(Bankr. W.D. Ky. Mar. 23, 2018)
The bankruptcy court denies the creditor’s motion to amend the December 2017 judgment. The creditor’s lien was only on equipment and did not apply to two pole barn structures, which were fixtures and subject to the competing creditor’s mortgage. Opinion below.
Judge: Lloyd
Attorney for Movant: Stites & Harbison, Brian R. Pollock
Attorney for Mortgagee: T. Richard Alexander, II
Author: Matt Lindblom
(6th Cir. B.A.P. Feb. 6, 2018)
The Sixth Circuit B.A.P. affirms the bankruptcy court’s order denying the mortgage holder’s motion for judgment on the pleading in this mortgage avoidance action. The creditor argued that recently-enacted Ohio statutes provide that the bankruptcy trustee, as a hypothetical judicial lien creditor, cannot avoid the mortgage, which was improperly executed and recorded. The B.A.P. holds that, pursuant to Ohio law at the time the case was filed, the trustee takes priority over the creditor’s defective mortgage. Opinion below.
Judge: Opperman
Attorneys for Trustee: Donald F. Harker, III; Rieser & Marx, Dianne F. Marx, John Paul Rieser
Attorneys for Creditor: Plunkett Cooney, Amelia A. Bower
Author: Matt Lindblom
(Bankr. W.D. Ky. Dec. 6, 2017)
The bankruptcy court finds that two tobacco pole barns on the debtor’s property were fixtures and thus subject to the plaintiff bank’s mortgage. Two other creditors with security interests in the debtor’s personal property argued that the barns were instead subject to their liens and thus the insurance proceeds following destruction of the barns in a wind storm should be subject to their lien. The court analyzes Kentucky law on fixtures and rules in favor of the mortgage holder. Opinion below.
Judge: Lloyd
Attorney for Plaintiff: T. Richard Alexander, II
Attorney for Debtor: Sullivan Mountjoy Stainback & Miller PSC, K. Timothy Kline
Attorney for Defendants: Brian R. Pollock; Adam R. Kegley
Author: Matt Lindblom
(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
Author: Matt Lindblom
(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
Author: Matt Lindblom
(7th Cir. Apr. 14, 2016)
The Seventh Circuit applies Wisconsin state law and holds that a mortgage can attach a lien to a vendor’s interest in a real estate contract and that the lender perfected the lien by recording in the county land records rather than filing a UCC-1 financing statement. The trustee is unable to avoid the lien. Opinion below.
Judge: Hamilton
Attorneys for Trustee: Michael F. Dubis, Christopher R. Schultz
Attorneys for Appellees: Ruffi Law Offices, Sara Lynn Ruffi, Lund Law Office, Brad M. Lund
Author: Matt Lindblom
(Bankr. W.D. Ky. July 22, 2015)
The bankruptcy court grants summary judgment in favor of the mortgage holder. The debtor commenced the adversary complaint seeking to avoid the creditor’s mortgage lien. The debtor argued that, because the note and mortgage had been assigned, the note and mortgage had been separated and thus the mortgage was no longer valid. The court reviewed the evidence and concludes otherwise. Opinion below.
Author: Matt Lindblom
(Bankr. E.D. Ky. Feb. 2, 2015)
The bankruptcy court grants the defendant’s motion to dismiss the adversary complaint seeking a declaratory judgment that the defendant’s mortgage was invalid. The defendant argued and the bankruptcy court holds that the complaint was barred by the doctrine of res judicata. The parties had litigated the issue to judgment in a prior action before the district court. Opinion below.
2015-02-02 – haffey v deutsche bank
Author: Matt Lindblom
(Bankr. E.D. Ky. Jan. 14, 2015)
The bankruptcy court grants summary judgment in favor of the mortgagees in this avoidance action. The debtor had executed a special power of attorney, with the intent of giving another individual the authority to purchase and grant mortgages on real property. The power of attorney was recorded and contained ambiguous language as to the extent of authority granted. The mortgages were properly recorded. The trustee sought to avoid the mortgages, arguing that the power of attorney did not grant the authority necessary to execute the mortgages. The court rejects the trustee’s argument. Because the mortgages were properly recorded, they provided the requisite notice. A non-party cannot raise the question of authority of an attorney-in-fact when the parties relying on the power have not made authority an issue. Opinion below.
Author: Matt Lindblom
(Bankr. N.D. Ind. Oct. 10, 2014)
The bankruptcy court grants the bank’s motion for summary judgment and dismisses the debtors’ adversary complaint against it. Prepetition, the bank had foreclosed on the debtors’ mortgage in state court. The debtors’ complaint alleged that the bank knew it had an invalid mortgage when it sought the relief in state court, which constituted fraud and an abuse of process. The court held that the Rooker-Feldman doctrine barred the complaint. That doctrine prohibits a lower federal court from reviewing a state court’s final judgment. Because the state court enforced the mortgage in favor of the bank, the bankruptcy court could not reconsider whether the mortgage was valid. Opinion below.
Kentuckiana Bankruptcy Opinions 