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Horizon Womens Care Professional LLC; Case No. 13-28436 HRT; Order entered February 14, 2014 (relief from stay under § 362(d) to continue state court appeal).
Movant is the appellant in a state court appeal against the Debtor where she appeals a judgment the Debtor obtained in pre-petition state court litigation. In this Court, Movant seeks a declaration that the automatic stay is inapplicable to the pending appeal or, alternatively, an order lifting the automatic stay. Based on TW Telecom Holdings, Inc. v. Carolina Internet, LTD, 661 F.3d 495 (10th Cir. 2011), because the original suit was filed by the Debtor against the Movant, the court determined that the pending appeal does not constitute an action against the Debtor that is stayed under 11 U.S.C. § 362(a). As to the Movant's alternative prayer for relief from the automatic stay, Debtor took the position that the Court should deny relief from stay because this Court could decide the issues that are on appeal in the process of considering an adversary proceeding Debtor filed against the Movant. The Court rejected the Debtor's position because federal bankruptcy jurisdiction does not permit the Court to act in the role of an appellate court with respect to the state court judgment. Moreover, the Court's analysis of the Curtis factors, In re Curtis, 40 B.R. 795 (Bankr. D. Utah 1984), showed ample cause to lift the stay under § 362(d)(1).
Posted: 3/6/2014 7:46:05 AM
In re John Gazzo (Gasso v. Ruff and Merrick), Bankruptcy Case No. 12-33683-SBB, Adversary Proceeding No. 13-01356-SBB.
Debtor/Plaintiff initiated an adversary proceeding against his former spouse and her counsel for violating the automatic stay by continuing on with a domestic court hearing the day after the Debtor filed for bankruptcy relief and seeking an order from the domestic court against the Debtor post-petition. Defendants argued that the domestic court hearing and the resulting order did not violate the automatic stay because they fell under exceptions from the stay under 11 U.S.C. §§ 362(b)(1) and 362(b)(2)(A)(ii), respectively. Specifically, Defendants argued that the domestic court hearing was a hearing for criminal contempt of court and the resulting order was a modification of an order of domestic support obligation and they were both, thus, excepted from the automatic stay.
The Court however found that the nature of the domestic court hearing was not criminal nor was the resulting order a modification of a domestic support obligation, and thus was not excepted from the automatic stay. Rather the ultimate goal of the hearing was to enforce the terms of a divorce decree and otherwise compel the Debtor to pay on a debt. Additionally, the Court found that the order entered by the domestic court was not an order modifying a domestic support obligation but an award of costs and therefore was not excepted from the broad reach of the automatic stay.
The Court treated the Defendants' Motion to Dismiss as a Motion for Summary Judgment under FED. R. CIV. P. 12(d) and denied relief to the Defendants. Because the Defendants knew of the Debtor's bankruptcy and acted in a deliberate manner, the Court found that the Debtor was entitled to an award of actual damages. Additionally, the Court concluded that because the Defendants acted with a reckless disregard of the Debtor's bankruptcy filing, punitive damages may be appropriate. The Court instructed the Debtor to file a separate application/motion for damages.
Posted: 2/10/2014 8:03:25 AM
In re Conley/Carroll, Case No. 10-12949 ABC, Docket No. 91 (Bankr.D.Colo. January 14, 2014); 11 U.S.C. §§ 1327 and 1329.
Debtors proposed a postconfirmation modified plan to surrender a vehicle to a lender whose secured claim had been determined under section 506 and provided for in a certain amount in Debtors' confirmed plan. Debtors further proposed to recalculate the secured creditor's allowed secured claim after taking into account the amount the secured creditor would recover upon liquidation of the vehicle. The Court denied Debtors' request to approve such a modification citing to its prior opinions which denied approval of similar postconfirmation modifications. In re Knapp, Case No. 08-24134 ABC, Docket #51 (July 5, 2013), In re Rentie, Case No. 10-18997 ABC, Docket #66 (August 8, 2013), and In re Rutt, 07-13448 ABC, Docket #76 (September 10, 2010).
In response, Debtors filed another motion to modify wherein they proposed again to bifurcate the secured claim of the same vehicle lender. Debtors argued that the secured creditor had filed an amended proof of claim in which it recalculated the amount of its claim and asserted a wholly unsecured claim after taking into account the amount it had received upon liquidation of the vehicle. The Debtors proposed to limit the payment to the secured creditor to the total of the amount the creditor had received upon liquidation of the collateral plus what Debtors had paid the creditor through the confirmed plan. That aggregate amount was less than the allowed secured claim provided for by the Debtors' confirmed plan. The Court again denied Debtors' motion holding Debtors were bound to their confirmed plan and that section 1329 of the Code would not permit the rebifurcation of the secured creditorrÃ¢Â€s allowed secured claim
Posted: 1/23/2014 9:22:19 AM
In re: Local Service Corporation, Bankruptcy Case No 08-15543 EEB, Adversary Proceeding No 12-1532 EEB.
The Bank in this adversary had properly recorded a transcript of judgment against the Debtor pre-petition in a particular county. Section 13-52-102(1) of the Colorado Revised Statutes provides that judgment liens attach to property "owned by such judgment debtor or which such judgment debtor may afterwards acquire in such county, until such lien expires." In another adversary proceeding, the Trustee acquired real property for the estate in this same county by means of a default judgment against an entity related to the Debtor under an alter ego theory. The Bank then asserted that its judgment lien attached to this "after-acquired" property, even though the Debtor's estate had obtained the property post-petition. The Trustee argued that § 362(a)(4) prevented the attachment of this post-petition lien. The Court acknowledged that, if § 362(a)(4) could be read so broadly as to prevent all post-petition liens, then it would render § 552(a) superfluous. Section 552(a) cuts off the operation of "after acquired" property clauses post-petition, but it does so expressly only in the context of consensual liens. Ordinarily, the principle of expressio unius est exclusio alterius would cause the Court to infer from Congress' silence that "after-acquired" involuntary liens are not cut off by § 552(a). But the Court held that general rules of statutory construction are always subordinate to the primary rule that legislative intent should govern. One of the overarching purposes of the automatic stay is to preserve the status of the creditors as they existed on the petition date, not allowing some creditors to continue to improve their positions. Moreover, other provisions of § 362 ((Ã‚ 362(b)(9) and (18)) would be rendered superfluous if the stay did not prevent the attachment of involuntary liens post-petition. Thus, with great reluctance, the Court concluded that the omission of involuntary liens from § 552(a) was likely Congressional oversight and, in keeping with the overall purposes of the Code, the Court held that the general provision of § 362(a)(4) prevented the attachment of the Bank's post-petition lien on the property.
Posted: 1/14/2014 8:01:02 AM
Blackwell Oil Co., Inc., v. Potts, Case No. 12-23027- HRT; Adversary Proceeding No. 11- 1592, Order entered November 14, 2013 (Denial of discharge under § 727(a)(5))
Creditor moved to deny Debtor's discharge under 11 U.S.C. §§ 727(a)(3), (a)(4)(A), (a)(4)(D), and (a)(5). The Court granted the Creditor's complaint for denial of discharge under § 727(a)(5) because Debtor failed to explain satisfactorily a loss or deficiency of assets; namely, the value of Debtor's 100% interest in a corporation. The Creditor showed the corporation had over $700,000 in unexplained cash losses for several years prior to the filing of Debtor's Chapter 7 bankruptcy petition, and Debtor then transferred the assets of the corporation for significantly less than their value prior to filing for bankruptcy. The Court concluded that the dissipation of assets, combined with the transfer, was not too remote in time to be considered under § 727(a)(5), citing, in part, In re Lindemann, 375 B.R. 450 (Bankr. N.D. Ill. 2007). Because the Debtor failed to satisfactorily explain the loss of assets, the Court denied his discharge under
Posted: 12/11/2013 8:04:21 AM
In re Kurtz, No. 11-35725 ABC (Bankr. D.Colo. November 26, 2013) ECF#71
Debtor, joined in by Douglas Kiel, Chapter 13 Trustee, moved to reconsider the Court's order denying a postconfirmation motion to modify his confirmed Chapter 13 Plan. Debtor proposed in his modified plan to surrender his home and discharge any deficiency balance owed to the first mortgage holder. The Court denied Debtors' motion to reconsider holding that: (1) the Debtor is bound to the provisions of his confirmed plan; (2) section 1329 does not contemplate the bifurcation of a secured claim not subject to bifurcation at confirmation; (3) Debtors could not seek to discharge any deficiency because the claim of the first mortgage holder was one excepted from discharge by section 1328(a)(1).
Posted: 12/2/2013 8:35:05 AM
In re Calderon, ___ B.R. ___ (Bankr. D.Colo. 2013) (Bankr. Case No. 12-23843-SBB, issued October 23, 2013)
The debtor used tools and equipment owned by him in his personal capacity in conducting his masonry business through a wholly-owned corporation. The trustee contended that debtor was not entitled to tools of the trade exemptions under Colo. Rev. Stat. § 13-54-102(1)(i) because the tools and equipment at issue were used and kept not by the debtor, but by his legally distinct corporation. The Court concluded that the mere creation of a separate legal entity does not render a debtor's claim of exemption in his tools and equipment to be improper. The Court held that the focus of the inquiry is on ownership and the nature of the use and keeping of the tools and/or equipment. The Court set forth a nonexclusive five-factor test to help determine whether under Colo. Rev. Stat. § 13-54-102(1)(i), tools and equipment are "used and kept for the purpose of carrying on any gainful occupation." Based on the parties' stipulations, the Court determined that the debtor was the proper entity who owned, maintained, used and kept the tools and equipment related to his masonry business. The Court further concluded that the tools and equipment were integral to the debtor's masonry business and to his fresh financial start. Consequently, the Court denied the trustee's objection to the debtor's claim of exemptions.
Posted: 11/20/2013 2:12:24 PM
In re: Soles, Bankruptcy Case No. 12-32042 EEB.
The chapter 7 trustee objected to debtors' claim of homestead exemption for a vacant lot adjacent to the lot on which their house was situated. Debtors owned the vacant lot jointly with their neighbor. Trustee argued that the vacant lot was not "occupied as a home" by the debtors for purposes of the homestead exemption statute, Colo. Rev. Stat. § 38-41-201(1)(a). The Court overruled the trustee's objection, emphasizing that exemption statute specifically allows a homestead to consist of multiple lots. The statute does not require that a homestead consist of only one parcel or legal description, that all lots be purchased at the same time, or that a house touch every lot. Further, there was no evidence that debtors had used the vacant lot as anything other than as part of their residence. Accordingly, the Court concluded debtors were entitled to claim a homestead exemption for both lots.
Posted: 9/20/2013 11:45:56 AM
In re Lisa L. Spence, Bankruptcy Case No. 12-23626-SBB.
After the Debtor voluntarily converted her case from Chapter 7 to Chapter 13, counsel for the former Chapter 7 Trustee filed a fee application for an administrative claim of attorney's fees and costs incurred during Debtor's Chapter 7 case. The Debtor objected to the allowance of the fee application arguing that (1) the bankruptcy code does not confer standing upon counsel of Chapter 7 trustees to seek administrative claims after the case converts from Chapter 7 to Chapter 13; (2) the work performed by counsel for the Chapter 7 Trustee in this case lacked substantial justification and was not necessary or likely to benefit the Debtor's estate; and (3) even if the Court finds that counsel is entitled to an administrative claim, attorney fees for counsel of Chapter 7 trustees are limited to a percentage of the monies actually disbursed by the trustee pursuant to 11 U.S.C. § 326(a).
The Court relied upon the plain and logical reading of 11 U.S.C. §§ 1322(a)(2), 507(a)(1)(c), 503(b)(2) and 330(1)(a) to conclude that the statutory scheme provided therein authorizes bankruptcy courts to grant administrative claims for work performed by counsel for the Chapter 7 trustees during the Chapter 7 case. The Court also concluded that while conversion of a case from Chapter 7 to Chapter 13 terminates the Chapter 7 trustee and his or her counsel from the case, it does not bar standing of the trustee or counsel from seeking an administrative claim for attorney's fees and costs for work performed and services rendered during the Chapter 7 case. Further, the Court found that based on the facts of this case, work performed by counsel of the Chapter 7 Trustee was not only justified in light of Chapter 7 trustees' statutory and common law fiduciary obligations to investigate, examine, evaluate and pursue debtors' interest in non-exempt property for the benefit of the estate, but also that the hourly rates charged and time spent by counsel for the Chapter 7 Trustee in this case were reasonable and necessary under 11 U.S.C. § 330. Finally, the Court concluded that while 11 U.S.C. § 326(a) provides certain statutory limitations on compensation of trustees in Chapter 7 or 11 cases, the limitation simply does not apply to counsel for trustees. The Court made adjustments to counsel's fee application and allowed her a claim for fees and costs limited to work performed and services rendered post-petition but pre-conversion.
Posted: 9/12/2013 9:36:42 AM
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