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 court held that debtor's discharge injunction under 11 U.S.C.§ 524(a)(2) enjoins a creditor holding a dischargeable claim from commencing acts to collect any unpaid portion thereof from the debtor, rather than from the debtor's non-filing spouse who may also be liable for the debt.
The matter before the Court is the United States Trustee's motion to dismiss this case for abuse under 11 U.S.C. § 707(b). Section 707(b)(1) provides that a court may dismiss an individual case under Chapter 7 if (1) the debtor’s debts are primarily consumer debts and (2) it would be an abuse of the provisions of chapter 7 of the Bankruptcy Code to grant relief to the debtor. Section 707(b)(2) provides that abuse is presumed if a debtor's net monthly income exceeds a certain threshold amount as determined by the means test. Section 707(b)(3)(B) provides that if the presumption in Section 707(b)(2) does not arise or is rebutted, the court must consider the totality of the debtor's financial circumstances in determining whether proceeding in Chapter 7 would be an abuse. The burden of proof is on the United States Trustee to prove by a preponderance of the evidence that continuance under Chapter 7 would constitute abuse of the Bankruptcy Code. The Court concluded that the debtor does not have sufficient income to fund a Chapter 13 plan, and no other facts indicative of abuse are present. Therefore, the Court denied the United States Trustee's motion to dismiss this case for abuse.
The matter before the Court is a motion for relief from the automatic stay filed by a creditor. Because the debtor is a single asset real estate debtor, as defined by 11 U.S.C. § 101(51B), the creditor's motion for relief from the automatic stay must be granted under 11 U.S.C. § 362(d)(3) unless the debtor has either: (a) filed a plan of reorganization that has a reasonable possibility of being confirmed within a reasonable time or (b) commenced monthly payments that are in an amount equal to the interest at the then applicable non-default contract rate of interest on the value of the creditor's interest in the real estate. The debtor has made no post-petition payments to the secured creditor and debtor’s plan does not have a reasonable possibility of being confirmed within a reasonable time. Accordingly, the Court granted the creditor's motion for relief from the automatic stay.
The Court denied a creditor’s motion to prosecute fraudulent conveyance actions on behalf of the estate under 11 U.S.C. § 548. Section 548 grants trustees the authority to avoid fraudulent transfers and obligations. The Bankruptcy Code does not expressly grant creditors "derivative standing" to initiate avoidance actions. The Fourth Circuit has twice declined to decide whether the doctrine of derivative standing exists and the creditor did not provide a strong argument that such standing should be recognized.
The Court granted a motion to dismiss a negligence claim under Federal Rule of Civil Procedure 12(c) because, under Virginia law, creditor (a residential mortgage loan servicer) is not subject to any common law duty or fiduciary duty owed to debtors (loan obligors) and instead merely is subject to a contractual duty. The Court also granted a motion for summary judgment against debtor-wife under Federal Rule of Civil Procedure 56 because debtors' loan is not in debtor-wife's name and therefore creditor could not have been negligent towards her or breached a fiduciary duty owed as to her. Further, the Court granted creditor's motion for summary judgment with respect to debtor-husband only because any duty owed by creditor is limited to the terms of the loan and debtors did not allege any breach of the terms of the deed of trust. Lastly, the Court held that debtors’ failure to mention only one of two creditors in relation to breach of contract litigation in their schedules for bankruptcy does not raise any equitable estoppel grounds against the assertion of any claims that may exist as a result of such litigation against either creditor.
The court held that creditor's refusal to return wages garnished post-petition pursuant to a pre-petition writ of garnishment constituted a knowing and willful violation of the automatic stay under 11 U.S.C. § 362(h) and that debtors are entitled to actual damages in the amount of wages garnished post-petition plus wages lost due to this proceeding, compensatory damages, attorney's fees, and punitive damages because creditor acted in disregard for the law and for debtors' rights under 11 U.S.C. § 362.
The Court held that, prior to the date on which collateral is actually surrendered to secured creditor, adequate protection payments made by a debtor to a Chapter 13 trustee under Standing Order #9 and 11 U.S.C. § 1326(a)(1)(C) must be forwarded to the secured creditor because they account for the depreciation of collateral. The Court also held that a proof of claim that is timely filed must be given effect nunc pro tunc from the filing date unless the Bankruptcy Code or Rules provide otherwise, and that surrender of collateral pursuant to a plan does not extinguish a secured claim prior to the surrender of the collateral.
The Court granted debtors' motion to approve the sale of their primary residence free and clear of liens under 11 U.S.C. § 363(f)(3) and determined the extent of a creditor's lien on such primary residence.
Two toy designers ("Designers") brought an adversary proceeding against the Chapter 7 trustee for recovery of money owed to them after the debtor violated a licensing agreement and manufactured and sold toys designed by the Designers without the Designers' knowledge or consent. The Court, applying the analysis set forth in Capital Investors Co. v. Morrison, 800 F.2d 424 (4th Cir. 1986), awarded the Designers royalties plus the profits the debtor made from the toys. Accordingly, the Court held that the value of the constructive trust is not property of the estate under 11 U.S.C. § 541(d).
Respondent's motion requesting recusal of judge from show cause hearing pursuant to 28 U.S.C. section 455 denied.