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

Feldman v. Pearl (In re Pearl)

(Bankr. E.D. Ky. Mar. 8, 2017)

The bankruptcy court grants the creditor’s motion to dismiss the debtor’s counterclaim in this nondischargeability action. The debtor failed to state a claim for conversion under Kentucky law. The debtor also failed to state claims under Kentucky’s statutes governing corporations, derivative actions, and shareholder claims. Opinion below.

Judge: Wise

Attorney for Debtor: Stuart P. Brown

Attorney for Creditor: Michael L. Baker

2017-03-08 – in re pearl

Author: Matt Lindblom



Sam’s NA, Inc. v. US Small Business Administration (In re Sam’s NA, Inc.)

(Bankr. S.D. Ind. Oct. 19, 2016)

The bankruptcy court enters judgment in favor of the plaintiff in this adversary proceeding arising from a transaction involving the sale of a restaurant and associated assets. The court finds that rights in the purchase agreement were effectively assigned to the plaintiff, and the purchase agreement should be reformed to reflect the proper selling party. Further, the court finds that various defendants are liable to the plaintiff on breach of warranty, conversion, and other claims. Opinion below.

Judge: Lorch

Attorneys for Debtor: Seiller Waterman LLC, Neil C. Bordy

Attorneys for Certain Defendants: Tilford Dobbins & Schmidt, PLLC, Lisa Koch Bryant, Ayala Golding


Author: Matt Lindblom

The Village at Knapp’s Crossing, LLC v. Pioneer Ventures, LLC (In re The Village at Knapp’s Crossing)

(6th Cir. Jan. 8, 2016)

The Sixth Circuit affirms the B.A.P.’s decision dismissing the appeal for mootness. The debtor appealed an order converting its case from Chapter 11 to Chapter 7 but did not seek or obtain a stay of the conversion order. The bankruptcy court then authorized a sale of the debtor’s primary asset, which was necessary to any Chapter 11 plan. Because there is no mechanism to unwind the sale or bring the property back into the estate, the appeal is now moot. Opinion below.

2016-01-08 – village at knapps crossing v pioneer ventures

Author: Matt Lindblom

Harris v. Viegelahn

(U.S. Sup. Ct. May 18, 2015)

The Supreme Court holds that post-petition debtor wages held by the Chapter 13 trustee after the debtor converts to Chapter 7 should be returned to the debtor rather than distributed to creditors in accordance with the Chapter 13 plan. There was a split on this issue between the Fifth and Third Circuits, with the Fifth Circuit holding the funds were properly distributed to creditors under the plan following conversion. So long as the debtor does not convert to Chapter 7 in bad faith, such funds should be returned to the debtor. Opinion below.

2015-05-18 – harris v viegelahn

Author: Matt Lindblom

In re Peterson

(Bankr. S.D. Ind. Feb. 4, 2015)

The bankruptcy court denies the creditor’s motion to dismiss or convert the chapter 7 case. The creditor had obtained a judgment against the debtor and her employer for the debtor’s unlawful accessing and dissemination of the creditor’s medical information. The creditor sought dismissal of the case under § 707(b) (failure of means test), but the court determined the debtor’s debts were not primarily consumer debts and thus that section did not apply. While the judgment was not a business debt, that did not necessarily mean it was a consumer debt. The creditor also sought dismissal for cause under § 707(a). The court recognized that seeking to pay a large debt of one creditor is a factor in favor of dismissal, but that alone did not warrant dismissal for cause. There was no evidence of the debtor’s ability to pay the large judgment. Finally, the creditor alternatively sought to convert the case to chapter 11, but the court denied the request, finding no credible evidence of the debtor’s ability to pay the debt or that chapter 11 would benefit creditors more than chapter 7 (in part because the creditor could collect the judgment from the debtor’s employer). Opinion below.

2015-02-04 – in re peterson

Author: Matt Lindblom

Hagan v. Baird (In re B & P Baird Holdings, Inc.)

(6th Cir. Jan. 2, 2015)

The Sixth Circuit reverses the bankruptcy court’s decision denying the trustee’s motion to amend his complaint. The debtor’s principals had received funds from the debtor prepetition while the debtor was defending against a patent infringement claim. The trustee asserted a conversion claim against the principals. The bankruptcy court dismissed the complaint, pursuant to the in pari delicto doctrine, and denied the trustee’s motion to amend the complaint to assert one of the principals was an innocent recipient of the funds (although still liable for conversion under Michigan law). The Sixth Circuit reverses, holding that the amendment would not be futile, as the principal could be liable for conversion even if the principal had not intended to convert the funds. The in pari delicto doctrine should not be applied until that principal’s role in the alleged conversion is determined. Opinion below.

2015-01-02 – hagan v baird