Chapter 7 trustee sought to avoid a transfer debtor had made to a related entity, alleging it was a preference under 11 U.S.C. § 547(b), and defendant moved for partial summary judgment. The transaction at issue was part of a three-way debt forgiveness between debtor, defendant, and another related entity. Defendant argued that the transaction constituted a setoff rather than a transfer, and thus § 547(b) was inapplicable. The court agreed that § 547(b) does not apply to setoffs, and considered whether the "triangular setoff" at issue fell within the protection of 11 U.S.C. § 553(a). The court held that creditors only have the right to setoff "mutual debt," which generally requires that debtor and creditor owe debts to each other, and as such, triangular offsets are not typically considered "mutual." The court recognized narrow exceptions to that outcome, however, where the debtor "formally agreed" that two related entities could aggregate debts owed to and from debtor as a setoff, or where the other entities were alter egos of one another. Concluding that these scenarios were fact-dependent, the court denied defendant's summary judgment motion.
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Title: Elggren v. Enoch Smith Sons Co. (In re Park Meadows Inv. Co.) | Date: Jun-29-1990 | Status: UNPUBLISHED (Judge Clark) | Case(s): 89PC-0510
Title: In re Martin, 115 B.R. 311 (Bankr.D.Utah)In re VerwerIn re Fullmer | Date: Jun-19-1990 | Status: PUBLISHED See 330.pdf (Judge Boulden) | Case(s): 89B-5149 89B-5263 89B-6063
Trustees in three chapter 7 cases objected to debtors' exemption claims with respect to funds held in ERISA-qualified retirement plans. The court held that an ERISA retirement fund was an asset of debtors' estate that was not exempt within the meaning of 11 U.S.C. § 522(b)(2)(A), because the Utah statutes seeking to exempt such funds were preempted by ERISA pursuant to 29 U.S.C. § 1144(a). The district court affirmed the bankruptcy court's decision in 330.pdf.
Title: Billings v. Key Bank of Utah (In re Granada, Inc.), 115 B.R. 702 (Bankr.D.Utah) | Date: May-25-1990 | Status: PUBLISHED See 316.pdf (Judge Clark) | Case(s): 89PC-0420
Relying on 11 U.S.C. § 547(b), chapter 11 trustee sought to avoid payments made by debtor to three partnerships, in which debtor was a partner, that were then used by the partnerships to make loan payments to defendant bank. The bankruptcy court held that trustee could recover the payments from bank, as the "initial transferee" under 11 U.S.C. § 550, finding that the partnerships were mere "conduits" between debtor and bank. This decision was reversed by the district court in 316.pdf.
Title: Stoddard v. Stoddard (In re Stoddard) | Date: May-10-1990 | Status: UNPUBLISHED (Judge Boulden) | Case(s): 89PB-0694
Prior to the filing of debtor's chapter 7 petition, debtor's wife had placed money into an account she owned jointly with him, with the understanding that debtor would manage those funds on her behalf. Instead, debtor used wife's funds for his own purposes. Wife claimed entitlement to a non-dischargeable judgment against debtor pursuant to 11 U.S.C. § 523(a)(4). The court found that, as wife had not proven the existence of an express, technical, or statutory trust, she had not proven a claim for breach of fiduciary duty under § 523(a)(4). However, the court found that debtor's conduct was an embezzlement within the scope of § 523(a)(4), and awarded wife a non-dischargeable judgment for the funds debtor had appropriated to his own use.
Title: In re Isakson | Date: May-2-1990 | Status: UNPUBLISHED (Judge Boulden) | Case(s): 90B-0604
Creditor repossessed business equipment from chapter 13 debtor without seeking relief from stay, and asserted as a defense to a stay violation claim that it believed its contract to be with a corporate entity rather than with debtor individually. The court found that debtor had informed creditor that her business had not filed its articles of incorporation, and had signed the agreement without listing any corporate capacity. The court further found that creditor had failed to either confirm the existence of a corporate entity or take any other action in response to debtor's disclosure that she was under the court's protection. The court concluded that creditor had willfully violated the stay, and awarded debtor actual damages, attorney's fees, and punitive damages pursuant to 11 U.S.C. §105(a) and 362(h).
Title: In re Mann | Date: Apr-20-1990 | Status: UNPUBLISHED (Judge Clark) | Case(s): 89C-3445
Creditor had obtained relief from stay to foreclose on chapter 13 debtors' residence, due to their failure to make postpetition mortgage payments. Before the foreclosure sale had taken place, the court denied confirmation of debtors' proposed plan, and specifically kept the case open until the foreclosure sale was completed. Shortly before the foreclosure sale, and while their chapter 13 was still pending, debtors filed a second chapter 13, thereby forcing cancellation of the property sale. Creditor sought sanctions under Fed. R. Bankr. P. 9011. Finding that the second petition had been filed as a bad faith attempt to forestall the foreclosure sale, especially since 11 U.S.C. § 109(g)(2) would have barred debtors from refiling their case for 180 days if they had voluntarily dismissed it, the court awarded sanctions against debtors' attorney, but not from debtors themselves.
Title: Am. First Credit Union v. Shaw (In re Shaw), 114 B.R. 291 (Bankr.D.Utah) | Date: Apr-13-1990 | Status: PUBLISHED (Judge Boulden) | Case(s): 89PB-0668
Creditor filed a non-dischargeability complaint against chapter 7 debtor under 11 U.S.C. § 523(a)(2)(B), then later stipulated to dismissal of the complaint with prejudice. Debtor requested attorney's fees from plaintiff under § 523(d). Noting that the purpose of the § 523(d) fee-shifting provision was to protect an honest debtor from claims that have no basis in fact or law, the court found that plaintiff could have discovered facts, with little cost or inconvenience, that would have led it to conclude that its legal claim was not supported. Therefore, the claim against debtor was not substantially justified. However, because creditor had relied on debtor's schedules and her sworn testimony at the creditors' meeting, the court concluded that special circumstances made an award of fees unjust, and debtor's request was denied.
Title: Commercial Factors of Salt Lake City, Inc. v. Jensen (In re Jensen), 113 B.R. 51 (Bankr.D.Utah) | Date: Apr-13-1990 | Status: PUBLISHED (Judge Boulden) | Case(s): 88PB-0679
Creditor successfully asserted that its debt was non-dischargeable under 11 U.S.C. § 523(a)(2)(A), after having incurred both prepetition and postpetition attorney's fees in its collection efforts. The court determined that § 523(d) only authorizes debtors to recover their attorney's fees, and even then, only if the claims against the debtor were not substantially justified. However, the court held that, where the contract sought to be enforced was freely entered into between parties of relatively equal bargaining power, and provides that the winning party is entitled to recover its fees, the attorney's fees and costs incurred in enforcing the contract become part of the debt, as defined in 11 U.S.C. § 101(11). Therefore, a creditor who successfully obtains a non-dischargeable judgment against a debtor is entitled to recover the fees and costs it incurred, both before and after debtor's bankruptcy filing, as part of the non-dischargeable judgment on the contract.
Title: Dahlstrom v. Placer U.S., Inc. (In re Dahlstrom) | Date: Apr-3-1990 | Status: UNPUBLISHED (Judge Clark) | Case(s): 89PC-0653
The court granted creditor's motion to dismiss the chapter 11 debtor's complaint that had sought to prevent creditor from enforcing its state court judgment. Debtor argued that creditor's claim had been discharged, pursuant to 11 U.S.C. § 1141(d)(1)(A), when debtor's plan of reorganization was confirmed. Creditor had filed a proof of claim in debtor's bankruptcy, but debtor had not amended his schedules or his mailing matrix to reflect that claim. As such, creditor did not receive formal notice of matters in the bankruptcy proceeding. Relying on Reliable Elec. Co. v. Olson Constr. Co., 726 F.2d 620 (10th Cir. 1984), the court concluded that debtor's failure to give defendant reasonable notice of the plan confirmation hearing constituted a denial of due process that rendered creditor's claim not subject to the plan and, therefore, not discharged. The court further ruled that creditor, similar to the one in the Reliable case, had acted reasonably by expecting that it would receive the same formal notice of the confirmation hearing as did debtor's other creditors. Finally, the court ruled that debtor's attempt to attack the validity of creditor's judgment was an attempt to use Fed. R. Civ. P. 60(b) as a substitute for appeal, which was not permitted.
Title: In re Dillon, 113 B.R. 46 (Bankr.D.Utah) | Date: Apr-3-1990 | Status: PUBLISHED (Judge Boulden) | Case(s): 89B-6914
Chapter 7 debtor claimed a car and a rifle as exempt under Utah law, asserting that both items had particular sentimental value, and that the car was used in her businesses. Trustee objected to the exemption claims. The court determined that the sentimental value exemption could only be claimed as to one item, and was intended to apply only when the estate's potential monetary gain from the asset would be minimal compared to the emotional harm suffered by debtor as a result of its loss. The court then considered what types of sentimental attachment were protected by the exemption, concluding that a bona fide emotional attachment is required. Debtor failed to establish such a sentimental attachment, either to the car that she won in a contest, or to the rifle that she purchased to replace one she owned as a child but lost in a divorce. The court also concluded that debtor failed to establish that the car was subject to a business use exemption, in that she had not provided any evidence of an ongoing business.