Bankr. N.D. Ind. Opinions – June to August 2014

The following opinions were just recently made available on the website for the Bankruptcy Court for the Northern District of Indiana. I understand that opinions from this Court may be uploaded as “opinions” at different times (sometimes much later than the date they are issued), depending on the particular Judge and office staff. I will continue to check this Court’s website routinely and report on opinions as soon as they appear there.

In re Kohler (Bankr. N.D. Ind. June 27, 2014) – Denial of motion to approve settlement under Bankruptcy Rule 9019, because settlement terms not finalized. Opinion below.

2014-06-27 – in re kohler

Sun Enterprises, Inc. v. May (In re May) (Bankr. N.D. Ind. July 9, 2014) – Motion to quash subpoena granted where party served resided outside the state of and more than 100 miles from the site of the deposition stated in the subpoena. Opinion below.

2014-07-09 – in re may

In re Wilson (Bankr. N.D. Ind. July 14, 2014) – Motion to reconsider granted such that a motion to assume an executory contract would be reheard by the Court. Opinion below.

2014-07-14 – in re wilson

In re Neary (Bankr. N.D. Ind. July 17, 2014) – Motion to dismiss case with prejudice for bad faith filing granted, where debtor had filed multiple bankruptcies in short time period. Opinion below.

2014-07-17 – in re neary

Sun Enterprises, Inc. v. Hoffman (In re Hoffman) (Bankr. N.D. Ind. Aug. 11, 2014) – Denial of plaintiff’s motion for summary judgment in nondischargeability action where factual dispute existed with respect to alleged misrepresentation. Opinion below.

2014-08-11 – in re hoffman

Sun Enterprises, Inc. v. May (In re May) (Bankr. N.D. Ind. Aug. 11, 2014) – Denial of plaintiff’s motion for summary judgment in nondischargeability action where factual dispute existed with respect to alleged misrepresentation. Opinion below.

2014-08-11 – in re may

Sun Enterprises, Inc. v. Stafford (In re Stafford) (Bankr. N.D. Ind. Aug. 11, 2014) – Plaintiff’s motion for summary judgment in nondischargeability action granted, pursuant to 11 U.S.C. § 523(a)(2)(A), where defendant did not challenge plaintiff’s declarations or the motion. Opinion below.

2014-08-11 – in re stafford

Fischer v. Trammell (In re Trammell) (Bankr. N.D. Ind. Aug. 13, 2014) – Trustee’s motion for default judgment granted in adversary proceeding filed to revoke the debtor’s discharge. Opinion below.

2014-08-13 – in trammell

Spradlin v. Beads and Steeds Inns, LLC (In re Howland)

(Bankr. E.D. Ky. Aug. 22, 2014)

The bankruptcy court dismisses the trustee’s fraudulent transfer complaint based on a reverse veil piercing theory, which has not been adopted (or rejected) by Kentucky courts. The trustee’s complaint was filed against a limited liability company that purchased real property from the debtors’ entity for $800,000 (it had been purchased for $1.6 million a few years before this sale). Such a claim would require the debtors and their entity to be treated as the same. Even if Kentucky courts recognized reverse veil piercing, Kentucky law treats veil piercing as an equitable remedy, not as a claim itself. For these reasons, the bankruptcy court dismisses the complaint with leave for the trustee to amend (the trustee suggested at oral argument that substantive consolidation would also allow for the relief requested in the original complaint). Opinion below.

2014-08-22 – in re howland

U.S. v. Robinson (In re Robinson)

(6th Cir. Aug. 22, 2014)

The Sixth Circuit holds that the government may proceed to collect on a criminal restitution order from a bankruptcy debtor and his or her bankruptcy estate. Pursuant to 18 U.S.C. § 3613(a), the government may collect on a restitution order “notwithstanding any other federal law.” This language supersedes the bankruptcy automatic stay, and the distinction in the bankruptcy code between property of the debtor and property of the bankruptcy estate does not prevent collection from either. Opinion below.

2014-08-22 – in re robinson

In re Davidson

(Bankr. W.D. Ky. Aug. 20, 2014)

The bankruptcy court denies the debtor’s motion to employ an auctioneer nunc pro tunc. The court states that only the trustee has the authority to seek approval of an auctioneer. The debtor’s prior employment of the auctioneer had failed to give the court the opportunity to perform an appropriate screening, verify the necessity of the appointment, and limit expenses to the estate, and thus it was not appropriate to approve such prior employment. Opinion below.

2014-08-20 – in re davidson

The Liquidating Trustee of the Appalachian Fuels Liquidating Trust v. Energy Coal Resources (In re Appalachian Fuels)

(Bankr. E.D. Ky. Aug. 20, 2014)

The plaintiff’s complaint alleged that the individual board members for the parent entity breached their fiduciary duties to the subsidiary entity while it was insolvent. The court dismisses the complaint as to the board members holding that the board members owed a fiduciary duty to the subsidiary, but only to avoid personal self-dealing. The plaintiff had only alleged a breach of a duty of care and failed to allege that the board members advantaged themselves at the expense of the subsidiary. Opinion below.

2014-08-20 – in re appalachian fuels

Samaritan Alliance, LLC v. Kentucky Cabinet for Health and Family Services (In re Samaritan Alliance, LLC)

(Bankr. E.D. Ky. Aug. 18, 2014)

The bankruptcy court finds that the Cabinet did not commit fraud on the court when it contended it had overpaid the debtor hospital for Medicaid reimbursements. The debtor alleged the Cabinet had emails reflecting it understood it had actually underpaid the hospital at the time it was alleging the overpayment in court. The court held that this did not constitute fraud on the court such that a five-year old judgment should be overturned. Nevertheless, the bankruptcy court recommends that the district court enter judgment in favor of the debtor hospital for the now undisputed amount of the underpayment from the cabinet. Opinion below.

2014-08-18 – in re samaritan alliance

Sunshine Heifers, LLC v. Citizens First Bank (In re Purdy)

(6th Cir. Aug. 14, 2014)

The Sixth Circuit reverses the bankruptcy court’s decision holding that the livestock business’s leases of livestock to the debtor dairy farmer were per se security agreements such that the bank’s purchase money security interest trumped the livestock business’s interest in the livestock. The court applies Arizona state law (per the choice of law provision in the leases) and determines that the agreements are true leases—not security agreements—because they lacked an option for the dairy farmer to purchase the livestock. Judge Drain dissents, stating the “leases” should be considered security agreements because the economic life of the individual heads of cattle would not last the term of their lease. Opinion below.

2014-08-14 – in re purdy