Case No. 11-17555-13
In a prior ruling the bankruptcy court disallowed 50 percent of BMO's fees for lack of specificity. Subsequently, BMO filed a supplemental claim asserting a claim for attorney's fees incurred post-confirmation for work done in connection with the debtor's objection to its first supplemental claim. Debtor objected that the claim was not specific, violated the creditor's obligation of good faith and fair dealing, and was not caused by debtor's default. The court sustained debtor’s objection and held that the fees were not reasonable because they resulted from creditor's prior insufficient itemization of attorney's fees. “The debtor should not be penalized for BMO's failure to prepare its fee notice in compliance to these standards.”
11 U.S.C. § 506(b)
11 U.S.C. § 1322(e)
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- Chief Judge Catherine J. Furay--2013-present
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- Judge Robert D. Martin (retired)--1990-2016
- Judge Thomas S. Utschig (retired)--1986-2012
Judge Robert D. Martin
Case No. 11-17555-13
Case No. 12-13442-7
Case No. 11-12304-7
Debtors sought to avoid a lien on a liquor license under 11 U.S.C. § 522(f)(1)(B)(ii) as a “tool of the trade.” The license had been exempted under 11 U.S.C. § 522(d)(5), the “wildcard” exemption. The debtors owned a golf course, and there was no dispute that the liquor license was necessary for the success of the business. The bankruptcy court determined that the lien could not be avoided because the license was not a tool of the trade. The court explained that in the Seventh Circuit, the reference to “tools of the trade” in § 522(f) takes on the meaning of either the federal tools of the trade exemption under § 522(d)(6) or the state tools of the trade exemption, depending on which the debtor has elected. In re Thompson, 867 F.2d 416, 420 (7th Cir. 1989). In this case, the debtors elected the federal exemptions, and therefore were limited to the narrow definition of the federal tools of the trade exemption as set forth by the Seventh Circuit Court of Appeals in In re Patterson, 825 F.2d 1140, 1146 (7th Cir. 1987). Patterson stated that the purpose of the tools of the federal tools of the trade exemption is to enable an artisan to retain tools of modest value, like rakes and other hand tools, so that he is not forced out of his trade. The bankruptcy court held that under this reasoning, a liquor license is not a tool of the trade.
11 U.S.C. § 522(f) -- Lien avoidance
Case No. 12-14088-7
Mr. Myhre sought to have his student loan discharged. Mr. Myhre was injured in a swimming pool accident in which he broke his neck and became a quadriplegic. Since the accident he has required a live-in caregiver for assistance with all daily needs, including eating, dressing, and bathing. After several years of depending on Social Security disability payments, he decided to attend school and learn computer programming in an attempt to support himself. He received an associate’s degree but was still unable to find work for five years. After returning to school again to further his computer programming education, he finally secured a full time position. The U.S. Department of Education argued that Mr. Myhre should have to repay his student loan because he had full-time employment. The bankruptcy court found that with the increased cost of living as a quadriplegic, Mr. Myhre was unable to afford even a minimum payment on his student loan. Even without making any payment on his student loan, Mr. Myhre was unable to make ends meet and was depending on the generosity of his caregiver to get by. The bankruptcy noted that the Seventh Circuit Court of Appeals recently injected common sense into its consideration of § 523(a)(8) in Krieger v. Educ. Credit Mgmt. Corp., 713 F.3d 882 (7th Cir. 2013), declining to require that certainty of hopelessness and proof of prior payment overwhelm the inquiry into the future burden of the debt in question to the debtor’s anticipated livelihood. In light of Krieger, the bankruptcy court held it would be an undue hardship on Mr. Myhre to require him to pay back his student loan.
Wis. Stat. § 409.108
Wis. Stat. § 409.203
Chief Judge Catherine J. Furay
Case No. 12-14575-7
The plaintiff filed an adversary complaint seeking a determination that a Minnesota state court punitive damages award was nondischargeable under section 523(a)(6) of the Bankruptcy Code. The parties filed cross motions for summary judgment. Under Minnesota law, punitive damages are available if a plaintiff shows a defendant acted with a deliberate disregard for the rights or safety of others, acting with intent or indifference. By contrast, section 523(a)(6) requires a creditor to prove the debtor acted in conscious disregard of her duties and intended to injure the creditor or was substantially certain injury would occur. Looking at a special verdict without the jury instructions and the state court record, the court had no basis to determine whether the jury concluded the defendant acted wilfully and maliciously. The jury answered "yes" to the question of whether the defendant acted "with deliberate disregard for the rights or safety of others." It could have found that the defendant acted with reckless disregard, which is insufficient to demonstrate willfulness and maliciousness under section 523(a)(6). Therefore, the court denied both motions for summary judgment.
11 U.S.C. § 523(a)(6) -- Nondischargeability - willful and malicious injury
Case No. 10-12142-13
The debtor persistently sought, from a variety of procedural angles in state and federal court, a finding that the mortgage on her home was invalid. After the court entered an order dismissing her adversary proceeding and denying her claim objection concerning her mortgage, the debtor sought Rule 60 relief from the court’s judgment. The court found that the debtor had failed to show the relevance of allegedly “newly discovered evidence,” the existence of any evidence of “fraud, misrepresentation, or misconduct," or the merit of her position that the court’s judgment was void. In light of these findings, and after concluding that the debtor appeared to be using her motion for relief as a substitute for an appeal, the court denied the motion.
Fed. R. Civ. P. Rule 60(b) Relief from a judgment order
Case No. 12-16788-7
An insurance company sought a determination that the debt and accrued interest arising from a state court judgment related to the debtor’s drunk driving conviction was nondischargeable under 11 U.S.C. § 523(a)(9). On summary judgment, the court concluded there was no genuine dispute as to the relevant facts and that judgment was appropriate as a matter of law. The court determined that both the state court judgment and post-judgment interest were nondischargeable. The court specified, however, that the amounts were nondischargeable as to the debtor alone and not to his co-debtor wife. In support of this finding, it noted that the adversary proceeding had been brought against only the debtor, not his wife, and that in any event Wisconsin law protects the innocent spouse and her property from liability for her spouse’s torts.
11 U.S.C. § 523(a)(9) -- Nondischargeability - drunk driving
Wis.Stat. § 766.55(2)
Case No. 11-17754-12
The Chapter 12 standing trustee objected to confirmation of the debtor’s amended plan on the grounds that it impermissibly provided for direct payment of an impaired secured claim. The court recognized a split of authority among the circuits, and no Seventh Circuit authority directly on point. After evaluating the two most prominent approaches—one which categorically prohibited the direct payment of impaired secured claims and the other that permitted direct payments under certain circumstances—the court overruled the Trustee’s objection and confirmed the amended plan. The court endorsed the thirteen-factor test set forth in In re Pianowski, 92 B.R. 225 (Bankr. W.D. Mich. 1988), and concluded that proposals to make direct payments should be evaluated on a case-by-case basis.
11 U.S.C. § 1226(c) -- Payments
Case No. 08-15291-13
Debtors' counsel filed an Application for Approval, Allowance and Payment of Compensation and Reimbursement of Expenses as an Administrative Creditor seeking reimbursement for a total of 17 hours of work. An examination of the billing entries showed that the bulk of the work was performed in the course of representing the Debtors against small claims actions in state court. The Court acknowledged that the attempt to resolve the matters quickly and inexpensively in state court was a logical choice, but noted that opting not to remove the matters to the bankruptcy court entailed a risk of prolonged litigation. It ruled that the additional fees that resulted from complications in the state court should not be paid by the bankruptcy estate, and denied the balance of Debtors' counsel's request beyond the initial amount budgeted for "a single appearance followed, perhaps, by one brief."
11 U.S.C. § 330 -- Compensation of professionals
Case No. 12-16616-11
When the Debtor filed bankruptcy in December 2012, an action to foreclose on her home had been pending in Oneida County Circuit Court since January 2009. She removed the foreclosure action to the bankruptcy court, and Bank of America filed a Motion to Remand, Abstain, or Dismiss. After analyzing the impact of removal and remand on the foreclosure action and the bankruptcy case in light of a fourteen-item list of factors, the bankruptcy court concluded that "permissive" abstention was appropriate under 28 U.S.C. § 1334(c)(1).
Fed. R. Bankr. P. Rule 9027 -- Removal
28 U.S.C. § 1334 -- Abstention