The bankruptcy court determined that creditor had willfully violated the automatic stay by selling debtors' previously repossessed vehicle after receiving notice of debtors' bankruptcy filing, and awarded sanctions to debtors under 11 U.S.C. § 362(h). Creditor appealed. The district court concluded that the bankruptcy court's findings, that the notice of bankruptcy was received at creditor's post office box prior to the sale and that creditor's employees did not intend to violate the stay, were not clearly erroneous. Noting that creditor could only act through its employees, and that § 362(h) requires willful and intentional violation of the stay, the district court determined that the bankruptcy court had improperly imposed sanctions under § 362(h). However, concluding that bankruptcy courts have authority, under 11 U.S.C. § 105, to impose civil contempt sanctions, the district court remanded the matter to the bankruptcy court for imposition of such sanctions, within its discretion.
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Title: In re Skinner | Date: Aug-10-1988 | Status: APPEAL Unpublished (U.S. District Court, Utah) | Case(s): 87A-3646
Title: Clendenen v. Van Dyk Oil Co., Inc. (In re By-Rite Distrib., Inc.) | Date: Jul-27-1988 | Status: APPEAL Unpublished (U.S. District Court, Utah) | Case(s): 86PA-0946
The court considered whether payments by check that were delivered to payee shortly before debtor filed its bankruptcy petition were "transferred" when delivered, or when paid by debtor's bank postpetition, for purposes of both avoidance under 11 U.S.C. § 549(a)(1) and the limitations period applicable to such claims in § 549(d). Payee appealed the bankruptcy court's ruling that the transfer occurred on the date debtor's bank actually disbursed funds belonging to debtor, which meant the funds were avoidable as postpetition transfers. The district court affirmed.
Title: Eggett v. Shaffer (In re Shaffer) | Date: Jul-27-1988 | Status: UNPUBLISHED (Judge Clark) | Case(s): 86PC-0021
Plaintiffs filed an adversary complaint alleging that a judgment they had obtained in state court was not dischargeable in debtor's bankruptcy pursuant to 11 U.S.C. § 523(a)(2). On the parties' cross-motions for summary judgment, the court ruled that § 523(a)(2) requires a showing of intentional misrepresentation. Plaintiffs' state judgment was based on negligent misrepresentation, which is not sufficient. The court indicated that debtor's motion would be granted unless plaintiffs amended their complaint to state an intentional misrepresentation claim pursuant to § 523(a)(2).
Title: Megabar Corp. v. First Sec. Bank of Utah (In re Megabar Corp.) | Date: Jul-21-1988 | Status: UNPUBLISHED (Judge Clark) | Case(s): 87PB-0772
Debtor-in-possession filed an adversary complaint against defendant bank, alleging that payment on a loan from bank to debtor that was made by debtor's licensee constituted a preference under 11 U.S.C. § 547. Debtor argued that the payment was an indirect transfer of its property to bank, as licensee simply paid to bank what licensee owed to debtor. Bank argued that the payment was made pursuant to licensee's independent obligation as guarantor of debtor's loan. The court defined the issue as whether the payment depleted estate assets in favor of one creditor over others. The court determined that licensee had made the payment to bank in order to protect its own interests as a guarantor on the loan, and that the result did not diminish debtor's estate because bank essentially gave its claim for the payment amount to licensee. Therefore, the payment was not a preference subject to § 547.
Title: ANR Ltd. Inc. v. Chattin [Utex Oil Co., debtor] | Date: Jul-20-1988 | Status: RELATED CASE 89 B.R. 898 (D.Utah) (U.S. District Court, Utah) | Case(s): (Utex Oil Co., debtor)
After settling its adversary proceeding against a chapter 11 debtor in bankruptcy court, plaintiff filed an action in district court against debtor's former officers and directors. Plaintiff alleged that defendants assisted debtor's mismanagement of funds for which debtor owed plaintiff a fiduciary duty. The district court defined the issue before it as whether plaintiff had standing to bring the causes of action in the complaint, which would depend on whether the claims were personal to plaintiff or belonged to the debtor's bankruptcy estate. The court determined that, under Utah law, the corporation is the proper party to assert claims against its insiders for corporate management and, therefore, such claims belonged to the debtor corporation's estate. However, claims by creditors that they were specifically harmed by insider conduct are personal to the creditor, and are not part of the corporation's bankruptcy estate. A personal claim is one in which no one else has an interest. Plaintiff's claim sought an alter ego remedy against defendants, seeking to have them held personally liable for the corporation's debts, which the district court determined could be either a corporate claim or a personal claim of a creditor under Utah law. The court then held that a determination of that issue depended on whether placing the claim within the bankruptcy estate would further federal bankruptcy policies. Since a successful alter ego claim concludes that insiders are personally liable for all of the corporation's debts, fundamental principles of bankruptcy compel a conclusion that the bankruptcy trustee should be the one to assert such a claim, on behalf of all creditors. Plaintiff did have standing to bring its tort claims against the defendants because those claims alleged direct injury to plaintiff and not to others.
Title: In re Smith & Son Septic & Sanitation Serv., 88 B.R. 375 (Bankr.D.Utah) | Date: Jul-1-1988 | Status: PUBLISHED (Judge Boulden) | Case(s): 86B-5435
Debtor partnership moved to dismiss its chapter 11 case due to changes in financial circumstances that made confirmation of a plan impossible. The US Trustee objected to dismissal on the ground that debtor had failed to pay quarterly fees imposed by 28 U.S.C. § 1930(a)(6). Both parties agreed that conversion of the case to chapter 7 would serve no purpose. No other party objected to dismissal. Noting that Congress had failed to provide a means of enforcing payment of the § 1930(a)(6) fees, the court considered and rejected trustee's suggested alternatives to dismissal, including imposition of a contempt order against debtor, or awarding trustee a money judgment for the fees. The court concluded that trustee's interpretation of the fees statute, to the effect that debtors must pay the minimum fee for each quarter even if no disbursements were made, was not supported by the statute's legislative history. The court dismissed debtor's case, but allowed time for the trustee to determine whether it wanted to file an adversary proceeding to recover unpaid fees in accordance with the court's interpretation of § 1930(a)(6).
Title: DLB Collection Trust v. Harline (In re Harline) | Date: Jun-30-1988 | Status: APPEAL Unpublished (U.S. District Court, Utah) | Case(s): 87-0184 and -0185
When debtor's chapter 11 case was converted to chapter 7, the bankruptcy court issued a notice that listed February 11 of the previous year as the last day to file non-dischargeability complaints. The correct date should have been February 9, 1987. Plaintiffs' complaints, filed on February 11, 1987, were dismissed by the bankruptcy court as untimely, finding that plaintiffs could not reasonably rely on a date that had already passed, and had a duty to compute the date themselves from the date of the creditors meeting. On appeal, the district court reversed, concluding that the bankruptcy court should have, sua sponte, used its power under Bankruptcy Rule 4004(b) to correct its own mistake by extending the time for filing plaintiffs' complaints, even though plaintiffs had not requested an extension.
Title: In re Granada, Inc., 88 B.R. 369 (Bankr.D.Utah) | Date: Jun-24-1988 | Status: PUBLISHED (Judge Clark) | Case(s): 87C-0693
The court considered a claim for non-residential rent that was incurred by debtor postpetition. Lessor asserted that, under 11 U.S.C. § 365(d)(3), its claim for rent must be paid immediately. However, trustee claimed that, as the estate did not have sufficient liquid assets at that time to pay all administrative claims, paying lessor's claim would give that claim improper superpriority over other administrative claims. The court determined that such priority was not supported by the statute, its legislative history, or case authority, and held that § 365(d)(3) claims do not have superpriority status over other 11 U.S.C. § 507(a)(1) administrative claims. However, the court held that, when immediate payment of a § 365(d)(3) claim has been properly sought, full payment must be made unless the trustee establishes a "substantial doubt" that there will ultimately be sufficient funds available to pay all administrative expenses. The court concluded that trustee had not made such a showing in the case before the court.
Title: Dewsnup v. Timm (In re Dewsnup), 87 B.R. 676 (Bankr.D.Utah) | Date: Jun-15-1988 | Status: PUBLISHED See 908 F.2d 588 (Judge Clark) | Case(s): 87PC-0116
Debtors filed an adversary action against a secured creditor, asserting that they could redeem abandoned secured property, pursuant to 11 U.S.C. § 506(d), by paying creditor the property's fair market value. Debtors argued that, since an allowed secured claim is limited to the value of the collateral by § 506(a), they should be able to pay creditor that value and take the property free and clear of creditor's security interest. The court extensively discussed the role of § 506 in bankruptcy, concluding that it only applies to property in which the estate has an interest. Since the estate has no interest in property that has been abandoned, that provision is not applicable to abandoned property. In addition, rights in abandoned property are considered the same as if no bankruptcy had been filed. Therefore, § 506(d) does not grant debtors any greater rights in abandoned property than they had under prepetition non-bankruptcy law. This decision was affirmed by the district court, and later by the Tenth Circuit.
Title: In re Dunyon | Date: May-27-1988 | Status: UNPUBLISHED See 274.pdf (Judge Boulden) | Case(s): 87B-4887
Creditor obtained a prepetition judgment against debtor, and continued its efforts to collect that judgment after debtor filed a chapter 7 petition. The court found that creditor's conduct constituted a willful violation of the automatic stay, without justification, and awarded sanctions pursuant to 11 U.S.C. § 362(h). This decision was upheld, but remanded for recalculation of the amount of fees that were a direct, foreseeable consequence of creditor's conduct in 274.pdf.