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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

Organic Family, LLC, Rolf Klefstad, Roger Klefstad, Gregory Hetrick, Samuel Danzinger, and Steven Pechacek v. Chad L. Pawlak and Jo Ann Pawlak (In re Pawlak), Adv. No. 10-0148, Case No. 10-11787-7 (06/03/2011) – Judge Thomas S. Utschig 06/03/2011

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

Opportunity Bank, N.A. v. Henry Conrad Martinsen (In re Martinsen), Adv. No. 11-0011, Case No. 10-15990-7 (05/10/2011) (449 B.R. 917) – Judge Thomas S. Utschig 05/10/2011

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)

Randi L. Osberg, Trustee v. Gregory D. Halling (In re Halling), Adv. No. 10-0303, Case No. 10-14488-7 (05/09/2011) (449 B.R. 911) – Judge Thomas S. Utschig 05/09/2011

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

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

Judge Robert D. Martin

In re Howe, Case No. 10-15290-7 (05/25/2011) (455 B.R. 148) -- Judge Robert D. Martin 05/25/2011

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

In re Heffron-Clark, Case No. 10-18035-7 (05/10/2011) (450 B.R. 858) -- Judge Robert D. Martin 05/10/2011

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

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

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