2010 Decisions

Charles L. Nail, Jr.,  Chief Bankruptcy Judge

Numerical Listing

2010 DECISION SUMMARIES

Charles L. Nail, Jr., Chief Bankruptcy Judge

1.  January 28, 2010. WOOD, SHAWN ARTHUR.  Case No. 09-50404, Chapter 7, (bench ruling, January 28, 2010).  Issue: Whether Debtor’s refusal to amend his form B22A and schedules I and J and his refusal to provide copies of his cohabitating girlfriend’s pay advices and federal income tax refund constituted cause for dismissal under 11 U.S.C. § 707(a)?  Ruling: No, cause for dismissal was not shown. A debtor would be required to disclose financial benefits received from a non-spouse on line 8 of form B22A. However, the record did not support a finding that Debtor received any such benefits in this case. A debtor would also be required under 11 U.S.C. § 521(a)(3) to provide copies of a cohabitating nn-spouse’s financial information, including pay advices and federal income tax returns, if such financial information was in his possession or under his control. However, the record did not support a finding that Debtor was in possession or control of his cohabitating girlfriend’s pay advices or federal income tax return. Consequently, while the information sought was relevant to the United States Trustee’s review of the totality of the circumstances of Debtor’s financial situation, that information would need to be obtained from Debtor’s cohabitating girlfriend, either voluntarily or by an examination under Fed.R.Bankr.P. 2004.

2.    February 24, 2010.  DATOON, CEFERINO LIPATA DATOON, JR. (Trustee Lee Ann Pierce v. Calvin J. Gjere).  Case No. 09-40190, Adv. No. 09-4018, Chapter 7.  Issue: Whether Defendant was entitled to summary judgment on Trustee-Plaintiff's complaint to avoid under 11 U.S.C. § 547(b) a preferential transfer of a vehicle where Defendant argued the undisputed material facts showed the subject transfer was a contemporaneous exchange for new value or was made within the ordinary course of the debtor's business?  Ruling: Defendant's motion was denied. Defendant was estopped from arguing the transfer was a contemporaneous exchange for new value under § 547(c)(1) or made within the ordinary course of the debtor's business or financial affairs under § 547(c)(2) where Defendant had earlier represented to state licensing officials the transfer was a gift.

3.    March 30, 2010.  MENG, EDWARD GENE, SR. & TAMMY LYNN.  Case No. 10-40116, Chapter 7.  Issue: Whether an individual who completed credit counseling on September 1, 2009 and filed a chapter 7 petition on March 1, 2010 could be a debtor?  Ruling:  No. An individual may not be a debtor under title 11 unless she receives credit counseling within the 180-day period preceding the date of the filing of her petition for relief. The Court must count backward from the petition date, not forward from the completion of credit counseling. To compute the relevant 180-day period, the Court must exclude the petition date, count every day, including intermediate Saturdays, Sundays, and any legal holidays, and include the 180^th day, unless the 180^th day is a Saturday, Sunday, or legal holiday. If the 180^th day is a Saturday, Sunday, or legal holiday, the 180-day period must be extended backward to the next preceding day that is not a Saturday, Sunday, or legal holiday. In this case, the 180^th day was Wednesday, September 2, 2009.

4.    July 9, 2010.  VEBLEN WEST DAIRY LLP (Cash Collateral).  Case No. 10-10071, Chapter 11.  Issue: Whether under 11 U.S.C. § 552(b)(1) a creditor's security interest extends to post-petition milk and milk proceeds where the cows producing the milk are secured to that creditor?  Ruling: Yes, the creditor's security interest extends to the milk produced post-petition by the secured cows and the proceeds from that milk.

5.  July 16, 2010.  VEBLEN WEST DAIRY LLP (Appointment of Trustee).  Case No. 10-10071, Chapter 11.  Issue: Whether a chapter 11 trustee should be appointed?  Ruling: Appointment of a trustee was mandated because the movant established cause under 11 U.S.C. § 1104(a)(1). The cause shown included numerous pre-petition transactions, mostly in 2010, between and among Debtor and several related entities, involving substantial assets and liabilities and significant changes in equity positions, that Debtor was unable to satisfactorily explain or justify.

6.  July 23, 2010.  PRIEST, GARRETT E. & NIKKI ANNE.  Case No. 09-10105, Chapter 7.  Issue:  Whether the United States Trustee should be granted summary judgment regarding its motion to dismiss for abuse under 11 U.S.C. § 707(b)(3) where the United States Trustee alleged Debtors had sufficient disposable income to fund a chapter 13 plan but where Debtors argued certain expenses and the need to save a six-month emergency fund prevented them from funding a plan? Ruling:  The United States Trustee was granted summary judgment, and the case was dismissed. The Court calculated Debtors had at least $615.66 in monthly disposable income to fund a meaningful chapter 13 plan. The Court also concluded Debtors' unwillingness to find more affordable housing was also cause to dismiss the case for abuse because Debtors' monthly mortgage payment greatly exceeded the IRS allowance for a family of their size in their county of residence, the home required substantial maintenance, and the mortgage debt exceeded the value of the home by over $22,000.00.

7.    October 5, 2010.  BARTON, BRENT JOSEPH & DAWN FRANCINE (Dacotah Bank v. Aberdeen Federal Credit Union).  Case No. 09-10085, Adv. No. 10-1004, Chapter 7.  Issue:  Whether the Court had jurisdiction over an adversary proceeding in which one creditor sought a determination that its liens against certain sale proceeds that had been paid to another creditor were senior to that creditor's liens against the same proceeds?  Ruling:  No. The adversary proceeding did not "arise under" title 11, because it did not implicate any provision of title 11. It did not "arise in" a case under title 11, because the underlying dispute was between two creditors and did not involve either the debtors or the chapter 7 trustee and because the proceeds were no longer property of the estate. Finally, it was not "related to" a case under title 11, because the outcome could not have any conceivable effect on the debtors or the bankruptcy estate.

8.    October 27, 2010.  MEIER, RYAN EUGENE & REBECCA ANN.  Case No. 10-40346, Chapter 7.  Issue: Whether Debtors, who were married but separated on the petition date, were both the head of a family within the meaning of S.D.C.L. § 43-45-4 and were thus both entitled to claim $6,000.00 exempt under that statute?  Ruling: No. Because they were still married on the petition date, Debtors and their children comprised a single family, within the plain and ordinary meaning of that word. Debtor-wife's monthly income was greater than Debtor-husband's monthly income. She was thus the head of the family and was entitled to claim $6,000.00 exempt under S.D.C.L. § 43-45-4. Debtor-husband was entitled to claim only $4,000.00 exempt under that statute.

9.  December 7, 2010.  COLEMAN, ARLYN JUARD & BARBARA LYNN.  Case No. 10-10171, Chapter 7.  Issue: Whether 11 U.S.C. § 524(k)(3)(J)(i) excused the Court from reviewing Debtors' reaffirmation agreement?  Ruling: No.  If the presumption of undue hardship arises under 11 U.S.C. § 524(m)(1), the Court must review the presumption, and if the presumption is not rebutted to the Court's satisfaction, the Court may disapprove the agreement, even if the agreement was negotiated with the assistance of counsel, and even if the debt being reaffirmed is a consumer debt secured by real property.