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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.

Pearson v. Bank of America et al (In re Pearson) (Case No. 11-60579-LYN) (A.P. No. 11-06116) 01/27/12

Debtor filed a motion against Bank of America seeking damages for violation of the discharge injunction and the Fair Debt Collection Practices Act. First, precedent provided that the plaintiff had to prove that the defendant willfully violated the discharge injunction. The language of the letter the defendant sent to the plaintiff could not be construed as an attempt at collection. Accordingly, the Court held that the defendant did not violate discharge injunction.

Anderson v. Bank of America (In re Anderson) (Case No. 10-60510; A.P. No. 11-06117) 01/27/2012

Debtors sought damages for violation of the discharge injunction and the Fair Debt Collection Practices Act. First, precedent provided that the court may hold parties in contempt for willfully failing to comply with a previous order. The letter sent to the debtors contained language which made it clear that it was not an attempt to collection. Accordingly, the Court held that the defendants did not violate the discharge injunction.

Carrico v. Beneficial Discount Co. of Virginia (In re Carrico) (Case No. 11-62265; A.P. No. 11-06136) 01/10/2012

Debtor sought to avoid a lien of Beneficial Discount Co. of Virginia. Beneficial did not file an answer and the Debtor subsequently filed a motion for default judgment. The facts pleaded by the Debtor did not support the relief requested because no exceptions which would allow for lien avoidance applied in this case. Accordingly, the motion for default judgment was denied.

In re Wood (Case No. 10-61852) 12/21/2011

            Pre-petition, the debtor leased retail space to operate a restaurant through a limited liability company.  The debtor and the LLC also executed an unsecured note in consideration for the purchase of equipment to be used in the restaurant’s operations.  The lessor filed a complaint in state court and obtained a judgment based on the note obligation in the approximate amount of $15,000; the judgment was recorded at a time when neither the debtor nor the LLC owned real property in the county.  The debtor filed a chapter 7 petition and eventually obtained a discharge, notice of which was sent to all the defendants.

            Post-petition, the debtor received a letter seeking to collect a debt arising from the note judgment.  Subsequently, the debtor and the LLC were also served with a summons to answer interrogatories.  The debtor asserts that he was “badgered” for forty-five minutes about his personal financial condition when he declined to answer certain questions.  The parties appeared in state court on the interrogatories, which was eventually dismissed by the Albemarle County Judge.  Nothing in the record indicated that the defendants continued collection efforts after the dismissal.

            The debtor then filed a motion seeking compensatory and punitive damages for violation of the discharge injunction.  The Court found that the actions clearly violated the discharge injunction and that the defendants knew that the discharge injunction was invoked, particularly given that the collection efforts continued even after being informed of the application of discharge injunction.  The Court determined that sanctions were appropriate, but only in an amount necessary to deter future violations taking into account that this was the first time these defendants were before the Court on such charges and that the parties could have brought the dispute to an end long before bringing it before the Court.

 

In re Sutherland (Case No. 11-70993) 12/13/2011

            The debtor filed a motion for valuation with respect to certain real and personal property securing certain loans made to them by Grayson National Bank.  Grayson National also objected to confirmation of the proposed chapter 13 plan.  In determining the values, the Court noted that the replacement value of such property is the rule, and that means what it might reasonably be expected to cost someone to purchase the same or similar property in the market place, as of the filing date.

In re Adams (Case No. 09-70001) 12/01/2011

            Counsel for the debtor filed an application for compensation to which objections were filed by the United States trustee and Wells Fargo Bank concerning the claim for $5,585 for services related to extensive litigation with respect to a Wells Fargo claim which had been the subject of pre-petition confession of judgment proceeding brought by the bank against the debtor in the Circuit Court of the County of Grayson, Virginia, which ultimately was resolved in Wells Fargo’s favor.  The main objection was that the ensuing litigation by counsel for the debtor concerning Wells Fargo’s claim did not benefit the debtor, was futile from the outset, and only caused delay in the bankruptcy case.  It was also argued that none of the fees sought in relation to this litigation are reasonable under 11 U.S.C. § 330(a)(4)(B).

            The Court concluded that the ultimate failure of the Firm’s efforts to defeat Wells Fargo’s claim and that such efforts ultimately were of no benefit to either its client or the bankruptcy estate is not a sufficient reason to deny it compensation for those services.  The Court thus allowed the fees, although with certain reductions in the amount.

In re Mary Adams (Case No. 09-7001) 12/01/2011

The United States Trustee and a creditor objected to the debtor's counsel’s application for compensation for fees incurred in connection with litigation with respect to a claim that the subject of a pre-petition confession of judgment proceedings brought by the creditor against the debtor in the state circuit court. The United States Trustee and the creditor asserted that the fees sought were unreasonable under 11 U.S.C. § 330(a)(4)(B) and that the amount of time spent on the litigation was excessive in light of the case.  The Court held that the ultimate failure of the firm's efforts to defeat the creditor’s claim was not a reason to deny compensation to the debtor’s attorney and, therefore, partially granted the application for compensation.  However, the Court reduced counsel’s fees in the amount of $750 for failing to take action to make any inquiry as to whether an objection to claim was properly filed or whether it was a false pleading.

In re Burnett (Case No. 11-71622) 11/18/2011

Debtor filed an objection to a creditor's proof of claim that was filed as unsecured claim even though it was filed with proof of perfection of a deed of trust securing the obligation. As treatment of creditor's claim as unsecured would frustrate the debtor's ability to confirm a plan which proposes to pay his unsecured creditors in full, the Court disallowed the proof of claim and ordered the creditor to file an amended claim as a secured creditor or be bound by amount of arrearage set forth in debtor's plan.

In re M & M Enterprises, Inc. (Case No. 10-70468) 11/18/2011

            The debtor filed an objection to a claim filed by the Internal Revenue Service.  The debtor conceded that under 26 U.S.C. § 6321 the IRS’s tax lien did create a lien on two of its bank accounts but argued that the lien was junior and inferior to the holders of checks which had been issued by the debtor pre-petition and were outstanding at the time the debtor filed its bankruptcy petition.  The Court concluded that the law is clear that the bankruptcy estate includes the full balance of any non-payroll or other non-trust bank account owned by the bankruptcy debtor as of the commencement of the bankruptcy case.  Even if the payees of these checks honored after filing would have a defense by virtue of § 6323(b)(1)(A) to the IRS’s enforcement of its lien against them outside of bankruptcy, the Court concluded that such fact would not affect the amount of the government’s secured claim against the bankruptcy estate “as of the date of filing” under § 502(b) of the Bankruptcy Code.

In re Kell (Case No. 11-71388) 11/17/2011

            The debtors moved to redeem a 2006 Chrysler PT Cruiser which they acquired by means of financing provided to them by C & F Finance Company.  The issue presented was what the proper redemption value of the vehicle was.  Noting that although the evidence would justify a conclusion that the present liquidation value of the PT Cruiser was something less than the scheduled value of that vehicle, the Court concluded that the debtors have admitted that the car’s value as of the petition filing date was $4,575 and that they were bound by such figure for the purpose of the redemption motion.

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