Less than a month before the Debtor filed bankruptcy, her mother transferred funds to the trust account of the Debtor's criminal defense attorney, who in turn transferred the money to the Defendants to settle criminal charges against the Debtor. The Trustee sought to avoid the transfer to the Defendants as a preferential or fraudulent transfer, and both parties moved for summary judgment. Applying the dominion or control and diminution of the estate tests found in Parks v. FIA Card Services, N.A. (In re Marshall), 550 F.3d 1251 (10th Cir. 2008), the Court granted summary judgment to the Defendants, concluding that the transfer was not of "an interest of the debtor in property" under 11 U.S.C. § 547 or § 548.
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Title: Hofmann v. Drabner (In re Baldwin) | Date: Aug-11-2014 | Status: PUBLISHED (Judge Thurman) | Case(s): 13-2515
Title: Jubber v. Hiawatha Coal Proceeds (In re C.W. Mining Company) | Date: Jun-20-2014 | Status: PUBLISHED (Judge Mosier) | Case(s): 11-08001
The Debtor was party to a contract that gave the Debtor the exclusive right to mine coal. An involuntary chapter 11 petition was filed against the Debtor. During the GAP period, the Debtor transferred its rights in the mine to a third party, which mined coal until an order for relief was entered and the case was converted to chapter 7. The Chapter 7 Trustee brought an adversary proceeding against the third party and others seeking avoidance of the mine's transfer and recovery of the mined coal under §542, 549 and 550, arguing, inter alia, that the coal mined post-petition, as well as any proceeds of the coal, was property of the estate. The Court denied the Trustee's claims to the mined coal and the Trustee appealed to the District Court. The District Court affirmed that the mined coal, while it was in situ, was not property of the estate but remanded the case to address the Trustee's additional arguments. On remand, the Court found that, under the terms of the contract and Utah law, the Debtor's property interest was an incorporeal hereditament, a future right to possession of the coal, which was contingent on the Debtor mining the coal. While the Trustee may have a claim for damages, the Debtor had no possessory interest in the mined coal because the third party, not the Debtor, mined the coal. The Court also held that none of the Trustee's alternative arguments - (1) the third party was not authorized to mine the coal; (2) the Debtor had expenditure significant sums preparing the coal for extraction; (3) the estate was liable for royalties on the coal it did not mine; (4) the transfer of the mine was a violation of the automatic stay; and (5) equity supported finding the coal to be property of the estate - were sufficient to create a possessory interest in the mined coal. The Court therefore denied the Trustee's §542, 549 and 550 causes of action with respect to the mined coal.
Title: In re Cotant, In re Davidson | Date: May-25-2014 | Status: UNPUBLISHED (Judge Thurman) | Case(s): 13-34235, 13-34268
Debtors filed a request for "special notice," through which all pleadings would be served personally on the Debtors in addition to their counsel. The Chapter 13 Trustee objected, which did not serve as a bar to confirmation. The Court held that Debtors did not have standing because there was no injury in fact nor certainly impending injury. Alternatively, the Court held that denying the special notice request would not violate the Debtors' rights to due process or equal protection.
Title: Hunt v. Steffensen (In re Steffensen) | Date: May-23-2014 | Status: PUBLISHED (Judge Thurman) | Case(s): 13-2192
The Defendant filed a motion to dismiss the Plaintiff's complaint, which the Court treated as a motion for summary judgment pursuant to Fed. R. Civ. P. 12(d), yet permitting the Defendant to argue his motion merged with a motion for summary judgment. After the parties submitted additional briefing, the Court examined the Defendant's revised motion separately under Fed. R. Civ. P. 12(b)(6) and 56. The Defendant provided sworn statements of fact with his revised motion, which he argued contradicted the factual allegations in the complaint, requiring it to be dismissed. The Court held to the contrary, reasoning that all well-pleaded factual allegations in a complaint are assumed true on a motion to dismiss, which is not a proper means to contest the truthfulness of the allegations.
Title: West v. Christensen (In re Christensen) | Date: May-8-2014 | Status: UNPUBLISHED (Judge Thurman) | Case(s): 13-2248
In this adversary proceeding, the Court addressed the parties' compliance with new Local Rule 7056-1. It ruled that the Plaintiff's opposition to the Defendant's motion for summary judgment was not untimely because the Defendant had not filed a Notice of Summary Judgment Motion and Notice of Hearing. Nor did the Defendant set an opposition deadline as required by Local Rule 7056-1(c). The Court also ruled that the Defendant's motion for summary judgment was not in compliance with Local Rule 7056-1(b) as it was not contained in one document and was not organized as required by that rule. The Court cautioned the parties to hew to the rule in the future. As to the merits, the Court held that a debtor's spouse is related to the debtor by affinity and therefore an insider of the debtor under § 101(31) for this avoidance action.
Title: Rushton v. Tennessee Valley Authority (In re C.W. Mining Company) | Date: Mar-31-2014 | Status: PUBLISHED (Judge Mosier) | Case(s): 10-2816
Postpetition, a garnishee and customer of the Debtor paid to the Debtor's agent funds that were garnished prepetition. After conversion from chapter 11 to chapter 7, the trustee commenced an adversary proceeding to recover the garnished funds from the garnishee and alleged custodian of those funds. Relying on its prior determination that the Debtor's agent had authority to receive payments from purchasers during the time between the filing of the bankruptcy petition and the order for relief, the Court held that the bankruptcy estate was not injured by the payment to the Debtor's agent because payment to the agent was equivalent to payment to the then Debtor in possession. The Court also held that the garnishee was not a custodian under § 101(11) and therefore did not have the duties of a custodian under § 543. Even if the garnishee did have those duties, however, the Court held that it fulfilled them by delivering the garnished funds to the Debtor's agent. Because the Debtor received, through its agent, what it was entitled to receive, and the estate was not entitled to receive more from the garnishee, the Court granted the garnishee's motion for summary judgment.
Title: Rushton v. Standard Industries (In re C.W. Mining Company) | Date: Mar-31-2014 | Status: PUBLISHED (Judge Mosier) | Case(s): 09-2047
One of the Debtor's customers interpleaded funds resulting from payments withheld on certain invoices into the Court. After conversion from chapter 11 to chapter 7, the trustee commenced an adversary proceeding to recover the interpleaded funds for the benefit of the estate. The Court initially granted the trustee's motion for summary judgment in part and ordered that the interpleaded funds be paid to the trustee. After the Court's decision was appealed and the case was remanded from the District Court, a creditor moved for summary judgment on the issue of whether the estate was entitled to the interpleaded funds. The Court granted the creditor's motion, holding that because the Debtor only assigned its interest in contract proceeds to its agent, but not the contract itself, and because the agent did not perfect its interest in the proceeds under the UCC, the trustee's interest in the interpleaded funds was superior to that of the agent. The Court also held that the invoices, though generated in the agent's name, did not create a genuine dispute regarding the ownership of the account with the customer or the interpleaded funds.
Title: In re Akbarian | Date: Feb-5-2014 | Status: PUBLISHED (Judge Thurman) | Case(s): 12-21670
The Court approved the Debtor's waiver of her chapter 7 discharge, concluding that it met the statutory requirements of § 727(a)(10) and was voluntary, knowing, informed, and made with awareness of the consequences of foregoing a discharge in bankruptcy. As a consequence, the Court granted the Debtor's request to dismiss two consolidated denial of discharge adversary proceedings, which were rendered moot by the waiver. In approving the waiver and dismissing the adversary proceedings, the Court overruled the objections of the Chapter 7 Trustee and two creditors, who had filed the adversary proceedings. The Court concluded that the objecting parties had not raised concerns sufficient to deny approval of the Debtor's waiver.
Title: In re Stain | Date: Jan-13-2014 | Status: UNPUBLISHED (Judge Thurman) | Case(s): 10-30043
The Chapter 13 Trustee filed a motion to dismiss after Debtors failed to make three plan payments. Debtors objected and filed a motion to abate, requesting, inter alia, that the Court "permanently" abate the three payments that had already come due under the plan as Debtor was injured and unable to work full time. The Court explained, citing to In re Tonioli, 359 B.R. 814 (Bankr. D. Utah 2007) and In re Hughes, No. 08-24736, 2009 WL 2252181 (Bankr. D. Utah, July 17, 2009), that abatement in this District is a term of art and that it may only be applied prospectively. The Court held that the Debtors showed cause and granted the abatement, prorating the future payments to account for the delinquent payments in full and ongoing plan payments under the modified plan.
Title: In re Akbarian | Date: Dec-19-2013 | Status: UNPUBLISHED (Judge Thurman) | Case(s): 12-21670
The Court denied the Debtor's motion to dismiss her chapter 7 case under § 707(a). The Court applied the factors enumerated by the Tenth Circuit BAP in Isho v. Loveridge, 2013 WL 1386208 (B.A.P. 10th Cir. Apr. 5, 2013), and concluded that the Debtor had not demonstrated cause to dismiss. In addition, the Court found that the objecting creditors would be prejudiced by dismissal because, after twenty months in bankruptcy court, they would be required to return to state court to litigate their claims, which would deny them the possibility of a return through the Trustee's pending avoidance actions. The Court also held that the presence of denial of discharge proceedings and the potential that dismissal would reorder the payment priority established by bankruptcy law were factors favoring denial of the motion. While not present here, the Court opined that there could be circumstances that would permit dismissal, such as where all parties consented, or where the debtor demonstrated a precise mechanism to satisfy all creditors.