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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 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

In re Durand and Durand Land Holdings, LLC, Case Nos. 23-12043-11 & 23-12045-11 (Jointly Administered) (03/19/2024) -- Judge Catherine J. Furay 03/19/2024

Case Summary:
Creditor Newtek Small Business Finance, LLC, filed a motion for relief from stay to foreclose against real property owned by the Debtor for cause, including lack of adequate protection, and on the basis that there was no equity in the property and it wasn’t necessary for an effective reorganization. Prior to the hearing, the Debtor stipulated that there was no equity in the property. But the Debtor argued that Newtek over-valued the property, and that based on an actual, lower valuation, the Debtor could afford adequate protection payments. Debtor also argued that his primary source of income derived from a business that he operated out of the property, and thus it was necessary for an effective reorganization.

The Court ruled for Newtek. First, Newtek presented testimony from an appraiser and an appraisal report establishing the value of the property as significantly higher than what the Debtor listed in its schedules. The Debtor attempted to counter Newtek’s evidence on valuation through personal testimony, but the weight of the evidence, including a bid at a recent sheriff’s sale, persuaded the Court that the true value of the property aligned with Newtek’s valuation. Thus, the amount of adequate protection that the Debtor would be required to pay was much higher than he could afford, and cause was shown in support of lifting the stay. Second, the Debtor stipulated that there was no equity in the property, and the evidence showed that the property wasn’t necessary for an effective reorganization, because no such reorganization was reasonably in prospect. More than four months into the case, the Debtor had not employed an appraiser, had not filed a disclosure statement or plan, and was delinquent on taxes. Plus, based on profit and loss statements from the Debtor and his related entities, there was no evidence that the Debtor would be able to present a plan that satisfied the best interest of creditors.

Statutes/Rule Reference:
11 U.S.C. § 362(d)(1), (2)

Key Terms:
Adequate Protection
Automatic Stay
Equity
Valuation

In re Durand and Durand Land Holdings, LLC, Case Nos. 23-12043-11 & 23-12045-11 (Jointly Administered) (03/15/2024) -- Judge Catherine J. Furay 03/15/2024

Case Summary:
Creditor Newtek Small Business Finance, LLC, filed a motion for relief from stay to foreclose on certain real property owned by the Debtor. The Debtor objected, and the Court scheduled a final hearing. The Court issued a standard final hearing order, requiring the parties to exchange and submit witness and exhibit lists no less than 7 days before the date set for hearing. Newtek timely submitted its witness and exhibit lists. The Debtor filed its lists 1 day late. On its witness list, the Debtor stated that an appraiser, Darin Voegeli, would be testifying as to the value of the real property. And on its exhibit list, Debtor stated that it intended to introduce an appraisal prepared by Mr. Voegeli “when received.” Newtek moved to prohibit the Debtor from calling Mr. Voegeli as a witness and prohibit the Debtor from introducing the appraisal as evidence. The Court granted the motion.  Newtek did not have sufficient opportunity to review the appraisal or any opinions. There was no explanation for the failure to comply with the Court’s final hearing order and no suggestion of excusable neglect.

Statutes/Rule References:
Fed. R. Evid. 403 -- Excluding Relevant Evidence for Prejudice, Confusion, Waste of Time, or Other Reasons
Fed. R. Evid. 702 -- Testimony by Expert Witnesses
Fed. R. Evid. 703 -- Bases of an Expert

Key Terms:
Evidence
Motion in Limine

In re Skomars, Case No. 22-11992-7 (12/28/2023) -- Judge Catherine J. Furay 12/28/2023

Case Summary:
Debtor claimed an interest in a life insurance contract as an exempt annuity under Wis. Stat. § 815.18(3)(f) and claimed an interest in tools as exempt under section 815.18(3)(b). The Debtor first argued that the annuity exemption statute was ambiguous, and that the Debtor in fact owned the annuity. Second, he argued that the exemption statute regarding tools was also ambiguous and that it didn’t require active use of tools in a business to qualify for the exemption. The Trustee objected, first arguing that the funds derived from the life insurance contract did not qualify as an exempt annuity, and second, that the tools were not used in a business of the Debtor, and thus also did not qualify for an exemption. This Court ruled for the Trustee and found that the Debtor could not use the claimed exemptions. First, the Court found that the life insurance contract was unambiguous: the Debtor’s late mother was listed as the owner, not the Debtor. Under the plain language of the statute, Debtor did not qualify for the exemption because he was not the owner. And second, there was no evidence that the Debtor used the tools in connection with any business in the past 4 years, or that he was going to use the tools in a business in the future. Thus, he also couldn’t claim the tools as exempt.

Statutes/Rule References:

Wis. Stat. § 815.18(3)(b) -- Business property
Wis. Stat. § 815.18(3)(f) -- Annuities
Fed. R. Bankr. P. 4003(c) -- Burden of proof

Key Terms:

Business and Farm Property Exemption
Exemptions
Life Insurance and Annuities Exemption
State Law Exemptions

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

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