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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

Starfire, Inc. v. John M. Steiner (In re Steiner), Adv. No. 09-0030, Case No. 08-15859-7 (05/02/2011) -- Judge Robert D. Martin 05/02/2011

Case Summary:
The Defendant appealed this case to the District Court after this court determined that the debt owed to Starfire was nondischargeable. The District Court then remanded this case to this court to make a finding on whether the Defendant acted with the intent necessary to support defalcation under § 523(a)(4). On remand, this court found that the Defendant’s conduct was “something more than negligence.” The Defendant was an experienced and sophisticated contractor, who received payment on 42 jobs, yet failed to remit a significant portion of the proceeds to the subcontractor, Starfire, as required under Wis. Stat. § 779.02(5). Because Wisconsin’s theft by contractor creates an express trust, and the Court concluded that the Defendant possessed the requisite intent, Starfire’s claim was rendered nondischargeable under § 523(a)(4).

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

Dealer Services Corporation v. Dennis E. Erb d/b/a Glendale Motorsports (In re Erb), Adv. No. 10-0195, Case No. 10-13068-7 (04/08/2011) (453 B.R. 914) -- Judge Robert D. Martin 04/08/2011

Case Summary:
Dealer Services Corporation (“DSC”) filed this adversary action to determine the nondischargeability of its claim under § 523(a)(2), § 523(a)(4) and § 523(a)(6). At trial, DSC established that the Defendant, owner of a used car dealership, purchased his inventory under a “flooring planning” agreement whereby DSC financed the purchase of all inventory in exchange for a security interest in the vehicles. Under the agreement, all proceeds that the Defendant received from the sale of his inventory were to be held “in trust” for DSC. When the Defendant stopped making payments to DSC on the loan, a DSC representative performed a field audit and determined that the inventory had inexplicably “disappeared.” The Debtor denied all wrongdoing, and at trial was asked no questions by DSC’s counsel relating to the vehicles’ whereabouts. Accordingly, the Court found that DSC did not meet its burden of proof under either § 523(a)(2), or § 523(a)(6) as there was no proof that the defendant acted with any “negative intent” or “scienter.” The Court also found that while the floor planning agreement did constitute an express trust, DSC failed to establish that the Debtor committed defalcation. The Court dismissed DSC’s complaint.

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:
Actual Fraud
Defalcation while Acting as a Fiduciary
Express Trust

First Weber Group v. Jonathan H. Horsfall (In re Horsfall), Adv. No. 10-0179, Case No. 10-12596-7 (03/01/2011) (444 B.R. 578) -- Judge Robert D. Martin 03/01/2011

Case Summary:
First Weber Group commenced this adversary proceeding to determine the nondischargeability of its claim under 11 U.S.C. § 523(a)(6) for a willful and malicious injury. Its claim arose from a state court judgment for tortious interference of a contract rendered in favor of First Weber. On motion for summary judgment, First Weber argued that the doctrine of issue preclusion precluded the parties from re-litigating the facts previously litigated on its claim for tortious interference of a contract. Denying First Weber’s motion, the Bankruptcy Court held that issue preclusion did not apply because the state court’s finding that the Defendant tortiously interfered with a contract did not support a finding that the Defendant willfully and maliciously intended to injure First Weber. Likewise, the Bankruptcy Court found that an application of issue preclusion in this case would be “fundamentally unfair” to the Defendant in light of the state court’s standard of review and the differences in the evidentiary burdens between the state court claim and First Weber’s claim for nondischargeability.

Statute/Rule References:
11 U.S.C. § 523(a)(6) -- Nondischargeability - Willful and Malicious Injury
Wis. Stat. § 802.08(2)

Key Terms:
Conversion
Evidentiary Burden
Issue Preclusion
Tortious Interference with Contract
Willful and Malicious - Defined

Desert Palace, Inc. d/b/a Caesars Palace v. Christian Peterson (In re Peterson), Adv. No. 10-0155, Case No. 10-11874-7 (01/31/2011) (444 B.R. 573) -- Judge Robert D. Martin 01/31/2011

Case Summary:
Desert Palace commenced this adversary proceeding against the Defendant to determine the nondischargeability of its claim under § 523(a)(2)(A) and (B). Before trial, Desert Palace moved for summary judgment arguing that its claim against the Defendant for fraud was already litigated in Nevada state court, and therefore the parties were barred from relitigating the issue of fraud in the Defendant’s bankruptcy case. Interpreting Nevada law, the Court held that the issue of fraud had not been “actually litigated” in state court, because the Defendant never filed an answer to Desert Palace’s allegations of fraud in the amended complaint. As a result, issue preclusion did not apply and the Court denied summary judgment.

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

Key Terms:
Actually Litigated
Default Judgment
Fraud
Issue Preclusion
Summary Judgment

Judge Thomas S. Utschig

In re Griffith, Case No. 10-16201-7 (04/15/2011) (449 B.R. 909) – Judge Thomas S. Utschig 04/15/2011

Case Summary:
The chapter 7 trustee objected to the debtor’s exemptions, arguing that the debtor could not claim an exemption in the portion of various assets which were technically owned by the debtor’s non-filing spouse. The debtor sought to exempt all of the equity in these assets notwithstanding the fact that half of the equity belonged to the spouse. The court noted that a debtor’s interest in property is defined by state law, and under Wisconsin marital property law both the debtor and the spouse have an “undivided one-half interest in marital property.” Under the bankruptcy code, both spouses’ interests in property become property of the estate. The court rejected the idea that the debtor could assert an exemption only as to the portion of the equity which she personally owned. Instead, because each spouse had an undivided interest in the whole and the assets could not be easily divided, it was reasonable to allow the debtor to claim an exemption in the whole up to the dollar limits afforded to one debtor under applicable law.

Statute/Rule References:
11 U.S.C. § 522(d) -- Exemptions - Federal

Key Terms:
Exemptions (Marital Property)

In re Vanderhei, Case No. 10-14944-7 (04/15/2011) (449 B.R. 359) – Judge Thomas S. Utschig 04/15/2011

Case Summary:
The chapter 7 trustee objected to the debtor’s exemptions, arguing that the debtor could not claim an exemption in the portion of various assets which were technically owned by the debtor’s non-filing spouse. The debtor sought to exempt all of the equity in these assets notwithstanding the fact that half of the equity belonged to the spouse. The court noted that a debtor’s interest in property is defined by state law, and under Wisconsin marital property law both the debtor and the spouse have an “undivided one-half interest in marital property.” Under the bankruptcy code, both spouses’ interests in property become property of the estate. The court rejected the idea that the debtor could assert an exemption only as to the portion of the equity which he personally owned. Instead, because each spouse had an undivided interest in the whole and the assets could not be easily divided, it was reasonable to allow the debtor to claim an exemption in the whole up to the dollar limits afforded to one debtor under applicable law.

Statute/Rule References:
Wis. Stat. § 815.18 -- Exemptions

Key Terms:
Exemptions (Marital Property)

In re Elsemore, Case No. 10-15229-7 (04/14/2011) – Judge Thomas S. Utschig 04/14/2011

Case Summary:
The chapter 7 trustee sought to revoke a report of no distribution in order to pursue certain fraudulent transfer claims. A creditor objected, arguing that the abandonment was irrevocable. Following the same rules as articulated in Bartels, the court concluded that the trustee’s no asset report was an “inadvertent” error. The question was whether the creditor could claim to be unduly prejudiced by the revocation. If the bank were the beneficiary of a transfer, the delay was not itself prejudicial. The creditor did not significantly alter its position in reliance upon the abandonment order, and as such the objection was overruled.

Statute/Rule References:
11 U.S.C. § 554(a) -- Abandonment

Key Terms:
Abandonment

Randi L. Osberg, Trustee v. Jason P. Bartels, Jennifer L. Bartels, and Bank of New York as Trustee for the Certificate Holders of CWALT 2005-06CB (In re Bartels), Adv. No. 09-0344, Case No. 07-14779-7 (03/02/2011) (449 B.R. 355) – Judge Thomas S. Utschig 03/02/2011

Case Summary:
Bartels Trustee sought to revoke abandonment of property and to sell real estate upon discovery that the creditor’s mortgage did not cover all of the property in question. The creditor moved to dismiss the adversary proceeding on the grounds that the trustee’s request to revoke the abandonment was untimely. The court concluded that while abandonment orders are ordinarily irrevocable, in the Seventh Circuit an exception may be made for instances in which the abandonment was the result of an inadvertent error and the parties were not “unduly prejudiced.” See In re Lintz West Side Lumber, Inc., 655 F. 2d 786 (7th Cir. 1981). The fact that the trustee’s request came almost 18 months after the initial abandonment was not controlling as the creditor was not unduly prejudiced by the request. The motion to dismiss the adversary proceeding was denied.

Statute/Rule References:
11 U.S.C. § 554(a) -- Abandonment
Fed. R. Civ. P. 60 Relief From a Judgment Order

Key Terms:
Abandonment
Motion to Dismiss

Wells Fargo Bank, N.A., as Indenture Trustee for The Grand Pacific Business Loan Trust 2005-1 v. Transcontinental Realty Investors, Inc., and EQK Bridgeview Plaza, Inc., Adv. No. 10-0341 (01/24/2011) – Judge Thomas S. Utschig 01/24/2011

Case Summary:
The defendant removed the proceeding from state court on the grounds that the action was related to a bankruptcy proceeding in Texas, and requested that the matter be transferred to the Texas bankruptcy court. The plaintiff objected to the transfer request and moved to remand the matter back to state court. The court first ruled that the matter had been properly removed to the bankruptcy court rather than the district court for the district in which the civil action is pending. The court also rejected the idea that the court to which the action is removed must in all cases act as a “gatekeeper,” and instead adopted the rationale that a court may, in proper cases, transfer a removed case to another forum and allow that court to consider whether the matter should be remanded. In this case, transfer was the appropriate course of action, and the Texas bankruptcy court could consider whether the case should be remanded to state court.

Statute/Rule References:
28 U.S.C. § 1412 -- Change of Venue
28 U.S.C. § 1452 -- Removal

Key Terms:
Removal
Transfer

John M. Cirilli, Trustee v. Leonard D. Bronk (In re Bronk), Adv. No. 10-0044, Case No. 09-15224-7 (01/07/2011) (444 B.R. 902) – Judge Thomas S. Utschig 01/07/2011

Case Summary:
The chapter 7 trustee sought to deny the debtor’s discharge and his exemption claims on the grounds that the debtor’s pre-petition bankruptcy exemption planning had risen to the level of conduct which “hindered, delayed, or defrauded creditors” under either § 727(a)(2)(A) or the relevant Wisconsin statute, Wis. Stat. § 815.18(10). The standard applied to these issues is essentially the same in the Seventh Circuit, and exemption planning, in and of itself, is not objectionable. Instead, the plaintiff is obligated to demonstrate that the debtor engaged in some act “extrinsic to the conversion” which hinders, delays, or defrauds. After reviewing the stipulated facts, the court concluded that there was no evidence that the debtor engaged in the type of “extrinsic” conduct required for denial of his discharge or his exemption claims. However, the court also concluded that the debtor was not entitled to claim an exemption for a number of college savings plans under Wis. Stat. § 815.18(3)(p) because a review of the statute and the “surrounding or closely-related statutes” as required by relevant Wisconsin case law indicated that the exemption was limited to protection of the “beneficiary’s right to qualified withdrawals” under

Statute/Rule References:
11 U.S.C. § 727(a)(2)(A) -- Hindering, Delaying, or Defrauding Creditors
Wis. Stat. § 815.18 -- Exemptions

Key Terms:
Discharge
Exemptions (Annuity/College Savings Plan)

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