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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 Rachel M. Blise

In re Peterson, Case No. 22-11787-7 (06/08/2023) -- Judge Rachel M. Blise 06/08/2023

Case Summary:
The Court denied confirmation of the debtors’ chapter 13 plan because it contemplated payments over a period of more than 60 months, contrary to the requirements of 11 U.S.C. § 1322(d).  The debtors’ mortgage on their principal residence had matured prepetition, and the debtors proposed a plan that would amortize the balance over 84 months.  The trustee would distribute payments to the creditor in months 1 through 60 of the re-amortized term, and the debtors would pay the creditor directly in months 61 through 84.  The debtors relied on § 1322(c)(2), which provides that a plan can modify a claim secured by a debtor’s principal residence if the last payment under the original payment term is due before the end of the plan term.  The Court held that such a modification in a plan cannot include payments beyond the end of the plan term.  The Court held that direct payments made to a creditor whose claim is provided for by the plan are “payments under the plan” for purposes of § 1328(a).  The direct payments in months 61 to 84 were also necessarily “payments” for purposes of § 1322(d).  Under that section, all payments, including all payments made by the debtor directly to a creditor and all payments made to the trustee for distribution to creditors, must be completed within a maximum term of 60 months.  The debtors’ plan payments would not complete within the maximum allowed term, so the plan could not be affirmed.  The Court also rejected the debtors’ argument that the plan was confirmable because the creditor consented to the plan’s terms.  Even if a creditor consents to its treatment under § 1325(a)(5), the plan still must comply with the other provisions in chapter 13, as required by § 1325(a)(1).

Statute/Rule References:
11 U.S.C. § 1322
11 U.S.C. § 1325
11 U.S.C. § 1328

Key Terms:
Confirmation

 
In re Snyder, Case No. 22-11334-13 (03/31/2023) -- Judge Rachel M. Blise 03/31/2023

Case Summary:
The Court denied confirmation of the debtor’s chapter 13 plan because it did not meet the requirements of 11 U.S.C. § 1325(a)(9).  That section requires that debtors “file[] all applicable Federal, State, and local tax returns as required by section 1308.”  Section 1308 requires that all tax returns due for the four-year period before the petition date must be filed before the meeting of creditors is concluded.  The debtor filed required tax returns after the meeting of creditors but before confirmation, and he argued that § 1325(a)(9) should not prevent the Court from confirming the plan.  Under the debtor’s reading of the Code, § 1325(a)(9) would mandate only that the relevant tax returns are filed before confirmation.  The debtor argued that incorporating § 1308’s timing requirement would render superfluous § 1307(e), which provides for dismissal of cases where debtors do not comply with § 1308.  The Court explained that while § 1325(a)(9) and § 1307(e) may sometimes lead to the same outcome, the statutes merely overlap and are not so similar that departure from the plain meaning of § 1329(a)(9) is warranted.

The Court adopted the reasoning of In re Long, 603 B.R. 812 (Bankr. E.D. Wis. 2019), and held that a chapter 13 debtor must file the required tax returns before the deadline in § 1308 as a condition of plan confirmation.

Statute/Rule References:
11 U.S.C. § 1325(a)(9) -- Plan Confirmation - tax returns
11 U.S.C. § 1307(e) -- Conversion or dismissal - tax filings
11 U.S.C. § 1308 -- Filing of prepetition tax returns

Key Term:
Taxes / tax returns

In re Thompson, Case No. 22-11921-7 (10/03/2023) -- Judge Rachel M. Blise 03/10/2023

Case Summary:
The bankruptcy court granted a general contractor's motion for an order confirming that it could pursue its claims against the individual debtors' limited liability company.  The general contractor, which had subcontracted with the debtors' LLC for work on a construction project, sued the LLC and and the debtors in state court, alleging theft by contractor and civil theft.  After the individual debtors filed bankruptcy, the general contractor asked the bankruptcy court to confirm that the automatic stay did not apply to the debtors' LLC or to grant relief from the stay if it did.  The bankruptcy court noted that while the stay is broad and automatic, it generally does not apply to nondebtors.  The Seventh Circuit in In re Fernstrom Storage & Van Co., 938 F.2d 731 (7th Cir. 1991), stated that the § 362(a)(1) stay may be applied to a nondebtor when “there is such identity between the debtor and the third-party defendant that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor.”  See also A.H. Robins Co. v. Piccinin, 788 F.2d 994 (4th Cir. 1986) (exception first applied).  The bankruptcy court concluded that such stay of litigation against a nondebtor does not apply automatically and must instead be ordered by the court.  The bankruptcy court determined that the matter did not satisfy the “identity of interest” test under A.H. Robins because any judgment against the debtors’ LLC under Wisconsin's theft-by-contractor statute, Wis. Stat. § 779.02(5), would not necessarily impact their bankruptcy case.  The Wisconsin statute indicated that members of an LLC are liable only if they are "responsible for the misappropriation."  Thus, even assuming the general contractor could prove that the LLC committed theft by contractor, it would also need to prove, at a minimum, that the debtors were responsible for the misappropriation before the debtors would be liable.  Because the general contractor's claims against the LLC could be separated from its claims against the debtors, and the debtors had not demonstrated that success on the claims against the LLC would have an identifiable impact on the debtors or the bankruptcy estate, the court declined to extend the § 362(a)(1) stay to enjoin the general contractor from proceeding against the debtors' LLC in state court.

Statute References: 
11 U.S.C. § 362(a)(1)
Wis. Stat. § 779.02(5)

Key Terms: 
Automatic Stay
Non-Debtor
Enjoin
Theft by Contractor
Limited Liability Company

In re Snyder, Case No. 22-11334-13 (01/13/2023) -- Judge Rachel M. Blise 01/13/2023

Case Summary:
After the chapter 13 trustee held and concluded the meeting of creditors, it came to light that the debtor had not filed tax returns for two taxable periods preceding the petition date, as required by 11 U.S.C. § 1308(a).  In an effort to remedy his non-compliance, the debtor filed a motion to reconvene the meeting of creditors.  The court rejected the debtor’s argument that it had the power to reopen the meeting of creditors pursuant to 11 U.S.C. § 105(a).  Noting that the Supreme Court in Law v. Siegel, 571 U.S. 415, 421 (2014), held that courts cannot use § 105(a) to “override explicit mandates of other sections of the Bankruptcy Code,” the bankruptcy court determined that the relief requested by the debtor would override the explicit mandates in § 1308(b).  Under § 1308, if a debtor has not filed the required tax returns, then the mechanism for the debtor to obtain more time to file the returns is to ask the trustee to hold open the meeting or to seek relief from the court before the meeting is concluded.  If debtors could simply ask the court to reopen the meeting of creditors under § 105(a), then § 1308(b) would be superfluous.  Moreover, the bankruptcy court noted that 11 U.S.C. § 1307(e) – which requires dismissal or conversion of a case when a debtor fails to comply with § 1308(a) – would likewise be rendered inoperative if a debtor could avoid dismissal by filing the missing tax returns and seeking to reopen the meeting of creditors.  Accordingly, the debtor’s motion to reconvene the meeting of creditors was denied.

In re Hunter, Case No. 21-11247-13 (01/05/2023) -- Judge Rachel M. Blise 01/05/2023

Case Summary:
After the chapter 13 debtor fell behind in payments to the company that provided her electric services, the utility moved to dismiss the debtor’s case or, alternatively, for a declaratory ruling that it did not need relief from the automatic stay to terminate service.  The court denied the motion to dismiss, but granted the motion for an order that the automatic stay did not prevent disconnection of utility service.  Under 11 U.S.C. § 366(a), a utility must continue to provide service to a trustee or debtor after the petition date even where the debtor owes a significant pre-petition debt to the utility.  This obligation to provide post-petition services unwillingly continues for only 20 days after the petition date.  Thereafter, a utility may disconnect service if the debtor does not provide adequate assurance of payment.  11 U.S.C. § 366(b).  The court rejected the debtor’s argument that the utility was prohibited from disconnecting service because it had not requested adequate assurance of payment under § 366(b) in the 20 days after the petition date.  If the debtor wanted to prevent termination of service, it was incumbent on the debtor to inquire regarding the assurance of payment necessary to prevent disconnection of services.  The utility’s obligation to provide service without adequate assurance of payment expired on the 21st day after the petition date.

Chief Judge Catherine J. Furay

Paul Burritt v. Shaylynn M. Hoven (In re Hoven), Adv. No. 22-00035, Case No. 22-10605-7 (04/11/2023) (652 B.R. 531) -- Judge Catherine J. Furay 04/11/2023

Case Summary:
Plaintiff Paul Burritt sued Debtor/Defendant Shaylynn Hoven to have his debt be declared nondischargeable under a theory of res judicata and under Code section 523(a)(6). Burritt won summary judgment against Hoven in a state court for making false allegations of sexual assault. The state court judge awarded Burritt nearly $750,000. After Hoven filed bankruptcy, Burritt sought to have the damage award declared nondischargeable under res judicata and section 523(a)(6). The Court denied the complaint on both counts. First, the Court found that the issue wasn’t actually litigated in state court (due to the summary judgment), the state court did not make all the findings necessary to satisfy the elements of 523(a)(6), and that the damages awarded by the state court were not justified. Second, the Court ruled, based on the evidence, that Hoven’s actions were willful but not malicious. The evidence showed that Hoven was aware her actions were wrong at the time she committed them, but not that she understood the consequences of making the false accusations.

Statutes/Rules:
11 U.S.C. § 523(a)(6)

Key Terms:
Collateral Estoppel
Res Judicata
Willful and Malicious Injury

Ben Parr v. Clinton J. Rassbach and Molly A. Rassbach (In re Rassbach), Adv. No. 22-00050, Case No. 22-11344-7 (03/13/2023) 650 B.R. 568 -- Judge Catherine J. Furay 03/13/2023

Case Summary:
Defendants Clinton and Molly Rassbach moved to dismiss Plaintiff's complaint based on a failure to state a claim. Defendants argued that the complaint failed to state a plausible claim for relief under sections 523(a)(2)(A), 523(a)(6), and against Molly Rassbach individually. The Plaintiff responded arguing that the Court should apply the doctrines of res judicata and collateral estoppel due to the underlying state court action, and that the complaint otherwise states claims for relief under 523(a)(2)(A) and 523(a)(6). In reply, the Defendants claimed that the Plaintiff mischaracterized the findings of the state court. This Court denied the Defendants' motion. First, this Court did not apply the preclusive effect of res judicata, but looked beyond the state court docket as permitted under Brown v. Felsen to find that there was a plausible claim for relief under sections 523(a)(2)(A) and 523(a)(6). Second, the Court held that Molly Rassbach could potentially have imputed liability for Clinton Rassbach's actions as a co-owner of the Defendants' LLC and the recent Supreme Court decision Bartenwerfer v. Buckley. Also, Molly is an appropriate party under Federal Rule 20.

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - false pretenses, false representation, or fraud
11 U.S.C. § 523(a)(6) -- Nondischargeability - willful and malicious injury
Fed. R. Civ. P. 12(b)(6) -- Failure to State a Claim
Fed. R. Civ. P. 20 -- Permissive Joinder of Parties

Key Terms:
Collateral Estoppel
Permissive Joinder
Res Judicata

Jonah Heyerholm, et al. v. Ryan M. Johnson, et al. (In re Johnson), Adv. No. 22-00049, Case No. 22-11548-7 (01/24/2023) -- Judge Catherine J. Furay 01/24/2023

Case Summary:
Plaintiffs John, Rita, and Jonah Heyerholm sued defendants Ryan and Angela Johnson to except their debt from discharge under section 523(a)(6). Jonah Heyerholm was injured when the defendants offered to take him wakeboarding on their boat on Rock Lake, Wisconsin. Jonah accepted their invitation. When Jonah was done wakeboarding, defendant Ryan Johnson maneuvered the boat into a position in front of Jonah while he was in the water. Ryan kept the boat in neutral rather than turning it off. Ryan engaged the transmission and the boat moved in reverse toward Jonah and injured him. The Johnsons did not maintain liability insurance for the boat. The plaintiffs’ complaint alleged that the boat had a faulty transmission and would sometimes move in reverse when the operator intended to move forward. Thus, they argue that the defendant’s actions constituted willful and malicious injury under section 523(a)(6). The defendants filed a motion to dismiss, arguing that a claim under section 523(a)(6) requires an intent to injure, which the complaint does not allege. Therefore, they argued that the complaint should be dismissed because it fails to state a claim. The Court denied the defendants’ motion. Case law from the Seventh Circuit states that “willful” injury under section 523(a)(6) can be found when a defendant acts with an intent to injure, or when their actions are substantially certain to result in injury. Here, accepting the allegations in the complaint as true (which the Court must do when deciding a motion to dismiss), the plaintiffs alleged that the boat could move in reverse at any time. And they alleged that the defendant maneuvered the boat in front of Jonah, kept the boat in neutral, and then it reversed into Jonah. Accepting these allegations as true and drawing all reasonable inferences in favor of the plaintiffs, these actions were substantially likely to result in injury. Thus, the Court held that the complaint stated a plausible claim for relief and denied the motion to dismiss.

Statute/Rule References:
11 U.S.C. § 523(a)(6) -- Nondischargeability - Willful and Malicious Injury
Rule 12(b)(6) -- Failure to State a Claim

Key Terms:
Motion to Dismiss
Willful and Malicious Injury

In re Peterman, Case No. 22-10296-7 (12/20/2022) -- Judge Catherine J. Furay 12/20/2022

Case Summary:
The United States Trustee moved to dismiss Debtor Kelly Lynn Peterman’s Chapter 7 case under section 707(b)(3), arguing that the totality of his financial circumstances demonstrated abuse. The Debtor owned a sport boat and had an above-median annual household income. The UST argued that the boat was unnecessary luxury collateral, and that his income was high enough to fund a Chapter 13 plan that would substantially repay his creditors. In response, the Debtor argued that he used the boat as part of a seasonal dock cleaning business, and that he was facing significant upcoming expenses and income adjustments that would diminish the return that he could pay his creditors. After an evidentiary hearing, the Court agreed with the Debtor and denied the UST’s motion. The evidence showed that the boat was used in the business and that the Debtor recently experienced a reduction in income. He also had several significant upcoming expenses, including two surgeries. As a result, the UST could not show, by a preponderance of the evidence, that the Debtor’s financial circumstances demonstrated abuse, and the case was allowed to continue.

Statute/Rule References:
11 U.S.C. § 707(b)(3) -- Dismissal

Key Terms:
Dismissal (for abuse/totality of the circumstances)
Luxury Collateral

Michael Erwin Acuna v. Illinois Department of Revenue and Internal Revenue Service (In re Acuna), Adv. No. 21-00034, Case No. 21-11517-7 (10/27/2022) -- Judge Catherine J. Furay 10/27/2022

Case Summary:
Debtor filed a motion under Rule 59(e) to amend or alter the Court’s summary judgment decision in favor of the Internal Revenue Service (“IRS”). The Debtor sought to overturn the judgment on grounds that the Court did not properly consider the Debtor’s argument under section 506(d), the Court improperly granted summary judgment to the IRS, and the Court did not consider dischargeability. In response, the IRS argued that the Court properly decided the issue but suggested that summary judgment was proper because the trustee’s rights as a lien creditor automatically rendered the IRS’s improperly recorded tax liens invalid against the estate, rather than the Debtor’s rights to avoid the lien under section 522. Regarding his section 506(d) argument, the Debtor did not present new evidence or argument in support of his motion, but merely reiterated arguments that he had previously presented. Nonetheless, in reconsidering the issue, the Court again rejected the Debtor’s argument under section 506. Also, although the IRS was correct in its alternative argument, the Court’s prior reasoning was proper under the facts of the case. Next, the Court reviewed case law regarding Rule 56(f) and determined that it was justified in granting summary judgment to the IRS because both parties agreed that there were no remaining material issues of fact. Lastly, under Rule 54(c), the Court again concluded that since no argument regarding dischargeability was presented, the Court did not need to rule on it.

Statute/Rule References:
11 U.S.C. § 506(d) -- Determination of Secured Status
Fed. R. Civ. P. 59(e) -- Motion to Alter or Amend a Judgment

Key Terms:
Dischargeability (taxes)
Motion to Alter or Amend a Judgment
Reconsideration

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