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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 Stanley (Case No. 15-70378) 7/29/16

Debtor’s motion seeking approval of the sale of real property was granted by the Court, but the Court denied the 5% commission and reimbursement of expenses requested by the realty company.   The sale was conducted by auction pursuant to the terms of the confirmation order.  The Debtor subsequently filed a response to his own motion alleging that the sales price was insufficient.  During the evidentiary hearing, the Court was advised that the auctioneer purchased the property through a corporation wholly owned and controlled by that auctioneer and that no disclosure of this relationship was made at or prior to the sale.   The Court held that the auctioneer and the realty company violated the regulations of the Virginia Auctioneers Board by the auctioneer bidding on his own behalf without providing notice that his bidding would be permitted.  The Court then found that the auctioneer was neither a statutory insider nor a non-statutory insider and was disinterested at the time he was employed to conduct the auction under 11 U.S.C. § 327(a). However, once the auctioneer began bidding without prior disclosure, the question of whether he violated his fiduciary duties as a professional employed pursuant to an order of the Court came into play.  The court adopted the “inherently fair” approach and allowed the sale as it was in the estate’s best interest, shown by arm’s length, good faith negotiations with full disclosure.  However, the Court denied the requested commission and reimbursement of expenses of the realty company in line with the Court’s duties to maintain disinterestedness, avoid the appearance of impropriety and ensure impartiality in the administration of the estate.  

Boyd v. New Peoples Bank (Case No. 08-71119; A.P. No. 16-07008) 5/27/2016

The Debtor filed an adversary proceeding complaint against a creditor for violation of the discharge injunction.  The creditor filed a motion to dismiss the complaint; the Debtor filed a Motion for Judgment on Issue of Liability.  The Court treated both motions as cross-motions for summary judgment pursuant to Rule 7056 as matters outside the pleadings were presented to and not excluded by the Court.  The Court held that the creditor violated the discharge injunction by collecting on “new” notes that were made by the creditor with the Debtor that were based in whole or in part on a debt that was discharged within the scope of Section 524(c).  Neither the Debtor nor the Bank attempted to reaffirm the debt by following the procedures of Section 524(c) before moving forward with a second note.  The Debtor’s motion for summary judgment on the issue of liability was granted with a further hearing to be scheduled to determine the appropriate sanctions, if any. 

In re Futreal (Case No. 15-70886) 05/05/2016

The Court issued a Show Cause for Sanctions against law firm and attorneys in these two cases after hearing on United States Trustee’s Motion for Review of Attorney’s Fees filed in the cases.  Federal court has inherent power to control admission to its bar and to discipline attorneys who appear before it.  The Court imposed sanctions against attorneys and law firm pursuant to that inherent power and authority granted to it under 11 U.S.C. Section 105(a).  The Court found that the parties violated Bankruptcy Rule 9011(b) and transgressed duty of disclosure required by Bankruptcy Rule 2016(b).  The attorneys and law firm were each sanctioned and fined by the Court.

In re Repass (Case No. 15-70885) 05/05/2016

The Court issued a Show Cause for Sanctions against law firm and attorneys in these two cases after hearing on United States Trustee’s Motion for Review of Attorney’s Fees filed in the cases.  Federal court has inherent power to control admission to its bar and to discipline attorneys who appear before it.  The Court imposed sanctions against attorneys and law firm pursuant to that inherent power and authority granted to it under 11 U.S.C. Section 105(a).  The Court found that the parties violated Bankruptcy Rule 9011(b) and transgressed duty of disclosure required by Bankruptcy Rule 2016(b).  The attorneys and law firm were each sanctioned and fined by the Court.

In re Webber (Case No. 15-70705) 4/7/2016

Debtor filed a motion to sell real estate that was objected to by the property owners association and other creditors. The primary objection was that a boat slip and access easement that were also to be sold were located on property owned by the POA.  The Court denied the motion without prejudice and abstained pursuant to 28 U.S.C. § 1334(c)(1) from determining the Debtor's rights in the boat slip and access easement to allow litigation to proceed in state court to determine those rights, and potentially the rights of other parties not before the Court. The Court also expressed concern that the matter should have been brought as an adversary proceeding given that the parties sought a determination of an interest in property within the scope of FRBP 7001(2).

In re Morgan (Case No. 14-60461) 3/25/2016

The Debtors filed a contempt motion against a creditor for pursuing a deficiency claim against the male Debtor and a co-debtor despite failing to timely file a deficiency claim within the time required pursuant to a consent order granting the creditor relief from stay.  The creditor failed to appear at the hearing on the motion and the Court issued a show cause order requiring the creditor to appear and show cause why an order should not be entered holding the creditor in contempt of Court.  At the show cause hearing, the creditor again failed to appear. 

The Court found, by clear and convincing evidence, that the creditor violated the automatic stay of 11 U.S.C. § 362(a), but held that damages and attorney's fees were not appropriate under Section 362(k)(1) since evidence of damages was not proven by a preponderance of the evidence.  However, pursuant to Section 105(a), the Court held the creditor in civil contempt for failing to comply with the Court's previous order and thus, sanctioned the creditor in the amount of $500.00 for willful violation of the consent order payable to the male Debtor and the co-debtor and $500.00 in attorney's fees payable to Debtors' counsel.

In re Keith's Tree Farm (Case No. 15-71262) 03/18/2016

A secured lender of the Chapter 12 debtor and the Chapter 12 Trustee filed objections to confirmation of the Debtor's Chapter 12 plan.  Additionally, the creditor filed a motion to dismiss the case for abuse.   The Court considered the fact that the Debtor, a tree farming operation, most recently filed a Chapter 12 case in 2013 that was dismissed without leave to amend after four failed attempts to confirm a plan.  The Court did not believe that a viable plan could be confirmed in this case, despite the Debtor making progress since the last case including changes in leadership and its bookkeeping staff, as well as the liquidation of some of its real estate which proceeds paid down a significant portion of its secured debt.  The Court held that the Chapter 12 plan was not feasible pursuant to Section 1225(a)(6), denied leave to amend under Section 1208(c)(5) as the Debtor failed to show any reasonable likelihood of reorganization, and dismissed the case for abuse under Section 1208(c) as a result of the Debtor’s unreasonable delay and gross mismanagement with a bar on refiling for 365 days.

In re Nuckoles (Case No. 15-50904) 03/09/2016

Creditor exercised ipso facto clause to repossess the debtor's vehicle.  No reaffirmation agreement had been filed with the Court, but the agreement had been sent to the debtor who signed and returned it to the creditor.  The Court held that the repossession violated the discharge injunction because the debtor had done everything in her capcity to reaffirm her debt and was current on all contractual obligations.

In re Ervin (Case No. 15-70467) 2/23/2016

The United States Trustee filed a motion to dismiss the case either as presumptively abusive under Section 707(b)(2) or as the granting of a Chapter 7 discharge to the Debtor is abusive when viewed in the totality of the circumstances under Section 707(b)(3).  The Court granted the United States Trustee’s motion, but gave the Debtor an opportunity to convert his case to a case under Chapter 13.

The above-median Debtor listed a negative monthly disposable income on his means test form, asserting that the presumption of abuse under Section 707(b)(2) does not apply.  The Debtor did not list any special circumstances on his means test form.  However, when the Debtor's actual income and expenses were taken into account, a presumption of abuse arises.  The Debtor overstated the additional health care expenses deduction and the health savings account deduction.  Thus, the burden was on the Debtor to rebut the presumption of abuse.  The Debtor failed to prove that any special circumstances exist.  The Court allowed a vehicle operation expense for two vehicles, and allowed an additional deduction for a prescription to treat hypersomnia as an unusual circumstance, however the presumption of abuse still arises and the Debtor did not sufficiently rebut the presumption.

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