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Opinions

The Western District of Wisconsin offers a database of opinions for the years 1986 to present, listed by year and judge. For a more detailed search, enter a keyword, statute, rule or case number in the search box above.

Opinions are also available on the Government Printing Office website for Appellate, District and Bankrupty cases. The content of this collection dates back to April 2004, though searchable electronic holdings for some courts may be incomplete for this earlier time period.

For a direct link to the Western Wisconsin Bankruptcy Court on-line opinions, visit this link.

Available Decisions:

  • Chief Judge Catherine J. Furay--2013-present
  • Judge William V. Altenberger--2016-present
  • Judge Brett H. Ludwig--2017-present
  • Judge Robert D. Martin (retired)--1990-2016
  • Judge Thomas S. Utschig (retired)--1986-2012

Judge Brett H. Ludwig

Case Number 1-17-13506-bhl

The chapter 13 trustee objected to confirmation of the debtor's plan on several grounds, including the debtor's ineligibility to be a chapter 13 debtor because she exceeded the debt limits established by section 109(e).  The debtor had scheduled over $870,000 in noncontingent, liquidated, unsecured debt, of which approximately $700,000 was attributable to student loan obligations.  The debtor argued it would be in the best interests of the creditors to allow her to remain in chapter 13, and urged the court to exclude her student loan debts from the total unsecured debt limits of section 109(e).  The court rejected the debtor's arguments, finding the plain terms of section 109(e) precluded a person who was ineligible to be a chapter 13 debtor from continuing in a chapter 13 case.   Because the debtor would not be able to cure her ineligibility to be a chapter 13 debtor, she would never be able to propose a plan that complied with Title 11 or section 1325(a)(1).  The court therefore denied confirmation of the plan and stayed dismissal of the case in order to afford the debtor an opportunity to convert to chapter 7 or chapter 11.

 

Chief Judge Catherine J. Furay

Bankr. Case No. 17-14180-13

Bankr. Case No. 16-12372-7

Case summary:

Debtor filed a motion for sanctions against University of Wisconsin-Stout for violating the final discharge order in her chapter 7. Debtor had enrolled in Stout in 2008 and signed a Payment Plan which allowed Debtor to register for classes and defer full payment of her tuition. Debtor took classes and qualified for a degree, but never paid her tuition. She subsequently filed for a chapter 7 and received a discharge. The issue before this Court was whether the unpaid tuition constituted a “loan” under 11 U.S.C. § 523(a)(8). The Court determined the Payment Plan was a loan. The Court looked to the common law definition of a loan, which is (1) a contract, whereby (2) one party transfers a defined quantity of money, goods, or services, to another, and (3) the other party agrees to pay for the sum or items transferred at a later date. Additionally, the Court dismissed the notion that a formal exchange of money is required to constitute a loan. Although money never changed hands between Debtor and Stout, the transaction was clearly understood to be a student loan, so the motion for sanctions was denied and the loan was deemed nondischargeable.

Code references:
11 U.S.C. § 523(a)(8) -- Nondischargeability - student loans
20 U.S.C. § 1087II -- Cost of attendance
26 U.S.C. § 221 -- Interest on education loans

Key terms:
DEFERRED PAYMENT PLAN
DISCHARGEABILITY
EDUCATIONAL EXPENSES
SANCTIONS
STUDENT LOAN
 

Bankr. Case No. 17-12413-13

Case summary:

Creditor Dells Land & Cattle Company, LLC ("DLCC"), filed an objection to Debtor's plan claiming that confirmation should be denied because the Plan modified the rights of claimholders whose interest was secured by a principal residence in violation of section 1322(b). The property at issue was a duplex, where Debtors occupied one unit and rented out the other unit. The Plan provided payment of $120,000 plus interest and a final balloon payment to DLCC. The Court addressed whether DLCC's claim could be modified through the Plan and whether the Plan was feasible. The Court held that the anti-modification provision did not apply, reasoning section 1322(b) controls only property that is exclusively a debtor's principal residence and not that merely includes or contains a principal residence. The Court noted that even if a balancing test was used under section 1322(b), the property would still be characterized as commercial. Debtors formed an LLC with the sole purpose of starting a commercial housing rental service at the time they acquired the duplex. Still, the Plan could not be confirmed because it was not feasible. Debtors had no room in their budget for savings and did not provide evidence of their ability to make the end-of-plan balloon payment.

Code references:
11 U.S.C. § 1322(b)(2) -- Modification of rights of secured claimants.
11 U.S.C. § 1325 -- Confirmation of plan

Key terms:
BALLOON PAYMENT
FEASIBILITY
MIXED PROPERTY
PRINCIPAL RESIDENCE

Adv. No. 17-46, Bankr. Case No. 17-10690-7

Case summary:

Defendant was a contractor who was hired to refurbish and remodel Plaintiffs’ properties in Osseo and Rice Lake. Neither project was completed, and Defendant failed to provide an accounting of the work done and money spent. Plaintiffs then received a judgment in their favor from state court and brought this adversary to determine that judgment nondischargeable under section 532(a)(4). The Court held (1) a fiduciary relationship existed between the parties under Wis. Stat. § 779.02(5) and (2) Defendant breached his fiduciary duty when he failed to account for money he spent on the project. Under Wis. Stat. § 779.02(5), funds paid to contractors for work constitute a trust fund. Plaintiffs demanded an accounting of payments made on the projects, but Defendant repeatedly failed to provide them. The Court found Defendant’s actions went beyond mere negligence. Plaintiffs had met their burden under section 523(a)(4) by establishing the amount of trust res and Defendant had failed to present some explanation and accounting in order to rebut the prima facie case. This Court determined that the $23,825 judgment was nondischargeable under section 523(a)(4).

    Code/statute references:
    11 U.S.C. § 523(a)(4) -- Nondischargeability - fraud or defalcation in fiduciary capacity
    Wis. Stat. § 779.02(5) -- Theft by contractor

    Key terms:
    DEFALCATION WHILE ACTING AS A FIDUCIARY
    THEFT BY CONTRACTOR

 

Bankr. Case No. 17-11448-12
 
This matter came before the Court on the confirmation of a Chapter 12 plan. Debtor is a farmer dealing primarily in corn and soy beans. His plan sought to assume several leases and Debtor would have been liable for over $60,000 immediately upon confirmation. The Court found the plan lacked feasibility. Debtor's projections on his crop yields and expenses were unrealistic. The Court concluded, based on Debtor's historic income, that he would be unable to make plan payments. The Court also concluded that the proposed interest rate to Hiawatha National Bank, a creditor, was inadequate to compensate it for risk. The Court denied confirmation and dismissed the case, reasoning the interests of the estate and creditors would be better served by dismissal. 
 
Code References:
11 U.S.C. §305(a) -- Dismissal 
11 U.S.C. §1225(a)(6) -- Feasibility
 
Key Terms:
FEASIBILITY
INTEREST RATE
PLAN CONFIRMATION
 

Case summary:

Creditor JJC of Eau Claire, LLC, filed an objection to Debtor’s third amended plan of reorganization on the grounds of unfair discrimination. Debtor has two creditors: JJC and Royal Credit Union. Under the proposed plan, each creditor is placed in its own class. Royal Credit Union’s under-secured claim of $100,0000 would be paid in full, but JJC’s unsecured $75,000 claim would only be paid 13.3% of the full amount. The Court addressed whether the plan unfairly discriminated against JJC and determined the plan violated 11 U.S.C.§§1122 and 1129. The Court found the claims held by JJC and Royal Credit Union were substantially similar, but debtor failed to articulate a sufficient business reason for separating them. The Court stated that Debtor attempted to gerrymander its way into confirmation of the plan and unfairly and improperly preferred one creditor over the other. Additionally, the Court found that the proposed plan violated the absolute priority rule because Fuerbringer, an equity holder, would retain his interest in the LLC. Debtor argued that Fuerbringer’s interest had minimal value, but the Court determined that was immaterial. While Fuerbringer may only retain a minimal amount of property through his continued equity interest in the LLC, it is enough to be cognizable as property under the Code. As such, Debtor’s plan could not be confirmed. Finally, under 11 U.S.C. §1129, the 45-day period for confirmation had long passed and the Court could not conclude that a plan would be confirmed within a reasonable period of time. The Court declined to permit Debtor to file another Plan and the case was dismissed.

Code references:

11 U.S.C. §1122 -- Classification of claims or interest
11 U.S.C. §1126(c) -- Acceptance of plan
11 U.S.C. §1129(b)(2)(B) -- Absolute priority rule

Key words:
Absolute Priority Rule
Classification of Claims
Gerrymander
Sweat Equity
Unfair Discrimination

Adv. No. 17-49, Bankr. Case No. 17-10782-7

Plaintiff filed an adversary proceeding seeking to have a debt declared nondischargeable pursuant to section 523(a)(6) for willful and malicious conduct. Plaintiff and Defendant at one time resided in the same home and have a daughter together. Plaintiff fled the home after Defendant became physically abusive, leaving behind various pieces of her personal property. Two months later, Defendant discarded the items Plaintiff left behind. A judgment in the amount of $7,800 was issued by a state court in favor of Plaintiff. The Court held that while Defendant's actions may have been motivated by ill feelings, he had a valid excuse. The Court denied Plaintiff's motion on the section 523(a)(6) claim on the grounds that: (1) Plaintiff failed to produce extrinsic evidence that Defendant acted maliciously in disposing of Plaintiff's abandoned items that were left in the house, and (2) Plaintiff failed to articulate any theory under which Defendant would have a duty to keep the property.

    Code Reference:
    11 U.S.C. § 523(a)(6) – Nondischargeability – willful and malicious injury

    Key Terms:
    DISPOSAL OF PROPERTY
    JUDGMENT
    NONDISCHARGEABLE DEBT
    WILLFUL AND MALICIOUS
 

Adv. Case No. 17-11, Bankr. Case No. 15-12496-11

Bank Trust and Park Bank each held an interest in Debtors' homestead. Debtors took out three loans to finance the construction of their home. The original loans were refinanced with The Money Store on November 20, 1998, but not recorded until May 12, 1999. After the loan was refinanced but before it was recorded, Park Bank executed and recorded a Real Estate Security Agreement on the homestead. The sole issue before the Court was whether The Money Store's successor, U.S. Bank, held a priority interest over Park Bank. Though Wisconsin is a race notice state, the Court ruled U.S. Bank had priority because Park Bank had actual notice of The Money Store's pre-existing interest when it executed its loan. U.S. Bank also argued that the Court should apply the doctrine of marshaling. Because U.S. Bank failed to show Park Bank would not be prejudiced by such a ruling, the Court declined to marshal the collateral.

Wisconsin Statute:
Wis. Stat. § 706.08(1)(a) – Race Notice

Key Words:
PRIORITY
RACE NOTICE
ACTUAL NOTICE
MARSHALING
 

Adv. Case No. 17-17, Bankr. Case No. 17-10305-13

Plaintiff filed this adversary seeking to avoid a second mortgage on her residence. Plaintiff argued the value of her home was so low that it would not satisfy the first mortgage, and therefore there was no value to which Defendants' second mortgage could attach. Defendants disagreed with Plaintiff's valuation. The Court ruled the value of the house was high enough to satisfy the first mortgage with some left over for the second. In reaching that conclusion, the Court noted the Defendants' appraiser was more persuasive because he had experience in selling houses, rather than simply appraising them. Having found the claim was partially secured, the Court determined the lien was unavoidable.

Code Reference:
11 U.S.C. § 1322(b)(2) -- Modification of rights of secured claimants

 Bankruptcy Rule:
 Fed. R. Bankr. P. 3012 -- Valuation

 Key word:
 VALUATION
 

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