(Bankr. W.D. Ky. Aug. 10, 2017)
The bankruptcy court denies the U.S. Trustee’s motion to enter an order for sanctions and requiring disgorgement of fees. The attorney had provided advice to the debtor about the petition and schedules that the debtor had drafted. The attorney was not aware that a bankruptcy was filed until he received the U.S. Trustee’s motion. The court declines to grant the relief requested under these circumstances. Opinion below.
Judge: Lloyd
Author: Matt Lindblom
(Bankr. W.D. Ky. Apr. 11, 2017)
The bankruptcy court denies the debtor’s motion to condition the plaintiffs’ voluntary dismissal on payment of the debtor’s attorney fees. The plaintiffs sought to voluntarily dismiss the action without prejudice, but the debtor argued the legal fees paid to date would be wasted if the action was refiled at a later date. The court finds that the available evidence does not establish that the fees were necessary or that the legal work would be wasted and thus the debtor did not show that he would suffer “plain legal prejudice.” The dismissal without prejudice is appropriate and the debtor is not entitled to an award of attorney fees. Opinion below.
Judge: Lloyd
Attorneys for Plaintiffs: Waller Landsden Dortch & Davis, LLP, Ryan K. Cochran, Joseph A. Woodruff
Attorney for Defendant: Kenneth A. Meredith, II
2017-04-11 – in re mammoth resource partners
Author: Matt Lindblom
(6th Cir. B.A.P. Jan. 4, 2017)
The Sixth Circuit B.A.P. affirms the bankruptcy court’s decision and order denying the trustee’s request for turnover of funds paid to the debtor’s criminal defense attorney. The debtor’s mother had made the transfer from a bank account held jointly with the debtor. The trustee failed to meet the burden of proving by a preponderance of the evidence that the attorney fee was property of the estate, and thus turnover was inappropriate. Because the debtor had no claim to the fee, the trustee had no claim for turnover. Opinion below.
Judge: Humphrey
Attorneys for Defendants: Khouri Law Firm, Yelena Bakman, Edward P. Kerns, Michael John Khouri, Wai Brenda Tso
Attorneys for Trustee: Bingham Greenebaum LLP, Richard Boydston
Author: Matt Lindblom
(Bankr. E.D. Ky. Dec. 6, 2016)
The court enters judgment declaring the state court judgment nondischargeable under 11 U.S.C. §523(a)(2)(A). The debtor represented to the plaintiff that he needed a loan to expand his construction business. The plaintiff loaned the debtor $62,000 based on this representation, but the debtor used the money to purchase vending machines that were disposed of within eight months. The debtor did not repay the loan, and the plaintiff obtained a judgment against him for the loan balance, interest, and punitive damages. The bankruptcy court finds the debt non-dischargeable, with the exception of certain attorney fees. Opinion below.
Judge: Schaaf
Attorney for Plaintiff: John E. Hinkel, Jr.
Attorney for Defendant: John M. Simms
Author: Matt Lindblom
(7th Cir. Sept. 14, 2016)
The Seventh Circuit affirms the bankruptcy court and district court ruling that debtor husband must pay ex-wife’s attorney’s fees as a priority, non-dischargeable domestic support obligation (DSO). Debtor was ordered by a state court to pay $25,000 directly to his ex-wife’s attorney for “significant over-trial”. He never paid and eventually filed Chapter 13. His ex-wife’s attorney filed a DSO claim for $25,000. Debtor objected to the claim but was overruled. On appeal, he argued that the over-trial award did not deserve DSO status because it was not payable to his spouse, former spouse, child, or caregiver as required by §101(14A) of the Code. The 7th Circuit noted that debtor’s interpretation of §101(14A) was correct, but refused to address this argument because he failed to raise it before the bankruptcy court or the district court. Debtor also argued that DSO status should be denied because the over-trial award was intended as punishment, not as support, but the Court noted that every Circuit that has considered the issue (including the 6th, in In re Rugiero, 502 F.App’x. 436, 439 (6th Cir. 2012)) has recognized that attorney fee awards can constitute support under certain circumstances. Opinion below.
Circuit Judges: Ripple, Kanne, and Williams
Attorney for Debtor/Appellant: Jared Nusbaum
Attorney for Appellee: Helen Ludwig
Author: Robert Imperial
(Bankr. W.D. Ky. May 17, 2016)
The debtor sustains, in part, the debtors’ objection to the creditor’s notice of post-petition mortgage fees, expenses and charges. The debtor contended the following fees were unreasonable: $500 for an objection to the debtor’s plan, $100 for the filing of the notice, and $650 for the preparation and filing of a proof of claim. The creditor submitted an affidavit of its counsel detailing the tasks completed for the case. However, the affidavit failed to allocate specific amounts of time to each task. Thus, the Court reduces the proof of claim fee to $200, finds the other fees are reasonable, and allows the creditor’s claim in the amount of $800. Opinion below.
Judge: Lloyd
Attorneys for Debtors: Kruger & Schwartz, Richard A. Schwartz
Attorneys for Creditor: Lerner, Sampson & Rothfuss, LPA, Kerry Nunley Bruckner
Author: Matt Lindblom
(6th Cir. B.A.P. Mar. 3, 2016)
The Sixth Circuit B.A.P. reverses the bankruptcy court’s sanctioning of a lawyer under Bankruptcy Rule 9011. The bankruptcy court sua sponte entered a show cause order to address whether the bankruptcy court should find the attorney in violation of Rule 9011. Following a hearing, the court entered an order holding the attorney liable for $26,000 in attorney fees and revoking his ECF privileges. The B.A.P. reviews the record and finds that the bankruptcy court relied on clearly erroneous factual findings to support the sanctions order and that attorney fees could not be awarded because the show cause order was issued sua sponte. Opinion below.
Author: Matt Lindblom
(W.D. Ky. Aug. 31, 2015)
The district court affirms the bankruptcy court’s dismissal of the claims against the debtor without prejudice. The debtor objected to dismissing the claims, following a settlement agreement, without condition or awarding him attorney fees. The district court finds the bankruptcy court was within its discretion to do so, as the debtor did not suffer plain legal prejudice as a result of the dismissal. Opinion below.
Author: Matt Lindblom
(Bankr. E.D. Ky. Aug. 21, 2015)
The bankruptcy court approves the final fee applications of the Chapter 11 professionals following conversion to Chapter 7. The secured lenders objected on a number of grounds. The court first determines that certain funds should be turned over to the Chapter 7 trustee despite the lenders’ prepetition liens. The court also determines the requested fees are reasonable and for actual and necessary services. Finally, the court determines that the fees are within the authorized “carve-out” amounts and can be paid from the lenders’ collateral, despite the fact that the lenders had appealed certain earlier orders on fee applications based on procedural issues. Opinion below.
2015-08-21 – in re licking river mining
Author: Matt Lindblom
(Bankr. E.D. Ky. Aug. 10, 2015)
The bankruptcy court grants judgment in favor of the defendants in this turnover action brought by the Chapter 7 trustee. After the petition was filed, the debtor’s mother transferred $50,000 to the debtor’s criminal defense attorney for legal representation. The trustee argued and presented evidence at trial that the funds were actually the debtor’s funds and sought a judgment directing that the $50,000 be turned over to the estate. The bankruptcy court holds that even if the funds originated with the debtor, because the transfer had not been avoided, the funds were no longer property of the estate and thus not subject to turnover under 11 U.S.C. § 542. Opinion below.
2015-08-10 – spradlin v khouri
Author: Matt Lindblom
Kentuckiana Bankruptcy Opinions 