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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

Brian A. Hart, Chapter 7 Trustee v. Greenwich Business Capital, LLC (In re Conway), Adv. No. 24-00034, Case No. 24-10126-7 (07/19/2024) -- Judge Catherine J. Furay 07/19/2024

Case Summary:
Plaintiff Chapter 7 Trustee filed an adversary proceeding seeking (i) a determination that Defendant’s asserted lien was invalid under state law, and (ii) a preliminary injunction enjoining Defendant from continuing state court litigation and collection efforts. Defendant filed a response along with a motion to abstain or, alternatively, to dismiss the case. The Court held that it was not required to abstain under 28 U.S.C. § 1334(c)(2) because the primary issue in the complaint regarding the validity of Defendant’s lien was a core proceeding under 28 U.S.C. § 157. Also, the Court did not discretionarily abstain under section 1334(c)(1) because permissive abstention was not in the best interest of justice, respect for state law, or comity with state courts. The proceeding concerned property of the estate, which this Court maintains exclusive jurisdiction over under § 1334(e).

Statute/Rule References:
11 U.S.C. § 362 -- Automatic stay
11 U.S.C. § 541 -- Property of the estate
28 U.S.C. § 157(b)(2)(K) -- Determination of the validity, extent, or priority of liens
28 U.S.C. § 1334(c), (e)

Key Terms:
Core Proceeding
Mandatory Abstention
Motion to Dismiss
Permissive Abstention
Property of the Estate

In re Coburn, Case No. 24-11054-7, and In re Hyland, Case No. 24-10657-7 (07/18/2024) -- Judge Catherine J. Furay 07/18/2024

Case Summary:
After the Court issued a third order to show cause why the privileges of an attorney should not be conditioned or suspended, Debtors’ attorney filed a motion seeking recusal of the judge. The motion argued that communication regarding the docket from the office of the Clerk of Court and the issuance of the OSC by the Court combined to question the impartiality of the judge. The motion was denied, holding that Section 105(a) and the authority of the Court to manage proceedings, dockets, and practice within the court authorized issuing the OSC. Finally, the Court held that communications with the office of the Clerk of Court are not ex parte communications.

After repeated filing mistakes and errors, the Court issued an Order to Show Cause why debtors’ counsel’s e-filing privileges should not be suspended or revoked. Counsel filed a response and there was a hearing. The Court ruled that counsel’s arguments concerning the Code and Rules (specifically the time limits under Fed. R. Bank. P. 1006 and 1007, and Code section 521) were unpersuasive. The Court noted that counsel’s repeated and continuing filing errors were concerning but did not suspend or revoke the attorney’s privileges. The attorney had recently completed CM/ECF training with the Clerk’s office and had filed a more recent case which did not contain any errors. Ultimately, the attorney’s conduct had not risen to the level that a suspension from practice in this District was warranted. The Court will continue to review and consider any future deficiencies that may arise in cases filed by the attorney just as it considers and reviews other repeated deficiencies by other attorneys practicing in this Court.

Statute/Rule References:
11 U.S.C. § 105(a) -- Powers of court
11 U.S.C. § 521 -- Debtor’s duties
28 U.S.C. § 455 -- Disqualification of justice, judge, or magistrate judge
Fed. R. Bankr. P. 1006 -- Filing fee
Fed. R. Bankr. P. 1007(a) -- List of creditors

Key Terms:
CM/ECF
E-Filing
Ex Parte Communication
Order to Show Cause
Recusal
Suspension or Revocation

In re Komprood, Case No. 23-11890-13 (06/04/2024) -- Judge Catherine J. Furay 06/04/2024

Case Summary:
Debtor’s ex-spouse filed a claim for a domestic support obligation in Debtor’s Chapter 13 bankruptcy case. The subject of the claim was a home equity line of credit obligation that was secured by the ex-spouse/claimant’s homestead. The Debtor incurred the obligation under the line of credit, and although his ex-spouse was co-liable for it, the Debtor was ordered to pay the obligation under the parties’ divorce judgment. The Debtor failed make all payments due under the line of credit, and the lender filed a foreclosure against the ex-spouse’s homestead. She was forced to cure the deficiency herself, and thereafter obtained a contempt judgment against the Debtor for failing to pay the line of credit obligation. Her claim in the bankruptcy case was that the obligation which she paid was a domestic support obligation under the parties’ judgment of divorce. The Court agreed and held that her claim was nondischargeable. Principally, the divorce judgment specified that the obligation was a nondischargeable domestic support obligation and was assigned to the Debtor in lieu of maintenance. Testimony of the parties also supported the conclusion that the obligation was meant to be a domestic support obligation.

Statute/Rule References:
11 U.S.C. § 523(a)(5) -- Nondischargeability - Domestic Support Obligation
11 U.S.C. § 523(a)(15) -- Nondischargeability - Marital Obligations
11 U.S.C. § 1328(a)(2) -- Discharge
Fed. R. Bankr. P. 3001(f)

Key Terms:
Claims – Allowance
Domestic Support Obligation
Marital Settlement Agreement
Nondischargeable Debt

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

Judge Rachel M. Blise

In re Farwell Ventures Inc., Case No. 23-11125-7 (05/17/2024) -- Judge Rachel M Blise 05/17/2024

Case Summary:
The Court held that a Subchapter V debtor-in-possession was required to obtain court approval before employing and paying an accountant to prepare its tax returns during bankruptcy.  Section 327(a) specifically includes “accountant” in the list of professionals that a trustee or debtor-in-possession must seek court approval to employ, and the Seventh Circuit has held that employment under § 327(a) is a condition precedent to payment of professionals under § 330(a).  The debtor argued that employment under § 327(a) was not required because the accountant’s services were not central to the administration of the bankruptcy estate and because the debtor would need to prepare tax returns regardless of the pendency of the bankruptcy.  The court disagreed, holding that the debtor-in-possession was required to file tax returns and that the accountant assisted with that duty.  The Court also rejected the debtor’s arguments that the accountant’s fees could be paid under § 363(c) as an ordinary course business expense and that the permissive language in § 327(a) means that court approval is not mandatory.  Finally, the Court held that the statutes requiring prior authorization to pay professionals do not have a de minimus exception.  Though the accountant’s fee was only $500, the debtor was still required to employ and pay the account under §§ 327(a) and 330(a).  The Court ordered the accountant to disgorge all fees received after the petition date.

Statute/Rule References:
11 U.S.C. § 327
11 U.S.C. § 330(a)
11 U.S.C. § 363(c)

Key Terms:
Professional(s), accountant

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