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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 Minick (18-50146) 05/31/2018

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.

 

In re Underwood (Case No. 18-70168) 5/30/2018

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.

 

In re Thompson (18-60017) 05/23/2018

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.

In re Napier, No. 17-71557, 5/23/2018

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.

Fitzgerald v. Delafield, et al. (In re Williams) (Case No. 15-71767, A.P. No. 16-07024) 5/14/2018

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.

Farthing v. Fraley (In re Fraley), Case No. 17-70067; A.P. No. 17-07027 3/28/18

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.

In re Hoole (17-50262) 03/21/2018

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.

In re Townside Construction, Inc., Case No. 16-70629 (03/14/2018)

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.

Dulles Electric & Supply Corp. v. Shaffer (In re Shaffer) Case No. 13-51380; A.P. No. 17-05018 02/27/2018

Plaintiff reopened the bankruptcy cases of defendants and filed separate complaints against each defendant seeking a declaratory judgment on the dischargeability of particular debts for postpetition extensions of credit based on a guaranty signed prepetition.  The Court concluded that the chapter 7 discharge orders did not discharge liability under the guaranty for the postpetition extensions of credit.

Robbins v. Delafield, et al. (In re Williams)(Case No. 15-71767, A.P. No. 16-07024) 2/12/2018

The United States Trustee filed adversary proceedings against certain parties involved in a multi-jurisdictional law practice seeking disgorgement of attorney's fees, cancellation of fee agreements between the debtors and their attorneys, an injunction against the parties enjoining them from violating 11 U.S.C. §  526, and the imposition of civil penalties and sanctions against the parties.  While the Court expressed concern about the way the multi-jurisdictional law firm conducted its business and the lack of proper oversight of its employees, the Court found the Rule 2016(b) statements were not actionable on the grounds the local partners were not sharing compensation with members of the same law firm.   However, the Court found the law firm was an active participant in promoting and participating in an improper scheme called a "New Car Custody Program" to have consumers' vehicles towed out of state to facilitate the payment of the law firm's attorney's fees and filing fees by the towing company.  The Court ordered disgorgement of attorney's fees received under 11 U.S.C. § 329, with the funds to be paid to the debtor's estates.   Further, under its inherent authority pursuant to 11 U.S.C. § 105(a), the Court sanctioned the "local partner" attorneys by revoking their privileges to conduct and file cases in the Western District of Virginia for one year and eighteen months, respectively, and also monetarily sanctioned them $5,000.00 each. The Court also separately fined the law firm and certain of its members and affiliated persons the sum of $250,000 and revoked the law firm's privilege to conduct and file cases in this District for five years. The managing partner was fined $50,000 personally.  The Court further ordered the towing defendant in default to, among other things, disgorge all funds received from residents of this district in connection with the vehicle recovery program.

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