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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

H. Brooks and Company, LLC v. Stanley G. Yerges (In re Yerges), Adv. No. 13-0105, Case No. 13-10813-7 (05/06/2014) -- Judge Catherine J. Furay 05/06/2014

Case Summary:
In prior proceedings, the District Court determined the Defendant’s produce LLC had violated its Perishable Agricultural Commodities Act (“PACA”) trust obligations to the plaintiff. It made no findings about whether the defendant was individually liable. The Defendant then filed an individual Chapter 7 petition, and the Plaintiff sought to except the PACA debt from discharge under section 523(a)(4). In denying a motion to dismiss the adversary complaint, the Bankruptcy Court determined the defendant-owner was personally liable for the dissipation of the PACA trust assets. The Court also ruled that a PACA trust imposed fiduciary duties within the meaning of section 523(a)(4). The Plaintiff then filed a motion for summary judgment, and the only question remaining was whether the Debtor’s conduct constituted fraud or defalcation within the meaning of section 523(a)(4). The Court rejected the Plaintiff’s arguments that the Supreme Court’s interpretation of “defalcation” in Bullock v. BankChampaign, N.A., 133 S. Ct. 1754 (2013), did not apply to statutory breaches of fiduciary duty and that a breach of fiduciary duty imposed by PACA constituted per se defalcation within the meaning of section 523(a)(4). Instead, applying Bullock, the Court looked to the facts available and could not conclude whether or not the Debtor had knowledge of, or acted with gross recklessness in respect to, the improper nature of the behavior that resulted in a breach of his fiduciary duties. Accordingly, the Court denied summary judgment.

Statute/Rule References:
11 U.S.C. § 523(a)(4) -- Nondischargeability - Fraud in Fiduciary Capacity

Key Term:
Defalcation while Acting as a Fiduciary

Minnesota Department of Employment and Economic Development v. Gregory L. Sanderson (In re Sanderson), Adv. No. 13-0209, Case No. 13-14059-13 (04/11/2014) (509 B.R. 206) -- Judge Catherine J. Furay 04/11/2014

Case Summary:
The Plaintiff sought a determination that debt for overpaid unemployment benefits was nondischargeable. On summary judgment, the court had an obligation to verify the debts were nondischargeable, even though the defendant conceded the overpayment was nondischargeable and only disputed his liability for the filing fee. The overpayment was excepted from discharge under section 523(a)(2)(A) because the Defendant falsely certified he was unemployed and not receiving wages. A penalty assessed for the overpayment was intended to punish fraud, and thus was excepted from discharge under section 523(a)(7). The Plaintiff could recover the fee for filing the adversary proceeding, as its recovery was permitted under a state statute. Because the underlying debt was nondischargeable, the filing fee was too.

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - Fraud
11 U.S.C. § 523(a)(7) -- Nondischargeability - Fines / Penalties / Forfeitures

Key Terms:
Fines - Penalties - Forfeiture
Fraud
Nondischargeable Debt

Chase Michael Boruch v. The Estate of Sally Pergolski, et al. (In re Boruch), Adv. No. 12-0245, Case No. 11-16005-7 (01/31/2014) (505 B.R. 508) -- Judge Catherine J. Furay 01/31/2014

Case Summary:
A few months after filing bankruptcy, the Debtor was convicted of first-degree homicide for the murder of his mother. From prison, he filed a pro se adversary proceeding seeking, among other things, a finding that his bankruptcy estate had an interest in proceeds from his mother’s life insurance policies. The defendants’ motion to dismiss argued that the Debtor’s interest in the life insurance proceeds was severed upon his conviction by operation of Wis. Stat. § 854.14, Wisconsin’s “slayer’s statute.” The Debtor argued that he was entitled to exhaust his appellate remedies before the statute could be applied.

At the time the defendant’s motion to dismiss was filed, that question—whether the slayer statute applied upon conviction or awaited the completion of an appeal—was a matter of first impression in Wisconsin. While the motion to dismiss was pending, however, the Debtor’s criminal conviction was affirmed by the Wisconsin Court of Appeals. Concluding that the affirmance mooted the legal question raised by the motion to dismiss, the Bankruptcy Court held that the slayer’s statute severed the Debtor’s interest in the proceeds as of the date of his mother’s death, thereby depriving the bankruptcy estate of any interest. The Court explained further that even if the affirmance had not exhausted the Debtor’s appellate remedies, the slayer’s statute was triggered by the Debtor’s conviction. Accordingly, it granted the defendants’ motion to dismiss.

Statute/Rule References:
11 U.S.C. § 541(a)(1)
Wis. Stat. § 854.14 -- Slayer's Statute

Key Terms:
Property of the Estate

Forward Financial Bank v. John Milton Edwards IV and Nancy Carol Edwards (In re Edwards), Adv. No. 12-0195, Case No. 12-14091-7 (12/19/2013) -- Judge Catherine J. Furay 12/19/2013

Case Summary:
Forward Financial Bank brought an adversary proceeding seeking a denial of the Debtors’ discharge under several provisions of 11 U.S.C. § 727 or, alternatively, a finding that the debt owed to the bank was nondischargeable under 11 U.S.C. § 523(a)(6). After a two-day trial and the submission of post-trial briefs, the court found that there was insufficient evidence to deny the Debtors’ discharge or render any portion of the debt nondischargeable. The Court entered judgment in favor of the Debtors and dismissed the adversary proceeding.

Statute/Rule References:
11 U.S.C. § 523(a)(6) -- Nondischargeability - Willful and Malicious Injury
11 U.S.C. § 727 -- Discharge

Key Terms:
Discharge
Dischargeability - Willful and Malicious

H. Brooks and Company, LLC v. Stanley G. Yerges (In re Yerges), Adv. No. 13-0105, Case No. 13-10813-7 (12/17/2013) -- Judge Catherine J. Furay 12/17/2013

Case Summary:
In prior proceedings, the district court determined the defendant’s produce LLC had violated its Perishable Agricultural Commodities Act (“PACA”) trust obligations to the plaintiff. It made no findings about whether the defendant was individually liable. The defendant then filed an individual chapter 7 petition, and the plaintiff sought to except the PACA debt from discharge under section 523(a)(4). In denying a motion to dismiss the adversary complaint, the court determined the defendant-owner was personally liable for the dissipation of the PACA trust assets. The court also ruled that a PACA trust imposed fiduciary duties within the meaning of section 523(a)(4). The plaintiff then filed a motion for summary judgment, and the only question remaining was whether the debtor’s conduct constituted fraud or defalcation within the meaning of section 523(a)(4). The court rejected the plaintiff’s arguments that the Supreme Court’s interpretation of “defalcation” in Bullock v. BankChampaign, N.A., 133 S. Ct. 1754 (2013), did not apply to statutory breaches of fiduciary duty and that a breach of fiduciary duty imposed by PACA constituted per se defalcation within the meaning of section 523(a)(4). Instead, applying Bullock, the court looked to the facts available and could not conclude whether or not the debtor had knowledge of, or acted with gross recklessness in respect to, the improper nature of the behavior that resulted in a breach of his fiduciary duties. Accordingly, the court denied summary judgment.

Statute/Rule References:
11 U.S.C. § 523(a)(4) -- Nondischargeability - Fraud in Fiduciary Capacity

Key Terms:
Fiduciary Capacity

Patricia Mroczenski v. Larry Dennis Mroczenski and Tami Jo Mroczenski (In re Mroczenski), Adv. No. 13-0058, Case No. 12-16800-7 (12/16/2013) -- Judge Catherine J. Furay 12/16/2013

Case Summary:
The plaintiff in this adversary proceeding—the incapacitated mother of one of the Defendants/Co-Debtors—secured a $60,000 state court judgment against her son and his wife for breach of fiduciary duties, conversion, and defalcation and sought a determination that the amounts owed were nondischargeable under 11 U.S.C. § 523(a)(4). The Court found that the language of the state court judgment conclusively established that the Plaintiff’s son had engaged in “fraud or defalcation while acting in a fiduciary capacity” and that his debt should be nondischargeable; however, the judgment was not clear regarding his wife’s culpability. Accordingly, summary judgment was granted as to the son but denied as to his wife.

Statute/Rule References:
11 U.S.C. § 523(a)(4) -- Nondischargeability - Fraud or Defalcation in Fiduciary Capacity

Key Terms:
Claim Preclusion
Fiduciary Capacity

Erie Insurance Company and Anthony Stafford v. Kevin John Zaja (In re Zaja), Adv. No. 13-0060, Case No. 13-10684-7 (12/12/2013) -- Judge Catherine J. Furay 12/12/2013

Case Summary:
The Plaintiffs obtained a state court judgment against the Debtor for stealing a trailer and two automotive hoists and sought a finding that the consequent debt was nondischargeable as larceny under 11 U.S.C. § 532(a)(4). On summary judgment, the Court found that the terms of the state court judgment conclusively established that the Debtor committed larceny for purposes of section 523(a)(4). Accordingly, summary judgment was granted in favor of the Plaintiffs and the debt was rendered nondischargeable.

Statute/Rule References:
11 U.S.C. § 523(a)(4) -- Nondischargeability - Fraud in Fiduciary Capacity

Key Terms:
Collateral Estoppel
Larceny

Judge Robert D. Martin

Condon Oil Company v. Michael Wood (In re Wood), Adv. No. 12-0181, Case No. 12-13442-7 (02/21/2014) -- Judge Robert D. Martin 02/21/2014

Case Summary:
After a trial on the dischargeability of debt under 11 U.S.C. § 523(a)(2)(A), § 523(a)(4), and 523(a)(6), the plaintiff filed a proposed bill of costs. The Debtor-Defendant objected on the grounds that the Plaintiff was not the prevailing party on all claims. The Court held that the complete lack of success on the first two claims must result in a reduction of two thirds of the total fees. As to the third claim, the Court recognized that only a state court can determine precisely who the prevailing party was. Nonetheless, the Court awarded the full one third of the fees to the Plaintiff in light of the evidence presented at trial.

Statute/Rule References:
28 U.S.C. § 1920
Fed. R. Bankr. P. 7054

Key Terms:
Fee Dispute

In re Goodreau, Case No. 13-11713-7 (12/27/2013) -- Judge Robert D. Martin 12/27/2013
In re Thompson, Case No. 13-11527-13 (12/19/2013) -- Judge Robert D. Martin 12/19/2013
Case Summary:
After confirmation of her Chapter 13 plan, the Debtor objected to the claim of the Wisconsin Department of Revenue, arguing that the claim was not entitled to priority status because her tax obligations for 2007, 2008, and 2009 came due more than three years prior to the filing of the petition. The Department of Revenue contended that the “lookback” period was tolled during the Debtor’s first Chapter 13 case (filed in 2010). Under 11 U.S.C. § 507(a)(8)(A)(i), the lookback period is tolled for any period in which the stay of proceedings was in effect in a prior case. Because the Debtor’s prior case was pending until its dismissal in February of 2013, the lookback period was tolled and Department had a valid priority claim.

Statute/Rule References:
11 U.S.C. § 507(a)(8)
11 U.S.C. § 523(a) -- Nondischargeability - Divorce Decrees

Key Terms:
Divorce Decrees - Maintenance or Property Division
Taxes - Tolling

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