In re Isaacs

(Bankr. W.D. Ky. May 19, 2016)

The bankruptcy court grants summary judgment in favor of the debtor, holding a mortgage debt had been discharged in the Chapter 7 and the recording of the mortgage and foreclosure action constituted a violation of the automatic stay and the discharge injunction. The mortgagee had failed to record the mortgage prepetition, and it contained a provision that stated the lien did not attach until recorded. The court rejects the creditor’s argument that an equitable lien arose, in part because the creditor had control over attachment and simply failed to record for approximately one year before the bankruptcy was filed. The court also rejects the creditor’s argument that the post-bankruptcy state court foreclosure judgment could not be disturbed under the Rooker-Feldman doctrine. Opinion below.

Judge: Fulton

Attorney for Debtor: Marcus H. Herbert

Attorneys for Creditor: David C. Nalley, Gregory A. Stout

2016-05-19 – in re isaacs

Author: Matt Lindblom

Leonard v. RDLG, LLC (In re Leonard)

(6th Cir. Mar. 28, 2016)

The Sixth Circuit affirms the order granting summary judgment to the creditor, finding a debt nondischargeable under 11 U.S.C. § 523(a)(2)(A). Summary judgment was appropriate because the debtor was collaterally estopped from defending against the fraud claim. The creditor had obtained a default judgment against the debtor, post-petition, in another court as a sanction. The court holds that the entry of the default judgment was not a violation of the automatic stay. Opinion below.

Judge: Boggs

Attorney for Debtor: Jonathan Rudman Bunn

Attorney for Creditor: Rayburn, Cooper & Durham, Ross R. Fulton, David J. Fulton

2016-03-28 – in re leonard

Author: Matt Lindblom

In re Jepson

(7th Cir. Mar. 22, 2016)

The Seventh Circuit affirms the lower courts’ decision to grant the mortgagee’s motion to modify the automatic stay to proceed with the state court foreclosure action. The court also affirms the lower courts’ decision to dismiss claims in the debtor’s adversary complaint against the mortgagee based on alleged violations of a pooling and service agreement. The debtor did not have standing on those claims because the debtor was not a third-party beneficiary to that agreement. However, the court remands for reconsideration of the dismissal of two claims that were not based on the pooling and service agreement. Opinion below.

Judge: Ripple

Attorney for Debtor: Kenneth E. Kaiser

Attorneys for Mortgagee: Kluever & Platt, LLC, Matthew Reasor Bowman, Morris Laing Evans Brock & Kennedy, CHTD., Justin F. Carter

2016-03-22 – in re jepson

Author: Matt Lindblom

In re Martin

(6th Cir. B.A.P. Dec. 16, 2015)

The Sixth Circuit B.A.P. affirms the decision of the bankruptcy court granting relief from the automatic stay so that the creditor can continue with state court litigation against the debtor. The court discusses the factors considered in deciding whether to lift the stay for prepetition litigation, but ultimately affirms the bankruptcy court. The state court litigation was further along than the bankruptcy, additional parties not involved in the bankruptcy were involved in the state court litigation, and the creditor had included a jury demand in state court. Opinion below.

2015-12-16 – in re martin

Author: Matt Lindblom

Weary v. Poteat

(6th Cir. Sep. 30, 2015)

The Sixth Circuit affirms the lower courts, holding that the creditor willfully violated the automatic stay and punitive damages were appropriate. The creditor had been the debtor’s landlord. After the petition was filed, the creditor sent a letter to the debtor threatening to pursue criminal charges against the debtor. The lower court determined that the purpose for sending the letter was to coerce payment for rent owed and that the creditor was aware of the bankruptcy stay. The creditor argued that the criminal prosecution exception to the automatic stay applied, but the court held it did not. The creditor never pursued criminal charges and the letter would not have been necessary to do so. Opinion below.

2015-09-30 – weary v poteat

Author: Matt Lindblom

Saint Catherine Hospital of Indiana, LLC v. Indiana Family and Social Services Administration

(7th Cir. Aug. 28, 2015)

The Seventh Circuit reverses the district court and affirms the bankruptcy court, finding that the hospital assessment fee of the state was a pre-petition claim and thus subject to the automatic stay. The fee was determined by analyzing conduct of the debtor occurring prepetition. The court discusses and applies the “conduct test” to determine when the claim accrued and ultimately determines it accrued prepetition. Thus, the state was not permitted to withhold Medicaid reimbursements to offset the claim postpetition. Opinion below.

2015-08-28 – saint catherine hospital of indiana v indiana fam

Author: Matt Lindblom

Baxter v. Sarmadi

(6th Cir. Apr. 22, 2015)

The Sixth Circuit affirms the bankruptcy court’s annulment of the automatic stay, ratifying a foreclosure sale that took place post petition. The debtor filed a chapter 13 petition on the day before the foreclosure sale, and the bankruptcy court found that the debtor intentionally withheld the filing from the creditor. The court found that the debtor’s behavior constituted “cause” sufficient to annul the automatic stay. Opinion below.

2015-04-22 – baxter v sarmadi

Author: Matt Lindblom