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12-25938, Grisham (February 2013) -- Judge Pepper

"Chapter 13 debtor had made a series of payments to her uncle during the year prior to filing her bankruptcy petition.  The trustee objected to confirmation of the debtor's plan, arguing that it failed the liquidation analysis because if the case were a Chapter 7, the trustee would be able to recover those payments as preferences and distribute them to creditors.  At the evidentiary hearing, the debtor conceded that she'd made the payments during the preference period, but argued that they were subject to the ordinary-course-of-business defense under section 547(c)(2).  She argued that she had taken three loans from her uncle over a ten-year period, and had repaid each with interest by having regular payments deducted from each of her paychecks.  She argued that it was her ordinary course of business to borrow money from her uncle and to pay it back in this way.  The trustee argued that a personal loan could not fall under the ordinary-course defense.  The debtor responded that in cases such as In re Jackson, 90 B.R. 793 (Bankr. D.S.C. 1988); In re Gawronski, 411 B.R. 139 (Bankr. W.D.N.Y. 2009); and In re Eckman, 447 B.R. 546 (Bankr. N.D. Ohio 2010), courts had left open the possibility that repayment of a personal, family loan could be subject to the ordinary-course defense, although it would be very difficult for the debtor or the creditor to prove the defense.  The Court found that, in this case, while the debtor may have presented evidence that it was in her ordinary course of financial affairs to borrow money from her uncle and repay it through wage deductions, she had not presented any evidence that it was in her uncle's ordinary course to make such loans, and that section 547(c)(2) required the debt to be incurred in the ordinary course of the financial affairs of both the debtor and the transferee.  The Court nonetheless acknowledged that the cases the debtor had cited indicated that there could exist a set of facts which would make the ordinary course defense applicable to repayments of a personal, family loan."

Fischer v. Bank of America, N.A. (In re Fischer), 483 B.R. 877

(December 2012) -- Judge Kelley

Based on Rooker-Feldman doctrine and doctrine of claim preclusion, Chapter 13 Debtors' attempt to strip mortgage lien denied when state court previously determined that mortgage was in first position.


12-20115-pp, Lockett (December 2012) -- Judge Pepper

Order denying payment of unclaimed funds

In re Washington, 483 B.R. 871

(December 2012) -- Judge Kelley

Court allows late-filed Chapter 13 claim for creditor without notice under three limited conditions.


In re Archdiocese of Milwaukee, 483 B.R. 855

(December 2012) -- Judge Kelley

Court denied creditors' committee's request for derivative standing to bring fraudulent transfer claim against Debtor's parishes. 

In re Archdiocese of Milwaukee, 483 B.R. 693

(December 2012) -- Judge Kelley

Court denied creditors' committee's request to (1) assert alter ego claims against Debtor's parishes; and (2) substantively consolidate the parishes with the Debtor.

McDonald v. Little Limestone, Inc. (In re Powers Lake Constr. Co.), 482 B.R. 803

(November 2012) -- Judge Kelley

Trustee could recover preferential payment made by Debtor contractor to subcontractor despite Wisconsin Statute creating trust fund in amounts paid by owners to contractors, because between date that Debtor received payment from owner and check to subcontractor cleared Debtor's bank, Debtor's bank account went into a negative balance.  Under the "lowest intermediate balance test," this destroyed the trust fund.  Subcontractor's giving of a lien release did not satisfy the contemporaneous exchange defense, but whether payment was in ordinary course of business could not be decided on summary judgment, based on the materials submitted.

Gerard v. Gerard (In re Gerard), 482 B.R. 265

(November 2012) -- Judge Kelley

State court jury's determination that debtor committed slander of title was given preclusive effect, and judgment debt was nondischargeable as a willful and malicious injury under § 523(a)(6).


In re Donald Kalmerton, Case No. 12-20544, Dempsey Law Firm, LLP v. Debtor, Adv. No. 12-2279 (November 2012) -- Judge McGarity

State court's $500 sanction award and findings regarding frivolous and abusive nature of chapter 7 debtor's state law counterclaim against plaintiff did not encompass the requisite specific intent to cause willful and malicious injury under section 523(a)(6), precluding summary judgment.

In re Thongta, 480 B.R. 317

(October 2012) -- Judge Kelley


Chapter 13 Trustee is not required to provide Rule 3002.1 Notice of Final Cure Payment to Creditor that has received relief from stay and withdrawn its claim. If Trustee does provide such a Notice, the Creditor does not lose any rights by failing to respond.


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