Trustee objected to debtors' exemption claim under Utah Code Ann. § 78-23-8(2) on the ground that debtor had admitted that other vehicles could be provided for him in his employment. The court rejected the objection as insufficient, concluding that the exemption statute applies to vehicles used in a business or profession, but does not require the vehicle to be necessary in light of available substitute vehicles.
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Title: In re Pead | Date: Sep-20-1982 | Status: UNPUBLISHED (Judge Clark) | Case(s): 82C-0408
Title: In re Bennion | Date: Sep-16-1982 | Status: UNPUBLISHED (Judge Clark) | Case(s): 82C-1605
Creditor sought to dismiss or convert this chapter 13 case on the ground that debtor was a "stockbroker," and thus precluded from filing a chapter 13 petition. Based on legislative history, the court ruled that "stockbrokers" were precluded from filing under chapter 13 in order to allow their customers the protections offered by chapter 7. Based on the definition of "stockholder," a sales agent of a brokerage house that is commonly called a "stockbroker" does not meet the statutory definition of "stockbroker." Such "common" stockbrokers do not have "customers" that require the protection of chapter 7, subchapter III. Creditor's motion was denied.
Title: McCoy v. Interlake Thrift (In re McCoy) | Date: Sep-15-1982 | Status: UNPUBLISHED (Judge Mabey) | Case(s): 81PM-0182
Chapter 13 debtors filed a complaint to avoid liens pursuant to 11 U.S.C. § 522(f). In defense, defendant asserted that § 522(f) is not applicable in chapter 13 cases. The court disagreed, stating several reasons why § 522(f) was applicable in chapter 13. The court also rejected defendant's assertion that § 522(f) was inconsistent with 11 U.S.C. § 1325(a), which requires that creditors retain their liens in order for a chapter 13 plan to be confirmed, noting that avoided liens need not be included in the plan. The court also noted that chapter 11 contains a similar provision to § 522(f), which is 11 U.S.C. § 1129(b)(2)(A)(i)(I), and defendant's interpretation would therefore eviscerate every avoidance power under both chapters, which was a result Congress could not have intended.
Title: Red Mountain Mining Co. v. Reeves (In re Reeves) | Date: Aug-13-1982 | Status: UNPUBLISHED See 84.pdf (Judge Clark) | Case(s): 82PC-0709
Debtor filed a motion to dismiss plaintiffs' non-dischargeability complaint against him. The complaint included by reference a claim made against debtor in an Arizona state court that alleged breach of contract, and both negligent and fraudulent misrepresentation. The court found that, to the extent plaintiffs' claim was for non-dischargeability, the court had subject matter jurisdiction over it. However, if plaintiffs wished to pursue other claims as well, they would first need to seek relief from stay. Plaintiffs were ordered to amend their complaint to assert only claims that were properly before the bankruptcy court.
Title: Empire Enters., Inc. v. Koopmans (In re Koopmans), 22 B.R. 395 (Bankr.D.Utah) | Date: Aug-11-1982 | Status: PUBLISHED (Judge Mabey) | Case(s): 81PM-0890
Plaintiff, which held a lien on one of fourteen homes owned and rented out by chapter 11 debtors, sought relief from stay to foreclose its lien. The complaint alleged that debtors had no equity in the home, and had no prospect of rehabilitation. The court found that debtors did not have any equity in the property, and had not presented evidence concerning their rehabilitation prospects. However, the court agreed with debtors that the standard under 11 U.S.C. § 362(d)(2)(B) was not based on rehabilitation prospects, but on the necessity of the property to an effective reorganization. In considering the statutory language, the court ruled that an "effective reorganization" could be either an effective rehabilitation or an effective liquidation, and that the standard was therefore a necessity, rather than a rehabilitation, test. As most courts analyzed § 362(d)(2)(B) as a rehabilitation test, the court adopted its own necessity criteria for situations in which debtors have no equity in the property, which was that property is necessary to an effective reorganization whenever it is necessary, either to operation of the business or in a plan, to further the interests of the estate through either rehabilitation or liquidation. Because the home at issue was producing net income, the court found that it satisfied the § 362(d)(2)(B) necessity test, and relief from stay was denied.
Title: Andrus v. Afco Dev. Corp (In re Afco Dev. Corp.)Utah Firstbank v. Andrus | Date: Jul-22-1982 | Status: UNPUBLISHED (Judge Clark) | Case(s): 82PC-0575 and -0628
Andrus filed a complaint in debtor Afco's bankruptcy case, naming Afco, Firstbank, and Grant Affleck as defendants. Shortly thereafter, Andrus removed a state court action, brought against him by Firstbank, to the bankruptcy court. Andrus almost immediately moved to consolidate the removed lawsuit and the pending adversary proceeding. Counsel for Afco and Affleck filed a motion to dismiss the adversary, asserting that it violated the automatic stay. Shortly thereafter, Affleck filed his own bankruptcy petition. The court had previously ruled that a postpetition lawsuit against the debtor, based on a prepetition claim, violates the automatic stay when it is filed in bankruptcy court without first securing relief from the automatic stay. However, in this case, Affleck was not protected by a bankruptcy stay when the adversary was filed, only Afco was, and the court found that Afco had waived protection of the stay by accepting service of the complaint and filing an entry of appearance of counsel. In addition, Afco did not raise any objection to the adversary until after the objection period had run. Finally, the court determined that the automatic stay attached to Affleck's bankruptcy did not prevent the court from ruling on the motion for consolidation, which was ready for decision when the stay took effect. Consolidation of the two cases was granted.
Title: Larson v. Olympic Fin. Co. (In re Larson), 21 B.R. 264 (Bankr.D.Utah) | Date: Jun-25-1982 | Status: PUBLISHED (Judge Mabey) | Case(s): 81P-0128
Chapter 7 debtor sought to avoid three prepetition garnishments by creditor as preferences under 11 U.S.C. § 547(b) and 11 U.S.C. § 522(h). Creditor denied that debtor was insolvent at the time of the transfers, claiming that he had regular employment and a high income. Debtor stated that his filings established his insolvency when the transfers occurred, and relied on the § 547(f) presumption of insolvency during the 90-day period prior to filing of the petition. The court determined that creditor had failed to meet its burden to rebut the presumption and, therefore, debtor was insolvent during the 90-day period. The only remaining issues were whether the transfers occurred in the 90-day period, and whether they allowed creditor to recover more than it would have received in a distribution under the Code. The court noted that garnishment proceedings under Utah law involve several steps, at least two of which would be considered "transfers" under 11 U.S.C. § 101(40). However, § 547(e)(3) provides that a transfer does not occur until debtor has acquired rights in the transferred property. Therefore, on the day the writ of garnishment was served on debtor's employer, a transfer of all wages debtor had already earned took place on that date, and subsequent wages within the same pay period were "transferred" to creditor on each day they were earned by debtor. Any garnishments of wages earned within the 90-day period were therefore avoidable.
Title: In re Booth, 19 B.R. 53 (Bankr.D.Utah) | Date: Apr-13-1982 | Status: PUBLISHED (Judge Mabey) | Case(s): 80-0292
Debtor, a buyer and seller of real property under contracts for deed, which require transfer of the deed by the seller to the buyer upon full payment under the contract, had purchased property from creditor and later sold it to a third party. Creditor asserted that 11 U.S.C. § 365(i) and (j) make contracts for deed executory contracts, and requested that debtor be compelled to either accept or reject the parties' agreement. The court held that contracts for the sale of real property to the debtor are classified as liens rather than executory contracts, both because § 365(i) and § 365(j) were intended to protect non-debtor sellers in the same way that mortgage holders were protected, and because classification of the debt as a lien benefits the estate by enlarging its value. Treatment of such contracts as liens where debtor is the buyer both furthers debtor's rehabilitation and provides protection to sellers.
Title: In re Barrington Oaks Gen. P'ship, 15 B.R. 952 (Bankr.D.Utah) In re Starcrest Props., Ltd. | Date: Dec-9-1981 | Status: PUBLISHED (Judge Mabey) | Case(s): 80-1233, -1234
The court held that chapter 11 debtor's sale of real property to a third party, in violation of a "due on sale" provision in its contract with secured creditor, altered creditor's interest in the property, and was thus an "impairment" under 11 U.S.C. § 1124, whether or not the due on sale provision was valid, because a change of obligors also changes the risk. There were two secured classes in debtor's plan, one was the objecting creditor, and the other was another lienholder on the property that had neither accepted nor rejected the plan. The court concluded that 11 U.S.C. § 1129(a)(10) requires at least one impaired class to affirmatively vote for the plan in order for the plan to be confirmed. Although the addition of 11 U.S.C. § 1126(f), which deems unimpaired classes to have accepted the plan, created some ambiguity, it did not undo the intent of § 1129(a)(10). Confirmation of debtor's plan was denied.
Title: In re Callister, 15 B.R. 521 (Bankr.D.Utah) | Date: Nov-20-1981 | Status: PUBLISHED (Judge Mabey) | Case(s): 80-2605
Secured creditor of chapter 11 debtor sought relief from stay, after which the parties agreed to the value of the collateral and the amount owed, and to other conditions that would adequately protect creditor's interest. Debtor defaulted on the payment provision it had agreed to, and the stay was lifted according to the terms of the parties' agreement. Debtor's case was converted to chapter 7, and fee applications were submitted by counsel for debtor and counsel for the creditors committee, to which creditor objected on the basis of its superpriority under 11 U.S.C. § 507(b). As of the date on which the stay was lifted, the court determined that the collateral had significantly decreased in value due to various circumstances, including debtor's use of the collateral, error in the stipulated values, and uninsured loss of one of three secured tractors, due to debtor's inadvertent failure to obtain insurance on it as required by the stipulation. The court explained that the concepts of adequate protection and superpriority are related and intertwined. Adequate protection initially shields the creditor from impairment in the value of its interest, whereas superpriority is intended to recapture value that was unexpectedly lost during the course of a case. Thus, "the superpriority is born when adequate protection fails," and only applies to declines in value that could and probably would have been prevented or mitigated, but for the stay. The court then considered whether creditor was entitled to superpriority for each loss of value, concluding that creditor was not entitled to superpriority for loss attributable to error in the parties' stipulation, but was entitled to superpriority for losses attributable to uninsured loss, market forces, and depreciation through use of the collateral. However, since depreciation was a factor taken into account in the interim payments required by the parties' stipulation, the court held that the amount of that loss for which creditor would receive superpriority would be limited to the total of the required stipulated payments until the stay was lifted, less the amount of payments that were actually made. Finally, the court rejected creditor's contention that its superpriority precluded payment of attorney's fees until it's claim was paid, holding that fees "may" be paid on an interim basis under 11 U.S.C. § 331, which creates a rebuttable presumption that they will be paid, despite the existence of a superpriority.