Source: https://www.mdb.uscourts.gov/view-opinions
Timestamp: 2019-04-21 04:39:56+00:00

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The matter before the Court involves the scope of the automatic stay—specifically, whether any aspect of section 362(a) remains applicable to this chapter 13 case. The question arises because the above-captioned Debtor had two chapter 13 cases pending in the past year, and section 362(c)(3) limits the application of the stay in such circumstances. Neither the parties in this matter nor bankruptcy courts agree on exactly what that limitation entails. Based on the Court’s reading of the statute, and its understanding of the rules of statutory interpretation, the Court finds no significant reason to deviate from the majority approach, which was previously adopted by Judge Gordon in this district. The Court thus adopts the reasoning and holding of In re Tubman, 364 B.R. 574 (Bankr. D. Md. 2007). Accordingly, the automatic stay of section 362(a) terminated under section 362(c)(3) only as to the Debtor and property of the Debtor. The automatic stay remains in place in this case with respect to property of the estate pending resolution of the Lender’s Stay Motion.
Whether a contract is executory depends on the facts of the particular matter, the language of the subject agreement, and the consequences under applicable nonbankruptcy law of either party ceasing to perform any ongoing or remaining obligations under the contract. Here, the core purpose of the settlement agreement was to resolve the pending legal disputes between the parties, providing certainty and finality to each affected party. In exchange for the transfer of a certain business and a cash payment, the parties agreed to dismiss the litigation between them; the non-debtor parties agreed to dismiss, and to take certain other action in, related litigation involving a third party; and the parties agreed to refrain from disparaging each other and their respective businesses. Considering the totality of the circumstances and the core purpose of the settlement agreement, the Court determines that the settlement agreement is an executory contract and subject to rejection in the Debtors’ chapter 11 cases.
A creditor holding a right to payment under applicable nonbankruptcy law generally may file a proof claim in a debtor’s bankruptcy case under section 501 of the U.S. Bankruptcy Code. In the chapter 13 case underlying this adversary proceeding, the Defendants filed proofs of claim based on defaulted debt purchased from another entity. The Plaintiff (Debtor) then filed a complaint against the Defendants that, as amended, objected to the Defendants’ proofs of claim and asserted two separate causes of action against the Defendants for alleged violations of the Maryland Consumer Debt Collection Act and the Maryland Consumer Protection Act. The Court had to consider the effect of plan confirmation and preemption on the Plaintiff’s complaint, as well as several of the principles articulated by the U.S. Supreme Court in Midland Funding, LLC v. Johnson, 137 S.Ct. 1407, 1412 (2017). The Court ultimately determined that (i) confirmation of the chapter 13 plan was not an adjudication of the claims on the merits; (ii) under Midland Funding, the Defendants’ proofs of claim, based on their right to payment on the purchased debt, could stand, subject to objections raised through the claims allowance process; and (iii) the Plaintiff’s claims that the Defendants’ act of filing the proofs of claim violated Maryland law were preempted by the Bankruptcy Code.
A condominium requested termination of the automatic stay to pursue, among other things, an in personam collection action against the Debtor for unpaid post-petition assessments. Under the terms of the Debtor’s plan, which was confirmed without objection from the condominium or the secured lender, title to the condominium unit vested in the secured lender upon confirmation. The Bankruptcy Court, David E. Rice, Judge, held that, because the confirmed plan was binding on the parties, the condominium should be granted limited stay relief to obtain a judgment against the Debtor, but only for post-petition assessments that accrued prior to plan confirmation. The court further held that it was premature to allow enforcement of any such judgment against post-petition wages or other property of the estate, following the reasoning of Carrollan Gardens Condominium Association v. Khan (In re Khan), 504 B.R. 409 (Bankr. D. Md. 2014) and In re Wiley, 2018 WL 604401, __ B.R. __ (Bankr. D. Md. Jan. 26, 2018).
A condominium requested termination of the automatic stay to, among other things, pursue an in personam collection action against the Debtor for unpaid condominium assessments and other post-petition charges. The Bankruptcy Court, David E. Rice, Judge, held that the Debtor’s obligation to pay post-petition condominium assessments and charges continues until the entry of discharge under § 1328(a), and upon entry of such discharge the condominium’s in personam remedies are discharged, following the reasoning of Carrollan Gardens Condominium Association v. Khan (In re Khan), 504 B.R. 409 (Bankr. D. Md. 2014) and the plain language of § 1328(a). Accordingly, the court granted limited stay relief to allow the condominium to obtain and enforce a judgment against the Debtor, but concluded that it was premature to permit enforcement of any such judgment against post-petition wages or other property of the estate.
This adversary proceeding requires the Court to evaluate both the avoidance of an alleged postpetition transfer and the transferee’s liability for the same if the transferee asserts a valid and perfected lien in the transferred property. Specifically, the Defendant made a postpetition transfer of property in the amount of $25,000.00 to itself in payment of certain prepetition legal fees. The Plaintiff asserts that the postpetition transfer constitutes an avoidable transfer under section 549 of the Bankruptcy Code and is moving for partial summary judgment on that basis. The Defendant’s opposition to that motion turns largely on section 550 of the Bankruptcy Code and the reasoning of In re C.W. Min. Co., 477 B.R. 176 (B.A.P. 10th Cir. 2012). The Bankruptcy Court, Michelle M. Harner, Judge, held that, based on the existing record, the Defendant had not established a valid and enforceable attorney’s lien under applicable state law. The Court further determined that the Defendant received the postpetition transfer in violation of section 549 of the Bankruptcy Code. The Court did not, however, direct repayment of the postpetition transfer, as the Plaintiff’s motion did not seek such relief and the Court found genuine issues of material fact relating to that issue.
Debtor’s Counsel: Michael P. Coyle, Esq.
Counsel for MidFirst Bank: Richard J. Rogers, Esq.
The debtor filed a Motion for Stay Pending Appeal with respect to his appeal of an order granting MidFirst Bank’s Motion for Relief From the Automatic Stay. The Bankruptcy Court, David E. Rice, Judge, held that regardless of whether the more difficult Real Truth About Obama, Inc. v. FEC test applied or the less difficult Long v. Robinson test applied, the request for a stay pending appeal should be denied. In particular, the Court focused on the likelihood of success on the merits. MidFirst Bank sought relief from the automatic stay to continue a foreclosure proceeding in which the auction sale occurred earlier on the same day that the debtor’s bankruptcy petition was filed. The debtor sought to invalidate the foreclosure sale and cure his mortgage defaults under 11 U.S.C. § 1322(c). The Court rejected the debtor’s argument that the unreported decision in Kameni v. Ocwen Loan Servicing, 589 Fed. App’x 145 (4th Cir. 2015), was applicable because the foreclosure sale in Kameni occurred after the bankruptcy petition had been filed in a case where the automatic stay did not go into effect upon the filing by reason of 11 U.S.C. § 362(c)(4) but was subsequently imposed retroactively effective as of the petition date.
The issue before the Court is whether a private loan extended for educational purposes is dischargeable in a debtor’s chapter 7 case. Section 523(a)(8) includes three subsections addressing educational debt that is excepted from discharge. The parties do not argue that either section 523(a)(8)(A)(i) or 523(a)(8)(B) is applicable to this case. Rather, the defendant asserts that its debt is covered by section 523(a)(8)(A)(ii), as “an obligation to repay funds received as an educational benefit, scholarship, or stipend.” 11 U.S.C. § 523(a)(8)(A)(ii). Based on the facts of this case, the Court holds that the private student loan at issue is not an educational benefit under section 523(a)(8)(A)(ii) and, therefore, is dischargeable in the debtor’s chapter 7 case. To hold otherwise would ignore the plain language of the statute and render subsections (A)(i) and (B) largely meaningless. Indeed, if subsection (A)(ii) covers any loan for educational purposes, much of the language in the remainder of the section is superfluous. The Court accordingly entered an Order granting the debtor’s motion for summary judgment and denying the defendant’s motion for summary judgment.
Counsel for the Debtor: Robert M. Stahl, IV, Esq.
Counsel for the Plaintiff: Joseph A. Pulver, Esq.
The plaintiff filed a complaint alleging that the Debtor was liable to Chesapeake Employers Insurance Company (“CEIC”) on a judgment entered against his wife in the amount of $338,776 in addition to punitive damages of $500,000 and that such amounts were excepted from discharge under 11 U.S.C. §523(a)(2). CEIC sought a determination that the Debtor and his wife entered into an oral partnership agreement and as such, the Debtor was liable as a partner or by reason of his direct actions for (i) misrepresentation or fraudulent concealment, (ii) use of a false written statement, or (iii) civil conspiracy. The court found in favor of the Debtor and concluded that there was no partnership (either in fact or by estoppel), that the Debtor was not liable by reason of any of his individual actions, and that the Debtor was not a participant in a civil conspiracy.
Counsel for Brandon: Charlene A. Wilson, Esq.
Counsel for Ruckers: Robert N. Grossbart, Esq.
Counsel for Burrows: Jeffrey M. Sirody, Esq.
Counsel for Everest: Edward C. Christman, Esq.
The Supreme court’s decision in Harris v. Viegelahn, 135 S. Ct. 1829 (2015), does not preclude the bankruptcy court from directing Chapter 13 trustees to pay funds remaining in their possession to debtor’s counsel up to the amount of the attorney’s fee allowed in cases that are dismissed or converted prior to confirmation of a Chapter 13 plan.
Counsel for Plaintiff: Joyce A. Kuhns, Esq. and Robin Leone, Esq.
Counsel for Defendant: Joseph Selba, Esq.
Plaintiff asked the court to declare that a judgment she held against defendant for more than $2,100,000 was nondischargeable under 11 U.S.C. § 523(a)(2)(A). The Bankruptcy Court, David E. Rice, Judge, held that the judgment was discharged because the plaintiff did not meet her burden by a preponderance of the evidence. The court found that the defendant debtor did not make a false representation or have any intent to deceive the plaintiff, and that in any event the plaintiff did not sustain any damage as a result of the allegedly false representations.
Counsel for Dane Equities, LLC: James C. Olson, Esq.
Counsel for FCI Lender Services, Inc. as servicer for Vonderharr Wagner Associates LLC Defined Benefit Pension Plan: Rita Ting-Hopper, Esq.
The court reopened a case to resolve a dispute between Dane Equities, LLC and FCI Lender Services, Inc. about the effect of Dane’s foreclosure of the debtor’s equity of redemption in real property pursuant to a tax sale certificate while the bankruptcy case was pending. The Bankruptcy Court, David E. Rice, Judge, analyzed a variety of factors and found that cause existed to annul the automatic stay and thereby validate Dane’s state court tax sale certificate foreclosure. Among other reasons, Dane acted in good faith without knowledge of the bankruptcy filing whereas FCI knew of both the bankruptcy filing and the tax sale foreclosure proceeding but took no action to advise Dane or the state court of the automatic stay.
The plaintiff sought an order declaring a judgment entered by Court of Common Pleas for York County, Pennsylvania and later domesticated in Maryland against the defendant in the amount of $217,604.15 non-dischargeable under 11 U.S.C. § 523(a)(2) and 11 U.S.C. § 523(a)(4). The Bankruptcy Court, David E. Rice, J., held that the debt owed by the defendant to the plaintiff under the judgment was excepted from discharge under 11 U.S.C. § 523(a)(2)(A) and § 523(a)(2)(B) because the defendant used misrepresentations and a false financial statement to induce the plaintiff to make a loan that was not repaid. The court held that the defendant was not acting in a fiduciary capacity when he induced the plaintiff to make the loan, despite having been his friend and accountant, and thus 11 U.S.C. § 523(a)(4) was not applicable.
Counsel for Plaintiff: Joseph H. Ostad, Esq.
Counsel for Defendant: Steven A. Allen, Esq.
The plaintiff sought an order declaring a judgment entered by the Circuit Court for Prince George’s County, Maryland against the defendant in the amount of $2,650,000 non-dischargeable under 11 U.S.C. § 523(a)(2) by reason of fraud, false pretenses, and misrepresentations with actual malice and intent to deceive. The Bankruptcy Court, David E. Rice, J., held that the defendant was bound by the judgment entered in the Circuit Court and was not entitled to re-litigate his liability, and that compensatory damages of $150,000 and punitive damages of $1,500,000 (awarded by the Circuit Court in the amount of $500,000 on each of three counts for intentional misrepresentation, civil conspiracy and concealment and non-disclosure) were excepted from discharge. The court held the remaining punitive damages of $1,000,000 awarded by the Circuit Court for constructive fraud and conversion to be discharged.
Leonard Paul Raskin, a married man, filed for bankruptcy individually and sought to use 11 U.S.C. §522(f) and the recently enacted Maryland homestead exemption to avoid a joint lien on real property owned with his wife as tenants by the entirety. The lienholder objected and argued that since only the Debtor’s interest in the real property was before the Court, the Court could neither avoid the lien in part nor entirely as this would allow the Debtor to unilaterally destroy the unity of interest that is the hallmark of the tenancy by the entireties estate. The Court held that the Maryland homestead exemption and Section 522(f) act in concert to create an exception to the common law prohibition against the unilateral alteration of rights in the entireties estate such that the Debtor could have the lien avoided. However, the Court agreed that the homestead exemption does not extend to the avoidance of the lien as to the wife’s interest in the property and the result was limited to allowing only the Debtor to avoid the lien to the extent it impaired his exemption as to his interest.
Following the decision to convert jointly administered Chapter 11 cases to Chapter 7 in lieu of the approval of the proffered disclosure statement, and the corollary denial of confirmation of the plan, the Debtors, an individual and a shell entity, appealed the decision and filed a motion for stay pending appeal. The Court found that its decision to withhold approval of the disclosure statement and deny confirmation of the plan, and therefore convert, was appropriate in light of the plan’s failure to conform to applicable law, the individual Debtor’s repeated acts of bad faith, the plan’s violation of the liquidation test and its proposed unfair discrimination in favor of the individual Debtor’s mother, all in violation of the confirmation requirements of Section 1129(a). Conversion was deemed appropriate as the individual Debtor’s schedules and disclosure statement reflected substantial equity in both her real and personal property. In light of these factors, the individual Debtor could not establish that (1) there was a likelihood of success on the merits on appeal, (2) she would suffer irreparable injury if the stay is denied, (3) other parties will not be substantially harmed by the stay, and (4) the public interest will be served by granting the stay. The requested stay pending appeal was denied.
Plaintiffs filed separate complaints objecting to dischargeability pursuant to 11 U.S.C. § 523(a)(2), (4), (6) and (19). The Counts brought under § 523(a)(6) and (19) were dismissed by summary judgment. After trial on the remaining Counts, the Bankruptcy Court, Duncan W. Keir, J., ruled in favor of Defendant. The Court found (1) no fiduciary relationship existed as intended by the § 523(a)(4) and Plaintiffs did not plead or prove claims under embezzlement or larceny; and (2) Plaintiffs failed to prove that Defendant’s representations were made with fraudulent intent or with a reckless representation constituting a knowing false representation.
Court limited the amount of reasonable fees for a bankruptcy petition preparer's services to $100 of the fee charged by him to prepare petition and other filings in a straightforward Chapter 7 case but found that an additional $75 charged for lease preparation and dispute resolution with a utility service was not related to the preparation of the bankruptcy filing and was not subject to review or approval by the court. Although the evidence presented indicated that an additional $150 was paid to a third party associated with the bankruptcy petition preparer for educational services and advice regarding the bankruptcy and that such services may be in violation of section 110 as well as an unauthorized practice of law, the court found that the third party was not on notice that her fees were at issue in the hearing and refrained from ordering her fees disgorged without prejudice to the right of the U.S. Trustee to seek such relief by separate motion.
Debtor and his co-heir, non-debtor sister, inherited his principal residence from their mother who had encumbered the residence with a reverse mortgage. Upon the mother’s death, the reverse mortgage accelerated and was due in full prior to the petition date. The Debtor, relying upon 11 U.S.C. § 1322(c)(2) which provides that a Chapter 13 plan may modify a claim secured by a debtor’s principal residence when “the last payment on the original payment schedule… is due before the date on which the final payment under the plan is due,” sought to repay the reverse mortgage in full over the life of his Chapter 13 plan. The mortgagee, Federal National Mortgage Association (FNMA), objected to confirmation of the plan and asserted that (1) Section 1322(b)(2) forbids modification of a claim secured by a debtor’s principal residence and therefore the reverse mortgage could not be decelerated and paid over time under the plan and (2) the modification could not be accomplished without the presence of the Debtor’s sister in the case. At issue was whether the acceleration of the reverse mortgage makes it a claim for which the last payment is due before the date on which the final payment under the plan is due and whether a co-owner need be a party in order for a mortgage’s payment terms to be modified. The Court held that (1) the provisions of Section 1322(c)(2) apply to the mortgage’s payment terms and it could be paid over time under the plan and (2) the Debtor’s sister is not a necessary party to the modification of the payment terms. FNMA’s objection to confirmation was overruled.
Bankruptcy petition preparer was ordered to disgorge all but $100 of the fee charged by her to prepare petition and other filings in no-asset Chapter 7 case. Since a bankruptcy petition preparer's services are limited to typing and transcribing, $300 was not "reasonable" per 11 U.S.C. Section 110 for preparing a routine Chapter 7 filing when typing services generally charge an hourly rate of not more than $35.
The debtors filed what is known as a “Chapter 20” case; a chapter 13 case in which they are ineligible for a discharge due to receiving a chapter 7 discharge within the preceding four-year period. During the “Chapter 20” case, the debtors avoided a second, wholly unsecured, lien on their residence. They then filed an objection to the claim of the creditor, Real Time Resolutions, Inc., on the grounds that the in personam rights of the creditor had been discharged in a prior chapter 7 case and, therefore, the creditor was not entitled to treatment as an unsecured creditor in their chapter 13 plan. The Bankruptcy Court, David E. Rice, J., sustained the objection, holding that after avoidance of its fully unsecured lien, the creditor did not hold any in personam or other rights against the debtors that were allowable as an unsecured claim for purposes of distributions under a chapter 13 plan in a “Chapter 20” case.
Debtor, a sixty-three year old woman suffering from an autism spectrum disorder (Autism) and various physical ailments, filed a complaint pursuant to 11 U.S.C. §523(a)(8) to have her student loans included within her discharge. Debtor argued that she was unable to obtain gainful employment due to her Autism and other permanent shortcomings and that to have her student loan debt excepted from her discharge would be an undue hardship. Three of her student loan creditors, who were collectively owed nearly $340,000, objected. The Court applied the Brunner test to determine the dischargeability of the student loans and found that, 1) Debtor’s monthly finances would not allow her to sustain a minimal standard of living if she was forced to re-pay her student loans; 2) Debtor’s Autism and other ailments amounted to sufficient additional circumstances to establish a certainty of hopelessness as regards the Debtor’s ability to ever obtain regular employment sufficient to re-pay her student loan debts; and 3) Debtor had acted in good faith in attempting to obtain employment and steady income to repay her loans but Autism and other circumstances beyond her control prevented her from realizing the same. Finding that all requirements of the Brunner test had been met, the Court discharged all of the student loans.
This opinion holds that the trustee of an involuntary Chapter 11 corporate debtor who sued the sole insider for the recovery of fraudulent transfers made with actual intent to defraud creditors, has standing as a creditor on behalf of the Chapter 11 estate to obtain a nondischargeable judgment against the insider in his subsequently-filed voluntary Chapter 7 bankruptcy case in the amount of the avoided transfers.
The Chapter 13 Trustee filed an objection to confirmation of the debtor’s chapter 13 plan on the grounds that the debtor had not committed all her projected disposable income for the applicable commitment period to the plan as required. The Bankruptcy Court, Duncan W. Keir, Chief J., denied confirmation with leave to amend because the debtor’s plan was funded significantly below the disposable income shown on the B22C form, which form did not list a marital adjustment for the non-debtor’s spouse’s arguably unavailable income. Debtor’s argument that her non-filing spouse refused to contribute his income to the plan was not the type of change to anticipated funding that would lead the court to deviate from using the B22C calculation as the required level of funding. The Court granted the debtor leave to amend the plan or the marital adjustment taken on the B22C statement, but cautioned that the court must carefully scrutinize issues of good faith in confirming a plan or an amended B22C statement under stated circumstances.
In this Chapter 20 case, the Debtors moved to avoid a wholly unsecured junior mortgage lien against their principal residence pursuant to 11 U.S.C. § 506. In opposition to the Motion and to confirmation of the Debtors’ Amended Plan, TD Bank, N.A. and the Chapter 13 Trustee encouraged the Court to adopt a per se rule making lien avoidance contingent on a debtor’s eligibility for discharge. Alternatively, TD Bank, N.A. and the Chapter 13 Trustee argued that the Debtors’ Amended Plan was not proposed in good faith and the Debtors’ case was not filed in good faith because the Debtors’ sought to strip off a lien that could not be stripped off in their prior Chapter 7 case. The Bankruptcy Court, Wendelin I. Lipp, held that a Chapter 13 debtor's ability to strip off a wholly unsecured junior lien is not conditioned on the debtor's eligibility for discharge. Rather, eligibility for discharge is one factor the Court considers in the good faith analysis at the plan confirmation stage.
Motions to dismiss or convert were brought by the United States Trustee and an interested party. The Bankruptcy Court, Duncan W. Keir, Chief J., held that cause for dismissal existed pursuant to 11 U.S.C. § 1112(b) as amended by the Bankruptcy Technical Corrections Act of 2010. In addition to other factual causes for dismissal, the court held that cause was demonstrated under 11 U.S.C. § 1112(b)(4)(A) because the Debtor had continuing postpetition losses and there was no likelihood of rehabilitation . The Debtor had no ongoing business and the purpose of filing the bankruptcy case was to collaterally attack a final order in a separate proceeding.
Debtor objected to a proof of claim asserting that a three-year statute of limitation barred recovery of an unsecured claim resulting from the deficiency balance after sale of a vehicle. The Bankruptcy Court, Duncan W. Keir, Chief J., held that by Maryland statute, a four year statute of limitations applies to purchase installment contracts. However, the court further held that the period of limitation begins to run when the right to sue for payment accrues under the terms of the contract. The Court found that the record on the pleadings stated only the later date of disposition of the collateral and was insufficient for determination of the expiration of the statute of limitations. An evidentiary hearing on the objection to claim would be held.
bankruptcy case that In re Hurtz and In re Hernandez correctly prevent.
Chapter 11 debtor provided staffing to hospital emergency rooms and paid for malpractice insurance for its doctors. Malpractice insurer hired claimant law firm to defend two doctors against malpractice claims. After law firm had performed legal work at behest of malpractice insurer, malpractice insurer went into receivership. Subsequently, the debtor filed a Chapter 11 bankruptcy petition. The law firm filed a claim against the debtor, and the debtor, succeeded in interest by a Plan Trust, objected to claim of law firm. Held, because law firm’s claim would only be enforceable under state law against malpractice insurer, debtor’s objection to claim was sustained.
Trustee sought preferential avoidance of deed of trust perfected within 90 days prior to bankruptcy petition date. The Bankruptcy Court, Duncan W. Keir, Chief J., held that the creditor was entitled to be equitably subrogated to the lien position held prior to the refinance transaction despite recording its new lien beyond ten days after the promissory note was signed on a date within the preference period and filing a certificate of satisfaction prior to recordation of its new lien.
Analyzing projected disposable income in accordance with section 1325 (b) of the Bankruptcy Code in accordance with BAPCPA amendments.
Please see the attached PDF opinion.
Debtor’s breach of non-competition clause in pre-petition employment contract, accompanied by tortious conduct that amounted to fraud, misrepresentation and breach of fiduciary duty to the plaintiff, resulted in a finding that the resulting damages were non-dischargeable pursuant to 11 U.S.C. §523(a)(2), (a)(4), and (a)(6).
Motions for appointment of chapter 11 trustees or alternatively for conversion were filed by the purported largest secured creditor, alleging, inter alia, dishonesty, mismanagement and futility. Debtors, who were married, but in separate cases, opposed the motions and the court held a lengthy evidentiary trial. The Bankruptcy Court, Duncan W. Keir, Chief J., explaining the different analyses of the applicable Bankruptcy Code sections, held that cause existed under both 11 U.S.C. § 1104 and § 1112 for appointment of a trustee, dismissal or conversion. The court found that the appropriate remedy was the appointment of a chapter 11 Trustee who could further assess whether there was any means for a financial reorganization.
After the Court decided it was appropriate to certify an ipso facto default issue in a car loan to the Court of Appeals of Maryland, Ford Motor Credit asserted that it had a right to arbitrate. The Court denied the arbitration demand as untimely and because it conflicted with an aspect of bankruptcy law.
Counsel for Debtor: Mark A. Pudinski Counsel for Mazda American Credit; Michael Klima Chapter 7 Debtors and Creditor filed a joint motion to allow Debtors to assume prepetition vehicle lease. The court, Duncan W. Keir, C.J. held that assumption of a lease of personal property in chapter 7 pursuant to 11 U.S.C. § 365(p)(2) does not require court approval but that the underlying indebtedness will be discharged by the discharge order entered in the Debtors’ case unless reaffirmed in compliance with the provisions of 11 U.S.C. § 524(c) et seq. Without such reaffirmation, any waiver of discharge contained in the assumption agreement is ineffective.
Held, (1) Chapter 11 debtor corporation had standing to reject executory contract notwithstanding the fact that the debtor’s parent corporation was the contracting party and not the debtor, where the obligee demanded payment from the debtor and the debtor was unwittingly in possession of the claimant’s computer equipment on the petition date; (2) debtor may reject an executory contract to which it was not a party in the exercise of its sound business judgment based upon the reasonable belief that the debtor might be liable for performance of the contract; (3) debtor’s rejection of an executory contract is not an acknowledgment of indebtedness per se; (4) while rejection of an executory contract may give rise to an unsecured claim and/or an administrative claim against the bankruptcy estate for breach of contract, administrative claimant seeking rejection damages bears burdens of proving damages and that the debtor was obligated to perform the contract, particularly where the debtor is not a party to the rejected contract, but might be liable on some other basis; (5) debtor’s rejection of an executory contract to which it was not a party did not give rise to a claim for any damages against the bankruptcy estate where administrative claimant failed to prove both debtor’s obligation to perform the contract and that debtor’s rejection thereof caused damage to the claimant.
On remand from the U.S. district court (which held that certain key employees of the Chapter 11 debtor were officers and therefore subject to the provisions of Section 503(c)(1) as insiders of the debtor), the issue was whether any of five employees could satisfy limitations set forth in the statute in order to receive payments under a Key Employee Retention Plan (“KERP”). Held, Section 503(c)(1) requirements not satisfied by the agreement of the purchaser of Chapter 11 debtor corporation’s stock (pursuant to confirmed plan) to pay the same compensation as that proposed by the KERP, because the agreement to match the debtor’s KERP was not a bona fide job offer as not coming from a different business, and therefore not an offer in competition with the KERP. As being the same business as that of the debtor, the purchaser’s offer did not test the value of the KERP as a competing offer.
Plaintiff filed a two-count complaint for nondischargeability of debt pursuant to 11 U.S.C. §§ 523(a)(2)(A) and (B). The Debtor, an experienced real estate developer, sought to refinance an existing loan secured by a first lien on the real property at issue. Plaintiff was to receive a first lien on the real property when the loan was settled. Prior to the settlement with the Plaintiff and unbeknownst to it, Debtor granted an indemnity deed of trust in favor of non-party private investors, securing it with the same real property that was to be pledged to the Plaintiff. This resulted in a loss of the lien priority bargained for by the Plaintiff. The Court found that Plaintiff’s Section 523(a)(2)(A) claim failed because the Debtor’s omission or active misrepresentation regarding the Plaintiff’s lien status was a statement regarding the Debtor or an insider’s financial condition and outside that section’s scope. However, the Court concluded that the Debtor had made materially false written statements regarding an insider’s financial condition with the intent to deceive which were reasonably relied upon by the Plaintiff, thus satisfying all elements of Section 523(a)(2)(B) and requiring that the underlying debt be excepted from the Debtor’s discharge.
Chapter 13 trustee objected to confirmation of debtor’s proposed plan which committed all of the debtor’s “projected disposable income” as calculated under the applicable statute, but permitted debtor to continue making mortgage payments in excess of what the Chapter 13 trustee argued was a reasonable amount for a housing allowance under Debtor’s circumstances. The court, Duncan W. Keir, C.J., held that it would not redefine “disposable income” based on the argument that the secured installment payments appeared disproportionate to the needs of debtor. The court also determined that the plan was proposed in good faith under the facts of this case.
Nondischargeable judgment in the amount of $341,233.00 was entered by the bankruptcy court against Chapter 7 debtor by default after which the bankruptcy case was closed. Thereafter clerk of bankruptcy court issued to judgment creditor's assignee a writ of garnishment in which the debtor's first name was incorrect. Debtor objected because the initial writ used the wrong first name for the debtor. In response the creditor filed an amended writ, and a corrected writ was issued, to which the debtor again objected. Held, (1) debtor’s wages were properly withheld by garnishee and were not refundable to debtor where initial writ issued in debtor’s incorrect first name was nevertheless valid because identifiable to judgment debtor and where an amended, corrected writ was issued timely; (2) debtor was entitled to exempt 75% of the garnished funds pursuant to the Maryland wage exemption statute (Md. Comm. Law Code §15-601.1); (3) bankruptcy court possessed subject matter jurisdiction to enforce its own nondischargeable judgments even after the underlying bankruptcy case was closed.
Where a corporate debtor filed a voluntary Chapter 7 case and subsequently moved for an Order “confirming” that the automatic stay protected non-debtor officers, employees and shareholders, the court denied the motion. The court found that the uncontested facts failed to prove any of the bases for extending the automatic stay under the holdings of A.H. Robbins Company, Inc. v. Piccinin (In re A.H. Robbins Company, Inc.), 788 F.2d. 994 (4th Cir. 1986), and In re Johns-Manville Corp., 40 B.R. 219, 226 (S.D. N.Y. 1984). Furthermore, the court found that the automatic stay did not apply to Florida actions that had been commenced against the officers, employees and shareholders pursuant to 11 U.S.C. § 362(a)(3) as the actions did not seek to obtain possession of, or control assets of the bankruptcy estate.
Creditor filed complaint to determine State court judgment nondischargeable for fraud under 11 U.S.C. §§ 523(a)(2). State court judgment was entered after debtors filed one page pro se answer but did not appear for trial. Held, collateral estoppel did not apply to render State court judgment nondischargeable under 523(a)(2)(A) because it was not based on the debtor’s intent not to perform a contract; further, collateral estoppel did not apply to render State court judgment nondischargeable under 523(a)(2)(B) because it was not based upon a written misrepresentation of financial ability.
In complaint for declaratory judgment that tax debt owed to State of Maryland for years 1992 to 1996 was dischargeable in bankruptcy, debtor had filed returns for those tax years but had not filed a report of federal adjustment after the IRS audited her and found additional income. Held, the failure to file a report of federal adjustment did not render tax debt to the State nondischargeable under 11 U.S.C. § 523(a)(1)(B)(i) because a report of federal adjustment is not the type of “equivalent report” of which the failure to file would render tax debt nondischargeable.
The state court appointed Receiver of the Debtor (Receiver) and his Counsel filed separate motions seeking allowance of compensation and expenses incurred as administrative expense claims pursuant to 11 U.S.C. §§ 543(c)(2), 503(b)(3)(E) and 503(b)(4). The Receiver served in this capacity for the ten-day pre-petition period and was superseded by the commencement of the bankruptcy case pursuant to 11 U.S.C. § 543(a). The Receiver did not seek authority to continue in this capacity for the post-petition period yet continued to play an active role in the case primarily by seeking its dismissal. The Receiver and Counsel sought compensation and expenses for both the pre and post-petition periods. The Receiver and Counsel argued that it was not necessary that their actions contributed a substantial benefit to the estate for an award of fees but instead that the Court should rule in their favor because their activities could reasonably have been thought to be beneficial to the estate when they were performed. The Court, in concluding pursuant to well established law that a genuine benefit to the estate must be established, found that: (1) conclusory and bald averments that the Receiver and Counsel’s work tended toward the preservation and benefit of the estate was not sufficient; (2) reduced compensation for the Receiver would be awarded only for the ten-day pre-petition period; (3) Counsel was not entitled to any compensation, as his time records did not provide any evidence that his work tended toward the preservation or benefit of the estate.
Plaintiff moved for summary judgment in adversary proceeding on grounds that collateral estoppel applied to render state court judgment for defamation and abuse of process nondischargeable as a debt for willful and malicious injury under 11 U.S.C. § 523(a)(6). Held, collateral estoppel rendered state court judgment for defamation nondischargeable because (1) issue of malice had been necessarily litigated in state court; plaintiff was a public official and therefore was constitutionally required to prove actual malice to obtain a judgment for defamation; (2) the issue of willfulness, defined as intent to cause injury, was necessarily litigated in state court because conduct was defamatory per se, creating a presumption of intent to cause injury, and state court trial transcript did not show rebuttal of presumption; (3) collateral estoppel rendered state court judgment for abuse of process nondischargeable because judgment was necessarily based on findings of willfulness and malice.
Debtor filed an amended list of exemptions on the eve of a consensual conversion from Chapter 11 to Chapter 7. The Chapter 7 trustee filed a timely objection to a portion of the newly exempted property and an amended objection within thirty days of the conclusion of the post-conversion 11 U.S.C. § 341(a) meeting, objecting to the remaining exemptions taken. The fundamental issue raised is whether the deadlines for objecting to exemptions set forth in Federal Rule of Bankruptcy Procedure 4003(b) automatically re-set following conversion so that the trustee and creditors are granted two thirty day periods to object to amended exemptions previously listed by a debtor; thirty days following the amendment and an additional thirty days following the conclusion of the 11 U.S.C § 341(a) meeting of creditors held in the converted case. The Debtor argued that there is no second meeting of creditors held pursuant to 341(a) upon conversion and thus the deadlines do not reset. Debtor likewise argued that because the deadlines do not reset, the trustee’s amended objection was untimely and any exemptions not objected to were therefore conclusively established resulting in the severance from the estate of the exempt property and its re-vesting in him. Debtor also argued that: (a) property exempted as tenants by the entirety was completely severed from the estate and was not subject to the claims of any creditors, (b) he was entitled to take exemptions allowed by the state of Florida, and (c) his exemptions of non-marital estate property were not limited by the exemption values that he assigned to such property. The Court concluded that a second 341(a) meeting of creditors is a statutory imperative in a converted case but the thirty day deadline for filing objections after the conclusion of the 11 U.S.C. § 341(a) meeting prescribed by Rule 4003(b)(1) does not apply to exempt property that had already re-vested in the Debtor; the Chapter 7 trustee’s amended objection to the Debtor’s amended list of exemptions was consequently untimely; that nevertheless, the long settled law in this Circuit provides that property held as tenants by the entirety may be administered by the trustee for the benefit of joint creditors whether a party files a timely objection or not; the Debtor, a Maryland resident for the relevant statutory period, may only utilize those exemptions provided by Maryland law; and the value of the Debtor’s permissible exemptions shall be limited by the dollar amount ceilings that he assigned to his claimed exemptions.
Unsecured creditor objected to confirmation of joint debtors’ Chapter 13 plan on ground that bankruptcy court should look to Schedule I in calculating debtors’ “projected disposable income” under 11 U.S.C. § 1325 and arguing that debtors improperly deducted monthly secured debt payments on real property that they were surrendering on Form B22C. Held, debtors’ deduction of monthly secured debt payments on real property that they were surrendering was improper, but creditor did not provide sufficient evidence to cause bankruptcy court to deviate from Form B22C when calculating monthly income. This opinion is in accord with the decision of Chief Judge Keir in the case of In re Watson, 366 B.R. 523 (Bankr. D. Md. 2007), which held that only in rare instances will the bankruptcy court consider confirming Chapter 13 plans where the “projected disposable income” does not conform with the calculations on Form B22C. In Watson, Judge Keir held that disposable income as calculated on Form B22C is the presumptive “projected disposable income” for application of Section 1325(b)(1)(B). but “if the presumption is rebutted, a projected budget based upon the evidence, reflecting projected earnings and projected reasonable necessary expenses will govern the determination of ‘projected disposable income’ for purposes of confirmation of the plan.” In re Watson, 366 B.R. at 531.
Chapter 7 trustee filed opposition to secured creditor’s motion for relief from the automatic stay as to the debtor’s residence, but the trustee did not attend the hearing on motion, which was granted after the secured creditor’s presentation of evidence. The trustee filed motion to vacate the lift stay order on grounds that secured creditor had received a preference as a result of its late recordation of an indemnity deed of trust. Trustee then withdrew the motion to vacate in order to pursue an adversary proceeding to avoid the preference. On secured creditor’s motion to dismiss the adversary as barred by collateral estoppel, Held, collateral estoppel did not apply because the issue of the preferential transfer was not “actually litigated” at the hearing on the motion for relief from stay.
Plaintiff filed a two-count complaint for nondischargeability of debt under 11 U.S.C. §§ 523(a)(5) and 523(a)(15). Plaintiff received a judgment from the Circuit Court for Howard County retroactively reducing the amount of alimony owed to Debtor-Defendant, which a Washington State Court had compelled Plaintiff to pay pursuant to the terms of a divorce separation agreement. Plaintiff alleged this overpaid alimony should be excepted from the Debtor’s discharge. The parties agreed, and the Court found, that the material and relevant facts in this case were not subject to dispute. In granting the Plaintiff’s Motion for Summary Judgment as to Count II, the Court held 1) Debtor owed a judgment debt to the Plaintiff who is an ex-spouse of the Debtor, 2) the overpayment of alimony in this case did not constitute a domestic support obligation under 523(a)(5), because the Debtor is the beneficiary of the obligation, not the designated payor per the separation agreement and the fact that the Maryland Judgment is premised on the overpayment of alimony does not transform it into an offsetting right in favor of Plaintiff to receive alimony, and 3) the debt was incurred in connection with a separation agreement or divorce decree. Accordingly, the debt fell within the confines of Section 523(a)(15) and is excepted from the Debtor’s discharge.
After plaintiff voluntarily dismissed adversary proceeding against defendant law firm that had formerly represented him, defendant moved under Federal Rule 41 to stay future action absent payment of duplicate fees and costs. Held, motion was not ripe because plaintiff had not yet filed a second action, and Court did not have authority to impose a stay until he did so.
The court ruled that a creditor cannot continue to file motions for relief from stay asserting the same factual averments and legal arguments, but expect different results. Here, the creditor, First Niagara Leasing, Inc., filed two consecutive motions for relief from stay. The first motion for relief from stay was denied by the court because the creditor failed to prove a security interest in the collateral. Later, the same creditor filed a second motion for relief from stay asserting the same factual averments and attaching one additional document to prove a security interest in the collateral. The court denied the motion under the doctrines of res judicata, law of the case, and finality of judgment.
Creditor moved for an order declaring nondischargeable a debt that was held to be nondischargeable by default in a previous bankruptcy case, and also for an order declaring no stay in effect because no motion to extend the automatic stay had been filed by the debtor within 30 days of the petition date. Held, debt which is non-dischargeable in one bankruptcy was nondischargeable in subsequent case, even where the previous judgment was granted by default; because the automatic stay expired as to non-estate property, the creditor could execute on the debtor’s post-petition wages; however, because § 522(c)(1) disallowed execution on exempt property, the creditor would not be permitted to execute on commissions earned prepetition, and which had been exempted without objection.
Upon the trustee’s objection to confirmation of a chapter 13 plan which, with respect to three secured judgment creditors, did not provide value, as of the effective date of the plan equal to the allowed amount of claims, the court determined that (1) that the chapter 13 trustee has standing to be heard as to all issues relevant to confirmation of a chapter 13 plan; (2) under the specific facts of this case, due process was satisfied and the absence of an objection to confirmation by any of the judgment creditors would constitute acceptance of the terms of the plan so as to satisfy Section 1325(a)(5).
Chapter 7 debtor objected to trustee’s professional fees, entered as a sanction against debtor under Federal Rule 37, to be paid from non-estate assets. Held, in light of debtor’s oppressive and obstructive behavior, trustee’s fees were more than reasonable and objection was overruled.
Debtor’s former wife filed complaint against him to declare certain debts nondischargeable. The parties settled most of the controversy, except the former wife’s interest in the debtor’s military pension, which the debtor had exempted. Held, because the military pension was either the spouse’s property or the debtor’s exempt property, the Court lacks jurisdiction over the dispute because it did not affect the bankruptcy estate.
Trustee’s assignee filed a motion to amend the name of a defendant against which a default judgment had been entered. The trustee had filed a complaint to recover a preferential transfer, naming the defendant as “Signal Electric Construction,” rather than “San Jose Signal Electric Construction.” The defendant received service but did not respond, and a default judgment was entered against “Signal Electric Construction.” Limitations ran on any action the trustee might have pursued against San Jose Signal Electric Construction. Held, because the trustee lacked a reasonable excuse for failing to name the proper defendant and because the defendant had not behaved inappropriately, the motion to amend the judgment was denied.
A trial was held on cross complaints filed by two secured lenders and the Chapter 7 trustee seeking a declaratory judgment concerning whether Chapter 7 debtor’s residence titled in the name of his wholly-owned corporation was property of his bankruptcy estate and the validity of liens. Held, reverse veil-piercing was appropriate under Maryland law to bring the property within the bankruptcy estate where debtor set up the corporation solely to own his residence, he did not observe corporate formalities, and he used the corporation to launder money to hinder, delay and defraud creditors; lien of the senior secured lender was void under Maryland law because it had been released of record by an unknown party that filed an incorrect certificate of satisfaction; while the junior lien was valid, the trustee took priority to it as successor to the first lienholder’s position.
NOT FOR PUBLICATION. The court determined that it should not grant a creditor's motion to reopen a closed no asset Chapter 7 case to allow the filing of an adversary proceeding to determine non-dischargeability of an alleged debt under 11 U.S.C. § 523(a)(3). Under the circumstances of this case, Creditor can challenge in a filed state court action, the defense of discharge and obtain a ruling on its assertion of non-dischargeability in that action.
Debtor/Defendant moved to dismiss nondischargeability adversary proceeding for untimeliness under Fed. R. Bankr. P. 4007(c), specifically asserting that following conversion from Chapter 11 to Chapter 7 there is no Section 341(a) meeting of creditors and that therefore Plaintiff's complaint under Section 523(a)(2) had to be filed no later than sixty (60) days following the date of conversion to be timely, despite Rule 4007(c)'s explicit command that the deadline expires sixty (60) days after the "first date set for the meeting of creditors under Section 341(a)".
The Court held that, upon conversion, Section 348(a) operates to spawn a new "order for relief" (notwithstanding the statutory caveat that the "date of" the order for relief does not change from the date of the original order for relief) and that this in turn generates a second, independent Section 341(a) meeting of creditors, by operation of the plain meaning of Sections 301, 341(a), 342(a), 343 and 348(a).
following conversion from a case under Chapter 11 to a case under Chapter 7, require that a Section 341(a) meeting be convened post-conversion and that nondischargeability complaints must be filed within the time period stated in Rule 4007(c)'s plain language i.e. within sixty (60) days after the first date set for the meeting of creditors in the converted case. As the Plaintiff's complaint was timely filed, Debtor's motion to dismiss was denied.
Counsel for Debtor filed his first fee application five years into the case seeking approval of compensation of approximately $80,000. In the fee application, Counsel disclosed for the first time that, three years prior, he had received approximately $40,000 directly from a third party non-debtor business entity in which the Debtor held an ownership interest. This compensation arrangement was not outlined in the disclosure of compensation filed with the petition and at no time thereafter did Counsel submit an amended disclosure pursuant to Section 329 and Fed. R. Bankr. P. 2016(b). In response to the Court's concerns, Counsel argued that approval of the undisclosed payments was not required because the funds were not property of the estate. Counsel also argued that the exercise of billing judgment is generally not mandatory and was not warranted in this case save for a de minimis write-off. The Court held that 1) income derived by the Debtor from his passive ownership interest in business entities was in the nature of dividends or profits and not wages for post-petition services rendered, was not excepted from property of the estate under Section 541(a)(6), and should not have been used to pay Counsel without court approval, 2) fee applicants must conduct a searching and thorough analysis to determine whether the exercise of billing judgment is necessary, 3) the exercise of billing judgment was required in this case because certain services were of marginal value or were necessitated by Counsel's own failure to meet deadlines, 4) Section 329 and Fed. R. Bankr. P. 2016(b) provide an inflexible rule requiring counsel to disclose the precise nature of the fee arrangement with the debtor and the source of compensation to be paid, regardless of whether counsel will seek approval of compensation from the estate, 5) Severe sanctions are rightly imposed for violating the duty to disclose and may require denial of all fees, and 6) Counsel did violate his duty by not disclosing the payment of $40,000 until three years after he received the funds, but since the confirmed plan provided for the payment of all claims in full and there was no apparent harm to the estate, the appropriate sanction in this instance was reduction of compensation by $10,000.
Creditor moved to vacate an order determining an automatic stay to be applicable on real property titled and mortgaged in the name of Chapter 13 debtor’s non-filing spouse. Held, motion granted because debtor’s marriage to the titled owner of real property did not create an interest sufficient to bring the property into the debtor’s bankruptcy estate.
Condominium association moved for relief from the stay to enforce its lien rights as to Debtor's real estate due to Debtor's failure to pay post-petition assessments. Movant and Debtor, pro se, submitted a proposed consent order that the Court found lacking in several respects. In this Order Denying Consent Order Modifying Stay Without Prejudice, the Court articulates its general requirements for consent orders, including (1) that the debtor is given an opportunity to cure a subsequent default thereunder and (2) that the movant cannot proceed to collect from other property of the estate, such as by obtaining a lien against any other real or personal property or garnishing Debtor’s wages, without first obtaining further authorization from this Court.
In a Chapter 7 case, secured lender filed a motion for relief from stay under 11 U.S.C. Section 362 to enforce its rights under a Deed of Trust as to certain real property owned by the Debtor. No response was filed by either the Debtor or the Chapter 7 Trustee. The Court denied the motion without prejudice for the failure to comply with Local Rule 4001-1(b)(1) by filing a detailed statement of the debt owed. Secured lender then filed a motion to reconsider, in which it both challenged its noncompliance and attached the requisite account statement. The Court granted the motion to reconsider, but was compelled to address the issue of Movant's initial noncompliance. The Court held that under its interpretation of Local Rule 4001-1(b), creditors seeking to prosecute motions for relief from stay must document in detail the indebtedness due and be prepared to support the motion with evidentiary materials, in most instances by attaching copies of account summaries or some other relevant business records.
Debtor, an experienced mortgage broker and real estate professional who engineered and caused the establishment of a conservation easement and environmental mitigation credit bank as to certain valuable real estate which he owned, acted with the requisite fraudulent intent under 11 U.S.C. § 523(a)(2)(A) when he conveyed and transfered the same real estate in fee simple to good faith purchasers for value but continued to sell those mitigation credits to third parties, such that the resulting judgment entered by the state court should be excepted from his discharge. Fraudulent intent, for purposes of Section 523(a)(2)(A), requires that the debtor subjectively intended to deceive the creditor, based on the totality of the circumstances. Such intent may be inferred from the circumstances, including when the debtor knowingly or recklessly made false representations. In this case, Debtor argued that he was simply and innocently mistaken as to his right to continue selling the credits after conveying the underlying real property and that he did not intend to defraud the Plaintiffs. The Court found the existence of fraudulent intent based on a confluence of factors: 1) Debtor misrepresented to Plaintiffs at closing that all of the credits had been sold and at no time disclosed his intention to continue selling the credits post-settlement, 2) no documents either severed the interest in the credits from the interest in the land or disclosed the existence of the credits, 3) no documents supported Debtor's argument that he honestly believed he retained the right to continue to sell the credits, despite the fact that Debtor engineered the creation of the property rights at issue, 4) any ongoing maintenance duties as to the conservation easement, if Debtor had any, did not entitle Debtor to exercise control over the credits, and 5) Debtor sold the credits in at least 15 separate transactions post-settlement utilizing a form contract that erroneously continued to identify his wholly-owned entity as the owner of the real estate.
Cross motions for summary judgment filed to the Chapter 7 trustee’s complaint to avoid lien, turnover property and damages, as well as objection to debtor’s use of tenancy by the entirety exemption. Debtor was separated from wife but not divorced until 197 days after petition date. Issues presented were whether the trustee’s objections were timely and meritorious, and whether the tenancy was severed by the divorce or by any property settlement agreement. Held, the objection filed was not timely because objections to exemptions must be filed within 30 days of the conclusion of the last meeting of creditors, which the trustee unreasonably delayed, as determined on a case-by-case basis. The trustee’s objection was without merit. Entireties property is exempt from collection if there are no joint creditors and can only become part of the debtor’s bankruptcy estate if the divorce settlement occurs within 180 days of the petition date.
Defendant was sub-subcontractor to subcontractor debtor, and entered into agreement with debtor and general contractor that required, in addition to checks made payable solely to debtor, that contractor would issue checks payable jointly to debtor and defendant. Chapter 11 plan created two entities, the reorganized debtor and litigation trust. The defendant and debtor entered into a release agreement that was approved by the court but not served on litigation trustee. The litigation trustee sued the defendant seeking recovery of amount of joint checks issued by contractor, as preferential transfers. On defendant’s motion for summary judgment, defendant contended that suit was barred by both the plan and the release agreement and the joint checks were not “property of the estate,” as required by 11 U.S.C. § 547(b). Held, summary judgment granted and complaint dismissed on the second ground. Neither the plan nor the release barred the litigation trustee from bringing the suit to recover a preference because the plan did not divest the litigation trustee of claims against a party to a contract that was assumed by the reorganized debtor after confirmation; but the joint checks were not property of the estate because Texas law provided that subcontractor held joint checks only as “constructive trust” for sub-subcontractor.
The debtor filed a reaffirmation agreement seeking to reaffirm a debt secured by her vehicle. The Court rejected the reaffirmation agreement, finding that the debtor did not rebut the presumption of undue hardship that arose because the debtor's monthly income is less than her monthly expenses. The Court further found that the debtor complied with her obligations under Section 521(a)(2) by timely stating her intention to reaffirm a loan secured by her vehicle and by timely executing the reaffirmation agreement. The Court held that the provisions of Sections 362(h), 521(a)(6) and 521(d) do not apply, and the automatic stay remains in place with respect to the vehicle, the vehicle remains property of the estate, the Debtor is not obligated to turn over possession of the vehicle, and the lender may not exercise remedies as a result of default under the ipso facto provision under the loan agreement.
and 3) although the creditor retained the ultimate burden of proof on the claim under state law, Debtor failed to rebut the claim's prima facie validity by presenting countervailing evidence that showed that the creditor had forfeited its right to collect on the debt.
Plaintiff filed a complaint for nondischargeability under Section 523(a)(2)(A) for a mortgage debt incurred by Debtors years before, asserting that Debtors misrepresented their ownership of the real property that secured the loan. The results of Plaintiff's pre-filing investigation established Debtors did in fact own the real property at the time the debt was incurred. Debtors' filed a motion to dismiss and Plaintiff responded with its own motion to dismiss the Adversary Proceeding. After Debtors received their discharge, they filed a motion for award of attorney's fees under Section 523(d), contending that Plaintiff’s position in bringing the Adversary Proceeding was not substantially justified. Finding that Plaintiff knew or should have known the complaint lacked substantial justification before it was filed and that despite Plaintiff’s subsequent dismissal, the case therefore should never have been filed, the Court granted summary judgment for Debtors and awarded attorney’s fees.
Creditor filed motion to dismiss second Chapter 11 case filed by asbestos law firm. Held, the case must be dismissed for bad faith under 11 U.S.C. § 1112 because it was a repeat filing seeking to undermine a settlement agreement which concluded the first case.
This case addresses the following issue: whether a Maryland corporation whose charter has been forfeited can pursue an action for denial of discharge under Section 727 and determination of nondischargeability of a debt under Section 523. The Bankruptcy Court, J. Gordon, held that: (1) under Maryland law, a corporation whose charter is forfeit is a legal non-entity and therefore the original adversary proceeding filed by the forfeit corporation was a nullity, (2) while a director-trustee of the void entity could have brought the suit as a part of the winding up of the corporation’s affairs, that did not occur in this instance, and (3) the subsequent revival of the corporate charter did not serve to resurrect the adversary proceeding since the limitations periods in Bankruptcy Rules 4004(a) and 4007(c) expired while the charter was forfeited thus divesting the corporation of the cause of action. As there was no action to prosecute and the refiling of the action was barred by the Bankruptcy Rules, the Court granted Debtor’s motion to dismiss.
The U.S. Trustee’s office filed a motion to dismiss debtor’s Chapter 7 case for bad faith under 11 U.S.C. § 707(b)(1) and 707(b)(3). Held, the case must be dismissed for bad faith because the totality of the circumstances suggested abuse.
Held, a motion to file claim after claims bar date, to which the debtor and the Chapter 13 Trustee objected must be denied because the bankruptcy court does not have the authority to extend the 90-day period in which a creditor may file a proof of claim in a Chapter 13 case, and that the defense of “excusable neglect” is not applicable in a Chapter 13.
On cross motions for summary judgment on complaint to recover alleged preferential payments, held,(1) the filing of cross motions for summary judgment does not require the granting of judgment for either movant as a matter of law because each motion must be considered on its own merits and all facts and inferences are viewed in the light most favorable to the nonmoving party; (2) that a reasonable trier of fact could not find in favor of defendant on its “ordinary course of business” defense, even viewing the evidence in the light most favorable to it as the non-moving party, where the defendant engaged in certain unusual collection activities against the debtor; (3) the defendant failed to carry its burden of proof by a mere preponderance that the transactions were made according to ordinary business terms; and (4) affidavits containing mere conclusory statements that transfers were made in the ordinary course of business are insufficient to prevail against the plaintiffs’ motion for summary judgment.
Order awarding compensation for Chapter 7 Trustee after conversion to Chapter 13 (dkt. 69).
compensation to a Chapter 7 trustee (as comission) and counsel for the Chapter 7 trustee (at an hourly rate), and 2) that the proper methodology in setting the Chapter 7 trustee's compensation in a converted case is to calculate the maximum commission that the Chapter 7 trustee could have earned for his pre-conversion efforts based on the sums to be distributed under the Chapter 13 plan, discounted by a reasonable amount as determined by the circumstances of the case and the actual services performed. When applying the discount rate and setting the ultimate compensation the trustee's hourly rate and number of hours of work are relevant factors. The Court found that the Chapter 7 Trustee had made such calculation and awarded compensation in the amount of $1,400.
After the award of a $7 million judgment by the bankruptcy court against the alter ego of a debtor corporation in an earlier adversary proceeding, a second suit was brought in the bankruptcy court by the successor in interest of the judgment creditor to enforce the judgment by avoiding alleged fraudulent transfers of real and personal property by the alter ego to other non-debtor defendants. Held, the bankruptcy court lacked “related to” subject matter jurisdiction over the second suit because it was so tangential to the bankruptcy case that it would not have a minimal impact on the administration of the debtor’s estate.
The Court overruled the Chapter 13 debtors’ objection to the secured claim of the holder of an indemnity deed of trust on their house issued to enable their daughter to purchase a house through a membership interest in a Maryland limited liability company. The daughter’s property was sold at foreclosure and the sale was ratified by the state court. Held, (1) the IDOT did not create any personal liability on the part of the debtors, (2) the IDOT served as security for the underlying promissory note, (3) although the promissary note was not filed with the proof of claim, its existence was not in dispute and therefore the proof of claim was sufficient, (4) the presentation of a check to the lender did not constitute tender of payment, and (5) because proper notice of the foreclosure sale was given to the daughter, the debtors’ objection would be overruled.
On April 10, 2006, the Chapter 7 debtor filed the instant case pro se. The U.S. Trustee determined that her case was presumptively abusive after a review of her schedules, statement of financial affairs and statement of current monthly income and means test calculation, pursuant to Section 707(b)(2). The debtor indicated a 60-month disposable income of only $2,752.80, thus the presumption of abuse is not apparent in the instant case, as it is required to be greater than $10,000. After the debtor obtained counsel and amended her schedules, the U.S. Trustee continued to argue that the case was abusive because the debtor was not entitled to deduct the full amount of $471 allowed by the IRS Local Standards for a motor vehicle she owned because it was not encumbered and she has no obligation to make car payments. Held, debtors are entitled to claim the full amount of the transportation exclusion regardless of whether or not they are obligated to make car payments.
The Chapter 13 debtor was a director of a corporation who allegedly employed the claimant as a project manager. The claimant filed a proof of claim in the debtor’s case for $9,453.90, representing unpaid wages and business expenses. Held, the debtor’s objection to the proof of claim was sustained because the claimant was unable to prove that the debtor was personally liable for a debt owed by the corporate employer to the claimant.
Chapter 7 trustee objected to the exemption of life insurance policies because they named as beneficiary the “Trustee Named in the Last Will and Testament of the Insured.” Held, objection sustained because neither the debtor nor his wife were dependents of their minor children and thus, the policies were not within the statutory exemption.
Movants, Chapter 13 Debtors, pro se, sought to compel university to release academic transcripts and diploma earned by Debtors’ daughters during the 2005-2006 academic year. University opposed Debtors’ Motion maintaining that the university’s official policy of withholding transcripts and diplomas of students having delinquent accounts was properly enforced against Debtors’ daughters based upon the unpaid status of their student accounts. The Bankruptcy Court, Duncan W. Keir, Chief J. held that: Debtors’ daughters, and not Debtors, hold rights to the academic transcripts and diploma at issue. The Court found no violation of the automatic stay imposed by 11 U.S.C. §362(a)(3) or 11 U.S.C. §362(a)(6).
income” for application of Section 1325(b)(1)(B), but may be rebutted by evidence of a substantial change in circumstance.
Debtor, who had a Chapter 13 case dismissed within the preceding 1-year period, filed a motion to extend the automatic stay in her current Chapter 13 case pursuant to 11 U.S.C. 362(c)(3)(B) after the expiration of the 30-day post-petition period. The Court conducted an initial hearing and Debtor subsequently filed a motion for declaratory judgment as to the extent of the termination of the stay under Section 362(c)(3)(A) and additionally sought the imposition of a stay under Section 105(a). A secured creditor, holder of a deed of trust on Debtor’s residence, objected to both motions, arguing, in an attempt to proceed with foreclosure, that the automatic stay under Section 362(a) had expired in toto by operation of law. The Bankruptcy Court, J. Gordon, held that: (1) the automatic stay terminated by operation of law on the 30th day post-petition under Section 362(c)(3)(A), (2) an untimely filed motion cannot serve to reimpose the automatic stay under Section 362(c)(3)(B), (3) the termination of the stay under Section 362(c)(3)(A) was limited in scope and the stay, while terminating as to the Debtor, did not terminate as to property of the estate, and (4) the alternative relief requested by Debtor under Section 105(a) appeared unnecessary in light of the Court’s ruling.
Although a codebtor existed on the Debtor’s residential mortgage loan held by Respondent, after receiving notice that the Debtor filed her third bankruptcy case within one year, the Respondent proceeded with a foreclosure sale because the automatic stay did not arise by operation of Section 362(c)(4)(A)(i) of the Bankruptcy Code.
HELD: The codebtor stay of Section 1301 barred the Respondent from proceeding with a post-petition foreclosure sale of the Debtor’s residence, even though the automatic stay of Section 362(a) did not arise as a result of Section 362(c)(4)(A)(i). The foreclosure sale, therefore, was void.
Chapter 11 debtor’s liquidating plan created litigation trust for purposes including the pursuit of fraudulent conveyances and preferences. Litigation trustee filed complaint against two defendants, alleging various state law claims as well as claims for fraudulent conveyances, and the defendants moved to dismiss for lack of subject matter jurisdiction. Held, bankruptcy court had subject matter jurisdiction because the plan was a liquidating plan where recovery of proceeds would benefit creditors, because the claims were partially federal in nature, and because the claims arose prepetition.
This opinion stands for the following propositions: (1) that certain debts that arose as a result of undue influence are nondischargeable pursuant to Section 523(a)(2)(A) of the Bankruptcy Code, where the plaintiff proved by a preponderance of the evidence that the defendants obtained property of the creditor by exerting undue influence accompanied by fraud; and (2) that in an adversary proceeding brought in the bankruptcy court to determine the nondischargeability of a debt, where no prior judgment had been awarded in a nonbankruptcy forum, the bankruptcy court may liquidate the damages, enter a nondischargeable judgment, and may also, where appropriate, award punitive damages as part of the nondischargeable judgment, where the plaintiff also proved actual malice in the commission of fraud by clear and convincing evidence.
Debtor filed a motion to redeem his automobile, secured by a lien in favor of Respondent, pursuant to Sections 722 and 506(a) by paying the value of the collateral in a lump sum within 30 days. The Court concluded that in order to redeem the automobile, Debtor must pay the fair-market, retail value of the collateral, as adjusted for age and condition. The Court further held that under Section 506(a)(2), added by BAPCPA, the valuation of the collateral should be made as of the date of filing of the petition, and thus post-petition depreciation should not be taken into account.
In 2004, this court (Derby, J) entered an order finding dischargeable collection fees and costs awarded by the state court on an otherwise nondischargeable debt owed to the State of Maryland. The State of Maryland appealed the decision and the United States District Court for the District of Maryland affirmed the bankruptcy court decision. The State of Maryland then filed an appeal with the United States Court of Appeals for the Fourth Circuit which reversed the lower courts’ decisions. Upon remand, the Bankruptcy Court, Duncan W. Keir, Chief J., vacated the prior order and ordered that all of the debt is nondischargeable , as required by the Court of Appeals’ unpublished opinion.
Debtor found eligible to file his bankruptcy petition under section 109(h)(1) when credit counseling occurred before the moment of filing rather than the day before filing.
Chapter 11 Trustee filed an application for allowance of both trustee’s commission and compensation for counsel to the trustee. As to the trustee’s commission element, instead of seeking compensation based upon the commission schedule in Section 326, Trustee decided to seek compensation as if he were an attorney for all work performed, based upon the hourly rate he would normally charge for legal services. Trustee noted that the amount requested was substantially less than what his commission would have been if calculated under Section 326. Court held that 1) under Section 328, Trustee’s commission calculation must be performed separately and distinctly from an analysis of an award of attorney’s fees, 2) betterapproach would have been for Trustee to present an application for commission in an amount voluntarily reduced to the amount sought, without injecting calculation of his attorney’s fees for such work, and 3) as Trustee was not attempting to use hourly rate calculation to gain greater compensation than he would be entitled to under Section 326, the commission was reasonable and would be approved.
In a proceeding removed from the California Superior Court against former officers and professionals of Railworks Corporation and its affiliates, the court dismissed three counts of the amended complaint as barred by the plan confirmation order injunction, determined that the four remaining claims are not preempted, and remanded the remaining claims to the California Superior Court.
The creditor held a foreclosure sale after the date of petition and before the case was dismissed under Section 109(h). The Bankruptcy Court, Duncan W. Keir, Chief J., held that the filing of a petition by a debtor who is ineligible to be a debtor pursuant to Section 109(h)(1) and (3) creates an automatic stay under Section 362(a).
NOT FOR PUBLICATION. The Movant, Baltimore County, Maryland, sought to have its late-filed proof of claim allowed on the basis that it had not received timely notice of the bankruptcy case. The Bankruptcy Court, Duncan W. Keir, Chief J., held that (1) the court is without the power to enlarge the period within which a claim can be timely filed in this chapter 13 case; (2) the prepetition indebtedness owed to Movant was secured by an unavoidable interest attached to the bankruptcy estate’s interest in property; (3) as a secured creditor the failure to file a timely proof of claim would have no practical effect on Movant because the plan provided that secured claims would not be paid through the plan and would not be discharged.
In response to a motion for relief from the automatic stay, Debtor contended that the bankruptcy petition filed on his behalf by a third person pursuant to a power of attorney given orally was filed prior to the foreclosure sale, making the foreclosure sale a nullity. HELD: (1) the bankruptcy petition was filed after the auction, and (2) without reaching the issue of whether a bankruptcy case could be instituted pursuant to a power of attorney, a written power of attorney is required to constitute a third party an attorney in fact.
Summary judgment granted to Chapter 7 trustee who sued debtor to deny her a discharge pursuant to 11 U.S.C. Section 727(a)(4)(A) on grounds that she had made false oath in failing to list interests in real property on her bankruptcy schedules.
Debtor and Citifinancial, Inc., a secured creditor, entered into a Reaffirmation Agreement whereby Debtor reaffirmed an obligation secured by a lien on her 1994 Mercury Sable automobile to repay $11,753.42 to the creditor, together with interest at an undisclosed rate. Because the Debtor was not represented by an attorney during the course of negotiating the Agreement, the court held a hearing pursuant to 11 U.S.C. § 524(d). HELD: An agreement to reaffirm a debt in the sum of $11,753.42 secured by an automobile that had a value between $590.00 and $1,050.00 could not be found to be in the best interests of the Debtor under 11 U.S.C. § 524(c)(6)(A).
Section 109(a): Decedent's Estate is not a person eligible to file a bankruptcy petition.
Interpleader filed by Chapter 11 debtor after confirmation of liquidating plan against union and company that paid employees for assignment of their WARN Act claims. Union cross-claimed against assignee to invalidate assignment of claims by employees on grounds of fraud, unconscionability, that union was holder of claims and not the employees, and for violation of Rules of Professional Responsibility because union claimed that its counsel represented the individual employees and that assignee was barred from contacting employees directly. Assignee cross-claimed against union alleging breach of contract and tortious interference.
Held, (1) Union had standing to sue on behalf of employees; (2) however, claims were property of the employees and not the union, and therefore, employees had the right to assign claims without union approval; (3) assignments were not procured by fraud and were not unconscionable; (4) refusal of employees to honor assignments constituted breach of contract; the conduct of union did not amount to tortious interference with contract because the union acted in good faith in advising members not to honor assignments. Judgment for assignee.
Section 1123(b)(3): Provision of Debtors' confirmed plan retaining avoidance claims for prosecution by a Litigation Trustee was sufficient to prevent application of res judicata and was of claims "belonging to" the estate, although the estate ceased to exist.
The Defendant moved to dismiss an adversary proceeding to revoke his discharge that was filed by the United States Trustee a year and a day after the entry of the Defendant's discharge. Defendant argued that complaints filed pursuant to 11 U.S.C. § 727(d)(1) must be filed within the one-year time period allowed by 11 U.S.C. § 727(e)(1). HELD: the Complaint was timely as the one-year period was extended by Fed. Rule of Bankruptcy Pro. 9006(a) to the next business day after the end of the one-year period--a Sunday.
Adversary proceeding by health care provider and debtor in possession against HMO with which the plaintiff contracted to administer Medicare plans. The complaint sought the disallowance of the defendant’s claim against the estate in the amount of $29,796,049.37, and for breach of contract, including improper draws of letters of credit, that caused the debtor to file bankruptcy. The defendant HMO counterclaimed that it was excused from performance because the debtor’s prior breach that entitled the defendant to draw down the letters of credit.
Held, (1) the bankruptcy court had subject matter jurisdiction because the complaint concerned the disallowance of a claim against the estate pursuant to 28 U.S.C. § 157; (2) the contract was executory and could properly have been assumed by the debtor; (3) the defendant anticipatorily breached the contract; (4) Court disallowed the defendant’s claim in its entirety because the HMO was party ultimately liable under state law to pay the amounts asserted; and (5) the plaintiff was entitled to damages in the amount of $21.3 million as consequential damages arising from breach of contract. Judgment for the plaintiff.
Before the Court was Debtor’s Emergency Motion to Enforce the Automatic Stay. The Court held that a lease that is deemed rejected pursuant to 11 U.S.C. 365(d)(1) is not automatically abandoned. Therefore, a debtor’s interest in the unperformed agreement remains property of a debtor’s estate. A creditor must obtain relief from stay from the Bankruptcy Court before pursuing an action in state court to recover possession of the leased premises.
Amended solely to correct Citation in footnote 3.
In denying a motion for relief from stay by a landlord of nonresidential real property in a Chapter 11 case, the court adopted the accrual method rather than the billing method for determining when real property tax obligations arise under 11 U.S.C. Section 365(d)(3).
Before the court were motions for summary judgment filed by the Plaintiffs in two-related adversary proceedings. The complaints for which Plaintiffs sought summary judgment requested a declaratory judgment by this court determining that the Defendants, Shirley Blair, individually, and Blair Temporaries and Staffing, Inc. (hereinafter “Blair Temps”), are precluded by the doctrines of res judicata and judicial estoppel from bringing any malpractice claims against the Plaintiffs for services rendered by the Plaintiffs as special counsel to the Chapter 11 Trustee in the bankruptcy case of Blair Temps. The court found that the elements of res judicata were met and that equity prevented the Defendants from pursuing allegations of malpractice against the Plaintiffs in another court. Alternatively, the court determined that the doctrine of judicial estoppel precluded Defendants from pursuing such claims.
The Debtors objected to the proof of claim filed on behalf of Mrs. Trobaugh's former husband. The claim was based upon both unpaid child support, that Debtors did not object to, and payments to be used for the education of a child of the parties who was no long a minor. HELD: the rule of decision applicable in matters involving priority claims filed pursuant to 11 U.S.C. § 507(b) is identical to that applied to cases under 11 U.S.C. § 523(a)(5). Where the parties by agreement intended future payments to function as support for their children, unpaid payments are entitled to priority under 11 U.S.C. § 507(b).
The United States Trustee filed a motion pursuant to 11 U.S.C. § 707(b) of the Bankruptcy Code to dismiss this bankruptcy case under Chapter 7 as an abuse of the bankruptcy system. HELD: under the totality of the circumstances, including the fact that $30,000.00 was devoted annually to educational expenses of adult children that the United States Trustee sustained his weighty burden of proof.
After the filing of a bankruptcy case under Chapter 7, a lender secured by Debtor's automobile learned that the vehicle was to be sold to satisfy an alleged mechanic’s lien. The lender notified the mechanic that consummation of the sale was barred by the stay of 11 U.S.C. § 523(a). The mechanic went forward with the foreclosure, purchased the vehicle for a sum less than was owed to the secured creditor, and thereupon sold the vehicle. HELD: A secured creditor may recover actual and punitive damages sustained on account of a willful violation of the automatic stay by a third party.
In an attorney disciplinary proceeding, a judgment of costs against the disciplined attorney was found nondischargeable under 11 U.S.C. Section 523(a)(7).
The Chapter 13 Debtor filed a Motion for Reconsideration of the Court’s dismissal of her Complaint to sell property held by her and her son as co-owners free and clear of liens. The Motion was DENIED. The Chapter 13 debtor does not have standing to proceed under 11 U.S.C. § 363(h).
The bankruptcy court has inherent power to decide whether a bankruptcy petition preparer has engaged in the unauthorized practice of law in violation of 11 U.S.C. § 110, and in making that determination the court may apply state law.
After confirmation of his Chapter 13 Plan, Debtor moved to convert his case to a case under Chapter 11. HELD: § 1307(d) of the Bankruptcy Code compels a negative inference that after a Chapter 13 debtor’s plan has been confirmed, the bankruptcy case may not be converted to a case under Chapter 11.
Judicial estoppel applied to bar the reorganized Chapter 11 Debtor's prosecution of a contract claim that was knowingly not disclosed during the reorganization process.
This is an appeal from a Bankruptcy Court ruling that interest payments made by debtor, Merry-Go-Round Enterprises, on post-petition policy loans obtained from appellant Phoenix American Life Insurance Company (“Phoenix”) are avoidable post-petition transfers under 11 U.S.C. § 549(a). I will affirm the ruling of the Bankruptcy Court.
This case came before the court upon the Debtors’ Objection to the Proof of Claim (the “Objection”) filed by the United States Internal Revenue Service (the “IRS”). In the Objection, the Debtors assert that the secured claim of the IRS should be allowed in the amount of $21,224.00, which represents the value of the Debtors’ real property after deducting the balance due upon debts secured by liens having priority above the IRS tax lien. The Debtors argued that the remainder of the IRS claim should be treated as an unsecured claim. The IRS, on the other hand, asserted that the Debtors’ interest in an ERISA-qualified pension plan should be included in the bankruptcy estate for the limited purpose of securing the IRS claim. The Court held that the IRS claim is not secured within the meaning of 11 U.S.C. § 506(a) by the Debtors’ interest in the subject pension plan. Accordingly, the court sustained the Debtors’ Objection to the Proof of Claim filed by the IRS.
This case came before the court on cross motions for summary judgment. Plaintiff, the Chapter 7 Trustee appointed to Debtor’s bankruptcy case, filed a Complaint against the Defendant seeking to avoid a payment made by the Debtor to the Defendant as a preference pursuant to 11 U.S.C. § 547(b). The payment was for work performed by the Defendant pursuant to a sub-contract agreement between Debtor, as general contractor, and Defendant, as subcontractor. Defendant defended against the preference action by asserting that the Debtor’s estate lost no value as a result of the payment because if the Debtor had not made the disputed payment, the bonding company, which furnished a payment bond for the project, would have been required to make the payment and would have therefore acquired a secured claim against the Debtor’s estate in the amount of the disputed payment. Finding the existence of genuine disputes of material facts, the court denied both motions for summary judgment.
Counsel for Debtor filed an amended application for compensation, in which Counsel reduced the amount of compensation sought by approximately $7,000 from the original application for compensation. The voluntary reduction was not explained by Counsel. Hence, the Court concluded that it arose from an error in calculation and was not an exercise of either billing judgment or Counsel's largesse. Because the section of the amended application devoted to "billing judgment" did not provide a sufficient analysis of why a voluntary reduction of actual fees would be inappropriate in this instance, but instead recited factors common to any Chapter 11 case, the Court, finding that the exercise of "billing judgment" is a requirement of all attorney fee applications, further reduced Counsel's fees by $745.
The District Court affirmed the Bankruptcy Court's decision that an approved sale of debtor's real estate did not reduce the required funding of the confirmed plan, but instead constituted a modification of the plan.. Consequently the debtor was not entitled to a refund, The District Court agreed with the published opinion of the Bankruptcy Court in the Case of In re Morgan, 299 B.R. 118 (Bankr. D. Md. 2003).
11 U.S.C. § 542(b). On facts presented, insurance coverage dispute found not to be a core proceeding and not a proper § 542(b) turnover action. Although mandatory abstention did not apply because there was diversity jurisdiction, court exercised discretion to abstain under 28 U.S.C. § 1334(c)(1) in favor of pending arbitration proceeding where no overriding, countervailing bankruptcy purpose.
In a suit brought by the United States Trustee against bankruptcy petition preparers, it was held that § 110 of the Bankruptcy Code is constitutional and supplies sufficient authority to the United States Trustee to bring an action against the defendants for fraud and deception.
11 U.S.C. § 1329. Chapter 13 Trustee’s motion to modify plan to capture appreciated value from sale of residence was granted because there was (1) a substantial and (2) an unanticipated change in Debtor’s financial condition.
In a suit brought by the Chapter 7 trustee to avoid and recover an alleged fraudulent transfer of certain real property located in the Bahamas made by the debtor to her son and daughter, it was held that the complaint was sufficient to survive a motion to dismiss based upon the subject matter jurisdiction of the bankruptcy court over property of the debtor’s estate wherever located.
In a suit brought by a Chapter 7 trustee against defendants who had conspired with the debtor to injure others, it was held that the trustee lacks standing to assert a fraud claim on behalf of the bankruptcy estate against third parties with whom the debtor was engaged in wrongdoing.
Upon the objection of the debtor-in-possession to the application of former counsel for compensation, it was held that the quality of the legal representation for which compensation was sought, being the most important consideration, did not justify the award of a fee in the amount requested. Whereupon, a counsel fee in a reduced amount was granted.
In a complaint to avoid and recover fraudulent transfers, default judgment was entered against the debtor for his failure to respond to discovery requests. Thereafter a hearing was held on the trustee’s ex parte motion for damages and this Court awarded the trustee a judgment. The judgment was reversed by the United States Court of Appeals for the Fourth Circuit based upon the failure to afford the debtor an opportunity to produce evidence on the issue of damages. Upon remand, this Court conducted a second hearing on damages to which the debtor was invited to attend and which he did in fact attend. At the conclusion of the second hearing this court awarded the Chapter 7 trustee a judgment in the identical amount entered as a result of the earlier hearing, to wit: $1.6 million plus fees and costs.
In a dischargeability action brought against the pro se debtor by a credit card company, it was held that the debtor’s failure to respond to requests for admissions did not entitle the plaintiff to summary judgment, where the debtor had answered the complaint and denied allegations of fraud and where the plaintiff made no effort to warn the pro se defendant as to the possible effect of his failure to respond.
Chapter 13 debtor sold real property post-confirmation and sought to retain portion of net proceeds and reduce balance of chapter 13 plan by amount paid to mortgagee at settlement and outside of plan provisions. The court granted the debtor’s request for modification and the chapter 13 trustee sought reconsideration. The Court, Duncan W. Keir, Judge, granted the motion for reconsideration. The court found that the best interest test set forth in 11 U.S.C. § 1325(a)(4) should be recalculated at the time of modification and that debtor was not entitled to reduce the funding of the chapter 13 plan to yield a lower dividend to unsecured creditors than that which would be received in a case under chapter 7.
The United States Trustee filed a motion to dismiss the chapter 11 case, arguing that the case was improperly filed for the sole purpose of disrupting foreclosure proceedings pending with respect to debtor’s residence. The Court, Duncan W. Keir, Judge, granted the motion to dismiss as a bad faith filing. Specifically, the court found that the debtor’s residence had been sold at foreclosure to debtor as bid purchaser and subsequently ratified, but that after default by bid purchaser, the property was resold to a third-party. The court held that debtor retained no interest in the party at the time of the bankruptcy filing and that no legitimate purpose existed for the continuance of the case.
§ 541(a): When a debtor holds real property with another as joint tenants, upon the filing of the debtor’s Chapter 7 petition the joint tenancy is severed and the bankruptcy estate holds the debtor’s interest as a tenant in common.
Defendant GMAC Residential Funding Corporation filed a Motion to Dismiss Plaintiff’s Complaint or in the Alternative, Summary Judgment arguing, inter alia, that Plaintiff’s notice of election to rescind via the adversary proceeding complaint was untimely under the Truth in Lending Act, 15 U.S.C. § 1635(f). Plaintiff, Carolyn Thomas, argued that the notice of election to rescind was timely under the extension of time granted by Federal Rule of Bankruptcy Procedure 9006. The court granted Defendant’s motion, finding that because Plaintiff’s notice of election to rescind was not required to have been brought in the bankruptcy case, the Federal Rules of Bankruptcy Procedure did not extend the statutory time for Plaintiff to give notice of her election to rescind.
Held, the creditor of a Chapter 7 debtor corporation had standing to sue on the claim in the bankruptcy court against the debtor and the debtor’s alter ego whose fraudulent misrepresentations on behalf of the debtor caused injury to the plaintiff and gave rise to the creditor’s claim. The plaintiff as trustee under certain indentures sued the insider and various corporations he owned or controlled, including the debtor, for misrepresentation, concealment by breach of duty to disclose and fraudulent conveyance. The Chapter 7 trustee consented to the suit and entered into an agreement with the plaintiff whereby the estate would share pari passu in any recovery against the insider. The bankruptcy court permitted the plaintiff to “pierce the corporate veil” because of the insider’s multiple fraudulent transactions between shell corporations which gave rise to the claim. The court awarded the plaintiff a $7M judgment against the insider.
The Chapter 7 Trustee, citing the recent United States Supreme Court decision in U.S. v. Craft, 535 U.S. 274 (2002), objected to the Debtor’s tenants by entireties exemption of real property in a case where only one spouse was a debtor in bankruptcy. The United States Bankruptcy Court, Duncan W. Keir, J., denied the Chapter 7 Trustee’s objection.
This case came before the court upon Motion of Defendant Videsh Sanchar Nigam Limited for Order Dismissing Staying Adversary Proceeding and Compelling Arbitration of Plaintiffs’ Claims and Granting Related Relief (the “Motion to Dismiss”) of a multi-count complaint filed by Plaintiffs (the “Complaint”). The Motion to Dismiss argued that this court should compel arbitration of alleged breaches of a pre-petition International Telecommunications Services Agreement between Videsh Sanchar Nigam, Ltd. and Startec Incorporated. This contract included a binding arbitration clause. The court found that certain causes of action arose out of post-petition disputes and alleged violations of this court’s orders; thus, the arbitration clause is inapplicable. Also, the court determined that the causes of action which may be subject to the arbitration clause are within this court’s core jurisdiction, and in it’s discretion, the court found that the best interest of the estate will be served by litigation of all claims before one forum, this court.
This case came before the court upon Ford Motor Credit Company’s (the “Defendant”) Motion to Dismiss Second Amended Complaint (the “Motion to Dismiss”). The Motion to Dismiss argued that this court does not possess subject matter jurisdiction over certain claims raised in the Second Amended Complaint because those claims should have been raised in a previous state court action and are thus barred by the doctrine of res judicata. This court found that the Tracey F. Drazenovich (the “Plaintiff”) was not precluded from asserting those claims in this court because Maryland does not have a compulsory counterclaim rule requiring all possible counterclaims to be raised in the original state court action.
This court granted the Motion to Dismiss as to one claim, the impairment of exemptions under 11 U.S.C. § 522(b)(2), because the Second Amended Complaint failed to state a basis upon which the requested compensatory damages could be granted.
11 U.S.C. § 328(a): Determining reasonableness of indemnification provision in employment agreement between Chapter 11 debtor and financial advisor is best accomplished by applying principles akin to the "business judgement rule"; indemnification of financial advisors should not cover breaches of duty of loyalty, breaches of duty of care, and contractual disputes between the Chapter 11 debtor and the advisors.
11 U.S.C. § 502(b)(6): In determining cap on a landlord's prepetition lease termination claim, "one year" is the twelve-month period immediately following the earlier of the petition date, or date of repossession or surrender; it is not the average annual rent for the remaining term of the lease.
Prior to bankruptcy, Debtor co-owned real property as joint tenants with his mother. Debtor’s mother passed away intestate within 180 after the Debtor’s Chapter 7 case filed. Chapter 7 Trustee filed complaint seeking a declaratory judgment as to ownership interests in the subject property and further seeking authority to sell the property free and clear of the interests of the co-owner. The United States Bankruptcy Court, Duncan W. Keir, J., held that: (1) the pre-petition judgment creditor holding judgment against only the Debtor had not obtained a lien on the Debtor’s real property; (2) the filing of the chapter 7 bankruptcy case severed the joint tenancy; (3) Debtor’s one-half interest in the property at the time of petition constituted property of the Debtor’s bankruptcy estate; (4) upon the death of Debtor’s mother the property was co-owned by the Debtor’s bankruptcy estate and the Estate of Jeung Soon Kim to which Debtor (and therefore his estate) was a one-third beneficiary; and (5) the Chapter 7 Trustee was authorized to sell the property free and clear of the interests of the Estate of Jeung Soon Kim.
This is an appeal from an order of the Bankruptcy Court denying the motion filed by Resort Computer Corporation (“RCC”) to “deem rejected” a Software License Agreement (“SLA”) between it and the debtor, Sunterra Corporation. I will affirm the order, albeit it on grounds different from those articulated by the Bankruptcy Court. This memorandum briefly states the reasons for my ruling.
This is an appeal by CitiFinancial, Inc., from an order of the Bankruptcy Court rescinding CitiFinancial’s lien on the debtor’s home without conditioning the rescission upon the debtor tendering to CitiFinancial its “legal due.” I find that the Bankruptcy Court erred in its analysis of the legal issues in certain respects and that the errors led the court to an inadequate consideration of the factors that should have guided the exercise of its discretion in determining the relief to afford the debtor. I further find, however, that, contrary to the position advanced by CitiFinancial, the Bankruptcy Court does have authority under section 1635(b) of the Truth in Lending Act (“TILA”), 15 U.S.C. § 1635(b), to order rescission of a lien without conditioning the rescission upon return to the creditor of the net balance due on the loan secured by the lien. Accordingly, I will reverse the Bankruptcy Court’s order and remand the case to the Bankruptcy Court for further proceedings.
The United States Trustee filed a motion to disgorge attorney’s fees paid to the former attorney for debtor in this chapter 13 case. The Bankruptcy Court, Duncan W. Keir, Judge, denied the motion for disgorgement and also the United States Trustee’s subsequent motion for reconsideration. The Bankruptcy Court found that a debtor’s attorney in a chapter 13 case is not required to file a proof of claim for the unpaid balance of the attorney’s fees, however, an application for allowance of fees is required pursuant to Federal Rule of Bankruptcy Procedure 2016(a) in a chapter 13 case for any post-petition fee sought, other than a flat fee fully disclosed in the Rule 2016(b) statement filed at the outset of the case.
This case came before the court upon Montgomery County, Maryland's (the "Movant") Motion for Allowance and Payment of Personal Property Taxes as an Administrative Expense (the "Motion"). Finding that the taxing authority held an unliquidated tax claim on the petition date, the Court concluded that the tax was not incurred post-petition and therefore cannot be allowed as an administrative expense.
Alternatively, the Motion states that to the extent that the claim is not allowable as an administrative expense, it should be entitled to priority as a tax claim under 11 U.S.C. § 507(a)(8). However, the Movant also asserts that pursuant to Section 14-804 of the Tax-Property Article of the Annotated Code of Maryland, the tax claim is secured by a statutory lien upon the personal property assessed for the tax. As 11 U.S.C. § 507(a)(8) only provides priority treatment to ”unsecured claims” of governmental units, if the tax claim is in fact a secured claim, then it is not entitled to an unsecured priority. Therefore, the alternative treatment under Section 507(a)(8) was denied.
Chapter 7 debtor filed a motion to redeem vehicle. The Bankruptcy Court, Duncan W. Keir, J., held that the proper valuation of the collateral to be redeemed pursuant to 11 U.S.C. § 722 is wholesale value.
11 U.S.C. § 524(a)(2): Withholding payment of health benefits to recover prebankruptcy overpayment of health benefits did not violate debtor’s discharge injunction because it constituted a recoupment under a single contractual arrangement, and not a setoff/offset.
Debtor’s former boyfriend objected to the Chapter 7 trustee’s proposed sale of a diamond engagement ring in debtor’s possession at time of bankruptcy filing. The objection was sustained. HELD: the engagement ring was a conditional gift made in contemplation of marriage that debtor was obligated to return upon dissolution of the relationship prior to the filing of the bankruptcy.
The claimant, Tom D. Kelsey, sued Creditrust and Key Bank for breach of contract, violation of the Fair Debt Collections Practices Act (FDCPA) and defamation of credit. Kelsey filed a proof of claim against the debtor based upon the grounds set forth in the lawsuit and the debtor objected to the claim. Debtor’s objection to the claim was sustained. HELD:1) objections to claims are core proceedings over which the bankruptcy court has jurisdiction, even where the claim is based upon the FDCPA; 2) the FDCPA applies to consumer debt, not business debt; 3) there was insufficient evidence of injury to the claimant; and 4) any communications by the creditor to various credit bureaus were made in good faith.
Chapter 7 trustee and creditor objected to the debtor’s exemption of rings given to her after marriage by the non-filing spouse. Debtor claimed the rings were held as tenants by the entireties and that the full value of $8,000 was exempt. The objections to debtor’s exemptions were sustained. HELD: 1) property held by the entireties is not subject to the claims of individual creditors; 2) tenancy by the entireties may be created in personalty; 3) one spouse may make a gift of personal property to the other, even if the property was purchased from assets held jointly by both parties as husband and wife; and 4) presumption of tenancy by the entireties in marital household goods is not present where rings were for the exclusive use of wife by gift, even when purchased from marital funds.
This is an appeal from a summary judgment order entered by the Bankruptcy Court in favor of Appellee, World Computer Systems (“World Computer”). See Meiburger v. World Computer ( In Re Maxima Corporation), No. 98-1850-PM, Adv. No. 98-1366-PM (Bankr. D. Md. September 24, 2001). Appellant, Janet M. Meiburger, a trustee in bankruptcy for Maxima Corporation (“Maxima”), appeals the judgment, asserting that the Bankruptcy Court erred in its finding that Maryland’s three-year statute of limitation for breach of contract had expired. The issues have been fully briefed by all parties. On April 9, 2002, the Court heard oral argument. Finding the Bankruptcy Court’s judgment correct, this Court affirms.
Plaintiff sought to except from Defendant’s Chapter 7 discharge, pursuant to 11 U.S.C.
§ 523(a)(5), certain obligations arising from the parties’ Separation Agreement that was incorporated into a Judgment of Absolute Divorce. At issue was Defendant’s obligation to share equally in costs associated with their two minor children’s attendance at private school and related attorney fees. Defendant asserted that the obligations are not reasonable and were not intended as alimony, maintenance, or support.
The petitioning creditors who obtained an Order for Relief in a case later converted to a case under Chapter 11 sought compensation from the estate under 11 U.S.C. § § 503(b)(3)(A) and 503(b)(3)(D). The application was opposed by an insider creditor who argued that the applicants were limited to compensation for the actual filing of the involuntary petition and for nothing more. HELD: the applicants were entitled to compensation for the three time segments involved; the filing of the involuntary petition, the time between the entry of the Order for Relief and the date of conversion of the case to a case under Chapter 11, and the time after conversion. The court found that the applicants rendered a substantial contribution to the case under Chapter 11 and that had they not acted as they did when they did, the case would have been stranded in legal limbo.
After confirmation of Debtor's Chapter 13 Plan, certain payments made by the Trustee to secured creditors were returned to him, because those creditors had been paid as a result of the Debtor's paying off their claims through refinancing. The Trustee then distributed the returned funds pro rata among unsecured creditors filing claims not having priority. Debtor moved to make the Trustee refund the redistributed funds. Held: In the absence of a modification of Debtor's Plan, the Trustee properly distributed those funds to unsecured creditors as mandated by Debtor's Plan.
After debtor’s motion to avoid lien was granted (by default), creditor filed a motion to vacate. The property was owned by debtor and debtor’s non-filed spouse and the lien was a subordinate deed of trust. Lender argued that the deed of trust trustees were necessary parties to the motion to avoid lien, without whom the order should not have been entered.
The court determined that deed of trust trustees are not necessary parties to motions to avoid liens. However, because the co-tenant by the entirety (debtor’s spouse) was not a party, the court granted the motion to vacate and dismissed the motion to avoid lien, without prejudice.
A Chapter 13 debtor sought to avoid a judgment lien that attached to his interest as a tenant-in-common of a parcel of real property eight days before the filing of his bankruptcy case. Defendant did not respond, and a default was entered. HELD: because the debtor had equity in the real property in an amount nearly five times the amount of the judgment, his avoidance power was limited to the amount of exemption left to him, that is, $1,039.00, rather than avoidance of the entire judgment.
Under Section 330, a post confirmation application for additional fees for preconfirmation services of debtor's attorney to be paid through the plan as an administrative expense was denied where no source for payment was provided and no plan amendment was filed.
A mortgage loan entered into in 1986 was modified in 1995. The court determined that the Modification and Extension Agreement entered into by the debtor and the secured creditor is a refinancing as referred to in the Legislative History of the Bankruptcy Reform Act of 1994, and that such refinancing constitutes an “agreement” as set out under Section 702(b)(2)(D) of the Bankruptcy Reform Act of 1994. As the Modification was entered into subsequent to enactment, 11 U.S.C. § 1322(e) applies. Accordingly, 11 U.S.C. § 1322(e) and not Rake v. Wade, 508 U.S. 464, 113 S.Ct. 2187 (1993), controls the Bank’s right to interest on the prepetition arrearage as a component of cure of the default.
This is an appeal from an order of the bankruptcy court denying Tidewater Finance Company’s request for payment as an administrative expense under 11 U.S.C. § 503(b). Jurisdiction is proper under 28 U.S.C. § 158(a); see also Fed. R. Bankr. P. 8001, 8002; Local Rule 403 (D. Md. 2001). The motions have been fully briefed, and a hearing was held on November 16, 2001, see Fed. R. Bankr. P. 8012. For the reasons set forth below, the order of the bankruptcy court will be affirmed.
§ 522(b); Md. Code Ann., Cts. & Jud. Pro. § 11-504(b)(2): Life insurance proceeds payable to a spouse may be exempted by the beneficiary spouse.
Following Judge Derby's decisions in In re Hurst, 239 B.R. 89 (BC Md.1999), and In re Verna Anderson, 99-5-6749-SD, this court likewise finds that MD. CODE ANN. CTS. & JUD. PROC. 11-504(b)(2) does not encompass an exemption for unpaid prepetition medical expenses within Maryland's personal injury exemption.
The court issued an order staying an adversary proceeding wherein the debtor sought to avoid as a preference garnishment payments made within ninety (90) days of the filing of her case, in order to await the decision of the United States Court of Appeals for the Fourth Circuit in Stine v NationsBank, No. 00-2352, involving the same issue. That court has certified a question of law to the Court of Appeals of Maryland.
28 U.S.C. § 1334(b): In a Chapter 7 case, the bankruptcy court did not have subject matter jurisdiction over a cause of action that arose post-petition to enforce a covenant not to compete, and remand of the adversary proceeding was required under 28 U.S.C. § 1447(c).
This matter came on for hearing upon the motion of BARCODING.COM to vacate the debtor's Chapter 7 bankruptcy discharge and to dismiss the instant Chapter 13 case [P. 15]. For the reasons set forth, the instant Chapter 13 case will be dismissed, but the debtor's Chapter 7 discharge will not be revoked.
Chapter 13 Trustee filed a motion to disallow claim of secured creditor and permit the funds to be redisbursed to other creditors entitled to disbursement under the confirmed chapter 13 plan. Court denied motion because case was converted to case under chapter 7. Upon a motion to reconsider by the Chapter 13 Trustee, the Bankruptcy Court, Duncan W. Keir, J., held that: (1) the Chapter 13 Trustee retained standing to allow winding up of the chapter 13 affairs; and (2) post-petition wages paid by the Debtor to the Chapter 13 Trustee for disbursement under the confirmed plan and held by the Chapter 13 Trustee at the time of conversion to chapter 7 should be distributed in accordance with the terms of the confirmed plan.
Chapter 13 Trustee filed Motion to Dismiss for Failure to Qualify. Largest claim in this matter was for a judgment for injury and punitive damages from a state court in South Carolina. Debtor alleged that because the claim was listed as disputed on his schedules, it did not count for Chapter 13 eligibility purposes. Debtor had filed no formal objection to the claim filed by the creditor but merely attacked the Proof of Claim in the context of defending against the Trustee's Motion to Dismiss.
The Court found the Creditors claim to be both liquidated and noncontingent by virtue of the South Carolina judgment, brought before the court in the form of a triple-seal, exemplified copy. In following In re Stern, 266 B.R. 322, the Court agreed that claims labeled as disputed by a debtor for purposes of their schedules are still used in the computation when determining a debtor's Chapter 13 eligibility.
Creditor willfully violated the Automatic Stay by conducting a foreclosure sale of its interest in property of the debtor after learning that debtor initiated a new bankruptcy case a few days before the sale. Creditor subsequently filed an emergency motion to dismiss debtor's case nunc pro tunc, arguing that serial filings by debtor and his wife on the eve of previous foreclosure sales, and the fact that debtor had another open bankruptcy case, demonstrated that the instant filing was in bad faith. The United States Bankruptcy Court for the District of Maryland, Duncan W. Keir, J., (1) denied the motion to dismiss nunc pro tunc; (2) found the foreclosure sale to be void; (3) prohibited any assessment of costs by creditor on account of the unlawful foreclosure sale; (4) found that debtor filed his case in bad faith; and (5) consolidated debtor's newly filed case into debtor's previously filed case.
Section 365(d)(10): Lease obligations to pay periodic rental charges for personal property first arose under 11 U.S.C. § 365(a)(10) on their due date, rather than on an earlier invoice date; and § 365(d)(10) did not bar a personal property lessor from recovering lease rental charges as a Chapter 11 administrative expense under § 503(b)(1)(A) where they constituted actual, necessary costs and expenses of preserving the estate.
Section 362(d)(1): Relief from automatic stay to perfect mechanics' lien as an in rem right against exempt entireties property is denied because property not subject to a mechanics' lien where only one owner is liable on the debt.
Chapter 13 debtors objected to the priority claim of the IRS contending that the tax liabilities at issue were too old to qualify for priority treatment 11 U.S.C. § 507(a)(8)(A)(i). The Bankruptcy Court, Duncan W. Keir, held, by exercise of its 11 U.S.C. § 105(a) equitable powers, that the 11 U.S.C. § 507(a)(8)(A)(i) priority period was automatically tolled during the pendency of the automatic stay in debtors' prior Chapter 13 case.
This matter came before the court upon two matters, a "Motion to Vacate Automatic Stay as to Property of Debtor's Estate" and "Debtor's Motion to Impose Sanctions for Willful Violation of Automatic Stay." The court has considered the motions, the opposition thereto, the memoranda, the oral arguments of the parties and the case file and has decided, for the reasons stated below, to deny both motions.
This matter came before the court upon a Motion to Avoid Judicial Lien. The court has considered the motion and the case file and has decided, for the reasons stated below, to deny the motion.
Section 365(d)(1): A deemed rejection of an employment contract in Chapter 7 did not terminate the contract, but only constituted a prepetition breach. Consequently, a noncompetition agreement that was triggered by post-petition actions of the Debtor could be enforced under State law against the Debtor, and the obligation was not subject to discharge.
This matter came on for hearing before the U.S. Bankruptcy Court for the District of Maryland at Baltimore on December 21, 1998, June 29, 1999 and July 1, 1999. For the following reasons, the complaint will be granted and judgments will be entered against the defendants.
On February 13, 1997, Ashby Enterprises, Ltd., Luskins Appliances, Inc., Luskins, Inc., We-Are-Electronics, Inc., and Sound and Sight, Inc., (the "plaintiffs," or collectively "Luskins") filed voluntary Chapter 11 bankruptcy petitions in this Court. On July 10, 1997, the plaintiffs filed the instant amended complaint for breach of contract and damages against the defendant, Petters Company, Inc. At trial on January 21, 1999, this Court found the defendant liable to the plaintiffs for breach of a contract dated December 21, 1996 ("Collateral Disposition Agreement" or "Agreement") by which Petters obligated itself to purchase "factory-fresh" inventory from Luskins located at a warehouse in Columbia, Maryland, and retail outlets located in Towson and Woodlawn, Maryland. Determination of the amount of damages was reserved, and the parties submitted post-trial briefs on that issue. Based upon the submissions and the evidence presented at trial, the Court has determined damages to have been sustained by the plaintiffs in the amount of $94,594.07, and will enter judgment in that amount in favor of Luskins, Inc., against Petters, Inc.
The plaintiffs are individual physicians and their corporate employers engaged in performing legal abortions. The corporate plaintiffs are providers of women's health services. The debtor, a regional leader of the American Coalition of Life Activists ("ACLA"), a radical organization opposed to abortion, targeted the individual plaintiffs for possible injury and death by posting their names and addresses on the Internet and by distributing wanted posters bearing their likenesses. The plaintiffs sued the debtor and other members of the ACLA in the Federal district court in Oregon and obtained substantial judgments against them for damages based upon the infliction of willful injury. The debtor filed bankruptcy in this Court, and the plaintiffs filed the instant complaint to determine the Oregon judgments to be nondischargeable based upon the doctrine of collateral estoppel. Before the Court are the motions for summary judgment [P. 9] filed by the plaintiffs, Planned Parenthood of the Columbia/Willamette, Inc., Portland Feminist Women's Health Center, Robert Crist, M.D., Warren M. Hern, M.D., Elizabeth P. Newhall, M.D. and James Newhall, M.D., and by the debtor-defendant, Donald J. Treshman, as to the second cause of action stated in the instant complaint, namely the nondischargeability of debts. For the reasons set forth, the plaintiffs' motion will be granted and the defendant's motion will be denied.
PURSUANT to Bankruptcy Rule 7054 and Federal Rule 54, and the Court finding that there is no just reason for delaying entry of final judgment, it is ORDERED that final judgment be and it is hereby ENTERED against the defendant, Brian Fraidin, and in favor of the plaintiff, Michael G. Rinn, Chapter 7 trustee, in the principal amount of Seventy Thousand Dollars ($70,000.00), plus interest from March 22, 1996, at the rate of 5.25% per annum, plus costs.
PURSUANT to Bankruptcy Rule 7054 and Federal Rule 54, and the Court finding that there is no just reason for delaying entry of final judgment, it is ORDERED that final judgment be and it is hereby ENTERED against the defendant, Michael Fraidin, and in favor of the plaintiff, Michael G. Rinn, Chapter 7 trustee, in the principal amount of Ten Thousand Dollars ($10,000.00), plus interest from March 22, 1996, at the rate of 5.25% per annum, plus costs.
This matter came on for hearing on cross motions for summary judgment upon the instant complaint brought by the liquidating trustee for the recovery of a preference. For the reasons stated, the plaintiff's motion for summary judgment [P. 25] will be granted, the defendant's motion for summary judgment [P. 27] will be denied, and the preferential transfer will be avoided.
Upon cross motions for summary judgment, this Court is called upon to decide two questions of law, namely whether the debtor and FINOVA Capital Corporation ("FINOVA") may avoid a prepetition tax lien of the Mayor and City Council of Baltimore (the "City") for unpaid personal property taxes, and whether the said municipal tax lien primed an earlier deed of trust lien of FINOVA upon proceeds of the debtor's real property that was sold free and clear of liens. A tax lien of the Internal Revenue Service is not the subject of this opinion. There are no material facts in dispute because the parties, including the IRS, joined in a stipulation of material facts. For the reasons stated, the plaintiffs' motion for summary judgment will be granted.
After the bar date to file a complaint objecting to the discharge of a debt under 11 U.S.C. § 523(c) had passed, First Union National Bank moved for an extension of time within which to file a complaint. It argued that it was entitled to rely upon the court telephone attendant's interpretation of an Order extending the time to object to debtor's discharge that the Order applied to dischargeability actions as well. The motion for extension of time was denied. The court found that the creditor's attorney's reliance upon an unauthorized statement made by a deputy clerk was unreasonable and no basis for granting the relief sought.
The defendants, Cerberus Partners, L.P. ("Cerberus"), Madeleine L.L.C. ("Madeleine"), and Gordon Brothers Capital Corporation ("Gordon Brothers") filed the instant motion for summary judgment or, in the alternative, for judgment on the pleadings [P. 13]. This opinion addresses the question, "May a party (in this case, a debtor) that sustained injury or alleged that it sustained injury from the rejection by a debtor in a different bankruptcy case of an unexpired lease or executory contract maintain a cause of action in a State court against the insiders of the other debtor who caused it to file bankruptcy and reject the contract or lease?" For the reasons stated, the answer is "No," thereby requiring the dismissal of the instant complaint upon the defendants' motion.
PURSUANT to Bankruptcy Rule 7054 and Federal Rule 54, and the Court finding that there is no just reason for delaying entry of final judgment, it is ORDERED that final judgment be and it is hereby ENTERED against the defendant, Laura Fraidin Overmier, and in favor of the plaintiff, Michael G. Rinn, Chapter 7 trustee, in the principal amount of Ten Thousand Dollars ($10,000.00), plus interest from March 22, 1996, at the rate of 5.25% per annum, plus costs.
MEMORANDUM OPINION DENYING DEBTORS' MOTION FOR STAY OF PROCEEDINGS. This matter came before the Court upon the defendants' motion for stay of proceedings pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940. For the stated reasons, the motion will be denied.
Debtor filed motion to reopen case seeking declaratory judgment that the pre-petition Charging Order held by respondent had been extinguished by the order of discharge. The United States Bankruptcy Court for the District of Maryland, Duncan W. Keir, J., held that under Maryland law, the Charging Order constituted a pre-petition lien on certain partnership interests of the debtor, and that the rights of the holder of the charging order remained unaffected by the order of discharge.
Terri Lynn Sneider, Esq. for the Debtor. Patrick C. McKeever, Esq. for respondent, Academy of American Franciscan History, Inc., and Robert Brownwell, Esq. for respondent Wheeler & Korpeck, LLC.
The issue presented is whether the administrative claim of Norritech for postpetition, prerejection damages arising from the rejection of its unexpired lease of nonresidential real property includes interest and counsel fees. According to the provisions of the lease and applicable law, this opinion holds that it does.
Based upon the memorandum opinion filed simultaneously herewith, the complaints brought by Michael G. Rinn, the Chapter 7 trustee of the estate of Jacob Fraidin, are granted against the defendants. The fraudulent transfer from the debtor to Brian Fraidin in the amount of $60,000 is hereby AVOIDED. The fraudulent transfer by the debtor to each of the defendants, Brian Fraidin, Michael Fraidin and Laura Fraidin Overmier, in the amount of $10,000 each, is hereby AVOIDED.
On Friday, November 17, 1995, an involuntary Chapter 7 bankruptcy petition was filed in this Court against the debtor, Farm Fresh Supermarkets of Maryland, Inc. ("Farm Fresh"). On the same day, the appointment of an interim trustee was authorized by this Court and Terry L. Musika was appointed to that position by the United States Trustee. On Sunday, November 19, 1995, Beckenheimer's, Inc., a wholly-owned subsidiary of Farm Fresh, filed a voluntary Chapter 7 petition in Case No. 95-5-8441 on an emergency basis at the home of the undersigned bankruptcy judge. On that occasion, Mr. Musika was appointed interim trustee in that case as well. On the same day, this Court approved Mr. Musika's motion that the two cases be jointly administered, Farm Fresh having consented to adjudication as a Chapter 7 debtor. Thereafter, the United States Trustee appointed Mr. Musika as Chapter 7 trustee in both cases. On April 28, 1998, the trustee filed the instant complaint for avoidance of a postpetition transfer, turnover and other relief, against Arbutus Shopping Center Limited Partnership ("Arbutus" and/or "landlord"), the landlord of one of the debtor's stores. For the following reasons, the instant complaint will be dismissed.
Fed.R.Civ.P. 56(e): An expert's conclusory affidavit was not sufficient to support summary judgment as to § 547(c)(2)(C).
Plaintiffs filed a motion for summary judgment on count one of their complaint against debtor, seeking nondischargeability pursuant to 11 U.S.C. § 523(a)(6) of their claim arising from an Oregon Federal District Court judgment grounded in defendant's violation of the Freedom of Access to Clinic Entrances Act, 18 U.S.C. § 248. The Bankruptcy Court, Duncan W. Keir, Judge, granted the motion for summary judgment on grounds of collateral estoppel. Specifically the Bankruptcy Court found that both the jury award of $8,526,336.14, and the Oregon District Court's grant of injunctive relief based upon the same acts considered by the jury, established that defendant had intended to harm plaintiffs.
The Chapter 7 trustee objected to the debtors' exemption of a deferred compensation plan. This opinion holds that The Maryland State Employees Deferred Compensation Plan and Trust (the "Plan") is a pension plan that is both excludable from the debtors' bankruptcy estate pursuant to Section 541(c)(2) of the Bankruptcy Code and and that even if it is includable in the estate pursuant to 11 U.S.C. § 541(a), it is exemptible from the estate pursuant to the law of the State of Maryland. Accordingly, the objection will be overruled, for the following reasons.
Fifth Amendment: After the Debtor invoked her Fifth Amendment privilege in response to almost every question posed to her at her omnibus examination and the Trustee moved to compel the Debtor's testimony, the Debtor was directed to appear in open court to supplement her inadequately justified assertion that questions posed to her at her omnibus examination would reasonably cause her to apprehend a danger of self-incrimination.
Plaintiff/debtor filed an adversary complaint to avoid and recover money garnished by Allfirst Bank from debtor's employer. Both parties filed motions for summary judgment. In addition, Allfirst filed an objection to debtor's use of exemptions.
The United States Bankruptcy Court for the District of Maryland, Keir, J., found that, up to the extent of the debtor's limits on "cafeteria" exemptions not otherwise taken under 11 U.S.C. § 522, and Md. Code. Ann. Courts & Jud. Proc. § 11-504, that a debtor can utilize the trustee's avoidance powers 11 U.S.C. § 547 and § 550 to avoid garnishments made within 90 before the filing of debtor's petition in bankruptcy.
Debtor's motion for summary judgment granted. Objection of Allfirst Bank to debtor's use of exemptions denied.
Section 523(a)(6): Judge McFeeley held that the prior District of Columbia judgment would be given collateral estoppel effect on dischargeability issue and that nondischargeability is extended to compensatory, punitive and attorney fee awards.
Internal Revenue Service filed a proof of claim in debtor's bankruptcy case for non-payment of income taxes. Debtor objected, asserting that during the tax years in question, pursuant to 26 U.S.C. § 911(a), he met all the prerequisites to exclude the income from taxation as "foreign earned income." On cross motions for summary judgment, the parties stipulated that the only bar to debtor's use of the foreign earned income exclusion was whether debtor's employer, the Army Recreation Machine Program, was an "agency" for the United States for the purposes of 26 U.S.C. § 911(a).
The United States Bankruptcy Court, Duncan W. Keir, J., held that the United States Army exercised pervasive financial and supervisory control over the Army Recreation Machine Program, causing it to accomplish Army purposes, on a nonprofit basis, for persons directly or indirectly affiliated with the Army, such that it was an agency of the Army and the United States for purposes of 26 U.S.C. § 911(a). Debtor's motion for summary judgment denied, and the motion of the United States granted.
This bankruptcy appeal presents the question of whether a Chapter 7 bankruptcy debtor, exercising the avoidance power conferred upon him by 11 U.S.C. § 522(h), may recover wages garnished by a judgement creditor within the ninety-day preference period. The bankruptcy court, answering this question in the affirmative, held that the debtor, Kenneth W. Stine, was entitled to recover $1,064.05 that NationsBank had obtained from him pursuant to wage attachments. I find that Stine may avoid the garnishments as preferential transfers but that he must count the $1,064.05 against the $6,000 limit on exemptions imposed by Maryland law upon bankruptcy debtors. Since the bankruptcy court did not address the latter point, I will remand the case for the entry of an appropriate order.
Creditor objected to debtors' disclosure statement asserting that it described a plan that could not be confirmed as a matter of law. Creditor first argued that the plan proposed to illegally sell securities which it owned under a repurchase agreement entered into by the parties. Creditor also argued that even if the court found that it only a security interest in the securities, that the disclosure statement still described a plan that could not be confirmed because it proposed to sell the securities free and clear of liens without affording the creditor an opportunity to credit bid its lien.
The United States Bankruptcy Court for the District of Maryland, Keir, J., denied the objection. The court found that the first issue (ownership of the securities) involved issues of fact necessitating an evidentiary hearing at the time of confirmation. As to the second issue, the court concluded that a plan of reorganization could be confirmed over a dissenting secured creditor's objection if it met any of three alternative tests of fair and equitable treatment enumerated in 11 U.S.C. § 1129(b)(2)(A)(i)-(iii). Because debtors' plan proposed to give the creditor the indubitable equivalence of its claim under section 1129(b)(2)(A)(iii), there was no requirement that it also provide credit bid rights pursuant to 1129(b)(2)(A)(ii). The issue of whether the proposed treatment of the creditor was the indubitable equivalent of secured creditor's claim is a question of fact to be determined upon the evidence introduced at the confirmation hearing.
Plaintiff brought adversary proceeding seeking a determination that the $10,000 attorney fee award granted in the parties' divorce was excepted from discharge. Plaintiff moved for summary judgment. The Bankruptcy Court, Duncan W. Keir, J., held that: (1) the findings of the Master for Family Division met the federal standard for nondischargeability under 11 U.S.C. § 523(a)(5); and (2) the $10,000 attorney fee award was inextricably linked to the custody, visitation and child support litigation and was thus nondischargeable.
On February 13, 1997, Ashby Enterprises, Ltd., Luskins Appliances, Inc., Luskins, Inc., We-Are-Electronics, Inc., and Sound and Sight, Inc. filed voluntary Chapter 11 bankruptcy petitions in this Court. On October 3, 1997, Luskins, Inc. filed the instant amended complaint [P. 2] for breach of contract and an accounting against Washington/Baltimore Cellular Limited Partnership (“Cellular One”). On March 13, 1998, Cellular One filed a motion for summary judgment [P. 14]. On April 28, 1998, this Court entered an order [P. 26] denying defendant’s motion on the grounds that summary judgment was inappropriate as a matter of law because general issues of material fact remained in dispute. This Court finds that Luskins breached the contract between the parties dated September 1, 1996, thereby excusing any further performance by Cellular One. Based upon the evidence presented at trial, the instant complaint will be dismissed.
For reasons set forth in the memorandum of opinion filed simultaneously herewith, the defendants' motion to dismiss the instant adversary proceeding is hereby DENIED.
The issue raised on summary judgement in the instant complaint to determine nondischargeability of debt for willful and malicious injury is not whether the debtor's conduct in torching his own automobile in which the plaintiff held a security interest was willful and malicious. Rather, it is whether such willful and malicious conduct was satisfactorily proven at an earlier trial in a State court so as to bar relitigation of the issue in the present context. For the reasons stated, the complaint will be granted on summary judgement and the debt will be determined to be nondischargeable.
For reasons set forth in the Memorandum Opinion filed simultaneously herewith, the plaintiff's motion for summary judgement is hereby GRANTED and the debt owed to it by the debtor, pursuant to a judgement rendered in the District Court of Maryland for Anne Arundel County in Case No. 12903-1997, in the amount of $14,109.41, plus pre-judgement interest of $1,149.92, attorney's fees of $2,116.41 and costs of $35, plus post-judgement interest at the legal rate is hereby determined to be NONDISCHARGEABLE.
This opinion holds that while a decedent's estate is not eligible to file a Chapter 13 banktuptcy petition because it is not within the definition of an "individual" as set forth in 11 U.S.C. § 109 for purposes of Chapter 13, a debtor who is serving as a personal representative of a decedent's estate is not thereby barred from filing a Chapter 13 petition in his individual capacity, if otherwise eligible.
§ 523(a)(6): A Maryland Circuit Court sanction of an attorney under Md. Rule 1-341 based on bad faith is nondischargeable under § 523(a)(6), because intent to injure per Kawaauhau v. Geiger is inherent in the finding of bad faith and collateral estoppel applies.
Based upon the Memorandum Opinion filed simultaneously herewith, the Chapter 7 trustee's objection to the debtor's exemption of proceeds from a settlement of a claim for gender discrimination and harassment is hereby OVERRULED and the said exemption is hereby ALLOWED.
The issue in this case is whether a claim for sexual harassment may be exempted from the Chapter 7 debtor's bankruptcy estate under Maryland's personal injury exemption statute, Md. Cts. and Jud. Proc. Code Ann. § 11-504(b)(2). The Chapter 7 trustee objected on that basis to the debtor's claimed exemption of $29,575 paid to her in settlement of a claim for sexual harassment brought against the debtor's former employer.
In 1992, the plaintiffs filed a complaint, an amended complaint, and a second amended complaint to determine dischargeability of debt, which this Court dismissed at trial because the evidence related solely to the general denial of a discharge in bankruptcy, but it was too late to amend the complaint because the deadline had passed for bringing complaints objecting to discharge. See Wright v. Asbury, Adversary Proceeding No. 92-5257-JS. After the second amended complaint was dismissed and while the debtor's instant Chapter 7 case was still open, the plaintiffs filed the instant complaint objecting to discharge. After a two-day hearing, the Court will dismiss the instant complaint on grounds of res judicata, issue preclusion and limitations. The plaintiffs and defendant are pro se.
On remand from the U.S. District Court, the instant complaint to determine dischargeability was dismissed for a second time by memorandum opinion and order [PP. 54 and 55] dated March 31, 1998. The unsuccessful plaintiffs, Stephen M. Wright and Stephen M. Wright, CPA, P.A., filed motions to alter, amend or vacate the order dismissing complaint with prejudice, a motion for new trial and a motion to revoke and/or strike discharge of debtor. For the following reasons, the motions will be denied.
The Memorandum of Decision dated March 17, 2000, contains a scrivener's error on page 5, in the quote from Collier on Dewsnup.
For the reasons set forth in the Memorandum Opinion filed simultaneously herewith, the instant complaints to determine dischargeability of debt, etc., are hereby DISMISSED WITH PREJUDICE. All costs of these proceedings to be assessed to the plaintiffs.
Section 328(a)(5): In a case filed before the 10/22/94 effective date of § 362(b)(18), § 362(a)(5) operated to prevent an automatic Texas ad valorem tax lien on personal property from attaching automatically to inventory acquired postpetition by the debtor in possession.
Section 507(a)(8)(A): The three year period for determining priority income tax claims is tolled during a debtor's prior bankruptcy case.
Debtors filed motion to reopen Chapter 7 case. Judge Mannes held that debtors would not be allowed to reopen “no asset” Chapter 7 case to add previously unscheduled and unnoticed creditors to schedule of creditors holding unsecured nonpriority claims.

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