You are here

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.

Hayes v. Well Fargo Home Mortgage et al (In re Hayes) (Case No. 12-61487-LYN; A.P. No. 12-06067) 10/11/12

First, the debtor sought to avoid a lien arising under a deed of trust in favor of Wells Fargo Home Mortgage. Case law provided that, generally, a debtor is permitted to avoid a consensual lien on a debtor’s residence if the amount of the senior liens are greater than the value of the residence. The Debtor met that standard and therefore the Debtor was allowed to avoid Wells Fargo’s lien arising from its second deed of trust.

In re Magic Wand, LLC (Case No. 12-70404) 10/10/2012

            The chapter 7 trustee, Robert E. Wick, filed objections to two proofs of claim, both on the basis that no supporting documentation was filed with the claim.  Under 11 U.S.C. § 502(a) and Bankruptcy Rule 3001(f), a properly filed proof of claim is prima facie evidence of the validity and amount of the claim.  However, the Court noted that the failure to file the documentation merely deprives the claimant of prima facie validity; the objection must still be based on some good faith ground.  The debtor in this case listed the two claims in its schedules as undisputed and owing in the same amounts asserted in the proofs of claim.  In short, simply the lack of documentation, standing alone, is no reason to conclude that a debt which is in no way disputed by the debtor is not valid.  The Court overruled both objections.

Hayes v. Wells Fargo Home Mtg. (In re Hayes) (Case No. 12-61487; A.P. No. 12-06067) 10/11/2012

In a second chapter 7 case filed by the debtor, a creditor was granted relief from stay based on two deeds of trust on real property.  The debtor then received a discharge.  Thereafter, the creditor attempted to sell the property on 3 separate occasions, but was not successful.  The creditor then agreed to modify the debt owed under the first deed of trust.   The debtor then filed a chapter 13 case and provided for avoidance of the creditor’s second deed of trust.  The creditor and the debtor entered into a consensual judgment to avoid the second deed of trust, subject to approval by the Court and completion of performance under Chapter 13 plan.  The Chapter 13 Trustee objected to the plan on the grounds that it was filed in bad faith.

The Court held that a debtor may avoid a lien in a Chapter 13 bankruptcy case if the value of the collateral is less than all senior liens and if the debtor is not eligible to receive a discharge in the case.   The Court held that the determination of whether a plan has been proposed in good faith is to be determined by considering all militating factors.   In this case, the creditor holding the lien consented to the entry of a judgment avoiding its lien.  That decision followed 3 failed attempts to auction off the real property and an agreement between the parties resulting in a signification modification of the creditor’s first deed of trust.  The Court held that the filing of the petition and the plan did not constitute bad faith because the debtor had not forced any creditor to accept a modification of its rights.  The plan only modified the creditor’s claim and the creditor had agreed to that modification.

Johnson v. Dowling (In re Dowling) (Case No. 12-60031; A.P. No. 12-06017) 9/27/2012

The Court found that the Debtor’s receipt of a $150,000 loan from a creditor was dischargeable, determining that (1) there was no defalcation because the Debtor was not in a fiduciary capacity with the creditor pursuant to 11 U.S.C. § 523(a)(4); (2) there was no evidence presented that the Debtor willfully and maliciously sought to cause injury to the creditor pursuant to 11 U.S.C. § 523(a)(6); and (3) there was no common law fraud pursuant to 11 U.S.C. § 523(a)(2)(A), though the Court found that this was a “close case.”  The Court ultimately concluded that the Debtor did not intend to deceive the creditor. 

In re Coburn (Case No. 12-71189) 9/24/2012

Chapter 7 debtors claimed IRA exemptions on Schedule C pursuant to Section 522(b)(3)(C).  The trustee argued that since Virginia opted out of federal exemption scheme, the debtors could only claim the Virginia exemption for retirement accounts under Va. Code section 34-34 and within the time limit prescribed by Va. Code section 34-17.  The Court relied on In re Diaz, 2010 Bankr. Lexis 1944 (Bankr. E.D. Va. June 10, 2010), which held that a debtor who is required to take state law exemptions can still elect to claim the retirement account exemption under section 522, and overruled the Trustee's objection.

In re Rasnake (Case No. 12-71221) 9/24/2012

Chapter 7 debtors claimed IRA exemptions on Schedule C pursuant to Section 522(b)(3)(C).  The trustee argued that since Virginia opted out of federal exemption scheme, the debtors could only claim the Virginia exemption for retirement accounts under Va. Code section 34-34 and within the time limit prescribed by Va. Code section 34-17.  The Court relied on In re Diaz, 2010 Bankr. Lexis 1944 (Bankr. E.D. Va. June 10, 2010), which held that a debtor who is required to take state law exemptions can still elect to claim the retirement account exemption under section 522, and overruled the Trustee's objection.

In re Gillenwater (Case No. 12-71022) 09/18/2012

            The debtor filed a Homestead Deed that claimed as exempt under the Code of Virginia § 34-4, as amended “Reimbursed money to mother, Joyce Gillenwater, payment made 2/2/12 claimed as exempt $3,000.00.”  The trustee filed an objection to exemption stating that the debtor was not in possession of the $3,000.00 he paid to his mother and, therefore, did not retain a sufficient ownership interest in those funds to be able to file a homestead deed as to them.  The debtor asserted that he retained an interest in all property that was property alleged to be part of the bankruptcy estate, specifically any property alleged to have been transferred to someone alleged to be an insider within one year of the bankruptcy filing date, and that he was entitled to exempt such property by a properly filed homestead deed.  Relying upon two unpublished cases issued by the Court in 2003, the Court sustained the trustee’s objection.  In those decisions, the Court sustained similar objections for three reasons.  First, under Virginia law, there is no right to claim an exemption in property no longer owned by the exemption’s claimant.  Second, for a debtor properly to claim an exemption in the original schedules, the property claimed as exempt must be part of the bankruptcy estate on the date of filing.  And third, if the preferential payments made by the Debtors were to be recovered by the trustee, as to the debtors they would still be preserved under 11 U.S.C. § 551 for the benefit of the bankruptcy estate and their creditors generally.

In re Falls (Case No. 07-70111) 9/12/2012

The Court denied the debtors' motion to vacate its order disapproving a reaffirmation agreement. At the hearing, the debtors advised the Court that they had not been able to get the creditor to respond to their request for a loan modification and that they were willing to accept the Court's original decision denying approval of the reaffirmation agreement.  The Court further directed that the discharge order be entered which had been deferred pending a final ruling on the motion.

In re Lyall (Case No. 11-70535) 08/09/2012

The debtors attempted to avoid a creditor’s lien on the basis that it impaired an exemption which they did not claim at the time of filing their initial petition or at any time prior to the confirmation of their first amended plan.  The creditor objected arguing that its treatment under the first confirmed plan was binding.  The court concluded that the debtors had not been shown to have engaged in any nefarious conduct which would estop them from amending their Schedule C post-confirmation.

Jernigan v. Wells Fargo Bank, N.A. (In re Jernigan) (Case No. 12-70778; A.P. No. 12-07026) 08/01/2012

            The debtor filed a complaint containing four counts: (1) turnover of funds pursuant to 11 U.S.C. § 542; (2) civil liability under 12 C.F.R. § 229.21; (3) class action civil liability under 12 C.F.R. § 229.21; and (4) violation of the automatic stay.  Wells Fargo filed a motion to dismiss the complaint or in the alternative for summary judgment.  Both parties agreed that the turnover claim was moot.  The Court found that counts two and three failed to state a claim upon which relief may be granted.  The violation of automatic stay was based on an administrative hold Wells Fargo placed on the debtor’s accounts after receiving notice of the bankruptcy.  The Court concluded that the key in determining if an administrative hold violates the automatic stay turns upon whether the hold is temporary and serves to maintain the status quo and preserve property of the estate.  The Court held that, because the administrative hold was reasonable and temporary, it did not violate the automatic stay.  The Court, therefore, granted summary judgment as to count four in favor of the bank.

Pages

View all »