The debtor-plaintiff alleged that the creditor-defendant violated the automatic stay and the Wisconsin Consumer Act when it garnished funds from her paycheck approximately two weeks after she filed her chapter 7 case. The debtor acknowledged that the creditor returned the garnished funds a few weeks after the debtor filed her adversary complaint, which the creditor did not answer.
In moving for default judgment, the debtor requested compensatory damages for financial and emotional injuries and punitive damages. The court ruled that the debtor was entitled to recover reasonable attorney's fees under 11 U.S.C. §362(k)(1) because the uncontested facts showed that the creditor willfully violated the automatic stay. The court further ruled that controlling precedent commands that §362(k)(1) does not afford a right to recover damages for emotional injury, and that the alleged conduct did not justify an award of punitive damages because it was not sufficiently egregious or reprehensible. Finally, the court ruled that the debtor failed to state a claim under the Wisconsin Consumer Act, Wis. Stat. §427.104(1)(h) & (j), because the alleged acts of garnishment could not "reasonably be expected to threaten or harass" and could not constitute a "[c]laim, or attempt or threaten to enforce a right with knowledge or reason to know that the right does not exist".
In re Ryan Ebert, Case No. 18-31065 (December 2019) -- Chief Judge G.M. Halfenger
AmeriCredit Financial Services, Inc. filed a motion for relief from the automatic stay and the co-debtor stay with respect to its collateral. The motion was without merit because the debtor's confirmed chapter 13 plan surrendered the collateral and entry of the order confirming the plan immediately terminated the automatic stay with respect to the collateral, terminated the co-debtor stay, and the collateral was deemed abandoned. The debtor filed a frivolous objection to the motion for relief, stating that his non-filing co-debtor had become current with payments to AmeriCredit. The court denied the motion as moot and ordered the parties and their counsel to show cause in writing why they should not be sanctioned under Federal Rule of Bankruptcy Procedure 9011(c)(1)(B). The court noted, "[i]f ever there were a time when parties could file meritless requests for relief and demands for hearing without risk of sanction, that time has passed."
In re Dawn Schroeder, Case No. 17-27289 (September 2019) -- Chief Judge G.M. Halfenger
Before confirmation Richard Voss filed proof of a claim secured by a mortgage on the chapter 13 debtor's residence. The confirmed plan provided for mediation to modify the mortgage and either payment on Voss's claim outside of the plan, if modified, or a plan modification to address the claim, if not. About a year after confirmation, after mediation failed, Voss filed an amended proof of claim, seeking to increase the amount of his secured claim based on a post-confirmation increase in the value of the debtor's residence. The debtor objected to Voss's claim and filed a request to modify the confirmed plan to pay Voss's allowed secured claim through the plan in the amount stated in his original proof of claim and to otherwise treat his claim as an allowed unsecured claim. The court concluded that the debtor's proposed modification of the plan is permissible under 11 U.S.C. §§1322(c)(2) & 1329, disallowed Voss's amended proof of claim based on insufficient cause to amend, and sustained the debtor's objection to Voss's claim.
In re Patrick and Hope Souter, Case No. 19-21582 (September 2019) -- Chief Judge G.M. Halfenger
The court ordered the debtors to show cause why their chapter 13 case should not be dismissed or converted based on their failure to file all applicable tax returns as required by 11 U.S.C. §1308, a requirement for plan confirmation specified in 11 U.S.C. §1325(a)(9). The debtors argued that some of §1325(a)'s requirements may be mandatory—including §1325(a)(1)'s requirement that the plan must comply with all applicable provisions of the Code, United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 277 (2010)—but others are discretionary, such as §1325(a)(9)'s requirement that the debtor must comply with §1308, and the court may confirm the plan even if such a requirement is not satisfied, if no one objects. The court held that the best construction of §1325(a), given Supreme Court and Seventh Circuit authority, is that all of its requirements are mandatory. The court denied confirmation and dismissed the case.
In re Karl Boddy, Jr. and Theresa Boddy, Case No. 19-23004 (August 2019) -- Chief Judge G.M. Halfenger
The chapter 13 debtors' amended plan provides for an allowed claim secured by a mortgage on their principal residence, stating that the debtors will seek a modification of the mortgage through the court’s mortgage modification mediation program; if mediation is successful, the debtors will pay the claim "outside of the plan"; if mediation is unsuccessful, the debtors "will file a feasible plan to address the mortgage claim." The mortgage creditor consented to mediation but objected to plan confirmation, asserting that the plan does not conform to 11 U.S.C. §1325(a)(5). The court denied confirmation.
In re Velicia Buchanan, Case No. 16-30201 (August 2019) -- Chief Judge G.M. Halfenger
A mortgage creditor filed an affidavit of default and debtor’s counsel filed an “objection” that explained that counsel had not been able to contact the debtor but that counsel believed that there may have been extenuating circumstances for the debtor’s failure to make mortgage payments. The court overruled the debtor’s objection as baseless and granted the mortgage creditor relief from the automatic stay. The debtor filed a letter requesting that the court “rescind” the order granting the creditor relief from the automatic stay. The court refused to act on the debtor’s request to rescind the order, noting that the request was not properly made because it was made by letter, rather than by motion on notice as required by Federal Rules of Bankruptcy Procedure 9013 and 9014. The court also noted that the letter did not state with particularity the grounds for the relief the debtor sought, nor did it state the authority on which it was based, as required by Federal Rule of Bankruptcy Procedure 9013 and Local Rule 9013, respectively.
In re Victoria Toliver, Case No. 17-20724 (August 2019) -- Chief Judge G.M. Halfenger
The confirmed chapter 13 plan provides for payment with interest by the trustee of Consumer Portfolio Services Inc.'s claim secured by the debtor's vehicle. The debtor filed a request to modify the plan to surrender the vehicle and discontinue payments on CPS's secured claim. CPS objected to the proposed modification asserting that 11 U.S.C. §1329(a) does not permit such a modification and that the modification was not proposed in good faith, as required by 11 U.S.C. §§1329(b) & 1325(a)(3). The court concluded that the debtor's proposed modification is to "reduce the amount of payments on claims of a particular class provided for by the plan", as allowed by §1329(a)(1), and that the good-faith inquiry requires an evidentiary hearing.
In re Velma Lowe, Case No. 19-20287 (August 2019) -- Chief Judge G.M. Halfenger
The debtor moved to enlarge the time to file a tax return required by 11 U.S.C. §1308(a) after the time to file the return expired, asserting that the debtor's failure to file the return was the result of "excusable neglect" and that an enlargement is, therefore, permitted by Federal Rule of Bankruptcy Procedure 9006(b). The court denied the motion because Rule 9006(b) only applies "when an act is required or allowed to be done at or within a specified period by these rules or by a notice given thereunder or by order of court". Fed. R. Bankr. P. 9006(b)(1) (emphasis added). Rule 9006(b) does not apply where, as here, the debtor was required to act within a period specified by a statute, such as §1308.
In re Robert and Lois Long, Case No. 19-20186 (July 2019) -- Chief Judge G.M. Halfenger
The trustee objected to confirmation of the chapter 13 debtors’ plan under 11 U.S.C. §1325(a)(9), which imposes a plan-confirmation requirement that the debtor file all tax returns “as required by” §1308. Section 1308(a) requires the debtor to file with appropriate tax authorities all tax returns for all taxable periods that ended during the four-year period preceding the filing of the petition by no later than the day before the date on which the meeting of creditors is first scheduled to be held “if the debtor was required to file a tax return under applicable nonbankruptcy law”. The court overruled the trustee’s objection, which was based on the debtors’ failure to file federal income-tax returns for the 2018 taxable year, holding that, because the meeting of creditors was first scheduled to be held before April 15, 2019, and applicable nonbankruptcy law did not require the debtors to file federal income-tax returns for 2018 until April 15, 2019, §1308(a) does not apply to those returns.
In re Hoang and Kim Nguyen, Case No. 17-27906 (July 2019) -- Chief Judge G.M. Halfenger
The debtors failed to confirm a debt management plan. Before the court dismissed the case, debtors’ counsel applied for an award of $9,645 in compensation, an amount approaching ten times the presumptively reasonable amount in a chapter 13 case dismissed before plan confirmation. The court found that (1) neither the application nor counsel’s record of time spent on the case demonstrated that this was “an unusually complex case” that “reasonably require[d] significantly more work than the presumptively reasonable fee contemplates”, see Local Rule 2016.1 app. at 1, and (2) counsel failed to show how the services rendered “were of value to the debtors,” given that the plan was never confirmed. In re Ward, 511 B.R. 909, 914 (Bankr. E.D. Wis. 2014). Considering all relevant factors, including the nature of the services rendered and the results obtained, the court concluded that the $2,000 directly paid to counsel pre-petition reasonably compensated counsel for all actual, necessary services rendered, awarded that amount as reasonable compensation under §330(a)(1)(A), allowed that amount as an administrative expense under 11 U.S.C. § 502(b)(2), and afforded counsel 14 days to request an evidentiary hearing with respect to the disallowed compensation.