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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 Milby (Case No. 07-71553) 6/16/2008

Debtor sought a ruling that he performed obligations under sections 521(a) and 362(h) or, alternatively, for approval of two reaffirmation agreements with State Farm regarding two auto loan debts.  Counsel did not represent the debtor in the negotiation of the reaffirmation agreements and did not execute Part C of the agreements as debtor's budget clearly indicated that there was a presumption of undue hardship. Knowing he could not achieve reaffirmation, but as he was current on his monthly payments, he sought a ruling that he complied with all statutory obligations for reaffirmation in order to restrain State Farm post-discharge from exercising its contractual rights and its state law remedies unless he defaulted.  Court held that it did not have subject matter jurisdiction to determine that debtor performed under sections 362(h) and 521(a) solely for purposes of determining that section 521(d) was not applicable and that State Farm was restrained by the post-discharge injunction from declaring the note and security agreement in default as a result of the ipso facto clause.  However, even if subject matter jurisdiction attached, the debtor did not enter into the reaffirmation agreements in good faith but solely for the purpose of satisfying the statutory requirements necessary to restrain State Farm from exercising its ipso facto clause post-discharge.  Therefore, Court denied approval of the reaffirmation agreements and dismissed his motion for a ruling that he performed under sections 362(h) and 521(a).

Tolley v. Obaugh Ford, Inc. (In re Tolley) (Case No. 07-50514; A.P. No. 07-05031) 5/27/2008

Debtor's appeal of counterclaim from Va. General District Court did not include appeal of judgment against debtor. Accordingly, the judgment became final and debtor could not void the judgment lien under section 506(d) in the bankruptcy proceeding eight years later. An appeal from the general district court is de novo only for the specific claims appealed. All other judgments and conclusions become final if not appealed.

Jessee v. Johnson et al. (In re Johnson) (Case No. 06-71511; A.P. No. 07-07084) 05/19/2008

Using the standard set forth in Bell Atlantic Corp. v. Twombly, the Court denied in part the trustee's motion to dismiss a counterclaim under Bankruptcy Rule 7012(b)(6) (incorporating Federal Rule of Civil Procedure 12(b)(6)) because the Court found that it is not plausible that a reference in a deed of trust to a county tax map parcel number which is inconsistent with the metes and bounds description of the property intended to be conveyed serves as notice to a competent title examiner of Virginia land records that such description cannot be relied upon because it is or may be either totally wrong or may describe only part of the property intended by the parties to be encumbered by the deed of trust.  However, the Court sustained the motion with respect to any claim based on the street address referenced in the deed of trust, any claim based on the deed of trust purportedly refinanced by the deed of trust, and any claim of equitable subrogation.

In re Horsely (Case No. 04-00820) 5/16/2008

The Debtor filed an application for hardship discharge under 11 U.S.C. § 1328.  Under Section 1328(b), a chapter 13 debtor can obtain discharge after confirmation even though complete payments under the plan have not been made so long as three criteria are satisfied: The debtors must show that (1) the failure to complete plan payments is due to circumstances for which the debtors cannot justly be held accountable; (2) the value of property distributed under the plan on account of each allowed unsecured claim is not less than the amount that would have been paid on such claim if the estate of the debtor had been liquidated under chapter 7 of this title on such date; and (3) modification of the plan is not practicable.  11 U.S.C. § 1328(b)(1)-(3).  The Court found that although the Debtor has experienced health difficulties, there is no evidence that the health problems amount to a "catastrophic circumstance" that would preclude him from holding any gainful employment.  Accordingly, the Court denied the Debtor’s application for a hardship discharge.

Kirkland v. Sallie Mae et al. (In re Kirkland) (Case No. 01-00627; A.P. No. 07-06057) 05/02/2008

The court held that, under 11 U.S.C. § 502(a), a proof of claim is deemed allowed unless a party in interest objects; the Trustee's Final Report cannot unilaterally reduce the amount of an allowed claim; the debtor may not keep money refunded to the debtor in error even if the debtor was not at fault for such refund; the claims of student loan lenders are non-dischargeable under almost any factual situation under 11 U.S.C. § 523(a)(8) and interest continues to accrue on such claims even though that is not the case for other priority claimants; and student loan lenders have a duty to provide evidence supporting a record on which the court may accurately determine the amount of claims during the pendency of the bankruptcy case or the amount of debts thereafter.

General Creations, LLC v. Callahan (In re General Creations, LLC) (Case No. 03-03058; A.P. No. 06-07095) 5/2/2008

The Court previously issued a decision and order granting the Plaintiffs constructive trusts in portions of settlement proceeds held by the Chapter 7 trustee.  The Chapter 7 trustee then filed a motion to amend findings pursuant to Federal Rule of Civil Procedure 52 or to alter or amend judgment pursuant to Rule 59(e), arguing that a valid constructive trust did not exist, and the Court, by setting an evidentiary hearing on the matter, essentially confirmed that the Plaintiffs failed to properly trace the funds and account for its commingling with other monies.  The Court denied the trustee's motion, finding that the Plaintiffs were able to clearly trace the funds, and have therefore satisfied their burden of identifying and tracing the res of the constructive trust.  The Chapter 7 trustee had the duty to determine the amount of the profits.

Comer v. U.S. Social Security Admin. (In re Comer) (Case No. 07-70908; A.P. No. 07-07062) 4/18/2008

Debtors may not utilize section 522(h) to recover under section 553(b) the setoff of the debtors’ income tax refund against the prepetition claim of the SSA for overpayment of social security benefits because the insufficiency on the date of the setoff was not less than the insufficiency ninety days before the date of the filing of the debtors’ petition.  Debtors could not utilize section 547 for purposes of recovery of the setoff unless the setoff was not valid.

In re Breidert (Case No. 07-62329) 04/16/2008

The matter before the Court is the debtor's motion to avoid a judgment lien.  The debtor scheduled her real property at a fair market value of $127,100.  The real property secures a consensual lien in the amount of $62,156.07.  The Debtor claimed an exemption of $1,370.  There is a judgment lien in the amount of $15,388.80 that attached to the real property.  Added together, the judgment lien, the consensual lien, and the exemption total $78,914.87 ( = $15,488.80 + $62,156.07 + $1,370).  This amount is less than the scheduled value of the property, which is $127,100.  Therefore, because the judgment lien does not impair the debtor’s exemption, the Court denied the debtor’s motion to avoid the lien.

Barnett v. I.R.S. (In re Barnett) (Case No. 04-01283; A.P. No. 06-05022) 4/1/2008

The issue before the Court is whether the debtor, who was president of a company, was a "responsible person" of that company, and therefore, personally liable under 26 U.S.C. § 6672 for the company's unpaid trust fund taxes.  "Trust fund taxes" are federal income taxes and social security taxes that employers are required to withhold from their employees’ wages pursuant to 26 U.S.C. §§ 3402(a) and 3102(a).  To be held liable under Section 6672, two elements must exist: “(1) the party assessed must be a person required to collect, truthfully account for, and pay over the tax, referred to as a ‘responsible person’; and (2) the responsible person must have willfully failed to insure that the withholding taxes were paid.” O’Connor v. United States, 956 F.2d 48, 50 (4th Cir. 1992).  The Court applied the standard in United States v. Pomponio, 635 F.2d 293 (4th. Cir. 1980) to determine whether debtor was a responsible person or whether his failure to pay the taxes was not willful, and held that the weight of the evidence proved the debtor was not a responsible person at the company and therefore not personally liable for the failure to pay the trust fund taxes to the I.R.S.

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