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

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

Thomas G. Smith v. SoFi Lending Corp. and Mohela (In re Smith), Adv. No. 22-00011, Case No. 21-11453-7 (08/05/2022) -- Judge Catherine J. Furay) 08/05/2022

Case Summary:
Debtor sued student loan creditor seeking to discharge his student loans, arguing that they were private student loan debts not described under 11 U.S.C. § 523(a)(8). In response, creditor sought to dismiss the claim under Rule 12(b)(6) for failure to state a claim. The Court agreed with creditor that Debtor's Amended Complaint failed to contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face under section 523(a)(8)(A)(ii). The Debtor did not include sufficient factual allegations about how the loans failed to provide any educational benefit, as required under 523(a)(8)(A)(ii). Similarly, the Court agreed with creditor that the Amended Complaint failed to state a claim for a cause of action under section 523(a)(8)(B) because it only contained a threadbare recitation that the debts were not qualified educational loans, without more. Finding for Debtor, however, the Court ruled that the allegations in the Amended Complaint were sufficient for Debtor to make a plausible undue hardship claim under section 523(a)(8).

Statute/Rule References:
11 U.S.C. § 523(a)(8) -- Nondischargeability - Student Loans
Fed. R. Civ. P. 12(b)(6) -- Failure to State a Claim

Key Terms:
Dischargeability
Qualified Educational Loan
Student Loan

Michael Erwin Acuna v. Illinois Department of Revenue and Internal Revenue Service (In re Acuna), Adv. No. 21-00034, Case No. 21-11517-7 (07/29/2022) (643 B.R. 583) -- Judge Catherine J. Furay 07/29/2022

Case Summary (for decision pertaining to IDOR):
Debtor initiated an adversary proceeding against both the IRS and the Illinois Department of Revenue (IDOR), Counts II, III, and IV of which pertain only to the IDOR. Debtor and the IDOR filed cross-motions for summary judgment. The core of the motions was the Debtor's Illinois state income taxes and tax returns for 2016, 2017, and 2018. Count II relates to statutory liens resulting from unpaid income taxes from 2016 and 2017. IDOR filed liens for both years of unpaid taxes in Sangamon County, Illinois. Both parties agree, however, that the Debtor does not have any personal property in the state of Illinois, nor has the Debtor ever owned real property in Sangamon County, Illinois. The Court held that, based on the record as well as the Debtor's current schedules, IDOR had not shown that it has any lien on any property of the estate. There was thus no genuine issue on the question of whether IDOR had a valid lien in any of Debtor's disclosed property. But this determination is confined to the property the Debtor has disclosed as property of the estate. Count III related to Debtor's 2018 Illinois individual income tax liability. Debtor timely filed his original 2018 Illinois Individual Income Tax Return, in which he incorrectly reported his Wisconsin sourced wage income as taxable income. But then the Debtor filed an amended return indicating his tax liability was zero, which IDOR accepted. Indeed, in its answer, IDOR has conceded that it accepted the Debtor's amended return and that Debtor has no tax liability for 2018. The Court reasoned that there was no controversy and thus no dispute that the Court needed to determine. Summary judgment on Count III was therefore denied as moot and for lack of justiciability. Finally, in Count IV, Debtor asked the Court to determine and declare on summary judgment that the 2017 unpaid Illinois income tax claim was not an eighth priority tax claim, did not fall within any section 523 exception to discharge, and was a general unsecured claim that had been discharged. In short, the issue turned on whether a federal change notification is a "return" under applicable provisions of the Illinois Income Tax Act. The Court found that the federal change notification was a return, and therefore, the debt was nondischargeable under section 507(a)(8).

Statute/Rule References:
11 U.S.C. § 506 -- Determination of secured status
11 U.S.C. § 507(a)(8) -- Priority of claims - taxes
11 U.S.C.  523(a)(1) -- Nondischargeability – taxes

Key Terms:
Lien Avoidance
Priority Tax Debt

Michael Erwin Acuna v. Illinois Department of Revenue and Internal Revenue Service (In re Acuna), Adv. No. 21-00034, Case No. 21-11517-7 (07/29/2022) -- Judge Catherine J. Furay 07/29/2022

Case Summary (for decision pertaining to IRS):
Debtor initiated an adversary proceeding against both the IRS and the Illinois Department of Revenue, Count I of which pertains only to the IRS. Debtor filed a Motion for Summary Judgment asking that the Court declare the IRS's federal tax liens against the Debtor's real and personal property were forever void for all purposes under section 506(d) and section 522(h). However, the Court found that the IRS's liens may not be avoided under section 506(d) of the Code. Turning to Section 6323 of the Internal Revenue Code, the Court found the IRS’s failure to file an NFTL only made its liens not perfected or enforceable against third parties. However, an NFTL is not needed to perfect a tax lien against the taxpayer and therefore the IRS had a validly perfected lien at the time the Debtor filed for bankruptcy. Further, the parties agreed that, to the extent the IRS's liens encumbered Debtor's exempt property, they were avoidable under 11 U.S.C. § 522(h). This is because the IRS filed its notice of federal tax lien in the wrong county as required under Wisconsin law. However, the Court held that the Debtor is entitled to summary judgment avoiding his federal tax liens on his exempt property under 11 U.S.C. § 522(h), subject to section 522(c)(1), which renders exempt property liable for taxes that are excepted from discharge under section 523(a)(1) of the Bankruptcy Code. The Court further held the Debtor failed to establish that there is no genuine issue of material fact as to whether the IRS may avail itself of section 522(c)(1), because no nondischargeability action had been brought.

Statute/Rule References:
11 U.S.C. § 506 -- Determination of secured status
11 U.S.C. § 507(a)(8) -- Priority of claims - taxes
11 U.S.C.  523(a)(1) -- Nondischargeability – taxes

Key Terms:
Lien Avoidance
Priority Tax Debt

Michael Schuster v. Dennis Mark Warner (In re Warner), Adv. No. 21-00035, Case No. 21-11039-13 (07/21/2022) -- Judge Catherine J. Furay 07/21/2022

Case Summary:
Creditor filed an adversary proceeding against Debtor alleging that he was the sole owner to a piece of property the Debtor listed as “jointly owned” in his schedules. Despite what was listed on the Debtor’s schedules, Debtor responded by alleging creditor was merely a lienholder on the property. Both parties asked the Court for a declaratory judgment determining who owned the Property. Further, each party believed that they were a 100 percent owner of the Property and asked the Court to order the property be put in either party’s name alone. As a preliminary matter, the Court held that a just disposition of the case would be best achieved by considering the Debtor’s late-filed answer to the Complaint. The Court found that deciding dispositive issues against a party because of a delay in responding to requests to admit where the defendant was an elderly, ill, and unrepresented party does not strike a balance between the diligence in litigation and the interest of justice. Rather, justice was best served by deeming proffered facts not admitted and considering the Debtor’s responses. Additionally, Plaintiff did not assert how the delay would prejudice his litigation of the case. Turning to the merits of the cross-motions for summary judgment, the Court found that the warranty deed was clear that both parties were joint tenants on the property and that there was no genuine issue of material fact about the issue of which party owns the property. Therefore, the Court granted the motion and cross-motion for summary judgment to the extent that each party requested a declaratory judgment of who owned the property, holding that the parties jointly owned the property. The Court, however, denied both the motion and cross-motion for summary judgment to the extent that the parties asked the Court to determine either party was a 100 percent owner of the property and that the Court order the property be put in either party’s name alone.

Statute/Rule References:
11 U.S.C. § 541 -- Property of the Estate

Key Terms:
Joint Tenancy

Maple Leaf Cheese Cooperative v. Maple Leaf Cheesemakers, Inc., (In re Maple Leaf Cheese Cooperative), Adv. No. 21-00039, Case No. 20-13006-11 (06/14/2022) -- Judge Catherine Furray 06/14/2022

Case Summary:
Defendant moved to dismiss Plaintiff’s adversary proceeding regarding property damage and breach of contract. Defendant argued that Plaintiff lacked standing to assert such claims because it transferred the real property and equipment to its primary secured lender after it failed to find a suitable buyer within the time limit imposed by its confirmed plan. The Plaintiff objected, stating that the Plan expressly reserved its right to prosecute claims, including property damage, against Defendant. The Court found that Plaintiff had standing to assert the claims against Defendant because the language in the confirmed plan expressly contemplated the Plaintiff pursuing claims against Defendant for property damage. Defendant was aware that the claims were not transferred, and the basis for the claims accrued before any surrender or transfer of the property to the primary secured lender. Further, the Court held that the Plaintiff had constitutional standing to bring the claims because the Plaintiff suffered “injury-in-fact,” and the damage was “concrete and particularized.”

Statute/Rule References:
11 U.S.C. § 541 -- Property of the Estate
11 U.S.C. § 1123 -- Contents of Plan
Fed. R. Civ. P. 12(b)(1) -- Lack of Subject-Matter Jurisdiction

Key Terms:
Jurisdiction
Standing

In re Leaver, Case No. 21-10905-12 (05/26/2022) (641 B.R. 197) -- Judge Catherine J. Furay 05/26/2022

Case Summary:
Creditor argued its administrative expense priority claim from the Debtor's previously dismissed bankruptcy proceeding carried over to a Debtor's subsequently filed bankruptcy, entitling the creditor to an administrative expense priority claim in the second bankruptcy. The Court found that administrative expense claims under section 503 of the Bankruptcy Code are tied to the estate in a particular bankruptcy case, and so the creditor must show that its administrative claims asserted in the second bankruptcy case relate solely to the estate in that second bankruptcy. Because the creditor could not do so, its claims against the Debtor must be treated as general unsecured claims.

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

Key Terms:
Administrative Expenses
Administrative Priority Claim

Pages