Walro v. Lee (In re Lee)

(S.D. Ind. Feb. 13, 2017)

The district court affirms the bankruptcy court’s judgment in favor of the trustee in this fraudulent transfer action. The district court rejects the defendant’s arguments that the bankruptcy court relied too heavily on a trust document and state court judgment for the finding of fraud. The bankruptcy court did not abuse its discretion by entering a money judgment for the value of the shares at the time of the transfer rather than ordering that the shares be returned (at their depreciated value). The bankruptcy court also did not commit clear error in valuing the shares. Opinion below.

Judge: Young

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

Appellant: Pro Se

2017-02-13-in-re-lee

Author: Matt Lindblom

Indiana Department of Workforce Development v. Burge (In re Burge)

(Bankr. S.D. Ind. Feb. 2, 2017)

The bankruptcy court makes additional findings of fact following the appeal and remand. The court’s original judgment stands, as the court concludes again that the plaintiff failed to prove that the debtor should have known of the fraud committed with his accounts. Opinion below

Prior opinion summary: click here

Judge: Carr

Attorneys for Plaintiff: Jackson Kelly, PLLC, Spencer W. Tanner; Office of the Attorney General, Heather M. Crockett, Maricel E.V. Skiles

Attorneys for Debtor: Redman Ludwig, Keith Eirik Gifford

2017-02-02-in-re-burge

Author: Matt Lindblom

Federal Insurance Company v. Woods (In re Woods)

(Bankr. W.D. Ky. Sep. 16, 2016)

The bankruptcy court grants in part the plaintiffs’ motion for summary judgment in this nondischargeability action. The court denies the motion as to the amount of damages. The debtor admitted to committing the fraud and embezzlement while employed by the plaintiff car dealer. Thus, the court finds that the elements in 11 U.S.C. 523(a)(6) are satisfied, as the undisputed facts established that the debt arose from the willful and malicious injury by the debtor. However, Kentucky’s statute of repose for fraud claims creates an issue as to how much of the loss can be attributed to acts committed within the ten-year repose period. Opinion below.

Judge: Stout

Attorney for plaintiffs: Stoll Keenon Ogden PLLC, Adam Mastin Back

Attorney for debtor: Lowen & Morris, Jan C. Morris

Author: Matt Lindblom

2016-09-16-in-re-woods

Siragusa v. Collazo (In re Collazo)

(7th Cir. Apr. 5, 2016)

The Seventh Circuit affirms the decision of the bankruptcy court dismissing some of the creditors’ nondischargeability claims because the claims were based on alleged fraud occurring outside the applicable Illinois five-year limitations period. The court reverses the dismissal of one of the claims because it was not clear that the creditor had notice of the fraud to start the limitations period. The court also remands so that a money judgment can be entered, as the bankruptcy court’s concerns that it did not have jurisdiction to do so were addressed in the Supreme Court’s Wellness and Arkison decisions. Opinion below.

Judge: Posner

Attorney for Debtor: David Robert Herzog

Attorney for Creditors: Patrick Gerard Cooke

2016-04-05 – in re collazo

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

Waldman v. Stone

(W.D. Ky. Jan. 15, 2016)

On remand from the Sixth Circuit, the district court apportions fault 50/50 between the two defendants (pursuant to KRS 411.182) and reduces the punitive damage award proportionally with the reduction of compensatory damages. The court also finds that the punitive damages should be apportioned 50/50. The two defendants had conspired to defraud the debtor of his interest in his business entity. Opinion below.

 

2016-01-15 – waldman v stone

Author: Matt Lindblom

MERV Properties, L.L.C. v. Forcht Bancorp, Inc. (In re MERV Properties, L.L.C.)

(6th Cir. B.A.P. Oct. 6, 2015)

The Sixth Circuit B.A.P. affirms the bankruptcy court’s order granting summary judgment in favor of the bank. The debtor brought claims against the bank following the debtor’s default on the loan after its Chapter 11 plan was confirmed. The debtor alleged fraud and collusion against the bank and others. The bank moved to dismiss the claims based on a release provision in a forbearance agreement that had been executed by the debtor, and the bankruptcy court granted the motion. On appeal, the court rejects the debtor’s argument that it should have been allowed time to conduct discovery because that issue was not preserved for appeal. The court also holds that the debtor failed to show that there exists a dispute of material fact as to the validity of the release. The adverse interest exception did not apply because the forbearance agreement provided benefits to the debtor. Finally, the court holds that the forbearance agreement was not unconscionable under Kentucky law. Opinion below.

2015-10-06 – merv properties v forcht bancorp

Author: Matt Lindblom

Peterson v. McGladrey LLP

(7th Cir. July 7, 2015)

The Seventh Circuit affirms the bankruptcy court’s decision recognizing the in pari delicto defense and dismissing the trustee’s suit against the accounting firm for malpractice. The debtors were mutual funds that were essentially a vehicle for a ponzi scheme. The accounting firm argued that under Illinois law the trustee’s claims were barred by the in pari delicto doctrine. The trustee argued that Illinois courts only apply the doctrine when the parties have committed the same wrong. He argued it should not apply here, where the debtors committed fraud and the firm committed malpractice for failing to detect the fraud. The court applies the doctrine, finding Illinois law does not have such a requirement. Opinion below.

2015-07-07 – peterson v mcgladrey

Author: Matt Lindblom

Stoughton Lumber Company v. Sveum

(7th Cir. June 4, 2015)

The Seventh Circuit affirms the bankruptcy court’s order denying discharge of a debt under 11 U.S.C. § 523(a)(4). Under Wisconsin law, the debtor had committed “theft by contractor” when he paid other creditors out of funds held in trust for the creditor. The creditor had sold hundreds of thousands of dollars’ worth of building materials to the debtor’s construction company. The court affirms, finding the evidence was sufficient to establish the requisite intent. Opinion below.

2015-06-04 – stoughton lumber co v sveum

Author: Matt Lindblom

MERV Properties, LLC v. Friedlander (In re MERV Properties, LLC)

(Bankr. E.D. Ky. May 4, 2015)

The bankruptcy court denies the plaintiff’s motion for default judgment and dismisses the action against the individual defendant. The plaintiff attempted to serve the complaint and summons on the defendant by mailing them to “the place where the individual regularly conducts a business or profession,” pursuant to Bankruptcy Rule 7004(b). The plaintiff then waited until well after the 120-day deadline to effect service and moved for default judgment. The court finds that service was not effective because the defendant did not regularly conduct business at the address at the time of the attempted service, and the plaintiff could not establish good cause for meeting the 120-day service deadline. Thus, the Court declined to extend the period for effecting service.

In a second opinion entered the same day, the Court granted motions for summary judgment in favor of the other defendants. Claims of fraud, breach of fiduciary duty, and related claims against the individual defendants were not supported by evidence and dismissed. Claims against the bank defendant were analyzed under Article 3 of Kentucky’s UCC and also dismissed. Opinions below.

2015-05-04 – merv properties v friedlander1

2015-05-04 – merv properties v friedlander2

Author: Matt Lindblom