The Court dealt with multiple claims of the Examiner seeking to reclaim property transferred from the Debtor's estate, including claims under 11 U.S.C. §362, 363, and 549, and Utah law. The Court determined that real property transferred by the Debtor postpetition to an affiliate which then transferred a security interest in that property to the Defendant could not be brought back into the estate because the Defendant successfully invoked the good faith defense under Utah law and under the Bankruptcy Code. In addition, the Examiner could not establish that the Defendant had not given reasonably equivalent value under Utah law or present fair equivalent value under § 549 for the transfer because the Court did not see it proper to collapse two separate loans into one. Finally, insufficient evidence prevented the Court from finding that the transferor (the Debtor's affiliate) was insolvent at the time of the transfer. On the other causes of action, the Court found that § 549 was the proper mechanism to attempt to avoid the initial transfer from the Debtor, rather than §362 or 363.
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Title: Strong v. Western United Life Assurance Company (In re Tri-Valley Distributing) | Date: Jun-16-2011 | Status: UNPUBLISHED (Judge Thurman) | Case(s): 04-2453
Title: In re Hargis | Date: May-3-2011 | Status: PUBLISHED (Judge Marker) | Case(s): 10-36861
Chapter 13 Debtors with above-median income attempted to deduct $200 in “additional operating expenses” on Line 27A of Form 22C for each of two older and high-mileage vehicles, which would have reduced the return to general unsecured creditors by $24,000 over the 60-month duration of the plan. The Debtors argued that the claimed additional operating expenses, which arise from a section of the Internal Revenue Manual dealing with offers in compromise, should be allowed as standardized deductions under § 707(b)(2)(A)(ii)(I) and the IRS Local Standards. The Chapter 13 Trustee and the Assistant U.S. Trustee argued that additional operating expenses may be allowed in appropriate circumstances but that parties in interest should be able to review the claimed expenses and object to them if appropriate. Based on the language of the statute and the Supreme Court's recent guidance in Hamilton v. Lanning and Ransom v. FIA Card Services, N.A., the Court held that above-median chapter 13 debtors are not automatically entitled to a $200 additional operating expense deduction on Line 27A of Form 22C for each vehicle over six years old or with more than 75,000 miles. But above-median chapter 13 debtors may claim additional operating expenses that they actually incur on Line 60 of Form 22C up to $200 per vehicle subject to review and objection by the Chapter 13 Trustee and holders of allowed unsecured claims.
Title: Cyprus Credit Union v. Dehlin (In re Dehlin) | Date: Mar-31-2011 | Status: PUBLISHED (Judge Mosier) | Case(s): 09-2176
In deciding the dischargeability of a debt arising from a "stated income loan" under 11 U.S.C. § 523(a)(2)(B), the Court found that the evidence presented confirmed the Debtors' statements that their income listed on the loan application was correct and the creditor failed to carry its burden of proof. Further, an inadvertent mistake on a confusing form was not sufficient to prove the Debtors had an intent to deceive the creditor. Finally, a debtor's representation cannot be the sole basis upon which a creditor can reasonably rely because a creditor has a duty to ensure some basis exists for relying upon the debtor's representations. Self-developed procedures that excuse reasonable reliance cannot insulate a creditor's claim from discharge.
Title: Rushton v. Bevan (In re D.E.I. Systems) | Date: Mar-31-2011 | Status: PUBLISHED (Judge Mosier) | Case(s): 09-2082
In defending a fraudulent transfer action, the defendants attempted to rely on 11 U.S.C. § 546(e), but adopting the proposed reading would have produced an absurd result. The protection of § 546(e) cannot be extended to include transactions related to a purchase or sale of securities simply because the parties utilize the banking industry to effect the transaction. The Court looked to congressional intent as explained in Kaiser Steel Corp. v. Charles Schwab & Co., Inc. (Kaiser I), 913 F.2d 846 (10th Cir. 1990) and Kaiser Steel Corp. v. Pearl Brewing Co. (In re Kaiser) (Kaiser II), 952 F.2d 1230 (10th Cir. 1991) to grant summary judgment for the trustee and deny summary judgment for the defendants as to this defense.
Title: In re Dennett | Date: Mar-8-2011 | Status: PUBLISHED (Judge Thurman) | Case(s): 10-21685
The Court ruled upon the requirements for a Trustee to meet in connection with a contested motion to approve a compromise and settlement under Federal Rule of Bankruptcy Procedure 9019. Here, the Trustee sought to compromise the claims that the Debtor had initiated in state court by settling with the Defendants for $25,000. The Debtor sought an order of abandonment so he could pursue the claims. The Court ruled that the Trustee had met the standard of Kopp v. All Am. Life Ins. Co. (In re Kopexa Realty Venture Co.), 213 B.R. 1020 (10th Cir. B.A.P. 1997), and thus approved the compromise. The Court commented on whether an auction procedure was required as held in the 5th Circuit case of Cadle Co. v. Mims (In re Moore), 608 F.3d 253 (5th Cir. 2010), where the trustee in that case attempted to compromise a claim in litigation with the defendants and a creditor offered more than the proposed settlement. In the appropriate case, an auction procedure under § 363 may be required for settlements but not here.
Title: In re Childs | Date: Dec-9-2010 | Status: UNPUBLISHED (Judge Thurman) | Case(s): 09-33970
Under the BAPCPA, chapter 11 debtors may be categorized as small business debtors depending on their type of business and amount of debt. Debtors may not voluntarily elect to be a small business, but must disclose their existence as a small business if they qualify. In this case, a designation by Debtors to be considered small business debtors was erroneous because Debtors did not qualify under 11 U.S.C. § 101(51D)(A). Upon a subsequent objection by Debtors to their designation as small business debtors under Federal Rule of Bankruptcy Procedure 1020(b), the Court entered an order finding the original designation incorrect. Such a finding and order made the designation void ab initio. Thus, although Debtors had failed to present and confirm a plan within the deadlines that pertain to a small business debtor, because Debtors were not small business debtors, those deadlines no longer applied and Debtors could continue their efforts toward confirmation.
Title: In re Skougard | Date: Oct-27-2010 | Status: PUBLISHED (Judge Thurman) | Case(s): 10-26950
Yearly tax refunds are property of the chapter 13 estate. However, refunds up to $2,000 may be retained by below median chapter 13 debtors in Utah if the debtors are receiving Earned Income Credit or Additional Child Tax Credit. The principles of In re Lawson previously decided by this Court still apply and factor into the determination of the amount of refund allowed to be retained.
Title: In re Woolsey | Date: Oct-12-2010 | Status: PUBLISHED (Judge Thurman) | Case(s): 10-25893
A plan proposed by chapter 13 debtors did not contain language permitting the retention of a wholly unsecured creditor's lien or requiring the reinstatement of the lien in the event of dismissal or conversion to a chapter 7 case. The Court found that Dewsnup v. Timm, 502 U.S. 410 (1992), prohibited avoiding the lien under 11 U.S.C. § 506(d) as argued by the debtors. Although the only collateral for the loan was the debtors' principal residence, because the loan was wholly unsecured, modification was not prohibited by 11 U.S.C. § 1322(b)(2). See Griffey v. U.S. Bank (In re Griffey), 335 B.R. 166 (10th Cir. B.A.P. 2005); Pierce v. Beneficial Mortgage Co. (In re Pierce), 282 B.R. 26 (Bankr. D. Utah 2002). Thus the rights of the creditor could be modified under 11 U.S.C. § 1322(b)(2) as long as the debtors' plan complied with the provisions of 11 U.S.C. § 1325(a)(5). The Court found further support for its position in the statistics showing the number of cases commenced under chapter 13 that are either dismissed or converted that could become a source of easily disguised bad faith filings.
Title: In re Bowen | Date: Oct-1-2010 | Status: UNPUBLISHED (Judge Thurman) | Case(s): 98-28722
Creditor in Chapter 7 case filed a motion for relief from this Court's sanctions order pursuant to Fed. R. Bankr. P. 9024 and Fed. R. Civ. P. 60(b) or, alternatively, to alter or amend the order or grant a new hearing pursuant to Fed. R. Bankr. P. 9023 and Fed. R. Civ. P. 59. Although creditor's motion was timely filed under Rule 59, the facts germane to the motion, the arguments of counsel and the testimony at the hearing on the motion first required analysis under Rule 60. Creditor argued that its paralegal mishandled debtors' motion for sanctions and, as a result, the matter was not given the attention it required. Balancing the circumstances surrounding creditor's failure to respond to debtors' sanctions motion, the Court concluded that this mishandling constituted excusable neglect for the purpose of Rule 60(b). The Court also concluded that creditor's timely filed Rule 59 motion raised concerns requiring a new hearing on debtors' motion.
Title: Carroll v. Key Bank (In re Carroll) | Date: Oct-1-2010 | Status: UNPUBLISHED (Judge Mosier) | Case(s): 10-02259
Section 506(d) does not allow a debtor to "strip off" a creditor's lien of the creditor has a claim that is allowed pursuant to § 502.