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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 Rasnake (Case No. 12-71221) 9/24/2012

Chapter 7 debtors claimed IRA exemptions on Schedule C pursuant to Section 522(b)(3)(C).  The trustee argued that since Virginia opted out of federal exemption scheme, the debtors could only claim the Virginia exemption for retirement accounts under Va. Code section 34-34 and within the time limit prescribed by Va. Code section 34-17.  The Court relied on In re Diaz, 2010 Bankr. Lexis 1944 (Bankr. E.D. Va. June 10, 2010), which held that a debtor who is required to take state law exemptions can still elect to claim the retirement account exemption under section 522, and overruled the Trustee's objection.

In re Gillenwater (Case No. 12-71022) 09/18/2012

            The debtor filed a Homestead Deed that claimed as exempt under the Code of Virginia § 34-4, as amended “Reimbursed money to mother, Joyce Gillenwater, payment made 2/2/12 claimed as exempt $3,000.00.”  The trustee filed an objection to exemption stating that the debtor was not in possession of the $3,000.00 he paid to his mother and, therefore, did not retain a sufficient ownership interest in those funds to be able to file a homestead deed as to them.  The debtor asserted that he retained an interest in all property that was property alleged to be part of the bankruptcy estate, specifically any property alleged to have been transferred to someone alleged to be an insider within one year of the bankruptcy filing date, and that he was entitled to exempt such property by a properly filed homestead deed.  Relying upon two unpublished cases issued by the Court in 2003, the Court sustained the trustee’s objection.  In those decisions, the Court sustained similar objections for three reasons.  First, under Virginia law, there is no right to claim an exemption in property no longer owned by the exemption’s claimant.  Second, for a debtor properly to claim an exemption in the original schedules, the property claimed as exempt must be part of the bankruptcy estate on the date of filing.  And third, if the preferential payments made by the Debtors were to be recovered by the trustee, as to the debtors they would still be preserved under 11 U.S.C. § 551 for the benefit of the bankruptcy estate and their creditors generally.

In re Falls (Case No. 07-70111) 9/12/2012

The Court denied the debtors' motion to vacate its order disapproving a reaffirmation agreement. At the hearing, the debtors advised the Court that they had not been able to get the creditor to respond to their request for a loan modification and that they were willing to accept the Court's original decision denying approval of the reaffirmation agreement.  The Court further directed that the discharge order be entered which had been deferred pending a final ruling on the motion.

In re Lyall (Case No. 11-70535) 08/09/2012

The debtors attempted to avoid a creditor’s lien on the basis that it impaired an exemption which they did not claim at the time of filing their initial petition or at any time prior to the confirmation of their first amended plan.  The creditor objected arguing that its treatment under the first confirmed plan was binding.  The court concluded that the debtors had not been shown to have engaged in any nefarious conduct which would estop them from amending their Schedule C post-confirmation.

Jernigan v. Wells Fargo Bank, N.A. (In re Jernigan) (Case No. 12-70778; A.P. No. 12-07026) 08/01/2012

            The debtor filed a complaint containing four counts: (1) turnover of funds pursuant to 11 U.S.C. § 542; (2) civil liability under 12 C.F.R. § 229.21; (3) class action civil liability under 12 C.F.R. § 229.21; and (4) violation of the automatic stay.  Wells Fargo filed a motion to dismiss the complaint or in the alternative for summary judgment.  Both parties agreed that the turnover claim was moot.  The Court found that counts two and three failed to state a claim upon which relief may be granted.  The violation of automatic stay was based on an administrative hold Wells Fargo placed on the debtor’s accounts after receiving notice of the bankruptcy.  The Court concluded that the key in determining if an administrative hold violates the automatic stay turns upon whether the hold is temporary and serves to maintain the status quo and preserve property of the estate.  The Court held that, because the administrative hold was reasonable and temporary, it did not violate the automatic stay.  The Court, therefore, granted summary judgment as to count four in favor of the bank.

In re Tony Gee's, Inc. (Case No. 12-61015) 7/20/2012

A creditor filed a motion seeking an order declaring that a lease between the Debtor and the creditor had been terminated or, in the alternative, to compel the Debtor to accept or reject the lease by a date certain.  The Debtor had entered into a five-year commercial lease where it operated a restaurant, but sublet the premises without permission approximately two-and-a-half years into the lease.   In addition, the Debtor did not pay rent when due and thus defaulted under the lease prior to the Debtor filing for Chapter 11.

The Court found that the Debtor defaulted under the terms of the lease by failing to pay rent when due and by subletting the premises without the consent of the creditor.  However, the Court determined that the lease was not terminated pre-petition notwithstanding the fact that the Debtor was in default since the creditor did not provide adequate notice of termination per the terms of the lease.  The Court further determined that, pursuant to § 365(d)(4)(A), the Debtor is allowed 120 days from the petition date (or sooner if a plan has been confirmed) in which to assume or reject the unexpired lease or the lease will be deemed rejected.  The Court set the 120-day deadline for accepting or rejecting the lease and required that, if the Debtor accepts the lease, it must cure all defaults under the lease by 7 days following the deadline.

In re Nittany Enterprises, Inc. (Case No. 11-70779) 07/06/2012

Claimants, who were customers of the debtor and who had purchased memberships in the franchisor of the debtor, filed proofs of claim seeking refunds of their membership fees after the debtor closed the local showroom.  The chapter 7 trustee objected.  The court considered three issues: (i) whether there was a material breach of contract so as to give the claimant a claim as defined by the Bankruptcy Code; (ii) even if there was a material breach leading to a claim, whether the claimed amount is the quantum of the claimants’ damage; and (iii) whether the claims were entitled to priority.  The court found that there was no material breach when the local showroom was closed, because there were other locations and the opportunity to shop on the Internet and there was no evidence to support a right to payment in the form of a refund of the membership fee.  The court thus disallowed the claims.

In re West (Case No. 12-60595) 5/29/2012

The Court denied a motion for relief seeking permission to repossess a vehicle.  The debtors' daughter financed a vehicle; the debtors did not sign the contract.  However, the vehicle was titled in the name of the female debtor and the debtors' daughter.  The male debtor's name was not placed on the title.   The Court held that the vehicle was property of the estate under Section 541(a).  As the debtor was not legally obligated to make any payments to the creditor, the creditor had no claim against the debtor under Section 101.  The creditor also argued lack of adequate protection.  However, the Court held that the creditor had no interest in the debtor's interest in the vehicle and thus had no interest that lacked adequate protection.  The Court further found that the Debtor had equity in the vehicle and that relief was not appropriate under Section 362(d) and that there was no basis for relief under Section 362(a).

White v. FIA Card Services (In re White) (Case No. 11-60956-LYN; A.P. No. 12-06016) 05/29/12

The Debtor filed a complaint to avoid a judgment lien of East Bay Funding, LLC. East Bay did not answer the Debtor’s complaint and subsequently, the Debtor filed a motion for default judgment. Case law provided that entering a default judgment is a matter of the court’s discretion. The facts pleaded by the Debtor did not support the relief requested because no exceptions which would allow for lien avoidance applied. Accordingly, the motion for default judgment was denied.

Goldstein v. PHC-Martinsville, Inc. (In re Huffman) (Case No. 09-60343; A.P. No 11-06095) 05/29/2012

The debtor allegedly sustained an injury in a hospital, and she filed for chapter 7 bankruptcy but did not schedule the claim and eventually received a discharge.  The chapter 7 trustee brought the personal injury action in the reopened bankruptcy case.  The defendant, which was the owner of the hospital, filed two motions, one to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) and one to abstain pursuant to 11 U.S.C. § 1334(c)(2) from hearing the matter in the federal courts.  The court denied both motions.  The defendant filed a motion to reconsider pursuant to Federal Rule of Bankruptcy Procedure 9023 and 9024.  The court denied the motion to reconsider.

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