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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.

Judge Robert D. Martin

Chase Bank USA, N.A. v. James Jay Mueller (In re Mueller), Adv. No. 11-0089, Case No. 10-18728-7 (07/06/2011) (455 B.R. 151) -- Judge Robert D. Martin 07/06/2011

Case Summary:
Chase Bank commenced this action for nondischargeability under § 523(a)(14) against the Defendant. The Defendant had charged a tax deposit to the IRS on his Chase Bank credit card. The deposit was not for the payment of tax, but rather served as a deposit if the IRS later determined that the Defendant owed income tax for tax year 2009. Subsequently, the Defendant received a refund from the IRS for an amount in excess of the initial deposit. Because Chase presented no evidence that the Defendant actually had a tax liability for 2009, Chase could not establish that the deposit was used to pay a “tax owed” to the IRS under § 523(a)(14). Accordingly, the Court dismissed Chase’s complaint and rendered the debt discharged.

Statute/Rule References:
11 U.S.C. § 523(a)(1) -- Nondischargeability - Taxes
11 U.S.C. § 523(a)(8)(A)(i) 
11 U.S.C. § 523(a)(14) -- Nondischargeability - Marital Obligations
11 U.S.C. § 523(a)(15) -- Nondischargeability - Marital Obligations

Key Terms:
Deposit Paid for Income Tax
Income Tax
Non-Dischargeable Tax
Taxes - Dischargeability

Midwest Property Management v. Nowell A. Polus (In re Polus), Adv. No. 11-0058, Case No. 10-18148-7 (07/06/2011) (455 B.R. 705) -- Judge Robert D. Martin 07/06/2011

Case Summary:
Midwest Property commenced this adversary action against the Defendant to determine the nondischargeability of its claim under § 523(a)(4). The Defendant served as a general contractor in a project for the construction of a log home. After receiving $119,000 from the owner, the Defendant paid all subcontractors on the job, except one. While one subcontractor was left unpaid, the Defendant retained $18,000 to cover the cost of his own labor and other costs on the project. The Court held that the Defendant’s retention of the funds did not constitute “defalcation of a fiduciary.” General contractors have a right to retain funds to cover their own costs, providing the retention of funds is proportional to any amounts paid to subcontractors. Accordingly, the Defendant’s conduct could not be characterized as reckless and Midwest’s complaint for nondischargeability was discharged.

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

Key Terms:
Defalcation while Acting as a Fiduciary
Express Trust
Statutory Trust
Theft by Contractor

In re Howe, Case No. 10-15290-7 (05/25/2011) (455 B.R. 148) -- Judge Robert D. Martin 05/25/2011

Case Summary:
Attorney for municipality failed to timely file a claim for personal property taxes due in Debtors’ Chapter 7 case. Attorney moved to extend the time period to file claim, which Bankruptcy Court denied. Because a portion of municipality’s claim was deemed “priority” and because few assets were expected to be distributed in Debtors’ case, attorney’s error had negligible effect on any dividend to municipality. The Court saw no reason for extension of the claim’s deadline.

Statute/Rule References:
11 U.S.C. § 501(c) -- Filing Proofs of Claim
11 U.S.C. § 502(b)(9)
11 U.S.C. § 507(a)(8)
11 U.S.C. § 726(a)

Key Terms:
Allowable Claim
Attorney Error
Chapter 7 Distribution
Extension of Time
Priority

In re Heffron-Clark, Case No. 10-18035-7 (05/10/2011) (450 B.R. 858) -- Judge Robert D. Martin 05/10/2011

Case Summary:
Chapter 7 debtors claimed wife’s interest in a beneficiary individual retirement account as exempt under both 11 U.S.C. § 522(b)(3)(C) and Wis. Stat. § 815.18(3)(j). Wife had received the account funds as a beneficiary after her mother, the owner of the IRA, died. The trustee filed a timely objection to the exemption, which was ultimately sustained by the bankruptcy court. In its ruling, the court held that funds contained in the “inherited IRA” were not “retirement funds” within the meaning of federal and state exemption law. The court reasoned that the funds in the inherited account were neither designated for the debtors’ retirement, nor were they currently held for wife’s deceased mother’s retirement. Additionally, the court found no persuasive legal source that concluded that inherited IRAs were indeed exempt from taxation under the internal revenue code.

Statute/Rule References:
11 U.S.C. § 522(b)(3)(C)
11 U.S.C. § 522(b)(4)(C)
26 U.S.C. § 408
Wis. Stat. § 815.18 -- Exemptions

Key Terms:
Federal and State Exemption Law
Inherited IRA
Taxes - Exempt

Starfire, Inc. v. John M. Steiner (In re Steiner), Adv. No. 09-0030, Case No. 08-15859-7 (05/02/2011) -- Judge Robert D. Martin 05/02/2011

Case Summary:
The Defendant appealed this case to the District Court after this court determined that the debt owed to Starfire was nondischargeable. The District Court then remanded this case to this court to make a finding on whether the Defendant acted with the intent necessary to support defalcation under § 523(a)(4). On remand, this court found that the Defendant’s conduct was “something more than negligence.” The Defendant was an experienced and sophisticated contractor, who received payment on 42 jobs, yet failed to remit a significant portion of the proceeds to the subcontractor, Starfire, as required under Wis. Stat. § 779.02(5). Because Wisconsin’s theft by contractor creates an express trust, and the Court concluded that the Defendant possessed the requisite intent, Starfire’s claim was rendered nondischargeable under § 523(a)(4).

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

Key Terms:
Defalcation while Acting as a Fiduciary
Express Trust
Statutory Trust
Theft by Contractor

Dealer Services Corporation v. Dennis E. Erb d/b/a Glendale Motorsports (In re Erb), Adv. No. 10-0195, Case No. 10-13068-7 (04/08/2011) (453 B.R. 914) -- Judge Robert D. Martin 04/08/2011

Case Summary:
Dealer Services Corporation (“DSC”) filed this adversary action to determine the nondischargeability of its claim under § 523(a)(2), § 523(a)(4) and § 523(a)(6). At trial, DSC established that the Defendant, owner of a used car dealership, purchased his inventory under a “flooring planning” agreement whereby DSC financed the purchase of all inventory in exchange for a security interest in the vehicles. Under the agreement, all proceeds that the Defendant received from the sale of his inventory were to be held “in trust” for DSC. When the Defendant stopped making payments to DSC on the loan, a DSC representative performed a field audit and determined that the inventory had inexplicably “disappeared.” The Debtor denied all wrongdoing, and at trial was asked no questions by DSC’s counsel relating to the vehicles’ whereabouts. Accordingly, the Court found that DSC did not meet its burden of proof under either § 523(a)(2), or § 523(a)(6) as there was no proof that the defendant acted with any “negative intent” or “scienter.” The Court also found that while the floor planning agreement did constitute an express trust, DSC failed to establish that the Debtor committed defalcation. The Court dismissed DSC’s complaint.

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - Fraud
11 U.S.C. § 523(a)(4) -- Nondischargeability - Fraud in Fiduciary Capacity
11 U.S.C. § 523(a)(6) -- Nondischargeability - Willful and Malicious Injury

Key Terms:
Actual Fraud
Defalcation while Acting as a Fiduciary
Express Trust

First Weber Group v. Jonathan H. Horsfall (In re Horsfall), Adv. No. 10-0179, Case No. 10-12596-7 (03/01/2011) (444 B.R. 578) -- Judge Robert D. Martin 03/01/2011

Case Summary:
First Weber Group commenced this adversary proceeding to determine the nondischargeability of its claim under 11 U.S.C. § 523(a)(6) for a willful and malicious injury. Its claim arose from a state court judgment for tortious interference of a contract rendered in favor of First Weber. On motion for summary judgment, First Weber argued that the doctrine of issue preclusion precluded the parties from re-litigating the facts previously litigated on its claim for tortious interference of a contract. Denying First Weber’s motion, the Bankruptcy Court held that issue preclusion did not apply because the state court’s finding that the Defendant tortiously interfered with a contract did not support a finding that the Defendant willfully and maliciously intended to injure First Weber. Likewise, the Bankruptcy Court found that an application of issue preclusion in this case would be “fundamentally unfair” to the Defendant in light of the state court’s standard of review and the differences in the evidentiary burdens between the state court claim and First Weber’s claim for nondischargeability.

Statute/Rule References:
11 U.S.C. § 523(a)(6) -- Nondischargeability - Willful and Malicious Injury
Wis. Stat. § 802.08(2)

Key Terms:
Conversion
Evidentiary Burden
Issue Preclusion
Tortious Interference with Contract
Willful and Malicious - Defined

Desert Palace, Inc. d/b/a Caesars Palace v. Christian Peterson (In re Peterson), Adv. No. 10-0155, Case No. 10-11874-7 (01/31/2011) (444 B.R. 573) -- Judge Robert D. Martin 01/31/2011

Case Summary:
Desert Palace commenced this adversary proceeding against the Defendant to determine the nondischargeability of its claim under § 523(a)(2)(A) and (B). Before trial, Desert Palace moved for summary judgment arguing that its claim against the Defendant for fraud was already litigated in Nevada state court, and therefore the parties were barred from relitigating the issue of fraud in the Defendant’s bankruptcy case. Interpreting Nevada law, the Court held that the issue of fraud had not been “actually litigated” in state court, because the Defendant never filed an answer to Desert Palace’s allegations of fraud in the amended complaint. As a result, issue preclusion did not apply and the Court denied summary judgment.

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - Fraud
11 U.S.C. § 523(a)(2)(B) -- Nondischargeability

Key Terms:
Actually Litigated
Default Judgment
Fraud
Issue Preclusion
Summary Judgment

Kay M. Lokowich v. New Century Mortgage Corporation et al. (In re Lokowich), Adv. No. 09-0317, Case No. 09-14739-13 (11/19/2010) -- Judge Robert D. Martin 11/19/2010
In re Kennedy, Case No. 09-13149-07 (08/09/2010) -- Judge Robert D. Martin 08/09/2010

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