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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.

Available Decisions:

  • Chief Judge Catherine J. Furay -- 2013 - present
  • Judge William V. Altenberger -- 2016 - present
  • Judge Rachel M. Blise -- 2021 - present
  • Judge William H. Frawley -- 1973 - 1986
  • Judge G. Michael Halfenger -- 2020 - present
  • Judge Beth E. Hanan -- 2023 - present
  • Judge Brett H. Ludwig -- 2017 - 2020
  • Judge Thomas M. Lynch -- 2018 - present
  • Judge Robert D. Martin -- 1990 - 2016
  • Judge Katherine M. Perhach -- 2020 - present
  • Judge Thomas S. Utschig -- 1986 - 2012

Chief Judge Catherine J. Furay

Case Summary:
The Minnesota Department of Labor and Industry ("MNDLI") is a state-based agency with the authority to license and regulate electrical contractors and electricians within Minnesota. In June 2018, MNDLI filed a civil lawsuit against the Defendant. A Minnesota state court granted summary judgment in favor of MNDLI and ordered the Defendant to pay the Restitution Judgment of $1,560,311.12. Defendant filed a voluntary Chapter 7 petition in October 2018. MNDLI filed this adversary seeking a nondischargeability determination for the Restitution Judgment under 11 U.S.C. §§ 523(a)(2) and/or 523(a)(6). Defendant's answer moved for dismissal without any statutory citations. The Court interpreted the Defendant's answer to move for dismissal under Federal Rule of Bankruptcy Procedure 7012(b), adopting Federal Rule of Civil Procedure 12(b)(6). The Court denied the motion to dismiss because MNDLI's complaint met the plausibility standard to overcome a 12(b)(6) motion.

Defendant also filed a counterclaim, seeking damages in the approximate amount of $7 million stemming from a host of torts he alleged MNDLI committed, including defamation. MNDLI moved to dismiss the counterclaim on three grounds: (1) the Court's lack of subject-matter jurisdiction under Rooker-Feldman; (2) principles of collateral estoppel and res judicata barred the re-litigation of issues in the counterclaim; and (3) Defendant failed to state a claim upon which relief can be granted.

The Court dismissed the Defendant's defamation counterclaim under Rule 12(b)(6) because the claim failed to state that the alleged defamatory statements were untrue. The Court also held it was barred from relitigating the remaining counterclaim allegations because of collateral estoppel and/or res judicata. Defendant had a full and fair opportunity to litigate the issues he presented in the counterclaim, however, he chose to not appear in the state court action. The Court further held that it lacked subject-matter jurisdiction under the Rooker-Feldman doctrine. The Court made no findings about the merits of MNDLI's nondischargeability action against the Defendant. This decision was merely a finding that the Court lacked subject-matter jurisdiction over the Defendant's counterclaim.

Statute/Rule References:
Fed. R. Bankr. P. 7012(b) -- Defenses and Objections
Fed. R. Civ. P. 12(b)(6) -- Motion to Dismiss for Failure to State a Claim

Key Terms:
Collateral Estoppel
Counterclaim
Motion to Dismiss
Nondischargeability
Res Judicata
Rooker-Feldman
Subject-Matter Jurisdiction


Case Summary:
Debtor and State Bank of Cross Plains (“State Bank”) executed a mortgage on real property containing the Debtor's homestead and business workshop in 2014. They renewed the Note in 2018. Debtor defaulted by failing to pay the required balloon payment. He then filed a Chapter 13. He had no unsecured debt and the only debt he defaulted on was the balloon payment. The parties agreed the Plan must pay State Bank's claim in full over the life of the Plan. The Plan provided, on account of State Bank's claim, monthly payments followed by an eventual refinance and balloon payment before the end of the Plan. State Bank objected to the Plan on three grounds: (1) the Debtor lacked the income necessary to make Plan payments whether or not the balloon payment was allowed; (2) the balloon payment was an impermissible modification of State Bank's claim; and (3) a future refinance was too speculative. The Court confirmed the Plan over State Bank's objection. The Plan was feasible. While the Debtor had good months and bad months, the good months more than compensated for the bad months. Given the unique facts of the case, notably the Debtor's substantial equity in the real property collateral, the Court found the balloon payment was permissible under sections 1322(b)(2) and 1325(a)(5). Further, a future refinance and balloon payment was not unduly speculative given the Debtor's equity and quality job outlook.

Statute/Rule References:
11 U.S.C. § 1322(b)(2) -- Modification of Rights of Secured Claimants
11 U.S.C. § 1325(a)(5) -- Providing for Curing of Default
11 U.S.C. § 1325(a)(6) -- Feasibility

Key Terms:
Balloon Payment
Confirmation
Feasibility
Modification


Case Summary:
The Internal Revenue Service ("IRS") asserted Harold Jung (“Debtor”) owed additional taxes and penalties. The Debtor commenced an adversary seeking to determine and discharge his tax liability, if any. The IRS filed a Motion to Dismiss for lack of subject-matter jurisdiction. The Court denied the Motion. The IRS then filed a Motion to Reconsider or, in the alternative, to hold the matter in abeyance pending the resolution of another case awaiting decision from the Seventh Circuit (In re Bush). The Court denied the Motion to Reconsider. There were no material changes in circumstances warranting a revisiting of the prior decision. Dischargeability of the taxes was still at issue. Dischargeability is a core proceeding and fundamental component of title 11. The Court likewise denied holding the matter in abeyance pending the resolution of Bush. Given the factual distinctions between this case and Bush, there was no guarantee the Bush decision would resolve this case. In addition, it is unfair to make the Debtor wait an indefinite amount of time before Bush is decided.

Statute/Rule References:
11 U.S.C. § 505(a) -- Determination of Tax Owed
11 U.S.C. § 523(a)(1) -- Nondischargeability – Taxes
28 U.S.C. § 157(a) -- Jurisdiction
28 U.S.C. § 1334 -- Abstention

Key Terms:
Dischargeability
Jurisdiction
Reconsideration
Tax Liability


Case Summary:
Lydell and Margaret Kluck (“Debtors”) sold certain assets in the weeks leading up to their petition and deposited the sale proceeds in an annuity (the “Account”). They claimed as exempt the funds in the Account under the Wisconsin retirement benefits exemption found in Wis. Stat. § 815.18(3)(j). The Trustee objected to the exemption and argued the Account did not satisfy the statutory requirements. The Court overruled the objection and held the Account satisfied the two requirements of section 815.18(3)(j). First, the Account is tax-deferred under section 72 of the Tax Code because the Account provides for certain death benefits. Second, the Account is payable “by reason of” death and age as it provided for benefits payable upon Mr. Kluck’s death or him reaching the age of ninety-five. Generally, courts construe exemptions broadly in favor of debtors, which supports the outcome of this decision.

Statute/Rule References:
11 U.S.C. § 522 -- Exemptions
26 U.S.C. § 72(s) -- Annuities
Wis. Stat. § 815.18 -- Exemptions (Retirement Benefits Exemption)

Key Terms:
Annuity
Exemptions (Retirement Benefits Exemption)
Tax-deferred
Wisconsin Exemptions


Case Summary:
The Court confirmed Schroeder Brothers Farms of Camp Douglas LLP's ("Debtor") Chapter 11 Plan. The Plan provided for appointment of a Liquidating Trustee in the event of the Debtor's failure to cure certain defaults. The Debtor defaulted and failed to cure. The Committee of Unsecured Creditors moved for appointment of a Liquidating Trustee. The Debtor objected and moved to convert to Chapter 12. The Debtor argued that absent conversion, sales of assets would give rise to substantial taxes and render the estate administratively insolvent. In addition, the Debtor stated it could elect to be taxed as a corporation to absolve the partnership of tax liability. The Court denied conversion because the Debtor was ineligible for Chapter 12 on the petition date. Postpetition events do not impact eligibility for Chapter 12. The Court granted the appointment of a Liquidating Trustee because the parties bargained for such rights during the confirmation process. Finally, the Court enjoined the Debtor from changing its tax treatment because doing so would benefit the Debtor's partners at the expense of the Debtor itself in violation of the absolute priority rule.

Statue/Rule References:
11 U.S.C. § 109(f) -- Eligibility for Chapter 12
11 U.S.C. § 1112 -- Conversion
11 U.S.C. § 1129(b)(2)(B) -- Absolute Priority Rule
26 U.S.C. § 701 -- Taxation of Partnership

Key Terms:
Absolute Priority Rule
Appointment of Trustee
Conversion
Partnership Taxation


Case Summary:
The Internal Revenue Service (“IRS”) assessed additional taxes and penalties against Harold Jung (“Debtor”). The Debtor filed an adversary proceeding seeking to determine the amount of additional taxes owed and the dischargeability of additional taxes owed, if any. The IRS moved to dismiss for lack of subject-matter jurisdiction under Federal Rules of Civil Procedure 12(b)(1) and 12(h)(3). The Court held it had subject-matter jurisdiction under 28 U.S.C. § 157. That section allows district courts to refer to bankruptcy courts any or all cases under Title 11 and any or all proceedings arising under, arising in, or related to a case under Title 11. The Court relied on two principal reasons for invoking jurisdiction: (1) section 505(a) of the Code authorizes bankruptcy courts to determine the amount or legality of any tax, and (2) “core proceedings” include “determinations as to the dischargeability of particular debts.” In addition, the Court declined to abstain from exercising jurisdiction under 28 U.S.C. § 1334(c)(1) because it would be inefficient and prejudicial to require the Debtor to litigate in Tax Court and then potentially litigate similar facts a second time in Bankruptcy Court.

Statute/Rule References:
11 U.S.C. § 505(a) -- Determination of Tax Owed
28 U.S.C. § 157(a)
28 U.S.C. § 1334 -- Abstention
Fed. R. Civ. P. 12(b)(1) -- Lack of Subject-Matter Jurisdiction
Fed. R. Civ. P. 12(h)(3) -- Dismiss for Lack of Subject-Matter Jurisdiction

Key Terms:
Abstention
Determination of Tax Owed
Jurisdiction


Case Summary:
In 2005, Tristan McGough borrowed funds from World Savings Bank, obtained a line of credit (“HELOC”) from Citibank, and gave both lenders mortgages in his home. Both lenders recorded their interests. Debtors later refinanced through First Tennessee, who received two mortgages: one for paying off the World Savings mortgage and a second for paying down the Citibank HELOC. However, the Citibank HELOC remained open. First Tennessee National Bank Association later assigned its first mortgage to U.S. Bank National Association. Three creditors filed claims asserted to be secured by the Debtors’ home. These claims, in order of their date of recording, are: (1) U.S. Bank for $176,516.33, (2) Citibank for $52,968.34, and (3) First Tennessee for $15,666.25. The parties stipulated U.S. Bank held a first priority mortgage. This Court previously ruled the value of the Debtors’ home is $190,000. Debtors objected to Citibank’s claim, stating First Tennessee’s mortgage had second priority and Citibank’s mortgage was defective for failing to notarize Lynnae’s signature. The Court found Citibank had a valid mortgage because notarization is required only for perfection, not attachment. Further, Citibank had a perfected security interest even though it failed to notarize Lynnae’s signature. Under Wisconsin statutes, if the recorder’s office accepts a record for filing, the record is considered properly recorded even if it contains errors. Since the Citibank HELOC was never closed and Citibank recorded its interest before First Tennessee, Citibank’s claim had priority over First Tennessee’s.

Statute/Rule References:
11 U.S.C. § 506(a) -- Determination of Secured Status
Wis. Stat. § 706.02 -- Requirements for a Valid Mortgage
Wis. Stat. § 706.05 -- Perfecting a Security Interest

Key Terms:
Priority
Recoding Statutes
Security Interest


Case Summary:
The United States Trustee (“UST”) appealed this Court's decision disallowing the administrative claim of the UST in regard to certain payments made by the Debtor, Cranberry Growers Cooperative, on a direct revolver loan. In that decision, the Court found certain payments were not “disbursements” subject to the UST quarterly fee under 28 U.S.C. § 1930(a)(6). Appeals of bankruptcy court final orders are heard by the District Court, unless the bankruptcy court certifies the order for direct review to the Seventh Circuit under 28 U.S.C. § 158(d)(2). To certify a final order for direct review, the bankruptcy court must certify that the order meets at least one of the following criteria: (1) the order involves a question of law as to which there is no controlling precedent in the Court of Appeals or Supreme Court; (2) the order involves a matter of public importance; (3) the order requires resolution of conflicting decisions; or (4) an immediate appeal to the Court of Appeals may materially advance the case. Here, the Court found all four to be present. UST quarterly fees impact Chapter 11 cases across the country. In addition, there is no precedent in the Seventh Circuit or Supreme Court on how to interpret the term “disbursement” while calculating UST fees, and courts within the Seventh Circuit have ruled inconsistently on what constitutes a “disbursement.” Finally, the Court found an immediate appeal to the Seventh Circuit would materially advance the progress of the case, as any decision by the District Court would likely have been appealed.

Statute/Rule References:
28 U.S.C. § 158(d)(2) -- Appeals
28 U.S.C. § 1930(a)(6) -- Bankruptcy Fees
Fed. R. Bankr. P. 8006(e)(1) -- Certification on the Court’s Own Motion

Key Terms:
Appeals
Direct Review
Disbursement
UST Quarterly Fee


Case Summary:
The U.S. Trustee (“UST”) filed a motion to include certain payments as “disbursements” subject to UST quarterly fees under 28 U.S.C. § 1930(a)(6). This case involved a unique set of facts. Debtor Cranberry Grower’s Association (“CranGrow”) had the same prepetition and postpetition lender, CoBank. CoBank offered a postpetition revolving line of credit that also “rolled-up” CranGrow’s prepetition debt into postpetition debt through diverting CranGrow’s accounts receivables. The prepetition debt was rolled-up into postpetition debt to the extent of each account receivable diverted through CoBank. Upon receiving an account receivable, CoBank collected interest and fees and immediately returned the remaining funds to CranGrow so CranGrow could pay operating expenses. Unlike other cases finding similar payments to be “disbursements,” the Court found the payments were not disbursements in this case because the payments at issue did not actually settle or repay any of the debt. In addition, there were concerns over the UST imposing a double fee as a result of CranGrow having to draw on its revolver in part to pay UST fees in the first place, since CranGrow often operated at a loss given the seasonal nature of the farming business.

Statute/Rule References:
28 U.S.C. § 1930(a)(6) -- Bankruptcy Fees

Key Terms:
Disbursement
UST Quarterly Fee


Judge Thomas M. Lynch

Case Summary:
Upon the court’s grant of the Debtor’s motion to convert this involuntary chapter 7 case to chapter 11, the Debtor in Possession (“DIP”) moved to enlarge the exclusivity period. One of the original petitioning creditors, a defendant in a preference action brought by the DIP, opposed the Motion. The adversary proceeding arises from the creditor’s proof of claim for a state court judgment lien purportedly secured by, among other things, the DIP’s interest in a limited partnership. The creditor objected to the requested extension, arguing that the DIP was engaging in dilatory conduct or otherwise trying to coerce an advantageous settlement of the preference action which his involuntary chapter 7 petition sought to preserve. Emphasizing that not all litigation must be resolved before a debtor can propose a plan, the court found that the adversary proceeding may have a drastic impact on assets available to fund reorganization and the allocation of payments to creditors. The court concluded that the DIP met its burden to show sufficient cause for the requested extensions, finding the creditor’s concerns to be “vague.” The court further noted the clear possibility that the adversary may be resolved in a short time and that the action to avoid the allegedly preferential security interest stood to directly benefit the entire pool of general unsecured creditors rather than only the DIP, in allowing the requested three-month extension.

Statute/Rule References:
11 U.S.C. § 547 -- Preferences
11 U.S.C. § 1107(a) -- Powers of a Debtor in Possession
11 U.S.C. § 1121(b) -- Exclusivity Period
11 U.S.C. § 1121(c) -- Party in Interest’s Right to File a Plan
11 U.S.C. § 1121(d) -- Extensions of the Exclusivity or Acceptance Periods

Key Terms:
Debtor in Possession
Exclusivity Period
Individual Chapter 11
Involuntary Petition
Judgment Lien
Limited Partnership
Plan of Reorganization
Proof of Claim


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