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.
Pro se debtor filed a motion for sanctions against the law firm of Klima, Peters & Daly. While the law firm did not respond to the motion despite a Court order requiring it to do so, the motion was dismissed as the debtor failed to establish that any violation of the automatic stay under 11 U.S.C. section 362(a) occurred.
This adversary complaint, filed by two children of the Debtor, stems from certain terms regarding life insurance proceeds contained in a separation agreement between the Debtor and her now deceased ex husband. The children sought a declaration that a state court default judgment they obtained against the Debtor was nondischargeable. The Court first held that the Bankruptcy Court was not precluded by the doctrine of collateral estoppel from considering the underlying conduct giving rise to the debt for dischargeability purposes given the state court’s failure to do so. The Court then found that the plaintiffs sufficiently established that the debt was nondischargeable under 11 U.S.C. § 523(a)(5) as a domestic support obligation or, alternatively, under 11 U.S.C. § 523(a)(15) as a debt to a child of the debtor incurred in connection with a separation agreement or divorce decree.
The debtor's chapter 7 case was dismissed after counsel failed to timely comply with the court's deficiency order requiring the filing of schedules and other required documents. The debtor moved to vacate the dismissal order under Federal Rule of Civil Procedure 60(b), arguing that counsel's failure to monitor the deficiency deadline constituted excusable neglect under Rule 60(b)(1) and that the court's deficiency order procedure violated the debtor's due process rights. The Court held that counsel's failure to monitor the deficiency deadline did not constitute excusable neglect under the Pioneer factors, as the fault rested with counsel and the prejudice to creditors of vacating the order outweighed the debtor's interest in relief. The Court further held that the deficiency order procedure satisfied due process under the Mathews v. Eldridge balancing test, as the debtor received adequate notice of the deficiency and the opportunity to be heard prior to dismissal. The Court denied the motion to vacate.
An unsecured creditor moved to conduct Rule 2004 examinations of the chapter 7 debtor and his non-filing wife to determine whether granting a discharge would be presumptively abusive under section 707(b)(1). The threshold question was whether certain tax liabilities that the IRS had designated as currently not collectible should be counted in calculating the debtor's total debt. The Court held that they should, reasoning that an administrative determination of non-collectibility does not extinguish or reduce the underlying tax obligation. Because the underlying tax liabilities remained valid legal obligations, they were properly counted as non-consumer debts, the debtor's non-consumer debts exceeded his consumer debts, and section 707(b) was therefore inapplicable. The Court denied the motion for a Rule 2004 examination as moot.
The plaintiff filed an adversary proceeding seeking a declaration that the debt owed to him by the debtors is not dischargeable under 11 U.S.C. § 1328(a)(4) as the debtors willfully or maliciously caused the plaintiff personal injury (pain and suffering, emotional distress, mental anguish, etc.). The debtors filed a motion to dismiss the complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) asserting that allegations of physical harm are needed for a claim to be non-dischargeable. The Court held that the term "personal injury" in Section 1328(a)(4) is not limited to claims alleging physical harm, but can include non-physical injuries such as defamation and emotional distress. The Court found that the facts as alleged in the complaint, when taken as true, show that the plaintiff suffered reputational damage and emotional harm as a result of the debtors' willful or malicious conduct and denied the motion to dismiss.
The question before the Court was whether to grant the trustee’s motion to modify the debtors’ confirmed chapter 13 plan over the objection of the debtors. The trustee moved to modify the confirmed plan because one of the debtors received an inheritance during the latter months of the plan term. The debtors opposed the motion to modify arguing they had not experienced a substantial and unanticipated change in financial condition. The Court granted the motion in part and denied the motion in part.
The debtor filed a complaint requesting that the Court determine that excepting his student loan debt from discharge imposes an undue hardship on him and his spouse, and thus under Bankruptcy Code section 523(a)(8), his student loan debt should not be excepted from discharge. The Court found that the debtor met the three prongs of the Brunner test to show that repayment of the student loan debt imposes an undue hardship on him. Accordingly, the Court entered an order discharging the debtor’s student loan debt.
An involuntary Chapter VII bankruptcy petition was filed against Yellow Poplar Lumber Company, Inc. under the Bankruptcy Act of 1898. The case was closed and then later reopened when the bankruptcy estate received proceeds from gas wells on property Yellow Poplar had an interest in at the time of its bankruptcy. The Trustee was left with $422,857.12 in unclaimed funds, which were transmitted to the Clerk of this Court. The issue before the Court is which version of Section 66 of the Bankruptcy Act applied: the 1956 version or the version in effect when the bankruptcy case was pending. The statute, as amended in 1956, provided that unclaimed funds were not subject to escheat under the laws of any state. The State of South Carolina asserted that under the pre-1956 version the funds are subject to escheat back to individual States where deceased shareholders who left no heirs were located. While Yellow Poplar went bankrupt in 1928, the natural gas royalties that give rise to the unclaimed funds did not manifest themselves until many decades after the case was closed. Since the funds did not exist prior to 1956, and therefore could not have escheated to any state prior to the date of amendment, the Court held that the 1956 amendment to Section 66 applies. As the unclaimed funds are not subject to escheat, the Court denied the State of South Carolina’s motion to pay the unclaimed funds into the registry of the court and then transfer the case and the funds back to the District of South Carolina.
Debtors filed complaint for violation of automatic stay alleging creditor continued collection efforts against Debtors for pre-petition debt after filing, which they alleged caused them harm. Court construed complaint as request for damages for violation of discharge injunction of 11 U.S.C. § 524(a). Court found that creditor violated the discharge injunction and ordered the creditor to pay the Debtor’s actual damages in the amount of attorney’s fees incurred, but did not award additional damages to the Debtors as their allegations of time spent on the case were overly speculative and they did not present any evidence of lost wages as a result. Nor did the Court award emotional damages as that is not an appropriate item of damages for civil contempt. Court found no egregious or vindictive conduct on the part of the creditor and also did not award punitive damages.
In this case, the Chapter 7 Debtor filed a motion to impose sanctions against a creditor alleging that the creditor violated the automatic stay and the discharge injunction by making 50 or more collection calls to the Debtor and his family members. The Debtor failed to redeem the collateral or enter into a reaffirmation agreement regarding the vehicle, so the Court found that the timing of the creditor’s action in the case was more appropriately governed by the discharge injunction than the automatic stay. The Court held that the Debtor failed to meet his burden of proof that the creditor violated the discharge injunction as the evidence showed that the creditor was not trying to coerce the Debtor to make a payment he did not want to make or attempting to collect a debt from the Debtor as a personal liability, but instead was calling when the payments were either due or late to determine if the Debtor wanted to perform under his contract to stave off repossession. Therefore, the Court denied the motion with a word of caution to the creditor that there comes a point where the sheer volume of calls tips a legitimate inquiry as to intent into coercive behavior.