The debtor moved for sanctions against his ex-wife and her family law attorney for allegedly violating the automatic stay by filing a state court motion for contempt based on the debtor’s failure to pay “section 71” payments incurred in the parties’ prepetition divorce. The court denied the motion, first noting—without deciding—that the action may have been excepted from the automatic stay under § 362(b)(2)(B) as an attempt to collect a domestic support obligation from non-estate property, and that the debtor had failed to demonstrate any compensable injury from the action, precluding an award of damages.
Doss v. Norhardt Crossing Condominium Association (In re Doss), Adv. No. 18-2091 (June 2018) -- Judge B.E. Hanan
The court rejected the debtor's argument that statutory liens become avoidable judicial liens after the holder obtains a foreclosure judgment, dismissing the adversary complaint against the debtor's condominium association on summary judgment. The court also ruled that the statutory lien was not avoidable under sec. 506(d), regardless of whether it was "consensual" or "nonconsensual," and that sec. 523(a)(16) applies to discharge of personal liability, not liens.
In re Hicks, Case No. 17-2800 (June 2018) -- Judge B.E. Hanan
The chapter 13 trustee objected to the debtor’s motion to modify a confirmed plan on the basis that its “plan shortening” language operated as a retroactive forgiveness of missed plan payments (and would, essentially, allow for less than 36 months’ worth of plan payments). The court overruled the objection, noting that the disposable income and “applicable commitment period” requirements of § 1325(b) do not apply to modifications under § 1329, but good faith considerations remain applicable.
Layng v. Sgambati (In re Sgambati), Adv. No 17-02022, Case No. 16-26430, 584 B.R. 865 (April 2018) -- Judge B.E. Hanan
The U.S. Trustee moved to deny the debtor's discharge under 11 U.S.C. section 727(a)(4)(A), based on the debtor’s alleged failure to list all debts, income, business creditors and expenses. The debtor, who operated a pizza business and regularly mixed business and personal expenses and income, admitted some errors on his schedules but denied any fraudulent intent. After a two-day trial, the court found that some of the errors were not intentional or reckless, and that fire loss insurance proceeds and cash advances from credit cards in this case were not income that the debtor should have disclosed. Nonetheless, other omissions and mischaracterizations on the debtor’s schedules were part of a pattern of reckless disregard for the truth. The court denied debtor's discharge.
Gorokhovsky v. Huron Hudson Condo Assn. (In re Gorokhovsky), Adv. No. 18-2045 (oral ruling) (April 2018) -- Judge B.E. Hanan
The plaintiff-debtor sought an order declaring that the debt owed to the defendant-creditor, a condominium association, and its corresponding lien were dischargeable. The complaint also asserted state law causes of action for waste and destruction of personal property and trespass. The court granted the defendant’s motion to dismiss, finding that the court lacked subject matter jurisdiction over the debtor’s state law claims, that the debtor’s request for an order declaring his personal liability dischargeable was not justiciable (so the court lacked constitutional jurisdiction), and that the request for a finding that the defendant’s lien was dischargeable failed to state a claim upon which relief could be granted. The court also denied leave to amend the complaint, concluding that amendment would be futile.
In re House, Case No. 17-30434-beh (March 2018) -- Judge B.E. Hanan
After a careful consideration of the debtor’s prior filing history, the court granted a secured creditor’s motion for in rem stay relief as to the debtor’s rental property. The fact that the debtor had filed five chapter 13 cases in six-and-a-half years was not dispositive. In deciding whether in rem relief was warranted, the court reviewed the circumstances surrounding each of the debtor’s prior filings, as well as her performance in those cases, including the reasons for their failures and the debtor’s treatment of the creditor.
In re Gorokhovsky, Case No. 17-28901-beh (March 2018) -- Judge B.E. Hanan
The United States moved for relief from stay to perfect its secured interest (tax liens) in three of the chapter 7 debtor’s real properties, against certain third parties. Because the debtor lacked equity in any of the properties, they were not necessary for a reorganization, and the United States’ interests would not otherwise be adequately protected in the event of a sale or further encumbrance of any of the properties, the court granted the motion.
Dubis v. Stebnitz (In re Stebnitz), Case No. 13-32097-beh, Adversary No. 17-02110, 586 B.R. 289 (February 2018) -- Judge B.E. Hanan
Trustee sought a declaratory judgment that an LLC operating agreement required remaining members to purchase the departing member's/Trustee's interest based on an appraisal of property held by the LLC. The remaining members read the agreement to require a valuation of the LLC itself, and not just the property held by it. The court applied principles of contract interpretation to conclude that the agreement text was plain, and because the only purpose of the LLC was to hold property for enjoyment of family members, an appraisal of the property held was all that was required. To read the agreement to require a valuation that included deductions for "lack of control "or "lack of marketability" would give the remaining members a windfall, and be inconsistent with the stated purposes of the LLC.
Brandt v. Hurley (In re Hurley), Case No. 16-32442-beh, Adversary No. 17-2048, 2018 WL 770364 (February 2018) -- Judge B.E. Hanan
The chapter 7 debtor’s ex-wife sought a determination that certain obligations assigned to the debtor in the parties’ pre-petition Martial Settlement Agreement (“MSA”) were non-dischargeable under 11 U.S.C. section 523(a)(15)—specifically, the debtor’s obligation to make certain payments toward the parties’ marital debt (the “marital debt payments”), and his obligation to hold his ex-wife harmless for payment of the second mortgage on the parties’ residence. In reviewing the language of the MSA and considering the agreement as a whole, the court concluded that the MSA required the debtor to make the marital debt payments directly to his ex-wife (not to the underlying creditors, as the debtor suggested), and that those debts were nondischargeable under section 523(a)(15). The court also concluded that the debtor’s hold harmless obligation on the second mortgage created a new, nondischargeable debt, and granted the plaintiff’s motion for summary judgment.
In re Dixon, Case No. 17-31675-beh, 2018 WL 400722 (January 2018) -- Judge B.E. Hanan
The lessor of the debtor’s vehicle repossessed the debtor’s car prepetition. When the lessor refused to return the vehicle after she filed her petition, the debtor moved to hold the lessor in contempt, for return of the vehicle, and to impose sanctions for willful violation of the automatic stay. After reviewing the language of the parties’ lease, the court concluded that the lessor had terminated the lease prepetition, and therefore the debtor did not possess any interest in the vehicle at the time of filing. The court therefore denied the debtor’s motion.