In re Thompson

(Bankr. E.D. Ky. Jan. 28, 2015)

The bankruptcy court grants the debtor’s motion to dismiss his chapter 13 bankruptcy, despite the trustee’s request to convert to chapter 7. The debtor failed to comply with the terms of the confirmed plan, and then filed a motion to dismiss. The trustee moved to convert to chapter 7, arguing that conversion was in the best interests of the creditors and the estate. The court held that § 1307(b), which gives a debtor the right to dismiss a chapter 13 case if it has not been previously converted, is mandatory. Section 1307(c) allows conversion to chapter 7 for cause, but this section is subject to the mandatory right of dismissal in §1307(b). Opinion below.

2015-01-28 – in re thompson

Author: Matt Lindblom

Go Wireless, Inc. v. Lehrmitt (In re Lehrmitt)

(Bankr. W.D. Ky. Jan. 27, 2015)

The bankruptcy court enters summary judgment in favor of the creditor, holding the debt owed to it is nondischargeable under § 523(a)(2), (4), and (6). The creditor had obtained a default judgment against the debtors in California state court, which judgment recited that the debtors had obtained funds from the creditor by fraud. The Full Faith and Credit Statute, 28 U.S.C. § 1738, as interpreted by the Sixth Circuit Court of Appeals precludes the debtors from defending against the findings in the state court judgment. Section 105 does not give the bankruptcy court authority to modify the otherwise non-dischargeable debt. Opinion below.

2015-01-27 – go wireless v lehrmitt

Author: Matt Lindblom

Carrington at Stonebridge Condominium Association v. Galanos

(N.D. Ind. Jan. 26, 2015)

The district court affirms the bankruptcy court’s order denying the creditor’s request for an award of attorney fees to be paid by the Chapter 13 debtor. The bankruptcy court had ordered the creditor to submit detailed invoices for the fees to be reviewed for reasonableness. The creditor failed to do so before the deadline. The court holds that the creditor failed to meet its burden of showing the fees were reasonable. Opinion below.

2015-01-26 – carrington at stonebridge v galanos

Author: Matt Lindblom

In re Sekema

(Bankr. N.D. Ind. Jan. 7, 2015)

The bankruptcy court finds sanctions are appropriate and enters an order fining the creditors $1,000 for submitting proofs of claim in violation of Bankruptcy Rule 9011. The debts were clearly barred by Indiana’s six-year limitations period. The debtor objected to the proof of claim, the creditors did not respond, and the claims were denied. The court then issued show cause orders, to which the creditors also did not respond. The creditors had not conducted the reasonable investigation required by Rule 9011 before submitting the claims. Opinion below.

2015-01-07 – in re sekema

Author: Matt Lindblom

Church Joint Venture, L.P. v. Montedonico (In re Blasingame)

(6th Cir. B.A.P. Jan. 21, 2015)

The Sixth Circuit B.A.P. denies the appellee’s motion to dismiss the appeal. The bankruptcy court entered an order sanctioning the debtor’s attorney but reserving the issue of the amount of the monetary sanctions. The attorney filed a notice of appeal of this first order. The bankruptcy court then entered two orders setting the sanction amount. The attorney then filed a corrected notice of appeal to include these two orders outside the normal 14-day appeal notice period. The appellee argued that the first notice was deficient because the first order was not final and appealable and the second notice was filed too long after the second set of orders. The court holds that the first order was not final, but the corrected notice of appeal was sufficient and timely. The second set of orders did not satisfy Rule 58 (incorporated by Bankruptcy Rule 7058) in that they were not set out in a “separate document,” and thus the attorney had an additional 150 days in which to file a notice of appeal of those orders. Opinion below.

2015-01-21 – church joint venture v montedonico

Author: Matt Lindblom

Rogan v. JPMorgan Chase Bank, N.A. (In re Engle)

(Bankr. E.D. Ky. Jan. 14, 2015)

The bankruptcy court grants summary judgment in favor of the mortgagees in this avoidance action. The debtor had executed a special power of attorney, with the intent of giving another individual the authority to purchase and grant mortgages on real property. The power of attorney was recorded and contained ambiguous language as to the extent of authority granted. The mortgages were properly recorded. The trustee sought to avoid the mortgages, arguing that the power of attorney did not grant the authority necessary to execute the mortgages. The court rejects the trustee’s argument. Because the mortgages were properly recorded, they provided the requisite notice. A non-party cannot raise the question of authority of an attorney-in-fact when the parties relying on the power have not made authority an issue. Opinion below.

2015-01-14 – rogan v chase

Author: Matt Lindblom

Yeley v. Forsythe

(S.D. Ind. Jan. 14, 2015)

The district court affirms the bankruptcy court’s nondischargeability judgment in the amount of $3 million. The debtor obtained $3 million from a business contact to invest in certain stock. The debtor proceeded to use the funds for other purposes until the investor requested return of the funds, at which time the funds had been spent or lost by the debtor on other ventures. The debtor argued on appeal that if the funds had been invested per the agreement, there would have been a loss based on the drop in value of the stock over the time period in question. Thus, the debtor argued, that drop in value should reduce the amount of the judgment. The court holds that the bankruptcy court properly held that the full $3 million was obtained through fraud and that while the stock may have dropped in value the investor never had an opportunity to take the risk because the debtor failed to comply with the agreement. Opinion below.

2015-01-14 – yeley v forsythe

Author: Matt Lindblom

In re Sweports, Ltd.

(7th Cir. Jan. 9, 2015)

The Seventh Circuit reverses the bankruptcy court’s decision declining to award fees to the attorney for the unsecured creditors committee. The bankruptcy court dismissed the chapter 11 prior to reorganization. The attorney then sought an order from the bankruptcy court holding the debtor liable for the attorney fees. The bankruptcy court declined to enter the order, reasoning that it could no longer grant the relief because the case had been dismissed and there were no assets in the bankruptcy estate. The Seventh Circuit holds that the bankruptcy court does have jurisdiction to resolve this issue and that it should have entered the order holding the debtor liable for the fees. The attorney could then enforce the order through other legal proceedings. Opinion below.

2015-01-09 – in re sweports

Liz Transport, Inc. v. Haifley (In re Haifley)

(Bankr. N.D. Ind. Dec. 19, 2014)

The bankruptcy court denies the plaintiff’s motion for summary judgment in this nondischargeability action. The plaintiff’s motion asserted the debtor was collaterally estopped from arguing facts contrary to those deemed admitted by him in the prepetition state court action. The court states that requests for admission are only good for the proceeding in which they are made and have no bearing in subsequent litigation. Such facts cannot support a claim of collateral estoppel. Opinion below.

2014-12-19 – liz transport v haifley

Roach v. Barcus (In re Bolan)

(Bankr. N.D. Ind. Dec. 16, 2014)

The bankruptcy court denies the defendants’ motion to dismiss the adversary proceeding. The trustee had sued the defendants in state court seeking to avoid certain stock transactions with the debtor. The trustee then removed the action to the bankruptcy court, and the defendants moved to dismiss based on lack of subject matter jurisdiction and mandatory abstention. The court has jurisdiction because the determination of the trustee’s claims has a significant impact on the debtor’s estate. Further, the court is not required to abstain, because abstention requires an action to be pending in another court. Because the case was removed to the bankruptcy court, there was no longer an action pending in state court. Opinion below.

2014-12-16 – roach v barcus