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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 McGough, Case No. 17-13809-13 (10/26/2018) (592 B.R. 846) -- Judge Catherine J. Furay 10/26/2018

Case Summary:
In 2005, Tristan McGough borrowed funds from World Savings Bank, obtained a line of credit (“HELOC”) from Citibank, and gave both lenders mortgages in his home. Both lenders recorded their interests. Debtors later refinanced through First Tennessee, who received two mortgages: one for paying off the World Savings mortgage and a second for paying down the Citibank HELOC. However, the Citibank HELOC remained open. First Tennessee National Bank Association later assigned its first mortgage to U.S. Bank National Association. Three creditors filed claims asserted to be secured by the Debtors’ home. These claims, in order of their date of recording, are: (1) U.S. Bank for $176,516.33, (2) Citibank for $52,968.34, and (3) First Tennessee for $15,666.25. The parties stipulated U.S. Bank held a first priority mortgage. This Court previously ruled the value of the Debtors’ home is $190,000. Debtors objected to Citibank’s claim, stating First Tennessee’s mortgage had second priority and Citibank’s mortgage was defective for failing to notarize Lynnae’s signature. The Court found Citibank had a valid mortgage because notarization is required only for perfection, not attachment. Further, Citibank had a perfected security interest even though it failed to notarize Lynnae’s signature. Under Wisconsin statutes, if the recorder’s office accepts a record for filing, the record is considered properly recorded even if it contains errors. Since the Citibank HELOC was never closed and Citibank recorded its interest before First Tennessee, Citibank’s claim had priority over First Tennessee’s.

Statute/Rule References:
11 U.S.C. § 506(a) -- Determination of Secured Status
Wis. Stat. § 706.02 -- Requirements for a Valid Mortgage
Wis. Stat. § 706.05 -- Perfecting a Security Interest

Key Terms:
Priority
Recoding Statutes
Security Interest

In re Cranberry Growers Cooperative, Case No. 17-13318-11 (10/24/2018) -- Judge Catherine J. Furay 10/24/2018

Case Summary:
The United States Trustee (“UST”) appealed this Court's decision disallowing the administrative claim of the UST in regard to certain payments made by the Debtor, Cranberry Growers Cooperative, on a direct revolver loan. In that decision, the Court found certain payments were not “disbursements” subject to the UST quarterly fee under 28 U.S.C. § 1930(a)(6). Appeals of bankruptcy court final orders are heard by the District Court, unless the bankruptcy court certifies the order for direct review to the Seventh Circuit under 28 U.S.C. § 158(d)(2). To certify a final order for direct review, the bankruptcy court must certify that the order meets at least one of the following criteria: (1) the order involves a question of law as to which there is no controlling precedent in the Court of Appeals or Supreme Court; (2) the order involves a matter of public importance; (3) the order requires resolution of conflicting decisions; or (4) an immediate appeal to the Court of Appeals may materially advance the case. Here, the Court found all four to be present. UST quarterly fees impact Chapter 11 cases across the country. In addition, there is no precedent in the Seventh Circuit or Supreme Court on how to interpret the term “disbursement” while calculating UST fees, and courts within the Seventh Circuit have ruled inconsistently on what constitutes a “disbursement.” Finally, the Court found an immediate appeal to the Seventh Circuit would materially advance the progress of the case, as any decision by the District Court would likely have been appealed.

Statute/Rule References:
28 U.S.C. § 158(d)(2) -- Appeals
28 U.S.C. § 1930(a)(6) -- Bankruptcy Fees
Fed. R. Bankr. P. 8006(e)(1) -- Certification on the Court’s Own Motion

Key Terms:
Appeals
Direct Review
Disbursement
UST Quarterly Fee

In re Cranberry Growers Cooperative, Case No. 17-13318-11 (09/21/2018) (592 B.R. 325) -- Judge Catherine J. Furay 09/21/2018

Case Summary:
The U.S. Trustee (“UST”) filed a motion to include certain payments as “disbursements” subject to UST quarterly fees under 28 U.S.C. § 1930(a)(6). This case involved a unique set of facts. Debtor Cranberry Grower’s Association (“CranGrow”) had the same prepetition and postpetition lender, CoBank. CoBank offered a postpetition revolving line of credit that also “rolled-up” CranGrow’s prepetition debt into postpetition debt through diverting CranGrow’s accounts receivables. The prepetition debt was rolled-up into postpetition debt to the extent of each account receivable diverted through CoBank. Upon receiving an account receivable, CoBank collected interest and fees and immediately returned the remaining funds to CranGrow so CranGrow could pay operating expenses. Unlike other cases finding similar payments to be “disbursements,” the Court found the payments were not disbursements in this case because the payments at issue did not actually settle or repay any of the debt. In addition, there were concerns over the UST imposing a double fee as a result of CranGrow having to draw on its revolver in part to pay UST fees in the first place, since CranGrow often operated at a loss given the seasonal nature of the farming business.

Statute/Rule References:
28 U.S.C. § 1930(a)(6) -- Bankruptcy Fees

Key Terms:
Disbursement
UST Quarterly Fee

Donna B. Ray v. Educational Credit Management Corporation, et al. (In re Ray), Adv. No. 17-0102, Case No. 17-12521-13 (09/20/2018) (591 B.R. 834) -- Judge Catherine J. Furay 09/20/2018

Case Summary:
Plaintiff Donna Ray filed this adversary proceeding seeking to discharge her student loans under 11 U.S.C. §§ 727(a) and (b) and 523(a)(8). In 2004, Plaintiff signed a Federal Consolidation Loan Application and Promissory Note (“Note”). After a series of assignments and transfers, Defendant Educational Credit Management Corporation (“ECMC”) held the Note. In a previous bankruptcy case, Plaintiff objected to ECMC’s student loan claim. Because ECMC did not respond to the objection, its claim was denied. However, the Court held that denial of ECMC’s claim in the previous case was not equivalent to a discharge, as a discharge determination requires an adversary. As a result, the Court denied Plaintiff’s motion under section 727. In addition, Plaintiff objected to ECMC’s claim under section 523(a)(8), asserting ECMC failed to satisfy its initial burden establishing the presence of a student loan. Despite ECMC’s failure to present the original loan document, ECMC met its burden by producing a reliable copy of the Note containing Plaintiff’s signature in which Plaintiff certified she incurred the original loans to support payments for her education. Although ECMC produced only the first five pages of the nine-page loan document, the final four pages contained standard form language and the first five pages contained the material provisions and Plaintiff’s signature.

Statute/Rule References:
11 U.S.C. § 523(a)(8) -- Nondischargeability – Student Loan
11 U.S.C. § 727(a) -- Nondischargeability – Global Exception to Discharge
11 U.S.C. § 727(b) -- Nondischargeability – Previous Discharge

Key Terms:
Nondischargeable Debt
Student Loan

Summit Credit Union v. Todd G. Goldbeck (In re Goldbeck), Adv. No. 17-0103, Case No. 17-13077-7 (09/07/2018) (590 B.R. 881) -- Judge Catherine J. Furay 09/07/2018

Case Summary:
Creditor Summit Credit Union filed a motion for summary judgment seeking to declare a $2.5 million loan to be nondischargeable under 11 U.S.C. §§ 523(a)(2)(A), 523(a)(2)(B), and 523(a)(6). Debtor Goldbeck sought a loan to finance construction of a physical therapy center. Goldbeck knew the actual cost of the center totaled around $5 million, yet presented multiple documents to Summit showing the cost to be approximately $2.5 million. To close the loan, Summit requested a signed lease from a future tenant. Goldbeck submitted an allegedly signed lease that the evidence indicated was likely forged. The Court found Goldbeck intentionally deceived Summit without any justification or excuse. The Court denied summary judgment under section 523(a)(2)(B), holding that the use of financial projections did not constitute Debtor’s “financial statement.” However, the Court did grant summary judgment under sections 523(a)(2)(A) and (a)(6), finding that Goldbeck misrepresented the cost of the budget and “willfully and maliciously” injured Summit by leaving it with a half completed building incapable of generating any return on its $2.5 million investment.

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability – False Pretenses, False Representation or Fraud
11 U.S.C. § 523(a)(2)(B) -- Nondischargeability – Use of a Statement in Writing
11 U.S.C. § 523(a)(6) -- Nondischargeability – Willful and Malicious Injury

Key Terms:
Nondischargeable Debt
Summary Judgment
Willful and Malicious - Defined

Thomas E. Rowe v. Educational Credit Management Corporation (In re Rowe), Adv. No. 17-0033, Case No. 17-11147-7 (06/28/2018) (586 B.R. 466) -- Judge Catherine J. Furay 06/28/2018

Case Summary:
Plaintiff filed a Chapter 7 petition and received a discharge. Plaintiff then filed an adversary seeking to discharge a student loan under 11 U.S.C. § 523(a)(8). Plaintiff denied ever taking out a student loan, but Defendant claimed Plaintiff signed it on behalf of his daughter and that it survived discharge. Neither party produced evidence of loan documents or the existence of a debt in advance of trial, and the opportunity to file evidence expired. Without evidence the loan existed, the Court ordered briefing on the burden of proof for establishing the existence of a student loan under 523(a)(8). Defendant challenged the Court’s jurisdiction. The Court held it had jurisdiction over the adversary because (1) Plaintiff stated a 523(a)(8) claim, (2) the Order of Discharge explicitly did not affect the adversary, and (3) the validity of the signature on the student loan related directly to Plaintiff’s liabilities. While the Debtor bears the burden of proving undue hardship, the creditor bears the initial burden of proving a debt exists and proving the debt is of the type excepted from discharge. Therefore, the Court held Defendant bore the burden of proving a debt exists but failed to produce any evidence to that end. Thus, no presumption of validity for the signature arose under Wisconsin’s negotiable instruments law, Wis. Stat. § 403.308(1). The Court declared the debt—if any—discharged.

Statute/Rule References:
11 U.S.C. § 523(a)(8) -- Nondischargeability - Student Loans
11 U.S.C. § 1322(b)(2) -- Modification of Rights of Secured Claimants
Fed. R. Bankr. P. 3012 -- Valuation
Wis. Stat. § 403.308(1) -- Proof of Signature and Status as Holder in Due Course

Key Terms:
Burden of Proof
Jurisdiction
Nondischargeable Debt
Student Loan

In re Cranberry Growers Cooperative, Case No. 17-13318-11 (06/27/2018) (588 B.R. 50) -- Judge Catherine J. Furay 06/27/2018

Case Summary:
Creditor Maxwell Foods filed a Motion to Approve Recoupment or to Exercise Right of Setoff in Debtor’s Chapter 11 case. Debtor moved for summary judgment on the motion. Prior to the petition, the parties executed an agreement whereby Debtor shipped seven loads of cranberries to Maxwell and offered Maxwell an exclusive sales arrangement for 2017. Debtor shipped all seven loads, but Maxwell failed to pay for the last three loads. Maxwell instead sought recoupment or setoff, claiming Debtor agreed to sell an additional ten loads, but breached by failing to fulfill the order. Relying on the single integrated transaction test, the Court granted Debtor’s motion for summary judgment. Even if the purchase order for the additional ten loads was binding and enforceable, Maxwell lacked a valid recoupment claim. The original 2017 agreement did not obligate Debtor to purchase anything beyond the agreed-upon seven loads. Thus, the 2017 agreement and the later purchase orders for ten loads were not part of a single integrated transaction and Maxwell’s claim was not eligible for recoupment. Similarly, Maxwell could not set off its claim because the two agreements were stand-alone contracts and occurred on opposite sides of the petition date.

Statute/Rule References:
11 U.S.C. § 553 -- Setoff

Key Terms:
Contract Enforceability
Recoupment
Setoff
Summary Judgment

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

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