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.
Debtor's objection to claim of debtor's ex-wife sustained. The Court disallowed the claim in its entirety as the obligation under the parties' Divorce Decree was not in the nature of alimony, maintenance or support and thus a domestic support obligation under Section 101(14A) entitled to priority treatment.
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).
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.
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.
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.
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.
The Court concluded that the debtor was entitled to summary judgment on all counts. The Court granted summary judgment sua sponte pursuant to Rule 56(f) for the section 523(a)(4) claim and granted debtor's written motion on the section 523(a)(6) claim.
At the time the Chapter 13 petition was filed in the instant case, the debtor had another Chapter 13 case pending in this same court. In that case, a secured creditor was granted relief from stay. The creditor began the foreclosure process, but the debtor filed this second case to stop the foreclosure. However, in the first case, the debtor had not received his discharge because of procedural matters that were out of his control, namely, an employer continued to send payment to the Chapter 13 Trustee per a wage deduction order, even though an order was sent to the employer notifying it that the Trustee had sufficient funds on hand to pay the case in full. Pursuant to Local Rule 1017-2, an order dismissing the second case was entered.
The Debtor then filed a motion to vacate dismissal and reinstate case. The court granted the motion after determining that, even though in general a debtor should not have multiple bankruptcy cases, the present circumstances constitute exceptional circumstances where the only reason the first case remained open was due to procedural issues out of the debtor's control. The pending foreclosure sale was deemed to be void and of no effect.
In a Chapter 11 case, the Court sustained the debtors' objection to the claim of a creditor and reclassified that claim from a secured claim to an unsecured claim. The creditor claimed that an asset purchase agreement relating to a mining lease provided for a security interest in certain assets of one of the debtors. The Court found that the creditor’s claim did not comply with Rule 3001(c)(1) and was not entitled to prima facie validity under Rule 3001(f). Therefore, the burden remained on the creditor to prove the validity of a security interest purportedly granted by that agreement by a preponderance of the evidence. The Court held that the clear intent of the parties to the agreement was specifically not to create any type of security interest. The “right of reentry” language relied upon by the creditor could not grant it a security interest as the terms of the agreement were clear. Further, under West Virginia law, the creditor did not hold legal title to the property and was not entitled to immediate possession of the property; thus is could not meet its burden of proof that a security interest existed. Moreover, the Court found that, even if the purported security interest did exist, the creditor failed to perfect that security interest as required by Rule 3001(d).
The Court also denied the creditor's motion for relief under Section 362(d)(1) after the court determined that the creditor did not have any security interest in the assets of the debtors.
The Chapter 7 Trustee filed an objection to the Debtor’s claim of exemption under Virginia Code § 34-29, entitled “Maximum portion of disposable earnings subject to garnishment.” The Debtor claimed the § 34-29 exemption in accounts receivable for stenography work performed prepetition.
The Court held that the analysis in In re Kluge, Case No. 11-61517 (Bankr. W.D. Va. Oct. 3, 2011), is correct in that § 34-29 only applies to garnishment, and because there is no garnishment at issue in this case, § 34-29 simply does not apply to afford the Debtor the relief claimed in her exemption. Because the Court found that § 34-29 is not applicable by its statutory terms to the facts of this case, the Court did not find it necessary to address the Trustee’s other arguments.