and rules, counsel's services were found to have been performed so poorly and negligently as to be of no value.The Court's ruling was based on several factors, including counsel's failure to provide any legal advice to the debtor prior to filing the bankruptcy petition, failure to file a list of creditors and their addresses with the petition, failure to notify the debtor of important deadlines affecting the case, and counsel's action in filing a second bankruptcy petition without the debtor's knowledge or consent. Counsel also collected a fee exceeding the amount disclosed on the Fed. R. Bankr. P. 2016(b) statement in violation of 11 U.S.C. § 329. The Court condemned counsel's office procedures which result in the routine filing of defective chapter 7 petitions absent a schedule of liabilities or list of creditors in violation of Fed. R. Bankr. P. 1007(a)(1) and (c). The Court further condemned counsel's practice of filing an incomplete list of creditors in a practice calculated to deprive creditors of proper notice of the first meeting of creditors under Fed. R. Bankr. P. 2002(a)(1) and circumvent the debtor's statutory duties under 11 U.S.C. §521(1).The Court overruled the objection to dismissal, but ordered debtor's counsel to disgorge fees in full. | |
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In re Simon Transportation Services, Dick Simon Trucking, and Simon Terminal [Jointly Administered], 292 B.R. 207 (Bankr.D.Utah) (Internal Ref: Opinion 435) |
Apr-25-2003 PUBLISHED |
02-22906 |
Judge Clark |
Following entry of order confirming sale of Chapter 11 debtors' assets to insider used as stalking horse, debtors filed supplemental motion for assumption and assignment of trade-back agreements allegedly included in assets sold. The court held that (1) insider used as stalking horse in connection with sale of debtors' assets did not pay anything for trade-back agreements which it later claimed to have purchased as part of its total bid of $51 million, so that motion to assume and assign such agreements to insider would not be approved as not being in best interests of estate; and (2) options which debtors had pursuant to terms of trade-back agreements with company from which they acquired refrigerated trucks, to require company to buy trucks back at price equal to 55 percent of original purchase price, were in nature of "executory contracts," that debtors could assume and assign. | |
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In re Sink; In re Valenzuela; In re Petersen (Internal Ref: Opinion 434) |
Feb-28-2003 UNPUBLISHED |
02-40042, 02-32504, 02-38843 |
Judge Boulden |
Creditors filed motions to dismiss with prejudice, pursuant to 11 U.S.C. § 109(g)(1). In each case, the debtor had failed to make plan payments, failed to appear at the first meeting of creditors, or failed to file required statements and schedules. To prevail on a § 109(g)(1) motion, the movant must prove either that the debtor willfully failed to abide by an order of the court or that the debtor willfully failed to appear before the court in proper prosecution of the case.The first clause of § 109(g)(1) relates to the debtor's failure to abide by a specific order that may be issued in the case. The Court distinguished In re Fulton , 52 B.R. 627 (Bankr. D. Utah 1985) which stated that failure to appear at a meeting of creditors may be a violation of a court order, because the standing order then in effect governing dismissal procedures has been superceded by Local Rules 2003-1(a) and 2083-1(a) and (b). The Court determined it was unnecessary to consider whether statutory requirements and local rules of practice are equivalent to court orders. Turning to the second clause of § 109(g)(1), the Court stated that an "appearance" encompasses a broad range of conduct in addition to physical presence at a hearing. An appearance was determined to include, among other things, being represented at non-court hearings related to a case and filing papers required by rule or statute. The Court further determined that a debtor's conduct is willful within the meaning of § 109(g)(1) when the debtor has notice of the responsibility to act and intentionally engages in conduct that results in a failure to fulfill that responsibility.The Court held that failure to file required papers, failure to appear at the first meeting of creditors, and failure to make Chapter 13 plan payments were failures to appear before the court in proper prosecution of the case. Failure to defend against dismissal proceedings was also held to be a failure to appear in proper prosecution. Evidence of repeated filings allowed an inference in each case that the debtor knew his or her responsibilities under the Bankruptcy Code and knew the consequences of failing to fulfill those responsibilities. Therefore, the Court determined that the debtor's conduct in each case was willful. Each case was dismissed with prejudice to refiling a bankruptcy petition for 180 days. |
