The United States Trustee asserted that the totality of the debtor’s financial circumstances demonstrated abuse of the provisions of chapter 7 of the Bankruptcy Code under section 707(b)(3)(B). The United States Trustee therefore moved for dismissal of the case pursuant to section 707(b)(1). The primary dispute focused on the debtor’s ability to pay in light of expenses associated with a house the debtor owned in addition to expenses associated with another house owned by the debtor’s non-filing spouse. Examining the factors set out in the Fourth Circuit decision in Green v. Staples (In re Green), 934 F.2d 568 (4th Cir. 1991), the Court failed to find evidence sufficient to support a showing that in this case the debtor’s financial circumstances demonstrated abuse. Accordingly, the Court denied the motion to dismiss.
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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.
Plaintiff failed to show as a matter of law that debtor committed a willful and malicious injury under section 523(a)(6). The court denied plaintiff's motion for default judgment, denied the motion to dismiss the debtor's petition, denied leave to amend, and dismissed the complaint.
The Court addressed the question of whether a Debtor's claimed exemption in her tax overpayment supersedes the government's right to setoff of the overpayment against a prior unpaid tax liability. The IRS challenged the Court's jurisdiction to address the Debtor's complaint, claiming sovereign immunity was not waived under Section 505 of the Bankruptcy Code. However, the Court found that 11 U.S.C. § 106(a) specifically waived sovereign immunity for actions brought in connection with 11 U.S.C. § 522 and 11 U.S.C. § 553, which formed the basis of the complaint. In addition, Section 106 allows the Bankruptcy Court to "hear and determine any issue arising with respect to the application" of those provisions to the IRS. Accordingly, the Court found sovereign immunity was abrogated as to the resolution of these matters and that the Court had jurisdiction to proceed to resolve the matter on the merits. As to the merits of the case, recognizing a growing split of authority on the issue, the Court ruled that the Debtor's right to claim an exemption in her tax overpayment pursuant to 11 U.S.C. § 522 is subordinate to the government's nonbankruptcy right of setoff preserved by 11 U.S.C. § 553.
Notice of Objection to Claim on the deadline to object to discharge under Section 523 rather than initiating an adversary proceeding by filing a dischargeability complaint in accordance with Rule 7001(6). The Creditor then sought to have the court construe the Motion for Relief as an "informal proof of claim" and to allow the creditor to file a dischargeability complaint that related back to the date of the Motion for Relief. The Court denied the request on the grounds that the Motion for Relief did not allege any grounds upon which the debt was dischargeable, it did not ask the Court to determine the dischargeability of the debt, and it did not contain a request to extend the deadline by which to file a dischargeability complaint. Accordingly, the Court denied the Motion for Relief and dismissed the Notice of Objection to Claim.
Pro se Debtor sought to proceed in forma pauperis on his appeal from an order dismissing an adversary proceeding. The Court found that the Debtor was eligible for waiver under 11 U.S.C. Section 1930(f) guidelines. However, as appeal was frivolous and not taken in good faith, the Court denied the application for waiver of fees under Section 1930(f)(3).
This matter was before the Court on cross motions for summary judgment filed by the parties in connection with a complaint to avoid certain transfers by the Debtor to the creditor as fraudulent or voluntary conveyances pursuant 11 U.S.C. §§ 544 and 548 and Va. Code §§ 55-80 and 55-81 stemming from the recordation of a deed of trust modification. The Debtor asserted that due to a lag between the time the deed conveying the real estate to the Debtor was recorded and the time the deed of trust modification was recorded, the recordation of the deed of trust modification rendered it insolvent or with unreasonably small capital. The creditor asserted that the Debtor received its real estate subject to the existing deed of trust liens; thus no transfer occurred. The Court granted the creditor’s motion for summary judgment, finding that the Debtor agreed to acquire the real estate subject to Farm Credit's liens as part of a single, unified transaction. The Court focused on (i) whether there was a transfer of an interest of the Debtor in property that would have been preserved but for the transaction with the creditor, and (ii) whether the net effect of the transaction depleted the Debtor's estate. The Court concluded that the answer to both questions is no. The Debtor’s motion for summary judgment was denied. The Debtor’s motion to amend the complaint was also denied on the grounds that the proposed amendment would be futile.
The debtor filed an objection to an unsecured proof of claim. Both the debtor and the claimant agreed that the claim was barred by the statute of limitations. The claimant, however, contested the objection, because the debtor filed her objection to claim after the Court entered an order confirming her chapter 13 plan and the proof of claim had been filed prior to confirmation. The claimant, therefore, argued that the objection was barred by res judicata. The Court concluded that the debtor’s objection to the unsecured claim was not barred by res judicata when she filed the objection after confirmation of her chapter 13 plan yet the claimant had filed its unsecured proof of claim before plan confirmation.
The plaintiff alleged in his amended complaint that certain actions related to foreclosure proceedings in Tennessee state court between 2012 and 2014 constituted a violation of the automatic stay. At oral argument, the Plaintiff asserted a claim that due to a jurisdictional defect in Tennessee state court, the judgment and writs of possession in favor of the defendant were unlawful. The Court granted Defendant HSBC's motion to dismiss the amended complaint on two grounds. First, the Court did not have subject matter jurisdiction under the Rooker-Feldman doctrine to engage in appellate review of the state court judgment. Second, the amended complaint failed to state a claim upon which relief could be granted for a violation of the automatic stay as the Plaintiff was not in bankruptcy at the time the defendant's conduct took place. Further, the Court sua sponte dismissed the amended complaint against the John Doe defendant for the same reasons.
Having determined in its Opinion of May 27, 2016 that the Bank violated the discharge injunction, the Court held a hearing as to what sanctions, if any, may be appropriate. The Debtor sought actual damages, attorneys' fees, and punitive damages. As to actual damages, the Debtor sought all payments made to the bank post-discharge, as well as all payments made to insure the property and to maintain electricity and water service to the property post-discharge. The Court determined that payments made voluntarily to the bank on the original note were not recoverable, but payments made under the subsequent renewal notes, which were made in violation of the discharge injunction, were recoverable. The Court further concluded that the insurance and utility costs were not recoverable because they were in rem obligations contained in the deed of trust and the debtor would have been required to pay these costs even had the bank not violated the discharge injunction. The Court thus awarded $11,796.29 in actual damages. As to attorneys' fees, the only evidence presented at the hearing was that the Debtor paid a $5,500 retainer and $586.00 in court reporter fees. No fee agreement or time records were produced, but counsel for the Bank conceded that the $5,500.00 had been fairly earned. Counsel for the debtor requested further opportunity to present evidence of his fees, but the Court denied that request and awarded the debtor $6,086.00 in attorneys' fees and costs. Finally, the Court determined that the Bank did not act with the requisite degree of malevolence to require an award of punitive damages.
The Court granted the United States Trustee’s Motion for Review of Attorney’s Fees in several cases after an evidentiary hearing. The attorneys and law firm were each sanctioned for civil contempt for failure to pay a fine imposed by this Court’s prior Order. An attorney and law firm were ordered to disgorge all attorneys’ fees paid by the debtors in the matters before the Court. Civil penalties were also assessed against the law firm under Section 526(c)(5) as the firm demonstrated a clear and consistent pattern or practice of violating Section 526(a)(1). The Court held that the attorneys’ fees collected were excessive under 11 U.S.C. Section 329(b). The Court also voided the contract between the law firm/debt relief agency and the assisted persons as the law firm failed to perform any service that the agency informed an assisted person it would provide under Section 526(a)(1), (c)(1). The law firm, attorney and any related entities, were also permanently enjoined from practicing before this Court.