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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.

In re Glover (Case No. 11-62175) 11/08/2011

            The debtor proposed a chapter 13 plan which included compensation for counsel of $3,124, consisting of $2,750 for services rendered, $274 for statutory filing fees advanced, and $100 for “credit counseling” fees advanced.  The chapter 13 trustee brought the matter before the Court.  The issue was whether the fees advanced were actual, necessary costs of preserving the estate under 11 U.S.C. § 503(a).

            The Court did not approve the advance of the fee for credit counseling because it created a conflict of interest and the debtor should have the funds to pay that fee before the chapter 13 petition is filed.  The Court did approve the advance of the filing fee because it is a post-petition expense and otherwise the case would be dismissed, thus making it necessary for the preservation of the estate.  The Court also concluded that the advancement of the fee for the Financial Management Course is not necessary.  The Court thus denied confirmation of the plan and allowed for the filing of an amended plan that provides for the reimbursement of the filing fee.

In re Beach (Case No. 11-62222) 11/08/2011

            The debtor proposed a chapter 13 plan which included compensation for counsel of $3,124, consisting of $2,750 for services rendered, $274 for statutory filing fees advanced, and $100 for “credit counseling” fees advanced.  The chapter 13 trustee brought the matter before the Court.  The issue was whether the fees advanced were actual, necessary costs of preserving the estate under 11 U.S.C. § 503(a).

            The Court did not approve the advance of the fee for credit counseling because it created a conflict of interest and the debtor should have the funds to pay that fee before the chapter 13 petition is filed.  The Court did approve the advance of the filing fee because it is a post-petition expense and otherwise the case would be dismissed, thus making it necessary for the preservation of the estate.  The Court also concluded that the advancement of the fee for the Financial Management Course is not necessary.  The Court thus denied confirmation of the plan and allowed for the filing of an amended plan that provides for the reimbursement of the filing fee.

Arvilla Pipeline Construction Co. v. Anders (In re Anders) (Case No. 11-70995; A.P. No. 11-07039) 11/04/2011

            The debtor moved to dismiss an adversary proceeding seeking a determination of non-dischargeability pursuant to11 U.S.C. § 523(a)(2), (4) and (6) of his asserted liability to the plaintiff for certain alleged pre-petition wrongful actions on his part which are claimed to have damaged the plaintiff’s property and business.  The ground for dismissal was that the complaint initiating this adversary proceeding was untimely in that it was filed after the deadline set by Bankruptcy Rule 4007(c).  The plaintiff conceded that the complaint was filed after the date provided for in the Rule, but sought an equitable exception to the enforcement of that provision on the ground that the Court’s notice to creditors of the bankruptcy filing failed to set forth the date by which such a complaint was required to be filed and that the Court has not provided to it any other notice of such bar date.  Federal Rule of Bankruptcy Procedure 4007(c) expressly provides that “[t]he court shall give all creditors no less than 30 days’ notice of the time so fixed [to file a non-dischargeability complaint] in the manner provided in Rule 2002.”

            The Court found that there was no evidence demonstrating that the plaintiff’s failure to make a timely filing of its adversary proceeding was directly attributable to any deficiency in the content of the notice.  The Court concluded that the facts of this case did not present the type of “extraordinary” circumstance justifying the Court in disregarding the explicit deadline imposed by Bankruptcy Rule 4007(c), and thus the Court granted the debtor’s motion to dismiss.

In re Vencill (Case No. 10-72956) 10/31/2011

            The United States trustee moved to disqualify the debtor’s counsel for two main reasons: (1) counsel did not provide adequate counsel nor comport with his fiduciary duties both before the filing of the case or since the filing of the case and (2) the pattern of inaccurate or incomplete disclosures on behalf of the estate also appear in the disclosure made to the Court by counsel in support of their employment application.  The Court concluded that the evidence before it, particularly pre-petition advice and services that were not disclosed, established cause for the disqualification of counsel from further representation of the debtor-in-possession.

In re Lee County Child Care Council, Inc. (Case No. 11-70168) 10/11/2011

            The United States Trustee filed a motion to dismiss the case, moving for dismissal under 11 U.S.C. § 1112(b)(1) for six defined causes provided in 11 U.S.C. § 1112(b)(4).  These grounds included the debtor’s alleged failures to: append either its Federal income tax return or a statement of noncompliance to the voluntary petition; file an operating report; comply with the Court’s order requiring certain reports; respond to the United States Trustee’s requests for tax returns; maintain the debtor’s corporate status; and operate the business so as to prevent substantial or continuing loss to the estate.  The Court granted the motion to dismiss without prejudice to refiling.

Russ v. Absher (In re Absher) (Case No. 10-70636; A.P. No. 10-07039) 10/07/2011

            The plaintiffs, who had purchased a used car from the debtor, sought to obtain a non-dischargeable judgment against him for the loss which they claimed to have suffered by reason of such car’s undisclosed salvage title history.  The Court concluded that the greater weight of the evidence persuaded it that the plaintiffs were induced to purchase the vehicle on the basis of a false representation of a material fact about the car’s damage history made by the debtor’s salesman, which representation caused them to forego making their own investigation of such vehicle’s history, and that as a result they acquired a vehicle which was worth significantly less than the contract price for it.  The Court this entered judgment for the plaintiffs finding the debt non-dischargeable under 11 U.S.C. § 523(a)(2)(A).

In re Russell 150, LC (Case No. 11-51041) 10/03/2011

            The debtor wired funds to its law firm pursuant to a retainer agreement; however, the wire transfer was not received by the firm until the day following the filing of the petition.  The debtor sought to have the Court approve the provisional application of the wired funds to pre-petition fees of the firm as well as approve the application of employment of the same firm.  The United States trustee opposed the application of employment on the grounds that at the time of the petition, the firm was a creditor of the debtor and was not “disinterested” as defined in the Bankruptcy Code.  The Court thus had to consider whether the wire transfer initiated before the petition, but not received until after the petition, constituted full prepetition payment of the claim.  The Court found that the firm had a claim pre-petition, was non-disinterested, and thus could not serve as counsel under 11 U.S.C. § 327(a).  The Court held that the firm must waive its fees for the pre-petition work or be barred from continuing as the debtor’s counsel.

In re Kluge (Case No. 11-61517) 10/03/2011

            The chapter 7 trustee objected to the debtors’ exemption under Virginia Code section 34-29 for “wages due but not received.”  The Court noted that section 34-29 of the Virginia Code only applies to earnings that are subject to garnishment.  The wages were not earnings subject to garnishment and were not the subject of a judicial or equitable proceeding.  Because the wages were not the subject of a garnishment, the Court sustained the chapter 7 trustee’s objection.

In re Askew (Case No. 09-60155) 09/15/2011

            The debtors paid off their plan early and received a discharge; the case was closed.  The debtors filed a motion to reopen and the following day the IRS filed a proof of claim with the Court for post-petition unsecured priority taxes.  The chapter 13 trustee filed an objection to the proof of claim on grounds that it was not timely filed.  The debtors filed a motion to compel the trustee to recover distributed funds from unsecured creditors so that the funds may be paid to the IRS.  The Court disallowed the IRS claim as being untimely filed, because a claim that is filed after a chapter 13 estate is distributed to other creditors and the case is closed constitutes unreasonable delay.  With such disallowance, the chapter 13 trustee had no authority to pay that claim.  Consequently, the Court found no reason to compel the trustee to recover funds from the other unsecured creditors.

In re Osteen (Case No. 09-63551) 09/12/2011

            Prior to filing for bankruptcy, the debtors refinanced their mortgage, but the mortgage company did not record the deed of trust.  In state court, the trustee under the deed of trust filed a complaint against the debtors seeking to have the court enter an order “confirming” that the mortgage company had a perfected first lien security interest in the property.  The parties entered into a settlement agreement under which the debtors signed and delivered a deed of confirmation of the deed of trust and affidavit of lost instrument; the deed of confirmation was recorded.  Less than a year after entering the settlement agreement, the debtors filed for bankruptcy under chapter 13 and initiated an adversary proceeding seeking to avoid the deed of confirmation under section 548(a)(1)(b) as a fraudulent conveyance on the grounds that the debtors never received the consideration that they bargained for.  The parties came to an agreement and filed a motion to approve settlement under which the debtors would receive $6,000 as well as certain mortgage concessions.  Subsequently, the case was converted to chapter 7.  The chapter 7 trustee filed a motion to employ a law firm to investigate and potentially prosecute a cause of action under section 548 against the holder of the note.  The debtors opposed the motion to employ on grounds that the chapter 7 trustee was barred by the doctrine of res judicata from bringing the action under section 548.

            The Court held that the chapter 7 trustee was not barred by res judicata for three main reasons.  First, the debtors did not have authority to bring an action under section 548.  Second, the settlement agreement did not “resolve” the section 548 cause of action.  Finally, the Chapter 13 trustee was not a party to the litigation.  The Court thus granted the trustee’s motion to employ counsel.

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