OpinionsCourt sustained chapter 13 trustee's objection to confirmation of plan based upon debtors' erroneous calculation of tax obligations. In re CAM Recycling & Materials, Inc., Case No. 09-25303 (April 2010) -- Judge M.D. McGarity Minority owner and major creditor of chapter 7 corporate debtor objected to the proofs of claim of the debtor's majority owner and former employee. The court sustained the objections and found the claimants were not entitled to compensation under the doctrine of quantum meruit. Levine v. Ward, 08-2240 (March 2010) -- Judge P. Pepper Plaintiff home buyers who paid contractor/seller $20,000 for post-purchase construction did not prove by a preponderance of the evidence that the defendant contractor obtained the $20,000 by false pretenses, and thus did not prove their cause of action for nondischargeability under 11 U.S.C. section 523(a)(2)(A). The plaintiffs did prove, however, that when the defendant used the $20,000 to pay the closing costs at the time of sale, rather than holding it in trust to pay subcontractors and material suppliers on the post-purchase construction, the defendant committed defalcation in a fiduciary capacity, and therefore that the debt was nondischargeable pursuant to 11 U.S.C. section 523(a)(4). The Court found, contrary to the defendant's assertions, that the plaintiffs clearly gave the defendant the $20,000 for "improvements," and that the fact that the defendant alleged that he'd told the plaintiffs he needed to use it to pay closing costs was not a defense. George v. Travis Brothers, 09-2241 (March 2010) -- Judge P. Pepper Granting summary judgment to the plaintiff/trustee in a preference avoidance action in which, within 90 days of the petition date, Chapter 7 debtors paid a portion of the overdue balance due a landscaping contractor who had done work on their home. In re Mary Nunez, Case No 09-32442 (March 2010) -- Judge M.D. McGarity Chapter 13 trustee opposed confirmation of plan because it limited contribution of one half of the debtor's tax refund to shorten the length of the plan rather than to pay unsecured creditors. The court sustained the objection, finding if a below-median income debtor elects to propose a longer term than three years and the court for cause approves such longer term, the requirements for payment of disposable income (which includes tax refunds), in years four and five of the plan remain the same as those in the first three years of the plan. In re Wolverine_Fire Apparatus Co. of Sherwood Michigan, Case No. 09-32985 (February 2010) -- Judge M.D. McGarity In a "double debtor" scenario, secured creditor's perfected security interest in collateral in possession of debtor lapsed one year after collateral was transferred from secured creditor manufacturer to debtor. Because the manufacturer had filed its financing statement in an incorrect location, its security interest was unperfected, as well. Consequently, first and second secured creditors' interests were subordinate to third secured creditor with perfected security interest in debtor's collateral. (This decision is a court minute decision, only.) In re DuWayne & Faith Kirchoff, Case No. 09-21188, USA v. Debtors, Adv. No. 09-2159 (February 2010) -- Judge M.D. McGarity Plaintiff filed a motion for summary judgment seeking a determination that obligations owed it were excepted from the debtors' discharge, as well as a denial of the debtors' discharge. The debtors had allegedly converted the plaintiff's collateral by failing to account for missing livestock and feed. The court granted the motion, in part, finding the debtor husband's judgment of nondischargeability in a prior bankruptcy case was nondischargeable in the current case. The court denied the motion, in part, finding issues of material fact, namely the debtors' subjective intent, precluded the entry of summary judgment on the other counts. In re David M. Larsen, Case No. 09-22963, Teri Jendusa-Nicolai, et al. v. Debtor, Adv. No. 09-2231 Published: In re Larsen, 422 B.R. 913 (January 2010) -- Judge M.D. McGarity Issue preclusion barred relitigation of state court judgments against chapter 7 debtor for assault and battery, as well as derivative claims for loss of society and companionship, making the judgments nondischargeable under sec. 523(a)(6). Terra Dev. Co. v. McCoy, 09-2433 (January 2010) -- Judge P. Pepper Where a debtor converts the underlying bankruptcy case from one under Chapter 7 to one under Chapter 13 before the deadline for filing an answer to a 727 complaint objecting to discharge,the conversion does not moot the 727 cause of action. Rather, it renders that cause of action dormant. The appropriate disposition of the 727 adversary proceeding is for the court to stay the proceedings and close the adversary case, subject to a motion to reopen in the event that the underlying bankruptcy case reconverts to one under Chapter 7. Nissan Motor Acceptance Corp. v. Smith, et al. (No. 07-C-0698 (E.D. Wis. Oct. 12, 2010) (January 2010) -- Judge P. Pepper |