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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 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.

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 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.

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.

Dean v. Campbell (In re Campbell) (Case No. 10-60197; A.P. No. 10-06110) 07/05/2011

            The plaintiffs were not scheduled as a creditor in the defendant’s chapter 7 case.  The plaintiffs filed a motion to extend time to file a complaint objecting to the dischargeability of the debt arising from their claim.  The Court granted that motion, and the plaintiffs filed an adversary proceeding under 11 U.S.C. § 523(a)(2), (4), and (6).  The defendant appealed the order granting the motion to extend, and the district court vacated that order on grounds that a complaint brought under 11 U.S.C. § 523(a)(2),(4), and (6) must be filed no more than sixty days after the date first set for the first meeting of creditors. The district court specifically did not rule on whether the complaint, if amended to include a cause of action under 11 U.S.C. § 523(a)(3)(B), would have been timely filed. The district court remanded the matter.

            The plaintiffs amended their complaint to include a cause of action under section 523(a)(3)(B) and on the same date filed a motion to amend the complaint.  The defendant filed an opposition to the motion.  The Court noted that section 523(a)(3)(B) provides that a creditor may file an objection to the discharge of a debt of the kind found in section 523(a)(2), (4) or (6) if the debtor did not schedule the creditor as required by section 521(a) and if the creditor did not have notice or actual knowledge of the case in time to timely file a complaint objecting to the dischargeability of the debt.  The Court concluded that in order for the second sentence of Rule 4007(c) to have meaning, creditors who do not receive notice of the filing of the petition from the debtor must have at least thirty days actual notice of the filing of the petition.

            Finding that the plaintiffs had notice of the bankruptcy case no more than twenty-six days before the deadline to file an adversary complaint under Section 523(a)(2), (a)(4), or (a)(6), the Court granted the motion to amend.

Crockett v. Educational Credit Management Corporation (In re Lucas) (Case No. 79-00018; A.P. No. 10-06104) 07/01/2011

            In 1975, the debtor obtained a federally insured student loan.  The debtor filed under chapter XIII of the Bankruptcy Act of 1898 in 1979 and received a discharge in 1983.  In 1998, Educational Credit Management Corporation acquired title to her student loan debt.  ECMC sent the debtor a letter asking for documents relating to her discharge; the debtor did not reply.  In 2004, ECMC began efforts to collect the debt, which included phone calls during which the debtor asserted that she did not owe the debt and that it was discharged by the order in 1983.  Further, ECMC notified the debtor that it intended to offset her federal income tax refund, and in 2006 the Department of Treasury offset the tax refund and forwarded those funds to ECMC.

            The debtor moved to reopen the case and filed an adversary complaint seeking a declaration that the debt was discharged by order entered in the 1978 case. The Court filed a judgment granting her request. The judgment was based on the conclusion that the discharge orders that issued in bankruptcy cases that were filed between November 6, 1978, and August 14, 1979, discharged all debts arising from governmentally insured student loans.  The judgment was affirmed after ECMC appealed the judgment to the United States District Court for the Western District of Virginia.  ECMC refunded all collected monies to the Plaintiff and marked the debt as “discharged” on its books.

            The debtor then filed a motion for sanctions against ECMC based on alleged violation of the discharge injunction.  The Court made several findings: When ECMC acquired ownership of the debt, it contacted the debtor through a 1998 letter but received no response.  Over a six-year period it attempted to gather facts that would permit it to determine whether the debt was dischargeable.  Before offsetting the debtor’s income tax refund in 2004, ECMC again contacted the debtor with the request for review, but again received no response.  When the debtor finally contacted ECMC seven years after ECMC’s first attempt to resolve the matter, ECMC correctly explained that its position was consistent with the weight of judicial authority.  When, two years later, the debtor hired an attorney and took steps to reopen the 1979 case, ECMC ceased all collections immediately.  The Court concluded that at no time did ECMC knowingly and wilfully violate the discharge order.

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