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 concluded that the debtor was entitled to summary judgment on all counts. The Court granted summary judgment sua sponte pursuant to Rule 56(f) for the section 523(a)(4) claim and granted debtor's written motion on the section 523(a)(6) claim.
At the time the Chapter 13 petition was filed in the instant case, the debtor had another Chapter 13 case pending in this same court. In that case, a secured creditor was granted relief from stay. The creditor began the foreclosure process, but the debtor filed this second case to stop the foreclosure. However, in the first case, the debtor had not received his discharge because of procedural matters that were out of his control, namely, an employer continued to send payment to the Chapter 13 Trustee per a wage deduction order, even though an order was sent to the employer notifying it that the Trustee had sufficient funds on hand to pay the case in full. Pursuant to Local Rule 1017-2, an order dismissing the second case was entered.
The Debtor then filed a motion to vacate dismissal and reinstate case. The court granted the motion after determining that, even though in general a debtor should not have multiple bankruptcy cases, the present circumstances constitute exceptional circumstances where the only reason the first case remained open was due to procedural issues out of the debtor's control. The pending foreclosure sale was deemed to be void and of no effect.
In a Chapter 11 case, the Court sustained the debtors' objection to the claim of a creditor and reclassified that claim from a secured claim to an unsecured claim. The creditor claimed that an asset purchase agreement relating to a mining lease provided for a security interest in certain assets of one of the debtors. The Court found that the creditor’s claim did not comply with Rule 3001(c)(1) and was not entitled to prima facie validity under Rule 3001(f). Therefore, the burden remained on the creditor to prove the validity of a security interest purportedly granted by that agreement by a preponderance of the evidence. The Court held that the clear intent of the parties to the agreement was specifically not to create any type of security interest. The “right of reentry” language relied upon by the creditor could not grant it a security interest as the terms of the agreement were clear. Further, under West Virginia law, the creditor did not hold legal title to the property and was not entitled to immediate possession of the property; thus is could not meet its burden of proof that a security interest existed. Moreover, the Court found that, even if the purported security interest did exist, the creditor failed to perfect that security interest as required by Rule 3001(d).
The Court also denied the creditor's motion for relief under Section 362(d)(1) after the court determined that the creditor did not have any security interest in the assets of the debtors.
The Chapter 7 Trustee filed an objection to the Debtor’s claim of exemption under Virginia Code § 34-29, entitled “Maximum portion of disposable earnings subject to garnishment.” The Debtor claimed the § 34-29 exemption in accounts receivable for stenography work performed prepetition.
The Court held that the analysis in In re Kluge, Case No. 11-61517 (Bankr. W.D. Va. Oct. 3, 2011), is correct in that § 34-29 only applies to garnishment, and because there is no garnishment at issue in this case, § 34-29 simply does not apply to afford the Debtor the relief claimed in her exemption. Because the Court found that § 34-29 is not applicable by its statutory terms to the facts of this case, the Court did not find it necessary to address the Trustee’s other arguments.
The Chapter 13 Trustee filed motions in nine separate Chapter 13 cases seeking payment of postpetition mortgage fees, expenses, and charges for notices filed pursuant to Rule 3002.1 and later filed a trial brief requesting a decision authorizing payment of Rule 3002.1 notices in other cases, subject to specified conditions.
The court approved the motion in part, allowing for payment by the Chapter 13 Trustee by increasing the debtors’ Chapter 13 plan payments without the necessity of filing a modified plan, and denied the motion in part, denying payment from the pool of funds earmarked for unsecured creditors. In addition, the court denied in its entirety the request to pre-approve language to be added to future Chapter 13 form plans allowing such payment.
Plaintiff filed a complaint against his ex-wife asserting that certain transfers of his property she made under a power of attorney before they were maried were excepted from discharge pursuant to section 523(a)(4) and 523(a)(6). The Court concluded that the 523(a)(4) claim was barred by the statute of limitations and that the plaintiff otherwise failed to state a plausible claim upon which relief could be granted.
Creditor objected to confirmation of the debtor’s amended plan on the grounds that the petition and amended plan were filed in bad faith in violation of Section 1325(a)(3) and 1325(a)(7) and that plan was not feasible under Section 1325(a)(6). Notwithstanding the Trustee’s recommendation in favor of confirmation, this was essentially a two-party dispute involving allegations of fraud, undue influence and willful and malicious injury to property by the debtor. The Court held that the debtor did not meet her burden of proof under Section 1325(a)(3) that the plan was proposed in good faith because of Debtor’s pre-petition and post-petition conduct, the lack of a meaningful dividend to unsecured creditors and the nature of likely non-dischargeable debt to the creditor. The Court denied confirmation of the plan.
The Court also held that the debtor filed her petition with a lack of good faith and dismissed the case under Section 1307(c)(5). The Court concluded that authorizing additional time to file a second amended plan was not in the best interests of creditors and would be fruitless. As almost half of the funding for the debtor’s “bare minimum” plan was proposed to come from her mother, some of which would go back to the mother in the form of a distribution on her own claim, it was unlikely that the debtor could propose a more advantageous plan for the repayment of her debts.
A creditor and the United States Trustee filed separate complaints to deny the debtor a discharge on various grounds. The court denied the debtor’s discharge under Bankruptcy Code sections 727(a)(2)(A), 727(a)(2)(B), and 727(a)(4)(A), because the debtor fraudulently transferred and concealed property of the estate and knowingly and fraudulently made false oaths in connection with these actions.
The debtor filed a complaint against his two brothers, personal representatives of the estate of their mother, seeking entry of an order to permanently suspend any attempt to collect on a debt, to enjoin the continuance of a suit filed in state court and to enjoin the estate from offsetting a discharged debt from the debtor’s inheritance. The debtor requested the court hold the defendants in contempt for their willful violations of the discharge order and injunctive provisions of section 524.
Prior to filing bankruptcy, the debtor's mother loaned him $87,000. This amount was listed in debtor's schedules and the Court granted the debtor a discharge. Nearly two years later, the mother executed her will listing the outstanding loan. The defendants later sought to administer the will, to determine how much of the loan remained unpaid and to take into account the amount of the outstanding loan in the final distribution so that the children would each receive an equal share of her estate, but the debtor claimed that such attempt would be a violation of the Bankruptcy Court's discharge order.
The Court, treating the motion to dismiss as a motion for summary judgment under Rule 7056, held that the state court action, which seeks to administer the will, did not violate the discharge injunction and dismissed the complaint. The Court concluded that the defendants were not seeking to collect an obligation owed by the debtor, but merely seeking to carry out the intention of the mother as expressed in her will. Thus, the filing of the state court petition to administer the will was not an act to collect a debt, but merely a request to the state court to interpret the provisions of a will.
The United States Trustee moved to dismiss the case, among other reasons, as presumptively abusive according to 11 U.S.C. § 707(b)(2). The court concluded that issuance of a chapter 7 discharge to the debtors was presumptively abusive under Bankruptcy Code section 707(b)(2) and that the debtors had not rebutted the presumption. Additionally, the court found that they failed to prove special circumstance deductions under 11 U.S.C. § 707(b)(2)(B). The court granted the debtors an opportunity to convert to chapter 13, absent which the case would be dismissed.