Creditor filed an adversary complaint against debtor asserting that a loan was obtained by debtor based on written, materially false, statements regarding his financial condition, and that the debt was therefore non-dischargeable pursuant to 11 U.S.C. § 523(a)(2)(B). After a trial, the court considered three issues, which were whether: (1) financing statements provided by debtor were "materially false," (2) creditor's predecessor "reasonably relied" on the statements, and (3) debtor had submitted the statements with the intent to deceive. The court found that debtor's financial statements were examples of extreme material falsity, that lender had reasonably relied on one of the financial statements in making the loan, and that debtor's uncorroborated denial of intent to deceive was insufficient to overcome the presumption of intent that arose from creditor's evidence on the first two issues. Creditor's claim against debtor was determined to be non-dischargeable.
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Title: N. Park Credit v. Harmer (In re Harmer), 61 B.R. 1 (Bankr.D.Utah) | Date: Oct-24-1984 | Status: PUBLISHED (Judge Clark) | Case(s): 82PC-0158
Title: In re Lambert, 43 B.R. 913 (Bankr.D.Utah) | Date: Oct-22-1984 | Status: PUBLISHED See 138.pdf (Judge Clark) | Case(s): 82C-2143
Creditors moved to dismiss or convert debtors' chapter 13 petition, claiming that their debts exceeded the $100,000 limit for "noncontingent, liquidated, unsecured debts" for chapter 13 eligibility under 11 U.S.C. § 109(e). After defining all of the relevant terms in § 109(e), the court concluded that both "liquidated" and "noncontingent" debts may also be "disputed," and that a bona fide dispute regarding either debtor's liability for, or the amount of, a debt renders it "unliquidated," and therefore not includable in the § 109(e) eligibility calculation. The court further held that, where there is a question regarding a debt's inclusion in the chapter 13 debt limit, § 109(e) requires a hearing to determine debtor's qualification for chapter 13 relief, unless that issue cannot be resolved expeditiously. In cases where resolution cannot be accomplished expeditiously, the court will rely on the debtor's characterization of the debt in its schedules over the creditor's version of the facts. Because an adversary proceeding between creditors and debtors regarding the validity of creditors' claims was already pending in the district court, the court relied on debtors' characterization of the debt as disputed, and denied creditor's motion to dismiss in order to allow the adversary to proceed. The court acknowledged that its ruling, which largely adopted the position taken in In re King, 9 B.R. 376 (Bankr. D. Ore. 1981), was not in line with the majority view.
Title: In re Schofield Greenhouse | Date: Oct-19-1984 | Status: UNPUBLISHED (Judge Allen) | Case(s): 82A-3165
Attorney appointed to represent debtor partnership filed an interim application for fees. There were no objections, and no complaints regarding attorney's work on behalf of debtor. Attorney also represented two general partners of debtor in connection with their personal bankruptcies, and all three cases were under joint administration. The court concluded that attorney was not a "disinterested person," as required by 11 U.S.C. § 327(a) and defined by 11 U.S.C. § 101(13)(E), based on his representation of both a partnership and its partners, even though such interests will generally be the same, due to the potential for conflicts to arise, especially as between the two partners. Attorney's application was denied.
Title: In re Wasatch Factoring, Inc. | Date: Sep-28-1984 | Status: UNPUBLISHED (Judge Allen) | Case(s): 83A-0134
Attorney appointed to represent corporate chapter 11 debtor filed an application for fees. There were no objections, and no complaints regarding attorney's work on behalf of debtor. However, the court concluded that attorney was not a "disinterested person," as required by 11 U.S.C. § 327(a) and defined by 11 U.S.C. § 101(13)(E), because he represented both debtor and its principals, which could result in conflicts of interest, especially in a bankruptcy. In addition, the court found counsel to have a conflict in fact, as the principals and debtor were defendants in litigation, in which principals were seeking indemnification from debtor. The court denied attorney's current application and set aside its prior order granting interim compensation.
Title: Lambert v. Petty Motor Lease, Inc. (In re Lambert) | Date: Sep-20-1984 | Status: UNPUBLISHED See 141.pdf (Judge Clark) | Case(s): 83PC-0112
Debtors filed an adversary proceeding seeking a declaratory judgment that any claims asserted by defendant in debtors' bankruptcy had been settled by contract, in addition to other relief. Defendant filed a motion to dismiss the adversary complaint, asserting the court lacked jurisdiction under N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982). The court held that the district court's interim rule after Marathon, which had been validated by the Tenth Circuit, gave the court jurisdiction over "bankruptcy proceedings," and that debtors' adversary, which dealt with their eligibility to be chapter 13 debtors, was just such a matter. Additionally, the court noted that it continued to have jurisdiction pursuant to 28 U.S.C. § 157, as the adversary was a "core matter."
Title: In re ChristensonIn re EicksIn re CarlgrenIn re WilldenIn re Johnson | Date: Sep-15-1984 | Status: UNPUBLISHED (Judge Clark) | Case(s): 82A-1180, -1108, -1128, -1156, and -1157
Chapter 13 debtors, who were all represented by the same counsel, moved to dismiss their cases, in which no schedules had been filed, pursuant to 11 U.S.C. § 1307(b). After the court's orders dismissing the cases and discharging the trustee had been entered, trustee moved to convert the cases to chapter 7. The court held that, in the absence of an improper motive for filing, debtors have an absolute right to dismiss at any time prior to entry of an order of conversion. Trustee's motion was denied.
Title: In re Flygare | Date: Aug-20-1984 | Status: UNPUBLISHED (Judge Mai (WY Bankr. Court, by designation)) | Case(s): 80C-1330
Chapter 13 trustee objected to debtors' third proposed plan on the ground it had not been proposed in good faith, as required by 11 U.S.C. § 1325(a)(3). The court considered the eleven good faith factors identified by the Tenth Circuit in debtors' previous appeal, Flygare v. Boulden (In re Flygare), 709 F.2d 1344 (10th Cir. 1983), concluding that only 2 of those factors were relevant. The court found that the percentage of debtors' payments to their total monthly surplus was 91%, which weighed in favor of confirmation. The court then found that the 47-month term of debtors' plan, which resulted in a 2% payback to unsecured creditors was, under all of the facts of the case, sufficient to satisfy the § 1325(a)(3) good faith standard. The proposed plan was confirmed.
Title: In re Snyderville Props., Inc. | Date: Aug-20-1984 | Status: UNPUBLISHED (Judge Mai (WY Bankr. Court, by designation)) | Case(s): 84C-0673
Bank, the first lienholder on property subject to chapter 11 debtor's second lien, began postpetition non-judicial foreclosure proceedings. Bank then filed a motion in the bankruptcy case seeking a determination of the automatic stay's applicability, stay relief, and other alternative relief. The court held that debtor's second trust deed on the property, which was its only asset, was property of the estate and subject to the automatic stay. The court found that debtor had a three-month right to cure under state law, which had been tolled by the stay, and that foreclosure would be injurious to that right. As bank's lien was oversecured by the property, the court denied stay relief, as well as bank's requests for conversion, dismissal, and the shortening of the chapter 11 time periods pursuant to 11 U.S.C. § 1121(d).
Title: Merrill v. Abbott (In re Indep. Clearing House Co.), 41 B.R. 985 (Bankr.D.Utah) | Date: Aug-6-1984 | Status: PUBLISHED See 237.pdf (Judge Allen) | Case(s): 83PA-0986
Chapter 11 debtors, the perpetrators of a massive Ponzi scheme, were subject to a confirmed plan of reorganization providing for substantive consolidation of the debtors, liquidation of all assets, and distribution to creditors based on priority. Trustee filed 2,000 adversary complaints against debtors' investors, seeking to recover (1) all payments made to them by debtors within 90 days of the petition filings, as preferences; (2) all payments, to the extent that they exceeded the amount of each investor's deposit with debtors, as fraudulent conveyances; and (3) all payments made by debtors to the investors, as fraudulent conveyances. On trustee's motion for summary judgment, the court found that there were no material issues of fact and proceeded to issue a ruling based on legal issues. Investors asserted that their investments were subject to a constructive trust and, therefore, never became estate property, but the court rejected this contention due to both the impossibility of tracing the investments, and because imposition of such a trust would nullify trustee's avoidance powers. The court dismissed trustee's third cause of action, concluding that all payments made outside of the preference period, except those that exceeded investors' investments, were not avoidable under any provision of the Bankruptcy Code. The court also held that any payments that exceeded investors' investment were not supported by reasonably equivalent value, and granted judgment in favor of trustee on his second claim for relief. Finally, the court ruled that all payments made within the preference period satisfied the elements of 11 U.S.C. § 547(b), and were not subject to the ordinary course of business exception. Trustee's first claim for relief was granted, including prejudgment interest at the legal rate. This decision was reversed, in part, by the en banc district court decision in 237.pdf.
Title: In re Loveridge Mach. & Tool Co., Inc.In re Loveridge | Date: Jul-18-1984 | Status: UNPUBLISHED (Judge Mai (WY Bankr. Court, by designation)) | Case(s): 83C-0071, -0238, -0312, -0313, and -0315
Oversecured creditor sought payment of its attorney's fees under 11 U.S.C. § 506(b), which allows such payment to oversecured creditors, as provided by their agreement with the debtor. The court determined that § 506(b) was an exception to the general "American rule" that parties must bear their own attorney's fees, and that such exceptions must be strictly construed. Creditor failed to provide a copy of its agreement with its proof of claim, as required by Bankruptcy Rule 3001, and again failed to provide it in response to debtor's objection to its attorney's fees claim. Without the agreement in the record, the court found that the application for attorney's fees under § 506(b) must be disallowed.