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Horizon Women's Care Professional LLC v. Judy Baack, Case No. 14-01074- HRT; Order entered April 17, 2015 (collateral estoppel, judicial estoppel, Rooker- Feldman doctrine).
Debtor filed an adversary complaint against Defendant alleging claims under 11 U.S.C. §§ 547 and 548 (preference and fraudulent transfer) as well as §§ 502 and 510 (disallowance and equitable subordination). Defendant moved for summary judgment, arguing Debtor's claims were barred by collateral estoppel, judicial estoppel, and the Rooker- Feldman doctrine. The Court denied summary judgment, holding collateral estoppel did not bar Debtor's claims because there was no final judgment in the state court, citing Rantz v. Kaufman, 109 P.3d 132, 141 (Colo. 2005) ("a judgment is not final for purposes of issue preclusion while an appeal is pending"). The Court also noted the elements of judicial estoppel differ slightly under Colorado and federal law because an "intentional effort to mislead the court" is an element of judicial estoppel under Colorado law, but the Tenth Circuit only requires "an appearance that either the federal or state court was misled." Eastman v. Union Pacific, 493 F.3d 1151, 1156 (10th Cir. 2007). The Court declined to apply judicial estoppel against the Debtor because there was no appearance that either court had been misled, and Debtor would not gain an unfair advantage over the opposing party if it were not estopped. Finally, the Court determined the Rooker-Feldman doctrine did not apply, observing it is unclear in the Tenth Circuit whether application of the doctrine requires a state court judgment to be final, citing Lambeth v. Miller, 363 Fed. Appx. 565, 567 (10th Cir. 2010) ("This court held in Guttman, 446 F.3d at 1031, that Rooker- Feldman only applies where there is a final judgment. But see Tal v. Hogan, 453 F.3d 1244 (10th Cir. 2006) . . . holding that the state court judgment need not be final for Rooker- Feldman to apply")).
Posted: 5/7/2015 8:07:24 AM
In re Smart, Case No. 14-14147 ABC, Docket #66 (Bankr.D.Colo. January 27, 2015) 11 U.S.C. §1325(a)(5)(C); surrender of real property and post-petition homeowner association assessments.
Chapter 13 debtors proposed a plan which surrendered real property to the creditors holding an interest in the real property, including a homeowners' association ("HOA"). The HOA objected to confirmation of debtors' Chapter 13 plan because the debtors did not propose to continue making the ongoing postpetition monthly homeowners dues. The HOA contended debtors were obligated to do so as long as debtors owned the real property. The HOA argued that the postpetition assessments are a personal obligation of the debtors, a covenant running with the land, and nondischargeable.
This Court overruled the HOA's objection concluding that surrendering the real property to the creditors holding an interest in the real property, including the HOA, was among the treatment options available to debtors under section 1325(a)(5). Having so provided for the secured creditors and there being no other statutory impediment to confirmation cited by the HOA or found by the court, Judge Campbell confirmed debtors' plan. The Court also observed that it was premature to consider whether any unpaid postpetition homeowners assessments were nondischargeable.
Posted: 3/19/2015 8:38:43 AM
Anstine v. Barclays Bank Delaware (In re Strauss), Case No. 12-01801- HRT; Order entered March 16, 2015 (Avoidance of Transfer under 11 U.S.C. §§ 547 and 548).
Chapter 7 Trustee ("Trustee") filed an adversary complaint against Barclays Bank Delaware dba Barclaycard US (the "Bank"), seeking to avoid transfers made by the Debtor to the Bank in the course of paying the Debtor's wife's credit card debt to the Bank in the two years pre-petition. Both parties moved for summary judgment. The Trustee argued that, because the Debtor's wife did not work outside the home, the Debtor's deposit of his paycheck into a joint account, and the Debtor's payment of the wife's credit card from that joint account, were either preferential transfers or constituted a fraudulent conveyance to the Bank. The Bank asserted that, as a matter of law, since both parents have a duty to support their children, the Debtor received a direct benefit from the transfers because the funds were used to pay his ordinary and reasonable living expenses and that of his family, and the transfers also satisfied his legal obligation to his dependents. The Court granted summary judgment to the Bank as to the preference action, holding that the Bank had an ordinary course of business and new value defense to the § 547 claim; and, as to the fraudulent transfer action, the Court determined that the Debtor had received reasonably equivalent value under § 548 in exchange for his payments to the Bank. The Court noted that in this case, the Trustee had not provided any evidence of fraud based on the Debtor's payment of the wife's credit card debt, where the credit card statements showed that a large portion of the charges incurred were made to support the couple's three children.
Posted: 3/17/2015 2:11:57 PM
Wallis v. I.R.S.; Case No. 14-1426 HRT; Order entered November 6, 2014 (11 U.S.C. § 1328(a); 26 U.S.C. § 7433; Rule 12(b)(6)).
The Debtor filed his chapter 13 case in 2008. He completed payments and received a discharge in 2013. He filed this adversary proceeding against the IRS seeking a declaration that his 2005 income tax liability was discharged. He also sought damages on account of IRS's alleged violations of the automatic stay and the discharge injunction. The IRS moved to dismiss under Rule 12(b)(6). The IRS claim originally included liability for 2005 and 2007 taxes in excess of $50,000.00. The Debtor's confirmed plan provided for full payment of the IRS claim. After the Debtor filed an amended 2005 tax return, he objected to the IRS claim. The objection stated that the Debtor had filed an amended tax return and invited the IRS to amend its claim to reflect the correct amount of the 2005 income tax liability. The IRS did not respond and the claim objection was granted, disallowing the IRS claim. IRS subsequently amended its claim but the amended claim only reflected the 2007 tax liability and not the 2005 tax debt. The debtor modified his plan to pay the amended IRS claim in full â€“ approximately $23,000.00. Later the IRS filed its final amended claim that reduced the 2007 liability claim to approximately $13,000.00 but still failed to show the 2005 debt. The IRS's amended claim was paid in full but the Debtor made no provision in his plan for payment of the 2005 tax debt. The Court dismissed the claims for violation of the automatic stay and discharge injunction. The count for violation of the stay was deficient because factual allegations did not meet the requirements of notice pleading under Rule 8. The Court dismissed the count alleging violation of the discharge injunction because the exclusive remedy against the IRS for willful violation of the discharge injunction is a damages claim under 26 U.S.C. § 7433(e) and the Debtor failed to allege exhaustion of administrative remedies which is a necessary requirement for recovery of damages. The Court allowed the case to go forward with respect to the declaratory judgment count. As a general matter, § 1328(a) operates to discharge any debt that is either provided for under the plan or disallowed under § 502. The debt for 2005 income tax liability was not provided for under the plan but the complaint alleges that the IRS claim was disallowed. That allegation was sufficient to defeat the IRS Rule 12(b)(6) motion with respect to that count. The ultimate issue in the case will likely focus on whether granting a claim objection by default that does not allege a substantive § 502(b) ground for disallowance is a disallowance under § 502 as required for discharge under § 1328(a).
Posted: 12/24/2014 3:42:01 PM
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