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Midwest Motor Supply Co., Inc. v. Jeffrey A. Hruby (In re Hruby); Case No. 14-11849 HRT; Order entered May 16, 2014, (§ 362(d)(1) cause to continue pre-petition litigation).
Movant, based in Ohio, employed Debtor as a salesman to service accounts primarily located in Colorado. Following the Debtor's resignation, Movant sued the Debtor in Ohio seeking breach of contract damages and injunctive relief. After commencement of Debtor's chapter 7 case, Movant sought relief from stay to continue that pre-petition litigation with respect to the injunctive relief. In cases of this type, Bankruptcy courts in the 10th Circuit frequently look to the Curtis factors, In re Curtis, 40 B.R. 795, 799-800 (Bankr. D. Utah, 1984), for considerations relevant to a finding of cause under § 362(d)(1). A factor that does not appear on the Curtis list, and which is frequently considered by courts outside of the 10th Circuit, is the likelihood the movant will prevail on the merits of the litigation. In In re Gindi, 642 F3d 865 (10th Cir. 2011), the movant sought relief from the automatic stay for cause under § 362(d)(1) in order to pursue a state court appeal. The 10th Circuit held "that the bankruptcy court should have lifted the stay under § 362(d)(1) only if [the movant] showed that his appeal was likely to succeed," Id. at 873, and discussed the likelihood of success on the merits in cases of this type. In light of Gindi, the Court considered whether it was necessary to address likelihood of success on the merits in this case and determined that it was. The Court determined that Movant was likely to succeed on 2 of its 3 injunctive relief claims and lifted the stay as to those 2 claims.
Posted: 7/10/2014 8:24:27 AM
In re Fogel, Case No. 10-38010 ABC, Docket #66, (Bankr. D. Colo. June 20, 2014) (Notice of Appeal filed 7/1/14 at Docket #69); Fed.R.Bankr.P. 1016
The wife of a deceased Chapter 13 debtor, the personal representative of the debtor's probate estate ("PR"), moved the Court to reconsider its order published at In re Fogel, 507 B.R. 734 (Bankr. D.Colo. 2014). The order denied the PR's request to waive the requirement that the debtor complete a course in personal financial management because of his death. The order also dismissed the deceased debtor's Chapter 13 case relying, in part, on Fed.R.Bankr.P. 1016. The PR urged the court to consider her interests and the interests of her children as among the interests referred to in Fed.R.Bankr.P. 1016. The Court denied the PR's motion to set aside the dismissal order concluding again that dismissal was the appropriate course in the case before it and that the PR is not entitled to obtain and receive the benefit of a discharge in a bankruptcy case which she did not file
Posted: 7/3/2014 8:12:36 AM
In re Lopez, Case No. 13-22220- HRT, Chapter 13; Order entered July 1, 2014 (Application of 11 U.S.C. § 506(a)(1) and 1322(b)(2) to the Colorado Common Interest Ownership Act, Colo. Rev. Stat. § 38-33.3-316 (the "Act")).
A condominium owners association ("COA") filed an objection to the Debtor's Chapter 13 plan that proposed to pay the COA six months of assessments under the Act and "strip off" the remaining past due assessments under § 506(a)(1), where the parties agreed that the Debtor's primary residence was valued at less than the first mortgage on the residence. The COA argued that part of its lien for assessments was secured due to the priority given the six months of assessments under the Act, and that, pursuant to § 1322(b)(2) and Nobelman v. American Sav. Bank, 508 U.S. 324(1993), its lien could not be stripped off in a Chapter 13 Plan. Debtor contended that under the Act, the COA had a super priority lien over the first mortgage holder's otherwise senior deed of trust in the event of a foreclosure, but that by the terms of the Act, the lien was limited to the assessments accruing within six months of the initiation of foreclosure proceedings. The Debtor argued that the remainder of the COA's lien could be stripped off in the Chapter 13 Plan under § 506(a)(1) and (d). The Court held in Debtor's favor, finding that under the plain terms of the Act, the COA's lien was a statutory lien, and not a "security interest" as defined in the Bankruptcy Code, the Act, or the COA Declarations. Because the COA's lien was not a security interest, it was not subject to the anti-modification clause of § 1322(b)(2), and was subject to 506(d), making the unsecured portion of the COA's lien void upon completion of the Chapter 13 Plan. The Court noted that Debtor's obligation to pay post-petition assessments was unaffected by the Court's order.
Posted: 7/3/2014 8:03:36 AM
In re Zachary Mason, Case No. 12-26209 ABC, 11 U.S.C. §§ 362(a)(1), 524(a)(2)
The Court denied, in part, Debtor's motion for sanctions based on creditor's post-petition application in state court for judgment for attorneys fees incurred in post-petition judicial foreclosure. Creditor's right to recover the attorneys fees was part of its pre-petition claim, and although judicial proceedings against the Debtor to collect such claim were no longer stayed by Section 362(a)(1) after Debtor's discharge entered, creditor's actions may have violated the discharge injunction of Section 524(a)(2), depending on outcome of a pending dischargeability adversary proceeding. The matter of violation of the discharge injunction was consolidated with the trial of the adversary proceeding.
Posted: 5/5/2014 7:44:55 AM
Lofstedt v. Kendall (In re Kendall), Adv. Proc. No. 10-01710 MER; Order entered April 25, 2014 (Fed. R. Bankr. P. 8005 - Stay Pending Appeal)
Following a trial on the merits, the Court entered an order and judgment in favor of the Chapter 7 trustee and against the defendants avoiding three fraudulent conveyances. The defendants appealed the matter to the United States Bankruptcy Appellate Panel of the Tenth Circuit ("BAP"), and obtained a stay pending appeal from this Court pursuant to Fed. R. Bankr. P. 8005. Later, the BAP issued a written opinion affirming the Court's order and judgment, and issued the mandate. Defendants filed a subsequent appeal to the Tenth Circuit, and that appeal is still pending. As a matter of first impression in this district, the Court examined whether the stay pending appeal imposed by this Court under Rule 8005 terminated at the conclusion of an appeal to the BAP, or whether the stay continues through the entire appeal process, including a subsequent appeal from the BAP to the United States Court of Appeals for the Tenth Circuit. While the Court agreed Rule 8005 is a flexible tool for a bankruptcy court to determine whether a stay pending appeal is appropriate given the facts of a specific case, the Court found a Rule 8005 stay should not continue through a subsequent appeal of a BAP or district court judgment to the Tenth Circuit. Ultimately, the Court held its stay pending appeal under Rule 8005 terminated at the conclusion of the BAP appeal.
Posted: 4/29/2014 9:08:13 AM
In re Fogel, Case No. 10-38010 ABC, Docket #58, (Bankr. D. Colo. April 1, 2014); Fed.R.Bankr.P. 1016
The Chapter 13 debtor died within a month of confirming his plan. The debtor's widow, who was not a debtor in the case, made the payments under the plan to the Chapter 13 trustee. Three (3) years later, upon completion of those payments, an attorney entered an appearance, purportedly on behalf of the deceased debtor, and moved to waive the requirements that debtor: (1) complete the course in personal financial management; and (2) file a certificate to obtain a discharge, because debtor had died. Upon that record, and in light of Fed.R.Bankr.P. 1016, the Court dismissed this case concluding that the non-debtor widow, as either personal representative of the deceased debtor's probate estate, or as a co-obligor on any of her husband's debts, could not achieve the benefits of the stay and the discharge without filing a bankruptcy case.
Posted: 4/8/2014 2:14:44 PM
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
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