Creditor-plaintiff seeks a declaration that a confirmed FINRA arbitration award against debtor-defendant is excepted from discharge by 11 U.S.C. §523(a)(2), (3), (6), and (19). Both parties seek summary judgment.
The decision grants summary judgment to the debtor-defendant on the §523(a)(2) and (6) claims because the creditor-plaintiff did not timely file an adversary proceeding as required by §523(c).
The decision grants summary judgment to the debtor-defendant on creditor-plaintiff's §523(a)(19) claim because, as a matter of law, the confirmed arbitration award cannot be shown to be "for" a violation of a federal or state securities law.
The decision denies summary judgment to both parties on creditor-plaintiff's §523(a)(3) claim. As to §523(a)(3)(A), the uncontested facts show that (i) the debtor-defendant did not list the creditor-plaintiff or schedule the debt to him in time allow him to file a timely claim under Federal Rule of Bankruptcy Procedure 3002(c), and (ii) the creditor-plaintiff did not have notice or actual knowledge of the bankruptcy in time to meet that deadline. The decision reads the plain language of §523(a)(3)(A) to render the debt excepted from discharge. But the decision construes the controlling case law to allow the debtor-defendant to avoid §523(a)(3)(A)'s discharge exception if (i) the clerk gave notice under Federal Rule of Bankruptcy Procedure 2002(e) that there appeared not to be assets available for distribution, (ii) the debt is a garden-variety debt, and (iii) the equities weigh in favor of discharge. The decision concluded neither party was entitled to summary judgment on whether §523(a)(3)(A) excepts the debt from discharge because there is a genuine dispute over the nature of the debt and the parties' summary judgment filings did not address the equities.
As to §523(a)(3)(B), the decision denies summary judgment to both parties because, although the debtor-defendant failed to list or schedule the creditor-plaintiff's debt in time for the creditor-plaintiff to file an adversary proceeding for a determination of nondischargeability, and the creditor-plaintiff lacked notice or knowledge of the bankruptcy during that time, there are genuine disputed issues of material fact regarding whether the debt is of a kind covered by §523(a)(2) or (6).
The decision also rejects the creditor-plaintiff's arguments that the Rooker-Feldman doctrine afforded him a right to summary judgment, and rejects both parties’ arguments that issue and claim preclusion apply.
In re Huenerberg, Case No. 17-28645 (September 2018) -- Judge G.M. Halfenger
A portion of the Internal Revenue Service's proof of claim arises from an assessment for a shared responsibility payment. That payment is required as a result of the debtors' failure to comply with the Patient Protection and Affordable Care Act’s individual mandate to maintain health insurance. The IRS asserts that the unremitted shared responsibility payment is an excise-tax debt entitled to priority under 11 U.S.C. section 507(a)(8). The debtors objected to the claim, contending that the shared-responsibility-payment debt is not entitled to priority. The court sustained the objection, ruling that the shared responsibility payment is not an excise tax on a transaction as required by section 507(a)(8).
In re Justin Daniel Paul Camacho, Case No. 18-27653 (September 2018) -- Judge G.M. Halfenger
The debtor filed a motion for a temporary waiver of the credit counseling requirement. The court denied the motion and dismissed the case because the debtor failed to meet the requirements for waiver provided in section 109(h) of title 11: that the debtor faced exigent circumstances and attempted to obtain the credit counseling within the seven days before the case was filed but was unable to do so. As a result, the debtor failed to meet the credit-counseling requirement imposed by section 109(h) on individuals desiring to file a bankruptcy case. The debtor's counsel then filed a letter explaining the circumstances that led the debtor to file bankruptcy and requested that the court "reinstate" the case. The court construed the letter as a motion to vacate the dismissal order under Federal Rule of Bankruptcy Procedure 9024. The court denied the motion because, even presuming the truth of the unverified statements in the letter, the debtor did not plausibly suggest that he could establish exigent circumstances or that he attempted to complete credit counseling before he filed his case.
In re Stanley Immel, Case No. 17-22036 (August 2018) -- Judge G.M. Halfenger
Section 522(f)(3)(B) of title 11 provides that if a debtor elects state-law exemptions for implements and tools of the trade under a law of a state that "prohibits avoidance of a consensual lien on property otherwise eligible to be claimed as exempt", then the debtor may not avoid the lien "to the extent the value of such implements . . . [and] tools of the trade . . . exceeds $6,425." Wisconsin law "prohibits avoidance of a consensual lien on property". A debtor electing Wisconsin exemptions can only avoid a lien on implements and tools of the trade up to $6,425.
In re Groth, Case No. 17-30264 (July 2018) -- Judge G.M. Halfenger
The trustee objected to confirmation because the debtor was not providing all of her projected disposable monthly income to unsecured creditors. The trustee argued that the debtor should not be allowed to deduct her homeowner association dues as a special circumstance on her means test. The court agreed and concluded that, under the facts of this case, the debtor's obligation to pay her homeowner association dues was not a special circumstance for purposes of 11 U.S.C. section 707(b)(2)(B)(i).
In re Ryan, Case No. 18-20366 (July 2018) -- Judge G.M. Halfenger
The court overruled the debtors' claim objections because (1) the debtors did not serve the claimant, Waterstone Bank, by certified mail as required by Fed. R. Bankr. P. 3007(a)(2)(A)(ii) and 7004(h); and (2) the claim objections did not comply with Local Rule 3007(b) because they were not supported by an affidavit or declaration stating facts in support of the objection made by individuals with personal knowledge. The debtors attempted to support their claim objections with an affidavit from their bankruptcy attorney. The debtors' bankruptcy attorney's affidavit did not establish that the bankruptcy attorney had personal knowledge of the relevant facts and accordingly the affidavit was not sufficient to support the claim objections.
In re Ali, Case No. 18-25548 (July 2018) -- Judge G.M. Halfenger
The debtor filed an application to waive the filing fee. The debtor filed a detailed affidavit showing he met 28 U.S.C. §1931(f)(1)’s waiver requirements, including stating facts showing that he faced special circumstances that make a discharge extraordinarily beneficial. The court waived the debtor’s filing fee and commended debtor’s pro bono counsel.
In re Patrick and Angela Sabec, Case No. 17-23264 (January 2018) -- Judge G.M. Halfenger
The chapter 13 debtors filed a motion to limit notice of their request to amend their unconfirmed chapter 13 plan contending that the amended plan did not adversely affect any other parties in interest. The court denied the motion. The court's order explains that Interim Local Rule 3015(c)(3) requires debtors to serve all plan amendments on all creditors in order to reduce substantially the administrative cost in determining whether the debtor properly served the plan. The order states that the court "will reserve orders limiting notice to those rare instances in which some final amendment that likely has no detrimental effect on creditors is needed to achieve confirmation."
Adv. Proc. No. 17-2187, George v. Novoselsky (October 2017) -- Judge G.M. Halfenger
The defendant filed a motion for recusal, abstention, dismissal and a request for trial by jury. The court denied the requests for recusal, dismissal and abstention. The court struck the defendant’s jury demand because the plaintiff’s claim under 11 U.S.C. sec. 549 is not one for which the Seventh Amendment to the U.S. Constitution preserves the right to a jury trial.
In re Bethe, Case No. 11-25388 (September 2017) -- Judge G.M. Halfenger
Section 1328(a) of title 11 provides that the court shall grant a debtor a discharge when, among other requirements, the debtor has completed “all payments under the plan”. Direct-pay maintenance payments on long-term debt provided for in a chapter 13 plan are “payments under the plan” for purposes of section 1328(a). Debtors who fail to make such payments are not entitled to a discharge.