2003

Irvin N. Hoyt,  Bankruptcy Judge

Numerical Listing

2003 DECISION SUMMARIES

Irvin N. Hoyt, Chief Bankruptcy Judge

1. January 10, 2003.    JOHNSON, TAMARA JO, a/k/a Tammy J. Johnson, Bankr. No. 01-41133, Chapter 7.   ISSUE: Whether the debtor’s case should be dismissed for substantial abuse under § 707(b)? RULING: Since the debtor’s household income, which included Social Security benefits to her sons, exceeded household expenses by $890 per month, the debtor could fund a meaningful Chapter 13 plan. The Court ordered that her case would be dismissed unless she voluntarily converted it to Chapter 13.

2.    January 21, 2003.  NOVOTNY BROTHERS, INC., Bankr. No. 96-30016, Chapter 12.  ISSUE: Whether the Chapter 12 case should be dismissed for Debtor’s failure to include a creditor in its plan? RULING: Dismissal was denied. The claim held by the creditor that was not included in the plan would not be discharged and the creditor could use its non-bankruptcy law remedies to collect its pre-petition claim once the automatic stay was no longer in place. Further, all plan payments had been completed and the plan could no longer be modified to include the creditor’s claim.

3.    January 31, 2003.  BLUDORN, TAMMIE L. a/k/a Tammi L. Earl, Bankr No. 02-10226, Chapter 7. ISSUE: Whether this case should be dismissed for substantial abuse where Debtor admitted she had $350 in monthly disposable income but where she argued that this was not enough to fund a Chapter 13 plan and where she argued she was still liable for a debt assumed by her former husband? RULING: Debtor was allowed to convert her case to Chapter 13 to avoid dismissal for substantial abuse under § 727(b). Debtor had $387 in disposable income that would fund a meaningful Chapter 13 plan. Moreover, she could move to modify her plan if and when she had to step in and make payments on a mobile home debt that her former husband had assumed.

4.    Februrary 7, 2003,  BRINK, DELBERT & PAMELA (First Western Bank v. Brink), Bank No. 02-50259, Adv. 02-5014, Chapter 7.  ISSUE: Whether the Bank’s claim against Debtors was nondischargeable under either § 523(a)(2)(B) or § 523(a)(6) where pre-petition one debtor had sold a bull dozer that was secured to the Bank and where Debtors listed on their financial statement an interest in a family ranch that turned out not to exist? RULING: The subject debts were not excepted from discharge. Under § 523(a)(2)(B), the record did not establish that Debtors listed an interest in the family ranch on the financial statements they gave the Bank with the requisite intent to defraud the Bank. Under § 523(a)(6), the record did not establish that one debtor sold the secured bull dozer with the requisite intent to financially harm the Bank.

5.    March 21, 2003, MAUNDERS, GEHRIG J. and PETERSON, JANA LEE, Bank. No. 01-41291, Chapter 7.  ISSUE: Whether creditor who did not receive timely notice of the need to file a proof of claim may file a tardy claim and have it included in the trustee’s distribution? RULING: Pursuant to 11 U.S.C. § 726(a)(2)(C), the creditor was allowed to file a tardy claim because it did not have timely notice of the proof of claim deadline and because the trustee had not yet made her distribution.

6.    April 8, 2003.  MEINDERS, ROY & JOY (Graham v. Meinders), Bankr. No. 00-40914, Chapter 13.  ISSUE: Whether under the facts and circumstances of the case, a constructive trust should be imposed against Defendant Bank’s mortgages against Debtors’ real property? RULING: Plaintiff pled no facts that would support imposing a constructive trust against Defendant Bank’s mortgages against Debtors’ property. See Matter of Estate of Perkins, 508 N.W.2d 597, 600 (S.D. 1993).  ISSUE: Whether under the facts and circumstances of the case, Defendant Bank should be estopped from asserting that its mortgage liens against Debtors’ property are superior to any judgment lien Plaintiff might have against Debtors’ real property? RULING: Plaintiff pled no facts that would support estopping Defendant Bank from asserting that its mortgage liens against Debtors’ property are superior to any judgment lien Plaintiff might have against Debtors’ real property. See State v. Peterson, 657 N.W.2d 698, 703 (S.D. 2003).

7.  April 25, 2003.      KESSLOFF, BILL MICHAEL (Poppen & Schleuning v. Kessloff), Bankr. No. 02-50271, Adv. No. 02-5011, Chapter 7.  ISSUE: Whether Defendant-Debtor should summarily be denied his general discharge under § 727(a)(4)(A)?  RULING: Record clearly established that Debtor intentionally or recklessly filed schedules and a statement of financial affairs that were materially false. His general discharge was denied under § 727(a)(4)(A).

8.    May 2, 2003.  DUFFY, BRIAN J. (Duffy v. Duffy), Bankr. No. 02-40948, Adv. 02-4069, Chapter 7.  ISSUE: Whether summary judgment on Plaintiff-Debtor’s complaint for damages arising from a violation of the automatic stay should be entered? RULING: Partial summary judgment was entered for Plaintiff-Debtor. There were no material facts in dispute and the record clearly showed that Defendant willfully violated the automatic stay and that Plaintiff-Debtor was injured. The amount of damages was not established summarily.

9.    May 29, 2003.  DAVIS, DOROTHY, Bankr. No. 02-41376, Chapter 7.  ISSUE: Whether case trustee could now or in the future realize the equity in Debtor’s home that exceeded $30,000? RULING: Since Debtor was older than 70 when she filed bankruptcy, under S.D.C.L. § 43-45-3, the case trustee could not force a sale of her homestead to realize any equity she had in it in excess of $30,000. Further, since Debtor’s entitlement to her homestead exemption was fixed on the petition date, the trustee could not hold the case open awaiting the day when the house would no longer be her homestead. Left to be decided another day were three constitutional challenges to § 43-45-3 that the trustee made.

10.    May 6, 2003.  BLUDORN, TAMMIE L.,  Bankr. No. 02-10226, Chapter 7 and LOPHOVSK V, FRANK S., Bankr. No. 02-10261, Chapter 13.  ISSUE: Whether Debtors’ counsel was entitled to fees incurred when Debtors resisted motions to dismiss for substantial abuse filed by the United States Trustee and when they converted to Chapter 13? RULING: Debtors’ attorney was not entitled to compensation for services and related costs associated with Debtors’ defense against the substantial abuse motions and the subsequent conversion of their cases to Chapter 13. Both cases should have been original filed as Chapter 13 cases.

11.    May 9, 2003.  HANKINS, LORRAINE M., Bankr. No. 01-41241, Chapter 17.  ISSUE: Whether Debtor’s attorney should be compensated from the Chapter 7 bankruptcy estate for services rendered after the meeting of creditors? RULING: Debtor’s attorney’s request for compensation and reimbursement from the bankruptcy estate for services and costs incurred after the § 341 meeting was denied because these post-petition services did not benefit the bankruptcy estate.

12.    June 20, 2003.  CREDIT STORE, INC. (Lovald v. Thornton Capital Advisors, Inc. & Recovery Partners II, L.L.C.), Case No. 02-40922, Adv. No. 03-4017, Chapter 7.  ISSUE: Whether Count I of Plaintiff’s complaint, which sought the avoidance of a fraudulent transfer, should be dismissed because the alleged fraud was not plead with particularity as required by Fed.R.Civ.P. 9(b) and Fed.R.Bankr.P. 7009? Whether Count II of Plaintiff’s complaint, which sought the avoidance of a constructively fraudulent transfer, should be dismissed because it does not state a claim upon which relief may be granted? RULING: Plaintiff’s fraud allegations under Count I were not set forth with sufficient particularity and Plaintiff was directed to file an amended complaint. Count II was allowed to stand as filed. (Count III was dismissed without prejudice upon Plaintiff’s consent.)

13.     June 26, 2003.  DUFFY, BRIAN J. (Duffy v. Duffy), Case No. 02-40948, Adv. No. 02-4069, Chapter 7.  ISSUE: To what damages was Debtor entitled for his former wife’s violation of the automatic stay? [Violation was established in an earlier decision.] RULING: Damages awarded to Debtor included his lost wages for one day arising from a state court hearing he had to attend and attorneys’ fees he had to pay for two state court hearings and for this adversary proceeding.

14.   June 17, 2003.  IVERS, VERNON E. & CAROL S., Case No. 02-50111, Chapter 7.  ISSUE: Whether Debtor’s objection to Trustee’s proposed distribution should be sustained whether Debtor complained that the Trustee had not recognized amendments to her schedule of exemptions that her attorney had mailed to the Trustee but not filed and where the Trustee proposed to pay a creditor that Debtor said was not owed any money? RULING: Debtor’s objection was overruled. The Trustee’s final report and proposed distribution properly recognized Debtors’ claimed exemptions as they were filed; none of the amendments had been properly filed. Further, no one had timely objected to the claim about which Debtor had complained. Thus, the claim was allowed as filed.

15.   July 11, 2003.  BARNES, WILLIAM G., Case No. 01-50397, Chapter 7.  ISSUE: Whether creditor’s claim arising from alleged partnership with Debtor should be allowed? RULING: There was no evidence to support the creditor’s claim. The claim was not allowed.

16.    August 15, 2003.  JOHNSON, KERMIT R., Case No. 03-10042, Chapter 7.  ISSUE: Whether Bank's motion to compel abandonment of some real property should be granted where equity may exist in it for the bankruptcy estate? RULING: The Bank's motion to compel abandonment was denied because it's mortgages on the property did not equal or exceed the value of the land, thus leaving equity for the bankruptcy estate. One mortgage claimed by the Bank had not been properly record, thus increasing the bankruptcy estate's equity.

17.    August 27, 2003.  MEINDERS, ROY & JOY (Graham v. Meinders), Case No. 00-40914, Adv. No. 02-4062, Chapter 13.  ISSUE: Whether Plaintiff's claim against Defendants-Debtors was excepted from discharge under 11 U.S.C. § 1328(a)(3) where Debtor Joy Meinders had been convicted of stealing money from the estate that Plaintiff represented and ordered to pay restitution to Plaintiff, but where the state court also gave Plaintiff a civil judgment to enforce the restitution order? RULING: The fact that the state court also gave Plaintiff a civil judgment to enforce the criminal restitution order did not remove the restitution order from § 1328(a)(3). Thus, the restitution debt was not dischargeable as to Debtor Joy Meinders. Since there was no criminal restitution order against Debtor Ray Meinders, there was no declaration that the subject debt was not dischargeable as to him.

18.    September 4, 2003.  PURDY, MICHAEL D. & JOELLEN S., Case No. 03-40883, Chapter 7.  ISSUE: Whether mortgage company was entitled to relief from the automatic stay regarding its mortgage on Debtors' home where an unsecured creditor objected to the motion based on the alleged fraudulent nature of its claim against Debtors? RULING: The mortgage company's relief from stay motion was granted because there was no equity in the property for the bankruptcy estate and because granting the relief would not impact the objecting creditor's claim in any regard.

19.  October 6, 2003.  AGUIRRE, ANTONIO M., Case No. 01-40161, Chapter 7.  ISSUE: To what compensation was the debtor’s attorney entitled where the debtor’s Chapter 13 case was converted to a Chapter 7 after confirmation of a plan? RULING: All fees for a Chapter 13 debtor’s attorney’s services are an administrative expense that is paid from the bankruptcy estate. Likewise, a Chapter 7 debtor’s attorney may be compensated from the estate for certain necessary services through the meeting of creditors. If the estate does have sufficient funds to pay these administrative expenses, the attorney may not collect the balance from the debtor. The debtor, however, is obligated to pay his attorney for any Chapter 7 legal services rendered post-petition that benefit the debtor only.

20.    October 12, 2003.  VOLKERS, CHAD ALLEN (Volkers v. Indiana Wesleyan University), Case No. 03-50038, Adv. No. 03-5006, Chapter 7.  ISSUE: Whether the student loan creditor was entitled to summary judgment in its favor on the plaintiff-debtor’s complaint that he should receive a hardship discharge of his student loan? RULING: Summary judgment was entered for the student loan creditor’s favor. The plaintiff-debtor failed to advance specific facts which showed he did not have the present ability to repay his student loans and that his less-than-ideal financial circumstances would continue for the foreseeable future. The student loan debt was not discharged.

21.  October 17, 2003.  WADDELL, WILLIAM H. & MELISSA, Case No. 03-10189, Chapter 7.  ISSUE: Whether claim arising from an auto accident involving the debtors’ daughter was discharged in this case as to the daughter? RULING: The only debts discharged in this bankruptcy case were claims against the debtors. Any claim against the debtors’ daughter was not a part of the debtors’ bankruptcy and was not within the Bankruptcy Court’s jurisdiction to address.

22.    November 14, 2003.  TRI-STATE ETHANOL COMPANY LLC (North Central Construction Company, Inc., v. Tri-State Ethanol Company, et al.).  Case No. 03-10194, Adv. No. 03-1032, Chapter 11.    ISSUE: Whether Bankruptcy Court should abstain from hearing lien dispute between multiple parties that originated in state court pre-petition? RULING: Bankruptcy Court did not abstain except as to issue regarding arbitration that the state trial court had already ruled upon. Bankruptcy Court advised parties that they could return to state court to complete the appeal of the arbitration decision; otherwise, Bankruptcy Court would hear all remaining issues raised in the adversary proceeding.

23.   November 21, 2003.  TINES, JIMMY DEAN (SD Department of Social Services v. Tines).  Case No. 00-50394, Adv. No. 03-5014, Chapter 7.  ISSUE: (1) Whether nondischargeability complaint under §§ 523(a)(5) and (a)(18) had been timely filed by the state? (2) Whether state’s claim against Debtor-father for medical care expenses it paid for Debtor’s child were nondischargeable? RULING: (1) State timely filed its nondischargeability complaint since there is no deadline for filing a complaint under either § 523(a)(5) or § 523(a)(18). (2) State’s claim was nondischargeable under both § 523(a)(5) and § 523(a)(18).

24.  December 19, 2003.  THE CREDIT STORE, INC., Case NO. 02-40922, Chapter 7.  ISSUE: Whether an attorney for a chapter 11 committee of unsecured creditors may be compensated for services rendered following conversion of the case to chapter 7? RULING: An attorney for a chapter 11 committee of unsecured creditors may not be compensated for services rendered following conversion of the case to chapter 7.

25.  December 19, 2003, WARKENTHIEN, BRETT E. (Patricia Warkenthien v. Brett Warkenthien), Case No. 03-30055, Adv. No. 03-3004, Chapter 7.  ISSUE: 1. Whether discovery related order under a § 523(a)(15) action should be vacated because it was too broad? 2. Whether adversary proceeding should be dismissed on Defendant-Debtor’s motion where Plaintiff was reluctant to comply with a discovery request? RULING: 1. It is appropriate in a § 523(a)(15) action to consider the Plaintiff’s present spouse’s current income and what share of the household expenses he pays. Without that information, the Court cannot adequately assess the benefits and burdens a discharge of the subject debt may pose on each party, as required by § 523(a)(15)(b). 2. Defendant-Debtor’s motion to dismiss the adversary was held in abeyance pending completion of discovery.

26.  December 23, 2003, THE CREDIT STORE INC. (B-Line, L.L.C., v. FDIC), Case No. 02-40922, Adv. No. 03-4039, Chapter 7.  ISSUE: Whether an adversary proceeding by one creditor against another creditor for an injunction and damages is a core proceeding? Whether an adversary proceeding by one creditor against another creditor for an injunction and damages is a non-core, related proceeding? RULING: An adversary proceeding by one creditor against another creditor for an injunction and damages is not a core proceeding. An adversary proceeding by one creditor against another creditor for an injunction and damages is not a non-core, related proceeding.

APPEAL RECORD