OpinionsThe plaintiffs filed an amended adversary complaint against the debtor-defendants alleging various theories of liability under Wisconsin law and seeking to have the debt declared nondischargeable under 11 U.S.C. §§ 523(a)(2)(A), (a)(4), and (a)(6). The amended complaint included references to a range of statutes and legal theories, including a claim under property-related statutes, a claim for theft by fraud, claims asserted by reference to the plaintiffs' cross claims against the defendants in a state court case, and conspiracy claims under state and common law. The defendants moved to dismiss the complaint. The Court determined that only one of the causes of action identified by the plaintiffs was legally cognizable based on the facts pleaded in the complaint. The Court dismissed the insufficiently plead claims and granted the plaintiffs leave to amend their complaint. In re Kimble, Case No. 25-25616 (July 2026) -- Judge R.M. Blise After the chapter 13 debtor failed to make post-petition rent payments to her residential landlord, the landlord obtained relief from the automatic stay, and the debtor vacated the apartment. The landlord then filed an application requesting approval of an administrative expense under 11 U.S.C. § 503(b) for the unpaid rent between the petition date and when the debtor vacated the apartment. The debtor opposed the request. The Court rejected the landlord's argument that the unpaid rent qualified as an actual and necessary cost of preserving the estate because maintaining stable housing was integral to the debtor's ability to earn income and perform under the plan. The Court determined that the “actual, necessary costs and expenses of preserving the estate” described in § 503(b)(1) must necessarily be of a different scope than the post-petition costs necessary for a debtor to perform under the plan described in 11 U.S.C. § 1305(a)(2), otherwise § 1305 would be superfluous and all such post-petition expenses could be allowed as administrative expenses. The Court concluded that the landlord's claim was not entitled to administrative expense priority because the debtor’s post-petition occupation of a residence was not an actual, necessary cost of preserving the estate under § 503(b)(1)(A). 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. |