Source: https://www.cob.uscourts.gov/judges-info/opinions?page=2
Timestamp: 2019-02-18 00:30:06
Document Index: 403356197

Matched Legal Cases: ['§ 1328', '§ 1307', '§ 1328', '§ 1307', '§ 1322', '§ 1307', '§ 1307', '§ 1307', '§ 1307', '§ 1307', '§ 109', '§ 349', '§ 303', '§ 548', '§ 548']

In re Diggins, Case 10-40335- JGR; Order entered December 20, 2016 (11 U.S.C. § 1328(a); Fed. R. Bankr. P. 3002-1(f)). 12/20/2016
The Court weighed in on the recent trend of lenders objecting to discharge at the conclusion of a Chapter 13 case because a debtor failed to make post-petition mortgage payments. In this particular case, the mortgage lender initially filed a response to the Trustee’s Notice of Final Cure Payment indicating Debtor had failed to make post-petition mortgage payments, but the parties were in the process of a loan modification. As a result, the Trustee filed a motion to dismiss under § 1307 for failure to comply with provisions of the Debtor’s Chapter 13 Plan. Subsequently, the mortgage lender filed a supplemental response indicating the loan had been modified and the Debtor was no longer in default.
The Trustee conceded a loan modification may cure deficiencies in post-petition mortgage payments under some circumstances, but questioned the timing of the loan modification, which was not finalized until after the 60-month plan period had ended. Debtor argued it would be inequitable to deny discharge, when she had made mortgage payments for most of the plan term, but entered a loan modification with her mortgage lender when her income dropped during the last year of her plan, and, pursuant to instructions from her mortgage lender, did not make payments for a certain amount of time.
The Court recognized the holdings of other divisions of this Court that post-petition mortgage payments are “payments under the plan” pursuant to § 1328(a). However, the Court agreed with the reasoning of In re Binder, 224 B.R. 483, 490 (Bankr.D.Colo. 1998), that, for a creditor holding a “long-term debt secured only by a lien against the debtor’s residence” the debtor is allowed to “cure arrearages over a reasonable period of time” so long as they keep current with regard to other obligations. In this particular case, the Court held any default was not material under § 1307(c)(6), because it was technical and temporary, and had since been cured to the mortgage lender’s satisfaction.
The Court also determined that, while §§ 1322 and 1325 prohibit a debtor and a bankruptcy court from knowingly extending a plan that extends beyond five years, these sections do not mandate dismissal of a bankruptcy case if a debtor needs a reasonable period of time to cure an unanticipated arrearage incurred during the sixty-month period. (Citing In re Handy, 557 B.R. 625, 628 (Bankr. N.D. Ill. 2016)).
Ultimately, the Court denied the Trustee’s motion to dismiss, determined it would be inequitable in this circumstances to deny discharge, and ordered the Clerk to enter Debtor’s discharge and close the case.
In re Sinischo, Case No. 15-19535- HRT; Order entered December 8, 2016 (Absolute right of Chapter 13 debtor to voluntarily dismiss under 11 U.S.C. § 1307(b)). 12/08/2016
Debtor filed for Chapter 13 and made multiple misrepresentations in her petitions and proposed plans during the subsequent nine-month period. Several creditors moved to convert Debtor’s case to Chapter 7, citing 11 U.S.C. § 1307(c), on the grounds of bad faith. Debtor then moved to voluntarily dismiss her case under § 1307(b), arguing she had an absolute right to dismissal, despite the pending motions to convert.
Noting the lack of Tenth Circuit authority on this issue, the Court ordered briefing and held an evidentiary hearing on the pending motions. Two creditors cited cases holding a bad faith exception to the absolute right to dismiss should allow the Court to determine whether dismissal or conversion was in the best interests of creditors. Another creditor, and the Trustee, sided with Debtor, citing cases holding the plain language of § 1307(b) mandated the Court to dismiss, rather than convert, the case notwithstanding Debtor’s bad faith conduct.
The Court examined the split of authority on this issue, as well as the implications of Marrama v. Citizens Bank of Mass., 549 U.S. 365 (2007) and Law v. Siegel, 134 S.Ct. 1188 (2014). The Court ultimately determined the statutory language of the Code, and the conflicting case law addressing the issue, compelled dismissal, rather than conversion, of Debtor’s case. Importantly, the Court agreed with cases determining the right to dismissal was not “self executing”; that is, after a debtor’s motion under § 1307(b) is filed, a court can hold a hearing on the motion to determine whether conditions should be placed on dismissal if it finds them appropriate.
Therefore, the Court dismissed the case with sanctions for Debtor’s bad faith conduct, pursuant to § 109(g) (180-day filing bar) and § 349(a) (barring discharge of debts in future bankruptcy cases). Additionally, the Court held that, should Debtor file a bankruptcy case after 180 days, but within three years, Debtor was required to provide notice to all creditors, including those in the current case, giving them an opportunity to object. Finally, the Court noted that nothing in its Order prohibited the filing of an involuntary bankruptcy case against Debtor under § 303.
In re SBN Fog Gap II, LLC, Case No. 16-13815-TBM and In re Fog Cap Retail Investors, LLC, Case No. 16-13817-TBM (jointly administered); Order entered December 8, 2016 (Docket No. 443) (motion to quash under Fed. R. Civ. P. 45) 12/08/2016
The Unsecured Creditors’ Committee served subpoenas to produce documents (subpoenas duces tecum) on two non-parties pursuant to Fed. R. Bankr. P. 2004 and 9016, as well as Fed. R. Civ. P. 45. The subpoenas properly were issued by the United States Bankruptcy Court for the District of Colorado (and signed by counsel for the Committee) but required that the entities produce documents in New York, New York. The targets of the subpoenas contested the subpoenas by filing a motion to quash in the United States Bankruptcy Court for the District of Colorado. But, the new version of Fed. R. Civ. P. 45(d)(3) mandates that attacks on subpoenas initially must be prosecuted in “the court for the district where compliance is required.” Since the subpoenas unequivocally required compliance in New York, the Court held that it lacked authority to adjudicate the motion to quash and that the non-parties must seek relief in the United States District Court for the Southern District of New York (or possibly the United States Bankruptcy Court for the Southern District of New York).
Simon E. Rodriguez, Chapter 7 Trustee v. Margaret Nelabovige (In re Kirst), Case No. 14-23835- JGR, Adversary Proceeding 15-01281-JGR; Order entered October 26, 2016 (fraudulent transfer under 11 U.S.C. § 548(a)(1)(B)). 10/26/2016
The issue before the Court was whether an innocent mistake by a grandmother in titling property in her name and the names of her daughter and son-in-law is reached by the law of constructively fraudulent transfers when the son-in-law transferred his interest in the property back to the grandmother immediately upon her request almost two years before the son-in-law filed bankruptcy.
Trustee filed a complaint against Debtor’s mother-in-law, Mrs. Nelabovige (“Nelabovige”), for recovery of a constructive fraudulent transfer under 11 U.S.C. §§ 548(a)(1)(B) and 550(a)(1). Trustee alleged that when Nelabovige purchased property in Fairplay, and titled the property in her name and the names of Debtor and his wife, Nelabovige gifted a one-third interest in the property to Debtor. Trustee further contended that when Debtor quit-claimed his interest in the property to Nelabovige, he made a transfer of his property to her and received less than a reasonably equivalent value in exchange for the transfer, and was either insolvent on the date of the transfer or rendered insolvent by the transfer. The Trustee requested a judgment against Nelabovige for one-third of the amount the property sold for in December 2014. The Court held a full-day evidentiary hearing on the complaint and Nelabovige’s answer, and took the matter under advisement.
In its written opinion, the Court cited Davis v. Pham (In re Nguyen) 783 F.3d 769, 776 (10th Cir. 2015), for the proposition that an interest in property consisting of bare legal title holds no tangible economic value; accordingly, the transfer of bare legal title does not constitute a fraudulent transfer. Therefore, the question before the Court was whether under Colorado law, Nelabovige made a gift of a one-third interest in the property to Debtor. If there was no gift, since she paid for the property and did not receive any consideration from Debtor, a resulting trust would arise in Nelabovige’s favor, making the transfers to and from Debtor of bare legal title only.
The Court found by strong and convincing evidence that Nelabovige did not intend to make a gift to Debtor. Thus, Debtor only had bare legal title subject to a resulting trust in favor of Nelabovige, who held equitable title. Accordingly, the reconveyance of Debtor’s bare legal title was not a fraudulent transfer. The Court entered judgment in favor of Nelabovige and against the Trustee, and dismissed the complaint with prejudice.