You are here

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

David Lester Warfel, Jr., Jeanne Marie Warfel, and Mark Harring v. 21st Mortgage Corporation (In re Warfel), Adv. Case No. 21-00002, Case No. 20-11651-13 (Indicative Ruling and Order Granting - 12/14/2023) -- Judge Catherine J. Furay 12/14/2023

Case Summary:
This Court entered an order avoiding 21st Mortgage's lien on the Warfels' manufactured home. 21st Mortgage appealed the ruling. While the appeal was pending, the parties agreed to settle the matter; the Warfels would grant 21st Mortgage a replacement lien on their property in exchange for postpetition financing. To accomplish the refinance, the parties needed to vacate the bankruptcy court's order; however, the bankruptcy court lacked jurisdiction to do so since the appeal was pending in front of the district court. So, the parties moved under Federal Rule of Bankruptcy Procedure 8008 for an indicative ruling. They filed a notice in the district court that they were seeking an indicative ruling from the bankruptcy court that would vacate the order and reinstate the lien. This Court issued an indicative ruling stating that it would grant the parties' request to vacate the order on remand, and the district court subsequently remanded the case and closed the appeal. The parties then submitted a joint motion to obtain postpetition credit.

Statutes/Rule Reference:
Fed. R. Bankr. P. 8008 -- Indicative Rulings

Key Term:
Indicative Ruling

In re Nordgaard, Case No. 23-10491-7 (11/29/2023) -- Judge Catherine J. Furay 11/29/2023

Case Summary:
Debtor Jennifer Nordgaard moved to receive funds held in her counsel’s trust account as exempt funds, and the Trustee objected and separately filed an objection to the Debtor’s claim of exemptions. Debtor divorced her ex-spouse several months before filing her petition. As part of the divorce, her husband was ordered to refinance the couples’ marital homestead and pay the Debtor her interest in the homestead’s equity. Her husband failed to refinance the property. Debtor listed the funds that she was entitled to receive from her husband on her Schedule C as exempt under Wisconsin’s homestead exemption and a retirement account exemption. Two months after filing, the divorce court ordered the ex-spouse to pay Debtor the funds, which were then held in Debtor’s counsel’s trust account. After the funds were received, the Debtor quitclaimed her interest in the property to her ex-spouse. Debtor then moved to receive the funds. The Trustee objected. The Court ruled for the Debtor regarding the homestead exemption, and against the Debtor regarding the retirement account exemption. The Debtor was entitled to receive the funds as exempt homestead proceeds because they derived from the Debtor’s former homestead and the Debtor did not relinquish her interest in the property until after the funds were paid. But the funds were not properly exempted as retirement funds because they were not held in a retirement account, they were not employer sponsored, and there was no assertion that the account the funds were held in qualified as an IRA under the Internal Revenue Code.

Statute References:
11 U.S.C. § 522(b)(2) -- Exemptions – State Law
Wis. Stat. § 815.18 -- Exemptions (Homestead and Retirement Benefits)
Wis. Stat. § 815.20 -- Homestead Exemption
Wis. Stat. § 990.01(14)

Key Terms:
Exemptions
Homestead Exemption
Retirement Account Exemption

David Lester Warfel, Jr., Jeanne Marie Warfel, and Mark Harring v. 21st Mortgage Corporation (In re Warfel), Adv. No. 21-00002, Case No. 20-11651-13 (08/09/2023) -- Judge Catherine J. Furay 08/09/2023

Case Summary:
On remand from the district court, the Court ruled in favor of the Warfels and avoided 21st Mortgage’s lien. The Court first determined that joinder of the standing trustee under Fed. R. Bankr. P. 7021 was proper. Second, the Court found that the trustee’s joinder was not precluded by undue prejudice to 21st Mortgage or unsecured creditors. There was no prejudice to 21st Mortgage because it was aware of all the facts and legal arguments that would be presented by the Debtors and had already litigated the issues at trial. There also wasn’t prejudice to unsecured creditors because they were still receiving at least as much as they would in a hypothetical chapter 7 liquidation. Third, the Court found that the complaint was not time barred by section 546 because the Trustee was simply being joined as a party, and the amended complaint adding him sufficiently related back to the original complaint. Finally, since no new facts were presented, the Court reiterated its original finding that 21st Mortgage’s lien was avoidable under section 544. The Court highlighted important facets of the evidence that indicated that the home was intended to be a permanent homestead and not moveable.

Statute/Rule References:
11 U.S.C. § 544(b) -- Lien Avoidance
11 U.S.C. § 546 -- Limitations on Avoiding Powers
Fed. R. Bankr. P. 7021 -- Misjoinder and Non-Joinder of Parties
Fed. R. Civ. P. 21 -- Misjoinder and Nonjoinder of Parties
Wis. Stat. § 101.9218(1), (2) -- Applicability of manufactured home security provisions

Key Terms:
Joinder
Lien Avoidance

Dennis Westley Eliason and Amy Marie Eliason v. Bank of North Dakota (In re Eliason), Adv. No. 23-00002, Case No. 21-12161-7 (08/08/2023) (653 B.R. 646) -- Judge Catherine J. Furay 08/08/2023

Case Summary:
Debtors Amy and Dennis Eliason sued the Bank of North Dakota to have Amy’s student loan debt discharged as an undue hardship under Code section 523(a)(8). Amy took out the loans to attend Globe University in Eau Claire, with the goal of becoming a certified medical assistant. Amy was misled about the medical assistant program at Globe and was thus never able to obtain her medical assistant certification. The Court discharged the loans. Applying the Brunner test, it was clear that Amy and Dennis maintained a minimal standard of living. Most of their expenses were at or below the national standards for a household of three. Second, the Court found that Amy and Dennis have never been able to significantly increase their earning potential, and each have only held low-skilled hourly wage positions for most of the past decade. Dennis has been found administratively disabled for several years and cannot work more than a couple of hours each day. And Amy, having never obtained her medical assistant certification, has been working only part-time, low-wage positions, in between periods of unemployment due to a complicated pregnancy and the deaths of her parents. Also, since the loans were in default, the Bank of North Dakota conceded that if they were found nondischargeable, the entire balance would be due and owing after the case was closed. Lastly, the Court found that the Debtors had made a good faith effort to stay on top of their loans but were simply unable to. The Debtors received at least two deferments and a forbearance during the loan repayment period. They were on a zero-dollar monthly payment schedule for their federal student loans. In sum, the Debtors satisfied the prongs of Brunner, and the loans were discharged.

Statute/Rule References:
11 U.S.C. § 523(a)(8) -- Nondischargeability - student loans

Key Terms:
Brunner Test
Student Loans
Undue Hardship

Paul Burritt v. Shaylynn M. Hoven (In re Hoven), Adv. No. 22-00035, Case No. 22-10605-7 (04/11/2023) (652 B.R. 531) -- Judge Catherine J. Furay 04/11/2023

Case Summary:
Plaintiff Paul Burritt sued Debtor/Defendant Shaylynn Hoven to have his debt be declared nondischargeable under a theory of res judicata and under Code section 523(a)(6). Burritt won summary judgment against Hoven in a state court for making false allegations of sexual assault. The state court judge awarded Burritt nearly $750,000. After Hoven filed bankruptcy, Burritt sought to have the damage award declared nondischargeable under res judicata and section 523(a)(6). The Court denied the complaint on both counts. First, the Court found that the issue wasn’t actually litigated in state court (due to the summary judgment), the state court did not make all the findings necessary to satisfy the elements of 523(a)(6), and that the damages awarded by the state court were not justified. Second, the Court ruled, based on the evidence, that Hoven’s actions were willful but not malicious. The evidence showed that Hoven was aware her actions were wrong at the time she committed them, but not that she understood the consequences of making the false accusations.

Statutes/Rules:
11 U.S.C. § 523(a)(6)

Key Terms:
Collateral Estoppel
Res Judicata
Willful and Malicious Injury

Ben Parr v. Clinton J. Rassbach and Molly A. Rassbach (In re Rassbach), Adv. No. 22-00050, Case No. 22-11344-7 (03/13/2023) 650 B.R. 568 -- Judge Catherine J. Furay 03/13/2023

Case Summary:
Defendants Clinton and Molly Rassbach moved to dismiss Plaintiff's complaint based on a failure to state a claim. Defendants argued that the complaint failed to state a plausible claim for relief under sections 523(a)(2)(A), 523(a)(6), and against Molly Rassbach individually. The Plaintiff responded arguing that the Court should apply the doctrines of res judicata and collateral estoppel due to the underlying state court action, and that the complaint otherwise states claims for relief under 523(a)(2)(A) and 523(a)(6). In reply, the Defendants claimed that the Plaintiff mischaracterized the findings of the state court. This Court denied the Defendants' motion. First, this Court did not apply the preclusive effect of res judicata, but looked beyond the state court docket as permitted under Brown v. Felsen to find that there was a plausible claim for relief under sections 523(a)(2)(A) and 523(a)(6). Second, the Court held that Molly Rassbach could potentially have imputed liability for Clinton Rassbach's actions as a co-owner of the Defendants' LLC and the recent Supreme Court decision Bartenwerfer v. Buckley. Also, Molly is an appropriate party under Federal Rule 20.

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - false pretenses, false representation, or fraud
11 U.S.C. § 523(a)(6) -- Nondischargeability - willful and malicious injury
Fed. R. Civ. P. 12(b)(6) -- Failure to State a Claim
Fed. R. Civ. P. 20 -- Permissive Joinder of Parties

Key Terms:
Collateral Estoppel
Permissive Joinder
Res Judicata

Jonah Heyerholm, et al. v. Ryan M. Johnson, et al. (In re Johnson), Adv. No. 22-00049, Case No. 22-11548-7 (01/24/2023) -- Judge Catherine J. Furay 01/24/2023

Case Summary:
Plaintiffs John, Rita, and Jonah Heyerholm sued defendants Ryan and Angela Johnson to except their debt from discharge under section 523(a)(6). Jonah Heyerholm was injured when the defendants offered to take him wakeboarding on their boat on Rock Lake, Wisconsin. Jonah accepted their invitation. When Jonah was done wakeboarding, defendant Ryan Johnson maneuvered the boat into a position in front of Jonah while he was in the water. Ryan kept the boat in neutral rather than turning it off. Ryan engaged the transmission and the boat moved in reverse toward Jonah and injured him. The Johnsons did not maintain liability insurance for the boat. The plaintiffs’ complaint alleged that the boat had a faulty transmission and would sometimes move in reverse when the operator intended to move forward. Thus, they argue that the defendant’s actions constituted willful and malicious injury under section 523(a)(6). The defendants filed a motion to dismiss, arguing that a claim under section 523(a)(6) requires an intent to injure, which the complaint does not allege. Therefore, they argued that the complaint should be dismissed because it fails to state a claim. The Court denied the defendants’ motion. Case law from the Seventh Circuit states that “willful” injury under section 523(a)(6) can be found when a defendant acts with an intent to injure, or when their actions are substantially certain to result in injury. Here, accepting the allegations in the complaint as true (which the Court must do when deciding a motion to dismiss), the plaintiffs alleged that the boat could move in reverse at any time. And they alleged that the defendant maneuvered the boat in front of Jonah, kept the boat in neutral, and then it reversed into Jonah. Accepting these allegations as true and drawing all reasonable inferences in favor of the plaintiffs, these actions were substantially likely to result in injury. Thus, the Court held that the complaint stated a plausible claim for relief and denied the motion to dismiss.

Statute/Rule References:
11 U.S.C. § 523(a)(6) -- Nondischargeability - Willful and Malicious Injury
Rule 12(b)(6) -- Failure to State a Claim

Key Terms:
Motion to Dismiss
Willful and Malicious Injury

In re Peterman, Case No. 22-10296-7 (12/20/2022) -- Judge Catherine J. Furay 12/20/2022

Case Summary:
The United States Trustee moved to dismiss Debtor Kelly Lynn Peterman’s Chapter 7 case under section 707(b)(3), arguing that the totality of his financial circumstances demonstrated abuse. The Debtor owned a sport boat and had an above-median annual household income. The UST argued that the boat was unnecessary luxury collateral, and that his income was high enough to fund a Chapter 13 plan that would substantially repay his creditors. In response, the Debtor argued that he used the boat as part of a seasonal dock cleaning business, and that he was facing significant upcoming expenses and income adjustments that would diminish the return that he could pay his creditors. After an evidentiary hearing, the Court agreed with the Debtor and denied the UST’s motion. The evidence showed that the boat was used in the business and that the Debtor recently experienced a reduction in income. He also had several significant upcoming expenses, including two surgeries. As a result, the UST could not show, by a preponderance of the evidence, that the Debtor’s financial circumstances demonstrated abuse, and the case was allowed to continue.

Statute/Rule References:
11 U.S.C. § 707(b)(3) -- Dismissal

Key Terms:
Dismissal (for abuse/totality of the circumstances)
Luxury Collateral

Michael Erwin Acuna v. Illinois Department of Revenue and Internal Revenue Service (In re Acuna), Adv. No. 21-00034, Case No. 21-11517-7 (10/27/2022) -- Judge Catherine J. Furay 10/27/2022

Case Summary:
Debtor filed a motion under Rule 59(e) to amend or alter the Court’s summary judgment decision in favor of the Internal Revenue Service (“IRS”). The Debtor sought to overturn the judgment on grounds that the Court did not properly consider the Debtor’s argument under section 506(d), the Court improperly granted summary judgment to the IRS, and the Court did not consider dischargeability. In response, the IRS argued that the Court properly decided the issue but suggested that summary judgment was proper because the trustee’s rights as a lien creditor automatically rendered the IRS’s improperly recorded tax liens invalid against the estate, rather than the Debtor’s rights to avoid the lien under section 522. Regarding his section 506(d) argument, the Debtor did not present new evidence or argument in support of his motion, but merely reiterated arguments that he had previously presented. Nonetheless, in reconsidering the issue, the Court again rejected the Debtor’s argument under section 506. Also, although the IRS was correct in its alternative argument, the Court’s prior reasoning was proper under the facts of the case. Next, the Court reviewed case law regarding Rule 56(f) and determined that it was justified in granting summary judgment to the IRS because both parties agreed that there were no remaining material issues of fact. Lastly, under Rule 54(c), the Court again concluded that since no argument regarding dischargeability was presented, the Court did not need to rule on it.

Statute/Rule References:
11 U.S.C. § 506(d) -- Determination of Secured Status
Fed. R. Civ. P. 59(e) -- Motion to Alter or Amend a Judgment

Key Terms:
Dischargeability (taxes)
Motion to Alter or Amend a Judgment
Reconsideration

Michael Erwin Acuna v. Illinois Department of Revenue and Internal Revenue Service (In re Acuna), Adv. No. 21-00034, Case No. 21-11517-7 (10/11/2022) -- Judge Catherine J. Furay 10/11/2022

Case Summary:
Debtor filed a motion under Rule 59(e) to amend or alter the Court's summary judgment decision in favor of the Illinois Department of Revenue (“IDOR”). The Debtor sought to overturn the judgment on grounds that the Court did not properly consider the Debtor's argument under section 506(d). The Debtor did not present new evidence or argument in support of his motion, but merely reiterated arguments that he had previously presented. Accordingly, the Court denied the motion because the Debtor failed to clearly establish that the Court had made a manifest error of law or fact.

Statute/Rule References:
Fed. R. Civ. P. 59(e) -- Motion to Alter or Amend a Judgment
11 U.S.C. § 506(d) – Determination of Secure Status

Key Terms:
Dischargeability (taxes)
Motion to Alter or Amend a Judgment
Reconsideration

Pages