OpinionsDebtors' discharge was denied based on § 727(a)(2) and (a)(4), when debtors failed to list personal property (Beanie Babies and Disney memorabilia) collected over many years and which debtors believed did not have value to anyone else. Court held that debtors should have listed property in general terms and given its value as unknown. In re Muth Mirror Systems, LLC, et al., Case No. 06-25609, Muth Mirror Systems, LLC, et al. v. Gentex Corp. v. Muth Mirror Systems, LLC, et al., Adv. No. 06-2470 Published: In re Muth Mirror Systems, LLC, 379 B.R. 805 (December 2007) -- Judge M.D. McGarity Chapter 11 debtor, the holder of patent for a non-dichroic signal mirror, brought an adversary proceeding against a competitor that had filed a proof of claim against the estate for the competitor's alleged infringement of its patent, alleged breach of alliance agreement between the parties, and tortious interference with its contractual relations, and the competitor counterclaimed against the debtor. The court held the debtors' patent was invalid and the competitor's product did not infringe that patent. The competitor did, however, breach the parties' alliance agreement, causing the debtor to suffer damages. In re Luckett, 2007 Bankr. LEXIS 3638 (October 2007) -- Judge S.V. Kelley Court interprets equal monthly payments provision of § 1325(a)(5)(B)(iii) to allow lump sum payment only if made on the effective date of the plan. In Re Stoltz, 07-22864 (October 2007) -- Judge P. Pepper Chapter 13 plan which relied on the language of the Eastern District model plan could not be confirmed in the face of objections that it did not clearly direct the trustee to distribute the amount listed in the creditor's proof of claim rather than the amount listed in the plan, and that it did not clearly indicate when the debtors intended the property of the estate to revest in the debtors. Fritz v. USA Funding Corp. and GMAC Mortgage Corp., 06-2085. (BR case 05-45778) (October 2007) -- Judge P. Pepper The Court dismissed the plaintiffs'/debtors' Truth-in-Lending Act claims against defendant GMAC Mortgage Corp. in their entirety, and dismissed the plaintiffs'/debtors' TILA claims against defendant USA Funding Corp. in part, because (1) some claims were barred by the Rooker-Feldman doctrine, (2) others were barred by the doctrine of claim preclusion, and (3) still others failed to state a claim upon which relief could be granted. The only claims to survive the motions to dismiss were the plaintiffs'/debtors' claims for declaratory judgment and damages against USA Funding Corp. for alleged violations to TILA. Elllsworth -v- Ellsworth (In re Ellsworth) (September 2007) -- Judge J.E. Shapiro Plaintiff, former wife of debtor, sought a judgment of nondischargeability against the debtor for failing to promptly notify her of a stock distribution he was to receive and which, under the terms of the parties' marital settlement agreement, was to be sold with the proceeds first to be used to pay certain debts and the balance to be divided by the parties. Instead of promptly notifying the plaintiff, the debtor placed the stock in a margin brokerage account in his sole name, which he used for his personal purposes. By the time the plaintiff finally received notice of the stock distribution, it had dramatically dropped in value (in excess of $442,000). The court found that the actions by the debtor constituted violations of 11 U.S.C. §§ 523(a)(2)(A) and 523(a)(4) (for both defalcation by a fiduciary and embezzlement). The court declined to find that debtor's conduct constituted a violation of 11 U.S.C. § 523(a)(6). In Re Davis 07-24688 (September 2007) -- Judge P. Pepper In a case in which the debtors' plan proposed to pay 100% to the unsecured creditors, the court overruled the Chapter 13 trustee's objection to the debtors' proposal to pay the consenting secured auto lender's claim outside the plan. In re Linda & Timothy Hardin, Case No. 03-31539 Published: In re Hardin, 375 B.R. 506 (September 2007) -- Judge M.D. McGarity Creditor with a security interest in chapter 13 debtors' motor vehicle moved for relief from stay after the vehicle was destroyed in an automobile accident postpetition and postconfirmation, in order to permit it to apply insurance proceeds paid by a third-party tortfeasor's insurer to its remaining secured and unsecured claims. The debtors and trustee objected, and disputed that the creditor had an interest in the insurance proceeds to the full extent of its remaining claims. The court granted the creditor's motion in part and denied it in part. The creditor's recovery of insurance proceeds paid by third party's insurance carrier after debtors' collateral was destroyed was limited to its allowed secured claim. Kovacs -v- United States of America (In re Kovacs) (September 2007) -- Judge J.E. Shapiro Kovacs entered into an offer in compromise (OIC) with the IRS resolving her income tax liabilities for the years 1990 to 1995. Kovacs subsequently defaulted in the terms of the IOC. The IRS terminated the OIC in 1999 and reinstated her liabilities for the tax years in question. On July 3, 2001, Kovacs filed a petition under Chapter 7 and listed the IRS as a creditor and obtained a discharge on October 10, 2001. After Kovacs received her discharge, the IRS mailed to her a series of notices of intent to levy on her assets with respect to these outstanding tax liabilities. The debtor filed an adversary proceeding. At the outset of the trial, the IRS conceded its mistake in determining the dischargeability of the tax liabilities for these years in question and acknowledged it had violated the discharge injunction under § 524 of the Bankruptcy Code. The court concluded that Kovacs was the prevailing party and that the IRS' breach of § 524(a) was a proximate cause of her damages. However, the court also found that Kovacs Attorneys' also were mistaken in the impact of her discharge on the tax liabilities, and, in addition, unreasonably protracted the court proceedings in the adversary proceeding. The court concluded that a fair portion of the total damages of $71,901.37 for which the IRS should be liable was $25,000 and stated that a cause of action for violation of the discharge injunction must not be utilized as a profit-making endeavor by the debtor's attorneys. *NOTE - currently on appeal. In re John & Jean Sundstrom, Case No. 05-41463, Emerging Vision, Inc. v. Sundstrom, Adversary No. 06-2286 Published: In re Sundstrom, 374 B.R. 663 (August 2007) -- Judge M.D. McGarity Creditor brought an adversary proceeding to deny the chapter 7 debtors a discharge based on the debtor-wife's alleged fraudulent prepetition transfer of assets. The court dismissed the complaint, finding the debtors' prepetition transfer of personal property into wholly-owned corporation did not evidence wrongful intent required for a denial of discharge under sec. 727(a)(2). |