In re Jodi L. Wagner, Case No. 09-33103(May 2015) -- Judge McGarity
The chapter 7 debtor opposed the trustee's motion to compromise a claim and administer the proceeds from a defective medical device MDL settlement award. The debtor underwent hip replacement surgery prepetition and, due to a recall of the device, hip revision surgery postpetition. The Court denied the trustee's motion for summary judgment, rejecting his argument that the claim exited prior to the debtor's filing because it was sufficiently rooted in the debtor's pre-bankruptcy past. Instead, the Court applied the "discovery rule" to determine whether or not the claim was property of the estate. Because the issue of whether or not the debtor knew of her injury or exercised reasonable diligence in discovering it prior to filing bankruptcy was a matter for trial, the debtor's motion for summary judgment was also denied.
The State of Wisconsin, Department of Workforce Development (the "DWD") filed a complaint against the debtor's non-filing spouse and requested a declaration that the non-filing spouse owed it a non-dischargeable debt under 11 U.S.C. section 523(a)(2). It did so in an effort to avoid section 524(a)(3)’s bar on collection of most community debts from the debtor’s community property. The court concluded that the complaint did not state a claim against the non-filing spouse for which relief could be granted. The court granted the DWD leave to amend the complaint to add the debtor as a defendant.
Chapter 13 debtor objected to priority status of claim filed by attorney who represented the debtor's former spouse in state court proceedings. The debtor argued the state court awarded the attorney's fees with the intent to punish the debtor for misconduct in litigation, not for the purpose of enforcing the debtor's duty to support his former spouse and/or children. The court overruled the objection and allowed the claim as a priority domestic support obligation under sec. 507(a)(1)(A). The fees were incurred in litigation relating to the care, custody, and welfare of the minor children of the marriage.
Kelley v. Dahle-Fenske (In re Dahle-Fenske), 525 B.R. 912(March 2015) -- Judge Kelley
Debt incurred was community claim but phantom discharge did not apply since creditor was not scheduled and did not have notice of deadline to file dischargeability complaint.
In re Rowell, 526 B.R. 300(January 2015) -- Judge Kelley
Under § 707(b)(2)(D)(ii), as long as the 540-day exclusion from means testing for veterans has not expired when the petition is filed, the exclusion applies, and the debtor is exempt from the means test.
The defendant moved to dismiss the chapter 13 debtor's adversary proceeding to set aside a prepetition transfer of real estate pursuant to a tax foreclosure judgment. The defendant argued the debtor lacked standing to pursue the action because the property owner of record was the debtor's mother who had died six years prior to the judgment. The Court denied the motion to dismiss, finding the debtor had standing because she had acquired an interest in the real estate upon her mother's death.
Decision discussing good faith in the context of a section 362(c)(3) motion.
Liebzeit v. Intercity State Bank (In re Blanchard), 520 B.R. 740(October 2014) -- Judge Kelley
Trustee could not avoid recorded mortgage on Debtors' real property where Debtors had sold property on unrecorded land contract.
In re Thompson, 520 B.R. 713(October 2014) -- Judge Kelley
Creditor with disallowed claim required to refund all mortgage payments made on claim; debtors' requests for attorneys' fees and return of mortgage note denied.
The trustee objected to confirmation of the debtors’ proposed chapter 13 plan asserting that it failed to provide for all of debtors’ disposable income. The trustee argued that the debtors must pay into the plan (i) any increase in the cash surrender value of their whole life insurance policy, and (ii) an additional $25 per month representing a reduction of the debtors’ claimed recreation expense of $125 per month.
The court held that the cash surrender value was not “income.” And the trustee (i) did not contest current monthly income or reasonableness of the debtors’ expenditures (other than recreation), and (ii) failed to establish a basis for a Lanning adjustment.
The court concluded that the reasonableness of the recreation expense could not be determined as a matter of law, but the debtors have no disposable income even if the recreation expense is excluded in its entirety.
Consequently, the court ruled that the debtors’ plan did not offend 11 U.S.C. §1325(b)(1)(B)’s requirement that they devote all projected disposable income during the plan term to pay unsecured creditors.