Failure to pay post-petition taxes was not cause for dismissal of Chapter 13 case where the Plan did not require the payment of § 1305 claims. The tax claims will survive the discharge, and the Debtor is liable for all applicable interest and penalties, but nonpayment did not constitute a violation of the confirmed Plan.
In re Carl and Linda Segebrecht, 536 B.R. 810 (August 2015) -- Judge S.V. Kelley
Homeowners Association Claim for attorneys' fees in litigating with Debtors was not allowed secured claim in Debtors' Chapter 13 case.
Neitzel v. J.P. Morgan Chase Bank, N.A. (In re Neitzel), Case No. 15-2057 (July 22, 2015) (July 2015) -- Chief Judge G.M. Halfenger
The debtor commenced an adversary proceeding against J.P. Morgan Chase Bank, N.A., (“Chase”) requesting a declaration that Chase's claim secured by a junior lien on the debtor's principal residence is only allowable as an unsecured claim because the residence's value was less than the amount the debtor owes a senior lienholder. The parties entered into a stipulation to resolve the adversary proceeding and requested that the court approve the stipulation. The stipulation provided, in part, that once the court approved the stipulation Chase would be permitted to file an unsecured claim for its current outstanding loan balance, despite the fact that the claims bar deadline had expired and Chase had not filed a claim. Chase argued that it could file its unsecured claim after the claims bar deadline because Federal Rule of Bankruptcy Procedure 3002(c)(3) provided an exception to the general rule that proofs of claims in chapter 13 cases must be filed within 90 days after the first date set for the meeting of creditors. The court denied the parties' request to approve the stipulation and held that Chase did not qualify for the exception set out in Fed. R. Bankr. P. 3002(c)(3). The court reasoned that Rule 3002(c)(3) only applies where a judgment both (i) gives rise to an unsecured claim or makes the claim allowable, and (ii) provides for the recovery of money or property or avoids an interest in property. The proposed judgment in the adversary proceeding would not avoid Chase's lien; thus it would not satisfy criterion (ii). And the order confirming the plan, which, depending on the plan terms, might eliminate Chase's lien, would not satisfy criterion (i).
In re Jason and Laura Kauth, Case No. 14-32145 (July 2015) -- Chief Judge G.M. Halfenger
The chapter 13 debtors proposed a chapter 13 plan that did not pay unsecured creditors in full but did propose to pay student loan creditors principal and interest. The chapter 13 trustee objected, arguing that the plan (A) paid more to the student loan creditors and constituted unfair discrimination in violation of section 1322(b)(1), and (B) violated section 1322(b)(10) because it paid interest to the student loan creditors but was not otherwise paying all allowed claims in full. The court concluded that the plan violated section 1322(b)(10) because it paid interest on unsecured student loan debts that are not dischargeable under section 1328(a) but did not otherwise pay all claims in full.
Clay v. City of Milwaukee, Case No. 14-2315 June 19, 2015 — Judge Halfenger (June 2015) -- Chief Judge G.M. Halfenger
The debtor filed an adversary complaint against the City of Milwaukee to avoid under 11 U.S.C. §§522 and 548 the City of Milwaukee's tax foreclosure of her residence. The debtor moved for summary judgment. The City opposed the motion solely on the ground that the debtor had received reasonably equivalent value for her residence, even though the parties agreed that the property's value was not reasonably equivalent to the delinquent tax debt satisfied by the foreclosure. The City argued that the foreclosure's elimination of a mortgage that secured a $25,000 note was also value to the debtor. The court granted the debtor's motion for summary judgment. It held that the elimination of the mortgage did not improve the debtor's financial position because the debtor remained liable on the note. Therefore, the debtor did not receive value reasonably equivalent to the value of the foreclosed residence.
In re Maurice Karl Buchanan, Case No. 14-27937 (May 2015) -- Chief Judge G.M. Halfenger
The debtor proposed a chapter 13 plan to modify the City of Milwaukee's claim for back taxes on his principal residence by paying the City the value of the residence, which was less than the tax bill. The City of Milwaukee objected and argued that the debtor was not entitled to “cram down” its claim. The court concluded that section 1322(b)(2) did not apply to the City of Milwaukee's tax claim because the tax claim is not secured by a consensual lien; rather, it is secured by a tax lien that arises by operation of law. Because of this, the court concluded that section 1322(b)(2) ‘s “anti-modification” clause does not apply to the City of Milwaukee's tax claim.
In re Jodi L. Wagner, Case No. 09-33103 (May 2015) -- Judge M.D. McGarity
The chapter 7 debtor opposed the trustee's motion to compromise a claim and administer the proceeds from a defective medical device MDL settlement award. The debtor underwent hip replacement surgery prepetition and, due to a recall of the device, hip revision surgery postpetition. The Court denied the trustee's motion for summary judgment, rejecting his argument that the claim existed prior to the debtor's filing because it was sufficiently rooted in the debtor's pre-bankruptcy past. Instead, the Court applied the "discovery rule" to determine whether or not the claim was property of the estate. Because the issue of whether or not the debtor knew of her injury or exercised reasonable diligence in discovering it prior to filing bankruptcy was a matter for trial, the debtor's motion for summary judgment was also denied.
Law Offices of Hans A. Buehler, LLC v. Thomas Kusz, et. al (In re Thomas Kusz and Mary Kusz ) (April 2015) -- Judge S.V. Kelley
Where creditor did not prove debtor did not intend to pay debt when the agreement to pay was made, creditor's claim under § 523(a)(2)(A) failed.
State of Wisconsin v. Cooper-Hoskins, Case No. 14-2351 (March 2015) -- Chief Judge G.M. Halfenger
The State of Wisconsin, Department of Workforce Development (the "DWD") filed a complaint against the debtor's non-filing spouse and requested a declaration that the non-filing spouse owed it a non-dischargeable debt under 11 U.S.C. section 523(a)(2). It did so in an effort to avoid section 524(a)(3)'s bar on collection of most community debts from the debtor's community property. The court concluded that the complaint did not state a claim against the non-filing spouse for which relief could be granted. The court granted the DWD leave to amend the complaint to add the debtor as a defendant.
In re Christopher Trentadue, Case No. 13-29917 (March 2015) -- Judge M.D. McGarity
Chapter 13 debtor objected to priority status of claim filed by attorney who represented the debtor's former spouse in state court proceedings. The debtor argued the state court awarded the attorney's fees with the intent to punish the debtor for misconduct in litigation, not for the purpose of enforcing the debtor's duty to support his former spouse and/or children. The court overruled the objection and allowed the claim as a priority domestic support obligation under sec. 507(a)(1)(A). The fees were incurred in litigation relating to the care, custody, and welfare of the minor children of the marriage.