Carl B. Davis. Trustee v. Charlie’s Cars and Patrick Nelson Cruth (In re Cruth); Adv. No. 04-5128 (Nugent) (September 29, 2005)
JUDGMENT ON DECISION
Facts:
On March 8, 2004, the debtor Patrick Nelson Cruth (“debtor”) acquired a 1994 Buick Park Avenue from Charlie’s Cars, pledged a security interest and took possession. Charlie’s Cars never filed a notice of security interest, and on April 6 applied for, and on May 13 received the certificate of title evidencing its lien status. On April 24, 2004, the debtor filed his Chapter 7 petition.
Holding:
The transfer was an avoidable preferential transfer, and no defense exists under 547(c)(3) or the 10-day safe harbor of 547(c)(2). No notice of security interest was filed, and not within the 20 days allowed for by a purchase money security interest.
U.S. Trustee v. James Ray Shepard (In re Shepard); Adv. No. 04-7090 (Karlin) (October 7, 2005)
MEMORANDUM ORDER AND OPINION
Facts:
The debtor James Ray Shepard (“debtor”) received large cash advances several months prior to filing for Chapter 7 bankruptcy relief, but the debtor was not in possession of the funds when he filed. The trustee’s motion for summary judgment was granted.
Holding:
The pro se debtor was unable to explain where the funds were directed, and any property acquired with the funds; and therefore, discharge is denied as allowed by 727(a)(5).
In re Jack Lee Rookard and Brenda Lucette Rookard; Case No. 03-42320-13 (Karlin) (October 17, 2005)
ORDER GRANTING DEBTORS’ MOTION FOR TURNOVER OF 2002 INCOME TAX REFUNDS
Facts:
The debtors Jack and Brenda Rookard (“debtors”) filed a Chapter 13 bankruptcy petition, and in the accompanying plan proposed to commit all disposable income through the plan, and retain their pre-petition 2002 tax refunds through a “buy back” provision. The trustee objected, and the plan was confirmed with the understanding that the debtor may buy back the refunds, but that in the interim the 2002 tax refunds would be held in escrow.
The debtors satisfied the best interest of creditor’s test, and filed a motion to turnover the funds held in escrow. The trustee objected on the grounds that the immediate return of the funds would constitute disposable income, subjecting the funds to disbursement. The Court held in favor of the debtors.
Holding:
Post-petition disposable income does not include pre-petition assets. See In re Burgie, 239 B.R. 406, 410 (9th Cir. BAP 1999. The critical date for disposable income is the date the debtors were entitled to receive the 2002 tax refund; not the date the debtors actually received the refund. See In re Midkiff, 271 B.R. 383 (10th Cir. BAP 2002). Furthermore, the debtors’ plan explicitly excluded the 2002 tax refunds as disposable income.
Oakwood Mobile Homes, Inc. v. Lori Kathleen Robson, Novastar Mortgage and Mid-America Bank (In re Robson); Adv No. 04-7015 (Somers) (September 22, 2005)
MEMORANDUM OF DECISION DENYING MOTIONS OF DEFENDANT ROBSON AND PLAINTIFF OAKWOOD FOR SUMMARY JUDGMENT
Facts:
Pre-petition the debtor Lori Robson (“debtor”) entered into a contract to purchase a manufacture home (“Home”) from Oakwood Mobile Homes (“Seller”). The Seller failed to finalize the certificate of title or the manufacturer’s certificate of origin. The home was affixed to land owed by the debtor, but mortgaged to Mid-America Bank and its later successor in interest Novastar Mortgage (“Mortgagee”). The debtor filed a Chapter 7 bankruptcy petition, and Oakwood claims ownership, or in the alternative, a security interest in the Home. See Holding No. 1. The Mortgagee claims a security interest in the Home based on its mortgage. See Holding No. 2.
Holdings:
1. Oakwood is not the owner of the Home and if Oakwood reserved title to the Home through an oral agreement, Oakwood has a security interest in the Home. See Affordable Residential Communities v. Morris (In re Knowles), Adv. No. 02-05250 (Bankr. D. Kan. February 10, 2005). To the extent Oakwood has a security interest, it would be unperfected because Oakwood failed to be noted on the certificate of title. See Morris v. Citifinancial (In re Trible), 290 B.R. 838 (Banr. D. Kan. 2003) Whether or not there was an oral agreement that the sale was a cash deal, requiring the balance to be paid immediately upon delivery of the Home, remains controverted.
2. The Mortgagee has an unperfected lien in the Home by virtue of its recorded mortgage on the real estate to which the Home is affixed. A written mortgage may serve as a security agreement, and the mortgage in this case satisfies the requirements for a security agreement. The first unperfected lien to have attached has priority.
In re Vernon G. Klaassen and Grace S. Klaassen; Case No. 01-14724-12 (Somers) (October 7, 2005)
MEMORANDUM AND ORDER DENYING MOTION OF THE ANDALE FARMERS COOPERATIVE COMPANY FOR RELIEF FROM AUTOMATIC STAY
Facts:
The debtors Vernon and Grace Klaassen (“debtors”) filed a Chapter 12 bankruptcy petition, and subsequently filed their plan of reorganization that identified and treat the claim of Andale Farmers Cooperative Company (“Coop”) as an unsecured claim. The Coop failed to object to the plan. The plan was confirmed, and the Coop later sought to apply certain patronage of the debtor as an offset on obligations owed by the debtor to the Coop. The debtors objected, and the Court agreed.
Holding:
Any right to setoff (if allowed under Kansas law and 553) was waived by the Coop upon plan confirmation. The Coop is seeking to offensively offset the patronage as payment on an unsecured claim; not in defense to a claim asserted by the debtors. See United State v. Norton, 717 F.2d 767 (3rd Cir. 1983) (confirmation precludes an offensive offset to satisfy a claim); but see Carloco Television Inc. v. National Broadcasting Co. (In re DeLaurentiis Entertainment Group, Inc.), 963 F.2d 1269 (9th Cir. 1992) (may assert defensive offset post-confirmation).
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