Source: http://www.wiwb.uscourts.gov/dec_sum3.html
Timestamp: 2014-03-12 06:12:25
Document Index: 520160647

Matched Legal Cases: ['sui generis', '§ 779', '§ 707', '§ 707', '§ 707', '§ 727', '§ 727', '§ 523', '§ 707', '§ 707', '§ 544', '§ 523', '§ 779', '§ 523', '§ 779', '§ 544', '§ 523', '§ 1329', '§ 1329', '§ 547', '§ 546', '§ 101', '§ 546', '§ 547', '§ 547', '§ 815', '§ 1821', '§ 1821', '§ 59', '§ 1821', '§ 325', '§ 1322', '§ 1325', '§ 1329', '§ 1329']

alphabetic order beginning with the letters R-Z.
Case Summaries R-Z
(9/3/93) (160 B.R. 323)
Wisconsin DNR's motion for allowance of priority administrative expense claim pursuant
to 11 U.S.C. � 503(b)(1)(a) is denied. No clean-up costs for environmental damage have
yet been incurred -- allowing administrative expense status for undetermined future costs
would constitute an advisory opinion; case is not ripe for judicial review. In addition,
clean-up costs would not constitute funds necessary to "preserve" the estate
pursuant to � 503(b)(1)(a); trustee had already declared intent to abandon pursuant to 11
U.S.C. � 554(a). Presence of unencumbered assets in the estate does not change this
result. DNR was not entitled to priority lien on environmentally contaminated property to pay
for future clean-up costs. Absent clear statutory authority to do so, Court refuses to
fashion a remedy to redress environmental damage in light of fact that no evidence
established that property presented imminent danger to public.
RAMEKER V. FARMERS STATE BANK (7/27/04) (Unpublished)
Trustee filed complaint against Defendant alleging that its financing statement was defective in that it didn't describe the collateral sufficiently. The General Business Security Agreement used to secure the business note contained a description of the collateral, but when the Defendant sought to perfect its security interest in the personal property by filing a UCC-1 financing statement, the collateral was described as the collateral covered as "general business security agreement now owned or hereinafter acquired." No documents were attached to the financing statement. Under Wisconsin law the description of personal property is sufficient if it reasonably identifies what is described. What is reasonable is putting third parties on inquiry notice to allow them to identify what property has a lien against it. It was determined that the description in this case failed to put third parties on notice as to which property of the Debtor was subject to the Defendant's security interest and that judgment may be ordered for the Trustee.
RAMEKER V. HOLDEN (12/4/07) (383 BR 727) Rameker v. Holden (In re Williams), adv. case #07-74, main case #06-12442. filed 12/4/2007, Trustee's application to sell debtor’s interest in real property. The non-debtor defendant argued that the debtor’s interest in a partnership was terminated by a prior written agreement. The consideration for the agreement was not a payment to the debtor made prior to the agreement, rather, it was a present release of an obligation to reimburse the partnership for said payment, and thus the agreement was enforceable. The debtor had no interest in the partnership property and the trustee’s complaint was dismissed. REDDICK
(11/13/91) (Unpublished)
Creditor (Snap-On Tools) did not lose its purchase money status in its security interest
in tools sold to debtor so as to make its lien in the tools avoidable by the debtor. Case
did not involve a cross-collateralization, after-acquired property clause or a
consolidation of security interests. The only consolidation which occurred involved the
outstanding balances from various purchases made by the debtor. Where security interest does not specify how payments are to be applied, court can apply
the payments pursuant to Wisconsin's "first-in, first-out" payment provision --
Wis. Stat. Ann. � 422.418(3) (West 1988).
(5/15/87) (Unpublished)
Motion by third party indebted to debtor in this case for rehearing and to vacate court
order entered December 31, 1986, is denied. Court order: 1) denied third party's motion to
prohibit trustee from initiating further collection activity on basis of state court
judgment against him; and 2) granted trustee's motion for turnover. Third party had failed
to appear at hearing on December 17, 1986, and later failed to timely file memorandum in
support of motion for rehearing/reconsideration as ordered by Court. Motion by third party to enjoin trustee from disbursing funds collected from third party
is also denied. Injunctive relief requires filing of adversary proceeding. Citing
bankruptcy rule 7001.
RENEW ENERGIES, LLC v. OLSEN'S MILL INC (7/12/10) (436 BR 112)
In an adversary proceeding to avoid certain transfers as preferential, the court found that all the elements of a preference had been proven. However, the creditor had a compete defense. First, many of the transfers were made in the ordinary course as between the two parties. Although the parties’ payment history was sui generis, they established a pattern where the debtor would pay the creditor in irregular amounts, by check or wire transfers, whenever it had funds available. Those payments that fell outside the ordinary course were shielded by the new value defense, in that after the debtor made the payments, the creditor delivered at least as much grain on an unsecured basis.
RESOP v. F & M BANK (in re McClearn) (5/15/07) (372 B.R. 471)
Noncompliance with Wisconsin's homestead joinder requirement was not grounds for avoidance by a chapter 7 trustee, even though the mortgage was "invalid." The protections for bona fide purchasers of real estate in Wisconsin provide no protection against the spouse of a prior transferor of real estate for five years after the prior transfer. Section 544(a)(3) of the Bankruptcy Code only grants the trustee the rights of a bona fide purchaser of real estate. Section 544, Wis. Stats. 706.02(1)(f), 706.09(1)(e). REIGLE
(7/31/01) (Unpublished)
Debtors challenged
claim of First American Credit Union
(“FACU”). At issue is whether
a car pledged as security for a direct
loan also secured a credit card debt
by virtue of a dragnet clause in the
loan contract. Both parties moved for
summary judgment based on stipulated
facts. Debtors made three arguments:
that FACU never explained the meaning
of the dragnet clause in the contract;
that they did not read the dragnet
clauses and had no intention of pledging
the car as security for the credit
card debt, and that the dragnet clauses
in the Rules and car loan contract
"were in boilerplate fine print." FACU
countered that the dragnet clauses
were customary and ordinary provisions
and that debtors’ intent to pledge
the car as security interest for the
credit card debt is evident from the
fact that debtors received the Rules
and signed the car loan contract, both
of which included dragnet clauses.
FACU further argued that it had no
obligation to explain the meaning or
effect of the dragnet clauses to debtors.
It was determined that the intent of
debtors to grant FACU a security interest
in the car for other debts is evident
from the clear language of the dragnet
clauses in the Rules and the car loan
RIECK (10/28/10) (439 BR 698)
Debtor sought summary judgment in a nondischargeability adversary proceeding that alleged a violation of Wisconsin’s theft by contractor statute, Wis. Stat. § 779.02(5). The debtor contended that the plaintiffs’ previous state court settlement with the other principal in their limited liability company constituted a release of any claim against him as well. The Wisconsin trust fund statute makes a contractor the trustee of the funds received from a property owner until various claims are paid. Under Wisconsin law, there are certain instances in which the release of one tortfeasor may lead to the release of a non-settling tortfeasor’s liability as well because the non-settling party’s right to contribution or indemnification is imputed against the plaintiff. However, only a negligent tortfeasor is entitled to contribution or indemnification from an intentional tortfeasor. In this case there was a dispute as to which of the contractors was the “intentional” tortfeasor. This dispute precluded the granting of summary judgment as there was a genuine issue of material fact as to a main component of the debtor’s defense.
RISLER (12/2/10) (443 B.R. 508)
The chapter 7 trustee sought authority to sell property the debtor co-owned with his son. The son had purchased the property and had made all the payments on it; the father had not paid anything toward the purchase and he had never lived in the home. The defendants argued that the father’s name was on the deed largely as an accommodation because the son believed he might need someone’s help managing the property because of his health problems. The trustee contended that he was entitled to rely upon the face of the deed in determining ownership, and that the debtor’s 50% titled interest in the home was property of the estate. The court agreed with the trustee, finding that where a deed is unambiguous, it is conclusive proof of ownership. On the face of the deed, the father was a coequal owner of the property and the trustee was entitled to sell the property in order to realize the value of his interest for the benefit of creditors.
ROLL & CURRIE (11/10/08) (400 B.R. 674)
The debtors were housemates and filed separate Chapter 7 petitions. Together, their incomes exceeded the median income; separately, their incomes were below the median income. The U.S. Trustee filed a motion to dismiss pursuant to § 707(b)(2) and (3). The Court denied the U.S. Trustee’s motions without prejudice. The Court found that the U.S. Trustee had not carried its burden of demonstrating that some or all of each debtor’s income was used to pay household expenses of the other debtor and should have been included as “income” for purposes of the means test. The Court concluded that ability to pay, standing alone, is not sufficient to serve as the basis of a finding of abuse under the totality of the circumstances inquiry of § 707(b)(3). The Court also found that the U.S. Trustee had not carried its burden to demonstrate that the totality of the circumstances supported a finding of abuse pursuant to § 707(b)(3).
RONDEAU (11/4/87) (Unpublished)
Creditor's motion to convert case from chapter 11 to chapter 7 for
failure to file plan and disclosure statement is denied. Decision whether to dismiss or
convert is within discretion of court. Continuation of case would not result in any
substantial benefit to creditors or to the estate; case will therefore be dismissed.
Moving creditor can pursue its remedies in state court.
ROYAL PLASTICS, INC. (11/30/94) (Unpublished)
Creditors of chapter 11 debtor contended that they were entitled to
the revenues generated by the debtor's use of certain plastic molds. These revenues were
generated by the debtor prior to the petition date, but were in the debtor's possession
when the case was filed. The creditors contended that they were entitled to the funds
because the debtor did not own the molds. Given the absence of any trust relationship
between the parties, however, and the extraordinarily broad definition of "property
of the estate" under 11 U.S.C. � 541, the court concluded that the debtor held legal
and equitable title to the funds when the bankruptcy was filed. Accordingly, the
creditor's adversary proceeding was dismissed.
(10/7/91) (Unpublished)
Debtor's motion to avoid the lien of Sears in her washer and dryer
pursuant to � 522(f)(2)(a) is denied. Issue of whether Sears was required to file a
financing statement to perfect its interest pursuant to Wis. Stat. � 409.302(1)(d) is
irrelevant for the court's analysis. Even an unperfected security interest remains valid
and enforceable as between the parties to it. Fact that a purchase money security interest
is unperfected does not destroy its purchase money status. Chapter 7 trustee took no
position as to Sears' lien because the debtor claimed the property as exempt. Trustee thus
did not take priority over the lien of Sears.
RYNEARSON (4/6/92) (Unpublished)
Debtor's motion for valuation of the lien of the USA-FmHA at $21,000
is denied. Supreme Court's decision in Dewsnup v. Timm, 116 L. Ed. 2d 903 (1992),
prevents chapter 7 debtors from "stripping down" the lien of a creditor to the
judicially determined value of the collateral. Debtors' attempts to distinguish Dewsnup
on its facts are without merit.
SABASKA (2/6/09) (Unpublished)
Creditor brought an adversary proceeding seeking to deny the debtors’ discharge, arguing that the debtors had transferred assets with the intent to hinder, delay, or defraud creditors in violation of § 727(a)(2) or that they failed to satisfactorily explain a loss or diminution in assets in violation of § 727(a)(5). The debtor husband had previously operated a trucking business, and the creditor was a former business partner who had obtained a judgment against him. The creditor contended that the assignment of various leases for semi-trailers to a new entity owned by the debtor’s aunt was a transfer of assets, and the debtor intended to hinder, delay, or defraud creditors by doing so. The creditor also contended that the debtor failed to explain the loss of assets, including business revenues associated with the trucking business. The court found that the debtor wife had no involvement in the conduct in question, and consequently there was no evidence to support denial of her discharge. As to the husband, the court acknowledged that the assignment of leases was a “transfer” of property, but the plaintiff failed to demonstrate any subjective intent as the debtor was simply attempting to stay in business. The court also found that debtor’s explanation as to the ultimate surrender or repossession of the trailers by the lessor was satisfactory, and that the creditor did not demonstrate any other loss of assets for which the debtor did not have an adequate explanation. The adversary complaint was dismissed.
(9/15/99) (240 B.R. 305)
Debtor filed adversary proceeding contending student loan debt
constituted an "undue hardship" under 11 U.S.C. � 523(a)(8). The Court
concluded that the debtor could not maintain a minimal standard of living, especially
given the presence of other student loans the debtor conceded were nondischargeable. The
debtor had done everything he could to maximize income and minimize expenses. His expenses
still exceeded his income by a considerable amount. Accordingly, the debt was an
"undue hardship" under � 523(a)(8) and dischargeable. [Reversed on appeal, 262 B.R. 457 (W.D. Wis. 1999)]
SALINAS (2/14/01) (258 B.R. 913)
On remand of district courts
order reversing prior order granting discharge of student loan debts, the
bankruptcy court again considered the debtors financial condition. Debtor did
not have significant income, and had in fact been employed for a period of time.
The Court concluded that the debtor had demonstrated an "undue
hardship" within the meaning of U.S.C. � 523(a)(8). The Court also
rejected the suggestion that the court could further defer or reduce the debtors
loan obligations. [Reversed on appeal, Case No. 01-C-234-S (W.D. Wis. 2001)]
SANDUS (6/3/11) (Unpublisthed)
The debtor owed approximately $147,000.00 in student loans. He was 52 years old, single, with no dependants. He had obtained an undergraduate degree and a master’s degree in computer science from Northwestern University. He finished his education in 1999. He worked in his field until 2003, when he lost his job and then worked as a contract computer technician. His last job in the computer science field was in 2007, and he worked as a carpenter for a time until his health prevented him from doing so. He had a heart condition which first manifested in 2004; this condition mandated several surgeries and required medication, regular medical appointments, and physical restrictions which would continue indefinitely. He also suffered from a physical condition which made it difficult to engage in computer keyboarding (and for which he had four unsuccessful surgeries). He began receiving social security disability payments in May of 2008. He had sought employment in the computer field and been unsuccessful. The Court concluded that his financial situation was likely to persist for a significant portion of the repayment period, thus satisfying the “certainty of hopelessness” mandated by the Seventh Circuit in In re Roberson, 999 F.2d 1132 (7th Cir. 1993), and Goulet v. Educ. Credit Mgmt. Corp., 284 F.3d 773 (7th Cir. 2002). SASOPA (3/2/00) (Unpublished)
The plaintiff filed a motion for summary judgment claiming
that as a matter of law, she is entitled to a judgment finding the debtor's debt
to her nondischargeable under 11 U.S.C. � 523(a)(6). The debtor attacked
the plaintiff, bit off the plaintiff's second finger at the joint area and was
charged in state court with aggravated battery with intent to cause substantial
bodily harm. The debtor pled guilty to this crime. The plaintiff
argued that because the debtor pled guilty to aggravated assault, she was
precluded, under the doctrine of issue preclusion, from re-litigating the issue
of whether her actions were willful and malicious for purposes of �
523(a)(6). The court (Judge Martin) denied plaintiff's motion on two
grounds: (1) there were issues of material fact regarding the debtor's
actions; and (2) this court could not apply the doctrine of issue preclusion
because the issue of the debtor's willfulness and maliciousness had not been
actually litigated. The court outlined the requirements for issue
preclusion and found that the plaintiff did not meet the fourth requirement --
that "the issues in the prior action . . . must have been actually
litigated and necessarily determined." See In the Matter of
Wagner, 79 B.R. 1016 (Bankr. W.D. Wis. 1987). Looking to Wisconsin
law, the court determined that in the absence of a clear statement from the
Wisconsin Supreme Court, this court was precluded from finding that a plea of
guilty satisfies the requirement that a controversy be "actually
litigated" for issue preclusion to apply.
SASOPA (8/6/01) (Unpublished)
SASSE (8/13/10) (438 BR 631)
Attorney who had represented the debtor in a pre-petition state court action filed an adversary proceeding, contending that his law firm’s claim for attorney’s fees was nondischargeable under § 523(a)(2)(A). The attorney argued that he had relied upon the debtor’s fraudulent representation, made approximately two years prior to the petition date, that he would not file for bankruptcy protection. The creditor also argued that the debtor had improperly prepared his means test form, and that the case should be dismissed under § 707(b)(2). The Court first considered the request that the case be dismissed for “presumed abuse” under § 707(b)(2) and concluded that the motion was untimely. Even had it been filed in a timely fashion, there was no substantive basis for dismissal of the case. The plaintiff argued that the debtor should have included his girlfriend’s income in the calculation of his current monthly income for purposes of the means test, but even if the debtor had done so, he would have been entitled to increase his household size, which would still mean that the debtor was below-median income and the case could not be presumed abusive. As for the fraud claims, the Court concluded that even if the debtor did promise not to file bankruptcy, the plaintiff did not demonstrate that the debtor acted with fraudulent intent or that the plaintiff justifiably relied upon the promise. Consequently, the Court granted judgment in favor of the debtor and awarded attorney’s fees to the debtor as the complaint was not “substantially justified.”
SAXE (3/22/13) (491 B.R. 244)
Chapter 7 debtors sought to avoid a lien on various items of farm equipment. The creditor asserted that it had a purchase-money security interest in one item, a skidsteer. The Debtors disputed the existence of a PMSI, argued that there had been a novation, and that their payments on the debt should be applied first to the skidsteer (such that the PMSI was paid, and the remaining obligation was a general security interest). The bankruptcy court found that the security agreement created a PMSI. The subsequent renewal of the loan did not constitute a novation, as the differences between the two notes were minimal, no additional funds were borrowed, and there was no indication that the original obligation was extinguished. Finally, under Wisconsin law regarding the application of payments, payments are applied first to obligations secured by purchase-money security interests only if “more than one obligation is secured.” Here, there was only one obligation, and payments would be applied to the whole debt (and the PMSI would be removed only after the entire debt has been satisfied). The motion to avoid the lien was denied as to the skidsteer.
SCHMID (1/14/13) (Unpublished)
Debtor sought an indefinite stay of her adversary proceeding. Debtor’s counsel argued that she had discovered new evidence of defects in the transfer of her client’s mortgage and note that amounted to fraud. She asserted that a stay was required to allow her to investigate the evidence, and to reconsider her posture in the adversary proceeding and the underlying bankruptcy case. After reviewing the lengthy procedural history, and evaluating counsel’s description of the evidence, the court concluded that the motion to stay failed to show adequate cause under Fed. R. Bankr. P. 9006(b)(1) to grant a stay. SCHMID 2 (4/23/13) (494 B.R. 737)
The Debtor filed an adversary proceeding against Bank of America, the holder of her mortgage and note, seeking a determination that the bank lacked standing to foreclose. The bank filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6). Noting a final judgment of the Portage County Circuit Court on the issue of the ownership of the mortgage and note, the Court concluded that it lacked jurisdiction to hear the Debtor's claims under the Rooker-Feldman doctrine. In the alternative, the Court ruled that the Debtor's claims were barred by the doctrine of claim preclusion. It also found that the Debtor's complaint should be dismissed under Rule 12(b)(6). The Debtor's motion to amend her complaint was therefore denied, and Bank of America's motion to dismiss was granted. SCHMITZ (6/24/10) (436 BR 110)
The debtors appealed a decision of the bankruptcy court to the district court, and the opposing party moved to strike certain items from the appellate record. The motion also objected to the debtors’ designation of issues on appeal. The court held that it had jurisdiction to decide issues relating to the record on appeal, and denied the two motions. Federal Rule of Bankruptcy Procedure 8006 does not permit an appellee to strike items from the record on appeal, although the court agreed to transmit the disputed items to the district court separately. Further, Rule 8006 only permits an appellee to file a statement of issues on appeal if he has filed a cross-appeal. Since no cross-appeal had been filed, the objection was denied.
SCHRANK (7/9/92) (Unpublished)
Abstention is appropriate in what is essentially an action grounded on
various state law fraud claims. Factors supporting abstention in this matter are: 1) the
effect or lack thereof on the efficient administration of the estate; 2) the extent to
which state law issues predominate over bankruptcy issues; 3) the difficulty or unsettled
nature of the applicable law; 4) the degree of relatedness or remoteness of the proceeding
to the main bankruptcy case; 5) the substance rather than the form of an asserted
"core" proceeding; 6) the feasibility of severing state law claims from core
bankruptcy matters to allow judgments to be entered in state court with enforcement left
to the bankruptcy court; 7) the existence of a right to a jury trial; 8) the presence in
the proceeding of a nondebtor party. Citing Republic Reader's Service, Inc. v.
Magazine Service Bureau, Inc. (In re Republic Reader's Service, Inc.), 81 B.R.
422, 429 (Bankr. S.D. Tex. 1987).
SEAWAY INTERNATIONAL TRANSPORT, INC. (3/8/06) (S.D. Florida) (341 B.R. 333)
Trustee sought to avoid certain alleged fraudulent transfers under 11 U.S.C. §§ 544 and 548. The corporate debtor made payments on the home mortgage of its sole principal and officer totaling some $14,000 over the four years prior to bankruptcy. The trustee contended that the debtor did not receive “reasonably equivalent value” for the transfers. The debtor’s principal argued that the payments were a portion of his compensation. In general, payments on behalf of a third party can be avoided in bankruptcy unless there was a clear benefit (or “value”) to the debtor. The principal took no salary or compensation from the debtor companies; the court concluded that the payments constituted a pattern of compensation and that the debtor received an “indirect benefit” from the payments.
SHAFER (6/9/08) (393 B.R. 655)
Chapter 13 plan confirmation. The debtors’ case was dismissed for lack of good faith under the totality-of-the-circumstances test. The debtors’ income, expenses, assets, occupation, a prior voluntary dismissal and refiling to avoid preference payments, and the likelihood that the debtors were abusing chapter 13 to parlay into an early retirement demonstrated an effort not to pay creditors.
(1/15/92) (137 B.R. 930)
The "applicable nonbankruptcy law" language of � 541(c)(2) includes ERISA's
anti-alienation provisions. Debtors' pension plan account is therefore excluded from the
Alternatively, � 815.18(31) of the Wisconsin statutes "relates to" ERISA
plans for purposes of 29 U.S.C. � 1144(a) but is saved from preemption pursuant to �
414(d) of ERISA [29 U.S.C. � 1144(d)]. Preempting Wis. Stat. � 815.18(31) would modify
or impair � 522(b) of the bankruptcy code in contravention of 29 U.S.C. � 1144(d).
Debtors' pension plan account is therefore exempted from the bankruptcy estate pursuant to
Wis. Stat. � 815.18(31). Alternatively, ERISA's anti-alienation provision constitutes "other federal
law" pursuant to 11 U.S.C. � 522(b)(2)(a). The debtors' pension plan account is
therefore exempted from the claim of the bankruptcy trustee pursuant to � 522(b)(2)(a).
(8/20/87) (78 B.R. 217)
Debtor's motion to avoid the lien of Bank of Holmen on certain office
equipment pursuant to 11 U.S.C. � 522(f) is denied. Bank legally took possession of
collateral upon default of debtor prior to bankruptcy filing. In so doing, bank's security
interest became "possessory." Bank's security interest, therefore, is no longer
voidable, due to "nonpossessory, nonpurchase-money security interest"
requirement of � 522(f).
SIMON BROTHERS/WALTER BOWE (11/25/91)
11 U.S.C. � 553 does not create an independent right of setoff; it limits the use of
setoff rights already available under state law. Before determining whether setoff was appropriate pursuant to � 553, state law right of
setoff must first be established. That issue is a proper one for determination by a state
court. Whether the language in defendant Agri-Supply's bylaws is sufficient to grant it a lien
under Wisconsin law is a proper matter for state court determination.
SINGER (3/15/12) (469 B.R. 293)
The debtors and their mortgage lender negotiated a forbearance agreement which contemplated that they would make reduced mortgage payments for a six-month period pending consideration of a loan modification. After the forbearance period, the lender denied the modification request and informed the debtors that they were obligated to pay the balance of the previously reduced payments. The debtors contended that those payments had been deferred to the end of the mortgage. The court found that a forbearance agreement is a contract and must be interpreted in accordance with its terms. As the agreement was drafted by the lender and was ambiguous as to the final treatment of the deferred payments, it would be construed in favor of the debtors. As such, they were entitled to treat the deferred payments as part of the unpaid balance due on the maturity date of the loan rather than as mortgage arrears which would need to be paid through the chapter 13 plan.
SLATON (4/6/12) (469 B.R. 814)
The plaintiffs alleged that the debtors fraudulently induced them to invest in an auction business. The parties had become friends after a chance meeting at a rummage sale, and their shared interests made them believe that they could operate a business together. The court found that the debtors did not make any false representations to the plaintiffs. The debtors used the plaintiffs’ investment in their partnership to pay down the secured debts of the business, but the plaintiffs were informed of this plan. There was no fiduciary relationship between the parties and the debtors’ conduct did not amount to a willful and malicious injury. However, the court found in the plaintiffs’ favor on their unjust enrichment claim, as the proceeds from the sale of the business real estate were the direct result of the plaintiffs’ investment in the business. Under the circumstances, it would be inequitable for the debtors to retain that benefit without payment to the plaintiffs. SMITHEY
(9/7/00) (Unpublished)
Creditor mailed claim prior
to claims bar date but it was not received until after the bar date expired.
The trustee objected and sought to classify the claim as a "tardily
filed claim" under 11 U.S.C. � 726(a)(3). The Court rejected use of
the "mailbox rule" and held that there was no issue as to receipt
of the claim. Since filing constitutes delivery and receipt by the proper
party, the proof of claim was filed after the bar date. The trustees
objection to the claim was sustained.
SPENCER (2/12/13) (unpublished)
After receiving a discharge, the Debtor sought to reopen her bankruptcy case in order to administer assets, amend her schedules, and have her case administered “on the basis of true facts.” She had been contesting the foreclosure of the mortgage on her home in Wood County Circuit Court for nearly four years, and had recently filed a Notice of Removal of that action to the United States District Court for the Western District of Wisconsin. The Debtor’s motion to reopen her bankruptcy case alleged that she expected a recovery against PNC Bank for fraud and violations of several state and federal laws related to the foreclosure proceeding. She believed that these assets should be made available to her creditors. Citing Redmond v. Fifth Third Bank, 624 F.3d 793 (7th Cir. 2010), the court held that the Debtor’s motion was untimely, that it appeared highly unlikely she was entitled to bankruptcy relief, and that either the state court or the district court were the appropriate fora for her action.
(6/30/89) (105 B.R. 476)
Parties sought Court determination regarding validity and extent of
judgment lien on nonexempt real estate of debtors who had received chapter 7 discharge.
Court holds that bankruptcy court discharge voided judgment against debtors. Further,
state court's subsequent order of satisfaction -- granted pursuant to Wisconsin Stat. �
806.19(4) providing for satisfaction of judgments upon showing of bankruptcy discharge --
voided judgment lien on nonexempt real estate. Judgment lien is voided pursuant to
Wisconsin Stat. � 806.21, which provides for voiding of lien upon satisfaction of
judgment. STANIFORTH (4/24/90) (116 B.R. 127)
Trustee's failure to timely object to debtor's claimed exemption cannot create an
exemption which would otherwise have no legal basis. [NOTE: But see Taylor v.
Freeland & Kronz, 118 L. Ed. 2d 280 (1992) -- trustee's failure to timely object
to debtor's claimed exemption prevented him from challenging the validity of the exemption
regardless of whether the debtor had a colorable statutory basis for claiming the
exemption.] Self-employed dentist's independent retirement accounts were exempt from creditors'
claims pursuant to Wis. Stat. � 815.18(31) -- the exemption provision for "interest
of any person in any employees' benefit plan."
STARFIRE INC. (5/2/11) (Unpublished)
The defendant appealed this case to the district court after this court determined that the debt owed to Starfire was nondischargeable. The district court then remanded this case to this court to make a finding on whether the defendant acted with the intent necessary to support defalcation under § 523(a)(4). On remand, this court found that the defendant’s conduct was “something more than negligence.” The defendant was an experienced and sophisticated contractor, who received payment on 42 jobs, yet failed to remit a significant portion of the proceeds to the subcontractor, Starfire, as required under Wis.Stat. § 779.02(5). Because Wisconsin’s theft by contractor creates an express trust, and the court concluded that the defendant possessed the requisite intent, Starfire’s claim was rendered nondischargeable under § 523(a)(4).
(6/10/93) (Unpublished)
Plaintiff insurance company's claim that $638.26 it paid for damages done to house of
its insured by debtor driving while intoxicated should be nondischargeable is dismissed.
Debtor's actions did not constitute "willful and malicious" injury pursuant to
11 U.S.C. � 523(a)(6) because he did not intentionally or knowingly damage the insured's
house. Drunk driving is not per se "willful and malicious." There may be
fact situations involving drunk driving so egregious as to constitute "willful and
malicious" injury, but this is not such a case. Agreeing with Cooper v.
Noller (In re Noller), 56 B.R. 36 (Bankr. E.D. Wis. 1985). Plaintiff's claim for nondischargeability pursuant to 11 U.S.C. � 523(a)(7) is likewise
dismissed. First-time offense under Wis. Stat. � 346.63 (driving while intoxicated) is
technically not a criminal act. State court judgment cannot therefore be found to be
"payable to or for the benefit of a government unit" as required by �
523(a)(7). 11 U.S.C. � 523(a)(9) is inapplicable because this case involved damage to property
rather than to a person.
STEVENS POINT ASSOCIATED (12/24/91)
Absent a reasonably clear manifestation to create a trust, no trust relationship existed
between the movant Manheim Auto Auctions and the debtor, a Wisconsin car dealership. Absent a reasonably clear manifestation by both parties of an intent to enter into a
security agreement, no security interest was given in cars transferred to debtor car
dealership for sale to third parties. Mere retention of possession of a vehicle's
certificate of title does not automatically result in a security interest attaching to the
vehicle. Movant Auto Auctions failed to show that either of two potentially applicable means of
perfecting their alleged security interest in vehicles transferred to debtor had been
implemented by them. Perfected security interest of floor-plan-financing bank therefore
took priority over any interest Auto Auctions might have retained in the vehicles.
(5/23/90) (116 B.R. 131)
Plaintiff Joan Stolp's motion for declaratory judgment excluding her
interest in debtor's (plaintiff's former husband) military pension from the bankruptcy
estate is granted. Any existing interest which the debtor had in that portion of his
pension was dissolved by the state court divorce decree which granted portion of pension
to debtor's wife. Decree entitled debtor's former wife to receive her portion of pension
benefits directly from the government. Former wife's share was thus not property of the
STONE (12/6/99) (243 B.R. 40)
The debtors brought an adversary proceeding to determine
whether the post-petition maintenance fees that accrued on the debtors' campsite
were dischargeable in their bankruptcy, and seeking sanctions against the
defendant for violating the automatic stay in attempting to collect a
debt. The court (Judge Martin) held that the 11 U.S.C. � 523(a)(16)
requirements for an exception to discharge had not been met because (1) the unit
is not a dwelling unit; (2) the debtor never physically occupied the unit; and
(3) the debtors never rented or received rent from the unit. The court
then, following the holding of the Seventh Circuit in In the Matter of
Rosteck, 899 F.2d 694 (7th Cir. 1990), held that the post-petition
maintenance fees were dischargeable in the debtors' bankruptcy because the debt
was for future assessments based on a pre-petition contract to pay, and the debt
arose pre-petition. The court refused to impose sanctions on the
defendants because if the defendants attempted to collect a debt from the
debtors they did so under a good faith belief, supported by case law, that the
debt was nondischargeable.
(11/8/94) (Unpublished)
In wife's action to have certain debts declared non-dischargeable
under 11 U.S.C. � 523(a)(5), the court determined that a portion of the debts which the
debtor was to have indemnified his former spouse from constituted obligations
"actually in the nature of" alimony, maintenance or support. The issue of
dischargeability under � 523(a)(5) is a matter of federal law, not state law. The court
found that it was not possible to consider the debtor's present financial condition or the
changes in circumstance of both parties since the time of the divorce. The purpose of the
section was to look at whether the obligation was intended as support at the time of the
divorce. As a result, the court found certain obligations to have been contemplated as
support, and others, including a debt to the wife's mother, to have been intended as
STRAIGHT ARROW CONSTRUCTION (3/13/08) (393 BR 652)
Trustee’s objection to claims. Debtor is a general contractor. Two subcontractors filed claims—“secured” by operation of Wisconsin’s theft by contractor statute. Wis. Stat. § 779.16. Wisconsin Dairies v. Citizens Bank & Trust controlled the outcome. 160 Wis. 2d 758 (Wis. 1991). The claims were secured only to the extent that the funds were traceable to specific construction projects on which the creditors worked, and only to the extent that funds from those projects were in the possession of the trustee. The remainder of the creditors’ claims were unsecured. SYVERSON (9/4/92) (Unpublished)
Chippewa County judgment docketed against property of debtors in Williams County, North
Dakota, within 90 days of debtors' bankruptcy filing constitutes a "transfer" of
property of the debtor for purposes of preference determination pursuant to 11 U.S.C. �
547(b). Docketing of judgment creates a lien under North Dakota law. "Transfer"
is broadly defined under 11 U.S.C. � 101(54); case precedent supports finding that a
docketing constitutes a "transfer" for preference purposes. Other elements of
preference are present here as well. Trustee did not waive his right to challenge creditor's lien by signing stipulation
which enabled Court to enter agreed order avoiding lien of creditor to extent of debtors'
allowed exemption in the property. Trustee correctly asserted that he did not raise the
preference issue at time of debtors' motion to avoid lien nor was he obligated to do so.
Trustee may therefore void the lien of creditor; creditor will share in any ultimate
(9/29/89) (106 B.R. 983)
Trustee's motion for turnover of property of the estate pursuant to 11
U.S.C. � 542(b) against bank which had issued letter of credit in favor of debtor is
denied. Agreement between debtor and bank called for bank to fund the unfunded portion of
a promissory note upon fulfillment of certain conditions precedent by the debtor. Although
agreement is found to constitute an executory contract pursuant to 11 U.S.C. � 365, it is
not assumable by the trustee due to the exception contained in 11 U.S.C. � 365(c)(2) --
the agreement constitutes "[a] contract to make a loan, or extend other debt
financing or financial accommodations, to or for the benefit of the debtor, or to issue a
security of the debtor."
TARBELL (4/16/10) (431 B.R. 826)
The chapter 13 debtor omitted the IRS as a creditor from his schedules. The creditor got no official notice of the filing before the claims bar date, but filed a late claim once the debtor discovered the omission. The chapter 13 trustee refused to pay the claim. The court held that while late-filed claims are generally not allowed in a chapter 13 case, there may be narrow circumstances where due process or equitable concerns require allowance. The time limits in the Bankruptcy Code implicitly assume that a creditor has been given notice in some form. Since the IRS had no notice before the bar date, its claim would be allowed.
TELEMARK MANAGEMENT CO., INC. (12/5/86) (77 B.R. 1022)
Motion requesting extension of time to file appeal from bankruptcy
court order -- filed more than 20 days after district court dismissed appeal as untimely
filed -- is itself untimely and is therefore denied.
(11/7/91) (Unpublished)
Combined language contained in document entitled "SearsCharge Plus Security
Agreement" and in sales receipts, both of which were signed by the debtor, was
sufficient to grant defendant Sears a security interest [pursuant to Wis. Stat. Ann. ��
409.105(m) and 409.203] in items of merchandise purchased by the debtors on credit. Description of merchandise contained on the sales receipts signed by the debtor
"reasonably identifies" the collateral for purposes of Wis. Stat. � 409.110. Conduct of defendant Sears did not constitute commercial unconscionability under
THOMPSON (2/1/88) (82 B.R. 985)
Debtors' motion to avoid liens pursuant to 11 U.S.C. � 522(f)(2) on
various farm tools and implements is granted. Farm implements of substantial value
constitute "tools" or "implements" of debtor-farmer. Bankruptcy code
provision allowing debtors to avoid nonpurchase money liens which impair exemptions does
not provide for unconstitutional taking of creditor's property without just compensation;
nor does it violate due process clause of Fifth Amendment.
THUL-THEIS (6/7/10) (431 B.R. 828)
The chapter 13 debtor omitted a creditor from her schedules. The creditor got no official notice of the filing before the claims bar date, but did have actual notice of the filing from the debtor. Notwithstanding this actual notice, the creditor filed a claim after the bar date. The chapter 13 trustee refused to pay the claim. The court held that generally, late-filed claims are not allowed in a chapter 13 case. While there may be narrow circumstances where due process or equitable concerns require allowance, those circumstances were not present here because the creditor had actual notice.
THULIS (6/4/12) (474 B.R. 668)
Chapter 7 trustee objected to bank’s secured claim on the grounds that its mortgage did not cover the specific parcel previously sold by the trustee. The bank contended that as a hypothetical subsequent purchaser under § 544(a)(3), the trustee would have had constructive notice of its claim. The bankruptcy court found that although Wisconsin law charges prospective purchasers with constructive notice of certain things that might be ascertained by a review of the land or an inquiry of those in possession, nothing about the parcel in question would provide notice of the bank’s mortgage. The mortgage was not in the property’s chain of title and Wisconsin’s doctrine of constructive notice would not require a prospective purchaser to make inquiries about an owner’s financing arrangements. The trustee’s objection was sustained, and the bank’s claim was allowed as unsecured. TOMAS-HAARSTICK (12/7/01) (Unpublished)
This case involves hypothetical discharge and its procedural requirements. Plaintiff filed an adversary complaint to determine whether a debt was dischargeable and the debtor answered. But the plaintiff filed the initial complaint thinking it was against debtor’s husband who has a similar first name as debtor. Plaintiff amended the complaint by adding allegations against debtor’s husband and objecting to the hypothetical discharge of his tortious debt. However, plaintiff did not seek the debtor’s or court’s consent before amending the complaint. In addition, the plaintiff did not name debtor’s spouse on the amended complaint. The time limit to object to debtor’s discharge had since passed. Debtor filed a motion to dismiss the adversary proceeding contending that any complaint seeking to deny debtor’s spouse’s hypothetical discharge is now time barred. Plaintiff responded by filing a motion to enlarge the time within which to bring the action under § 523(a)(6), which motion in itself is untimely but which was considered as a motion to further amend the complaint under Fed. R. Civ. P. 15(c). It was determined that the motion to amend the complaint to name debtor’s spouse as a defendant is granted TOZER (6/9/08) (392 BR 758)
Chapter 13 plan modification. The debtor’s ex-attorney sought to modify the chapter 13 plan to extend payments and pay attorney’s fees. In the Seventh Circuit, § 1329 imposes no threshold requirement of a change in financial circumstances. The attorney was the “holder of an allowed unsecured claim,” thus he could seek modification to “extend . . . time for such payments.” § 1329(a). Modification of the plan was approved. TRI-STATE HOMES, INC. (12/31/86) (Unpublished)
Application of debtor's attorney for allowance of fees and costs
totaling $62,988.25 as an administrative expense is denied. Debtor's chapter 11 plan was
confirmed on November 26, 1984. Case was converted to chapter 7 on March 21, 1986.
Debtor's assets were sold at auction on July 16, 1986; auction proceeds totaled
$296,718.50. All property sold at auction was subject to valid, unavoided security
interests. Security interests attached to proceeds of auction pursuant to 11 U.S.C. �
552(b). 11 U.S.C. �� 725 and 726 and bankruptcy rule 6007 specify how property of estate
is to be distributed. It is unlikely that there is any equity in remaining property above
claims of secured creditors. While applicant attorney may well have valid administrative
claim pursuant to 11 U.S.C. � 503, there are no assets available for distribution toward
such claims. Should unsecured assets later become available, they would be distributed in
accordance with 11 U.S.C. � 726. US BANK v. PLAINS MARKETING CANADA LP (8/24/11) (2011 WL 3793157)
The trustee brought an adversary proceeding against Plains Marketing Canada under § 547(b) to recover payments the debtor made to Plains for the delivery of gasoline. Plains argued that the payments fell within the safe harbor provision of § 546(e) because they constituted settlement payments pursuant to three forward contracts. The bankruptcy court found that two contracts qualified as “forward contracts” under § 101(25) because they matured more than two days after the contracts were entered into. The third contract did not meet this definition. Because payments related to the forward contracts were protected by § 546(e), the court granted Plains’s motion for summary judgment as to two of the contracts. Plains had also raised defenses under § 547(c)(2) and § 547(c)(4), but Plains failed to establish that the payments were made in the ordinary course of business or that new value had been given.
VANDERHAI (4/1511) (449 BR 359) The chapter 7 trustee objected to the debtor’s exemptions, arguing that the debtor could not claim an exemption in the portion of various assets which were technically owned by the debtor’s non-filing spouse. The debtor sought to exempt all of the equity in these assets notwithstanding the fact that half of the equity belonged to the spouse. The court noted that a debtor’s interest in property is defined by state law, and under Wisconsin marital property law both the debtor and the spouse have an “undivided one-half interest in marital property.” Under the bankruptcy code, both spouses’ interests in property become property of the estate. The court rejected the idea that the debtor could assert an exemption only as to the portion of the equity which he personally owned. Instead, because each spouse had an undivided interest in the whole and the assets could not be easily divided, it was reasonable to allow the debtor to claim an exemption in the whole up to the dollar limits afforded to one debtor under applicable law.
VANG (4/15/05) (324 B.R. 76) Debtor sought discharge of student loans. According to testimony at trial, the debtor was mildly mentally retarded and had difficulty speaking, reading, and writing the English language. In addition, he lived at or about the poverty level and cared for two preschool age sons, both of whom suffered from developmental delays. Accordingly, the Court discharged the debt as an "undue hardship."
VANGEN (11/23/05) (334 B.R. 241) The debtor placed some $136,000.00 into retirement-related annuities immediately prior to her bankruptcy. The debtor’s former husband and the bankruptcy trustee both objected to her exemption claims. They contended that her bankruptcy planning justified denial of her exemption under Wis. Stat. § 815.18(10), which provides that an exemption may be denied if the asset was procured, concealed, or transferred with the intention of defrauding creditors. The court overruled the objections, finding that the debtor’s conduct was permissible.
VAZQUEZ (3/3/05) (325 B.R. 30)
Trustee sought approval of settlement agreement with debtor. The primary creditor objected to the settlement and offered to “fund” ongoing litigation with the debtors. The trustee has the burden of demonstrating that a settlement proposal is both reasonable and in the best interests of the bankruptcy estate. The court must consider four factors when reviewing a proposed settlement: (1) probability of success in the litigation; (2) the difficulties, if any, to be encountered in collection; (3) the complexity of litigation and the expense, inconvenience, and delay associated with it; (4) the paramount interest of creditors and a proper deference to their reasonable views in the premises. The court found that despite the creditor’s promise to “fund” future litigation, all other circumstances supported approval of the settlement and the creditor’s perspective was unreasonable.
(12/23/93) (164 B.R. 308)
Bankruptcy court found that federal tax lien does not attach to items
claimed exempt by debtor under 26 U.S.C. � 6334(a). Exemption statutes are to be
liberally construed in favor of debtors. Enumerated items in � 6334(a) are not only
exempt from levy, but from reach of federal tax lien as well. 26 U.S.C. � 6331(b) defines
"levy" as "the power of distraint and seizure by any means."
District court reversed the bankruptcy court ruling and remanded for
further proceedings. The Seventh Circuit affirmed the district court's decision,
concluding that the tax lien did indeed attach to exempt property. VOSEPKA v. GEIGER (11/9/05) (Unpublished)
This court received a complaint objecting to the dischargeability of a debt on the last day to file such complaints. The filing fee accompanying the complaint was paid by the creditor’s personal check. Court staff returned the complaint and filing fee to the creditor under the belief that the fee could not be paid by personal check. However, only personal checks of debtors cannot be accepted. By the time the creditor re-submitted his complaint and filing fee, it was 10 days past the deadline for filing and the debtor objected to the complaint as untimely. The court found for the creditor, holding that there is no authority for disallowing personal checks of non-debtors, therefore, the filing fee and the complaint should have been accepted by the court. The creditor met the requirements for timely filing, and the complaint was allowed.
Debtors' motion to avoid lien on automobile, snowmobile and business inventory pursuant
to 11 U.S.C. � 522(f) is denied. General rule in this jurisdiction is that liens on
automobiles cannot be avoided. Citing In re Nowak, 48 B.R. 290 (W.D. Wis.
1984). Snowmobile does not constitute "tool of trade" for debtors' snowmobile
repair business. Evidence showed snowmobile racing was not bona fide business of debtors. Citing
In re Weinbrenner, 53 B.R. 571 (Bankr. W.D. Wis. 1985). Business inventory held for
sale does not constitute "tool of trade" of debtors. Such inventory is not
"tool" or "implement" within meaning commonly ascribed to those words.
Debtors may avoid liens on actual tools and implements used in their repair business. Debtor's wife is found to be engaged in debtors' business and can therefore exercise
lien avoidance pursuant to 11 U.S.C. � 522(f). Citing In re Flake, 33 B.R.
275 (Bankr. W.D. Wis. 1983)
WEDEWARD (9/29/04) (316 B.R. 705) Ex-husband brought adversary proceeding to establish nondischargeability of marital debts pursuant to section 523(a)(5). The Court, Judge Robert Martin, held that Matter of Woods, 561 F.2d 27, 29 (7th Cir. 1977) established that, while the nature of the obligation is ulitmately a bankruptcy court issue, if the intentions of the parties and the divorce court are clear, there is no need to consult state law to determine whether an obligation is in the nature of maintenance, alimony, or support or part of a property settlement. Nichols v. Nichols, 469 N.W. 2d 619, 625 (Wis. 1991) provides that there is nothing to prevent divorcing parties from specifically waiving maintenance and making up disparities in financial positions by assigning and assuming repsonsibility for marital debts, thereby keeping as part of support what otherwise might be characterized as a property settlement. WEIHERT v. JOHNSON (2/6/13) (489 B.R. 558) Teenage girl died in a rollover accident. The driver had been drinking, underage, at a party hosted by the debtor. Plaintiffs (the victim’s parents and her estate) brought claims of battery and sexual assault at the party, and wrongful death for the rollover accident. The plaintiffs sought to have these debts determined non-dischargeable as “willful and malicious injury.” The bankruptcy court held that the plaintiffs failed to prove that any battery and sexual assault occurred, given that the plaintiffs’ main witness was not credible and remaining evidence was negligible. The bankruptcy court also held that any social host liability the debtor may have had for the accident did not rise to the level of willful and malicious injury in this case. Under the standard of Jendusa-Nicolai v. Larsen, 677 F.3d 320, 322 (7th Cir. 2012), the plaintiffs failed to prove that the debtor desired to inflict the victim’s injuries or that he knew they were highly likely to result.
WEIHERT v. JOHNSON (2) (5/31/13) (493 B.R. 61) Plaintiffs objected to the bill of costs filed by the prevailing defendant, specifically to expert witness fees in the amount of $ 3,250 for the medical examiner. Under Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437 (1987), outside of court-appointed expert witnesses, an award of expert witness fees is limited to the amount in 28 U.S.C. § 1821 unless the parties have contracted otherwise or there is explicit statutory authority to the contrary. The plaintiffs argued that the expert witness fees for the medical examiner should be limited to the amounts set forth in § 1821. The defendant argued that the fees were authorized by Wisconsin Statutes Wisconsin Statutes §§ 59.36 and 59.38. The bankruptcy court held that rate setting is not the type of statutory authorization to which Crawford was referring. While these provisions authorized the medical examiner’s fees in the sense that they authorized how much he may charge for his services as a medical examiner, the Supreme Court in Crawford meant that there must be statutory authorization for the fees to be taxed as costs. Therefore, the defendant’s award of costs was limited to the amounts set forth in § 1821.
WELLS FARGO BANK v. TRANSCONTINENTAL (1/24/11) (Unpublished) The defendant removed the proceeding from state court on the grounds that the action was related to a bankruptcy proceeding in Texas, and requested that the matter be transferred to the Texas bankruptcy court. The plaintiff objected to the transfer request and moved to remand the matter back to state court. The court first ruled that the matter had been properly removed to the bankruptcy court rather than the district court for the district in which the civil action is pending. The court also rejected the idea that the court to which the action is removed must in all cases act as a “gatekeeper,” and instead adopted the rationale that a court may, in proper cases, transfer a removed case to another forum and allow that court to consider whether the matter should be remanded. In this case, transfer was the appropriate course of action, and the Texas bankruptcy court could consider whether the case should be remanded to state court.
WHITEFEATHER v. WIESE (9/8/10) (431 B.R. 456) Pro se chapter 7 debtors failed to appear at a pretrial conference or file the required pretrial statement in an adversary proceeding. The court entered a default. The plaintiffs in the proceeding brought a motion for default judgment, but failed to properly serve the debtors. The debtors failed to appear, and the judgment of default was granted. The debtors then retained counsel and sought to reopen their case to set aside the default judgment and entry of default. The court held that the default judgment was void, given the lack of notice to the debtors. But the court refused to remove the entry of default, since the debtors failed to show good cause. Pro se litigants were not, the court held, automatically entitled to more lenient treatment than other litigants.
(1/15/92) (137 B.R. 297)
State of Wisconsin may not effectively "opt out" of the federal lien avoidance
provision by defining its exemptions in such a way so as to exclude encumbered property. Proper inquiry under 11 U.S.C. � 522(f) is to inquire whether the debtor would be
entitled to a particular exemption under state law but for the existence of a lien.
Wisconsin exemption laws can be reconciled with the lien-avoidance provisions of the
bankruptcy code; federal law takes precedence over state law in cases involving those
lien-avoidance provisions.
(6/28/10) (431 B.R. 209)
The chapter 13 trustee objected to confirmation of the plan proposed by above-median income debtors. The debtors had proposed a plan of only 54 months in length. The trustee contended that the under § 325(b)(1)(B), the plan could only be confirmed if it met the terms of the “applicable commitment period,” which in the debtors’ case was 60 months. The debtors argued that the “projected disposable income” calculation and the applicable commitment period were not temporal requirements, but simply multipliers. Since their plan proposed to pay unsecured creditors the amount of money required by the projected disposable income calculation, they believed the temporal length of the plan did not matter. The Court ruled that while there is a logical basis for associating shorter plans with a greater likelihood of success, the statutory language dictated the result. The language of the statute is temporal in nature, and Congress clearly intended that above-median income debtors would be required to propose a 60-month plan term in the event of an objection by the trustee or unsecured creditors. The trustee’s objection was sustained.
WLODYGA (11/25/13) (Unpublished)
WOFFORD (5/23/11) (449 BR 362)
Chapter 13 debtors entered into loan modification agreement with creditor, and creditor moved for court approval of the agreement. The Court first noted various deficiencies in the loan modification documents. Under § 1322(b)(2), a chapter 13 debtor cannot unilaterally rewrite the terms of a home loan, although the creditor can agree to different treatment. Although that agreement could be reviewed (and approved) in the context of plan confirmation or as the resolution of an actual dispute, there is no statute or rule which requires judicial approval of the terms of such a loan modification. Even if it was construed to constitute a reaffirmation agreement, the debtors’ reaffirmation of a debt secured by real property does not require court approval. The creditor’s request essentially acted as a petition for an advisory opinion or comfort order. The bank’s motion was denied.
WOLLER (8/16/12) (483 B.R. 886)
The chapter 7 trustee objected to various exemptions, including a semi-tractor which the debtors claimed as “business property,” a bank account, revenues from the husband’s trucking business which had been claimed under an exemption for 75% of a debtor’s weekly “net income,” and an annuity purchased on the eve of bankruptcy with funds from the sale of real estate inherited from the wife’s father. The court found that while the semi-tractor was a “motor vehicle,” the debtors were still entitled to claim it as “business property” as it qualified as equipment within the meaning of that exemption. The trucking revenue also qualified as “net income” and the debtors’ exemption planning as to the purchase of the annuity did not rise to the level of “extrinsic” conduct which would justify the denial of the exemption. However, the debtors were not entitled to exempt a bank account used solely for the purpose of depositing the husband’s trucking receipts, as it was not used for the debtor’s “personal” use. The objection was granted in part and denied in part. WRIGHT
(12/1/95) (196 B.R. 97)
Dispute between two creditors over purchase money status of one
creditor's lien on a tractor. Creditor claimed to have perfected its PMSI by mailing the
UCC-1 financing statement to the appropriate office for filing. However, there was no
record of the financing statement having been filed, or even received by the filing
office. Creditor contended that the common law "presumption of receipt" mandated
that it be deemed to have filed the financing statement when it was mailed. Court held that the creditor had to demonstrate actual receipt of the
financing statement by the filing office. Although Wis. Stat. � 409.403(1) relieves the
creditor of any responsibility for the filing officer's failure to properly docket the
financing statement, the creditor still must prove that the item was actually presented
for filing. The "presumption of receipt" is insufficient to do so given the need
to prove not only the fact of receipt but the time of filing for priority purposes. The
court also rejected the creditor's argument that the second lienholder's claim to the
tractor should be subordinated under either unjust enrichment or the principles of
equitable subordination.
(1/24/92) (Unpublished)
Complete liquidation of partnership assets is not required in order for winding up and
termination of the partnership to occur. Debtors, members of a terminated family farm
partnership, each qualify as a "debtor" for purposes of Wisconsin's exemption
statute. Exemption rights are determined based on circumstances present at the time of filing of
the bankruptcy petition. Fact that debtors were engaged in farming at time of filing and
have expressed a desire to continue doing so is sufficient to entitle them to an exemption
in farm machinery.
WYSS (9/27/06) (355 B.R. 130)
Creditor sought determination that its claims against the debtors were nondischargeable. The creditor alleged that the debtors had misrepresented the existence of certain accounts receivable which served as the borrowing base of a line of credit. The court found that, under the facts of the case, the debtors’ loan obligation was not a factoring arrangement but a capital loan. The debtors did not “obtain” an extension of credit from the plaintiff through the use of the allegedly fraudulent borrowing base certificates. At most, the certificates induced the creditor to forbear collection activities, but it did not surrender or lose any legal rights as a result of its reliance on the documents. The debtors also did not engage in fraud in a fiduciary capacity or harm any property interest of the plaintiff. The plaintiff’s claim was discharged.
YERGES (12/17/13) (Unpublished)
YORK (7/20/09) (415 B.R. 377)
The chapter 13 trustee objected to the above-median income debtors’ 60-month plan. The plan proposed monthly payments of $750. Application of the means test resulted in negative disposable income, but Schedules I & J disclosed disposable income of $1,563.98. The chapter 13 trustee contended that the debtors should be required to commit all of the disposable income identified on Schedules I & J to a plan of less than 60 months, resulting in a 100% dividend to unsecured creditors. The Court overruled the objection, holding that § 1325(b)(4) does not permit the Court to approve a plan of less than 60 months for an above-median income debtor. The Court also rejected the chapter 13 trustee’s argument that the confirmed plan should be modified under § 1329 immediately following plan confirmation. The Court noted that § 1329 permitted modification, but that under the specific facts of the case, modification was not warranted. Specifically, the Court cited a total lack of any changed circumstances following confirmation and the lack of good faith inherent in attempting to circumvent the requirements of In re Mancl, 381 B.R. 537, 541 (W.D. Wis. 2008).
ZAJA (12/12/13) (Unpublished)
(9/29/95) (189 B.R. 732)
Bank objected to confirmation of chapter 13 plan where the debtors
proposed to pay the bank only what was owed on a mortgage loan on their home. The bank
contended that the home constituted collateral for a business note as well, and that the
home loan was secured by the guaranty of certain third parties. The court found that the
effect of the co-debtor stay of 11 U.S.C. � 1301 permitted the debtors to pay obligations
guaranteed by third parties under a chapter 13 plan; it was only if the plan did not
provide for full payment of the guaranteed obligation that the creditor would be permitted
to pursue the guarantor. Furthermore, given the bank's lack of documentation, the only secured
obligation was the home loan. The business debt was not secured by the home, as the
documents were ambiguous and those ambiguities would be construed against the bank as the
drafter of the documents. Accordingly, the bank's objections to confirmation were
overruled, and the plan was confirmed.
ZOGLMAN (12/5/86) (Unpublished)
Debtor's motion to dismiss plaintiff's Section 523 adversary
proceeding is denied for failure to timely file supportive legal memorandum.
ZOGLMAN (6/26/87) (78 B.R. 213)
Obligation to debtor's former wife, stemming from wife's payment of
tax assessment for which she and debtor were jointly liable, is excepted from discharge.
Former wife did not act as "volunteer" when she paid tax assessments; wife can
therefore invoke equitable doctrine of subrogation to assert nondischargeability claim
against debtor's bankruptcy estate. Persons who have interests of their own to protect are
not "volunteers" for subrogation purposes. Former wife is therefore subrogated
to the claim of the IRS. Since debtor's obligation to IRS would have been excepted from
discharge had it not been paid, debt owed to former wife stemming from that obligation is
excepted from discharge.