OpinionsThe debtor sought to extend her total plan length from 60 months to 84 months, pursuant to the temporary amendment to the Bankruptcy Code at 11 U.S.C. § 1329(d), made possible by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Her plan, however, originally was confirmed after the enactment of the CARES Act—four days after enactment. The plain text reading of the eligibility period under § 1329(d) limits modifications to plans confirmed before March 27, 2020. George v. Anderson (In re Anderson), Case No. 17-29971-beh, Adv. No. 19-02165-beh, 2020 WL 4463055 (Bankr. E.D. Wis. July 31, 2020) (July 2020) -- Judge B.E. Hanan The Chapter 7 trustee moved for summary judgment in her adversary proceeding against debtor’s brother, the recipient of an alleged fraudulent transfer. The Court weighed the facts of the case against both actual fraud under sec. 548(a)(1)(A) and constructive fraud under sec. 548(a)(1)(B), and found that the trustee had not met her burden on summary judgment to show entitlement to judgment as a matter of law. In re Luedke, Case No. 20-20729-beh, 2020 WL 4342242 (July 2020) -- Judge B.E. Hanan The Chapter 7 debtors claimed federal homestead exemptions in their primary residence, which was held by a living revocable trust of which they were the settlors, beneficiaries, and trustees. The Chapter 7 trustee objected to the claimed exemptions, asserting that the trust was a separate legal entity, and therefore the debtors had no interest in the residence that they could claim as exempt. Looking to Wisconsin trust law, the Court concluded that the debtors’ living trust—unlike a corporation or an LLC—was not a separate legal entity, and that the debtors maintained equitable ownership of their residence. Because that equitable ownership, coupled with the debtors’ present possessory interest, was an “aggregate interest” in the residence that could be exempted under 11 U.S.C. section 522(d)(1), the Court overruled the trustee’s objection. In re Hefty, Case No. 19-31232-beh, 2020 WL 4289367 (July 2020) -- Judge B.E. Hanan The trustee objected to confirmation of the above-median debtor's proposed Chapter 13 plan, asserting that it failed to provide for all of the debtor's disposable income. Because the debtor had obtained a new and higher-paying job shortly before filing his case, the trustee and the debtor agreed that the means test—using its six-month look-back period—did not accurately reflect the debtor’s “projected disposable income” under 11 U.S.C. section 1325(b)(1). But the parties disagreed on the proper method for accurately calculating projected disposable income. The trustee argued that the amount should be calculated with an amended means test, using the debtor’s new income, while the debtor asserted that only Schedules I and J mattered. The Court concluded that the means test (adjusted to reflect the upward increase in the debtor’s income), and not Schedules I and J, should be used to calculate the debtor’s projected disposable income, and sustained the trustee’s objection. In re H2D Motorcycle Ventures, LLC and JHD Holdings, Inc., Case Nos. 19-26914-beh, 19-26915-beh, 617 B.R. 625 (Bankr. E.D. Wis. 2020) (June 2020) -- Judge B.E. Hanan The jointly-administered Chapter 11 debtors had proposed and been approved for two significant asset sales, and now ask the Court to use the proceeds of the sales to pay select administrative claimants. Simultaneously, the U.S. Trustee filed a motion to convert the Chapter 11 cases to separate Chapter 7 proceedings, and the largest secured creditor filed a motion for relief from the automatic stay. The Court considered the best sequence and means of handling the various motions against the debtors' admission that the Chapter 11 process is no longer an option for them, as well as other facts of record. Based on the best interests of the creditors and the estates under Sec. 1112(b), the Court converted the two cases to Chapter 7, and held the remaining motions in abeyance. Verde Environmental Technologies, Inc. v. C2R Global Manufacturing, Inc. (In re C2R Global Manufacturing, Inc.), Case No. 1830182-beh, Adv. Proc. No. 20-02028-beh, 2020 WL 2529335 (Bankr. E.D. Wis. May 18, 2020) (May 2020) -- Judge B.E. Hanan Verde filed an adversary proceeding, seeking preliminary and permanent injunctive relief related to its claims for false advertising under federal and state law. C2R responded with a motion to dismiss Verde’s Count II, relating to claims for false advertising under Wisconsin Statute section 100.18—the Deceptive Trade Practices Act (DTPA). The Court concluded that Verde, as a competitor of C2R, is not a member of “the public” and, therefore, not eligible to bring a sec. 100.18 claim. The Court also ruled that Verde was not induced to act based on any statements or representations by C2R, a second element of a claim under sec. 100.18. Accordingly, the Court granted C2R’s motion to dismiss Count II of the adversary complaint with prejudice. In re C2R Global Manufacturing, Inc., Case No. 18-30182-beh, -- WL -- (May 2020) -- Judge B.E. Hanan In approving the parties’ settlement of their patent infringement lawsuit (waged as a claim objection proceeding) the Court vacated its February 20, 2020 decision construing the parties’ disputed patent claim terms. In re Gentry, Case No. 15-20990-beh, 2020 WL 2479662 (Bankr. E.D. Wis. May 13, 2020) (May 2020) -- Judge B.E. Hanan Four years after his plan was confirmed, a debtor objected to the State of Wisconsin’s proof of claim for overpayment of ChildCare benefits. The debtor argued that the Seventh Circuit’s recent decision in In re Dennis, 927 F.3d 1015 (7th Cir. 2019) (holding that overpayments were not domestic support obligations) is controlling and warrants the reclassification of the claim as a general nonpriority unsecured claim. The Court rejected the State’s arguments that res judicata and collateral estoppel relating to the confirmed Chapter 13 plan precluded the debtor from bringing the objection. Rather, the Court determined that deadlines set by statute and rule, plus law of the case and judicial estoppel governed the Court’s analysis. In doing so, the Court sustained the debtor’s objection, found that the Court is bound to follow In re Dennis and will do so here because the debtor’s case is still open. DeWitt v. Jacob (In re Jacob), Case No. 18-26186-beh, Adv. No. 18-02217-beh, 2020 WL 696795 (February 2020) -- Judge B.E. Hanan A creditor sought a determination that a portion of the state court money judgment against both the debtors and a non-debtor was non-dischargeable under 11 U.S.C. § 523(a)(6), based on the debtors’ conduct during their tenancy in the creditor’s home. The Court disregarded the debtors’ attempt to deny the existence of the debt as well as their inapplicable affirmative defenses. Where the creditor established by a preponderance of the evidence that the debtors caused willful and malicious injury, the Court determined that the damages flowing therefrom were non-dischargeable. The damages ranging from routine wear and tear to gross uncleanliness are dischargeable. CQM, Inc. v. Vandenbush (In re Vandenbush), Case No. 18-31066, Adv. No. 19-02041, 2020 WL 609609 (February 2020) -- Judge B.E. Hanan Creditors holding a large judgment debt against the debtor’s now ex-wife, attributable to the ex-wife’s theft-by-fraud, sought to retain their ability to collect the debt against the marital property the debtor retained in the parties’ subsequent divorce, and filed an action premised on 11 U.S.C. §§ 523(a)(2)(A) and (a)(15). The parties cross-moved for summary judgment. The Court granted summary judgment in favor of the debtor-defendant because (1) the complaint’s allegations under section 523(a)(2)(A) were premised solely on fraud committed by the debtor’s ex-wife, which could not be imputed to the debtor, and (2) the underlying judgment, which was assigned to the debtor’s ex-wife in the divorce, was not a debt owed to a spouse, former spouse or child, nor was it created by the parties’ divorce. The Court also rejected a new factual theory that the creditors raised for the first time in their brief opposing the debtor’s motion for summary judgment—that the debtor engaged in a post-judgment fraudulent transfer scheme through the parties’ marital property division. First, the Court noted that it is improper for parties to raise new factual, rather than legal, theories in opposition to summary judgment briefing. Then, the Court rejected the new theory on the merits because it did not link the underlying judgment debt that the creditors sought to except from discharge to the later asserted fraudulent conduct. Finally, to the extent the plaintiffs were attempting to invoke their rights under 11 U.S.C. § 524(a)(3) to collect against post-petition martial property, that section of the Code did not apply because the debtors were no longer married and thus there could be no non-exempt post-petition marital property from which to collect. |