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 Austin (Case No. 15-70133) 10/5/16

Trustee sought court order to issue a notice of surplus funds to creditors in Chapter 7 case in which no proofs of claims had been filed prior to bar date and Debtor received an inheritance thereafter. The Court found that there would be authority for Trustee to make distributions on tardily-filed claims under 11 U.S.C. §§ 726(a)(2)(C) & (a)(3). Neither the Court nor the Clerk's office has authority to extend the bar date for timely filed claims, and there is likewise no authority for the Court or Clerk to solicit untimely claims via a notice of surplus funds. However, the Trustee is free to solicit tardily-filed proofs of claims at his own expense within a reasonable time. Once a reasonable time has passed, it is Trustee's duty and obligation to furnish a final report, close the case, and refund the remaining property of the estate to the Debtor.

In re Hall (Case No. 12-51245) 09/30/2016

Debtors owned their home as tenants by the entireties, but only one Debtor signed the promissory note and deed of trust.  Thus, Creditor’s security interest never attached.  Debtors received a personal discharge of their debts under Chapter 7.  Following Debtors’ discharge, Creditor filed an action in state circuit court seeking to reform the deed of trust for the home and to create a constructive trust for unjust enrichment.  Debtors sought an injunction against Creditor in order to prevent Creditor from pursuing its counts in circuit court and sought sanctions against Creditor for violating 11 U.S.C. § 524(a).  The Court explained that Creditor did not violate 524(a) by requesting to reform the deed of trust, but that Creditor would violate § 524(a) if it continued to pursue its unjust enrichment claim.  The Court thus found that sanctions against Creditor were not appropriate.  The Court denied Debtors’ motion for a permanent injunction to keep Creditor from pursuing its claims in circuit court, but cautioned Creditor against pursuing the unjust enrichment claim.

In re Bruce (Case No. 16-60489) 9/6/2016

Creditor-ex-spouse objected to confirmation of Debtor's plan that did not fully provide for a lump-sum home equity line payment arising out of a property settlement agreement claimed as a domestic support obligation.  After the parties briefed the issue and the hearing was held, the Debtor then objected to the ex-spouse’s proof of claim. The Debtor has the burden of proof as to compliance with Chapter 13 requirements, but the objecting party bears the burden of proof as to its objection.  The Court denied confirmation of the amended plan as it did not provide for the creditor’s priority claim for a domestic support obligation at all. To determine the amount of priority claim, the Court then turned to the Debtor’s objection to the proof of claim.  The burden shifted to the Debtor to present evidence to rebut the presumption of validity of the creditor’s claim.  After considering the Webber factors, the Court found that the creditor-ex-spouse did not meet her burden to demonstrate that, contrary to the plain language of divorce decree and property settlement agreement, the lump sum equity line payment was intended as a domestic support obligation under 11 U.S.C. § 507(a).  The Court held that the obligation at issue was simply a lump sum division of marital debt and sustained the Debtor’s objection.

In re Hite (Case No. 15-51191) 09/06/2016

Debtors, a couple caring for their severely disabled son, filed bankruptcy under Chapter 13. Debtors receive payments from Public Partnership, LLC, a Virginia and Medicaid approved organization that pays Medicaid waiver benefits for their son’s homecare. The chapter 13 trustee objected to the plan under 11 U.S.C. § 1325(b) on the grounds that the debtors did not allocate all of their disposable income towards payments to unsecured creditors because they did not include the Medicaid waiver benefits as part of their disposable income.  The Court found that the Medicaid waiver benefits were received under the Social Security Act and the debtors lived with and cared for their son.  The Medicaid waiver benefits were therefore excluded from debtors’ disposable income. The Court explained that the Medicaid waiver benefits are also excluded from disposable income as foster care payments under 26 U.S.C. § 131 because the debtors provide non-medical care to their son within their own home. Accordingly, the Court overruled the trustee’s objection.

In re Wilburn (Case No. 14-70032) 8/22/2016

Above median debtor filed an amended plan due to a reduction in income that proposed to reduce both the payment and the term of the plan.  The Chapter 13 Trustee objected to the plan contending that the debtor could not both reduce the applicable commitment period and reduce the amount to be paid.  Relying on the reasoning in In re Davis, the Court held that Section 1325(b) is not applicable to plan modification under Section 1329(a) and overruled the Trustee’s objection.  The wording of Section 1329 read in conjunction with the Code’s rules of construction code section (Section 102(5)) supports the conclusion that the modification options set forth in Section 1329(a) are not mutually exclusive and are available either separately or in combination, provided the applicable elements of Section 1329(b)(1) are met.

In re Stinnie (Case No. 16-60846) 08/04/2016

Individual filed bankruptcy petition certifying she had taken a prepetition credit counseling course within the 180-day period ending on the date of the petition as required by section 109(h).  She subsequently filed a certificate of credit counseling showing that she took the course a day after filing her petition.  The Court found the individual did not meet the eligibility requirements and dismissed the case without prejudice.

In re Stanley (Case No. 15-70378) 7/29/16

Debtor’s motion seeking approval of the sale of real property was granted by the Court, but the Court denied the 5% commission and reimbursement of expenses requested by the realty company.   The sale was conducted by auction pursuant to the terms of the confirmation order.  The Debtor subsequently filed a response to his own motion alleging that the sales price was insufficient.  During the evidentiary hearing, the Court was advised that the auctioneer purchased the property through a corporation wholly owned and controlled by that auctioneer and that no disclosure of this relationship was made at or prior to the sale.   The Court held that the auctioneer and the realty company violated the regulations of the Virginia Auctioneers Board by the auctioneer bidding on his own behalf without providing notice that his bidding would be permitted.  The Court then found that the auctioneer was neither a statutory insider nor a non-statutory insider and was disinterested at the time he was employed to conduct the auction under 11 U.S.C. § 327(a). However, once the auctioneer began bidding without prior disclosure, the question of whether he violated his fiduciary duties as a professional employed pursuant to an order of the Court came into play.  The court adopted the “inherently fair” approach and allowed the sale as it was in the estate’s best interest, shown by arm’s length, good faith negotiations with full disclosure.  However, the Court denied the requested commission and reimbursement of expenses of the realty company in line with the Court’s duties to maintain disinterestedness, avoid the appearance of impropriety and ensure impartiality in the administration of the estate.  

Boyd v. New Peoples Bank (Case No. 08-71119; A.P. No. 16-07008) 5/27/2016

The Debtor filed an adversary proceeding complaint against a creditor for violation of the discharge injunction.  The creditor filed a motion to dismiss the complaint; the Debtor filed a Motion for Judgment on Issue of Liability.  The Court treated both motions as cross-motions for summary judgment pursuant to Rule 7056 as matters outside the pleadings were presented to and not excluded by the Court.  The Court held that the creditor violated the discharge injunction by collecting on “new” notes that were made by the creditor with the Debtor that were based in whole or in part on a debt that was discharged within the scope of Section 524(c).  Neither the Debtor nor the Bank attempted to reaffirm the debt by following the procedures of Section 524(c) before moving forward with a second note.  The Debtor’s motion for summary judgment on the issue of liability was granted with a further hearing to be scheduled to determine the appropriate sanctions, if any. 

In re Futreal (Case No. 15-70886) 05/05/2016

The Court issued a Show Cause for Sanctions against law firm and attorneys in these two cases after hearing on United States Trustee’s Motion for Review of Attorney’s Fees filed in the cases.  Federal court has inherent power to control admission to its bar and to discipline attorneys who appear before it.  The Court imposed sanctions against attorneys and law firm pursuant to that inherent power and authority granted to it under 11 U.S.C. Section 105(a).  The Court found that the parties violated Bankruptcy Rule 9011(b) and transgressed duty of disclosure required by Bankruptcy Rule 2016(b).  The attorneys and law firm were each sanctioned and fined by the Court.

In re Repass (Case No. 15-70885) 05/05/2016

The Court issued a Show Cause for Sanctions against law firm and attorneys in these two cases after hearing on United States Trustee’s Motion for Review of Attorney’s Fees filed in the cases.  Federal court has inherent power to control admission to its bar and to discipline attorneys who appear before it.  The Court imposed sanctions against attorneys and law firm pursuant to that inherent power and authority granted to it under 11 U.S.C. Section 105(a).  The Court found that the parties violated Bankruptcy Rule 9011(b) and transgressed duty of disclosure required by Bankruptcy Rule 2016(b).  The attorneys and law firm were each sanctioned and fined by the Court.

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