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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.

Didlake v. Wachovia Bank (In re Didlake), (Case No. 09-73166; A.P. No. 11-07003) 6/29/2011

The Court found that the defendant was in default as it failed to timely respond to complaint seeking to determine the value of the defendant's secured interest in property owned by the plaintiffs.  However, the Court ordered plaintiffs to submit authority in support of the legal positions contained in the complaint instead of entering default judgment against the defendant. Court found that credit line deed of trust remained secured by the real property notwithstanding a judgment lien.  Court found  that under sections 101(13A) and 101(27B) the definition of debtor's principal residence includes rents. Thus, fact that credit line deed of trust listed rents as item of collateral did not add any additional collateral to the defendant's security interest beyond those items already listed in the Code. Since the credit line deed of trust was secured only by the plaintiffs' principal place of residence, section 1322(b)(2) prohibited the plaintiffs from modifying the deed of trust; thus the plaintiffs could not cram down the deed of trust despite the assignment of rents provision.  As the aggregate value of first deed of trust and credit line deed of trust exceeded the value of the property, there was no equity in the property to which the judgment lien could attach.  Therefore, Court declared the judgment lien to be wholly unsecured under section 506(a).

In re Crewey (Case No. 11-71179) 06/28/2011

        The female debtor in a joint case filed a motion asking the Court to either find that she has complied with the requirements of 11 U.S.C. § 109(h) or, alternatively, to bifurcate the joint case and to dismiss her resulting individual case.  Instead of having taken the pre-filing credit counseling required, the female debtor had taken the post-petition debtor education course required to receive a discharge under chapter 13.  The petition was filed and the female debtor subsequently took the pre-filing course.  The Court found that the female debtor had not timely received the pre-petition credit counseling and was ineligible to be a debtor.  The Court then bifurcated the joint case and dismissed the female debtor’s resulting case.

In re Byington (Case No. 11-70729) 06/13/2011

            The debtors filed an application to employ counsel.  The United States trustee objected on the basis of inconsistent and inaccurate disclosures regarding the pre-petition services rendered by the firm to the debtors.  The Court concluded that question number nine of the Statement of Financial Affairs was properly interpreted broadly to require disclosure of the particulars regarding the case filing fee provided by the debtors’ son prior to the bankruptcy filing.  The Court further concluded that the receipt of the filing fee from the son ought to have been disclosed as a connection which the firm had with a party in interest in the case as a pre-petition transferee of a material part of the debtors’ property.

            Due to the novel situation presented by the facts of this case where the transferee was a close family member of elderly parents and the absence of prior controlling legal authority on point, the Court concluded that these omissions, standing alone and absent some indication that disclosure of the filing fee was expressly considered but rejected on the premise that there was an arguable basis upon which to contend that it was not mandated, are insufficient cause to deny the application to employ the firm.

In re Lebanon Equipment Company, Inc. (Case No. 10-72524) 06/10/2011

            A secured creditor filed a motion for relief from the automatic stay to allow it to repossess collateral.  The creditor asserted as basis for relief (1) that it lacked adequate protection under 11 U.S.C. § 362(d)(1) because the debtor had not made any payments to it since the commencement of the case, no proposal for adequate protection had been made, and the stay was resulting in a decrease in the interest in the property; (2) that the Debtor’s pre-petition default in the security agreement was cause, arguing that the default could not be cured in a chapter 11 plan because it resulted from the debtor’s misrepresentation; (3) that relief should be granted because the debtor filed the petition in bad faith, arguing that the debtor filed its petition just four days after the creditor filed an action for prejudgment attachment of the collateral in state court and, because the schedules were not filed until sixteen days after the petition date and none of the motions typically brought early in a chapter 11 case had been filed; and (4) that under § 362(d)(2) the debtor had no equity in the collateral and it was not necessary for an effective reorganization.

            The Court noted that in order to make out a prima facie case for relief from the stay for cause under § 362(d)(1), the movant must generally show that the continuation of the stay will cause some affirmative harm to it.  The Court concluded that the creditor failed to meet its burden of proof on the first three counts but did meet its burden on the § 362(d)(2) claim.  Weighing the balance of potential harm to the parties by the continuation of the stay, the Court concluded that it was appropriate to continue the stay in effect upon certain conditions.

Boyd v. Internal Revenue Service (In re Boyd) (Case No. 10-62492; A.P. No. 11-06015) 05/25/2011

            Plaintiff filed for bankruptcy and subsequently formed a corporation.  As a result of communications concerning a notice of levy sent by the IRS to customers of the debtor’s previous corporation, a client of the new corporation turned over funds to the IRS that were owed to the new corporation.  Plaintiff brought a complaint against the Internal Revenue Service under 11 U.S.C. § 362(k)(1) requesting the IRS to return the funds.  The Court found that the funds were not a debtor, were not property of the debtor, and were not property of the estate.  The Court accordingly held that the IRS did not violate the automatic stay.

In re Fugate (Case No. 09-63133) 04/28/2011

            The debtors filed a chapter 13 petition and subsequently converted to a chapter 7.  After conversion, the United States trustee filed a motion to dismiss the debtors’ case under 11 U.S.C. § 707(b)(1) as an abuse of the provisions of chapter 7.  Agreeing with an earlier decision issued by Judge Krumm, the Court concluded that the plain language of 707(b) only applies to cases filed under chapter 7 and that cases converted to chapter 7 from another chapter do not fall within the scope of that subsection.

In re Circle T Pipeline, Inc. (Case No. 11-70556) 04/27/2011

            The debtor filed an application to employ counsel, and the United States trustee objected, pointing to a number of provisions in the original attorney-client retainer agreement entered into by the debtor and counsel, which the United States trustee argued disqualified counsel from serving as debtor’s counsel under 11 U.S.C. § 327.  The Court considered the disinterestedness of counsel, counsel’s disclosure of all connections, the attorney fee retainer, an attorney’s ethical obligations, provisions of the employment agreement, and counsel’s prior representation of a creditor of the debtor.  The Court conditionally approved the employment application.

In re Girgenti (Case No. 10-62312) 04/11/2011

The debtors objected to a claim in the amount of $76,000.  According to the proof of claim, the $76,000 claim is a priority claim for child support.  The debtors scheduled the claim at $0 and the debtors' amended plan also estimates the claim at $0.  The claim objection states that the child support issue is on appeal, and therefore, the amount is contingent, unliquidated, and disputed.  The Court held that the fact that a claim is contingent or unliquidated is not a basis for disallowing the claim.  Pursuant to 11 U.S.C. § 502(c)(1), the debtors are required to estimate the claim, as failure to do so would unduly delay the administration of the case.  Therefore, the Court overruled the debtors' claim objection.

In re Hamilton (Case No. 10-60532) 04/11/2011

The debtors objected to the secured status of a creditor’s claim because the debtors have no equity in the property.   The creditor asserts in the proof of claim that the claim is fully secured by a truck and a motorcycle.   The Court found that no statutory basis was given for the debtors’ objection to the secured portion of the claim, but it appears that the debtors are asserting that the claim should be bifurcated into a secured portion (equal to $0) and an unsecured portion equal to the amount of the claim.  However, according to the debtors, the fair market value of the collateral is greater than the amount of the claim.  Therefore, the claim is fully secured and the objection is overruled.

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