In a case subject to the Bankruptcy Act and a case subject to the Bankruptcy Code, the court considered the collateral estoppel effect of a divorce decree on the issue of "alimony, maintenance or support," as well as whether the court should consider the parties' financial circumstances subsequent to entry of the decree, concluding that what constitutes alimony, maintenance or support for purposes of non-dischargeability is a matter of federal law, although a duty of support is dependent on state law. Bankruptcy courts must look behind the language used in the decree to determine whether a provision is actually in the nature of support. Moreover, bankruptcy courts must consider whether an award in the nature of support is still reasonably necessary for support at the time of discharge in bankruptcy.
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Title: Warner v. Warner (In re Warner), 5 B.R. 434 (Bankr.D.Utah)Long v. Long (In re Long) | Date: Aug-7-1980 | Status: PUBLISHED (Judge Mabey) | Case(s): 80-0024
Title: In re Patio Springs, Inc., 6 B.R, 428 (Bankr.D.Utah) | Date: Jul-30-1980 | Status: PUBLISHED (Judge Mabey) | Case(s): 78-0008
With respect to a chapter XI debtor's redemption right, the court held that the 60-day extension period in Bankruptcy Act § 11(e) begins to run on the date debtor is adjudicated a bankrupt, not on the date of filing the chapter XI petition, despite Bankruptcy Act § 378(a)(2) and Bankruptcy Rule 122, which require that, upon adjudication, a case be treated "as far as possible" as if adjudication took place on the date the chapter XI proceeding was commenced.
Title: Barker v. Stacey (In re Stacey) | Date: Jul-17-1980 | Status: UNPUBLISHED (Judge Mabey) | Case(s): 78-0307 and -0308
In rejecting a challenge to its jurisdiction made by the sellers of real property to debtors, the court found that debtors were in possession of the property and were equitable owners of it, and that a state court forfeiture action filed by sellers less than a month prior to initiation of debtors' bankruptcy had not advanced beyond the initial pleadings and had not changed debtors' property rights and, therefore, it could exercise summary jurisdiction over the property that was the subject of the parties' uniform real estate contract.
Title: Hoskins v. Hoskins (In re Hoskins) | Date: Jul-14-1980 | Status: UNPUBLISHED (Judge Mabey) | Case(s): 79-0074
In an adversary action filed by debtor's ex-wife, in which it was not clear from the parties' divorce decree what amount of an award to plaintiff was intended to be alimony, maintenance or support, the court determined, based on Brown v. Felsen, 442 U.S. 127 (1979), that it was not bound by the decree because the issue of non-dischargeability under § 17 of the Bankruptcy Act is a federal law question on which the court has exclusive jurisdiction. While characterization of certain debts under state law may be relevant to the dischargeability determination, such characterizations are not binding on the issue of dischargeability in bankruptcy. Although a clear state court record indicating that an award was intended as support would be both admissible and highly relevant, there was no such clear record in this case. The matter would therefore need to be tried in the bankruptcy court.
Title: Fisher v. Smith (In re Mrs. J.G. McDonald's Chocolate Co.) | Date: Jul-10-1980 | Status: UNPUBLISHED (Judge Mabey) | Case(s): 78-0739
In an adversary action seeking to avoid, as preferences, certain payments made to defendant, the court considered defendant's request for change of venue to the bankruptcy court in Georgia. The court noted that, although different elements for determining proper venue were not applied to adversary actions and bankruptcy cases, or to different types of bankruptcy cases, certain elements could be given more or less weight based on those facts. Finding no real difference in the inconvenience to the parties that would result from retention or venue change, the court determined that any recovery from defendant would necessarily take place in Georgia, that defendant had little or no contact with this district, that he owned and ran a small business in Georgia, and was already litigating a different matter in that forum, all of which weighed in favor of that jurisdiction. Therefore, defendant had met his burden of proving that a venue transfer was required by the "interests of justice" and the relative "convenience of the parties."
Title: Kesler v. Wilkins (In re Fashion Bowling Lanes) | Date: Jul-10-1980 | Status: UNPUBLISHED (Judge Mabey) | Case(s): 76-0837
In a case involving two trust deeds on debtor's real property, payments made on the first trust deed by both debtor and the second trust deed holder, funds in a "reserve account" set up to cover taxes, assessments, and insurance on the property, foreclosure of the second trust deed, transfer of the foreclosed interest, and a sale in the bankruptcy of personal property relating to debtor's previous operation of a bowling alley, the court was required to determine the respective rights of the bankruptcy trustee and the transferees from the second trust deed holder to funds in the reserve account. The court held that the amount of money in the reserve account, on the date title to the real property transferred to second trust deed holder pursuant to the foreclosure, was personal property of the debtor, and was therefore estate property. However, taxes paid on the property for the year in which debtor lost title were prorated, based on the date on which ownership transferred, and that amount was subtracted from those funds, and a 3-year prospective insurance premium paid from the account prior to the change in ownership was also prorated, and was added to the amount that was considered to be estate property. The court also ruled that a personal property sale in the bankruptcy did not include the reserve account funds.
Title: Tunex, Inc. v. Harrington (In re Tunex, Inc.) | Date: Jul-2-1980 | Status: UNPUBLISHED (Judge Mabey) | Case(s): 79-0272
Debtor filed an action against defendants, husband and wife, for damages and an injunction based on termination of a license agreement. The complaint and two summonses were sent to the parties' home, by mail, in an envelope addressed to both parties, and the return receipt was signed by wife. Defendants claimed lack of personal jurisdiction. The court held that Bankruptcy Rule 704(c) does not limit service by mail to only when authorized by state or federal law, as does Civil Procedure Rule 4. However, Rule 704(c)(1) does require service by mail to be made on "an individual," which the court ruled meant that each party must be separately served with a copy of the summons, complaint, and notice. As husband had not been separately served under the rule, the court held that it lacked in personam jurisdiction over him, whether or not he had actual notice. Service had been proper on wife, and the court held that it had both in personam and subject matter jurisdiction with respect to debtor's claims against her.
Title: Cole Assocs., Inc. v. Howes Jewelers, Inc. (In re Cole Assocs., Inc.), 7 B.R. 154 (Bankr.D.Utah)Cole Assocs., Inc. v. Jensen Jewelers, Inc.Cole Assocs., Inc. v. London Star, Ltd. | Date: Jun-23-1980 | Status: PUBLISHED (Judge Mabey) | Case(s): 80-0017, -0016, and -0019
Debtor filed complaints against three of its creditors seeking to recover property held by them. Each of the defendant creditors asserted that the property was held pursuant to a perfected security interest securing a debt owed them by debtor. Each creditor also moved that venue of their case be transferred to their home state. Prior to considering whether change of venue was appropriate under 28 U.S.C. § 1475, the court determined that venue was proper in its jurisdiction, under 28 U.S.C. § 1473(a), because the bankruptcy case was pending there. The court noted that the party seeking change of venue has the burden of establishing cause for change of venue, and the decision is typically based on practicalities that relate to efficient and inexpensive resolution of the issues. However, in bankruptcy cases, the courts also give significant weight to factors that may affect the remedial purposes of bankruptcy laws. On the facts before it, the court determined that retention of venue in all three cases was appropriate, and that on consideration of bankruptcy factors, retention was compelling. The most significant of such factors was the economic administration of the estate, which the court found weighed heavily in favor of retention.
Title: Rushton v. Adams (In re Payless Bldg. & Remodeling, Inc.) | Date: Jun-12-1980 | Status: UNPUBLISHED (Judge Mabey) | Case(s): 79-0107
Trustee sought to avoid two payments debtor had made to defendant, within four months of bankruptcy, as preferential under 11 U.S.C. § 96. The payments were to repay a loan defendant made to debtor that was not secured. The court found, based on the parties' stipulated facts, that both payments satisfied all of the elements of a preference under the statute. The court focused on whether the payments had depleted the estate, which would not be the case if the loan had been secured. Since the loan was not secured, the payments were not made in exchange for release of a secured interest, which would prevent depletion of the estate. In addition, the court noted that the facts before it would not support an equitable lien, whether or not such liens remained valid to defeat § 96.
Title: Burkehart v. Polychronis (In re Polychronis) | Date: Jun-3-1980 | Status: UNPUBLISHED (Judge Mabey) | Case(s): 79-0032
Plaintiff filed a negligence complaint against debtor in state court on the last day of the limitations period. Debtor subsequently filed a bankruptcy petition, listing plaintiff as a creditor. Plaintiff filed a complaint in the bankruptcy case, alleging non-dischargeability of her claim under 11 U.S.C. § 35a(8). Debtor moved for summary judgment, asserting plaintiff's claim was barred by the statute of limitations. The court disagreed, concluding that plaintiff's claim was based on her timely filed state complaint, and that it had jurisdiction to litigate that claim or grant relief from stay to allow plaintiff to continue litigating it in state court. The fact that her state claim was based on negligence was irrelevant, since jurisdiction to determine the dischargeability of that claim was exclusively in the bankruptcy court. Based on plaintiff's preference, the court retained the case for both the amount and the dischargeability of her claim.