In re Voslite, Inc.; Case No. 07-10217 (Nugent) (Jan. 28, 2008)
ORDER DENYING VOSLITE’S MOTION FOR STAY VIOLATION
• 11 U.S.C. § 362
Facts:
Debtor Voslite, Inc., a distributor of plastic shingles,
filed for relief under Chapter 7 in February 2007. Previously, Fleming Building
Company, Inc.
(FBC), and several individuals sued several defendants including Voslite in
Tulsa County, Oklahoma on a variety of commercial causes of action arising
out of defects in shingles manufactured, distributed and sold by the defendants.
Voslite filed a motion to show cause, alleging that FBC had violated the automatic
stay 1. by allowing the civil action in Oklahoma state court to remain pending
against Voslite post petition, and 2. by pursuing discovery sanctions against
Voslite’s counsel post petition. As to the first argument, Voslite pointed
to an administrative notation in the e-docket which Voslite alleged “reinstated” the
civil case, and to which FBC did not object. As to the second argument, FBC
had filed a sanctions motion against Voslite’s counsel prior to the petition
date, and after that date FBC requested the state court to conduct a hearing
on its demand for sanctions against the attorney. Voslite contended this violated
the automatic stay.
Holding:
The Court denied Voslite’s motion for stay violation. As to Voslite’s
first contention, it was not a violation of the stay for FBC to leave its civil
case on file and not pursue it further. There was no evidence that FBC had
anything to do with the administrative notation on the e-docket which Voslite
argued “reinstated” the civil case. Further, there was no evidence
that the Oklahoma state court had ordered dismissal in the first place. There
was no Tenth Circuit authority that requires a plaintiff to dismiss a pending
action against a debtor after that debtor files a bankruptcy petition.
As to
Voslite’s second contention, it was not a violation of the stay
for FBC to pursue discovery sanctions against Voslite’s counsel because
11 U.S.C. §362(a) stay does not extend to non-debtors, and such counsel
was accountable to the Oklahoma court for his conduct in the course of the
FBC litigation.
Cheryl R. Daly; Case No. 07-22628 (Somers) (January 30, 2008)
OPINION DECLARING ATTMEPT TO AMEND PETITION TO ADD JOINT DEBTOR IS VOID AND
HAS NO EFFECT
• 11 U.S.C. §302
Facts:
This matter was before the Court following Cheryl Daly’s (“Debtor”)
filing of a pleading that attempted to amend her original petition to add her
husband as a joint debtor. The Debtor filed a voluntary Chapter 13 bankruptcy
petition and a chapter 13 plan on November 19, 2007. Her spouse, Thomas J.
Daly, did not join in that petition. Notice of the Debtors’ filing was
sent to her creditors, notifying them of certain deadlines as proscribed by
the Federal Rules of Bankruptcy Procedure.
On January 15, the Debtor filed a document
labeled “Amendments to Original
Petition” which indicated the Debtor was amending the petition to add
her husband as a co-debtor, although it was identified on the docket as “Amended
Schedules.” An amended petition attached to the document purportedly
added her husband as a joint debtor, nearly two months after the Debtor’s
original petition was filed.
Holding:
The Court held that Mr. Daly, the Debtor’s husband had not become a
debtor in this bankruptcy and the Court directed the debtor’s attorney
to send notice that Mr. Daly was not a party to this bankruptcy and no automatic
stay was in effect.
The Court noted that 11 U.S.C. §302 makes clear that a joint case is
really two separate cases. If a joint case could be commenced as attempted
here there would be two commencement dates of the orders for relief, the first
when the Debtor filed her individual petition and the second when amended petition
was filed. The Court discussed that a number of other courts have similarly
concluded that an individual’s voluntary petition cannot be amended to
add a spouse to make the petition a joint one. The Court held that if the Dalys
wish to have a jointly administered case, Mr. Daly must file his own voluntary
petition and ask to have it consolidated with the Debtors.
For the foregoing reasons,
the Court declared the amended petition filed by the Debtor to be void and
of no effect.
Richard Arlen Dick and Marsha Gayle Dick; Case No. 06-12221 (Nugent) (January 30, 2008)
ORDER ON VALUATION OF AIRCRAFT PART INVENTORY
• 11 U.S.C. §1325(a)(4)
•
11 U.S.C. §326
Facts:
Debtors’ plan filed November 15, 2006 proposed to pay $268.00 per month
for 36 months for a total of $9,648.00. Both the Trustee and an unsecured creditor,
Allen B. Duckworth objected to the debtors’ proposed plan. The Trustee’s
objections center on the debtors not paying liquidation value of their property
to the unsecured creditors as required by 11 U.S.C. §1325(a)(4). The Trustee
also asserted that the debtors’ plan was not filed in good faith and
was not feasible. Duckworth joined in the Trustee’s objections.
At hearing,
the parties agreed that if the debtors’ aircraft parts
inventory was worth more than $4,500.00, the plan was likely to be unfeasible.
Also, at issue was the value of certain farm equipment, machinery, and rolling
stock observed on the premises of the Dicks’ farm in rural Hutchinson,
but neither the debtors nor the creditors offered any valuation evidence concerning
those items. The sole issue before the Court was the value of the aircraft
parts inventory and whether the debtors’ plan repays the liquidation
value of their property to the creditors as Chapter 13 requires.
The Court noted
that in order to confirm the debtors’ chapter 13 plan,
the debtors must show by a preponderance of the evidence that the plan meets
the requirements of 11 U.S.C. §1325(a). With regard to unsecured creditors,
the plan must return to the unsecured creditors not less than they would receive
were the debtors’ assets liquidated in a chapter 7, keeping in mind that
a chapter 7 trustee would incur administrative expense in liquidating this
property.
The debtors offered the testimony of Bud Palmer (“Palmer”) who
is an auctioneer of iconic status in the Wichita area. Palmer valued the parts
at “$3,500.00 to $4,500.00” and a certain Connex container at $1,000.00.
Duckworth, the unsecured creditor, offered the testimony of James Dalton Rhodes
(“Rhodes”). Rhodes is an aircraft service mechanic. Rhodes is certified
by the Federal Aviation Administration to inspect airframes and power plants.
Rhodes valued the parts, “based on the idea that you would have no deadline
to perform any sale,” at $261,388.60. Rhodes also agreed that if these
parts were sold by someone not vending to the aircraft industry, their value
would be largely as scrap. He stated that he would gladly pay $4,500.00 for
the entire inventory.
Holding:
The Court noted that in affixing a value to this inventory, the Court
was somewhat constrained by the evidence in the record. The Trustee might well
auction the parts at a Palmer Auction and realize the $3,500.00 to $4,500.00
that Palmer testified to. The Court also weighed the Rhodes valuation, but
concluded that he did not testify about a liquidation sale of the parts which
is how a Chapter 7 Trustee might perform a sale.
The only other evidence of value
presented to the Court was the debtors’ testimony
that he received a $10,000.00 offer for the inventory in the spring of 2007.
That offer, however, required the parts to be in a refurbished condition through
the debtors’ labors.
The Court held that for Chapter 13 liquidation test
purposes the parts should be valued at $4,500.00 and the container at $1,000.00.
The Trustee would be
entitled to 11 U.S.C. §326 compensation on $5,500.00 or $1,300.00. The
Court had no evidence of what the auctioneer’s commission would be and
made no deduction therefor. The Court noted that it would leave $4,200.00 for
distribution to the creditors.
The Court denied Confirmation, because it failed
to return to the unsecured creditors an amount equal to what they would receive
in a Chapter 7 liquidation.
In re Lamar Maltbia; Case No. 06-41166 (Karlin) (February 01, 2008)
MEMORANDUM OPINION AND ORDER OVERRULING DEBTOR’S OBJECTION TO CLAIM #1 OF THE INTERNAL REVENUE SERVICE
Facts:
The debtor objected to the proof of claim filed by
the IRS for tax years 2004 and 2005. For those tax years, the debtor claimed
as dependents his girlfriends
three child. The IRS disallowed those deductions. In response, the Debtor claimed
he was entitled to the deductions because he was the common-law husband to
the children’s mother. The IRS denied that any such common-law marriage
existed.
Holding:
The Court found that no common law marriage existed between the parties.
The Court noted that to prove a common-law marriage, one must show that (1)
the parties had capacity to marry; (2) the a present marriage agreement existed
between the parties; and (3) that the parties held each other out to the public
as husband and wife. The Court found that the debtor failed to offer any evidence
that his girlfriend and he held themselves out to the public to be husband
and wife. The Court found persuasive the fact that on three prior bankruptcy
petitions, the girlfriend claimed her marital status as single, and that on
the debtors current Schedule I, his Statement of Financial Affairs, and this
B22C form he claimed his marital status as single. Additionally, the Court
ruled where, a debtor has an obvious incentive is present for the debtors to
commit fraud, as in avoiding a non-dischargeable priority debt; the debtor
must offer more than just their self-serving testimony.
Robert Anthony Middendorf and Michelle Ann Middendorf; Case No. 05-21748 (Berger) (February 1, 2008)
MEMORANDUM OPINION AND ORDER DENYING TRUSTEE’S MOTION TO COMPROMISE
• 11 U.S.C. §547
•
11 U.S.C. §548
Facts:
Debtors filed for Chapter 7 relief on April 19, 2005.
Eight days prior to filing for bankruptcy, the Debtors paid the IRS $22,250.00
as an estimated
pre-payment for 2005 federal taxes on the capital gains realized by certain
stock sales. In April 2006, the Debtors filed a joint 2005 tax return. The
Debtors’ total 2005 federal income tax liability was $8,533.00 and their
total wage withholding for federal taxes was $7,223.00 for the 2005 tax year.
With the wage withholding and the pre-payment, the Debtors were entitled to
a $20,940.00 refund.
On March 6, 2006, the Chapter 7 Trustee, Christopher J. Redmond
(“Trustee”)
demanded the IRS turnover the entire $22,250.00 tax prepayment as a preferential
transfer avoidable by the Trustee even though turning over the entire payment
would create a $1,310.00 tax debt. The Trustee and the IRS subsequently entered
into Stipulation and Agreement in which the IRS agreed to turnover the prepayment
if the Debtors agreed or IF the Court ordered the turnover.
The Trustee filed
a Notice of Intended Compromise and Request for Order Approving Stipulation
and Agreement by and between the Trustee and the Internal Revenue
Service. The Debtors objected to turnover claiming that the prepayment was
neither preferential nor fraudulent and that turnover would result in the debtors
incurring a tax liability they would not otherwise incur. The IRS deposited
$22,250.00 in Debtors’ counsel’s trust account pending determination
of the parties’ rights to the funds. The Trustee alleged that money was
a preferential transfer. The Trustee offered the intended compromise in lieu
of filing a preference action against the IRS.
Holding:
The Court ruled that the estimated tax pre-payment
was not a preferential transfer. To prevail on a 11 U.S.C. §547 claim, the Trustee must prove
that the transfer was 1. for the benefit of the creditor; 2. for an antecedent
debt owed before the date of the transfer; 3. made while the debtor was insolvent;
4. made within 90 days of the bankruptcy filing; and 5. enabled the creditor
to receive more that it would have received under a Chapter 7 if the transfer
had not been made. The Court noted that the Trustee could not prove the second
element, thus the pre-payment was not a transfer on account of an antecedent
debt, and therefore the Trustee had no claim under the 11 U.S.C. §547.
The
Court also ruled that the estimated tax pre-payment was not a fraudulent transfer.
The Trustee offered no facts or arguments to support any element
of an 11 U.S.C. §548 claim. The Court further held that the portion of
Debtors’ tax refund attributable to pre-petition withholdings and payments
is property of the estate. Under the usual wage-withholding circumstance, the
tax refund is allocated proportionately between pre-petition and post-petition
based on the number of calendar days before and after the petition.
In this case,
the Debtors made a large estimated tax payment pre-petition. The estate is
entitled to the portion of the tax refund attributable to the
overpayment made pre-petition. The petition date is the starting point to calculate
the estate’s portion of the tax refund. 11 U.S.C. §541 states that
the bankruptcy estate is established at the commencement of the case. Pre-petition
wage withholdings and direct payments represent funds which would have been
other assets of the bankruptcy estate had they not been withheld or paid.
The
Court ruled that the Debtors and therefore the estate had a legal or equitable
interest in the tax overpayment as of the petition date; however,
the estate has no interest in the portion of the refund generated from the
post-petition wage withholdings.
Linda S. Parks, Trustee v. Boeing Wichita Credit Union (In re Fox);
Case No.
05-15882; Adversary Case No. 06-5263 (Nugent) (February 06, 2008)
MEMORANDUM OPINION
• 11 U.S.C. § 547
Facts:
This case involves a trustee’s attempt to avoid
a preferential transfer. The debtor used a balance transfer from one credit
card to pay on the balance
of another. Both the trustee and the creditor agreed that the transfer met
all the elements of a preferential transfer. The only question the parties
posed was whether the balance transfer constituted a transfer of an interest
of the debtor. The creditor also asserted an earmarking defense.
Holding:
The Court ruled the balance transfer was a preferential
transfer. The Court found that the debtor’s available credit constituted an “interest
of the debtor” under § 547 because the debtor had discretionary
use of the available credit. It was also this discretionary use, the Court
held, that distinguished the balance transfer from an earmark. The Court noted
that the repayment of an old debt must be under co-debtor status and must be
under some legal obligation, i.e. promissory note. The Court most notably rejected
Judge Somers’ analysis in Parks v. FIA Card Servs., N.A. (In re Marshall,
372 B.R. 511 (Bankr. D. Kan. 2007) – that balance transfer does not diminish
the property of the estate. The Court found that “diminish the estate” argument
fails to reconcile the fact that the old creditor receives more than it would
have if the transfer had not been made.
Victoria R. Reynolds v. Tony R. Reynolds (In re Tony Reynolds);
Case No. 05-42395,
Adversary No. 07-7117 (Karlin) (Feb. 8, 2008)
MEMORANDUM ORDER AND OPINION
• 11 U.S.C. § 362
•
11 U.S.C. § 105
Facts:
Debtor Tony Reynolds incurred a debt to Kansas Legal
Services (KLS) in 2004 arising out of services by Ty Wheeler as Guardian Ad
Litem (GAL) to the Debtor’s
minor children during his divorce from the mother of those three children.
The state court ordered each spouse to pay one half the GAL fees, and the debtor
did not pay his fees. In July 2005, debtor filed for Chapter 13 relief. Neither
Wheeler, KLS, nor the state court received notice of the bankruptcy proceeding,
and the debtor’s plan did not reference the $450.50 GAL debt. No collection
effort on this GAL debt was made until May 23, 2007, when Wheeler sent a letter
directly to debtor advising him of his failure to pay the outstanding GAL debt
and threatened contempt of court if the fees were not paid. At the bottom of
the letter it stated, “THIS IS AN ATTEMPT TO COLLECT A DEBT.” On
June 27, 2007, debtor filed an Amended Schedule F, adding KLS as a creditor
in the amount of $450.50 and served the amendment on KLS. KLS did not file
an objection, but rather filed an unsecured Proof of Claim for $450.50 on July
6, 2007. Wheeler then sent a letter to the state court judge for input on how
to handle the outstanding debt. Eight days later, the state court judge issued
a Citation of Contempt. Debtor filed a Motion for Order to Show Cause why Wheeler
and KLS should not be held in contempt of court for violating the automatic
stay.
Holding:
Wheeler’s initial letter did not violate the automatic stay because
KLS did not have notice of the bankruptcy filing. However, KLS’s later
actions and the state court judge’s actions violated the automatic stay
by attempting collect the pre-petition debt during the pendency of the Chapter
13 bankruptcy proceeding without first seeking relief from the automatic stay.
As such, debtor was entitled to damages for being injured as a result of a
willful violation of the automatic stay under 11 U.S.C. §362(h). The Court
assessed $500.00 of attorney fees under the same section and ruled that the
debt was discharged, pursuant to the Court’s powers under 11 U.S.C. §105.
Furthermore, the state court’s Citation of Contempt and Order to Appear
and Show Cause must be dismissed because holding debtor in contempt of court
for failing to pay his pre-petition debt during the pendency of his Chapter
13 case, or even making him appear for a show cause proceeding on that debt,
is clearly prohibited by 11 U.S.C. §362.
In re Donald W. and Phyllis C. Dawes; Case No. 06-11237 (Somers) (February 11, 2008)
MEMORANDUM OPINION AND ORDER GRANTING DEBTORS’ MOTION FOR SUMMARY JUDGMENT
AND DENYING UNITED STATES’ CROSS MOTION FOR SUMMARY JUDGMENT ON WHETHER
11 U.S.C. § 1222(a)(2)(A) APPLIES TO CLIAMS ARISING FROM POSTPETITION
SALES OF FARM ASSETS
• 11 U.S.C. § 503(b)(1)
•
11 U.S.C. § 507
•
11 U.S.C. § 1222
•
IRC § 1398
•
IRC § 1399
Facts:
This case involves the IRS’s objection to the confirmation of the debtors’ Chapter
12 plan. After filing a pro se Chapter 7, and that case being dismissed, the
debtors retained counsel and filed for relief under Chapter 12 of Title 11.
The IRS filed for relief from the automatic stay and sought to liquidate certain
property held in trust as the debtors’ nominee. IRS was given that relief.
The debtors then sought to have the capital gains tax held an unsecured debt
not entitled to priority and thus dischargeable under 11 U.S.C. § 1222.
The IRS argued that § 1222 was inapplicable to capital gains taxes arising
from postpetition dispositions of farm assets in Chapter 12 case because the
tax is the personal liability of the debtor, not an administrative expense
of the estate entitled to priority.
Holding:
The Court held that the capital gains tax assessed
was an unsecured debt not entitled to priority and that the tax could be discharged
as a result of
the BAPCPA exception created by § 1222. The Court rejected the IRS’s
argument that a separable taxable entity, such as a bankruptcy estate, was
necessary for the operation of § 1222. In doing so, the Court found the
phrase “incurred by the estate” in § 503(b)(1)(B)(i) defining
an administrative expense ambiguous. After reviewing the legislative history,
the Court found “incurred by the estate” was in reference to the
time the tax accrues and becomes fixed and not in reference to the entity liable
for the tax – the estate. Therefore, administrative claim status for
federal income taxes arising from the postpetition sale of farm assets is not
determined by whether the tax is payable by the case trustee under §§ 1398
and 1399 of the IRC.
Carl B. Davis, Trustee, v. World Savings Bank and Mark Walter Androes
(In re Mark Walter Androes); Case No. 06-12375, Adversary No. 07-5088 (Nugent)
(Feb. 11, 2008)
MEMORANDUM OPINION
• 11 U.S.C. §§ 544, 547,
550
•
K.S.A. § 58-2221
•
K.S.A. § 53-501, et seq.
Facts:
Mark Androes filed for Chapter 7 relief in December
2006. Carl B. Davis was appointed Chapter 7 Trustee. This proceeding related
to a real estate transaction
secured by a mortgage on real property in Sedgwick County, Kansas. World Bank
filed a proof of claim asserting that it was owed $60,314.03 on the petition
date. At filing, the debtor claimed this property as his exempt homestead.
Debtor and his wife made a mortgage in favor of World Bank covering the property.
World Bank filed the mortgage with the Register of Deeds, but the debtor’s
signature on the document was undated. World Bank commenced a foreclosure action
which was later dismissed for lack of prosecution. Trustee recorded a Notice
of Bankruptcy filing with the Register of Deeds. World Bank then filed an addendum
with the Register of Deeds which provided the date of the debtors’ signature.
Trustee moved for summary judgment, asserting two claims: 1. The omission of
the date from the notary’s certificate invalidated the acknowledgment,
resulting in the mortgage being improperly recorded and therefore subject to
the claims of a hypothetical lien creditor under 11 U.S.C. § 544; 2. If
the mortgage was not properly recorded, the earliest the World Bank could have
claimed a record interest in the property was November 29, 2006, the date it
filed its foreclosure suit and obtained a lis pendens, and that because such
lis pendens attached six days before the petition date, it was a voidable preference
under 11 U.S.C. § 547 and recoverable from the estate under 11 U.S.C. § 550.
Holding:
The Court granted Trustee’s motion for summary judgment avoiding World
Bank’s mortgage under 11 U.S.C. §544 and preserving it for the benefit
of the estate under 11 U.S.C. §550. The certificate of acknowledgment
on World Bank’s mortgage was patently defective and incomplete because
it lacked the date of the debtors’ signatures. Citing K.S.A. § 58-2221
and several old Kansas cases, the Court stated that a mortgage must be properly
acknowledged to be accepted by the Register of Deeds, and an unacknowledged
mortgage, although recorded, does not place a subsequent purchaser of the land
on notice. Additionally, the Uniform Law on Notarial Acts, K.S.A. § 53-501
et seq., requires a date. Therefore, the Trustee was entitled to avoid World
Bank’s mortgage as a hypothetical lien creditor. Kansas law does not
provide for correction of a defective acknowledgment certificate, and thus
the addendum did not relate back to cure the defect in the acknowledgement.
Given this holding, the Court did not reach the merits of the Trustee’s
preference argument.
Frontier Farm Credit, PCA v. Christopher Charles Norris, Mary Beth Norris,
Craig Norris (In re Norris);
Case No. 05-43551; Adversary Case No. 06-7005
(Somers) (February 12, 2008)
FINAL JUDGMENT DETERMINING THAT DEFENDANT MAY BETH NORRIS’S PERSONAL
LIABILITY ON PLAINTIFF’S CLAIM AGAINST HER IS NOT EXCEPTED FROM HER DISCHARGE
• 11 U.S.C. § 523(a)(2)(A)
•
11 U.S.C. § 523(a)(2)(B)
•
11 U.S.C. § 523(a)(6)
• Fed. R. Civ. P. 54
• Fed. R. Bankr. P. 7054
Facts:
This ruling involves a dischargeability complaint that Frontier filed against
Mrs. Norris. Mrs. Norris executed, along with her husband, several loan documents
to obtain a revolving line-of-credit from Frontier. All the documents were
given to Mr. Norris. No one testified whether Mrs. Norris read the documents
or that someone went over the document with her. Therefore, the issue decided
by the Court was whether those documents provided enough proof of fraudulent
action to except her debts owed to Frontier from being discharged.
Holding:
The Court found that Frontier failed to prove that Mrs. Norris provided any
false information to Frontier or did anything with the intent to harm Frontier.
Moreover, the Court found its judgment to be final under Fed. R. Civ. P. 54.,
even though not all the claims in the case had been adjudicated. The Court
reasoned that there was no just reason to delay entry of final judgment because
no matter affecting Mrs. Norris personal liability remained and the facts were
not so intertwined between the co-debtors as to prevent Mrs. Norris from some
finality regarding her debt.
David C. Sietter, Chapter 7 Trustee, v. Anne Wedow (In re Richie Adele Tankersley);
Case No. 05-26151, Adversary Case No. 07-06111 (Berger) (Feb. 13, 2008)
ORDER GRANTING SUMMARY JUDGMENT IN FAVOR OF DEFENDANT
• 11 U.S.C. § 547
•
11 U.S.C. § 550
Facts:
Wedow, a friend of Tankersley, paid mortgage payments
totaling $21,000.00 on Tankersley’s home when Tankersley was threatened with foreclosure.
Tankersley repaid Wedow $5,000.00 on October 18, 2004. Debtor Tankersley filed
for Chapter 7 bankruptcy relief on October 13, 2005. As of the petition date,
Tankersley still owed Wedow $12,000.00. In preparing his bankruptcy schedules,
Tankersley listed Wedow as an insider on his statement of financial affairs.
The Chapter 7 Trustee sued defendant Wedow to avoid what he considered preferential
transfers and to recover their value under 11 U.S.C. §§ 547 and 11
U.S.C. §550. The Trustee alleged that Wedow was an insider and subject
to a one-year look back. Wedow denied she was an insider. The parties filed
cross-motions for summary judgment.
Holding:
The Court held that Wedow was not an insider for
purposes of § 547 because
she gained no advantage as against the debtor’s other creditors. A per
se insider of an individual debtor includes relatives, general partners, a
partnership in which the debtor is a general partner, a general partner of
the debtor, or a corporation of which the debtor is a director, officer or
person in control. A defendant who does not have per se insider relationship
with the debtor may still be treated an insider if the trustee can show that
the defendant had a sufficiently close relationship with the debtor so that
his conduct is subject to closer scrutiny than those dealing at arm’s
length with the debtor. The focus of such an inquiry must be on the defendant’s
influence, through her relationship with the debtor, to obtain more favorable
repayment of the debt at the expense of the debtor’s other creditors.
The facts of this case simply did not establish such a close relationship,
or one in which Wedow had influence to obtain more favorable repayment, much
less one in which Tankersley treated Wedow differently from his other creditors.
In re Daniel Matthew Quick and Amy Melinda Quick; Case No. 07-21791 (Somers) (Feb. 14, 2008)
MEMORANDUM OPINION AND ORDER DENYING GMAC’S OBJECTION TO CONFIRMATION
• 11 U.S.C. § 1325(a)(9)
Facts:
Debtors financed the purchase of a 2005 Chevrolet Trailblazer
with GMAC and gave GMAC a security interest in the vehicle. Debtors filed for
relief under
Chapter 13 less than 910 days later. Debtors filed their proposed Chapter 13
plan, which provided that surrender of the Trailblazer to GMAC constituted
payment in full of GMAC’s claim. GMAC filed a proof of claim for $34,283.32,
secured in full by the Trailblazer. The Chapter 13 Trustee objected to GMAC’s
proof of claim and recommended that the claim not be allowed because the collateral
was surrendered in full satisfaction of the debt. Trustee’s objection
was granted. GMAC filed a motion for relief from stay as to the Trailblazer
and objected to confirmation of Debtors’ proposed plan, contending its
claim should be allowed as an unsecured claim for the remaining deficiency
after the sale of the vehicle. The motion for stay relief was granted by the
Court. The issue before the Court was whether the surrender of the Trailblazer
satisfied GMAC’s claim in full under the hanging paragraph of 11 U.S.C. §1325(a)(9).
Holding:
The Court denied GMAC’s objection to Debtors’ proposed plan.
Following the Tenth Circuit BAP’s rule from In re Quick, 371 B.R. 459
(10th Cir. BAP 2008), the Court held that the hanging paragraph following 11
U.S.C. §1325(a)(9) applies to plans which propose to surrender 910 collateral
pursuant to 11 U.S.C. §1325(a)(5)(C) and bars the allowance of an unsecured
deficiency claim following GMAC’s disposition of the collateral.
In re William V. and Diane R. Allen; Case No. 07-41327 (Karlin) (February 15, 2008)
MEMORANDUM ORDER AND OPINION OVERRULING TRUSTEE’S OBJECTION TO CONFIRMATION
OF DEBTOR’S CHAPTER 13 PLAN
• 11 U.S.C. § 101(10A)
•
11 U.S.C. § 523(a)
•
11 U.S.C. § 524(k)(3)(H)(ii)
•
11 U.S.C. § 544(c)
•
11 U.S.C. § 707(b)(2)
•
11 U.S.C. § 1325(b)
•
11 U.S.C. § 1326(a)(1)(B)
Facts:
This decision involves a Trustee’s objection to confirmation. In 2006,
the debtors entered into two promissory notes, one with Wells Fargo and one
with CitiFinancial. As security for each note, the debtors separately pledged
two unencumbered vehicles, a 2003 Chevy Cavalier to Wells Fargo and a 1997
Chevy Cavalier to CitiFinancial. On their means test, the debtors’ used
the full contractual payment due as deductions on lines 47(b) and 47(c). In
the debtors’ Chapter 13 plan, they sought to cram-down the value of the
two vehicles. The Chapter 13 trustee objected to confirmation arguing the debtors
were only entitled to use the average monthly payment debtors would actually
make to secured creditors if the plan was confirmed.
Holding:
The Court overruled the Trustee’s objection. The Court followed the
reasoning in In re Walker, 2006 WL 1314125 (Bankr. N.D. Ga. 2006) and In re
Palm, 2007 WL 1772174 (Bankr. D. Kan. 2007) that the phrase “contractually
due” under § 707 meant the amount owed on the contract and the amount
scheduled by the debtor. Therefore, even though the debtors sought to cram-down
the value on their two vehicles, the debtors could take a deduction for the
full contractual payment due. The Court reasoned that the purpose of the means
test is to take a snapshot of the debtor’s financial picture, rather
than presupposing the debtor’s financial picture when the bankruptcy
code relief is applied to the debtor’s financial affairs.
Darcy D. Williamson v. Janice Pearson Whiteman, et al. (In re West);
Case No.
05-43566; Adversary Case No. 06-7039 (Karlin) (February 21, 2008)
MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF’S MOTION FOR
SUMMARY JUDGMENT AS TO DEFENADNT, JANICE PEARSON WHITEMAN
• 11 U.S.C. §541
• Fed.R.Civ.P.56
Facts:
This matter was before the Court on the Motion for
Summary Judgment filed by the Chapter 7 Trustee Darcy D. Williamson (“Trustee”), against
Defendant, Janice Pearson Whiteman (“Whiteman”). The Trustee sought
a determination that Whiteman alienated or embezzled property from the estate
of her deceased mother resulting in an offset against any inheritance she may
be entitled to receive from the defendant’s estate, and further that
Whiteman owed the estate additional sums of money that should be offset against
any inheritance Whiteman may be entitled to receive.
On January 18, 2001, Winnie
Faye Pearson died in the State of Washington. Winnie was the mother of the
three defendants, Donna West, Johnny Ray Pearson,
and Janice Whiteman. Winnie died testate, and on June 1, 2001, a copy of her
will was attached to the Petition For Letters of Administrative for Probate
of Will field in the State of Wyoming. The heirs at law and the beneficiaries
under the will are the defendants. On June 4, 2001, an Order Admitting Will
to Probate and Appointing Coexecutors was filed in the state court action.
On June 26, 2001, Letters Testamentary and Oaths of Executors were filed in
the state court, whereby Mr. Pearson and Ms. West were appointed co-executors.
Five
years later Ms. West, along with her husband Harold West, filed for bankruptcy
protection in the United States Bankruptcy Court for the District of Kansas.
The Debtors properly disclosed the existence of the probate estate in their
Statement of Financial Affairs and further disclosed the property interest
in an inheritance from that estate. Any interest Ms. West had in the property
of Winnie Pearson’s estate is property of the instant bankruptcy estate
pursuant to 11 U.S.C. §541.
The Trustee filed a complaint which sought to
either disallow or avoid any claims Whiteman might have to Winnie’s estate as a result of a disclaimer
Whiteman had signed. The Trustee filed a motion for partial summary judgment
on January 14, 2008, alleging that under Wyoming law, any claim Whiteman may
have in Winnie’s estate should be offset by property she improperly took
from that estate. According to the Trustee, Whiteman was liable to the probate
estate in an amount equal to twice the value of the property she allegedly
took between the date Winnie died and the date the letters testamentary were
filed and an executor for Winnie’s estate appointed.
Whiteman failed to
respond to the Trustee’s partial motion for summary
judgment by the February 6, 2008 deadline set by D. Kan. LBR 7056.1(f). On
February 7, 2008, the Court sent a letter to Whiteman informing her that the
response was overdue, and that unless a response was filed within ten days
the Court would consider the motion for summary judgment an uncontested motion
pursuant to D. Kan. Rule 7.4 and would rule accordingly.
Holding:
The Court noted that, “A party’s failure to respond to a summary
judgment motion is not a sufficient basis on which to enter judgment against
the party.” The Court must still make a determination whether summary
judgment is appropriate pursuant o Fed.R.Civ.P.56.
The Trustee’s motion for summary judgment against Whiteman sought a
judgment offsetting certain debts against Whiteman’s portion of the decedent’s
estate based upon allegations that Whiteman improperly alienated or embezzled
property belong to the decedent’s following her death. The Court noted
that nothing in the Amended Complaint filed on August 24, 2006, made any mention
of either of these two claims. The only claims raised against Whiteman in the
Amended Complaint dealt with the disclaimer she filed in the probate actions,
which the Trustee admitted was untimely and unenforceable. Because the above
claim was not expressly brought by the Trustee in the Amended Complaint, the
Court held that it does not form a legitimate basis for granting summary judgment.
The
Court further found that the record submitted with the motion did not support
entry of summary judgment in this matter. The Trustee contended, relying
almost exclusively on the unanswered requests for admissions that Whiteman
embezzled or alienated property of Winnie’s estate and is liable to the
estate for double the value of the property she improperly took, plus the amount
of the outstanding loan used to purchase a vehicle for Whiteman’s son.
The Court found that the record submitted in support of this summary judgment
motion did not support the Trustees position.
The Court denied the Trustee’s
Motion for Summary Judgment.
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