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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

In re Stincic, Case No. 16-10129-13 (09/29/2016) (559 B.R. 890) -- Judge Catherine J. Furay 09/29/2016

Case Summary:
Johnson Bank held two mortgages against Debtor’s real property, and began foreclosure proceedings in state court. In state court, Debtor unsuccessfully attempted to rescind the first mortgage by raising a Truth in Lending Act defense. Debtor then filed a Chapter 13 petition. Johnson Bank moved for relief from stay. Debtor once again sought to rescind the first mortgage. Johnson Bank argued Debtor’s opposition to relief from stay was a disguised attempt for the Bankruptcy Court to review a state court judgement, and therefore, barred by Rooker-Feldman. Relying on the Seventh Circuit’s reasoning in Taylor v. Fannie Mae, 374 F.3d 529 (7th Cir. 2004), the Court found that the Debtor had a reasonable opportunity to raise the Truth in Lending Act defense in state court. As a result, by asking the Court to rule the first mortgage was rescinded, Debtor sought to overturn the state court judgment. Thus, the Court found his federal remedy was “inextricably intertwined” with the state court judgment. Success in the Bankruptcy Court would have allowed the Debtor to avoid the state court’s judgment. Accordingly, Rooker-Feldman doctrine barred review.

Statute/Rule References:
11 U.S.C. § 362 -- Automatic Stay
11 U.S.C. § 362(g) -- Automatic Stay - Burden of Proof

Key Terms:
Claim Preclusion
Rooker-Feldman
Truth in Lending Act (TILA)

In re Roen, Case No. 16-10037-7 (08/26/2016) (556 B.R. 401) -- Judge Catherine J. Furay 08/26/2016

Case Summary:
Debtors Julie Roen and Robert Dorshak filed a voluntary Chapter 7 petition. Both Debtors claimed a $75,000 exemption in real property as homestead property under Wis. Stat. § 815.20. The Chapter 7 Trustee objected to Debtor Dorshak’s $75,000 exemption claim, but conceded to Debtor Roen’s homestead exemption. Prior to their marriage, Debtor Roen owned the homestead free and clear with no liens as of 2007. There was no mortgage on the homestead throughout the Debtors’ marriage. Debtor Dorshak claimed that his payment of real estate taxes, home insurance, and necessary maintenance repairs constituted a mixing of marital property with individual property converting the homestead into marital property. The Court found Dorshak’s payments did not constitute a mixing under Chapter 766 because such payments were not applied to the mortgage nor did the payments substantially increase the property’s value. The Court sustained the Trustee’s objection and denied the exemption.

Statute/Rule References:
Wis. Stat. § 766.01 -- Marital Property Definitions
Wis. Stat. § 766.63 -- Mixed Property
Wis. Stat. § 815.20 -- Homestead Exemption

Key Terms:
Exemptions
Homestead Exemptions
Marital Property
Mixed Property

Bruce D. Trampush and Diane R. Trampush v. United FCS and Associated Bank (In re Trampush), Adv. No. 15-0166, Case No. 15-13725-13 (05/24/2016) (552 B.R. 817) -- Judge Catherine J. Furay 05/24/2016

Case Summary:
Both Defendants hold mortgages against Plaintiff’s property. Plaintiff seeks to determine priority of the liens. Associated Bank had a first mortgage on the property from 1982. This mortgage contained a future advance clause with specific requirements. United FCS received a mortgage on the property in 1993. In 2000, Associated Bank refinanced their loan by giving the Plaintiff a line of credit and received a new mortgage in return. They then satisfied the 1982 mortgage. In 2001, Associated modified the 2000 loan to extend the credit line. The property is worth significantly less than the sum of the debts. Associated filed a cross-claim against United to assert a theory of subrogation to place its 2000 mortgage in first priority ahead of United’s mortgage.

The Court found that Associated was entitled to subrogation in the amount of $5,965.49, but no more. That is the amount of the 1982 loan that Associated refinanced. All other amounts of Associate’s claim were placed behind United’s lien. Associated did not satisfy the specific requirements of the future advance clause, so it cannot rely on that to secure its 2000 loan. It also did not order a title report before granting that loan to reveal the existence of United’s lien. Subrogation under Wisconsin law is based upon equitable factors. Granting subrogation to Associated beyond the refinanced amount would place it in a position it would not have enjoyed if it had not satisfied and released the 1982 mortgage. Further, it would place United in a worse position than it otherwise would have enjoyed. Therefore, the balance of the equities on the remaining amounts of Associated’s claim beyond the refinanced amount of $5,965.49 favor United and subrogation for those amounts is denied.

Key Terms:
Subrogation

Katherine J. Hebl v. Bradley A. Windenshausen (In re Windeshausen), Adv. No. 15-0083, Case No. 15-10704-7 (02/29/2016) (546 B.R. 798) -- Judge Catherine J. Furay 02/29/2016

Case Summary:
Plaintiff and Defendant are former co-owners of a tavern. The business eventually failed, and the Plaintiff alleged that the Defendant converted funds from the business to pay his personal debts and expenses. Plaintiff sued the Defendant in state court, and the parties settled the matter by submitting it to binding arbitration. The arbitration agreement contained a provision stating that any award would be nondischargeable in bankruptcy. The arbitrators awarded the Plaintiff $310,000, and the Defendant subsequently filed bankruptcy. The Plaintiff brought this adversary and summary judgment motion to declare her debt nondischargeable. Plaintiff argues that the nondischargeability provision from the arbitration agreement is binding upon the Defendant, and even if it is not, promissory or judicial estoppel should prevent him from arguing the debt is dischargeable. The Defendant argues that he did not give his attorney the authority to enter into the agreement, that he understood any award would be dischargeable, and that promissory and judicial estoppel do not apply.

The Court found that although the Defendant did not sign the arbitration agreement himself, he was bound by it because he cloaked his attorney in the authority necessary to settle the case. The Court next found that the nondischargeability provision in the arbitration agreement was not binding on the Defendant. Prepetition waivers of discharge are not allowed. The Code authorizes certain postpetition waivers, but does not authorize prepetition waivers. The Plaintiff also did not satisfy the requirements of promissory or judicial estoppel. The debt may satisfy the elements required for nondischargeability under § 523(a)(2), (4), or (6), but genuine issues of material fact remain, so the Court denied summary judgment. Lastly, the Court found that the Defendant waived the attorney-client privilege by voluntarily disclosing otherwise privileged communications with his attorneys in affidavits submitted to the Court.

Statute/Rule References:
11 U.S.C. § 727(a)(10) -- Waiver of Discharge
Fed R. Evid. 502 -- Attorney-Client Privilege

Key Terms:
Attorney-Client Privilege
Estoppel
Waiver of Discharge

In re Kruse, Case No. 14-15001-7 (02/12/2016) (545 B.R. 581) -- Judge Catherine J. Furay 02/12/2016

Case Summary:
Debtors originally filed their case as a Chapter 13. Upon realizing they did not qualify for Chapter 13 relief, they converted to Chapter 11. The U.S. Trustee brought a motion to convert the Chapter 11 to a 7 or dismiss the case. The Debtors did not oppose conversion to Chapter 7. The U.S. Trustee now brings this motion to dismiss for abuse under 11 U.S.C. § 707(b). Debtors first argued the motion was barred by judicial estoppel. The Court found that judicial estoppel did not apply where the U.S. Trustee had been consistent with his position throughout the proceedings, the Court was not misled, and it would not result in an unfair advantage. Debtors next argued that section 707(b) did not apply to converted cases. The Court followed the majority rule that section 707(b) does apply to converted cases, also citing policy concerns if Debtors were able to file in Chapter 13 or 11 and convert to Chapter 7 to make themselves immune from section 707(b). Lastly, the Court found there was cause for abuse based upon the totality of the circumstances. The Debtors have a stable source of high income and have engaged in reckless consumer spending. Their expenses are unreasonably high and there are deficiencies with their schedules. The Court dismissed the case.

Statute/Rule References:
11 U.S.C. § 707 -- Dismissal

Key Terms:
Abuse
Dismissal
Estoppel

Mark Mathias, Trustee v. Thomas Kriescher and Vicky Kriescher (In re Gibson), Adv. No. 15-0069, Case No. 13-15635-7 (02/08/2016) -- Judge Catherine J. Furay 02/08/2016

Case Summary:
Creditors Thomas and Vicky Kriescher obtained a state court judgment in Minnesota and docketed it in St. Croix County, Wisconsin, just before the Debtor filed for bankruptcy. Trustee Mark Mathias filed a motion for summary judgment seeking to have the judgment set aside as a preferential transfer under 11 U.S.C. § 547. The creditors disputed whether the transfer was made while the Debtor was insolvent and whether the transfer allowed them to receive more than they would have in a chapter 7 distribution had the transfer not been made. The creditors offered amounts of Debtor’s assets and liabilities that would have made Debtor solvent. However, their liability calculation was based only on filed claims, which is not the true extent of a debtor’s liabilities. Their asset values were less than the liabilities the Debtor listed on her schedules, so the Debtor was insolvent at the time of the transfer. Because the Krieschers were unsecured creditors and this was not a 100% distribution case, any transfer would allow them to receive more than they would have without the transfer. The Court found that the elements of a preferential transfer had been satisfied and granted the motion for summary judgment.

Statute/Rule References:
11 U.S.C. § 547 -- Preferences

Key Terms:
Preferences

Farmers Organic Foods International, LLC, and Unsecured Creditors' Committee v. Rancho Cold Storage, Inc. (In re Farmers Organic Foods International, LLC), Adv. No. 15-0132, Case No. 13-16128-11 (02/03/2016) -- Judge Catherine J. Furay 02/03/2016

Case Summary:
Creditor Rancho Cold Storage filed motions for summary judgment in both an adversary proceeding, asking for administrative claim status, and the main case, asking for their claim to be deemed secured. Rancho stored certain products for the Debtor and was owed for certain post-petition storage costs. Rancho eventually sold the product it was storing, but continued to charge Debtor for storage until the buyer took delivery. Debtor disputed both motions for summary judgment, arguing there was no collateral left to secure the claim and that not all of the storage charges fit the requirements of an administrative expense claim under 11 U.S.C. § 503(b)(1). The Court found that there were genuine issues of material fact regarding whether there was any collateral remaining to secure Rancho’s claim and which costs, if any, qualified for administrative expense status. The Court denied both motions for summary judgment.

Statute/Rule References:
11 U.S.C. § 503 -- Administrative Expenses

Key Terms:
Administrative Expenses

Randy Joseph Netzer v. Office of Lawyer Regulation (In re Netzer), Adv. No. 15-0130, Case No. 14-13531-7 (02/03/2016) (545 B.R. 254) -- Judge Catherine J. Furay 02/03/2016

Case Summary:
Debtor Randy Netzer reopened his bankruptcy case to bring this adversary seeking to have a debt declared dischargeable. Netzer, an attorney, was disciplined by the Wisconsin Supreme Court, who assessed costs of $9,222.21. Netzer argues the costs are dischargeable because they were not levied by a governmental unit and are not fines or penalties as required by 11 U.S.C. § 523(a)(7). The Office of Lawyer Regulation argues the costs do satisfy the requirements of section 523(a)(7). The Court finds that the Office of Lawyer Regulation is a governmental unit. The Court also finds that the costs were assessed as a fine or penalty, not merely as compensation for pecuniary loss. Therefore, the costs are declared nondischargeable under section 523(a)(7).

Statute/Rule References:
11 U.S.C. § 523(a)(7) -- Nondischargeability - Fines / Penalties / Forfeitures

Key Terms:
Fines - Penalties - Forfeiture
Nondischargeable Debt

Gina S. Larson and Jessie L. Larson v. Nationstar Mortgage LLC (In re Larson), Adv. No. 14-0075, Case No. 13-14443-13 (01/22/2016) (544 B.R. 883) -- Judge Catherine J. Furay 01/22/2016

Case Summary:
Plaintiffs Gina and Jessie Larson filed this action to avoid the second wholly unsecured mortgage lien held by Nationstar under 11 U.S.C. § 1322(b)(2). The Supreme Court previously held in Dewsnup v. Timm, 502 U.S. 410 (1992) that a lien could not be avoided in a Chapter 7 case under 11 U.S.C. § 506(d). The Supreme Court had also previously held in Nobelman v. American Sav. Bank, 508 U.S. 324 (1993), that a Chapter 13 debtor could not use 11 U.S.C. § 506(a) to divide a mortgage into secured and unsecured portions in order to strip off the unsecured portion. While Nobleman did not address a wholly unsecured second lien in a Chapter 13, all eight circuit courts that have addressed it have held that a wholly unsecured second lien may be avoided under 11 U.S.C. § 1322(b)(2). First the court must use 11 U.S.C. § 506(a) to determine the secured status of the lien. If there is no value to secure the lien, then § 1322(b)(2)’s anti-modification provision does not prevent the lien from being avoided. The recent Supreme Court decision in Bank of America v. Caulkett, 135 S. Ct. 1995 (2015), another Chapter 7 case, does not affect this analysis. Debtors may use 11 U.S.C. § 1322(b)(2) to modify a claim that has no secured component.

Statute/Rule References:
11 U.S.C. § 506(a) -- Determination of Secured Status
11 U.S.C. § 1322(b)(2) -- Modification of Rights of Secured Claimants

Key Terms:
Determination of Secured Status
Lien Avoidance

Ocean Innovations, Inc. and Jet Dock Systems, Inc. v. Roy E. Ahern (In re Ahern), Adv. No. 14-0135, Case No. 14-12717-7 (11/19/2015) (541 B.R. 438) -- Judge Catherine J. Furay 11/19/2015

Case Summary:
Plaintiffs Ocean Innovations, Inc., and Jet Dock Systems, Inc., brought this action to have their judgment for patent infringement declared nondischargeable under 11 U.S.C. § 523(a)(6). Plaintiffs argued that the prior district court judgment for willful and deliberate patent infringement satisfied the willful and malicious elements of § 523(a)(6). Defendant argued that the standards were different and the debt should be discharged. The Court found that the elements of the patent judgment fulfilled the requirements for 523(a)(6). Further, all of the elements of collateral estoppel were satisfied, precluding relitigation of the issues. The Court granted summary judgment to the Plaintiffs and declared the debt nondischargeable.

Statute/Rule References:
11 U.S.C. §523(a)(6) -- Nondischargeability - Willful and Malicious Injury

Key Terms:
Collateral Estoppel
Issue Preclusion
Willful and Malicious - Defined

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