Section 362(d)(1) of the Bankruptcy Code requires the court to grant a secured creditor’s request for relief from the automatic stay for cause, including the lack of adequate protection. In a Chapter 13 case, a secured creditor is entitled to relief from the automatic stay, even when its proofs of claim were filed untimely, when the debtors failed to file a proof of claim on the secured creditor’s behalf pursuant to Rule 3004 and then also failed to provide the secured creditor with adequate protection.
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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 -- 2013 - present
- Judge William V. Altenberger -- 2016 - present
- Judge Brett H. Ludwig -- 2017 - present
- Judge Thomas M. Lynch -- 2018 - present
- Judge Robert D. Martin (retired) -- 1990 - 2016
- Judge Thomas S. Utschig (retired) -- 1986 - 2012
Judge Brett H. Ludwig
Chief Judge Catherine J. Furay
Debtor received a Chapter 7 discharge in November 2015. Four years later, he filed a Motion for Contempt with this Court against three individuals: his ex-wife; her attorney during their divorce; and the State Court Judge who presided over their divorce. Debtor alleged the continued pursuit of a state court action, stemming from the divorce, by his ex-wife and her attorney, as well as the orders entered by the Judge, violated the discharge injunction under 11 U.S.C. § 524. Debtor’s ex-wife, her attorney, and the Judge all moved to deny the Motion for Contempt. The Court reserved judgment as it pertains to the ex-wife and her attorney. A further hearing will be scheduled to adjudicate their motions to deny the Debtor’s Motion for Contempt. The Court found that the Judge is entitled to Judicial Immunity because he acted within his judicial capacity and had proper jurisdiction over the divorce proceedings. The Court denied the Motion for Contempt against the Judge.
11 U.S.C. § 524 -- Effect of Discharge
Motion for Contempt
Defendant acted in the capacity of financial power of attorney for his mother, who passed away in 2013. Plaintiff is the Personal Representative of the late mother’s estate. Defendant could not account for $240,927.70 belonging to the mother’s estate. In October 2017, a state court Judge entered an order pursuant to a stipulation between the parties and awarded the Plaintiff $120,463.85. Defendant filed a voluntary Chapter 7 in December 2018. Plaintiff brought this adversary seeking a nondischargeability determination with respect to the state court order under 11 U.S.C. § 523(a)(4). Defendant filed a pro se answer and moved to dismiss the adversary complaint without any statutory citations. The Court interpreted the Defendant’s answer to move for dismissal under Federal Rule of Bankruptcy Procedure 7012(b), adopting Federal Rule of Civil Procedure 12(b)(6). The Court ruled that the Plaintiff’s complaint is well pleaded and states a plausible claim that the Plaintiff is entitled to relief. The Court denied the Defendant’s motion to dismiss.
11 U.S.C. § 523(a)(4) -- Nondischargeability - Fraud or Defalcation in Fiduciary Capacity
Fed. R. Bankr. P. 7012(b) -- Defenses and Objections
Fed. R. Civ. P. 12(b)(6) -- Motion to Dismiss for Failure to State a Claim
Motion to Dismiss
The Minnesota Department of Labor and Industry ("MNDLI") is a state-based agency with the authority to license and regulate electrical contractors and electricians within Minnesota. In June 2018, MNDLI filed a civil lawsuit against the Defendant. A Minnesota state court granted summary judgment in favor of MNDLI and ordered the Defendant to pay the Restitution Judgment of $1,560,311.12. Defendant filed a voluntary Chapter 7 petition in October 2018. MNDLI filed this adversary seeking a nondischargeability determination for the Restitution Judgment under 11 U.S.C. §§ 523(a)(2) and/or 523(a)(6). Defendant's answer moved for dismissal without any statutory citations. The Court interpreted the Defendant's answer to move for dismissal under Federal Rule of Bankruptcy Procedure 7012(b), adopting Federal Rule of Civil Procedure 12(b)(6). The Court denied the motion to dismiss because MNDLI's complaint met the plausibility standard to overcome a 12(b)(6) motion.
Defendant also filed a counterclaim, seeking damages in the approximate amount of $7 million stemming from a host of torts he alleged MNDLI committed, including defamation. MNDLI moved to dismiss the counterclaim on three grounds: (1) the Court's lack of subject-matter jurisdiction under Rooker-Feldman; (2) principles of collateral estoppel and res judicata barred the re-litigation of issues in the counterclaim; and (3) Defendant failed to state a claim upon which relief can be granted.
The Court dismissed the Defendant's defamation counterclaim under Rule 12(b)(6) because the claim failed to state that the alleged defamatory statements were untrue. The Court also held it was barred from relitigating the remaining counterclaim allegations because of collateral estoppel and/or res judicata. Defendant had a full and fair opportunity to litigate the issues he presented in the counterclaim, however, he chose to not appear in the state court action. The Court further held that it lacked subject-matter jurisdiction under the Rooker-Feldman doctrine. The Court made no findings about the merits of MNDLI's nondischargeability action against the Defendant. This decision was merely a finding that the Court lacked subject-matter jurisdiction over the Defendant's counterclaim.
Fed. R. Bankr. P. 7012(b) -- Defenses and Objections
Fed. R. Civ. P. 12(b)(6) -- Motion to Dismiss for Failure to State a Claim
Motion to Dismiss
Debtor and State Bank of Cross Plains (“State Bank”) executed a mortgage on real property containing the Debtor's homestead and business workshop in 2014. They renewed the Note in 2018. Debtor defaulted by failing to pay the required balloon payment. He then filed a Chapter 13. He had no unsecured debt and the only debt he defaulted on was the balloon payment. The parties agreed the Plan must pay State Bank's claim in full over the life of the Plan. The Plan provided, on account of State Bank's claim, monthly payments followed by an eventual refinance and balloon payment before the end of the Plan. State Bank objected to the Plan on three grounds: (1) the Debtor lacked the income necessary to make Plan payments whether or not the balloon payment was allowed; (2) the balloon payment was an impermissible modification of State Bank's claim; and (3) a future refinance was too speculative. The Court confirmed the Plan over State Bank's objection. The Plan was feasible. While the Debtor had good months and bad months, the good months more than compensated for the bad months. Given the unique facts of the case, notably the Debtor's substantial equity in the real property collateral, the Court found the balloon payment was permissible under sections 1322(b)(2) and 1325(a)(5). Further, a future refinance and balloon payment was not unduly speculative given the Debtor's equity and quality job outlook.
11 U.S.C. § 1322(b)(2) -- Modification of Rights of Secured Claimants
11 U.S.C. § 1325(a)(5) -- Providing for Curing of Default
11 U.S.C. § 1325(a)(6) -- Feasibility
The Internal Revenue Service ("IRS") asserted Harold Jung (“Debtor”) owed additional taxes and penalties. The Debtor commenced an adversary seeking to determine and discharge his tax liability, if any. The IRS filed a Motion to Dismiss for lack of subject-matter jurisdiction. The Court denied the Motion. The IRS then filed a Motion to Reconsider or, in the alternative, to hold the matter in abeyance pending the resolution of another case awaiting decision from the Seventh Circuit (In re Bush). The Court denied the Motion to Reconsider. There were no material changes in circumstances warranting a revisiting of the prior decision. Dischargeability of the taxes was still at issue. Dischargeability is a core proceeding and fundamental component of title 11. The Court likewise denied holding the matter in abeyance pending the resolution of Bush. Given the factual distinctions between this case and Bush, there was no guarantee the Bush decision would resolve this case. In addition, it is unfair to make the Debtor wait an indefinite amount of time before Bush is decided.
11 U.S.C. § 505(a) -- Determination of Tax Owed
11 U.S.C. § 523(a)(1) -- Nondischargeability – Taxes
28 U.S.C. § 157(a) -- Jurisdiction
28 U.S.C. § 1334 -- Abstention
Lydell and Margaret Kluck (“Debtors”) sold certain assets in the weeks leading up to their petition and deposited the sale proceeds in an annuity (the “Account”). They claimed as exempt the funds in the Account under the Wisconsin retirement benefits exemption found in Wis. Stat. § 815.18(3)(j). The Trustee objected to the exemption and argued the Account did not satisfy the statutory requirements. The Court overruled the objection and held the Account satisfied the two requirements of section 815.18(3)(j). First, the Account is tax-deferred under section 72 of the Tax Code because the Account provides for certain death benefits. Second, the Account is payable “by reason of” death and age as it provided for benefits payable upon Mr. Kluck’s death or him reaching the age of ninety-five. Generally, courts construe exemptions broadly in favor of debtors, which supports the outcome of this decision.
11 U.S.C. § 522 -- Exemptions
26 U.S.C. § 72(s) -- Annuities
Wis. Stat. § 815.18 -- Exemptions (Retirement Benefits Exemption)
Exemptions (Retirement Benefits Exemption)
The Court confirmed Schroeder Brothers Farms of Camp Douglas LLP's ("Debtor") Chapter 11 Plan. The Plan provided for appointment of a Liquidating Trustee in the event of the Debtor's failure to cure certain defaults. The Debtor defaulted and failed to cure. The Committee of Unsecured Creditors moved for appointment of a Liquidating Trustee. The Debtor objected and moved to convert to Chapter 12. The Debtor argued that absent conversion, sales of assets would give rise to substantial taxes and render the estate administratively insolvent. In addition, the Debtor stated it could elect to be taxed as a corporation to absolve the partnership of tax liability. The Court denied conversion because the Debtor was ineligible for Chapter 12 on the petition date. Postpetition events do not impact eligibility for Chapter 12. The Court granted the appointment of a Liquidating Trustee because the parties bargained for such rights during the confirmation process. Finally, the Court enjoined the Debtor from changing its tax treatment because doing so would benefit the Debtor's partners at the expense of the Debtor itself in violation of the absolute priority rule.
11 U.S.C. § 109(f) -- Eligibility for Chapter 12
11 U.S.C. § 1112 -- Conversion
11 U.S.C. § 1129(b)(2)(B) -- Absolute Priority Rule
26 U.S.C. § 701 -- Taxation of Partnership
Absolute Priority Rule
Appointment of Trustee
Judge Thomas M. Lynch
Judgment Creditor moves for modification of the automatic stay and abandonment of the estate's interest in a strip mall. Movant asserts that he holds a blanket lien in the Debtor's interest in the property under Chapter 816 of the Wisconsin Code by virtue of an order entered by the state court in supplemental proceedings. That order states that the strip mall shall be sold and the proceeds of sale up to a fixed amount shall be paid to the creditor in partial satisfaction of his judgment. The creditor further asserts that the property has been damaged by fire and is subject to an in rem foreclosure action for unpaid property taxes to argue that the property lacks equity and is not necessary for effective reorganization and the lack of adequate protection for his lien interest. The Debtor and the Unsecured Creditors Committee oppose the motion, arguing in part that the creditor does not have a lien in the property. The court finds that the creditor failed to demonstrate his lien in property held by the estate. As the Wisconsin Supreme Court discussed in Associated Bank N.A. v. Collier, 852 N.W.2d 443 (Wisc. 2014), supplemental proceedings do not give rise to a blanket lien on all of a judgment debtor's personal property. To obtain a lien on such property a creditor must docket its money judgment, identify the specific personal property and levy that property. Such levy can be accomplished by at least three different means, including "obtaining an order to apply specific personal property to the satisfaction of the judgment, which a creditor may do with the assistance of a supplemental receiver." Id. at 445. In this case, the parties stipulate that the interest in the strip mall is owned by a limited liability company in which the Debtor held a membership interest. Further, established caselaw holds that any ownership interest the estate may have in a debtor's membership in a limited liability company does not extend to the assets owned by the company. The creditor failed to demonstrate that the property referenced in the state court order is personal property now owned by the bankruptcy estate and that the automatic stay applies to that property. So finding, it is not necessary to determine whether the state court order created an effective judgment lien over the property. Accordingly, the motion to lift stay/ abandon interest in Wisconsin strip mall is DENIED.
11 U.S.C. § 362(d) -- Relief from the Automatic Stay
11 U.S.C. § 362(g) -- Burden of Proof
11 U.S.C. § 554 -- Abandonment of Property of the Estate
Wis. Stat. Ann. § 816.08 -- Order to Apply Non-Exempt Property Toward Satisfaction of a Judgment
Abandonment of Property of the Estate
Interest in Non-exempt Personal Property
Levy and Execution
Property of the Estate
Upon the court’s grant of the Debtor’s motion to convert this involuntary chapter 7 case to chapter 11, the Debtor in Possession (“DIP”) moved to enlarge the exclusivity period. One of the original petitioning creditors, a defendant in a preference action brought by the DIP, opposed the Motion. The adversary proceeding arises from the creditor’s proof of claim for a state court judgment lien purportedly secured by, among other things, the DIP’s interest in a limited partnership. The creditor objected to the requested extension, arguing that the DIP was engaging in dilatory conduct or otherwise trying to coerce an advantageous settlement of the preference action which his involuntary chapter 7 petition sought to preserve. Emphasizing that not all litigation must be resolved before a debtor can propose a plan, the court found that the adversary proceeding may have a drastic impact on assets available to fund reorganization and the allocation of payments to creditors. The court concluded that the DIP met its burden to show sufficient cause for the requested extensions, finding the creditor’s concerns to be “vague.” The court further noted the clear possibility that the adversary may be resolved in a short time and that the action to avoid the allegedly preferential security interest stood to directly benefit the entire pool of general unsecured creditors rather than only the DIP, in allowing the requested three-month extension.
11 U.S.C. § 547 -- Preferences
11 U.S.C. § 1107(a) -- Powers of a Debtor in Possession
11 U.S.C. § 1121(b) -- Exclusivity Period
11 U.S.C. § 1121(c) -- Party in Interest’s Right to File a Plan
11 U.S.C. § 1121(d) -- Extensions of the Exclusivity or Acceptance Periods
Debtor in Possession
Individual Chapter 11
Plan of Reorganization
Proof of Claim