The plaintiff filed a motion for summary judgment in this adversary proceeding seeking to except the debtor’s debt owed to the plaintiff from discharge under section 523. The plaintiff based his motion for summary judgment on a collateral estoppel theory, relying on a Montana state court’s judgment which had found the defendant liable for fraud, constructive fraud, and breach of fiduciary duty. The Court found that the elements for collateral estoppel on the plaintiff’s 523(a)(2)(A) count were satisfied and thus granted judgment as a matter of law in the plaintiff’s favor.
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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.
The defendants filed a motion for partial summary judgment, asking the Court to grant summary judgment in its favor on three issues. Specifically, the defendants contended that Fair Debt Collection Practices Act claims related to the filing of proofs of claim are precluded by the Bankruptcy Code and Rules, that the amended proofs of claim that the defendants filed are in compliance with Rule 3001, and that the defendants are not subject to sanctions for their noncompliance with the Federal Rules of Bankruptcy Procedure. The Court denied the motion for partial summary judgment.
Chapter 7 Debtor filed a motion to convert his case to one under Chapter 11 so that he could amend his petition to elect Subchapter V status. The Trustee and two creditors objected to the conversion. Citing Marrama, the Court noted that a debtor should not be able to convert his case when conversion would result in immediate dismissal or reconversion. After analyzing the recent cases of In re Trepetin and In re Seven Stars on the Hudson Corp., along with the deadlines imposed by Sections 1188(a) and 1189(b), the Court noted that it sees no reason why a delayed conversion to Subchapter V cannot occur when the Section 1189(b) plan filing deadline can be extended by the Court, when no party objects to such conversion. However, in this case, the Debtor has been evasive and misleading about the true nature of his involvement with an LLC owned as tenants by the entirety with his spouse and gave conflicting information as to ownership and transfer dates to the Trustee, the United States Trustee and two different lenders. If converted to Chapter 11 and Subchapter V elected, this Court would decline to extend the time for the Debtor to file a plan under Section 1189(b) given the Debtor’s conduct. Because the Debtor would immediately run afoul of Section 1112(b)(4)(J) if the motion to convert were granted and the election made, the Court denied the motion to convert.
The chapter 7 trustee filed a complaint against the chapter 7 debtor and his company seeking, among other requests, turnover of postpetition transfers of property of the estate. The parties agreed that all of the stock of the debtor’s S Corporation became property of the estate at filing, but the defendants disagreed with the trustee over whether the transferred property was property of the estate. The defendants asserted that the property at issue fell within the “earnings exception” in section 541(a)(6). Ruling on cross motions for summary judgment, the Court held that the amounts transferred attributable to services preformed prepetition and certain shareholder distributions were property of the estate. The Court granted judgment as a matter of law in favor of the trustee.
A creditor filed a motion to dismiss the debtor’s case, claiming that the debtor was not eligible to be a debtor under chapter 12. Specifically, the creditor argued that the debtor did not qualify as a “family farmer” under section 101(18) because the debtor was not “engaged in a farming operation” and her gross income did not meet the 50 percent gross income test of section 101(18)(A). Based on the evidence presented, the Court found that the debtor was engaged in a farming operation at the time she filed her petition. Additionally, the Court ruled as a matter of law that the Tax Code’s definition of “gross income” informs the Bankruptcy Code’s definition of “gross income” under section 101(18) for purposes of determining whether to include social security income in the calculation of “gross income.” Based on an interpretation of the Tax Code’s definition of “gross income,” the Court found that more than 50 percent of the debtor’s gross income was received from the farming operation for the taxable year preceding the filing of her petition. Accordingly, the Court held that the debtor was a “family farmer” eligible to proceed as a debtor under chapter 12 and denied the motion to dismiss.
The Debtor filed an objection to a proof of claim filed by the Debtor’s business partner disputing that the Debtor was liable to the creditor for any amount for reimbursement of various sums, including capital contributions made in a joint venture arrangement, unpaid real estate taxes, attorney’s fees, improperly taken commissions, and other matters related to a real estate investment. The claim arose out of a largely undocumented joint venture between the Debtor and the creditor, which soured over time. The arrangement was that the creditor would provide most of the funds to purchase and renovate properties and the Debtor would provide her experience to rehabilitate and maintain the properties. The objection to claim was sustained in part and overruled in part. This is a fact specific opinion discussing the burden of proof on objections to claims and the Virginia Uniform Partnership Act. Certain portions of the claim were allowed, and others will be paid upon the sale of the real estate or upon settlement of the partnership accounting and were thus disallowed in the Debtor’s bankruptcy case.
Debtor’s complaint in this adversary proceeding alleged that certain notes made by the Debtor to a creditor were time barred under the applicable statute of limitations. The creditor asserted that the proper statute of limitations to apply was the six year statute of limitations under Va. Code Ann. § 8.3A-118 and not the five year period under Va. Code Ann. § 8.01-246 as argued by the Debtor. The Court agreed that the proper statute of limitations to apply was § 8.3A-118, which provides - “an action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date.” The Court held that the Complaint failed to allege facts to establish the claims at issue were time barred.
This matter came before the Court on a motion to enforce a settlement agreement to resolve a disputed claim and require the Trustee to present the settlement for Court approval under Rule 9019. The Trustee asserted that the settlement agreement was only tentative as it was subject to conditions precedent that were not satisfied. The Court found that the parties had entered into a binding settlement agreement. However, a further hearing would be needed for the Court to approve the settlement agreement as fair and equitable and in the best interests of the estate.
The female Debtor filed a motion for contempt against a creditor for violation of the automatic stay. The Court found that creditor willfully violated the automatic stay of 11 U.S.C. § 362(a) as the creditor had notice of the bankruptcy when he sent the female Debtor an email threatening to take criminal action if she did not pay him the money she owed, as well as repeated calls after notice of the bankruptcy. The Court awarded the Debtor $170.00 in actual financial loss damages. The Court also found sufficient evidence of egregious or vindictive conduct to award the female Debtor $500.00 in punitive damages.
The Debtors filed a motion for default judgment seeking damages against a creditor for violation of the automatic stay. The Court found that the creditor willfully violated the automatic stay of 11 U.S.C. § 362(a) by seeking to collect the balance owed for pre-petition services after receiving notice that the Debtors filed bankruptcy. The Court awarded the Debtors $300.00 in lost work time damages and attorneys’ fees in the amount of $1,875.00. However, the Court found that there was insufficient evidence to award the Debtors damages for emotional distress.