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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.

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.

In re Richardson (Case No. 07-60057) 03/19/2008

The matter before the Court is the United States Trustee's motion to dismiss this 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 burden of proof is on the United States Trustee to prove by a preponderance of the evidence that continuance under Chapter 7 would constitute abuse of the Bankruptcy Code.  The Court concluded that the debtor does not have sufficient income to fund a Chapter 13 plan, and no other facts indicative of abuse are present.  Therefore, the Court denied the United States Trustee's motion to dismiss this case for abuse.

In re Greenwood (Case No. 07-62155) 3/14/2008

The matter before the Court is a motion for relief from the automatic stay filed by a creditor.  Because the debtor is a single asset real estate debtor, as defined by 11 U.S.C. § 101(51B), the creditor's motion for relief from the automatic stay must be granted under 11 U.S.C. § 362(d)(3) unless the debtor has either: (a) filed a plan of reorganization that has a reasonable possibility of being confirmed within a reasonable time or (b) commenced monthly payments that are in an amount equal to the interest at the then applicable non-default contract rate of interest on the value of the creditor's interest in the real estate.  The debtor has made no post-petition payments to the secured creditor and debtor’s plan does not have a reasonable possibility of being confirmed within a reasonable time. Accordingly, the Court granted the creditor's motion for relief from the automatic stay.

In re Greenwood (Case No. 07-62155) 3/14/2008

The Court denied a creditor’s motion to prosecute fraudulent conveyance actions on behalf of the estate under 11 U.S.C. § 548.  Section 548 grants trustees the authority to avoid fraudulent transfers and obligations.  The Bankruptcy Code does not expressly grant creditors "derivative standing" to initiate avoidance actions.  The Fourth Circuit has twice declined to decide whether the doctrine of derivative standing exists and the creditor did not provide a strong argument that such standing should be recognized.

Davis v. ABN AMRO Mortg. Grp.et al. (In re Davis) (Case No. 05-72683; A.P. No. 06-07126) 02/22/2008

The Court granted a motion to dismiss a negligence claim under Federal Rule of Civil Procedure 12(c) because, under Virginia law, creditor (a residential mortgage loan servicer) is not subject to any common law duty or fiduciary duty owed to debtors (loan obligors) and instead merely is subject to a contractual duty.  The Court also granted a motion for summary judgment against debtor-wife under Federal Rule of Civil Procedure 56 because debtors' loan is not in debtor-wife's name and therefore creditor could not have been negligent towards her or breached a fiduciary duty owed as to her.  Further, the Court granted creditor's motion for summary judgment with respect to debtor-husband only because any duty owed by creditor is limited to the terms of the loan and debtors did not allege any breach of the terms of the deed of trust.  Lastly, the Court held that debtors’ failure to mention only one of two creditors in relation to breach of contract litigation in their schedules for bankruptcy does not raise any equitable estoppel grounds against the assertion of any claims that may exist as a result of such litigation against either creditor.

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