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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

Chief Judge Catherine J. Furay

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
 

Adv. Case No. 16-79, Bankr. Case No. 16-13134-11

The Debtor filed this adversary proceeding seeking a declaratory judgment that he was not liable to the Defendants and that the Defendants' claims were disallowed against him and the bankruptcy estate. The Debtor's father ran a Ponzi scheme through his insurance business, where Debtor had been an employee and director. The Defendants represent a small portion of the total number of individuals and families who were defrauded in that Ponzi scheme. The Defendants filed a counterclaim for a determination that their claims were nondischargeable on the ground that the Debtor was involved in the Ponzi scheme and therefore owed them a nondischargeable debt under 11 U.S.C. §§ 523(a)(2)(A) and 523(a)(6). The court granted summary judgment to the Debtor on the section 523(a)(2)(A) claim on the grounds that: (1) the Defendants failed to allege the Debtor "obtained" money through fraud, and (2) the Defendants failed to produce evidence that would show that the Debtor made any false representations, intended to commit fraud, or committed "actual fraud." The court granted summary judgment to the Debtor on the section 523(a)(6) claim on the ground that Defendants failed to produce evidence that the Debtor acted willfully and maliciously.

Code References:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - fraud
11 U.S.C. § 523(a)(6) -- Nondischargeability - willful and malicious injury

Key Terms:
ACTUAL FRAUD
CIVIL THEFT
CONVERSION
FALSE REPRESENTATION
NONDISCHARGEABLE DEBT
PONZI SCHEME

Bankr. Case Nos. 16-12820-11 & 16-12821-11 (jointly administered)
Prior to filing this Chapter 11, Debtor entered into a Loan Agreement with Sabra Phoenix Wisconsin, LLC. The loan provided the Debtor with financing necessary for the completion of a construction project. Simultaneously with the Loan Agreement, Debtor and Sabra Phoenix entered into an Option Agreement. Debtor subsequently filed in bankruptcy and Sabra filed a proof of claim for $17,773,438.77, which included damages for Debtor's alleged breach of the Option Agreement. The Debtor objected to the claim insofar as it sought damages related to the Option. The Court granted Debtor's objection and determined that Sabra was not entitled to a claim for breach of the Option Agreement. In so holding, the Court found that the Option served as additional security for the Loan Agreement, that there was insufficient consideration in the transaction, that the Option impermissibly clogged Weston's right of redemption of its mortgage, and that the Option Agreement was unconscionable.

Code Reference:
11 U.S.C. § 502 -- Allowance of claims or interests

Key Terms:
ADDITIONAL SECURITY
CLOGGING THE RIGHT OF REDEMPTION
CONSIDERATION
UNCONSCIONABILITY
 

Adv. Case No. 16-79, Bankr. Case No. 16-13134-11

Debtor filed a voluntary Chapter 11 petition on September 12, 2016. He filed an adversary complaint on September 14, 2016, against Defendants David J. and Gale I. Groth, David J. and Judith A. Heinecke, James G. Pritchard, John W. and Patricia Tesch, and Barbara L. Wegner (collectively as the "State Court Plaintiffs") seeking a declaratory judgment that he is not liable to these individuals, that their claims be disallowed, and that any debt owed to them is dischargeable. The State Court Plaintiffs filed an Answer and Counterclaim to the Debtor's Complaint. They seek a determination that under 11 U.S.C. §§ 523(a)(2), (a)(6), and (a)(19) that certain debts are nondischargeable. The State Court Plaintiffs filed a motion requesting that the Court abstain from determining issues related to liability under 11 U.S.C. § 523(a)(19), or in the alternative that a non-bankruptcy tribunal must determine liability under 11 U.S.C. § 523(a)(19). The Court denied the State Court Plaintiffs' motion for permissive abstention. In addition, the Court sided with the growing number of bankruptcy courts that reason section 523(a)(19)'s plain language does not divest the Court from fully adjudicating liability, damages, and exception to discharge in a section 523(a)(19)-based adversary proceeding.

11 U.S.C. § 523(a)(19) -- Nondischargeability - violation of securities laws
28 U.S.C. § 1334 -- Abstention

Key terms:
Abstention

Bankr. Case No. 17-10248-13
Debtor purchased a new Dodge Ram truck. As part of the purchase, she traded in a Chevrolet Silverado. Debtor owed more on the Silverado than its trade-in value, resulting in negative equity of $6,343.65, which she included in the financing of the new Dodge Ram. Members Cooperative Credit Union held a purchase money security interest in the Dodge Ram, and filed a proof of claim in Debtor's bankruptcy. The parties agreed the Dodge Ram was purchased within 910 days prior to Debtor's bankruptcy petition. Debtor objected to the Credit Union's claim seeking to cram down the amount of the Credit Union's to the value of the Dodge Ram. Following the Seventh Circuit's decision in In re Howard, 597 F.3d 852 (7th Cir. 2010), the Court overruled the Debtor's objection concluding a purchase money security interest in a vehicle includes negative equity.
11 U.S.C. § 506(a) -- Determination of secured status
11 U.S.C. § 1325(a) -- Confirmation of plan - 910-day hanging paragraph
Key terms:
CRAMDOWN
NEGATIVE EQUITY

Adv. Case No. 17-12, Bankr. Case No. 16-13848-7

Plaintiffs filed an action against the Debtor in state court on May 13, 2009. The state court found Debtors had obtained money in violation of state securities law and issued a default judgement against them for $974,104.46. The Plaintiffs then brought this adversary seeking a determination that the state court judgment is nondischargeable under 11 U.S.C. § 523(a)(19). Defendants responded that the state court judgment was invalid. The Court held the state court judgment was valid and enforceable against Debtors and nondischargeable.

Code reference:
11 U.S.C. § 523(a)(19) - Nondischargeability - violation of securities laws

Key terms:
NON-DISCHARGEABLE DEBT
 

Adv. Case No. 16-89, Bankr. Case No. 14-13435-7
Debtor filed a Chapter 13 petition on August 7, 2014. The Court entered a final decree on January 21, 2015. On August 4, 2016, Debtor moved to reopen her bankruptcy and filed the present adversary case to unwind the Social Security Administration’s (“SSA”) prepetition setoff of her social security disability benefits. The Court concluded under 11 U.S.C. § 553(b) that the SSA improved its insufficient position during the 90-day setoff period prescribed under the statute.
Code References:
11 U.S.C. § 553 -- Setoff
11 U.S.C. § 522(h) -- Exemptions
Key Terms:
SETOFF
 

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