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.
Before the Court was an objection to the secured status of a claim. The Court sustained the objection, finding that (i) the claim arose before the entry of a settlement agreement and the order that approved the settlement agreement and (ii) its basis was perfection was insufficient.
The debtor’s chapter 7 trustee filed an adversary proceeding to recover excessive compensation which she claims the debtor paid to an affiliate company, LTA Management, Inc., alleged to be owned by the debtor’s president, Norman D. Mason, his wife, and another insider. The defendants filed a motion to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6), which is made applicable to bankruptcy adversary proceedings by Bankruptcy Rule 7012.
Citing insufficient factual allegations to support the causes of action, the Court granted defendants' motion to dismiss the complaint as to Count 1 (turnover of estate property and accounting under Section 542), Count 3 (avoidance of voluntary conveyance under Va. Code Ann. § 55-81), Count 5 (avoidance of preferential transfers under Section 547), Count 8 (breach of fiduciary duty), Count 9 (aiding and abetting), Count 10 (breach of contract), and Count 12 (corporate waste) as the trustee failed to state a claim upon which relief could be granted. The Court partially granted the motion to dismiss as to Count 2 (avoidance of fraudulent transfers under Section 548) because insufficient facts were alleged beyond the mere recital of the elements of the cause of action -- the claims that the debtor was left with unreasonably small capital or that its principals intended to incur debts beyond the debtor's ability to pay. The Court also partially granted the motion as to Count 11 (conversion and money had and received). The court denied dismissal of Count 2 and Count 11 with regard to the rest of the claims.
Finding sufficient factual allegations to support the causes of action, the Court denied the motion to dismiss as to Count 4 (avoidance of fraudulent transfers under Va. Code § 55-80), Count 6 (avoidance of post-petition transfers), Count 7 (recovery under Section 550), Count 13 (objection to claims), and Count 14 (equitable subordination).
Debtor filed a motion to stay the Court’s previous remand order in this case pending appeal. A motion for a stay pending appeal under Rule 8005 is an extraordinary remedy and requires a substantial showing on the part of the movant, who is the Debtor in this case. A party seeking a stay pending appeal pursuant to the bankruptcy rules bears the burden of establishing: (1) the likelihood of success on the merits of the appeal, (2) that the movant will suffer irreparable injury if the stay is denied, (3) that no substantial harm will be suffered by the other parties if the stay is granted, and (4) that no harm to the public interest, if it is implicated, will be caused by granting the stay. See In re Section 20 Land Grp., Ltd., 252 B.R. 819 (Bankr. M.D. Fla. 2000)). The Court found that the Debtor, as the movant, did not meet its burden, and therefore, denied the motion for stay pending appeal.
The Court granted the motion to remand the adversary proceeding to the Georgia state court for further proceedings. The twelve factors that a court should weigh when considering discretionary abstention and remand are the same. See Eastport Assoc. v. City of Los Angeles, 935 F.2d 1071, 1075 (9th Cir. 1991). The overwhelming factor supporting remand in this case is the fact that the Georgia state court action has, after eighteen months of strongly contested litigation, come to the verge of resolution; therefore, it would be folly for this Court to begin the process anew.
The United States trustee filed a complaint under 11 U.S.C. § 727(a)(2), (4), and (5) seeking a judgment denying the debtor his discharge. The United States trustee withdrew his objection to discharge based on section 727(a)(5). The debtor had failed to disclose the sales and transfers of certain property and also failed to disclose that he conducted business through an LLC and not as a sole proprietorship. The Court found that the United States trustee presented no evidence to support the element of intent and thus concluded that the debtor’s failure to disclose the sales was not the result of an intent to hinder, delay, or defraud a creditor or an officer of the estate. While the Court concluded that the debtor made a false oath that was material in connection with the case, it also concluded that the debtor did so without any intent to deceive.
The Court denied the debtor’s motion to approve a reaffirmation agreement because the attorney representing the debtor in the bankruptcy case did not sign the attorney certification. The Court rejected the argument that no certification was necessary because no negotiation took place within the meaning of § 524(c) when the creditor insisted on reaffirmation on the same terms as the original contract. The Court concluded its responsibilities and authority with respect to approval of reaffirmation agreements are limited to those situations where (i) bankruptcy debtors are not represented by counsel in the bankruptcy case, or (ii) they are represented by counsel in cases where a “presumption of undue hardship” has arisen pursuant to the provisions of 11 U.S.C. § 524(m) and their counsel has executed the certification prescribed by § 524(k)(5)(B) that even though the presumption of undue hardship has been established, “in the opinion of the attorney, the debtor is able to make the payment.”
Court held that debtor's motions to join counsel for the Water Authority and his firm as party respondents to the underlying motion, to disqualify counsel from continuing to serve as counsel for the Water Authority and to enter summary judgment against the Water Authority and its counsel were without merit and denied. Debtor accused Water Authority and its counsel of attempting to perpetrate fraud upon him and the Court in connection with an exhibit filed with the Court relating to the due date for charges on an account the debtor had with the Water Authority.
The Court concluded that pursuant to 11 U.S.C. § 522(a)(2)(A), the liens on the debtors' property did not impair an exemption to which the debtors were entitled, and therefore, denied the debtors' motions to avoid liens.
The United States Trustee filed a motion to dismiss the case for abuse under 11 U.S.C. § 707(b). Section 707(b)(1) provides that a court may dismiss an individual case under Chapter 7 if (1) the debtor’s debts are primarily consumer debts and (2) it would be an abuse of the provisions of Chapter 7 of the Bankruptcy Code to grant relief to the debtor. Section 707(b)(2) provides that abuse is presumed if a debtor's net monthly income exceeds a certain threshold amount as determined by the means test. Section 707(b)(3)(B) provides that if the presumption in Section 707(b)(2) does not arise or is rebutted, the court must consider the totality of the debtor's financial circumstances in determining whether proceeding in Chapter 7 would be an abuse. The Court concluded that the Debtors do not have sufficient disposable income to fund a Chapter 13 plan, and no other factors suggest substantial abuse. Therefore, the Court denied the United States Trustee's motion to dismiss this case for abuse.
The U.S. Trustee filed a motion to dismiss the Chapter 7 case for abuse under 11 U.S.C. § 707(b)(3)(B) and 11 U.S.C. § 707(b)(2). The Court held that even if the debtors were not permitted to deduct expenses arising from student loan payments, the Court would still not find abuse under 11 U.S.C. § 707(b)(3)(B) and/or 11 U.S.C. § 707(b)(2). The Court held the debtors were entitled to deduct the full amount of the allowance for vehicle payments even if they owned the vehicle free and clear of any liens, citing In re Hylton, 374 B.R. 579 (Bankr. W.D. Va. 2007). Thus, the debtors' monthly disposable income under the Means Test was less than the required statutory minimum; accordingly, the Court concluded that it would not be an abuse under 11 U.S.C. § 707(b)(2) for the debtors to remain in Chapter 7. Further, the Court also held that the debtors did not have sufficient income to fund a Chapter 13 plan and no other factors suggest abuse; therefore, the Court concluded that it would not be an abuse under 11 U.S.C. § 707(b)(3)(B) for the debtors to remain in Chapter 7.