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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 Manor, Case No. 17-10248-13 (06/27/2017) (569 B.R. 764) -- Judge Catherine J. Furay 06/27/2017

Case Summary:
Debtor purchased a new Dodge Ram truck. As part of the purchase, she traded in a Chevrolet Silverado. Debtor owed more on the Silverado than its trade-in value, resulting in negative equity of $6,343.65, which she included in the financing of the new Dodge Ram. Members Cooperative Credit Union held a purchase money security interest in the Dodge Ram, and filed a proof of claim in Debtor's bankruptcy. The parties agreed the Dodge Ram was purchased within 910 days prior to Debtor's bankruptcy petition. Debtor objected to the Credit Union's claim seeking to cram down the amount of the Credit Union's to the value of the Dodge Ram. Following the Seventh Circuit's decision in In re Howard, 597 F.3d 852 (7th Cir. 2010), the Court overruled the Debtor's objection concluding a purchase money security interest in a vehicle includes negative equity.

Statute/Rule References:
11 U.S.C. § 506(a) -- Determination of Secured Status
11 U.S.C. § 1325(a) -- Confirmation of Plan - 910-day Hanging Paragraph

Key Terms:
Cramdown
Negative Equity

In re Strom, Case No. 16-12464-7 (06/21/2017) (569 B.R. 494) -- Judge Catherine J. Furay 06/21/2017

Case Summary:
Debtor filed a voluntary Chapter 7 petition on July 18, 2016. The Trustee entered a Final Report on December 20, 2016. Creditor Lakeview Care Partners objected to the Trustee’s Final Report seeking a Court Order to disapprove the report and require the Trustee to pursue collection of its debt from the Debtor’s ex-spouse. Lakeview argued the debt was nondischargeable under 11 U.S.C. § 523(a)(15). Pursuant to a marital settlement agreement, the Debtor’s ex-spouse was assigned the Lakeview debt. The ex-spouse filed bankruptcy on December 29, 2016. She received a discharge of her Lakeview debt on April 25, 2016. The instant Debtor also listed Lakeview as a creditor on his Schedules. The Court held the debt to Lakeview was dischargeable. The ex-spouse incurred a “new debt” when the state court granted the marital settlement agreement. Her debt to Lakeview was discharged with her bankruptcy. Similarly, when the Debtor received a discharge, his liability on that same debt was also discharged.

Statute/Rule References:
11 U.S.C. § 523(a)(5) -- Nondischargeability – Divorce Decrees
11 U.S.C. § 523(a)(15) -- Nondischargeability – Marital Obligations

Key Terms:
Marital Settlement Agreement
Nondischargeable Debt

Peggy A. Berg v. Social Security Administration (In re Berg), Adv. No. 16-0089, Case No. 14-13435-7 (06/15/2017) (569 B.R. 755) -- Judge Catherine J. Furay 06/15/2017

Case Summary:
Debtor filed a Chapter 13 petition on August 7, 2014. The Court entered a final decree on January 21, 2015. On August 4, 2016, Debtor moved to reopen her bankruptcy and filed the present adversary case to unwind the Social Security Administration’s (“SSA”) prepetition setoff of her social security disability benefits. The Court concluded under 11 U.S.C. § 553(b) that the SSA improved its insufficient position during the 90-day setoff period prescribed under the statute.

Statute/Rule References:
11 U.S.C. § 522(h) -- Exemptions
11 U.S.C. § 553 -- Setoff

Key Terms:
Setoff

Aaron J. Lofton and Linda L. Lofton v. Beneficial Financial I Inc. and Portfolio Recovery Associates LLC (In re Lofton), Adv. No. 16-0041, Case No. 15-14093-13 (06/05/2017) (569 B.R. 747) -- Judge Catherine J. Furay 06/05/2017

Case Summary:
Plaintiffs/debtors filed an adversary complaint against servicer Beneficial Financial I Inc. (“Beneficial”) alleging Beneficial impermissibly transferred servicing of their note and mortgage in violation of the Real Estate Settlement Procedures Act’s (“RESPA”) notice requirements. Following a foreclosure judgment, the Plaintiffs stated that they attempted to contact Beneficial to negotiate a workout agreement on their second mortgage. Beneficial assumed servicing of the Plaintiffs’ second note and mortgage when it acquired and/or merged with Beneficial Financial Wisconsin Inc. In addition, the Plaintiffs argued that Beneficial improperly and fraudulently denied it owned or serviced their loan, which constituted a violation under Wis. Stat. § 224.77(1)(m). That state law makes it unlawful for a mortgage banker to engage in improper, fraudulent or dishonest dealing. Beneficial moved for summary judgment. The Court granted summary judgment in favor of Beneficial because the Plaintiffs did not present any evidence that they sustained actual damages.

Statute/Rule References:
12 U.S.C. § 2605(b) -- Servicing of Mortgage Loans - Notice of Transferor of Loan Servicing at Time of Transfer
12 U.S.C. § 2605(f) -- Servicing of Mortgage Loans - Damages and Costs
12 C.F.R. § 1024.33(b) -- Real Estate Settlement Procedures Act – Notices of Transfer of Loan Servicing
Wis. Stat. § 224.77 -- Prohibited Acts and Practices of Mortgage Bankers, Mortgage Loan Originators, Mortgage Brokers
Wis. Stat. § 224.80 -- Penalties and Private Cause of Action

Key Terms:
RESPA

Brian P. Petska and Lori J. Petska v. Jeffrey J. Hazuga (In re Hazuga), Adv. No. 17-0002, Case No. 16-13326-7 (05/11/2017) -- Judge Catherine J. Furay 05/11/2017

Case Summary:
Plaintiffs filed an adversary complaint against Debtor seeking an exception to discharge under 11 U.S.C. §§ 523(a)(2) and (a)(6). The Plaintiffs moved the Court to permissively abstain under 28 U.S.C. § 1334(c)(1). The Plaintiffs agreed that whether a debt is nondischargeable in a bankruptcy case is a “core” proceeding as defined by 28 U.S.C. § 157(b)(2)(I). The Court concluded that since the Plaintiffs’ Complaint raised issues of nondischargeability under 11 U.S.C. § 523, it had authority to decide the issue of dischargeability. Since Stern v. Marshall, 564 U.S. 462 (2011), the United States Supreme Court in Wellness Int’l Network, Ltd. v. Sharif, __ U.S. __, 135 S. Ct. 1932 (2015), clarified that bankruptcy courts are permitted to adjudicate liability and damages existing under non-bankruptcy law provided the parties consent to the court’s jurisdiction. The Court concluded it had both jurisdictional and constitutional authority to determine whether there was a non-dischargeable debt.

Statute/Rule References:
28 U.S.C. § 157(a)
28 U.S.C. § 1334 -- Abstention

Key Terms:
Abstention

Brenda L. Zeddun v. Francis F. Fiore, Jr. (In re Szadziewicz), Adv. No. 16-0015, Case No. 14-10716-7 (04/17/2017) -- Judge Catherine J. Furay 04/17/2017

Case Summary:
Trustee filed an adversary complaint against Fiore alleging conveyance of a home constituted a fraudulent transfer. On August 23, 2016, the Trustee moved to dismiss her Complaint with prejudice. Fiore moved for sanctions under Fed. R. Bankr. P. 9011 arguing the Trustee’s Complaint lacked an evidentiary foundation. The Court denied Fiore’s motion for sanctions concluding Fiore did not comply with Rule 9011’s safe-harbor. In addition, the Court concluded Fiore’s motion for sanction was untimely. While Rule 9011 does not set a specific time for bringing a sanctions motion, in the Seventh Circuit, a party should file a motion for sanctions “as soon as practicable after discovery of a Rule 11 violation.” Kaplan v. Zenner, 956 F.2d 149, 151 (7th Cir. 1992). Fiore asserted the Trustee violated Rule 9011 on February 22, 2016, but did not move for sanctions until September 7, 2016, over six months after the first Complaint and over four months after the Amended Complaint. Accordingly, the Court denied Fiore’s motion for sanctions.

Statute/Rule References:
Fed. R. Bankr. P. 9011 -- Sanctions
11 U.S.C. § 544(b)
Wis. Stat. § 242.04 -- Transfers Fraudulent as to Present and Future Creditors

Key Terms:
Safe Harbor

Hellenbrand Glass, LLC v. Scott G. Pulvermacher and Jean M. Pulvermacher (In re Pulvermacher), Adv. No. 16-0025, Case No. 16-10249-7 (03/31/2017) (567 B.R. 881) -- Judge Catherine J. Furay 03/31/2017

Case Summary:
Plaintiff Hellenbrand Glass, LLC filed an adversary complaint seeking a determination that a debt evidenced by a state court judgment was nondischargeable under 11 U.S.C. § 523(a)(4). The parties filed a stipulation agreeing inter alia that $15,457.03 was nondischargeable. They also stipulated that the state court trebled this amount pursuant to Wis. Stats. §§ 895.446 and 943.20. The only issue before the Court was whether the treble damage portion of the debt was dischargeable. The parties agreed there were no material issues of fact and the court ordered briefs. To resolve the state court action, the Plaintiff and Debtor Scott G. Pulvermacher entered into a settlement agreement intending to resolve the Plaintiff’s claim for theft by contractor Plaintiff. The Court concluded that the trust created by Wis. Stat. § 779.02(5) establishes the type of express statutory trust contemplated by 11 U.S.C. § 523(a)(4). Accordingly, the Court found the entire debt nondischargeable reasoning a party’s breach of a settlement agreement disposing of the underlying action does not erase the history of the debt’s origin.

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
Wis. Stat. § 895.446 -- Action for Property Damage or Loss
Wis. Stat. § 943.20 -- Theft

Key Terms:
Theft by Contractor

In re Lisse, Case No. 16-12556-13 (03/29/2017) (567 B.R. 813) -- Judge Catherine J. Furay 03/29/2017

Case Summary:
Debtor moved the court to impose sanctions under Rule 9011 and 28 U.S.C. § 1927 against counsel for mortgage creditor alleging three (3) separate pleadings violated Rule 9011. The Debtor alleged opposing counsel deliberately misidentified the mortgage creditor in an effort to "conceal the authority under which [counsel] purport[ed] to engage in litigation activities . . . ." The Court concluded sanctions were not warranted because (1) the mortgage creditor filed the pleadings in an effort to protect its security interest in collateral; (2) the mortgage creditor demonstrated a right to payment in state foreclosure proceedings; and (3) the mortgage creditor proposed a legal theory creating a prima facie case as to why the case should be dismissed.

Statute/Rule References:
11 U.S.C. § 1322(b)(2) -- Modification of Rights of Secured Claimants
28 U.S.C. § 1927 -- Counsel’s Liability for Excessive Costs
Fed. R. Bankr. P. 9011 -- Sanctions

In re Lisse, Case No. 16-12556-13 (03/06/2017) (565 B.R. 903) -- Judge Catherine J. Furay 03/06/2017

Case Summary:
Debtor Sondra K. Lisse filed a Chapter 13 Plan. Mortgage creditor HSBC objected to confirmation. At a telephonic hearing, the Court permitted discovery. HSBC requested an extension of time; Debtor’s counsel agreed under certain conditions that were not agreeable to HSBC. HSBC then moved to dismiss Debtor’s case. Debtor moved for sanctions under Fed. R. Bankr. P. 7037 or, in the alternative, to determine the sufficiency of responses to her discovery requests, and compel responses. Digging through the cascade of voluminous filings, the Court found Debtor failed to certify that she conferred or attempted to confer in good faith with HSBC prior to bring her motion to compel because she offered HSBC an ultimatum.

Statute/Rule References:
Fed. R. Bankr. P. 7033 -- Interrogatories to Parties
Fed. R. Bankr. P. 7036(a)(6) -- Motion Requesting the Sufficiency of an Answer or Objection
Fed. R. Bankr. P. 7037 -- Failure to Make Discovery; Sanctions

Katherine Hebl v. Bradley A. Windeshausen (In re Windeshausen), Adv. No. 15-0083, Case No. 15-10704-7 (03/03/2017) (568 B.R. 299) -- Judge Catherine J. Furay 03/03/2017

Case Summary:
Plaintiff Katherine Hebl brought this action to have her arbitration award of $310,000 declared nondischargeable under 11 U.S.C. § 523(a)(2)(A) or, in the alternative, section 523(a)(4). Plaintiff alleged her business partner Bradley Windeshausen over the course of three and one-half years embezzled funds from a bar in which they operated as equal partners. At a continued hearing, the Court granted in part and denied in part Defendant’s motion to dismiss, finding Plaintiff failed to established section 523(a)(2)(A)’s intent element, but made a prima facie case for liability under section 523(a)(4). The Court found the debt dischargeable because the Plaintiff failed to establish a fiduciary relationship under section 523(a)(4), and failed to establish the element of intent. In addition, the Court found Plaintiff did not establish the existence of a “debt.”

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - Fraud
11 U.S.C. § 523(a)(4) -- Nondischargeability - Embezzlement
11 U.S.C. § 523(a)(4) -- Nondischargeability - Fraud or Defalcation in Fiduciary Capacity
11 U.S.C. § 523(a)(4) -- Nondischargeability - Larceny
Wis. Stat. § 183.0402 -- Duties of Managers and Members

Key Terms:
Embezzlement
Fiduciary Capacity
Fraud - Fiduciary Capacity
Larceny

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