The court denied all compensation sought by attorneys acting as counsel for corporate chapter 11 debtor-in-possession under 11 U.S.C. § 327(a), based on fact that attorneys were not disinterested. As the father and brother of debtor's principal officer, attorneys were relatives, insiders, and interested parties, and could not be disinterested, as is required. Attorneys' assertion that they relied on the court's appointment of them was rejected on the ground that it was their duty to acquaint themselves of the legal requirements for representation of debtors, and it was not up to the court to discover their relationship with a corporate employee. Nonetheless, there is no disinterest requirement for attorneys representing chapter 7 debtors, and attorneys would be allowed to submit applications for services they rendered after conversion of debtor's case to chapter 7, which application would be subject to all requirements of law.
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Title: In re Career Concepts, Inc., 76 B.R. 830 (Bankr.D.Utah) | Date: Mar-30-1983 | Status: PUBLISHED See 86.pdf (Judge Clark) | Case(s): 81C-1939
Title: In re Envirowest, Inc. | Date: Mar-30-1983 | Status: UNPUBLISHED (Judge Clark) | Case(s): 81C-2203
With respect to an untimely claim received by letter in a chapter 7 case, the court indicated that the claim could be treated as, and receive the priority of, one of three subsections of 11 U.S.C. § 726(a), which were (a)(2)(A), (a)(2)(C), or (a)(3), depending on the circumstances. Claimant could file a proof of claim with a motion for extension of the time for filing, supported by an affidavit showing good reason why his neglect in failing to timely file should be excused. If such a motion were granted, claimant's claim would be treated as a timely filed claim under subparagraph (a)(2)(A). There are also two ways the claim could be treated as an untimely claim: (1) if claimant could establish that he did not receive notice of the filing deadline in time to file a timely proof of claim, and his claim was filed prior to distribution, his claim would satisfy subparagraph (a)(2)(C); or (2) claimant could simply file a tardy proof of claim and it would be treated in accordance subparagraph (a)(3).
Title: In re L.W. Gardner Co. | Date: Mar-30-1983 | Status: UNPUBLISHED (Judge Clark) | Case(s): 80C-2316
With approval of the court, chapter 11 trustee hired two individuals to round up and sell debtor's cattle. Prior to the scheduled sale, debtor's principal filed a complaint against trustee's agents in district court, seeking to enjoin the cattle sale, total damages of $40 million, plus costs and attorney's fees. When the agents were served, they declined to proceed with the sale. Trustee obtained an order to show cause against debtor's principal and his attorney. At a previous hearing, the court had found the lawsuit against the agents to be "meritless on its face," and that debtor's principal was in contempt because the suit had been filed in order to deter the agents from performing their duties. Thereafter, the sale was completed. At a later hearing on the contempt issues, the court determined that no penalty would be imposed on debtor's principal, and that no finding of contempt would be issued against his attorney, since the court's earlier contempt ruling had successfully induced compliance.
Title: Gen. Elec. Mtg. Corp. v. S. Vill., Inc. (In re S. Vill., Inc.) | Date: Mar-29-1983 | Status: UNPUBLISHED (Judge Clark) | Case(s): 82PC-0127
A state court action seeking foreclosure of debtor's property was removed to the bankruptcy court, and defendant subcontractor moved for summary judgment on its cross-claim against defendant contractor. The issue before the court was whether a payment provision in the contractor/subcontractor contract was a condition precedent to subcontractor's payment. The court held that the provision, which indicated that subcontractor would be paid 10 days after owner paid contractor, was not a condition, and that subcontractor had not agreed to assume the risk of owner's non-payment. In the event of owner's non-payment, contractor was obliged to pay subcontractor "within a reasonable time." The court rejected contractor's argument that a reasonable time was the time necessary for it to exhaust its remedies against owner.
Title: In re Utah Agricorp, Inc. | Date: Mar-10-1983 | Status: UNPUBLISHED (Judge Clark) | Case(s): 79C-0037
In a case filed under the Bankruptcy Act, the court ruled that the state of Delaware could not file an untimely proof of claim, even though it had not been listed in debtor's schedules and had not received notice of the bankruptcy. In so ruling, the court followed the holding of In re Universal Trade Corp, No. 79-2148 (10th Cir. Nov. 17, 1980), that the deadline under the Act was a statute of limitations that courts had no equitable discretion to extend.
Title: In re L.W. Gardner Co. | Date: Mar-8-1983 | Status: UNPUBLISHED (Judge Clark) | Case(s): 80C-2316
The court dismissed an order to show cause obtained by creditor against debtor's principal, concluding that principal's imprudent handling of a check issued to him in exchange for cattle, which constituted proceeds subject to creditor's lien, did not justify imposition of contempt.
Title: In re Midwest Serv. & Supply Co. | Date: Mar-8-1983 | Status: UNPUBLISHED (Judge Clark) | Case(s): 82M-0329
In 57.pdf, the court previously granted government's motion for new trial, solely to consider additional legal arguments on a contempt order. Following a flurry of filings, including debtor's own motion for new trial, which were complicated by conversion of debtor's case to chapter 7, the court again ruled that the government violated the automatic stay when, in order to recoup a previous overpayment of debtor, it reduced payments that it owed to debtor. Debtor was awarded $2,000 in attorney fees. This decision was reversed on appeal in 44 B.R. 262 (D. Utah 1983).
Title: Color Craft Press, Ltd. v. Nationwide Shopper Sys., Inc (In re Color Craft Press, Ltd.) | Date: Feb-22-1983 | Status: APPEAL 27 B.R. 962 (D.Utah) See 66.pdf and 67.pdf (U.S. District Court, Utah) | Case(s): 82PM-0974
On appeal from the bankruptcy court's dismissal orders in 66.pdf and 67.pdf, the district court ruled that N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982) did not invalidate district court jurisdiction over bankruptcy cases, and that the district court could, by its emergency rule of December 24, 1982, continue using the bankruptcy court system to assist in the exercise of that jurisdiction. Specifically, the district court held that the Supreme Court's invalidation of bankruptcy court jurisdiction under 28 U.S.C. § 1471(c) did not invalidate district court jurisdiction over bankruptcy matters under § 1471(a), as those provisions are severable and, in addition, the Marathon decision did not in any way indicate that district court jurisdiction was affected.
Title: Color Craft Press, Ltd. v. Nationwide Shopper Sys., Inc (In re Color Craft Press, Ltd.), 27 B.R. 392 (Bankr.D.Utah) | Date: Feb-7-1983 | Status: PUBLISHED See 67a.pdf (Judge Mabey) | Case(s): 82PM-0974
The bankruptcy court held that it was without jurisdiction over chapter 11 debtor's breach of contract proceeding, and granted defendant's motion to dismiss. The court based its decision on non-severability of 28 U.S.C. § 1471, concluding that, when that portion of the statute that granted jurisdiction to the bankruptcy courts had been declared unconstitutional in N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982), the entire statute failed, including the jurisdictional grant to the district courts over bankruptcy matters, and no other jurisdictional basis existed. The court stayed its dismissal of the case, and certified its decision to the district court for review. The district court vacated the bankruptcy court's decision in 27 B.R. 962 (D. Utah 1983) [67a.pdf].
Title: Gillman v. Preston Family Inv. Co. (In re Richardson), 27 B.R. 407 (Bankr.D.Utah) | Date: Feb-7-1983 | Status: UNPUBLISHED See 67a.pdf (Judge Clark) | Case(s): 82PC-0746
In this case, as in Color Craft [66.pdf], the bankruptcy court dismissed an action arising under the Bankruptcy Code, based on its conclusion that the Supreme Court's Marathon decision eliminated any jurisdiction the court had over the matter. This decision was vacated in 27 B.R. 962 (D. Utah 1983) [67a.pdf].