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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 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.

In re Vencill (Case No. 10-72956) 09/09/2011

            The United States trustee filed a motion to disqualify debtor’s counsel.  During a hearing on the motion, counsel for the United States trustee questioned the debtor-in-possession and her counsel objected.  The objections were raised on the ground of attorney/client privilege as the questions sought disclosure of the particulars of a conversation which took place prior to the filing of this bankruptcy case, between the debtor and her counsel concerning certain real property which the former wanted to transfer to her son and did in fact transfer to him prior to filing her Chapter 11 bankruptcy petition.

            The United States Trustee asserted that the conversation in question was not subject to a claim of privilege for two reasons: that the debtor waived the privilege by testifying about advice given to her by her counsel concerning other matters without claiming the privilege, and that the communication is excluded from protection by the crime/fraud exception to the attorney/client privilege.  The Court concluded that her testimony did not amount to a waiver of the right but that under the evidence before it the crime/fraud exception to the attorney/client privilege applied.

In re Slater (Case No. 10-62521) 09/06/2011

            The debtors’ counsel received $2,500 from the debtors prepetition which was allowed by the Court as the standard “no-look” fee.  The debtors’ counsel subsequently sought an additional $3,950.30 on the basis of the lodestar method.  The Court found that the no-look fee was appropriate given that this was not a case which required significantly more than the average range of legal services.  The Court also determined that even under the lodestar method that the no-look fee was appropriate in this case.  The Court did allow reimbursement of expenses for the filing fee, a title abstract fee, an appraisal fee, the pre-petition credit counseling, a credit report fee, and post-petition credit education.

Reynolds Living Trust v. Wells Fargo Bank, N.A. (In re Reynolds) (Case No. 09-71964; A.P. No. 11-07012) 09/06/2011)

                The debtor filed a complaint pro se (which the Court noted “can hardly be said to be a model of clarity”), both in his capacity as the debtor and the trustee of a living trust, seeking monetary damages and other relief against his former bankruptcy counsel, counsel’s insurance carrier, and Wells Fargo Bank, which held two deeds of trust upon property owned by the trust.  The insurance carrier filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), and both former counsel and the bank filed motions for judgment on the pleading under Federal Rule of Civil Procedure 12(c).  The Court granted the motions and dismissed the case with prejudice.

In re Dunn (Case No. 11-60847) 08/18/2011

            The Court issued an order directing the debtor to cure deficiencies in the petition and schedules.  Counsel failed to do so on behalf of the debtor, and then the Court issued an order directing the debtor to appear and a show cause why the case should not be dismissed.  Counsel appeared and represented she would file the requisite pleadings; she failed to do so.  The Court filed an order directing counsel to appear and show cause why case should not be dismissed; counsel did not receive notice and did not appear.  New counsel replaced this counsel and informed the Court that the debtor had paid the original counsel $6,500.

            The Court then issued a show cause why original counsel should not be ordered to disgorge fees received by her in the amount of $6,500.00 and further show cause why she should not be sanctioned for failing to file pleadings with the Clerk of this Court as she had represented and for otherwise abandoning her client.  The Court found the only benefit to the debtor was the filing of the petition thus stopping a foreclosure.  The Court thus ordered her to disgorge $5,000 of the $6,500 fee.

Helton v. Bank of New York Mellon; Helton v. Wells Fargo Bank; Helton v. Navy Federal Credit Union (In re Helton) (Case No. 11-60126; A.P. Nos. 11-06028, 11-06030, 11-06031) 08/12/2011

            The debtor was not eligible for a discharge in chapter 13 because of a previous discharge in chapter 7.  The debtor filed three adversary proceedings seeking to avoid judicial liens, two against the debtor’s residence and one against a separate parcel of real estate.  No defendant filed a response, but the chapter 13 trustee opposed the three motions.  The Court thus considered whether Section 1328(f)(1) and Section 1325(a)(5) act together to provide an exception to the rule created by Dewsnup, Nobleman, section 506(a) and section 1322(b)(2).  The Court concluded that section 1328(f)(1) does not prohibit a Chapter 13 debtor from stripping off a wholly unsecured lien.

            The trustee also objected to confirmation of the plan as not being proposed in good faith.  The Court applied a totality of the circumstance test considering past bankruptcy filing, the nature and amount of unsecured claims, and the percentage of proposed repayment.  The Court sustained the trustee’s objection to confirmation concluding that purpose of the Plan in this case violates both the intent and the spirit of the Bankruptcy Code in that it is a clear attempt to circumvent the stricture of the holding in Dewsnup.

In re CCD Management, Ltd. (Case No. 11-71128) 07/28/2011

            Bank of Botetourt filed a motion for relief from stay under 11 U.S.C. § 362(d)(2) as to four commercial properties owned by the debtor.  The debtor agreed to relief as to one property but opposed it as to the other three.  The parties stipulated that the properties in question were worth less than the debt owing to the bank.  Accordingly, the burden shifted to the debtor to show that the property was necessary for effective reorganization.  The Court concluded that the equities at that early point in the case fell on the side of allowing the debtor an opportunity to pursue confirmation of a plan.

Fritter v. Value Properties Real Estate Management, Inc. (In re Fritter) (Case No. 10-63363; A.P. No. 11-06047) 07/25/2011

            The debtors filed a complaint, and subsequently a motion for default judgment, seeking damages under the Fair Debt Collection Practices Act.  The Court denied the motion and dismissed the complaint, because the Court determined that it did not have subject-matter jurisdiction over the complaint.

Basore v. Taxing Authority Consulting Services, Inc. (In re Basore) (Case No. 10-60595; A.P. 10-06127) 07/12/2011

            The debtors filed a complaint seeking sanctions for violation of the automatic stay by Taxing Authority Consulting Services, Inc. and the County of Louisa, Virginia.  A consent order was entered dismissing the complaint as against the County of Louisa, but TACS opposed the complaint.  After the debtors filed for bankruptcy, TACS filed a proof of claim in the case on behalf of Louisa County.  About two months later, TACS sent a collection letter to the plaintiffs attempting to collect the taxes, and the female debtor informed it she had filed a bankruptcy petition.  After this phone call, TACS made no further attempt to communicate with the debtors.

            Twice a year TACS received delinquent accounts from the County of Louisa with those taxpayers who have filed a bankruptcy petition flagged; the debtors were not flagged in the communication, which the Court found not to be the fault of TACS.  Further, TACS ceased collection efforts after being informed.  The Court found that TACS did not willfully violate the stay and that the debtors incurred no damages as a result of the collection letter other than attorney’s fees which were incurred well after TACS ceased such violation.  The Court declined to award any attorney’s fees because the attorney and debtors had a duty to mitigate damages and the problem could have been resolved by a two minute phone call instead of a complaint.

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