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Opinions

 

The summaries on this website are summaries of the opinions issued by the judges of the Bankruptcy Court for the Western District of Virginia from October 2004 to date. The opinions may be searched by year, judge, category and chapter. For a more detailed search, enter a keyword in the search box above. This opinion bank, however, is not an exhaustive list of opinions issued by the judges of the Western District. These summaries are not intended to replace other research methods, but may be used as a starting point for your research. These summaries do not contain information as to whether an opinion has been published, appealed or the disposition of any such appeal, or otherwise overruled or affected by subsequent case law or statute. These summaries have been prepared for the convenience of the researcher and in no way constitute an interpretation by the Court of the opinion summarized. Please rely on the opinion not the summary. Please contact Judge Connelly's chambers or Judge Black's chambers regarding any questions or errors.

In re Arnold (Case No. 23-61057) 08/26/2024

In this case, the Chapter 7 Debtor filed a motion to impose sanctions against a creditor alleging that the creditor violated the automatic stay and the discharge injunction by making 50 or more collection calls to the Debtor and his family members. The Debtor failed to redeem the collateral or enter into a reaffirmation agreement regarding the vehicle, so the Court found that the timing of the creditor’s action in the case was more appropriately governed by the discharge injunction than the automatic stay. The Court held that the Debtor failed to meet his burden of proof that the creditor violated the discharge injunction as the evidence showed that the creditor was not trying to coerce the Debtor to make a payment he did not want to make or attempting to collect a debt from the Debtor as a personal liability, but instead was calling when the payments were either due or late to determine if the Debtor wanted to perform under his contract to stave off repossession. Therefore, the Court denied the motion with a word of caution to the creditor that there comes a point where the sheer volume of calls tips a legitimate inquiry as to intent into coercive behavior.

Brown v. Goldman Sachs Bank USA (In re Brown) (Case No. 23-70426: A.P. No. 24-07009)

This adversary proceeding was brought by two debtors as a class action against Goldman Sachs Bank seeking damages for alleged violations of the automatic stay. Goldman Sachs responded by filing a motion to compel arbitration asserting that the debtors signed agreements with the creditor that contained enforceable provisions requiring such claims to be arbitrated. The debtors assert that their claims are constitutionally core claims that stem from their bankruptcies and that the bankruptcy court has discretion to retain the claims. While the Court recognized the federal policy favoring arbitration, it also recognized the competing considerations between the Federal Arbitration Act and the Bankruptcy Code. The Fourth Circuit has stated that the party seeking to prevent enforcement of an arbitration agreement must show that Congress has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue. One factor that the Court considers in determining this intent is whether an inherent conflict exists between arbitration and the statute’s underlying purposes. Finding that there was an inherent conflict between the Federal Arbitration Act and the Bankruptcy Code provision at issue in this case, the Court denied Goldman Sachs Bank’s motion to compel arbitration. The Court found that the claims were constitutionally core as the logical outgrowth of the authority giving rise to the Bankruptcy Code itself. Further, the Court exercised its discretion to maintain the claims in this case before the bankruptcy court as being more consistent with the goals of the Bankruptcy Code as the automatic stay is one of the fundamental debtor protections under the Code.

In re Hayes (Case No. 23-61366) 03/07/2024

The debtor filed a chapter 13 case pro se. This case was his sixth bankruptcy case and the fourth case in eighteen months. The debtor filed many documents with the Court regarding an ongoing dispute he had with the mortgage company; however, he did not pay the filing fee and failed to file the required schedules, statements, and chapter 13 plan. Based on this failure to fulfill his duties under the Bankruptcy Code, the Court found cause to dismiss the case. In addition, based on the debtor’s conduct in this case and his prior cases, both the chapter 13 trustee and the U.S. Trustee filed motions to dismiss the case with conditions. In dismissing the case, the Court conditioned the dismissal with a bar on refiling for a period of 365 days.

In re Poullath (Case No. 23-61057) 03/07/2024

The chapter 13 trustee objected to the debtor’s use of Virginia Code § 34-13, and that section’s reference to unused exemption amounts under Virginia Code § 34-4, to claim an exemption in personal property not used as her primary residence. The Court declined to read prohibitive language into the Virginia Code that was not present. Because Virginia Code § 34-13 by its terms permits a householder in Virginia to claim an exemption in personal property up to the value of any unused portion of the exemption to which she is entitled to claim under Virginia Code § 34-4, the Court found that the debtor was entitled to claim an exemption under Virginia Code § 34-13 in her personal property. The Court thus overruled the chapter 13 trustee’s objection.

In re Smith (Case No. 23-70619) 1/18/24

In this case, the City of Roanoke scheduled and held a judicial tax sale on real property. Unknown to the City at the time, the sale was held just a few minutes after the Debtor filed for bankruptcy. The City asserted that pursuant to Virginia Code Section 58.1-3974 the Debtor lost her equitable right of redemption on the day prior to the scheduled judicial sale, therefore the Debtor had no legal or equitable interest in the property at the time of the bankruptcy filing. The Court distinguished this case from an earlier opinion, In re Whitlow, a case where the debtor filed her petition days after the sale had taken place. The Court held that the property still belonged to the Debtor legally and equitably at the time her case was filed as the sale had not begun by the time the Debtor filed her petition. Therefore, the sale was conducted in violation of the automatic stay.

Advancial Federal Credit Union v. Cruz (In re Cruz) (Case No. 23-70483; A.P. No. 23-07020) 12.26.23

The Court denied the Chapter 13 Trustee’s motion to intervene in an adversary proceeding filed by a creditor seeking determination of nondischargeability of credit card debt arising from an alleged internet scam. The Trustee asserted he has an interest in the outcome of the adversary proceeding due to his trustee duties under Section 1302(b); that he has an interest in the success of each debtor’s case and that allowing him to intervene would not prejudice or unduly delay the plaintiff’s rights. The Court held that the Trustee did not have a right to intervene under Rule 24(a)(2) as he did not demonstrate a significantly protectable interest in the adversary proceeding. The Court further held that the Trustee did not demonstrate a basis for permissive intervention under Rule 24(b)(1)(B). Finally, the Court held that Federal Rule of Bankruptcy Procedure 6009 did not support intervention.

In re Dobson (Case No. 23-60148) 09/29/2023

The debtors filed a joint chapter 11 petition and elected to proceed under subchapter V of chapter 11. The U.S. Trustee moved to convert the case to chapter 7 pursuant to section 1112(b) of the Bankruptcy Code. At trial, after counsel for the U.S. Trustee completed his presentation of evidence, counsel for the debtors requested the Court grant judgment on partial findings pursuant to Federal Rule of Civil Procedure 52(c). The Court found that the U.S. Trustee had not shown cause under section 1112(b) to convert the case and granted the debtors’ Rule 52(c) motion.

In re Dobson (Case No. 23-60148) 05/17/2023

The debtors filed a joint chapter 11 petition and elected to proceed under subchapter V of chapter 11. An affiliate of one of the debtors filed a chapter 7 bankruptcy petition on the day after the debtors filed their chapter 11 petition. Subsequently, the U.S. Trustee objected to the subchapter V election. According to the U.S. Trustee, because the debts of the affiliate debtor when combined with the debtors’ debts exceeded the statutory maximum under section 1182, the debtors were made ineligible to proceed as subchapter V debtors due to the filing of the affiliate. The debtors disagreed, arguing that the eligibility determination is limited to the petition date. The Court overruled the U.S. Trustee’s objection, finding that the debtors had made a correct statement when they elected subchapter V on their petition and concluding that the debtors had established eligibility to proceed under subchapter V.

Cavalier Pharmacy v. Health Mart Atlas (In re Cavalier Pharmacy) (Case No. 23-70004; A.P. No. 23-07002) 3/8/23

Plaintiff, an independent retail community pharmacy, filed a motion for a temporary restraining order and preliminary injunction seeking to require the Defendant, a Pharmacy Services Administrative Organization, to turn over funds the debtor contended belong to it. In denying the Plaintiff’s motion, the Court found that the Plaintiff failed to meet its burden to prove that it is likely to succeed on the merits of the underlying claims in the adversary proceeding litigation. Here, the test is whether the debtor will be successful in this litigation where it seeks turnover of its receivables, an injunction and a finding that the automatic stay is violated. The Court found that the doctrine of recoupment applies to such receivables under the terms of the contract signed by the parties, thus the automatic stay provided for in the Bankruptcy Code does not apply.

Hegedus v. U.S. Bank (In re Hegedus) (Case No. 19-50855; A.P. No. 22-05007) 02/15/2023

The plaintiffs filed a complaint that the defendant violated the discharge injunction. In granting the defendant’s motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c), the Court found that the plaintiffs had failed to plead a cause of action that was plausible on its face.

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