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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 Bankruptcy 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.

Chief Judge Catherine J. Furay

Brian A. Hart, Chapter 7 Trustee v. Greenwich Business Capital, LLC (In re Conway), Adv. No. 24-00034, Case No. 24-10126-7 (12/19/2024) -- Judge Catherine J. Furay 12/19/2024

Case Summary:
Chapter 7 Trustee Brian Hart moved for summary judgment seeking to avoid a lien claimed by Defendant Greenwich Business Capital. Alternatively, Trustee Hart requested an order that any potential lien would be an avoidable preference. The Court granted his motion. The parties stipulated that Defendant failed to docket a foreign judgment on the Dane County judgment and lien docket before the Debtors sold their real property in that county. Thus, by operation of Wisconsin statute, the Defendant did not have a lien on the property when it was sold. Nonetheless, Defendant argued that since it filed a UCC financing statement with the register of deeds, it should be afforded an equitable lien. But the Court disagreed – Defendant could not invoke equity to protect its alleged interest when the statutory procedure for obtaining a lien was available to it. Also, any equitable interest could not defeat the interest of a Chapter 7 trustee, who is treated as a properly secured judgment lien creditor under the Code. Finally, the Court agreed with Trustee Hart that, to the extent that a later-filed foreign judgment case filed by Defendant gave it an interest in proceeds from the sale of the property, such an interest would be an avoidable preference.

Statutes/Rule References:
11 U.S.C. § 544 -- Lien avoidance
11 U.S.C. § 547 -- Preferences
Wis. Stat. § 409.102 -- Definition of “secured party”
Wis. Stat. § 806.15 -- Lien of judgment; priority

Key Terms:
Avoidance
Equitable Lien
Foreign Judgment
Judgment Lien
Preference

In re Sloniker, Case No. 24-11196-7 (12/12/2024) -- Judge Catherine J. Furay 12/12/2024

Case Summary:
Debtors filed an “Affidavit in Support” containing several requests. One of the requests was that the Chapter 7 Trustee in their case be removed due to an alleged conflict of interest. The United States Trustee objected to the removal of the Trustee, and the Court scheduled a hearing for December 3. The scheduling order provided that any supplement to Debtors’ response was due on November 25. No response or supplement was filed. At the December 3 hearing, Mrs. Sloniker requested that the hearing be canceled or rescheduled, which the Court denied. The Court denied the Debtors’ request to remove the Trustee. Bankruptcy trustees have duties outlined in Code section 704 and can only be removed for “cause” under section 324. The Debtors fail to state any cause for removal other than conclusory allegations that there was a conflict of interest. Debtors further requested that the Court grant the Debtors time to file a complaint with the Office of Lawyer Regulation. The Court explained that it lacked jurisdiction over that claim.

Statutes and Rules:
11 U.S.C. § 324 -- Removal of Trustee
11 U.S.C. § 704 -- Duties of Trustee
28 U.S.C. § 157 -- Jurisdiction
28 U.S.C. § 1334 -- Bankruptcy Cases and Proceedings

Key Terms:
Jurisdiction
Removal of Trustee

In re Cerny, Case No. 24-10322-13 (11/12/2024) -- Judge Catherine J. Furay 11/12/2024

Case Summary:
Though represented by an attorney, Debtors filed two pro se motions requesting various relief, including a motion to stay plan payments and administration, a claim objection, a motion to avoid a lien, and a request for an emergency hearing. The Court summarily denied the motions on several grounds. First, neither motion was accompanied by a notice or opportunity for objection. Second, the request for emergency hearing was not warranted; the basis for the emergency request was that plan payments should not continue until a purported claim objection and lien avoidance disputes are resolved. But the Court reasoned that claim objections and lien avoidance motions are somewhat routine, and other creditors should not be prejudiced by delay in administration simply because the Debtors had a dispute with their mortgage holder. Third, both motions suffered service deficiencies. The certificates of service were unsigned and failed to specify which documents were served, who served them, or by what means. Finally, the Court noted that there were substantive deficiencies, including citations to the federal criminal code, state medical assistance procedures, and the U.C.C., all of which were irrelevant or beyond the scope of the requested relief.

Statute/Rule References:
Fed. R. Bankr. P. 7001
Fed. R. Bankr. P. 9006 -- Time
Fed. R. Bankr. P. 9011 -- Signing of Papers
Fed. R. Bankr. P. 9014 -- Contested Matters

Key Terms:
Notice
Relevance
Service

Brian A. Hart, Chapter 7 Trustee v. Greenwich Business Capital, LLC (In re Conway), Adv. No. 24-00034, Case No. 24-10126-7 (07/19/2024) (663 B.R. 357) -- Judge Catherine J. Furay 07/19/2024

Case Summary:
Plaintiff Chapter 7 Trustee filed an adversary proceeding seeking (i) a determination that Defendant’s asserted lien was invalid under state law, and (ii) an injunction enjoining Defendant from continuing state court litigation and collection efforts. Plaintiff filed a motion seeking a preliminary injunction and an order enforcing the automatic stay. Defendant responded arguing that its state court litigation concerned non-debtor third parties and revolved around issues of state law. The Court ruled for Plaintiff. Even though there were other parties to the various state court proceedings, Defendant sought sales proceeds that were property of the estate in each of the cases. The automatic stay prohibits litigation or collection efforts seeking control or turnover of property of the estate. Property of the estate is broad and extends to even contingent interests of debtors. Thus, the Court granted Plaintiff’s motion and enjoined Defendant’s state court proceedings during the pendency of this adversary proceeding.

Statute/Rule References:
11 U.S.C. § 362(a)(3) -- Automatic stay
11 U.S.C. § 541(a) -- Property of the estate
28 U.S.C. § 157(b)(2)(K) -- Determinations of the validity, extent, or priority of liens
28 U.S.C. § 1334(e) -- Exclusive jurisdiction over property of the estate

Key Terms:
Automatic Stay
Core Proceeding
Exclusive Jurisdiction
Preliminary Injunction
Property of the Estate

Brian A. Hart, Chapter 7 Trustee v. Greenwich Business Capital, LLC (In re Conway), Adv. No. 24-00034, Case No. 24-10126-7 (07/19/2024) -- Judge Catherine J. Furay 07/19/2024

Case Summary:
Plaintiff Chapter 7 Trustee filed an adversary proceeding seeking (i) a determination that Defendant’s asserted lien was invalid under state law, and (ii) a preliminary injunction enjoining Defendant from continuing state court litigation and collection efforts. Defendant filed a response along with a motion to abstain or, alternatively, to dismiss the case. The Court held that it was not required to abstain under 28 U.S.C. § 1334(c)(2) because the primary issue in the complaint regarding the validity of Defendant’s lien was a core proceeding under 28 U.S.C. § 157. Also, the Court did not discretionarily abstain under section 1334(c)(1) because permissive abstention was not in the best interest of justice, respect for state law, or comity with state courts. The proceeding concerned property of the estate, which this Court maintains exclusive jurisdiction over under § 1334(e).

Statute/Rule References:
11 U.S.C. § 362 -- Automatic stay
11 U.S.C. § 541 -- Property of the estate
28 U.S.C. § 157(b)(2)(K) -- Determination of the validity, extent, or priority of liens
28 U.S.C. § 1334(c), (e)

Key Terms:
Core Proceeding
Mandatory Abstention
Motion to Dismiss
Permissive Abstention
Property of the Estate

In re Coburn, Case No. 24-11054-7, and In re Hyland, Case No. 24-10657-7 (07/18/2024) -- Judge Catherine J. Furay 07/18/2024

Case Summary:
After the Court issued a third order to show cause why the privileges of an attorney should not be conditioned or suspended, Debtors’ attorney filed a motion seeking recusal of the judge. The motion argued that communication regarding the docket from the office of the Clerk of Court and the issuance of the OSC by the Court combined to question the impartiality of the judge. The motion was denied, holding that Section 105(a) and the authority of the Court to manage proceedings, dockets, and practice within the court authorized issuing the OSC. Finally, the Court held that communications with the office of the Clerk of Court are not ex parte communications.

After repeated filing mistakes and errors, the Court issued an Order to Show Cause why debtors’ counsel’s e-filing privileges should not be suspended or revoked. Counsel filed a response and there was a hearing. The Court ruled that counsel’s arguments concerning the Code and Rules (specifically the time limits under Fed. R. Bank. P. 1006 and 1007, and Code section 521) were unpersuasive. The Court noted that counsel’s repeated and continuing filing errors were concerning but did not suspend or revoke the attorney’s privileges. The attorney had recently completed CM/ECF training with the Clerk’s office and had filed a more recent case which did not contain any errors. Ultimately, the attorney’s conduct had not risen to the level that a suspension from practice in this District was warranted. The Court will continue to review and consider any future deficiencies that may arise in cases filed by the attorney just as it considers and reviews other repeated deficiencies by other attorneys practicing in this Court.

Statute/Rule References:
11 U.S.C. § 105(a) -- Powers of court
11 U.S.C. § 521 -- Debtor’s duties
28 U.S.C. § 455 -- Disqualification of justice, judge, or magistrate judge
Fed. R. Bankr. P. 1006 -- Filing fee
Fed. R. Bankr. P. 1007(a) -- List of creditors

Key Terms:
CM/ECF
E-Filing
Ex Parte Communication
Order to Show Cause
Recusal
Suspension or Revocation

In re Komprood, Case No. 23-11890-13 (06/04/2024) -- Judge Catherine J. Furay 06/04/2024

Case Summary:
Debtor’s ex-spouse filed a claim for a domestic support obligation in Debtor’s Chapter 13 bankruptcy case. The subject of the claim was a home equity line of credit obligation that was secured by the ex-spouse/claimant’s homestead. The Debtor incurred the obligation under the line of credit, and although his ex-spouse was co-liable for it, the Debtor was ordered to pay the obligation under the parties’ divorce judgment. The Debtor failed make all payments due under the line of credit, and the lender filed a foreclosure against the ex-spouse’s homestead. She was forced to cure the deficiency herself, and thereafter obtained a contempt judgment against the Debtor for failing to pay the line of credit obligation. Her claim in the bankruptcy case was that the obligation which she paid was a domestic support obligation under the parties’ judgment of divorce. The Court agreed and held that her claim was nondischargeable. Principally, the divorce judgment specified that the obligation was a nondischargeable domestic support obligation and was assigned to the Debtor in lieu of maintenance. Testimony of the parties also supported the conclusion that the obligation was meant to be a domestic support obligation.

Statute/Rule References:
11 U.S.C. § 523(a)(5) -- Nondischargeability - Domestic Support Obligation
11 U.S.C. § 523(a)(15) -- Nondischargeability - Marital Obligations
11 U.S.C. § 1328(a)(2) -- Discharge
Fed. R. Bankr. P. 3001(f)

Key Terms:
Claims – Allowance
Domestic Support Obligation
Marital Settlement Agreement
Nondischargeable Debt

In re Karben4 Brewing, LLC, Case No. 24-10358-11 (05/21/2024) (661 B.R. 392) -- Judge Catherine J. Furay 05/21/2024

Case Summary:
Debtor was a four-member LLC. Two of its managers adopted a resolution authorizing themselves to file bankruptcy on behalf of the Debtor. Another member, holding 50% of the membership interests, filed a motion to dismiss the bankruptcy based on a lack of corporate authority. He argued that the operating agreement of the Debtor only authorized managers to perform ordinary course or day-to-day activities, and that majority-member consent was required to undertake an activity such as bankruptcy. In response, the Debtor argued that the activities requiring majority-member consent in the operating agreement were exhaustive, and in contrast, management’s authority under the agreement was explicitly open-ended, and thus the managers were empowered to cause the Debtor to file bankruptcy. Ruling against the Debtor, the Court first established that the operating agreement was ambiguous. Next, in interpreting the agreement, it was clear that the managers were only authorized to perform ordinary course or day-to-day activities. The Debtor offered extrinsic evidence in an attempt to show that managers had acted with broad authority in the past, but the evidence was unpersuasive. Almost all the examples of past broad authority were in fact authorized by a majority of the members, or were ordinary course activities for businesses in the Debtor’s industry. 

Statute/Rule Reference:
11 U.S.C. § 1112(b)

Key Terms:
Corporate Authority to File Bankruptcy
Ordinary Course

Judge Rachel M. Blise

James V. Block, Chapter 7 Trustee v. Bernard Charles Seidling, et al. (In re Seidling), Adv. No. 23-00032, Case No. 22-11191-7 (08/23/2024) -- Judge Rachel M. Blise 08/23/2024

Case Summary:
The Chapter 7 Trustee filed an adversary proceeding against 83 trusts and entities, seeking a declaration that certain property was property of the bankruptcy estate pursuant to 11 U.S.C. § 541. The Debtor had a real estate business that involved purchasing distressed real estate and either selling it at a profit, leasing it to a third party, or entering into some other contractual arrangement. The Debtor structured his business through a web of trusts, partnerships, sole proprietorships, and other entities. The Trustee contended that the real estate, contracts, bank accounts, and other related assets held in the name of the trusts and entities were wholly owned and solely controlled by the Debtor, and that it was all property of the bankruptcy estate. After a five-day trial, the Court found that the assets held by 77 of the trusts and entities named in the Trustee’s complaint were property of the bankruptcy estate. The Court determined that any assets owned by the debtor under a fictitious name, a “d/b/a,” or a sole proprietorship were not held by a separate legal person and were therefore property of the estate. In addition, the Court concluded that the trustee could reach the assets of the trusts because none of the trusts was validly created; even if the trusts were valid, the Debtor had the power to revoke the trusts; and the trusts were alter egos of the Debtor. The Court also determined that the partnership form could be disregarded because the partnerships were the alter egos of the Debtor and the Debtor used the entities to shield assets from his creditors.

Statute/Rule References:
11 U.S.C. § 541

Key Terms:
Property of the Estate
Sole Proprietorship
Partnership
Trust Property
Revocability of Trusts
Piercing of Trust Form

Diana Cannon v. Andrew M. Johnson (In re Johnson), Adv. No. 23-00041, Case No. 23-11365-7 (07/25/2024) -- Judge Rachel M. Blise 07/25/2024

Case Summary:
The Court granted in part and denied in part the defendant’s motion to dismiss the plaintiff’s adversary complaint.  The plaintiff alleged that the defendant fraudulently induced her to invest in his company and that the debt owed to her as a result was nondischargeable under 11 U.S.C. § 523(a)(2)(A), (a)(4), (a)(6), and (a)(19).  The Court denied the motion to dismiss as to the claims under §§ 523(a)(2)(A) and (a)(6) after concluding the plaintiff sufficiently alleged that the defendant made false representations to her that she relied on to her detriment.  The Court dismissed the claim under § 523(a)(4) because the plaintiff had not pleaded facts sufficient to establish that the defendant was acting as a fiduciary.  Finally, the Court denied the motion as to the claim under § 523(a)(19).  The plaintiff sufficiently alleged that the defendant violated Wisconsin state securities laws, based in part on a Wisconsin Department of Financial Institutions consent order.  The Court also concluded that the plain language of § 523(a)(19)(B) allows a bankruptcy court to enter the order or judgment required to render a debt for violation of securities laws to be nondischargeable.

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A)
11 U.S.C. § 523(a)(4)
11 U.S.C. § 523(a)(6)
11 U.S.C. § 523(a)(19)

Key Terms:
Nondischargeable
Fraud

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