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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 Thomas S. Utschig

In re Thulis, Case No. 10-16841-7 (06/04/2012) (474 B.R. 668) -- Judge Thomas S. Utschig 06/04/2012

Case Summary:
Chapter 7 Trustee objected to bank’s secured claim on the grounds that its mortgage did not cover the specific parcel previously sold by the Trustee. The bank contended that as a hypothetical subsequent purchaser under § 544(a)(3), the Trustee would have had constructive notice of its claim. The Bankruptcy Court found that although Wisconsin law charges prospective purchasers with constructive notice of certain things that might be ascertained by a review of the land or an inquiry of those in possession, nothing about the parcel in question would provide notice of the bank’s mortgage. The mortgage was not in the property’s chain of title and Wisconsin’s doctrine of constructive notice would not require a prospective purchaser to make inquiries about an owner’s financing arrangements. The trustee’s objection was sustained, and the bank’s claim was allowed as unsecured.

Statute/Rule References:
11 U.S.C. § 544 -- Trustee as Lien Creditor

Key Terms:
Lien Avoidance
“Strong Arm” Power

In re Palmer Lake Plaza, LLC, Case No. 12-11183-11 (04/16/2012) (470 B.R. 511) -- Judge Thomas S. Utschig 04/16/2012

Case Summary:
A creditor moved to transfer venue. The debtor’s primary asset was an office building located in Minnesota. The debtor was organized under Minnesota law, its principal place of business was in Minnesota, and the sole member of the debtor was a Minnesota resident. The case was filed in Wisconsin based entirely upon the debtor’s affiliation” with another entity whose case was presently pending in Western Wisconsin. While venue was technically proper under the statute, the court agreed with the creditor that the case should be transferred to Minnesota. It would be far easier for all parties for the case to be heard in Minnesota, and the debtor’s connection with Wisconsin was tenuous at best. Motion granted.

Statute/Rule References:
28 U.S.C. § 1408 -- Venue of Cases Under Title 11
28 U.S.C. § 1412 -- Change of Venue

Key Terms:
Transfer

Karina Amundson and Steven Lankford v. Theodore Duane Slaton and Vicki Lynn Slaton (In re Slaton), Adv. No. 10-0120, Case No. 10-10704-13 (04/06/2012) (469 B.R. 814) -- Judge Thomas S. Utschig 04/06/2012

Case Summary:
The plaintiffs alleged that the debtors fraudulently induced them to invest in an auction business. The parties had become friends after a chance meeting at a rummage sale, and their shared interests made them believe that they could operate a business together. The court found that the debtors did not make any false representations to the plaintiffs. The debtors used the plaintiffs’ investment in their partnership to pay down the secured debts of the business, but the plaintiffs were informed of this plan. There was no fiduciary relationship between the parties and the debtors’ conduct did not amount to a willful and malicious injury. However, the court found in the plaintiffs’ favor on their unjust enrichment claim, as the proceeds from the sale of the business real estate were the direct result of the plaintiffs’ investment in the business. Under the circumstances, it would be inequitable for the debtors to retain that benefit without payment to the plaintiffs.

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - Fraud
11 U.S.C. § 523(a)(4) -- Nondischargeability - Fraud in Fiduciary Capacity
11 U.S.C. §523(a)(6) -- Nondischargeability - Willful and Malicious Injury

Key Terms:
Fraud
Fraud - Fiduciary Capacity
Injust Enrichment
Willful and Malicious

Howard D. White, Trustee v. River Valley Bank (In re Elsemore), Adv. No. 11-0057, Case No. 10-15229-7 (03/20/2012) -- Judge Thomas S. Utschig 03/20/2012

Case Summary:
The chapter 7 trustee sought to recover an alleged preference. The defendant had received the proceeds of the sale of various assets, including several patents. The defendant subsequently obtained the patents and offered to return them to the estate in satisfaction of the preference claims. The trustee refused the offer and the defendant moved for summary judgment, arguing that under § 550(a) the trustee was only entitled to “the property transferred” if that property was actually available. The court ruled that the purpose of the statute is to restore the bankruptcy estate to the financial condition it would have enjoyed if the transfer had not occurred. As such, the statute permits bankruptcy courts the flexibility to award either the return of the property or a money judgment for its value, depending upon what would best return the estate to its pre-transfer position. The motion for summary judgment was denied.

Statute/Rule References:
11 U.S.C. § 547-- Preference
11 U.S.C. § 550 -- Recovery of Preferences

Key Terms:
Preferences

Melvyn L. Hoffman, Trustee v. Nancy Kay Fassett and Chaunda L. Fassett (In re Fassett), Adv. No. 11-0331, Case No. 11-15594-7 (03/20/2012) -- Judge Thomas S. Utschig 03/20/2012

Case Summary:
The trustee sought to recover a transfer as constructively fraudulent under § 548. The debtor transferred money to her daughter about 11 months before the bankruptcy. She withdrew the funds from a 401(k) account and placed them into her personal account prior to the transfer. The funds were intended to help the daughter buy a mobile home. The transfer was essentially a gift and the debtor received only intangible, emotional satisfaction in exchange for the funds. Further, even if the money did not lose its exempt character once it was removed from the 401(k) account, the debtor voluntarily transferred the funds to the daughter. Once the transfer is avoided by the trustee and the property is returned to the bankruptcy estate, the debtor is precluded from asserting an exemption in such assets under § 522(g)(1). Judgment was entered in the trustee’s favor.

Statute/Rule References:
11 U.S.C. § 548 -- Fraudulent Conveyance

Key Terms:
Fraudulent Conveyance

In re Singer, Case No. 08-16874-13 (03/15/2012) (469 B.R. 293) -- Judge Thomas S. Utschig 03/15/2012

Case Summary:
The debtors and their mortgage lender negotiated a forbearance agreement which contemplated that they would make reduced mortgage payments for a six-month period pending consideration of a loan modification. After the forbearance period, the lender denied the modification request and informed the debtors that they were obligated to pay the balance of the previously reduced payments. The debtors contended that those payments had been deferred to the end of the mortgage. The court found that a forbearance agreement is a contract and must be interpreted in accordance with its terms. As the agreement was drafted by the lender and was ambiguous as to the final treatment of the deferred payments, it would be construed in favor of the debtors. As such, they were entitled to treat the deferred payments as part of the unpaid balance due on the maturity date of the loan rather than as mortgage arrears which would need to be paid through the chapter 13 plan.

Statute/Rule References:
11 U.S.C. § 1322(b)(3)

Key Terms:
Contract – Rules of Construction
Loan Modification

Judge Robert D. Martin

In re Butler, Case No. 11-15497-7 (05/29/2012) (472 B.R. 786) -- Judge Robert D. 05/29/2012

Case Summary:
The Trustee objected to the Debtor’s claimed exemption in a “CSI Retirement Savings Plan” under 11 U.S.C. § 522(d)(10)(E). The Trustee argued that the Plan was actually a limited partnership interest, and therefore, it did not meet the standard under 11 U.S.C. § 522(d)(10)(E). Examining the three elements of the statute, the Bankruptcy Court overruled the Trustee’s objection. The Court found the Plan to be a “similar plan or contract” because it provided income that substituted for wages. The Plan payments met the second element of the statute, as redemption of units could occur “on account of” disability, death, or illness. Finally, the Court found the Plan to be reasonably necessary for the support of the Debtor. The Debtor was entitled to claim an exemption in the Plan under the statute.

Statute/Rule References:
11 U.S.C. § 522(d)(10)(E) -- Exemptions - Federal - Stock Bonus, Pension, Profit-sharing, Annuity

Key Terms:
Exemptions
Limited Partnership
Similar Plan

Troy Morrison and Christa Morrison v. Shelley Mergen (In re Mergen), Adv. No. 12-0016, Case No. 11-16545-7 (05/01/2012) (473 B.R. 743) -- Judge Robert D. Martin 05/01/2012

Case Summary:
Plaintiffs Troy and Christa Morrison sought to except the debt owed them from discharge under 11 U.S.C. § 523(a)(2)(A). The Plaintiffs relied on a state court jury verdict and judgment entered against the Debtor. The Debtor failed to answer timely, and the Plaintiffs moved for default judgment. The Debtor argued that the state court findings failed to establish the elements of 11 U.S.C. § 523(a)(2)(A), and was therefore not entitled to preclusive effect. Treating the matter as cross motions for summary judgment, the Bankruptcy Court found that the standards for collateral estoppel and issue preclusion were satisfied because the state court verdict contained findings that tracked the elements of 11 U.S.C. § 523(a)(2)(A), and the state court judgment was a final judgment on the merits of the case. The Bankruptcy Court concluded that the Plaintiffs could not prevail under 11 U.S.C. § 523(a)(2)(A) because identical issues were litigated in state court and the jury found that the Debtor lacked the requisite intent to deceive. The Court granted summary judgment in favor of the Debtor.

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

Key Terms:
Collateral Estoppel
Issue Preclusion
Default Judgment

In re Herbst, Case No. 12-11044-13 (04/11/2012) (469 B.R. 299) -- Judge Robert D. Martin 04/11/2012

Case Summary:
The Chapter 13 Debtor alleged that Talmer Bank & Trust willfully violated the automatic stay by refusing to return equipment it repossessed prepetition. The Bank had exercised its rights under a security agreement and repossessed the Debtor’s equipment pursuant to a default judgment and writ of replevin. The Bankruptcy Court held that the Bank violated 11 U.S.C. § 362(a)(3) by exercising control over property of the bankruptcy estate. The equipment had not yet been sold or transferred, and no evidence of a contract for disposition was presented. Therefore, under Wis. Stat. § 409.623(3) and Wis. Stat. § 409.617(a), the Debtor retained rights in the equipment even after the bank repossessed it. Further, the judgment of replevin did not extinguish the Debtor’s legal and equitable interests in the equipment. Therefore, it remained property of the Estate and subject to the automatic stay. Finding the violation to be willful, the Court held the Bank in contempt until it returned the equipment.

Statute/Rule References:
11 U.S.C. § 362(a)(3)
11 U.S.C. § 362(k)(1)
Wis. Stat. § 409.617(a)
Wis. Stat. § 409.623(3)

Key Terms:
Property of the Estate
Willful Violation
Automatic Stay
Collateral
Replevin

Associated Bank, N.A. v. Jonathan L. Graham and Veronica L. Graham (In re Graham), Adv. No. 11-0105, Case No. 11-10930-7 (02/16/2012) (472 B.R. 524) -- Judge Robert D. Martin 02/16/2012

Case Summary:
Associated Bank erroneously deposited $64,467.67 into the Debtors’ personal account, and the Debtors spent the funds. The Bank alleged that the amount the Debtors owed was non-dischargeable under 11 U.S.C. § 523(a)(2)(A) and 11 U.S.C. § 523(a)(6). The Bankruptcy Court held that the elements of 11 U.S.C. § 523(a)(2)(A) were not met because the money was not obtained by false pretenses. The Bank also failed to meet its burden of proof under 11 U.S.C. § 523(a)(6). While the evidence supported an inference that the Debtors knew the deposit was made in error, it also supported an inference that the Debtors believed the deposit was part of an expected inheritance. The Bank failed to establish the time period when the Debtors knew they were spending money that did not belong to them. It was therefore impossible to determine what portion of debt was based on a willful and malicious injury. The Court held that the debt owed to the Bank was dischargeable.

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - Fraud
11 U.S.C. § 523(a)(6) -- Nondischargeability - Willful and Malicious Injury

Key Terms:
Willful and Malicious - Defined
Deposit
Error

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