Creditor filed adversary proceeding seeking a determination that certain property damages caused by the Debtor to a rental mobile home were non-dischargeable under 11 U.S.C. § 523(a)(6) as debts “for willful and malicious injury by the debtor to another entity or to the property of another entity.” The Court found that the majority of the damages to the mobile home were a consequence of slovenly living habits, negligence and deplorable housekeeping, but did not rise to the level of malicious or willful action. However, certain damages related to the destruction of a bathroom vanity and ceiling fan were held to be non-dischargeable because the Debtor knew “with objective substantial certainty” his actions would injure the creditor’s property.
You are here
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.
This matter came before the Court on the Motion for Summary Judgment filed by the Virginia State Bar against a pro se Debtor to determine whether the Debtor’s debt to the State Bar was excepted from discharge under 11 U.S.C. § 523(a)(7). The Court granted the motion for summary judgment as the debt to be excepted from discharge is (1) a fine, penalty or forfeiture; (2) owed to or for the benefit of a governmental unit, and (3) that is not compensation for actual pecuniary loss. Therefore, the Court declared the debt to the Virginia State Bar in the amount of $10,972.56 nondischargeable under 11 U.S.C. § 523(a)(7).
This adversary proceeding was filed by the debtor against HUD and the holder of a reverse mortgage, as well as other parties, seeking declaratory judgment against HUD stating that it failed to implement certain anti-displacement protections into the Home Equity Conversion Mortgage program in contravention of enabling legislation. The debtor also asked the Court to order HUD to accept assignment of the deed of trust at issue in the case, to quiet title to the property voiding the reverse mortgage and enjoining the holder of the mortgage from proceeding with a foreclosure sale under the reverse mortgage. After an in depth discussion of the issues of mootness and standing, the Court granted HUD’s Motion to Dismiss and dismissed the complaint against HUD as redressability was absent as to HUD to support Article III standing. The Court denied the holder of the reverse mortgage’s motion to dismiss for failure to join a necessary party as the Court found that party not to be a necessary party under Rule 19(a) of the Federal Rules of Civil Procedure. The Court also denied that creditor’s motion to dismiss on the grounds of statute of limitations as the Court believed there were significant questions of fact as to when the debtor’s cause of action accrued.
The Debtor filed his complaint seeking turnover under 11 U.S.C. § 542 of certain real property, as well as damages arising from an alleged violation of the automatic stay in a prior case. The Court granted the Department of Veterans Affairs’s motion for summary judgment and dismissed the adversary proceeding for lack of subject matter jurisdiction as the action fell outside the 6 year statute of limitations contained in 28 U.S.C. § 2401 and the United States did not waive sovereign immunity. Even if the Court had subject matter jurisdiction, the record demonstrates that the Debtor is not entitled to turnover of the property and no violation of the automatic stay occurred; thus the Department of Veterans Affairs is entitled to judgment as a matter of law under Rule 7056 of the Federal Rules of Bankruptcy Procedure. The Court also denied the Debtor’s motion to amend his complaint to add party defendants to the action as the amendment would be futile.
The Court overruled the Trustee's objection to Debtors' claimed exemption in personal injury proceeds. The trustee objected to the exemption under Va. Code Ann. Section 34-28.1 on the grounds that Debtors lost their claimed exemption when the funds were commingled. Construing exemptions liberally in favor of the Debtors, the Court held that the funds were clearly traceable and properly segregated at the time of filing the petition.
After a two day trial on confirmation and the objections thereto, the Court denied confirmation of the Debtor’s Chapter 12 plan. After determining the value of the property of this farming operation, the Court turned to the proper interest rate to be paid to secured creditor and feasibility of the plan. Within the Till framework, the Court held that interest at the rate of prime plus 2.5% provided a rate high enough to compensate the secured creditor for its risk but not so high as to doom the plan. The Court also denied approval of the third-party injunction language in the plan. The Court allowed the Debtor an opportunity to amend its plan to address feasibility in accordance with the Court’s Opinion.
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.
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.