A judgment creditor filed a motion to reopen the Debtor’s no-asset Chapter 7 case. The creditor was a known creditor of the Debtor, but was not given actual notice of the case in time to file a non-dischargeability action. Citing In re Rollison, 579 B.R. 67 (Bankr. W.D. Va. 2018), the Court denied the motion to reopen. However, the court specifically noted that nothing contained in its Order prevented the creditor from proceeding in state court to seek a determination of the dischargeability of the Debtor’s obligation to him.
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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 Debtor filed a Complaint against his employer seeking an award of costs ($775.00) and attorney's fees ($4,200.00) as a sanction for violation of the automatic stay of 11 U.S.C. § 362. Noting that the paralegal and the attorney charged the same hourly rate ($200/hour) and billed in quarter hour increments instead of tenth of an hour increments, the Court reduced the paralegal's rate to $100/hour and also reduced her time by one half. This reduction was also supported by the fact that both the paralegal and attorney performed the exact same task on the exact same date on several occasions. Counsel's fees were allowed in a limited amount as this was not a complicated matter and counsel could have filed a motion to show cause against the employer without the necessity of filing an adversary proceeding. No costs were allowed as the matter should have been filed before the case was closed and due to the fact that no filing fees are due from a debtor who files an adversary proceeding. The Court allowed only $700.00 in attorney's fees and granted judgment in the total amount of $1,075.00 as a reasonable attorney's fee as a sanction against the employer. Counsel was also prohibited from recovering from the Debtor the filing and reopening fees paid in connection with the case.
Creditor moved the Court to dismiss a case as a bad faith filing, because the debtor filed to stop a state court civil action and because the creditor did not believe the debt was dischargeable. The state court action arose from the debtor's prepetition action in engaging in criminal conversation with the creditor's then wife. The Court held that prepetition bad faith conduct by itself is insufficient to disqualify a debtor from proceeding in bankruptcy. The Court also denied the alternative request of relief from stay to pursue the state court civil action.
The creditor obtained a judgment against the Debtor outside the preference period and issued a garnishment summons and writ of fieri facias for execution on the judgment. Prior to the return date of the garnishment, the Debtor filed bankruptcy. Upon request of the Debtor, the Court entered its standard order quashing the garnishment. The creditor filed an objection to this order. As the funds were still on deposit at the Debtor’s bank and no order was entered transferring the funds to the creditor, the bankruptcy filing and the automatic stay stopped further steps toward delivery of the funds to the creditor. Thus, the Debtor still retained an interest in the property and had the right to exempt the property on his schedules and avoid the creditor’s judicial lien. The Court overruled creditor's objection to order staying garnishment.
The debtor objected to a creditor's secured claim, asserting that the claim should be treated as an unsecured claim because the security interest was not properly perfected prior to the filing date of the petition. Analyzing the electronic titling and registration of motor vehicle provisions in the Virginia Code, the Court found that the creditor properly perfected its security interest prior to the petition date when the lien application was filed with the Department of Motor Vehicles pursuant to Virginia Code section 46.2-639. Thus, the Court found that the creditor was the holder of an allowed secured claim.
The Debtors filed objections to four proofs of claim asserting that no exhibit or other documentation was attached which showed that the claim was purchased by the claimant that filed the proofs of claim. The Debtors’ schedules, however, matched up almost identically with the proofs of claim in terms of amounts, original creditors, and dollar amounts owed. The Court held that the account summaries that the claimant attached to the original claim contained all of the information required by Rule 3001(c)(3) rendering the claims presumptively valid and shifting the burden to the Debtors to object. The Court held that the Debtors did not meet that burden. The claimant filed a power of attorney and short form bill of sale and also fully complied with Rule 3001(c)(3). To require the claimant to produce a master bill of sale, schedules or a full electronic file agreement with its proofs of claim was an unreasonable and unnecessary burden on the creditor, especially when all of the information the Debtors included in their schedules matched up readily with the proofs of claim actually filed. The Court denied the claim objections and allowed the proofs of claim as filed.
The defendants filed a motion for a limited stay of enforcement of a bankruptcy court order that revoked the privilege of Upright Law and certain other parties from filing or conducting cases in the Western District of Virginia for five years. The Court held that the defendants did not meet the burden under Rule 8007 to establish grounds for entry of a stay pending appeal as they did not demonstrate that they will likely prevail on the merits of the appeal, that they will suffer irreparable injury if the stay is denied, that other parties will not be substantially harmed by the stay and that the public interest will be served by granting the stay. The Court denied the motion, but ordered that the temporary stay would remain in effect through a certain date, after which it shall be dissolved.
The Chapter 7 Trustee sought order avoiding voluntary transfer of land from one debtor to his daughter in which a life estate was reserved for the debtors (one of whom was a stranger to the title) under 11 U.S.C. § 544(b) and Virginia Code § 55-81. As the female debtor did not own an interest in the property prior to the reservation, the reservation of the life estate only survived as to the male debtor. The Court then valued his single life estate in the property and added that to the value of his other personal property and found that the total asset value after the transfer was greater than his total liabilities. Thus, the male debtor was not insolvent at the time of, or made insolvent by, the transfer and the conveyance may not be avoided.
The chapter 7 trustee asked the Court to determine the estate's interest in a joint tenancy. The trustee asserted that the estate's interest was a one-half interest, while the debtor argued that the estate's interest was nominal at most. The Court found that the estate's interest was in the nature of a joint tenant with an undivided interest in the entire property with the right of survivorship.
The Chapter 7 Trustee, the Bank creditor and the foreclosure trustee under certain deeds of trust filed a motion to approve a compromise and settlement whereby the Bank would pay a certain sum to the Trustee, after which the Trustee would convey certain real property to the Bank and execute a general release of the Bank and foreclosure trustee releasing all claims against them, known and unknown, and accruing from the beginning of time through the date of the entry of the order approving the settlement. The Debtors objected to the motion asserting that certain causes of action were not property of the estates and that the Debtors were entitled to bring litigation against these parties without the Trustee's involvement. As the scope of the definition of estate property under 11 U.S.C. § 541 is both comprehensive and far-reaching, the Court found that the causes of action alleged by the Debtors in these pending separate lawsuits were "sufficiently rooted" in the Debtors' pre-bankruptcy pasts with the Bank to fall within the Segal v. Rochelle test, and that the alleged causes of action sufficiently flowed from the Debtors' prepetition assets such as to fall within the scope of Section 541. The Court did not decide whether the settlement should be approved, reserving the issue until after the Trustee fulfills his statutory duties.