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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 Hite (Case No. 15-51191) 09/06/2016

Debtors, a couple caring for their severely disabled son, filed bankruptcy under Chapter 13. Debtors receive payments from Public Partnership, LLC, a Virginia and Medicaid approved organization that pays Medicaid waiver benefits for their son’s homecare. The chapter 13 trustee objected to the plan under 11 U.S.C. § 1325(b) on the grounds that the debtors did not allocate all of their disposable income towards payments to unsecured creditors because they did not include the Medicaid waiver benefits as part of their disposable income.  The Court found that the Medicaid waiver benefits were received under the Social Security Act and the debtors lived with and cared for their son.  The Medicaid waiver benefits were therefore excluded from debtors’ disposable income. The Court explained that the Medicaid waiver benefits are also excluded from disposable income as foster care payments under 26 U.S.C. § 131 because the debtors provide non-medical care to their son within their own home. Accordingly, the Court overruled the trustee’s objection.

In re Wilburn (Case No. 14-70032) 8/22/2016

Above median debtor filed an amended plan due to a reduction in income that proposed to reduce both the payment and the term of the plan.  The Chapter 13 Trustee objected to the plan contending that the debtor could not both reduce the applicable commitment period and reduce the amount to be paid.  Relying on the reasoning in In re Davis, the Court held that Section 1325(b) is not applicable to plan modification under Section 1329(a) and overruled the Trustee’s objection.  The wording of Section 1329 read in conjunction with the Code’s rules of construction code section (Section 102(5)) supports the conclusion that the modification options set forth in Section 1329(a) are not mutually exclusive and are available either separately or in combination, provided the applicable elements of Section 1329(b)(1) are met.

In re Stinnie (Case No. 16-60846) 08/04/2016

Individual filed bankruptcy petition certifying she had taken a prepetition credit counseling course within the 180-day period ending on the date of the petition as required by section 109(h).  She subsequently filed a certificate of credit counseling showing that she took the course a day after filing her petition.  The Court found the individual did not meet the eligibility requirements and dismissed the case without prejudice.

In re Stanley (Case No. 15-70378) 7/29/16

Debtor’s motion seeking approval of the sale of real property was granted by the Court, but the Court denied the 5% commission and reimbursement of expenses requested by the realty company.   The sale was conducted by auction pursuant to the terms of the confirmation order.  The Debtor subsequently filed a response to his own motion alleging that the sales price was insufficient.  During the evidentiary hearing, the Court was advised that the auctioneer purchased the property through a corporation wholly owned and controlled by that auctioneer and that no disclosure of this relationship was made at or prior to the sale.   The Court held that the auctioneer and the realty company violated the regulations of the Virginia Auctioneers Board by the auctioneer bidding on his own behalf without providing notice that his bidding would be permitted.  The Court then found that the auctioneer was neither a statutory insider nor a non-statutory insider and was disinterested at the time he was employed to conduct the auction under 11 U.S.C. § 327(a). However, once the auctioneer began bidding without prior disclosure, the question of whether he violated his fiduciary duties as a professional employed pursuant to an order of the Court came into play.  The court adopted the “inherently fair” approach and allowed the sale as it was in the estate’s best interest, shown by arm’s length, good faith negotiations with full disclosure.  However, the Court denied the requested commission and reimbursement of expenses of the realty company in line with the Court’s duties to maintain disinterestedness, avoid the appearance of impropriety and ensure impartiality in the administration of the estate.  

Boyd v. New Peoples Bank (Case No. 08-71119; A.P. No. 16-07008) 5/27/2016

The Debtor filed an adversary proceeding complaint against a creditor for violation of the discharge injunction.  The creditor filed a motion to dismiss the complaint; the Debtor filed a Motion for Judgment on Issue of Liability.  The Court treated both motions as cross-motions for summary judgment pursuant to Rule 7056 as matters outside the pleadings were presented to and not excluded by the Court.  The Court held that the creditor violated the discharge injunction by collecting on “new” notes that were made by the creditor with the Debtor that were based in whole or in part on a debt that was discharged within the scope of Section 524(c).  Neither the Debtor nor the Bank attempted to reaffirm the debt by following the procedures of Section 524(c) before moving forward with a second note.  The Debtor’s motion for summary judgment on the issue of liability was granted with a further hearing to be scheduled to determine the appropriate sanctions, if any. 

In re Futreal (Case No. 15-70886) 05/05/2016

The Court issued a Show Cause for Sanctions against law firm and attorneys in these two cases after hearing on United States Trustee’s Motion for Review of Attorney’s Fees filed in the cases.  Federal court has inherent power to control admission to its bar and to discipline attorneys who appear before it.  The Court imposed sanctions against attorneys and law firm pursuant to that inherent power and authority granted to it under 11 U.S.C. Section 105(a).  The Court found that the parties violated Bankruptcy Rule 9011(b) and transgressed duty of disclosure required by Bankruptcy Rule 2016(b).  The attorneys and law firm were each sanctioned and fined by the Court.

In re Repass (Case No. 15-70885) 05/05/2016

The Court issued a Show Cause for Sanctions against law firm and attorneys in these two cases after hearing on United States Trustee’s Motion for Review of Attorney’s Fees filed in the cases.  Federal court has inherent power to control admission to its bar and to discipline attorneys who appear before it.  The Court imposed sanctions against attorneys and law firm pursuant to that inherent power and authority granted to it under 11 U.S.C. Section 105(a).  The Court found that the parties violated Bankruptcy Rule 9011(b) and transgressed duty of disclosure required by Bankruptcy Rule 2016(b).  The attorneys and law firm were each sanctioned and fined by the Court.

In re Webber (Case No. 15-70705) 4/7/2016

Debtor filed a motion to sell real estate that was objected to by the property owners association and other creditors. The primary objection was that a boat slip and access easement that were also to be sold were located on property owned by the POA.  The Court denied the motion without prejudice and abstained pursuant to 28 U.S.C. § 1334(c)(1) from determining the Debtor's rights in the boat slip and access easement to allow litigation to proceed in state court to determine those rights, and potentially the rights of other parties not before the Court. The Court also expressed concern that the matter should have been brought as an adversary proceeding given that the parties sought a determination of an interest in property within the scope of FRBP 7001(2).

In re Morgan (Case No. 14-60461) 3/25/2016

The Debtors filed a contempt motion against a creditor for pursuing a deficiency claim against the male Debtor and a co-debtor despite failing to timely file a deficiency claim within the time required pursuant to a consent order granting the creditor relief from stay.  The creditor failed to appear at the hearing on the motion and the Court issued a show cause order requiring the creditor to appear and show cause why an order should not be entered holding the creditor in contempt of Court.  At the show cause hearing, the creditor again failed to appear. 

The Court found, by clear and convincing evidence, that the creditor violated the automatic stay of 11 U.S.C. § 362(a), but held that damages and attorney's fees were not appropriate under Section 362(k)(1) since evidence of damages was not proven by a preponderance of the evidence.  However, pursuant to Section 105(a), the Court held the creditor in civil contempt for failing to comply with the Court's previous order and thus, sanctioned the creditor in the amount of $500.00 for willful violation of the consent order payable to the male Debtor and the co-debtor and $500.00 in attorney's fees payable to Debtors' counsel.

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