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Opinions


    Lee v. Hang (In re Hang), Case No. 24-23470, Adv. No. 24-2130 (March 2026) -- Judge R.M. Blise
    The plaintiffs filed an adversary complaint against the debtor-defendants seeking to have a debt declared nondischargeable under 11 U.S.C. § 523(a)(2)(A). The plaintiffs unwittingly invested money in a non-debtor third-party's fraudulent investment scheme, and those funds were subsequently given to the debtor-defendants in the form of a below-market mortgage loan on property purchased by the debtor-defendants. The parties filed cross motions for summary judgment. The Court determined that there were material questions of fact as to the intent element and the amount of money allegedly obtained by fraud, so neither party sustained their burden on summary judgment on the nondischargeability claim. The plaintiffs also filed a motion to amend their complaint to add claims for a declaration related to the mortgaged property and for a declaration that the debtor-defendants could not invoke a homestead exemption. The Court denied the plaintiffs' motion because the debtor-defendants would be prejudiced by a late amendment to the complaint. The Court also determined that the amendment would be futile because any objection to the claimed homestead exemption was untimely, the plaintiffs did not sufficiently plead that they owned the property at issue, and ownership of the property was irrelevant to a determination of nondischargeability.

    Lee v. Vang (In re Vang), Case No. 24-24067, Adv. No. 24-2153 (March 2026) -- Judge R.M. Blise
    The plaintiffs filed an adversary complaint against the debtor-defendants seeking to have a debt declared nondischargeable under 11 U.S.C. § 523(a)(2)(A) and to have the Court declare that the debtor-defendants could not invoke a homestead exemption. The plaintiffs unwittingly invested money in a non-debtor third-party's fraudulent investment scheme, and those funds were subsequently given to the debtor-defendants in the form of a below-market mortgage loan on property purchased by the debtor-defendants. The parties filed cross motions for summary judgment. The Court determined that there were material questions of fact as to the intent element and the amount of money allegedly obtained by fraud, so neither party sustained their burden on summary judgment on the nondischargeability claim. The Court granted the debtor-defendants’ motion with respect to their homestead exemption because the plaintiffs’ claim was not timely filed under 4003(b) and an objection to an exemption should be filed in the main case, not an adversary proceeding. The plaintiffs also filed a motion to amend their complaint to add another claim for a declaration related to the mortgaged property. The Court denied the plaintiffs' motion because the debtor-defendants would be prejudiced by a late amendment to the complaint, and the amendment sought relief the Court could not grant.

    Ahmed v. Pathan (In re Pathan), Case No. 24-23022, Adv. No. 24-2116 (March 2026) -- Judge R.M. Blise
    The plaintiff sought a determination that a $100,000 loan the plaintiff gave the debtor-defendant to use solely for business expenses related to the debtor-defendant's gas stations was nondischargeable. After trial, the Court concluded that the plaintiff met his burden of proof under 11 U.S.C. § 523(a)(2)(A). The plaintiff presented sufficient evidence to prove that he loaned money to the debtor-defendant under false pretenses because the debtor-defendant falsely suggested that he would use all the loan proceeds for business purposes. Of the $100,000 loan, the debtor-defendant used $47,112.57 for personal expenses, and the Court granted the plaintiff's request for a declaration of nondischargeability as to that portion of the debt.

    In re Russ's Mulch & Trucking LLC, Case No. 25-25134 (December 2025) -- Judge R.M. Blise
    The debtor filed an application to employ counsel pursuant to 11 U.S.C. § 327(a) more than five weeks after filing its petition under subchapter V of chapter 11. The application requested that the employment be made retroactive to the petition date. To justify retroactive approval, the Seventh Circuit instructs that counsel must demonstrate excusable neglect. In re Singson, 41 F.3d 316 (7th Cir. 1994). The Court found that counsel had not demonstrated excusable neglect for failing to file the application before providing significant legal services to the debtor. The Court thus concluded that retroactive approval was not appropriate and approved employment of counsel as of the date of the application.

    In re Kahle, Case No. 24-20054 (September 2025) -- Judge R.M. Blise
    Prior to filing bankruptcy, the married debtors each signed a commercial guaranty whereby they guaranteed repayment of a loan made by the bank to the debtor-husband’s company. After the debtors filed a joint chapter 7 bankruptcy case, the bank filed two proofs of claim, one for each of the guarantees. The trustee objected to the second claim, asserting that the debt owed by each debtor under the guaranties represented the same underlying unpaid loan, and the bank was entitled to just one distribution from the estate. The bank argued the claims were not duplicative because each debtor had separate liability under their separate guaranties. The Court concluded that the bank could not assert two claims because the bankruptcy estates of the married debtors were substantively consolidated pursuant to § 302(a) and Local Rule 1015, and the bank could be paid just once from the consolidated estate. The Court sustained the trustee’s objection to the second claim.

    Ramirez v. Knight (In re Knight), Case No. 24-22327, Adv. No. 24-2105 (September 2025) -- Judge R.M. Blise
    The plaintiff sought a determination that the debtor-defendant owed a nondischargeable debt for alleged misrepresentations in connection with the financing of a residential real estate "flipping" project. The plaintiff alleged the debtor misrepresented his plan regarding the sale of the property by failing to disclose his intent to refinance the debt and live in the property himself rather than offering it for sale on the open market. After trial, the Court concluded that the plaintiff had not sufficiently proven the required elements for nondischargeability under 11 U.S.C. § 523(a)(2)(A). The Court found that while the debtor knowingly created a false impression by omitting information about his intent and the plaintiff justifiably relied on that omission, the plaintiff failed to prove that the debtor intended to deceive him.

    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 Lang, Case No. 23-20782 (September 2024) -- Judge R.M. Blise
    After reopening his chapter 7 case, the debtor moved to amend his schedules to disclose and exempt proceeds from a personal injury claim. As a matter of law, the Court determined that a debtor could amend his schedules after a case is reopened only if the debtor demonstrates that the time should be enlarged under Bankruptcy Rule 9006(b), which requires a showing of excusable neglect. The Court considered the factors set forth in Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 385 (1993) – (1) the danger of prejudice to the opposing party; (2) the length of the delay and its potential impact on the proceedings; (3) the reason for the delay, including whether the delay was within the reasonable control of the movant; and (4) whether the movant acted in good faith. The Court found that two factors (prejudice against non-moving party and debtor’s good faith) weighed in favor of excusable neglect, and two factors (length of delay and reason for delay) weighed against. The Court determined that the lack of prejudice should be given great weight under the circumstances of the case. The Court concluded that the debtor had demonstrated excusable neglect and could amend his schedules to disclose and exempt the claim.

    Huebner v Humphrey (In re Humphrey), Case No. 23-22884, Adv. No. 23-2112 (September 2024) -- Judge R.M. Blise
    The plaintiff sought a determination that the debtor-defendant owed a nondischargeable debt for alleged misrepresentations in connection with the sale of residential real estate. The plaintiff alleged the debtor misrepresented the condition of the house by failing to disclose defects related to water intrusion in the living room, basement, and kitchen. After trial, the Court concluded that the plaintiff had not sufficiently proven the required elements for nondischargeability under 11 U.S.C. § 523(a)(2)(A) for debt related to any misrepresentation related to water intrusion in the living room and basement. The Court also concluded that the debtor owed a debt to the buyer for a misrepresentation on the pre-sale Real Estate Condition Report (RECR) related to water problems in the kitchen ceiling and that the debt was nondischargeable under § 523(a)(2)(A).