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

Walro v. Hatfield (In re Lee)

(S.D. Ind. June 27, 2017)

The district court adopts the bankruptcy court’s proposed findings and conclusions and holds that the trustee is entitled to avoid a fraudulent transfer made to one of the defendants. The court concludes the transfer of real property is appropriately avoided under the Indiana Uniform Fraudulent Transfer Act. The defendant was not entitled to the status of a good-faith purchaser because the circumstances surrounding the transfer were too bizarre, including facts suggesting the defendant did very little due diligence prior to purchasing the property and failed to obtain any receipt showing cash payments to satisfy the purchase price. Opinion below.

Judge: Young

Attorneys for Trustee: Rubin & Levin PC, John M. Rogers

Attorneys for Defendants: Hostetter & Associates, John K. McDavid, Joshua D. Hershberger

2017-06-27 – in re lee

Author: Matt Lindblom

Renner v. U.S. Bank National Association (In re Renner)

(Bankr. S.D. Ind. June 26, 2017)

The bankruptcy court dismisses without prejudice the debtor’s complaint against a foreclosing creditor because the court concludes it lacks subject matter jurisdiction. The debtor filed the complaint alleging numerous causes of action, including violations of the automatic stay. However, the alleged acts occurred at a time when the subject property was no longer property of the estate. Opinion below.

Judge: Carr

Attorneys for Debtor: Sabin, Shea & Des Jardines LLC, J. Andrew Sabin

Attorneys for Creditor: Rubin & Levin, Reynold T. Berry, Deborah Caruso, Ian Peter Goodman, Cassandra A. Nielsen, Meredith R. Theisen

2017-06-26 – in re renner

Author: Matt Lindblom

Spradlin v. Wrigley’s 7-711, Inc. (In re Licking River Mining, LLC)

(Bankr. E.D. Ky. June 21, 2017)

The bankruptcy court grants the defendant’s motion to dismiss the trustee’s complaint, which sought to avoid transfers from debtors to the defendant. The complaint failed to state a claim, in part because the defendant could not be deemed an “insider” of the debtor. The court additionally finds that the complaint contains insufficient facts to support various other claims. Opinion below.

Judge: Wise

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

Attorneys for Defendant: Stites & Harbison, PLLC, Brian H. Meldrum, Brian R. Pollock

2017-06-21 – in re licking river mining

Author: Matt Lindblom

In re Pace

(B.A.P. 6th Cir. June 20, 2017)

The Sixth Circuit B.A.P. holds that 11 U.S.C. § 522(f)(2)(C) does not preclude avoidance of mortgage deficiency judgment liens. Rather, based on the plain meaning of the statute, that section simply makes clear that entry of a judgment in a foreclosure action does not convert the underlying mortgage agreement into a judicial lien that may be avoided. Here, the bankruptcy court denied the debtor’s motion to avoid a deficiency judgment lien following a real property foreclosure action, stating that § 522(f)(2)(C) bars avoidance of a foreclosure deficiency judgment lien. The B.A.P. analyzes conflicting case law from multiple jurisdictions and reverses the bankruptcy court.

Judge: Wise

Attorney for Debtor: T. Robert Bricker

Author: Matt Lindblom

2017-06-20 – in re pace