Edmonton State Bank v. Smith (In re Smith)

(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

2018-03-23 – in re smith

Author: Matt Lindblom

Harker v. PNC Mortgage Company (In re Oakes)

(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

2018-02-06 – in re oakes

Author: Matt Lindblom

Edmonton State Bank v. Smith (In re Smith)

(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

2017-12-06 – in re smith

Author: Matt Lindblom

Isaacs v. DBI-ASG Coinvester Fund III, LLC (In re Isaacs)

(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

2017-07-03 – in re isaacs

Author: Matt Lindblom

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

Liebzeit v. Intercity State Bank, FSB (In re Blanchard)

(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

2016-04-14 – in re blanchard

Author: Matt Lindblom

Jernigan v. Household Finance Corporation II (In re Jernigan)

(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.

2015-07-22 – in re jernigan

Author: Matt Lindblom