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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

Logan D. Schultz, Melissa I. Schultz, and Alexandria M. Schultz v. Mark A. Downing (In re Downing), Adv. No. 17-0112, Case No. 17-13160-7 (06/19/18) -- Judge Catherine J. Furay 06/19/2018

Case Summary:
Defendant was convicted of second-degree intentional homicide for shooting and killing Plaintiffs’ father. Plaintiffs brought a civil action against Defendant in state court, which the parties settled by a stipulation. Defendant voluntarily signed the stipulation, in which he admitted his actions were intentional, willful, and malicious. Defendant then filed his chapter 7 petition and Plaintiffs brought this adversary for a determination the civil judgment is nondischargeable for Defendant’s willful and malicious conduct. The Court held the stipulation, state court judgment, and criminal conviction were binding under the doctrine of preclusion and therefore ruled in favor of Plaintiffs. Defendant admitted in the stipulation and the state court found his actions were willful and malicious; therefore, there were no remaining issues for this Court to decide.

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

Key Terms:
Claim Preclusion
Issue Preclusion

Gerald J. Manion v. Heather E. Modeen (In re Modeen), Adv. No. 17-0071, Case No. 17-11954-7 (06/08/2018) (586 B.R. 298) -- Judge Catherine J. Furay 06/08/2018

Case Summary:
Plaintiff filed an adversary against Defendant, a Chapter 7 Debtor, seeking a determination that Defendant’s student loan was nondischargeable under 11 U.S.C. § 523(a)(8). Plaintiff agreed to make loans to Defendant to refinance her two qualified educational loans. The agreement also allowed Plaintiff to declare the entire loan due immediately upon default. The Court found Defendant failed to show an undue hardship under the Brunner test. While Defendant could not maintain a minimal standard of living under the loan’s current repayment plans, Defendant lacked “exceptional circumstances” making it improbable she could ever repay the loan. Specifically, Defendant’s current full-time employment and continued employability weighed against a full discharge. The expense of caring for her adult daughter would decrease if her daughter contributed to household expenses or lived independently. However, the Court granted a partial discharge because under the current loan terms, Defendant could neither pay the balance in full nor afford the monthly payments. Instead, the Court ordered repayment based on the federal loan repayment plans. Defendant’s monthly payment would be recalculated each year based on income, tax status, and family size and any unpaid debt would be discharged after twenty years.

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

Key Terms:
Nondischargeable Debt
Partial Discharge
Student Loan
Undue Hardship

In re Muhammad, Case No. 17-11935-7 (06/01/2018) (586 B.R. 753) -- Judge Catherine J. Furay 06/01/2018

Case Summary:
Debtors received a Chapter 7 discharge of their debt, which included money owed to the Wisconsin Department of Children and Families (“DCF”) for overpayment of FoodShare benefits. Debtor Muhammad provided inaccurate information, resulting in DCF overpaying her $5,520.92 in benefits for her and her grandson. DCF intercepted Debtors’ tax return to satisfy part of the overpayment. Debtors moved to hold DCF in contempt and recover the tax intercept. DCF asserted the overpayments were nondischargeable under 11 U.S.C. § 523(a)(5). The Court held the overpayment was dischargeable because the debt was not a domestic support obligation as defined by 11 U.S.C. § 101(14A). The Court applied the Ninth Circuit’s reading of section 101, which requires the debt be tied to a “government’s family support infrastructure” rather than any money from the government. The DCF debt was not a domestic support obligation under section 101 because it was incurred to support her grandchild, not her child. The statute does not include grandchildren and Debtor did not have a legal duty to financially support her grandson. Thus, section 523(a)(5) did not apply and the debt was dischargeable. The Court held the DCF intercept violated the discharge injunction and ordered DCF to immediately release and refund the tax intercept to Debtors. 

Statute/Rule References:
11 U.S.C. § 101(14A) -- Definition of "Domestic Support Obligation"
11 U.S.C. § 106 -- Waiver of Sovereign Immunity
11 U.S.C. § 523(a)(5) -- Nondischargeability - Domestic Support Obligation

Key Terms:
Discharge Injunction
Dischargeability
Domestic Support Obligation

In re Kersten, Case No. 17-13739-7 (05/25/2018) -- Judge Catherine J. Furay 05/25/2018

Case Summary:
Debtors Leonard and Jamie Kersten filed a Chapter 7 petition. The majority in dollar amount of their debt arose from Debtors’ embezzlement of funds from a former employer, Kersten Lumber Company (“KLC debt”). The U.S. Trustee moved to dismiss under 11 U.S.C. §§ 707(a) and (b) for failure to file a Form B122A-2, a form which debtors with primarily consumer debt must file. The U.S. Trustee argued Debtors were required to file this form because the KLC debt was consumer in nature. The Court declined to dismiss. First, the U.S. Trustee lacked decisive evidence showing the KLC debt was in fact consumer. While Debtors used some of the funds for household expenses, those funds came from a business, not the extension of credit to a consumer. The Court declined to rule on the nature of the debt because dismissal is discretionary under sec. 707(a). Instead, the Court declined to dismiss under 707(a) because (1) the lack of the Form B122A-2 did not cause any prejudice and (2) Debtors’ counsel made a reasonable judgment about the nature of the debt, given the split in authority on the definition and the lack of probative evidence. The Court also declined to dismiss under sec. 707(b) because of the lack of evidence demonstrating the debt was primarily consumer or the Chapter 7 would be an abuse of the Code.

Statute/Rule References:
11 U.S.C. § 101(8) -- Definition of "Consumer Debt"
11 U.S.C. § 707(a) -- Dismissal - Failure to File Required Documents
11 U.S.C. § 707(b) -- Dismissal - Presumption of Abuse

Key Terms:
Abuse
Consumer Debt

H&M Electric, Inc., and MDA Plumbing and Heating, LLC v. Shawn M. Gee (In re Gee), Adv. No. 17-0075, Case No. 17-12147-7 (05/08/2018) -- Judge Catherine J. Furay 05/08/2018

Case Summary:
Defendant Gee was a contractor hired to perform work on a home in Pardeeville. Gee hired Plaintiffs H&M and MDA as subcontractors for all the electrical and plumbing materials and services on the home. The homeowners paid money into an escrow fund, from which Gee made three withdrawals. Gee did not pay Plaintiffs in full and they sued him for theft by contractor, breach of contract, among other allegations. The state court entered default judgment against him for breach of contract but did not make findings as to the other claims. Plaintiffs moved for summary judgment on their 11 U.S.C. § 523(a)(2)(A), (a)(4), and (a)(6) claims. The Court denied summary judgment as to all three claims. While the state court judgment was binding, it did not make any findings as to Gee’s intent. Plaintiffs failed to identify a false representation made with the intent to deceive required under section 523(a)(2)(A). Similarly, while Gee was a fiduciary of a trust, the fact that he failed to pay Plaintiffs the full contract amount did not by itself prove fraud or defalcation under section 523(a)(4). Finally, the state court findings did not show Gee acted with the requisite malice needed to render a debt nondischargeable under section 523(a)(6).

Statute/Rule References:
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
11 U.S.C. § 523(a)(6) -- Nondischargeability – Willful and Malicious Injury
Wis. Stat. § 779.02(5) -- Theft by Contractor

Key Terms:
Actual Fraud
Defalcation while Acting as a Fiduciary
False Representation
Theft by Contractor
Willful and Malicious - Defined

In re Fishel, Case No. 17-14180-13 (03/30/2018) (583 B.R. 474) -- Judge Catherine J. Furay 03/30/2018

Case Summary:
This matter came before the Court on the Trustee’s motion to dismiss Debtor’s Chapter 13 petition. The Department of Education filed an unsecured claim for a student loan that exceeded the statutory limit on unsecured debt in 11 U.S.C. §109(e). The Court addressed the questions (1) whether the cap on unsecured debt in section 109(e) is jurisdictional and (2) whether to convert the case to a Chapter 7.  The Court found section 109 is not jurisdictional. It further found the interests of creditors were best served by permitting Debtor’s Chapter 13 to proceed, even though her unsecured debt load exceeded the statutory cap. This Debtor was a true consumer debtor. It was undisputed that Debtor could make the proposed plan payments and the only real roadblock to confirmation was the alleged amount of the student loans, which in any case, were nondischargeable in bankruptcy. Literal interpretation of the section 109(e) would lead to an absurd result because it would lead Debtor to file either a Chapter 11—which she could not afford—or a Chapter 7—in which she would face the presumption of abuse. The Trustee’s motion was denied and the Court permitted Debtor’s Chapter 13 to proceed.

Statute/Rule References:
11 U.S.C. § 109(e) -- Who May be a Debtor Under Chapter 13
11 U.S.C. § 1307-- Conversion or Dismissal

Key Terms:
Conversion
Ineligible
Jurisdiction

Mark Cama and Stealth Tree Stands, Inc. v. Neil Ronald Hoffman (In re Hoffman), Adv. No. 17-0092, Case No. 17-12476-7 (03/30/18) -- Judge Catherine J. Furay 03/30/2018

Case Summary:
Plaintiffs filed an adversary against a Chapter 7 debtor seeking a determination of nondischargeability under sections 523(a)(2)(A), (a)(4), (a)(6), and a denial of discharge under section 727. Defendant filed a motion to dismiss on all counts and Plaintiff requested leave to amend the Complaint. The Court granted Defendant’s motion on sections 523(a)(4) and 727, but denied the balance of the motion and Plaintiff’s request for leave to amend. In reaching its conclusion, the Court found Plaintiffs’ Complaint failed to allege a fiduciary relationship existed between themselves and Defendants under section 523(a)(4). The Court further found the Plaintiffs failed to articulate a claim under 727 because they did not identify the specific subsection of their 727 claim and they did not plead the 727 claim with specificity. The Court denied Plaintiffs’ motion for leave to amend and noted Plaintiffs had many opportunities to amend their Complaint and their lack of specificity in their Complaint was unjustified. Still, the Complaint had sufficiently pled the bare outlines for claims under section 523(a)(2)(A) and (a)(6).

Statute/Rule References:
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
11 U.S.C. § 523(a)(6) -- Nondischargeability – Willful and Malicious Injury
11 U.S.C. § 727 -- Discharge
Fed. R. Civ. P. 12(c) -- Motion for Judgment on the Pleadings
Fed. R. Civ. P. 15(a)(2) -- Leave to Amend

Key Terms:
Leave to Amend

Christopher M. Seelen, Trustee v. Melissa Marie Arnette and Wells Fargo Bank N.A. (In re Arnette), Adv. No. 17-0074, Case No. 17-11795-7 (03/23/2018) (584 B.R. 304) -- Judge Catherine J. Furay 03/23/2018

Case Summary:
Chapter 7 Trustee filed this adversary proceeding seeking a declaratory judgment that a mortgage was void on its face because it lacked a legal description of the property. The mortgage at issue contained only a street address, but did not include a legal description. It was also recorded in the grantor/grantee index. Trustee argued the mortgage could be avoided under 11 U.S.C. §544(a)(3) because it did not give adequate notice of the mortgage and it violated the Wisconsin statute of frauds. Defendant Wells Fargo argued the mortgage described the property with reasonable certainty. The Court ruled the Trustee had sufficient notice of the mortgage because it was recorded in the grantor/grantee index. The Court also found the mortgage satisfied the statute of frauds because under the facts of this case the address described the land with reasonable certainty.

Statute/Rule References:
11 U.S.C. § 544(a)(3)
Wis. Stat. § 706 -- Conveyances of Real Property, Recording, Titles

Key Terms:
Grantor/Grantee Index
Land Description
Statute of Frauds

In re Hazelton, Case No. 16-12372-7 (02/23/2018) (582 B.R. 223) -- Judge Catherine J. Furay 02/23/2018

Case Summary:
Debtor filed a motion for sanctions against University of Wisconsin-Stout for violating the final discharge order in her Chapter 7. Debtor had enrolled in Stout in 2008 and signed a Payment Plan which allowed Debtor to register for classes and defer full payment of her tuition. Debtor took classes and qualified for a degree, but never paid her tuition. She subsequently filed for a Chapter 7 and received a discharge. The issue before this Court was whether the unpaid tuition constituted a “loan” under 11 U.S.C. § 523(a)(8). The Court determined the Payment Plan was a loan. The Court looked to the common law definition of a loan, which is (1) a contract, whereby (2) one party transfers a defined quantity of money, goods, or services, to another, and (3) the other party agrees to pay for the sum or items transferred at a later date. Additionally, the Court dismissed the notion that a formal exchange of money is required to constitute a loan. Although money never changed hands between Debtor and Stout, the transaction was clearly understood to be a student loan, so the motion for sanctions was denied and the loan was deemed nondischargeable.

Statute/Rule References:
11 U.S.C. § 523(a)(8) -- Nondischargeability - Student Loans
20 U.S.C. § 1087II -- Cost of Attendance
26 U.S.C. § 221 -- Interest on Education Loans

Key Terms:
Deferred Payment Plan
Dischargeability
Educational Expenses
Student Loan

Kevin Lenfant and Rita Lenfant v. Michael S. Hall (In re Hall), Adv. No. 17-0046, Case No. 17-10690-7 (02/23/2018) (581 B.R. 864) -- Judge Catherine J. Furay 02/23/2018

Case Summary:
Defendant was a contractor who was hired to refurbish and remodel Plaintiffs’ properties in Osseo and Rice Lake. Neither project was completed, and Defendant failed to provide an accounting of the work done and money spent. Plaintiffs then received a judgment in their favor from state court and brought this adversary to determine that judgment nondischargeable under section 532(a)(4). The Court held (1) a fiduciary relationship existed between the parties under Wis. Stat. § 779.02(5) and (2) Defendant breached his fiduciary duty when he failed to account for money he spent on the project. Under Wis. Stat. § 779.02(5), funds paid to contractors for work constitute a trust fund. Plaintiffs demanded an accounting of payments made on the projects, but Defendant repeatedly failed to provide them. The Court found Defendant’s actions went beyond mere negligence. Plaintiffs had met their burden under section 523(a)(4) by establishing the amount of trust res and Defendant had failed to present some explanation and accounting in order to rebut the prima facie case. This Court determined that the $23,825 judgment was nondischargeable under section 523(a)(4).

Statute/Rule References:
11 U.S.C. § 523(a)(4) -- Nondischargeability - Fraud or Defalcation in Fiduciary Capacity
Wis. Stat. § 779.02(5) -- Theft by Contractor

Key Terms:
Defalcation While Acting as a Fiduciary
Theft by Contractor

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