OpinionsKirk Ecklund, four LLCs of which he is the only member, and one corporation that he wholly owns all filed petitions for relief under chapter 11 of the Bankruptcy Code. The debtors sought joint administration of their estates, which the court granted, and approval under 11 U.S.C. §327 of each debtor's employment of Kerkman & Dunn to represent and assist them in carrying out their trustee duties as debtors in possession under 11 U.S.C. §1107. The United States trustee objected that the debtors have conflicting interests, specifically with respect to potentially avoidable pre- and post-petition preferential transfers by Ecklund to his sons and a company they own, and that each of the debtors is part of at least one debtor-creditor relationship with another debtor, such that shared representation is impermissible. The court overruled the UST's objection and approved the debtors' employment of Kerkman & Dunn, finding and concluding that Kerkman & Dunn is disinterested and does not hold or represent any interests adverse to any of the bankruptcy estates, as §327(a)'s generally requires for an estate's employment of a professional; the proposed employment does not currently involve any actual conflicts of interest, as §327(c) requires for disqualification due to counsel's representation of a creditor; and the bankruptcy estates and their creditors are most likely best served, at least for the moment, by common representation, which minimizes administrative and transaction costs. Toscano v Kahle (In re Kahle), Case No. 24-20054, Adv. No. 24-2078 (August 2025) -- Judge R.M. Blise The plaintiff alleged that the debtor-defendant fraudulently induced her to loan funds for his company and that the debt owed to him as a result was nondischargeable under 11 U.S.C. §§ 523(a)(2)(A). The Court denied the debtor's motion for summary judgment. The debtor argued that he no longer owed a debt because the plaintiff released his liability under a Settlement Agreement with the debtor’s company. The Court determined that, while the plaintiff had granted a release to the debtor, there were genuine issues of material fact regarding the scope of that release. The Court also rejected the debtor’s argument that the plaintiff was judicially estopped from pursuing her claim against him based on the position she took in a state court action, where she obtained a judgment against his company. Since the plaintiff contended that the debtor and his company were both liable for the monies borrowed under the promissory notes, the plaintiff’s position in state court – that the debtor’s company breached the Settlement Agreement – was not clearly inconsistent with her position in the nondischargeability action. Ahmed v Pathan (In re Pathan), Case No. 24-23022, Adv. No. 24-2116 (July 2025) -- Judge R.M. Blise The plaintiff alleged that the debtor-defendant fraudulently induced him to loan funds for his company and that the debt owed to him as a result was nondischargeable under 11 U.S.C. §§ 523(a)(2) and (a)(6). The Court granted in part and denied in part the defendant's motion for summary judgment. The Court denied the motion for summary judgment as to the claim under § 523(a)(2)(A). The Court determined the plaintiff could proceed with his claim under § 523(a)(2)(A) based on the debtor's representation that the funds the plaintiff loaned the debtor would be used for business purposes. The debtor's oral representations regarding his intended use of the funds from the plaintiff were actionable under § 523(a)(2)(A) if the debtor had no intent to use the funds as he represented he would. The Court determined, however, that the plaintiff could not proceed with a claim under § 523(a)(2)(A) based on the debtor's oral representations that the loan would “save his failing businesses” or that the debtor would be able to repay the loan because the businesses would be profitable. Both statements were outside of the scope of § 523(a)(2)(A) because they were statements respecting the debtor's financial condition, and a false statement respecting a debtor’s financial condition must be made in writing for a debt induced by the false statement to be nondischargeable. In addition, because the plaintiff failed to present an argument on his claim under § 523(a)(6), the Court granted summary judgment and dismissed that claim. In re Huiras, Case No. 23-24283 (July 2025) -- Chief Judge G.M. Halfenger The chapter 13 debtor's former spouse moved for dismissal of the case under 11 U.S.C. §1307(c)(11) based on the court's finding at an evidentiary hearing that the debtor is not current on post-petition child-support payments. The debtor raised many objections to dismissal of the case, including constitutional challenges to the validity and enforceability of the state-court divorce judgment requiring to make the child-support payments at issue, the state statute authorizing the state court's order, and the Bankruptcy Code provisions providing for dismissal of a chapter 13 case and barring confirmation of a chapter 13 plan based on the debtor's failure to make post-petition payments under a domestic support obligation. The court rejected the debtor's defenses to dismissal of the case because the state court's judgment is not void on its face but is, at most, voidable, meaning that this court must give it its full force and effect unless it is set aside; whether a state court could set aside that judgment in whole or in relevant part, this court lacks the jurisdiction to do that; and the challenged Code provisions are constitutional, having been enacted by Congress with a rational justification, well within congressional power under the Constitution to enact bankruptcy laws. The court afforded the debtor 30 days to cure his post-petition default in child-support payments and file proof that he has done so. In re Liukonen, Case No. 24-26139, and Johnson v. Liukonen, Adv. Proc. No. 25-2028 (June 2025) -- Chief Judge G.M. Halfenger Stephanie Johnson filed a prepetition civil action against the debtor in the Eastern District of Wisconsin. On the eve of a jury trial of her claims, the debtor filed a chapter 13 petition, which stayed Johnson's case by operation 11 U.S.C. §362(a). Moving to the bankruptcy court, Johnson filed an adversary proceeding in which she repleaded her district court claims and requested that the bankruptcy court to declare that any damages award she obtained on her claims for willful or malicious personal injuries are not dischargeable under 11 U.S.C. §1328(a)(4). Johnson also moved for relief from the automatic stay to pursue that award in the district court and requested that the district court withdraw the reference of the adversary proceeding (and, possibly, the bankruptcy case). The debtor objected to all of this. The debtor principally argued that Johnson's claims were dischargeable because §1328(a)(4) only excepts from discharge pre-bankruptcy damages awards for personal injuries, which, the debtor argued, Johnson cannot demonstrate. Consequently, the debtor further argued, the court should dismiss the adversary proceeding and deny relief from the stay. The court ruled to the contrary, reasoning that if Johnson obtained a damages award that otherwise satisfied §1328(a)(4)'s discharge-exception criteria before the debtor became eligible for discharge by completing payments under his debt-adjustment plan, the debtor would owe Johnson a debt that would not be discharged under §1328. The court thus modified the §362(a) stay to allow continuation of the district court case and stayed the adversary proceeding. The court also recommended that the district court deny Johnson's motion to withdraw the reference because the modification of the automatic stay is sufficient to grant her full relief without disrupting the efficient administration of the debtor's chapter 13 case. In re Xiong, Case No. 24-25435 (May 2025) -- Chief Judge G.M. Halfenger The chapter 7 debtors claimed an exemption in real property under Wisconsin's homestead exemption, Wis. Stat. §815.20. Judgment creditors Long Lee, Miana Lee, Unlimited Wealth, LLC, David Blong, and Mee Lee (the Lee Parties) objected to the exemption, arguing that the debtors obtained the property with converted funds and thus were not entitled to claim the exemption under Wisconsin law. The Lee Parties further argued that the court should disallow the exemption as a matter of law because the issue had already been determined in state-court proceedings. The court concluded that the state-court proceedings did not preclude the debtors from asserting the homestead exemption in their bankruptcy proceeding, and if the Lee Parties seek to argue that the debtors are not entitled to claim the exemption under Wisconsin law, they must adjudicate that issue anew in the bankruptcy proceeding. In re Landis, Case No. 23-25448 (March 2025) -- Chief Judge G.M. Halfenger Kathleen Hink filed a proof of claim asserting that the chapter 7 debtor, the former husband of Hink's daughter, owes her nearly $107 thousand, primarily because when the debtor and Hink's daughter were married and living together, Hink paid for new siding for their home and to construct an addition (a "mother-in-law suite"), where she lived. The debtor, who waived his discharge, objected to the portion of the claim related to the addition. Hink moved for summary judgment on the claim objection, arguing that issue preclusion or judicial estoppel, or both, bar the debtor from disputing the validity and amount of her claim in this case because the state court in the divorce case between the debtor and Hink's daughter ruled, and the final judgment in that case established, that they owe her marital debts totaling a bit more than $200 thousand for the siding and the addition and that the debtor is responsible for one half of the amount owed (a bit more than $100 thousand, the amount of the relevant portions of her claim). The court denied Hink's motion for summary judgment to the extent that the motion is based on issue preclusion, concluding that issue preclusion under Wisconsin law does not apply because most or all of the issues raised by the debtor's claim objection were not actually litigated in the divorce case and even if some of them were, it would be fundamentally unfair to apply issue preclusion under the circumstances, including that the relevant proceedings in the divorce case will likely differ substantially from those in this case and that the debtor was not incentivized to fully litigate the relevant issues in the divorce case due to the nature of the relevant proceedings in that case. The court also denied Hink's motion for summary judgment to the extent that the motion is based on judicial estoppel because Hink sought the application of that doctrine only with respect to the siding-related portion of her claim and the debtor has not objected to that portion of her claim. Brief v. Willcut, Adv. Proc. No. 24-02051 (March 2025) -- Chief Judge G.M. Halfenger The United States trustee filed an adversary proceeding seeking to revoke the debtor's chapter 7 discharge pursuant to 11 U.S.C. §727(d)(1). The defendant moved for summary judgment, and the court denied the motion, concluding that there were genuine issues of material fact that required a trial. Horton v. O'Keefe, Adv. Proc. No. 23-02072 (March 2025) -- Chief Judge G.M. Halfenger The plaintiff alleged that as a result of a physical confrontation in which the debtor-defendant punched the plaintiff three times in the head, the debtor owed him a debt for willful and malicious injuries, excepted from discharge pursuant to 11 U.S.C. §523(a)(6). After a trial, the court found that plaintiff failed to prove the necessary elements of injury (defined by precedent as a violation of a legal right) and malice (defined by precedent as acting with a conscious disregard of duties or without just cause or excuse) because the debtor acted in self-defense. In re Himes, Case No. 19-20183 (March 2025) -- Chief Judge G.M. Halfenger Flagstar Bank, N.A., filed a response to the chapter 13 trustee's notice of final cure payment pursuant to Rule 3002.1(g), asserting that the debtors were delinquent on postpetition payments. The debtors filed a motion pursuant to Rule 3002.1(h) requesting that the court determine the amount of the final cure payment owed to Flagstar Bank. The debtors also requested that the court award them attorney's fees and costs pursuant to Rule 3002.1(i), because Flagstar failed to provide them with the information required by Rule 3002.1(g). The court granted the debtor’s request for fees and costs, ruling that Flagstar Bank's Rule 3002.1(g) statement was inaccurate and failed to properly itemize the required amounts. The court also barred Flagstar from recovering any related fees or costs from the debtors. |