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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 Robert D. Martin
Case Summary:
Chase Bank commenced this action for nondischargeability under § 523(a)(14) against the Defendant. The Defendant had charged a tax deposit to the IRS on his Chase Bank credit card. The deposit was not for the payment of tax, but rather served as a deposit if the IRS later determined that the Defendant owed income tax for tax year 2009. Subsequently, the Defendant received a refund from the IRS for an amount in excess of the initial deposit. Because Chase presented no evidence that the Defendant actually had a tax liability for 2009, Chase could not establish that the deposit was used to pay a “tax owed” to the IRS under § 523(a)(14). Accordingly, the Court dismissed Chase’s complaint and rendered the debt discharged.
Statute/Rule References:
11 U.S.C. § 523(a)(1) -- Nondischargeability - Taxes
11 U.S.C. § 523(a)(8)(A)(i)
11 U.S.C. § 523(a)(14) -- Nondischargeability - Marital Obligations
11 U.S.C. § 523(a)(15) -- Nondischargeability - Marital Obligations
Key Terms:
Deposit Paid for Income Tax
Income Tax
Non-Dischargeable Tax
Taxes - Dischargeability
Case Summary:
Midwest Property commenced this adversary action against the Defendant to determine the nondischargeability of its claim under § 523(a)(4). The Defendant served as a general contractor in a project for the construction of a log home. After receiving $119,000 from the owner, the Defendant paid all subcontractors on the job, except one. While one subcontractor was left unpaid, the Defendant retained $18,000 to cover the cost of his own labor and other costs on the project. The Court held that the Defendant’s retention of the funds did not constitute “defalcation of a fiduciary.” General contractors have a right to retain funds to cover their own costs, providing the retention of funds is proportional to any amounts paid to subcontractors. Accordingly, the Defendant’s conduct could not be characterized as reckless and Midwest’s complaint for nondischargeability was discharged.
Statute/Rule References:
11 U.S.C. § 523(a)(4) -- Nondischargeability - Fraud in Fiduciary Capacity
Wis. Stat. § 779.02(5) -- Theft by Contractor
Key Terms:
Defalcation while Acting as a Fiduciary
Express Trust
Statutory Trust
Theft by Contractor
Case Summary:
Attorney for municipality failed to timely file a claim for personal property taxes due in Debtors’ Chapter 7 case. Attorney moved to extend the time period to file claim, which Bankruptcy Court denied. Because a portion of municipality’s claim was deemed “priority” and because few assets were expected to be distributed in Debtors’ case, attorney’s error had negligible effect on any dividend to municipality. The Court saw no reason for extension of the claim’s deadline.
Statute/Rule References:
11 U.S.C. § 501(c) -- Filing Proofs of Claim
11 U.S.C. § 502(b)(9)
11 U.S.C. § 507(a)(8)
11 U.S.C. § 726(a)
Key Terms:
Allowable Claim
Attorney Error
Chapter 7 Distribution
Extension of Time
Priority
Case Summary:
Chapter 7 debtors claimed wife’s interest in a beneficiary individual retirement account as exempt under both 11 U.S.C. § 522(b)(3)(C) and Wis. Stat. § 815.18(3)(j). Wife had received the account funds as a beneficiary after her mother, the owner of the IRA, died. The trustee filed a timely objection to the exemption, which was ultimately sustained by the bankruptcy court. In its ruling, the court held that funds contained in the “inherited IRA” were not “retirement funds” within the meaning of federal and state exemption law. The court reasoned that the funds in the inherited account were neither designated for the debtors’ retirement, nor were they currently held for wife’s deceased mother’s retirement. Additionally, the court found no persuasive legal source that concluded that inherited IRAs were indeed exempt from taxation under the internal revenue code.
Statute/Rule References:
11 U.S.C. § 522(b)(3)(C)
11 U.S.C. § 522(b)(4)(C)
26 U.S.C. § 408
Wis. Stat. § 815.18 -- Exemptions
Key Terms:
Federal and State Exemption Law
Inherited IRA
Taxes - Exempt
Judge Thomas S. Utschig
Case Summary:
The debtor owed approximately $147,000.00 in student loans. He was 52 years old, single, with no dependents. He had obtained an undergraduate degree and a master’s degree in computer science from Northwestern University. He finished his education in 1999. He worked in his field until 2003, when he lost his job and then worked as a contract computer technician. His last job in the computer science field was in 2007, and he worked as a carpenter for a time until his health prevented him from doing so. He had a heart condition which first manifested in 2004; this condition mandated several surgeries and required medication, regular medical appointments, and physical restrictions which would continue indefinitely. He also suffered from a physical condition which made it difficult to engage in computer keyboarding (and for which he had four unsuccessful surgeries). He began receiving social security disability payments in May of 2008. He had sought employment in the computer field and been unsuccessful. The Court concluded that his financial situation was likely to persist for a significant portion of the repayment period, thus satisfying the “certainty of hopelessness” mandated by the Seventh Circuit in In re Roberson, 999 F.2d 1132 (7th Cir. 1993), and Goulet v. Educ. Credit Mgmt. Corp., 284 F.3d 773 (7th Cir. 2002).
Statute/Rule References:
11 U.S.C. § 523(a)(8) -- Nondischargeability - Student Loans
Key Terms:
Student Loans
Case Summary:
Debtors moved to dismiss a portion of the plaintiffs’ second amended complaint. While the federal rules require only a “short and plain statement” of the plaintiffs’ claim, there must be enough alleged to state a claim that is “plausible on its face.” The plaintiffs sought to deny the debtors’ discharge under § 727(a)(4)(C), which relates to a debtor who knowingly, in connection with a case, gave or received something as an inducement to act (or to forebear from acting). This section essentially relates to bribery or extortion in connection with a bankruptcy case; the complaint featured no factual allegations to support such a claim. The Court also agreed with the debtors that a claim under § 523(a)(2)(A) was not plausible on its face. Both counts were dismissed.
Statute/Rule References:
11 U.S.C. § 727(a)(4)(C) -- Bribery of Officials in Connection with Case
In re Wofford, Case No. 10-12848-13 (05/23/2011) (449 B.R. 362) – Judge Thomas S. Utschig 05/23/2011
Case Summary:
Chapter 13 debtors entered into loan modification agreement with creditor, and creditor moved for court approval of the agreement. The Court first noted various deficiencies in the loan modification documents. Under § 1322(b)(2), a chapter 13 debtor cannot unilaterally rewrite the terms of a home loan, although the creditor can agree to different treatment. Although that agreement could be reviewed (and approved) in the context of plan confirmation or as the resolution of an actual dispute, there is no statute or rule which requires judicial approval of the terms of such a loan modification. Even if it was construed to constitute a reaffirmation agreement, the debtors’ reaffirmation of a debt secured by real property does not require court approval. The creditor’s request essentially acted as a petition for an advisory opinion or comfort order. The bank’s motion was denied.
Statute/Rule References:
11 U.S.C. § 1322(b)(2) -- Modification of Rights of Secured Claimants
Key Terms:
Loan Modification
Case Summary:
Debtor moved to dismiss adversary proceeding contesting discharge as being untimely filed. The plaintiff argued that the complaint should be regarded as timely because the U.S. Trustee had sought an extension of time. Alternatively, the plaintiff argued that the complaint should not be dismissed due to doctrines of equitable estoppel or equitable tolling. The Court determined that although the U.S. Trustee initially sought to extend the deadline for objecting to discharge as to “all parties in interest,” the order entered by the court (after an objection by the debtor) only extended the deadline as to the U.S. Trustee and the chapter 7 trustee. The plaintiff had plenty of time to seek an extension and did not do so. In addition, there was no contention that the debtor attempted to prevent the plaintiff from filing the adversary, and the plaintiff was not diligent in pursuing its possible claims. The complaint was untimely and the narrow equitable defenses to the rule did not apply. The debtor’s motion to dismiss was granted.
Statute/Rule References:
Fed. R. Bankr. P. Rule 4007(b) -- Time for Commencing Proceeding Other Than Under § 523(c) of the Code
Fed. R. Bankr. P. Rule 4007(c) -- Time for Filing Nondischargeability Complaint
Key Terms:
Complaints - Nondischargeability (Late Filed)
Case Summary:
The trustee sought to avoid certain payments as preferential. The debtor had made monthly payments on an obligation guaranteed by her son. The trustee argued that the payments were made “on behalf” of the son because they reduced his obligation on the guarantee. The defendant argued that he was not a “creditor” of his mother because he would never have sought to collect from her even if he had been forced to honor the guarantee. The Court concluded that the payments were made “on behalf of a creditor” because the son’s status was determined by the contractual relationship, not his statement about whether he would actually pursue his “contingent” right to payment (which constitutes a “claim” in bankruptcy and rendered him a “creditor” of his mother). Under § 550, the trustee could collect the avoided preference from either the initial transferee or the entity benefitted by the transfer. The defendant did not offer any evidence which supported the defense that the transaction had occurred in the ordinary course of business between the parties. As such, the trustee was entitled to judgment for the amount of the preference.
Statute/Rule References:
11 U.S.C. § 547 -- Preference
11 U.S.C. § 550 -- Recovery of Preferences
Key Terms:
Preferences