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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Title: In re Campbell | Date: Mar-5-2004 | Status: UNPUBLISHED (Judge Thurman) | Case(s): 03-23673
Title: In re Bushman | Date: Feb-17-2004 | Status: UNPUBLISHED (Judge Boulden) | Case(s): 01-26116
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.
Title: Great American Fidelity Insurance Co. v. Arrow Dynamics (In re Arrow Dynamics) | Date: Jan-20-2004 | Status: UNPUBLISHED (Judge Boulden) | Case(s): 02-2441
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.
Title: In re Lundahl | Date: Dec-19-2003 | Status: PUBLISHED (Judge Thurman) | Case(s): 03-21660
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.
Title: Marker v. Fullerton (In re Fullerton) | Date: Dec-18-2003 | Status: UNPUBLISHED (Judge Thurman) | Case(s): 03-2301
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.
Title: In re Grogan, 300 B.R. 804 (Bankr.D.Utah) | Date: Oct-27-2003 | Status: PUBLISHED (Judge Boulden) | Case(s): 02-36231
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.
Title: Gillman v. Carson (In re Carson) | Date: Oct-24-2003 | Status: UNPUBLISHED (Judge Boulden) | Case(s): 01-2326
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)
Title: Brewer v. Brewer (In re Brewer) | Date: Oct-7-2003 | Status: UNPUBLISHED (Judge Thurman) | Case(s): 02-2465
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.
Title: Dayton v. Newman (In re Dayton) | Date: Sep-24-2003 | Status: UNPUBLISHED (Judge Clark) | Case(s): 03P-2034
Issue: subject matter jurisdiction.
Title: Lundahl v. Telford (In re Telford) | Date: Sep-22-2003 | Status: UNPUBLISHED (Judge Clark) | Case(s): 03-2381
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.