Kohut v. United Healthcare Insurance Company (In re LSC Liquidation, Inc.)

(6th Cir. July 18, 2017)

The Sixth Circuit affirms the bankruptcy court’s order modifying its prior sale order under Rule 60(b). The court’s original order approved a sale of estate assets but the sale agreement and the order failed to include certain contracts to be assumed and assigned to the buyer. The court finds that modification of the order was appropriate because the motion to modify the order was filed within one year of entry of the sale order and the bankruptcy court properly exercised its discretion after weighing the relevant factors. Opinion below.

Judge: Stranch

Attorneys for Movant: Wolfson Bolton, Anthony J. Kochis, Scott A. Wolfson

Attorney for Appellee: Jeffrey Scott Grasi

2017-07-18 – in re lsc liquidation

Author: Matt Lindblom

Carroll v. Takada

(7th Cir. July 18, 2017)

The Seventh Circuit affirms the bankruptcy court’s order sustaining the trustee’s objection to the debtors’ $30,000 exemption in trust assets. The debtors argued the spendthrift provisions in the trust prevented the interest from becoming property of the estate. The court holds that the trust interest fully vested before the debtors filed bankruptcy. An exemption was inappropriate and the interest was property of the estate. Opinion below.

Judge: Sykes

Attorney for Debtors: Julia D. Mannix

Attorney for Trustee: Zane Zielinski

2017-07-18 – in re carroll

Author: Matt Lindblom

 

Community Financial Services Bank v. Edwards (In re Edwards)

(Bankr. W.D. Ky. July 17, 2017)

The bankruptcy court enters judgment in favor of the lender, holding the debt owed by one of the debtors would not be discharged, pursuant to 11 U.S.C. § 523(a)(6). The debtor disregarded the lender’s security interest in his business’s inventory, using the proceeds of the inventory for personal expenses in violation of the security agreement. The court holds that the lender failed to present sufficient evidence to except the other debtor’s (the first debtor’s spouse) debt from discharge. Opinion below.

Judge: Stout

Attorney for Plaintiff: Martin W. Johnson

Attorney for Debtors: Steve Vidmer

2017-07-17 – in re edwards

Author: Matt Lindblom

Ball v. United Cumberland Bank (In re Ball)

(Bankr. E.D. Ky. July 17, 2017)

The bankruptcy court dismisses the debtor’s complaint seeking to avoid a transfer to the bank defendant. The transfer consisted of the Bank exercising its contractual setoff right and applying funds in the debtor’s bank account to the Bank’s claim. The transfer occurred while the bankruptcy case was dismissed. The debtor fails to state a claim that is plausible on its face. Opinion below.

Judge: Schaaf

2017-07-17 – in re ball

Author: Matt Lindblom

Savino v. Dodd (In re Dodd)

(Bankr. S.D. Ind. July 14, 2017)

The bankruptcy court denies the creditor’s motion for summary judgment in this nondischargeability action under 11 U.S.C. § 523(a)(2), (4), and (6). The creditor argued the debtor should be collaterally estopped from defending based on a prepetition judgment entered against the debtor. The court concludes that the issues were not “fairly and fully litigated” in the state court, and thus summary judgment based on collateral estoppel is not appropriate. Opinion below.

Judge: Moberly

Attorneys for Plaintiff: Blackwell, Burke & Ramsey, P.C., David M. Bullington, Jason R. Burke

Attorneys for Debtor: Halcomb Singler, LLP, Erika K. Singler

2017-07-14 – in re dodd

Author: Matt Lindblom

Jahn v. Burke (In re Burke)

(6th Cir. July 14, 2017)

The Sixth Circuit affirms the bankruptcy court’s order granting the debtors’ motion to compel the Chapter 7 trustee to abandon their residential real property. The trustee sought to evict the debtors in order to sell the property and pay creditors. The trustee argued that because he tendered the homestead exemption payment to the debtors, eviction should be permitted. The debtors argued and presented evidence to establish that there was no equity for the estate considering the condition of the property. Opinion below.

Judge: Gilman

Attorneys for Debtors: William Thomas Bible, Jr., William P. Glascock, Jr.

Attorneys for Trustee: Richard Palmer Jahn, Jr., Nancy A. Cogar

2017-07-14 – in re burke

Author: Matt Lindblom

In re Morris

(Bankr. W.D. Ky. July 12, 2017)

The bankruptcy court sustains the creditors’ objection to the debtors’ claimed homestead exemption. The property was not owned solely by the debtors, so the exemption would apply only to their partial interest in the property. The property was sold but there was no evidence as to the amount allocated to the debtors’ interest in the property. Opinion below.

Judge: Lloyd

Attorney for Debtors: Mark H. Flener

Attorney for Creditors: Kerrick Bachert PSC, Scott A. Bachert

2017-07-12 – in re morris and bellair

Author: Matt Lindblom

Isaacs v. DBI-ASG Coinvester Fund III, LLC (In re Isaacs)

(6th Cir. B.A.P. July 3, 2017)

The Sixth Circuit B.A.P. vacates the bankruptcy court’s judgment and remands for dismissal based on lack of subject matter jurisdiction. The creditor failed to record its mortgage prior to the first Chapter 7 case, recorded it during that case, and it was not challenged. The creditor then sought to foreclose on the mortgage and obtained a state court in rem judgment permitting foreclosure. The debtor then filed a Chapter 13 case and challenged the state court judgment, based on the stay violation in the Chapter 7. The bankruptcy court held that the Rooker-Feldman doctrine did not apply because the state court judgment modified the discharge injunction inappropriately, as the lien was not valid based on the Chapter 7 discharge. The B.A.P. reverses, finding that the Rooker-Feldman doctrine does apply, and that the lien was effective under Kentucky law even if not perfected prior to the Chapter 7. Opinion below.

Judge: Humphrey

Attorney for Debtor: Marcus H. Herbert

Attorney for Creditor: DBI-ASG Coinvester Fund, III, LLC

2017-07-03 – in re isaacs

Author: Matt Lindblom

Spradlin v. Whitt (In re Licking River Mining, LLC)

(Bankr. E.D. Ky. June 29, 2017)

The bankruptcy court grants the defendants’ motion to dismiss in this adversary proceeding. The trustee sought to subordinate and recharacterize defendants’ claims under 11 U.S.C. § 510, avoid as fraudulent and preferential transfers certain transfers to the defendants, and disallow defendants’ claims. The court finds that the trustee fails to allege facts sufficient to support any of the claims. Opinion below.

Judge: Wise

Attorneys for Trustee: Bingham Greenbaum Doll LLP, Claude R. Bowles, Jr., Danial J. Donnellon, James R. Irving, Alex S. Rodger, April A. Wimberg

Attorneys for Defendants: Brian H. Meldrum, Brian R. Pollock

2017-06-29 – in re licking river mining

Author: Matt Lindblom

Trost v. Trost (In re Trost)

(6th Cir. B.A.P. June 28, 2017)

The Sixth Circuit B.A.P. affirms the bankruptcy court’s entry of summary judgment, finding the debt owed to the plaintiff nondischargeable under 11 U.S.C. § 523(a)(6). The plaintiff had obtained a judgment against the debtors in state court on a conversion claim. The court holds that collateral estoppel applies and the elements of § 523(a)(6) were satisfied by the state court judgment. Opinion below.

Judge: Delk

Attorneys for Debtors: Schram, Behan & Behan, Michael R. Behan; Eiler Law Firm, Christian Michael Eiler

Attorneys for Plaintiff: Troy Richmond Hendrickson

2017-06-28 – in re trost

Author: Matt Lindblom