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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 Leaver, Case No. 20-11122-12 (03/24/2021) (627 B.R. 517) -- Judge Catherine J. Furay 03/24/2021

Case Summary:
Creditor filed a proof of claim in the secured amount of $106,448.84 in Debtor’s Chapter 12 bankruptcy. The basis for the claim was a boarding lien. Shortly after the Debtor filed his Chapter 12 plan, a stipulation between Creditor and Debtor providing for the release of livestock was filed (“Stipulation”). The Stipulation also contained an agreement that Creditor would retain its lien rights. The Creditor objected to the Chapter 12 plan shortly thereafter, arguing the plan did not provide for its lien as stipulated or to treat the claim as an administrative expense.  Debtor then filed an amended plan. The amended plan, however, did not change the treatment of Creditor. The Court found that because Wis. Stat. § 779.43(3) (governing the liens of keepers) requires possession for perfection of a lien, Creditor no longer held a secured claim based on its pre-petition or post-petition statutory lien because it surrendered possession of the livestock. Similarly, when possession was relinquished, perfection of Creditor’s lien required a financing statement pursuant to Wis. Stat. § 409.310. Because this requirement was not met, perfection of Creditor’s lien was lost. Further, the Court found that Creditor was entitled to an administrative expense claim for its entire claim because Creditor’s surrender of the livestock to Debtor permitted Debtor to have possession of animals necessary for the operation of his business pursuant to 11 U.S.C. § 503(b)(1)(A).

Statute/Rule References:
11 U.S.C. § 503(b)(1)(A) -- Administrative expenses
Wis. Stat. § 409.310 -- When filing required to perfect security interest or agricultural lien
Wis. Stat. § 779.43(3) -- Liens of keepers

Key Terms:
Administrative Expenses
Perfection (Lien Perfection)

In re Beutel, Case No. 19-12690-13 (03/17/2021) -- Judge Catherine J. Furay 03/17/2021

Following dismissal of an adversary proceeding for nondischargeability of debt under a voluntary Chapter 13 bankruptcy, Debtor’s attorney applied for compensation (“Application”). The Standing Chapter 13 Trustee (“Trustee”) objected to the Application. The Trustee asserted that although the services provided were beneficial and necessary to the Debtor pursuant to 11 U.S.C § 330(a)(4)(B), they were not “necessary to the administration of, or beneficial at the time which the service was rendered toward the completion of” the case pursuant to 11 U.S.C. § 330(a)(3)(C). The Trustee made this assertion because the adversary proceeding related to the nondischargeability of debt, and although the debt was found to be dischargeable, such a finding did not lead to a reduction of the debt and no attorneys’ fees were awarded. The Debtor’s counsel responded by arguing that the language of 11 U.S.C. § 330(a)(4) is clear and there is no requirement that an application for compensation satisfy (4)(A) and provide a benefit for the estate/necessary for the administration, as well as satisfy (4)(B) to provide services that provide a benefit and are necessary to the Debtor.

Finding that a lack of benefit to the estate is not an absolute bar to compensation of a debtor’s counsel under § 330(a)(4)(B), the Court overruled the objection of the Trustee. The Court found that the magnitude of the claim in the adversary proceeding and its potential impact on the ability of the Debtor to achieve a fresh start were sufficient to determine that the services were a necessary benefit to the Debtor within the exceptions to the general rule that fees are compensable only if there is a benefit to the estate.

Statute/Rule References:
11 U.S.C. § 330 -- Compensation of professionals

Key Terms:
Compensation of Professionals

In re ATVT LLC, Case No. 20-11746-11 (03/12/2021) -- Judge Catherine J. Furay 03/12/2021

Case Summary:
Debtor was a kombucha producer who filed for bankruptcy under Chapter 11. Debtor concluded it could not make a decision regarding nonresidential real property lease assumption or rejection by the statutory deadline under 11 U.S.C § 365(d0(4)(A)(i). Debtor requested an extension of the deadline to permit Debtor adequate time to complete selling its assets. Debtor argued that if forced to assume within the statutory time, there may be unnecessary burden on the estate in the form of administrative expenses if it was later determined lease assumption is not required. Similarly, Debtor argued that premature rejection of the lease would leave the Debtor without the ability to operate its business and cripple the Debtor’s ability to maximize recovery efforts for the benefit of creditors. Plaintiff, Debtor’s landlord, opposed this request. Plaintiff’s attorneys then filed an Application for Allowance of Administrative Compensation. The Objectors to Application (which included the Debtor and Debtor’s primary secured creditor) argued that under 11 U.S.C. § 502(b)(6), a landlord’s claim for damages is limited to the amounts resulting from termination of a lease. Objectors to the Application also asserted that the requested sums do not qualify as administrative expense claims under § 503(b)(1) because the amounts were not actual or necessary costs and expenses of preserving the estate. The Court allowed the administrative expense claim of Debtor’s landlord. Based on the position taken by the Debtor, failing to extend the deadline to assume or reject the lease would have necessary implications for the sale process, could have impaired continued operation of the business, and would have impaired the ability to maximize the estate. Thus, the Court held that the work related to review of the lease and the motion for extension and its possible termination all align with the goals of preserving the estate by maximizing value for creditors, incentivizing creditors to do business with the Debtor, and preserving value.

Statute/Rule References:
11 U.S.C. § 502 -- Allowance of claims or interests
11 U.S.C. § 503 -- Administrative expenses

Key Terms:
Administrative Expenses

MM Education LLC, Mohamed Jaffer, and Yaseen Jaffer v. Todd Allen Barnhardt (In re Barnhardt), Adv. No. 20-00014, Case No. 19-13897-7 (02/26/2021) -- Judge Catherine J. Furay 02/26/2021

Case Summary:
The U.S. Trustee commenced an action seeking denial of discharge under 11 U.S.C. § 727 in a voluntary Chapter 7. Defendant-Debtor consented to a waiver of discharge and an order denying discharge was entered in the Debtor’s main case. Following a motion for summary judgment, the Court held it would abstain from the proceeding since discharge was waived by Debtor and discharge was denied. Plaintiffs indicated a desire that the Court continue with the scheduled trial to determine the amount of the debt owed by Defendant to Plaintiffs. The Court found that it lacks subject matter jurisdiction as it related to Plaintiffs’ claims because the debt was already established as nondischargeable. The amount of the debt is neither “arising out” of or related to Title 11 of the United States Code as required by 28 U.S.C. § 1334 and 11 U.S.C. § 157(c)(1). The Court further held that the Plaintiffs’ adversary proceeding is moot because the order waiving and denying discharge in Debtors’ case renders the Court unable to grant Plaintiffs any meaningful relief in addition to what they have already received.

Statute/Rule References:
28 U.S.C. § 157(c)(1) -- Core Proceedings
28 U.S.C. § 1334 -- Abstention

Key Terms:
Jurisdiction

Rob’s Automotive, LLC v. Jacob Lazarz (In re Lazarz), Adv. No. 20-0049, Case No. 19-13756-13 (01/13/2021) -- Judge Catherine J. Furay 01/13/2021

Case Summary:
Plaintiff was a Wisconsin limited liability company that performed auto repairs, body and paint work, detailing of cars, and the buying and selling of used cars. Plaintiff and Defendant entered into a business relationship. The business relationship ended that was followed by litigation in state court. Plaintiff filed an adversary proceeding seeking a determination that various debts owed to Plaintiff are not dischargeable under 11 U.S.C. § 523(a)(2), (4), or (6). Plaintiff moved for summary judgment.

First, the Court granted summary judgment pertaining to unpaid payroll reimbursements that Plaintiff alleged constituted breach of contract because there was no dispute about the amount at issue owed to the Plaintiff. Second, the Court denied Plaintiff's request for summary judgment for a claim of over-reimbursement of checks under a theory of false representation because the Plaintiff presented no evidence that (1) the Defendant knew he was making false representations when the checks were written and that (2) Plaintiff relied on the representations as required by 11 U.S.C. § 523(a)(2)(A). Third, the Court denied Plaintiff's request for summary judgment for a claim that the Defendant kept proceeds from the sale of an automotive hoist purchased using Plaintiff's credit card because there were material disputes of fact pertaining to these claims. Fourth, the Court denied Plaintiff's summary judgment for a claim that Plaintiff suffered damages by paying for a client database stored on a hard drive that was in Defendant's possession because Plaintiff presented no facts to prove either that Plaintiff suffered any actual damages or that Defendant used the data.

The Court also denied Plaintiff's request for summary judgment under 11 U.S.C § 523(a)(4), defalcation while acting in a fiduciary duty, because Plaintiff failed to establish any evidence of a fiduciary duty on the part of the Defendant. The Court held that repeated conclusory assertions that there was a fiduciary duty does not constitute evidence of any difference in power or ascendancy between Plaintiff and the Defendant, nor is it evidence of the imposition of particular duties imposed on Defendant that would arise to the level of a fiduciary capacity. Summary judgment on a 11 U.S.C § 523(a)(4) claim for embezzlement was also denied because Plaintiff did not offer evidence that satisfies the requisite intent of embezzlement; simply alleging that the "only reasonable conclusion" for checks being written for greater amounts than the legitimate expenses is that Defendant did so with fraudulent intent" does not satisfy Plaintiff's burden of proof.

Finally, the Court denied Plaintiff's summary judgment request for claims that over-reimbursed checks are nondischargeable under 11 U.S.C. § 523(a)(6) on the grounds that the drafting of the checks were done willfully and with malice. The Court held that Plaintiff failed to satisfy the requirement that defendant acted willfully because Plaintiff offered no evidence Defendant knew there was an over-reimbursement when the checks were drawn.

Statute/Rule Reference:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - false pretenses, false representation, or fraud
11 U.S.C. § 523(a)(4) -- Nondischargeability – fraud or defalcation in fiduciary capacity; embezzlement
11 U.S.C. § 523(a)(6) -- Nondischargeability - willful and malicious injury

Key Terms:
Defalcation While Acting as a Fiduciary
False Representation
Fiduciary Capacity
Summary Judgment
Willful and Malicious

In re Spindler, Case No. 20-11642-12 (12/28/2020) (623 B.R. 543) -- Judge Catherine J. Furay 12/28/2020

Case Summary:
Debtors filed a Chapter 12 plan proposing to reamortize debt on personal property and the mortgage on Debtors’ homestead. Debtors proposed making these payments directly to the Creditor. The Trustee objected asserting that the re-amortized debt should be paid through the Trustee. Debtors filed an amended plan proposing the personal property debt be paid through the Trustee and the reamortized mortgage debt be paid directly to the Creditor. The Trustee maintained the objection. The Court held that direct payments, like the one proposed in the plan, must be evaluated on a case-by-case basis especially given the purpose of Chapter 12. Applying the factors used in Pianowski, the Court determined the amended plan struck an appropriate balance and could be confirmed over the Trustee’s objection. 

Statute/Rule References:
11 U.S.C. § 1222(a)(1) -- Contents of plan - future earnings
11 U.S.C. § 1225 -- Confirmation of plan
11 U.S.C. § 1226(c) -- Payments

Key Terms:
Chapter 12 plan
Direct payment
Pianowski factors     

Dells Land and Cattle Company II, LLC v. Jason J. Krus and Trina B. Krus (In re Krus), Adv. No. 19-00048, Case No. 17-12413-13 (10/23/2020) -- Judge Catherine J. Furay 10/23/2020

Case Summary:
Debtors dismissed their Chapter 13 case while an adversary proceeding initiated by Plaintiffs was pending. Debtor defendants argued that although the Court had the ability to retain jurisdiction of the adversary proceeding, it should exercise its discretion and dismiss the adversary. The Plaintiffs argued jurisdiction should be retained because of the substantial time the parties had devoted to the issue. The Court found that the considerations of retention (i.e., judicial economy, federal interest, effect of the proceeding on the bankruptcy case) did not weigh in favor of the Court retaining jurisdiction. The Court found that the remaining issues were solely state law claims and the adversary proceeding had not advanced to a point where it would be unfair to the parties to litigate the matter in state court as exhibits had not been filed and a hearing had not yet occurred. The Court exercised its discretion and dismissed the adversary proceeding.

Key Terms:
Federal Interest
Judicial Economy
Jurisdiction of Adversary Proceedings
Retaining Jurisdiction

In re Rusch, Case No. 18-14155-7 (10/22/2020) -- Judge Catherine J. Furay 10/22/2020

Case Summary:
Debtor, for the second time, moved for reconsideration of the Court’s decision to approve the Trustee’s motion to sell property free and clear of liens and encumbrances. Just as in the first motion to reconsider, Debtor asserted that, although he was present on the phone, he was muted and so his questions and statements were not addressed. Debtor also, again, challenged the validity of the state court judgment against him. At the hearing referenced by the Debtor, his attorney was present and withdrew the objection to the motion. The Trustee’s motion was then approved. The Court, as a courtesy, heard Debtor’s first motion to reconsider and allowed the Debtor to voice his questions and concerns. The Court, after considering the Debtor’s position, denied the motion. The second motion for reconsideration repeats the same grounds as the first motion. The second reconsideration motion was denied.

Statute/Rule References:
Fed. R. Civ. P. 54(b); Fed. R. Bankr. P. 7054

Key Terms:
Reconsideration

Travis P. Krizan and Ronald V. Krizan v. Dale A. Krizan (In re Krizan), Adv. No. 20-0016, Case No. 20-10232-7 (10/16/2020) -- Judge Catherine J. Furay 10/16/2020

Case Summary:
Plaintiffs sought a determination that the debt owed to them is nondischargeable under 11 U.S.C. § 523(a)(2)(A). Debtor moved to dismiss under Fed. R. Civ. P. 12, made applicable by Fed. R. Bankr. P. 7012. He asserted the complaint failed to state a cause of action and the Plaintiffs were collaterally estopped.  The Debtor also filed various affidavits. Plaintiffs responded to the motion with supporting affidavits. The submission of affidavits and documents converted the motion to dismiss to a summary judgment motion (pursuant to Fed. R. Bankr. P. 56, made applicable by Fed. R. Bankr. P. 7056). The Court further determined collateral estoppel did not apply because the state court did not address Plaintiffs’ causes of action for fraud and misrepresentation. The motion was denied.

Statute/Rule References:
Fed. R. Civ. P. 12(c); Fed. R. Bankr. P. 7012 -- Judgment on the Pleadings
Fed. R. Civ. P. 56(c); Fed. R. Bankr. P. 7056 -- Summary Judgment

Key Terms:
Collateral Estoppel
Conversion of Motion to Dismiss
Issue Preclusion
Summary Judgment

In re Hazelton, Case No. 16-12372-7 (09/25/2020) (622 B.R. 354) -- Judge Catherine J. Furay 09/09/2020

Case Summary:
Debtors filed a motion for contempt and sanctions against University of Wisconsin-Stout for violating the final discharge order in their Chapter 7. The parties disagreed whether the unpaid tuition had been discharged. The District Court found the unpaid tuition was not a qualified educational loan and remanded for further findings. Creditor appealed to the Seventh Circuit, but the appeal was dismissed as an appeal of an interlocutory order and thus not final. Bound by the decision of the District Court, the Court determined that, under Taggart, sanctions could not be awarded because the offending creditor had a fair ground of doubt to conclude that their conduct was not barred by the discharge injunction. The Court also concluded that even if sanctions were appropriate, the Debtors would only be entitled to the return of the seized tax refund because there was no indication on the record what other damages Debtors may have incurred, and the Creditor was immune from an award of punitive damages.

Statute/Rule References:
11 U.S.C. § 105(a) -- Contempt Power
11 U.S.C. § 106 -- Sovereign Immunity
11 U.S.C. § 524(a) -- Discharge Injunction

Key Terms:
Contempt
Discharge Injunction
Sanctions
Taggart Standard

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