In re Paul D. Stogsdill and Kama K. Stogsdill; Case No. 03-14304-13 (Nugent) (July 11, 2005)
ORDER ON CITIFINANCIAL’S MOTION FOR RELIEF FROM STAY
Facts:
The debtors Paul Stogsdill and Kama Stogsdill (“debtors”) entered into a promissory note and mortgage with a subsidiary of Citigroup (“Lender”), and later a plan payment waiver program (PWP) that allowed for some forbearance of payment in the event of certain life events. The debtors defaulted on the note, and made some effort to apply for the PWP. The Lender denied coverage. The debtors filed a Chapter 13 bankruptcy petition and their plan provided that the payments would be deferred, as allowed by the unemployment insurance.
The Lender filed a motion for stay relief, and the Court granted the motion.
Holding:
The debtors were ineligible to receive assistance under the PWP for several reasons. Furthermore, the debtors have not made a house payment since October 2004, and cause exists to grant stay relief.
J. Michael Morris v. Bennington State Bank; et al. (In re Moravec); Adv. Case No. 03-5298; Case No. 03-12623-7 (Nugent) (July 29, 2005)
MEMORANDUM OPINION
Facts:
The debtors John and Linda Moravec (“debtors”) made several purchases, as follows (with purchase date), from Engine X-Change (“Seller”), and financed by Bennington State Bank (“Bank”):
1997 Ford Explorer (December 16, 2002);
1999 Chevrolet C-15000 (December 24, 2002); and
1999 Chevrolet S-10 (January 22, 2003).
The Bank applied for a secured title on the Ford Explorer, on March 18, 2003; and secured titles on the 1999 Chevrolets on May 20, 2003. On May 20, 2003 the debtors filed a Chapter 7 petition.
The Court held the loans were PMSIs (see Holding #1), and were not perfected in accordance with K.S.A. 8-135(c)(6) and therefore avoidable (see Holding #2).
Holdings:
1. The loans were in the amounts of the purchase prices and taken our within a day of each purchase.
2. The Bank failed to file a Notice of Security Interest within 20 days of the sale and delivery of the vehicles; failing to timely perfect its interest. The later perfection within the preference period served as a transfer of the debtor’s property, and may be avoided.
Curtis Gilsdorf v. Terry L. Reed (In re Reed); Adv. No. 04-5162; Case No. 04-11874-7 (Nugent) (July 29, 2005)
MEMORANDUM OPINION
Facts:
In 2001 Curtis Gilsdorf (“Investor”) invested in Reed Sales and Service, Inc. (“Business”), a business owned by the debtor Terry Reed (“debtor”). The Investor and the debtor signed a promissory note, in the name of the Business, with Beverly State Bank (“Bank”), but the note failed to identify the Business as a corporation or that the Investor and the debtor were signing in their representative corporate capacities. The note was secured by certain personal property (“Collateral”).
In 2003 the Investor and the debtor agreed to a buyout wherein the Investor would receive some payment and the assurance that the Collateral would not be sold without the obligation to the Bank being paid in full. The corporate status of the Business lapsed, the debtor sold some of the Collateral without payment to the Bank, the Business defaulted on the note, and the Investor acquired the Bank’s interest and began foreclosure. The debtor filed a Chapter 7 petition in 2004, and the Investor filed an adversary complaint under 523(a)(2) (see Holding #1) and 523(a)(7) (see Holding #2). The Court granted judgment in favor of the debtor.
Holdings:
1. Even though there may have been an implied fiduciary relationship, the relationship was not formal. Furthermore; any alleged fraud did not occur while the debtor was acting in any fiduciary capacity.
2. The Investor fails to demonstrate that the debtor intended to harm the Investor. The debtor believed that the lapsed corporate status of the Business caused the debtor to acquire ownership in the Collateral. The debtor mistaken belief is credible. The debtor believed that he had authority to sell the Collateral, and his actions were not intended to harm the Investor.
In re Margerite Wright; Case No. 03-20787-13 (Berger) (June 19, 2005)
Facts:
The debtor Margerite Wright (“debtor”) owned certain real estate which was encumbered by a first mortgage and later by a mechanic’s lien. The debtor filed a Chapter 13 bankruptcy and paid the first mortgage holder outside the plan and the mechanic’s lien holder through the plan. The debtor was in default with the first mortgage holder, and the first mortgage holder obtained stay relief to foreclose. The real estate was foreclosed, and the rights of the mechanic’s lien holder were extinguished. The debtor later filed an amended plan to treat the mechanic’s lien holder as an unsecured claimant, and the lien holder objected.
Holding:
The debtor may amend his confirmed plan to reclassify the now extinguished lienholder.
Rabo Agservices v. James Blair Kirby (In re James Blair Kirby); Adv. No. 04-5080; Case No. 03-16858-12 (Somers) (July 29, 2005)
MEMORANDUM AND ORDER GRANTING MOTION OF RABO AGSERVICES FOR SUMMARY JUDGMENT
Facts:
The debtor James Kirby (“debtor”) filed a Chapter 12 petition on December 29, 1995, and an order was entered allowing the debtor to incur indebtedness with Ag Services (“Lender”). The indebtedness was secured by certain crops. The debtor later sold the crops without applying the proceeds to the indebtedness of the Lender. The Lender filed a complaint under 523(a)(4) to find the total indebtedness non-dischargeable, contending that the debtor was serving as a fiduciary when he committed the defalcation. The debtor argued that the discharge order served as a complete defenses (see Holding #1), and in the alternative, only the portion relating to the misapplied proceeds should be non-dischargeable (see Holding #2).
Holdings:
1. The discharge order does not serve as a defense because the indebtedness was not provided for in the plan (it was approved after plan confirmation), was not an administrative expense, and was not disallowed by 502.
2. Only the portion relating to the misapplied proceeds is non-dischargeable. The extent of nondischargeability is determined by the amount of the loss caused by the defalcation while acting in a fiduciary capacity.
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