Jesse T. White, et al. vs. Chance Industries, Inc., et al. vs. Frank Joseph & Son, Inc. d/b/a Jolly Shows (In re Chance Industries, Inc.); Case No. 01-11698, 01-12000, 01-12002; Adv. No. 05-5591 (Nugent) (July 7, 2006)
MEMORANDUM OPINION
Facts:
Jesse T. White (“White”) rode an amusement park ride manufactured by Chance Industries, Inc. (“debtor”) on June 15, 2002 at a Maryland carnival operated by defendant Jolly Shows. White alleges he suffered a permanent brain injury as a result of riding the ride manufactured by debtor. White filed suit in a Maryland court in May of 2005. Debtor filed a motion to enforce the confirmation order entered in debtor’s Chapter 11 case on May 16, 2002, and to enjoin the prosecution of White’s lawsuits in Maryland.
Holding:
1. The court adopted the “pre-petition relationship test” for determining whether an unknown future products liability tort claimant has a pre-petition claim that is discharged upon confirmation of debtor’s Chapter 11 plan. White and Jolly Shows had no “right to payment” at the time of confirmation as White’s only contact with debtor occurred one month after confirmation. Therefore, Jolly Shows and White may prosecute their claims.
2. Even of White held a pre-petition claim that was discharged by the May 16, 2002 order, the discharge of that claim violated White’s due process rights where no notice of debtor’s bankruptcy or confirmation hearing was afforded him.
Jesse T. White, et al. vs. Chance Industries, Inc., et al. vs. Frank Joseph & Son, Inc. d/b/a Jolly Shows (In re Chance Industries, Inc.); Case No. 01-11698, 01-12000, 01-12002; Adv. No. 05-5591 (Nugent) (July 7, 2006)
JUDGMENT ON DECISION
Facts:
Plaintiffs seek a determination from this Court that Jesse White’s personal injury, product liability lawsuits against defendants were not discharged by this Court’s May 16, 2002 Order Confirming Debtors’ Second Amended Plan of Reorganization.
Holding:
An unknown future tort claimant does not have a claim within the meaning of 11 U.S.C. §101(5) where the debtor and the injured party had no pre-petition relationship and therefore a confirmation order that discharges the claims of an unknown future tort claimant without notice and opportunity to be heard violates due process.
In re John Randolph Malin & Janis Lynn Malin; Case No. 05-16107; Adv. No. 06-5042 (Nugent) (July 18, 2006)
ORDER ON DEFENDANT’S MOTION TO DISMISS
Facts:
The Debtors filed a “Complaint to Determine Dischargeability of Debt,” requesting that the Court determine that their federal income tax liabilities for 2000 be discharged, upon completion of their Chapter 13 plan pursuant to 11 U.S.C. § 507(a)(8)(A)(1). The IRS filed a motion to dismiss the Complaint, contending that the Court lacked subject matter jurisdiction or that the Complaint was premature as Debtors were not yet entitled to discharge under § 1328. Debtors responded that determination of dischargeability was ripe and proper under Rule 4007(b).
Holding:
1. Rule 4007(b) provides that a “complaint other than under § 523(c) may be filed at any time[,]” and because the tax liabilities of this case do not fall under § 523(c), this Complaint is ripe for judicial consideration.
2. Because the dischargeability of this tax debt is ripe for decision, the Court has subject matter jurisdiction to determine whether the tax debt will be discharged in the even that the debtors successfully complete their plan payments. Therefore, IRS’ motion to dismiss for lack of subject matter jurisdiction is denied as well as their motion to dismiss for failure to state a claim.
United States of America and Linda S. Parks vs. Gary Krause and Richard Krause (In re Krause); Case No. 05-17429; Adv. No. 05-5775 (Nugent) (July 21, 2006)
ORDER ON DEFENDANTS’ MOTION FOR CONTINUATION OF MONTHLY LIVING EXPENSES
Facts:
Debtor Gary Kruse and defendant Richard Krause filed separate motions for continuation of previously allowed living expenses for debtor, debtor’s children and certain anticipated future expenditures.
Holding:
1. After review, Court found debtors request for living expenses unreasonably high and therefore revised amount of allowed living expenses.
2. Court denied Richard’s motion for continuation of private school tuition and payment or reimbursement to debtor for other expenses because such expenses were either covered in the living expense allowed to debtor or are in the nature of support for debtors’ dependants and provide no benefit to the estate.
Steven L. Speth vs. EXSERV (In re Interior Resources, Inc.); Case No. 03-13110; Adv. No. 05-5246 (Nugent) (July 24, 2006)
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT
Facts:
The debtor hired defendant to perform work. The defendant sent an invoice for the work providing a specified period of time for payment. The debtor paid defendant, but only after the specified payment period had elapsed. Within 90 days of such payment, debtor filed a Chapter 7 bankruptcy petition. The Trustee seeks to avoid the payment as a preferential transfer under § 547(b)(4)(A).
Holding:
The Trustee is entitled to summary judgment because Debtor’s payments were made outside the time period for payment and such transfer was not a contemporaneous exchange for new value.
Steven L. Speth vs. Turnkey Project Services, LLC (In re Goldsmith’s Inc.); Case No. 03-13105; Adv. No. 05-5393 (Nugent) (July 24, 2006)
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT
Facts:
The debtor hired defendant to perform work. The defendant sent an invoice for the work stating that payment was due upon receipt. More than 90 days later, debtor paid defendant for the work performed. Within 90 days of payment, the debtor filed a Chapter 7 bankruptcy petition. The Trustee seeks to avoid the payment as a preferential transfer under § 547(b)(4)(A).
Holding:
The Trustee is entitled to summary judgment because the debtor’s payments were made outside of the ordinary course of business.
In re Leo J. Schwartz & Sharon J. Schwartz; Case No. 03-16197 (Nugent) (July 31, 2006)
ORDER DENYING MOTION TO REQUIRE SALE OF ASSETS AND MOTION FOR REVOCATION OF CONFIRMATION
Facts:
Debtors filed their Chapter 11 petition on November 12, 2003. Debtors did not list Leo’s 1/6 remainder interest in property on their schedules. Debtors denied any knowledge of the existence of Leo’s remainder interest in the property when they filed bankruptcy. The Court confirmed debtors plan on August 15, 2005. Leo’s mother died October 9, 2005 which prompted Frontier’s motion to require sale of Leo’s now undivided 1/6 interest in property.
Holding:
Frontier failed to file an adversary proceeding within 180 days of confirmation of the debtors plan. Because Frontier failed to file an adversary proceeding, they failed to properly or timely invoke the single remedy open to Frontier, and therefore the Court need not consider the rather dubious merits of Frontier’s other arguments.
In re Lynn Nanette Nunoz; Case No. 06-40168 (Karlin) (July 27, 2006)
ORDER OF DISMISSAL
Facts:
On March 22, 2006 the Court issued an Order to Correct Voluntary Petition in Bankruptcy by April 6, 2006, for failure to file employee income records. Debtor failed to file the pay advices and did not respond to the order or appear at two show cause hearings.
Holding:
The Court dismissed the case for failure to file pay advices within 45 days of filing bankruptcy.
In re Official Committee of Unsecured Creditors, et al. vs. Harvest Insurance Company (In re Lady Baltimore Foods, Inc.); Case No. 02-43428; Adv. No. 06-7024 (Karlin) (August 2, 2006)
MEMORANDUM AND ORDER GRANTING IN PART, AND DENYING IN PART, HARVEST INSURANCE COMPANY’S MOTION TO DISMISS AND GRANTING MOTION TO COMPEL ARBITRATION OF BREACH OF CONTRACT CLAIM
Facts:
Lady Baltimore was a member of Harvest Insurance Company (“Harvest”) for the policy years 1999 to 2002, and entered into a participation agreement with Harvest which governed the relationship of the parties. As part of the agreement Lady Baltimore posted a letter of credit for Harvest’s benefit. Lady Baltimore requested that the Court order Harvest to release all funds remaining on the letter of credit except for the amount of potential liabilities remaining under the agreement. Harvest disputed the potential liability and sought to compel arbitration of the remaining potential liabilities.
Holding:
The Court after determining that it had jurisdiction, stayed the pending litigation and enforced the parties pre-petition agreement to arbitrate the dispute.
In re Felicia S. Turner vs. Thomas James Ouellette & Sheryl Ann Ouellette; Case No. 03-41144; Adv. No. 04-7030 (Somers) (July 28, 2006)
MEMORANDUM AND ORDER DENYING UNITED STATES TRUSTEE’S MOTION FOR SUMMARY JUDGMENT
Facts:
The debtors received a discharge in their Chapter 7 proceeding and the Trustee subsequently filed a complaint to revoke such discharge. The Trustee filed a motion for summary judgment pursuant to § 727(d)(1). The trustee asserts that the debtors’ pleadings contained material errors and omissions, more specifically, that they failed to disclose significant gambling losses and failed to disclose a transfer of real estate to the mother of one of the debtors.
Holding:
In a complaint for revocation of discharge pursuant to § 727(d)(1), the petitioner must show that 1) the discharge was procured by fraud; 2) sufficient grounds existed that would have prevented discharge, had they been known and presented at the time; and 3) lack of knowledge of the fraud prior to discharge. The trustee’s motion for summary judgment is denied because the trustee did not address the issue of its lack of knowledge prior to discharge and issues of controverted fact remain regarding debtors’ intent to defraud.
In re Percy L. Lewis & Lorretta M. Lewis; Case No. 06-20027-13 (Somers) (August 3, 2006)
OPINION DENYING CONFIRMATION OF DEBTORS’ CHAPTER 13 PLAN, AND GRANTING STAY RELIEF TO WELLS FARGO FINANCIAL
Facts:
In 2004, the debtors purchased a van for their adult daughter, who made payments on the van until the Debtors filed for Chapter 13 bankruptcy. The daughter is not a dependent and does not live with them. Debtors’ proposed Chapter 13 plan treats Wells Fargo as a secured creditor to the extent of the van’s value and an unsecured creditor to the extent its claim exceeds that amount. Wells Fargo objected to the Plan contending that BAPCPA’s hanging paragraph to § 1325(a) prohibits splitting its claim into secured and unsecured parts. Wells Fargo further argued that Debtors’ plan does not meet the good faith requirement of § 1325(a)(3).
Holding:
In re Frank Garstecki; Case No. 04-25005 (Somers) (August 16, 2006)
MEMORANDUM DENYING OBJECTION TO EXEMPTIONS AND ADDRESSING LIEN AVOIDANCE
Facts:
The debtor filed a Chapter 7 bankruptcy on November 30, 2004, by and through his conservator. The debtor is a 72 year old single person residing at a nursing home. In his schedules, debtor claimed as exempt a tract of farm land in Osage County as his homestead and a 2005 Ford Focus as his vehicle. The debtor filed a motion to avoid the lien of Farm Credit Services (“FCS”). FCS objected to the avoidance of the lien and to the exemption of the homestead and vehicle.
Holding:
1. The homestead is exempt as FCS failed to establish that the debtor had no intent to return to his farm and therefore did not sustain its burden of proof.
2. A judgment lien does not attach to a homestead and therefore there is no need for a lien avoidance. If the lien did in fact attach, the conditions for avoidance were established, and therefore the homestead is not subject to a judgment lien.
3. The court held that the vehicle is exempt because it does not exceed $20,000 in value, the debtor has a property interest in the vehicle and the vehicle is used solely for the transportation of the debtor. The fact that the debtor’s relatives drive the vehicle to take debtor to appointments does not prevent the debtor from claiming vehicle as exempt.
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